<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
December 28, 1998
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
(Exact name of Registrant as specified in charter)
MARYLAND 333-31434 13-3951476
(State of (Commission File No.) (IRS Employer
organization) Identification No.)
50 Rockefeller Plaza, 2nd Floor
New York, New York 10020
(Address of principal executive offices)
(212) 492-1100 (Registrant's
telephone number)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
From February 2, 1998 to December 28, 1998 Corporate Property
Associates 14 Incorporated and its subsidiaries (the "Company" or "CPA(R):14")
purchased properties with a total purchase price of approximately $164,648,000.
The acquired properties are as follows:
PROPERTY LEASED TO BEST BUY CO. INC
GENERAL
On July 27, 1998, the Company purchased from Merchandising Development
U.S.A. ("MDUSA") a retail facility (the "Best Buy Property"). The Best Buy
Property, containing a 102,500 square foot retail facility, is located in
Torrance, California. The Property is suitable and adequate for use as a retail
facility.
Concurrently with the acquisition of the Best Buy Property, the Company
assumed the net lease with Best Buy Co. Inc. ("Best Buy") (the "Best Buy
Lease"). Material terms of the Best Buy Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Property, including the
Acquisition Fee payable to an Affiliate of the Advisor, was $19,582,000, an
amount less than the leased fee Appraised Value of the Property. The Company
paid an Acquisition Fee of $490,392 to an Affiliate of the Advisor, W. P. Carey
& Co., Inc., a New York corporation ("W.P. Carey & Co."). W.P. Carey & Co. will
receive a Subordinated Acquisition fee of $48,951 payable each of the next eight
years, but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Best Buy Lease is absolutely net. Best Buy will pay maintenance,
insurance, taxes and all other expenses associated with the operation and
maintenance of the Best Buy Property, except for the Best Buy subsidiary's debt
service and income taxes. In the opinion of management of the Company, the Best
Buy Property is adequately covered by insurance.
Term
The initial term of the Best Buy Lease is ten years, followed by two
five-year renewal terms at the option of Best Buy. The initial term expires on
January 31, 2005.
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<PAGE> 3
Rent
The initial annual rent under the Best Buy Lease is $1,741,990 payable
monthly in advance in equal installments of $145,166. Additionally, the Best Buy
Lease provides that at the end of the fifth year of the initial term, the annual
rent for each of the five years of the first renewal term will be $1,946,930
payable in advance in monthly installments of $162,244. The annual rent for the
second renewal term will be $2,151,870, payable in advance in monthly
installments of $179,323.
ASSUMPTION OF SUBLEASE
The Best Buy Lease includes a sublease agreement (the "Office Max
Sublease") between Best Buy and Office Max Inc. ("Office Max"). The initial term
of the Office Max Sublease is approximately nine years, followed by one
five-year renewal term at the option of Office Max. The initial annual rent
under the Office Max Sublease is $560,880 payable monthly in advance in equal
installments of $46,740. Additionally, the Office Max Sublease provides that at
the end of the fourth year of the initial term, the annual rent for each of the
next five years of the initial term will be $632,880 payable in advance in
monthly installments of $52,740. Thereafter, Office Max has an option for an
extended term, at an annual rent of $704,880, payable in advance in monthly
installments of $58,740.
DESCRIPTION OF BEST BUY
Best Buy is the nation's largest volume specialty retailer of name
brand consumer electronics, home office equipment, entertainment software and
appliances.
Financial statements for Best Buy are on file with the Securities and
Exchange Commission. The following is a summary of selected financial data for
Best Buy for the last three years:
<TABLE>
<CAPTION>
STATEMENT OF EARNINGS FOR THE FISCAL YEAR ENDED
FEBRUARY 28, 1998 MARCH 1, 1997 MARCH 2, 1996(1)
----------------- ------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues ............................ $8,358,212 $7,770,683 $7,217,448
Gross Profit ........................ 1,332,138 1,058,881 936,571
Selling general and administrative
expenses ............................ 1,145,280 1,005,675 813,988
Operating income .................... 186,858 53,206 122,583
Net earnings ........................ $94,453 $1,748 $48,019
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
BALANCE SHEET DATA
FOR THE FISCAL YEAR ENDED
FEBRUARY 28, 1998 MARCH 1, 1997 MARCH 2, 1996(1)
----------------- ------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Working capital ..................... $676,601 $567,456 $586,841
Total assets ........................ 2,056,346 1,734,307 1,890,832
Long-term debt, including current
portion ............................. 225,322 238,016 229,855
Convertible preferred securities .... 229,854 230,000 230,000
Shareholders' equity ................ $557,746 $438,315 $431,614
</TABLE>
(1) Fiscal year 1996 contains 53 weeks. All other periods contain 52 weeks.
PROPERTY LEASED TO ETEC SYSTEMS, INC.
GENERAL
On February 9, 1995, Corporate Property Associates 12 Incorporated
("CPA(R):12") purchased from Etec Systems, Inc. ("Etec") the office and
manufacturing facilities of Etec. The office and manufacturing facilities are
located on 16.92 acres of land in Hayward California (the "Etec Land").
CPA(R):12 entered into a net lease for the Etec facilities.
On February 3, 1998, CPA(R):12 contributed the Etec Land, facilities
and lease to a limited liability company (the "LLC"), in which the Company and
CPA(R):12 are the sole members. The LLC then entered into a Construction Agency
Agreement with Etec to build a 129,000 square foot manufacturing facility
located on the Etec Land (the "Etec Addition"). The Company acquired an interest
in the LLC which entitles it to a 49.99% interest in the newly built facility.
The Company did not acquire an interest in any portion of the facility owned by
CPA(R):12 prior to the formation of the LLC.
Under the Construction Agency Agreement, Etec will supervise and manage
the construction, installment, and completion of the Etec Addition. After
completion of the construction, the Etec Addition is expected to be suitable and
adequate for the uses for which it was intended. The cost of the Etec Addition
will be depreciated for tax purposes over a 40-year period on a straight line
basis.
The purchase terms, rent and financing commitments described hereafter
reflect only terms and conditions of the Etec Addition.
PURCHASE TERMS
The Company's share of the cost of constructing the Etec Facility,
excluding the Acquisition Fee payable to an Affiliate of the Advisor, will not
exceed $24,037,000, an amount less
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<PAGE> 5
than the leased fee Appraised Value of the Etec Facility. The LLC is obligated
to pay W.P. Carey & Co., an Affiliate of the Advisor, an Acquisition Fee of
$601,974 for the Company's share of the investment. W.P. Carey & Co. will
receive a Subordinated Acquisition Fee of approximately $130,890, payable each
of the next eight years, but only if the Company satisfies the Preferred Return.
The Company will pay a portion of the Subordinated Acquisition Fee based on its
proportional interest in the Etec Facility.
DESCRIPTION OF THE LEASE
General
The Etec Lease is absolutely net and bondable and in normal financeable
form. Etec will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the Etec Facility, except for
the Etec Subsidiary's debt service and income taxes. In the opinion of
management of the Company, the Etec Facility will be adequately covered by
insurance.
Term
The remaining initial term of the Etec Lease expires on May 31, 2014,
followed by three five-year renewal terms and one eighth-month renewal term
(each, an "Extended Term") which may be exercised at the option of Etec.
Rent
The initial annual rent for the Etec Facility is (a) to and including
June 1, 1999, an amount equal to the product of (a) the libor then in effect
stated on an annual basis divided by 12 plus 150 basis points, and (b)
commencing on July 1, 1999, monthly payments equal to the equal monthly
amortization payment required to pay the cost of the Etec Facility (exclusive of
the Acquisition Fee) in full over the remainder of the initial term assuming an
interest rate of 7.98% per annum. Additionally, the Etec Lease provides that on
March 1, 2001, March 1, 2004, March 1, 2007, March 1, 2010 and March 1, 2013 the
rent then in effect will be increased to reflect percentage increases in the
Consumer Price Index over the prior three years capped at 12% for each such
three year period.
Right of First Refusal
The Etec Lease provides Etec with certain rights of first refusal to
purchase the Etec Facility together with the Additional Facilities. If the
Company receives an offer between June 1, 2007 and May 31, 2008 for a price
equal to the greater of Fair Market Value of the Etec Facility and the CPA(R):12
Facilities or the final cost of the Etec Facility and the CPA(R):12 Facilities
plus the applicable Prepayment Premium reduced by principal payments on the
Note, Etec shall have the right to match such offer.
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<PAGE> 6
DESCRIPTION OF FINANCING
The LLC has a firm commitment from Teachers Insurance and Annuity
Association of America for a 15 year $30,000,000 mortgage loan (the "Loan") at
an initial rate of interest of 6.96% per annum. The Loan shall require the
payment of principal and interest based upon an amortization schedule of not
less than 20 years.
DESCRIPTION OF ETEC SYSTEMS
Etec is a leading producer of electron beam and laser lithography
equipment. These systems are used in the manufacturing of masks for the
semiconductor manufacturing industry. Etec's shareholders include DuPont, IBM,
Perkin Elmer Grumman, and Micron Technology. Financial Statements of Etec System
are on file with the Securities and Exchange Commission. The following is a
summary of selected financial data for Etec System for the last three years:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1997 1998
---- ---- ----
STATEMENT OF OPERATIONS DATA: (In thousands)
(Unaudited)
<S> <C> <C> <C>
Revenue $145,645 $240,914 $288,327
Cost of revenue 80,042 124,287 135,170
Gross profit 65,603 116,627 153,157
Operating expenses 44,940 66,186 86,035
Net income $35,783 $34,439 $46,767
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1997 1998
---- ---- ----
BALANCE SHEET DATA: (In thousands)
(Unaudited)
<S> <C> <C> <C>
Total assets $208,871 $284,543 $358,514
Total liabilities 92,994 86,902 111,845
Total shareholders' $115,877 $197,641 $246,667
equity
</TABLE>
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<PAGE> 7
PROPERTY LEASED TO METAGENICS INCORPORATED
GENERAL
On July 29, 1998, the Company acquired from Rancho San Clemente
Partners, L.P. certain property containing approximately nine acres of land
located in San Clemente, California (the "Metagenics Land") upon which the
Company will construct an office facility containing approximately 133,600
square feet (the "Metagenics Facility"). The Metagenics Facility will be
suitable and adequate for its intended uses. The Company formed a subsidiary to
take title to the Metagenics Facility. The cost of the Metagenics Facility will
be depreciated for tax purposes over a 40-year period on a straight-line basis.
Concurrently with the acquisition of the Metagenics Facility, (i) Lowe
Enterprises Commercial Group ("Lowe") assigned all its rights title to and
interest in the lease to the Company, (ii) the Company entered into a
Construction Agreement with Lowe pursuant to which Lowe will construct the
Metagenics Facility, and (iii) Lowe entered into a Guaranty of Completion of the
Metagenics Facility for the benefit of the Company. Material terms of the
Metagenics Lease are described below.
PURCHASE TERMS
The cost of acquiring the Metagenics Land and constructing the
Metagenics Facility, including the Acquisition Fee payable to an Affiliate of
the Advisor, is not anticipated to exceed $11,500,000, an amount less than the
leased fee Appraised Value of the Metagenics Facility. The Company paid an
Acquisition Fee of $437,000 to W.P. Carey & Co. W.P. Carey & Co. will receive a
Subordinated Acquisition fee of $28,750, payable each of the next eight years,
but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Metagenics Lease is triple net. Metagenics Incorporated
("Metagenics") will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the Metagenics Facility, except
for the Metagenics Subsidiary's debt service and income taxes.
Term
The initial term (the "Initial Term") of the Metagenics Lease commenced
on May 27, 1998 and shall continue until substantial completion of the
Metagenics Facility as defined in the Metagenics Lease. The primary term
("Primary Term") of the Metagenics Lease is 12 years, commencing upon the
expiration of the Initial Term, followed by two, five year renewal terms at the
option of Metagenics (each a "Renewal Term").
Rent
The annual rent during the Initial Term under the Metagenics Lease is
nine percent (9%) per annum on amounts advanced by or on behalf of the
Metagenics Subsidiary for the cost of construction. The annual rent during the
Primary Term under the Metagenics lease is an amount equal to 11% of the cost of
construction. The rent will increase annually by 3.5%.
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<PAGE> 8
DESCRIPTION OF FINANCING
The Company is currently seeking mortgage financing for the Metagenics
Facility.
DESCRIPTION OF METAGENICS
Metagenics is a formulator and distributor of nutritional supplements
for resale by licensed health care practitioners, health and natural product
retailers, and other specialty retailers.
The following is a summary of selected financial information for
Metagenics for the last two years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
STATEMENT OF INCOME 1997 1996
---- ----
<S> <C> <C>
Total Revenue ......................... $28,355,402 $25,258,789
Cost of Goods Sold .................... 12,870,785 11,677,832
Total Operating Expenses .............. 14,441,681 13,169,512
Net Income ............................ $1,008,192 $273,361
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
BALANCE SHEET DATA 1997 1996
---- ----
<S> <C> <C>
Cash $67,872 $25,463
Accounts Receivable 2,808,634 2,384,943
Total Assets 8,667,446 7,678,250
Long Term Debt 3,401,963 229,329
Total Stockholders Equity $2,826,324 $2,165,199
</TABLE>
PROPERTY LEASED TO BURLINGTON MOTOR CARRIERS INC.
GENERAL
On June 30, 1998, the Company purchased from Burlington Motor Carriers
Inc. ("Burlington") an office and maintenance facility (the "Burlington
Facility"). The Burlington Facility, containing approximately 63,700 square
feet, is located in Daleville, Indiana. The
-8-
<PAGE> 9
Burlington Facility is suitable and adequate for use as office and maintenance
facility. The cost of the Burlington Facility will be depreciated for tax
purposes over a 40-year period on a straight-line basis.
Concurrently with the acquisition of the Burlington Facility, the
Company entered into a net lease (the "Burlington Lease") with Burlington for
the Burlington Facility. Material terms of the Burlington Lease are described
below.
PURCHASE TERMS
The cost to the Company of acquiring the Burlington Facility, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $7,539,267, an
amount less than the leased fee Appraised Value of the Burlington Facility. The
Company paid an Acquisition Fee of $188,482 to W. P. Carey & Co. W.P. Carey &
Co. will receive a Subordinated Acquisition fee of $18,848, payable in each of
the next eight years, but only if the Company satisfies the Preferred Return.
WARRANTS
The Burlington Subsidiary was issued a warrant to purchase 4,666.9
shares of the common stock of Burlington at the price of $100 per share. The
warrant expires on the last day of the Burlington Lease.
DESCRIPTION OF THE LEASE
General
The Burlington Lease is absolutely net and bondable and in normal
financeable form. Burlington will pay maintenance, insurance, taxes and all
other expenses associated with the operation and maintenance of the Burlington
Facility. In the opinion of management of the Company, the Burlington Facility
is adequately covered by insurance.
Term
The initial term of the Burlington Lease is twenty years, followed by
two five-year renewal terms at the option of Burlington.
Rent
The initial annual rent under the Burlington Lease is $792,000 payable
quarterly in advance in equal installments of $198,000. Additionally, the
Burlington Lease provides that at the beginning of the third year of the initial
term and every two years thereafter, the annual rent will be adjusted by the
cumulative increase in the Consumer Price Index over the
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<PAGE> 10
prior two years, however such cumulative increase is capped at 6.09% for any
such two-year period.
DESCRIPTION OF FINANCING
The Company is currently seeking mortgage financing for the Burlington
Facility.
DESCRIPTION OF BURLINGTON
Burlington Motor Carriers, Inc. was incorporated on November 7, 1997
and operates as a common carrier providing truck load services throughout the
continental United States, to and from Mexico and certain provinces in Canada.
The following is a summary of selected financial data for Burlington
for the last two years:
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS YEAR ENDED PERIOD NOVEMBER 7, 1997
DECEMBER 31, 1997 THROUGH DECEMBER 31, 1996
----------------- -------------------------
(in thousands)
<S> <C> <C>
Operating Revenue .............. $201,118 $ 4,908
Total Operating Expenses ....... 193,680 5,205
Operating Income (loss) ........ 7,438 (297)
Net loss ....................... $ (547) $(1,650)
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA YEAR ENDED PERIOD NOVEMBER 7, 1997
DECEMBER 31, 1997 THROUGH DECEMBER 31, 1996
----------------- -------------------------
(in thousands, except per share data)
<S> <C> <C>
Cash ........................... $ 1,177 $ 1,378
Receivable ..................... 24,677 19,104
Total Assets ................... 29,978 27,878
Long Term Debt ................. 68,438 68,186
Total Stockholders' Equity ..... $27,262 $27,809
</TABLE>
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<PAGE> 11
PROPERTY LEASED TO THE BENJAMIN ANSEHL CO.
GENERAL
On November 24, 1998, the Company purchased from The Benjamin Ansehl
Company ("Ansehl") an office and manufacturing facility (the "Ansehl Facility").
The Ansehl Subsidiary, containing approximately 154,760 square feet, is located
on 8.5 acres of land in Overland, Missouri. The Ansehl Facility is suitable and
adequate for use as a manufacturing, warehousing and office space
Concurrently with the acquisition of the Ansehl Facility, the Ansehl
Subsidiary entered into a net lease (the "Ansehl Lease"). Material terms of the
Ansehl Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Ansehl Facility, including the
Acquisition Fee payable to an Affiliate of the Advisor, was $6,021,000, an
amount less than the leased fee Appraised Value of the Ansehl Facility. The
Company paid an Acquisition Fee of $271,000 to W.P. Carey & Co. W.P. Carey & Co.
will also receive a Subordinated Acquisition Fee of $15,056, payable in each of
the next eight years, but only if the Company satisfies the Preferred Return.
WARRANTS
The Company received warrants to purchase 1.50% of the fully diluted
shares of the outstanding common stock of Ansehl. The warrants have a term of 15
years and a strike price of $26.738, which is the same strike price at which
management received its warrants.
DESCRIPTION OF THE LEASE
General
The Ansehl Lease is absolutely net and bondable and in financeable
form. Ansehl will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the Ansehl Facility.
Term
The initial term of the Ansehl Lease is fifteen years, followed by two
five-year renewal terms at the option of Ansehl.
Rent
The initial annual rent under the Ansehl Lease is $649,750 payable
quarterly in equal installments of $162,437.50. Additionally, the Ansehl Lease
provides that at the beginning of the third year of the initial term and every
two years thereafter, the annual rent will be adjusted by the cumulative
increase in the Consumer Price Index over the prior two years.
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<PAGE> 12
Description of Financing
The Company is seeking mortgage financing in the amount of $3,100,000
for the Ansehl Facility, but the Company has not obtained a commitment for any
such financing at this time.
Description of Ansehl
Ansehl is a diversified manufacturer/marketer of liquid filled health
and beauty care products.
The following is a summary of selected financial data for Ansehl for
the last three years:
<TABLE>
<CAPTION>
STATEMENT OF EARNINGS
FOR THE FISCAL YEAR ENDED MARCH 1996 MARCH 1997 MARCH 1998
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues............................... $25,180 $43,552 $50,543
Gross Profit........................... 5,779 7,749 8,200
Selling, general and administrative
expenses............................... 3,500 4,761 5,467
Operating Income....................... 1,435 1,946 1,619
Net Income (Loss)...................... $ 359 $ (206) $ (196)
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA
AS OF MARCH 1996 MARCH 1997 MARCH 1998
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Total Assets........................... $16,568 $31,150 $29,025
Long-term debt......................... 3,877 6,886 14,260
Shareholders' equity................... $ 1,724 $ 4,789 $ 4,593
</TABLE>
PROPERTY LEASED TO ADVANCED MICRO DEVICES, INC.
GENERAL
On December 22, 1998, the Company, Carey Institutional Properties
Incorporated ("CIP(R)") and CPA(R):12 through their interests in a newly formed
Limited Liability Company (the "LLC") acquired from CIBC, Inc. an office
facility (the "AMD Facility"). The AMD
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<PAGE> 13
Facility, containing approximately 364,000 square feet, is located on 45.625
acres of land in Sunnyvale, California. The AMD Facility is suitable and
adequate for its intended uses. The Company, together with CPA(R):12 and CIP(R),
created a limited liability company (the "LLC") owned equally among the Company,
CIP(R) each own a one-third interest in the LLC. The cost of the AMD Facility
will be depreciated for tax purposes over a 40-year period on a straight line
basis.
PURCHASE TERMS
The cost to the LLC of acquiring the AMD Facility, including the
Acquisition Fee payable to an Affiliate of the Advisor, is $95,287,958, an
amount less than the Appraised Value of the AMD Facility. W.P. Carey & Co.
received paid an Acquisition Fee of $3,017,451 from the Company, CIP(R) and
CPA(R):12. W.P. Carey & Co. will also receive a Subordinated Acquisition fee of
$158,813.25 payable each of the next eight years, but will only receive the full
amount if the Company and CPA(R)12 satisfy the Preferred Return.
DESCRIPTION OF THE LEASE
General
The AMD Lease is absolutely net and bondable and in normal financeable
form. AMD will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the AMD Facility, except for
the AMD Subsidiary's debt service and income taxes. In the opinion of
management, the AMD Property is adequately covered by insurance.
Term
The initial term of the AMD Lease is 20 years followed by two ten-year
renewal terms at the option of AMD.
Rent
The annual rent during the initial term under the AMD Lease is
$9,145,500, adjusted every three years based on a multiple of the increase in
the Consumer Price Index ("CPI"), capped at 6.903% for each three year period.
DESCRIPTION OF FINANCING
Concurrently with the acquisition of the AMD Facility, the LLC obtained
a mortgage loan in the amount of $68,250,000 from GMAC Commercial Mortgage
Corporation ("GMAC") with a ten-year term and thirty (30) year amortization
schedule at an interest rate of 7.78%.
DESCRIPTION OF AMD
AMD is a global supplier of integrated circuits for the personal and
networked computer and communications market. AMD produces processors, flash
memories, programmable logic devices and products for communications and
networking applications.
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<PAGE> 14
Financial statements for AMD are on file with the Securities and
Exchange Commission. The following is a summary of selected financial
information for AMD:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 27 YEAR ENDED DECEMBER 28
------------ ----------------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
STATEMENT OF
INCOME 1998 1997 1997 1996 1995
------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $1,753,321 $1,743,204 $2,356,375 $1,953,019 $2,468,379
Expenses 1,946,839 1,788,845 2,447,028 2,206,329 2,246,179
Operating
income (193,578) (45,641) (90,653) (253,310) 222,200
Net income (126,281) (8,756) (21,090) (68,950) 216,236
(Loss)
Net income (0.88) (0.06) (0.15) (0.51) 1.69
per common
share (Basic)
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 27, YEAR ENDED DECEMBER 31
------------------- ----------------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA 1998 1997 1996
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Cash and short-term
investments $580,510 467,032 586,198
Total current assets 1,365,603 1,175,267 1,029,077
Property, plant and
equipment, net 2,375,105 1,990,689 1,787,402
Total assets 4,116,118 3,515,271 3,145,283
Total current liabilities 819,853 726,770 583,473
Total stockholders' equity 1,929,696 2,029,543 2,021,878
</TABLE>
[ON JANUARY 13, 1999, AMD ANNOUNCED UNAUDITED RESULTS FOR THE YEAR ENDED
DECEMBER 31, 1998 THAT SHOWED REVENUES OF $2,452,141, A NET LOSS OF $103,960 AND
A NET LOSS PER SHARE OF [$0.22.]
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<PAGE> 15
PROPERTY LEASED TO CONTRAVES BRASHEAR SYSTEMS, L.P.
General
On December 28, 1998, Company purchased from Stupar Holdings Corporation
an industrial/office facility (the "Contraves Facility"). The Contraves
Facility, containing approximately 151,124 square feet, is located in
Pittsburgh, Pennsylvania. The Contraves Facility is suitable and adequate for
its intended uses. The cost of the Facility will be depreciated for tax purposes
over a 40 year period on a straight-line basis.
Concurrently with the acquisition of the Contraves Facility, the Company
entered into a net lease with (the "Contraves Lease") with Contraves Brashear
Systems, L.P. Material terms of the Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Facility, including the
Acquisition Fee payable to the Advisor, was $6,806,283, an amount less than the
leased fee Appraised Value of the Facility. The Company paid an acquisition fee
of $170,157 to W.P. Carey & Co., an Affiliate of the Advisor. W.P. Carey & Co.
will receive a Subordinated Acquisition fee of $17,016 payable in each of the
next eight years, but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Contraves Lease is absolutely net and bondable and in normal
financeable form. Contraves will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Contraves
Facility. In the Company's opinion, the Contraves Facility is adequately covered
by insurance.
Term
The initial term of the Contraves Lease is fifteen years, followed by two
five year automatic renewal terms, unless Contraves notifies the Company in
writing at least fifteen calendar months prior to the expiration of the term
that Contraves is terminating the Contraves Lease.
Rent
The initial annual rent under the Contraves Lease is $643,500 payable
quarterly in advance in equal installments of $160,875 adjusted every three
years based on increased in the Consumer Price Index capped at 9.27% for each
rent increase.
-15-
<PAGE> 16
DESCRIPTION OF FINANCING
Peoples Bank of Western Pennsylvania (the "Lender") provided non-recourse
mortgage financing to the Company in the form of a loan in the amount of
$4,225,000 with a ten year maturity and a 7.50% fixed rate of interest for ten
years and with payments made in accordance with a 25 year amortization schedule.
DESCRIPTION OF CONTRAVES BRASHEAR SYSTEMS, L.P.
Contraves designs and manufactures electro-optical and electro-mechanical
systems and instrumentation for commercial and defense markets. The company
operates in four product areas: telescope systems, optical components,
electro-optical systems for fire control, tracking and surveillance and small
arms fire control systems.
Contraves was incorporated in September, 1997. The following is a summary
of selected financial data for Contraves for the last year:
<TABLE>
<CAPTION>
Nine Months Ended September 27, 1998
------------------------------------
(in thousands)
<S> <C>
STATEMENT OF OPERATIONS
Contract Revenue.......................... $21,704
Cost of Sales............................. 18,977
Interest Expense.......................... 128
Net Income................................ $ 501
</TABLE>
<TABLE>
<CAPTION>
As of September 27, 1998
------------------------
(in thousands)
<S> <C>
BALANCE SHEET DATA
Cash and Investments...................... $ 445
Total Assets.............................. 13,198
Long Liabilities.......................... 8,690
Partners' Capital......................... 3,500
Total Equity.............................. $4,508
</TABLE>
(B) PRO FORMA FINANCIAL INFORMATION
The pro forma financial information is currently unavailable and will be
filed by amendment within 60 days from the date hereof.
-16-
<PAGE> 17
(C) EXHIBITS
The following exhibits are filed as part of this Current Report on Form
8-K:
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
- ----------- ------- --------
10.1 Lease Agreement dated July 27, 1998 by and between Best (CA)
QRS 14-4, as Landlord, and Best Buy Co. Inc., as Tenants.
10.2 Lease Agreement dated February 3, 1998 by and between ESI (CA)
QRS 12-6 INC., as Landlord and Etec Systems, Inc., as Tenants.
10.3 Lease Agreement dated July 29, 1998 by and between META (CA)
QRS 14-16, as Landlord, and Metagenics Incorporated, as
Tenants.
10.4 Lease Agreement dated July 30, 1998 by and between TRUCK (IN)
QRS 14-3, INC., as Landlord, and Burlington Motor Carrier
Inc., as Tenants.
10.5 Lease Agreement dated November 24, 1998 by and between BAC
(MO) QRS 14-10, Inc., as Landlord, and The Benjamin Ansehl
Co., as Tenants.
10.6 Lease Agreement dated December 22, 1998 by and between
Conductor (CA) QRS 14-11, Inc., as Landlord, and Advance Micro
Devices, Inc., as Tenants.
10.7 Lease Agreement dated December 28, 1998 by and between CBS
(PA) QRS 14-12, Inc., as Landlord, and Contraves Brashear
Systems, L.P., as Tenants.
-17-
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 14
INCORPORATED
By: /s/ H. Augustus Carey
------------------------------------
H. Augustus Carey
Dated: January __, 1999
-18-
<PAGE> 1
Exhibit 10.1
LEASE
by and between
MERCHANDISING DEVELOPMENT U.S.A., INC., a California corporation
("Lessor")
and
BEST BUY CO., INC., a Minnesota corporation
("Tenant")
for improved real property at
Pacific Coast Highway and
Hawthorne Blvd., Torrance, CA
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
A. FUNDAMENTAL LEASE TERMS .............................................
1. THE PREMISES .................................................... 2
2. TITLE AND QUIET POSSESSION ...................................... 2
3. LEASE TERM AND RENT COMMENCEMENT DATE ........................... 3
4. OPTION TO EXTEND ................................................ 4
5. LESSOR'S WORK ................................................... 4
6. RIGHT OF PRIOR INSTALLATION ..................................... 6
7. RENT ............................................................ 6
8. USE ............................................................. 6
9. UTILITIES ....................................................... 8
10. REPAIR OF THE PREMISES .......................................... 8
11. ACCESS BY LESSOR ................................................ 9
12. TENANT'S FIXTURES AND SIGNS ..................................... 9
13. ALTERATIONS TO THE PREMISES ..................................... 9
14. SURRENDER OF THE PREMISES ....................................... 10
15. HOLDING OVER; RIGHT OF FIRST NEGOTIATION ........................ 10
16. REMEDIES UPON DEFAULT ........................................... 10
17. NONWAIVER OF DEFAULT ............................................ 12
18. QUIET ENJOYMENT ................................................. 12
19. DAMAGE BY FIRE OR CASUALTY ...................................... 12
20. WAIVER OF SUBROGATION ........................................... 13
21. EMINENT DOMAIN .................................................. 13
22. INSURANCE ....................................................... 13
23. SUBORDINATION OF LEASE .......................................... 14
24. TRANSFER OF INTEREST ............................................ 14
</TABLE>
<PAGE> 3
25. REAL ESTATE TAXES................................................. 15
26. NOTICES........................................................... 16
27. SEVERABILITY OF PROVISIONS........................................ 16
28. MEMORANDUM OF LEASE............................................... 17
29. PARKING REQUIREMENTS.............................................. 17
30. ENTIRE AGREEMENT.................................................. 17
31. RELATIONSHIP OF THE PARTIES....................................... 17
32. RIGHT OF PROTEST.................................................. 17
33. IMPORTANCE OF EACH COVENANT....................................... 17
34. HEADINGS.......................................................... 17
35. PARTIES IN INTEREST............................................... 18
36. COUNTERPARTS...................................................... 18
37. NUMBER AND GENDER................................................. 18
38. COMMON AREAS...................................................... 18
39. OBSTRUCTIONS AND CONSTRUCTION..................................... 19
40. RIGHT OF FIRST REFUSAL ON ADJOINING SPACE......................... 19
41. EXCLUSIVITY....................................................... 19
42. HAZARDOUS SUBSTANCES.............................................. 19
43. BROKERAGE......................................................... 20
44. ATTORNEY'S FEES................................................... 21
B. EXHIBITS AND RIDERS................................................... 21
ii
<PAGE> 4
EXHIBITS
A. LEGAL DESCRIPTION OF SHOPPING CENTER
B. SITE PLAN
C. PERMITTED TITLE EXCEPTIONS
D. FINAL PLANS
E. CONSTRUCTION SCHEDULE CHART
RIDERS
RECIPROCAL EASEMENT RIDER
iii
<PAGE> 5
Store No.
--------
L E A S E
THIS LEASE is made and entered into as of the 14th day of June, 1994, by and
between MERCHANDISING DEVELOPMENT U.S.A., INC., a California corporation
("Lessor") and BEST BUY CO., INC., a Minnesota corporation ("Tenant").
WITNESSETH:
In consideration of the rents reserved and the covenants and conditions set
forth herein, Lessor and Tenant agree as follows:
A. FUNDAMENTAL LEASE TERMS.
i. Parties.
Lessor: Merchandising Development U.S.A., Inc., a California
corporation
Tenant: Best Buy Co., Inc.
ii. Premises (Article 1).
See Article 1
iii. Term (Articles 3 and 4).
Ten (10) Lease Years, with one five (5) year renewal.
Estimated Term Commencement Date of November 11, 1994 or open for
business.
iv. Fixed Rent (Article 7).
<TABLE>
<CAPTION>
Lease Year Monthly Annual Per Sq. Ft. Based upon 102,470 sq. ft.
---------- ------- ---------------------------------------------
<S> <C> <C>
1-5 $145,165.83 $1,741,990.00 $17.00
6-10 $162,244.17 $1,946,930.00 $19.00
Option (11-16) $179,322.50 $2,151,870.00 $21.00
</TABLE>
v. Construction (Article 5).
See Article 5
vi. Addresses (Article 26).
Lessor:
Mr. Kiyoshi Imba
Merchandising Development U.S.A., Inc.
24712 Madison Street
Torrance, CA 90505
1
<PAGE> 6
with copy to:
Nancy N. Kennerly, Esq.
Paul, Hastings, Janofsky & Walker
555 South Flower Street, 23rd. FL
Los Angeles, CA 90071
Tenant:
Best Buy Co., Inc.
7075 Flying Cloud Drive
Eden Prairie, MN 55344
Attention: Legal Department-Real Estate
With a copy to:
Robins, Kaplan, Miller & Ciresi
2800 LaSalle Plaza
800 LaSalle Avenue South
Minneapolis, Minnesota 55402-2015
Attention: Steven A. Schumeister, Esq.
1. THE PREMISES.
Subject to the terms and conditions of this Lease, Lessor leases to Tenant and
Tenant rents from Lessor the premises situated in the City of Torrance, County
of Los Angeles and State of California, described as follows:
The approximately one hundred three thousand six hundred eighty six
(103,686) gross sq. ft. building located at Pacific Coast Highway and
Hawthorne Blvd., Torrance, California and shown in approximate location and
crosshatched on Exhibit B attached hereto and made part hereof (sometimes
referred to in this Lease as the ("Site Plan"), as same shall be remodeled
and renovated as described in this Lease and including all easement rights,
improvements and appurtenances thereto including but not limited to
easement rights under the REA (as defined in the Reciprocal Easement
Rider), truck dock facilities, loading facilities and trash facilities
exclusively serving such building ("Premises"). The Premises will be
physically divided by Lessor as provided in this Lease into two portions
shown on the Site Plan (and so defined for purposes of this Lease) as
"Premises A" and "Premises B". Premises A consists of approximately sixty
two thousand five hundred eighteen (62,518) square feet of "floor area" (as
defined in Section 7 below). Premises B consists of approximately thirty
nine thousand nine hundred fifty two (39,952) square feet of floor area.
Whenever the term "Premises" is used in this Lease it shall be deemed to
mean both Premises A and Premises B, unless specifically indicated
otherwise. The Premises is located in the Shopping Center shown on the Site
Plan (the "Shopping Center"). The legal description of the Shopping Center
is attached hereto as Exhibit A and made a part hereof. In the event of any
conflict between Exhibit A and the Site Plan, the Site Plan shall control.
2. TITLE AND QUIET POSSESSION.
Lessor hereby warrants that it has full right and authority to enter into this
Lease in accordance with the terms hereof and that, to the best of Lessor's
knowledge (but without investigation), as of the date of this Lease and upon
recordation of the Memorandum of Lease there will be no liens or encumbrances
against the Premises which would affect Tenant's rights under this Lease or its
easement rights in the Shopping Center except as stated in Exhibit C attached
hereto and made a part hereof (the "Permitted Exceptions"). Lessor further
warrants that, to the best of its knowledge, the Permitted
2
<PAGE> 7
Exceptions (other than the REA as to which Tenant shall satisfy itself) do not
contravene, hinder or impair any right or privileges granted Tenant in this
Lease.
3. LEASE TERM AND RENT COMMENCEMENT DATE.
3.1 Term and Term Commencement Date. The initial term of this Lease (the
"Initial Term") shall be for a period of ten (10) "Lease Years," as that term is
hereinafter defined and shall expire on the last day of the tenth (10th)
consecutive Lease Year. If the Delivery Date (as defined in Section 5.2) is on
or before October 21, 1994, and Lessor's Work (as defined in Section 5.1) for
Premises A is complete on or before November 11, 1994 then the Initial Term
shall commence on the first to occur of (i) November 11, 1994 and (ii) the date
Tenant opens for business to the public in Premises A. If the Delivery Date is
after October 21, 1994, and/or Lessor's Work is not complete by November 11,
1994, then the Initial Term shall commence on the first to occur of (A) the date
of completion of Lessor's Work and (B) the date Tenant opens for business to the
public in Premises A. The date of commencement of the Initial Term shall be
referred to in this Lease as the "Term Commencement Date".
3.2 Premises A Rent Commencement Date.
(a) If the Delivery Date (as defined in Article 5) is on or before October
21, 1994 and the Lessor's Work is completed on or before November 11, 1994 then
the "Premises A Rent Commencement Date" as used in this Lease shall mean the
earlier of (i) November 11, 1994 and (ii) the date Tenant opens for business to
the public in Premises A.
(b) If the Delivery Date is after October 21, 1994, or the Lessor's Work
is not completed on or before November 11, 1994, then the Premises A Rent
Commencement Date shall be the earlier of (i) three (3) weeks from the date of
completion of Lessor's Work and (ii) the date Tenant opens for business to the
public in Premises A; provided Tenant, as its option, may elect not to accept
delivery of the Premises and to extend the Deliver Date until January 26, 1995.
(c) In the event Tenant elects to extend the Delivery Date until January
26, 1995 as provided in subparagraph (b) above, the Premises A Rent Commencement
Date shall be the earlier of (i) three (3) weeks from the date of completion of
Lessor's Work for Premises A (but in no event prior to February 16, 1995 and
(ii) the date Tenant opens for business to the public in Premises A.
3.3 Premises B Rent Commencement Date.
(a) If Lessor has not received the Premises B Plans (as defined in Section
5.3 below) by January 1, 1995, the "Premises B Rent Commencement Date" as used
herein shall mean March 1, 1995; provided, as to Premises B Plans received after
January 1, 1995, Lessor shall diligently pursue the permits for such work and
further provided that if the Premises B Improvement Work is not completed in a
reasonably expeditious manner then the Premises B Rent Commencement Date shall
be extended by the amount of days of any delay caused by the lack of due
diligence in the completion of such work.
(b) If Lessor has received the Premises B Plans by January 1, 1995, then
the "Premises B Rent Commencement Date" shall be sixty (60) days after Lessor
receives the Premises B Plans and all governmental permits necessary for
commencement of the Premises B Tenant Improvement Work; provided, Lessor shall
diligently pursue the permits for such work and further provided that if the
Premises B Improvement Work is not completed by March 1, 1995 due to Lessor's
failure to diligently and in good faith pursued completion of such work by such
date then the Premises B Rent Commencement Date shall be extended by the amount
of days of such delay in the completion of such work.
3.4 Lease Year. The term "Lease Year" as used herein shall mean a
period of twelve (12) consecutive full calendar months (except for the first
Lease Year, which may be longer). The first Lease Year shall commence on the
Term Commencement Date. The first Lease Year shall expire at midnight on the
second January 31 following the Term Commencement Date. Succeeding Lease Years
shall each commence on the first (1st) day following the end of the preceding
Lease Year. After the Term Commencement Date and within ten (10) days after
request from the other party,
3
<PAGE> 8
each party shall execute ??? liver to the other a supplement ?? agreement
stipulating the Term and ???? Commencement Dates.
3.5 Permits. The Term Commencement Date and Premises A Rent Date shall be
extended until such time as Tenant receives all governmental construction
approvals and permits which may be necessary for Tenant to open for business in
Premises A, unless the delay was occasioned by Tenant's act or omission or a
Tenant Change Order (as defined in Section 3.6).
3.6 Change Orders. In the event of a delay in (i) the Delivery Date, (ii)
the Premises A Rent Commencement Date or (iii) the Premises B Rent Commencement
Date which is caused by a change order requested by Tenant, and not necessary
to meet the requirements of any governmental entity or public utility, then
such date shall be deemed to be the date which would have been met but for such
change order; provided such change order shall indicate on its face the extra
costs therefore, if any and the amount of anticipated delay, if any, caused by
such change order and provided such change order shall be executed by Tenant
("Tenant Change Order").
3.7 Tenancy Certificate. Upon the Term Commencement Date, and following
request of Lessor, Tenant agrees to execute a mutually agreeable "Tenancy
Certificate" which sets forth such facts as the Term Commencement Date, the
rent commencement dates, the dates of rent adjustments, the expiration of the
Lease Term and such other matters as Lessor may reasonably require. The
provisions of the Lease shall control, however, with regard to any omissions
from, or provisions of the Lease which may be in conflict with the Tenancy
Certificate.
4. OPTION TO EXTEND.
Provided Tenant is not in monetary default beyond any applicable cure period
(Tenant shall not be deemed in default if it is contesting any provision of
this Lease through judicial procedure or arbitration as same may be allowed by
this Lease), Tenant is hereby given the right to extend the Initial Term for
one (1) additional period of five (5) years (herein, the "Renewal Term") upon
the same terms and conditions as provided in the Initial Term, with the fixed
rent to be as set forth in subsection (iv) of the Fundamental Lease Terms.
Tenant shall exercise the right granted in the foregoing sentence by notifying
Lessor in writing of its intention to extend at least one hundred twenty (120)
days prior to the expiration of the Initial Term, whereupon this Lease shall be
so extended without any further document or act. The phrase "Lease Term" as
used in this Lease shall be deemed to mean the Initial Term and any such
Renewal Term upon Tenant's proper exercise of such option.
5. LESSOR'S WORK.
5.1 Lessor's Work.
(a) Lessor, at its sole cost and expense (except as otherwise provided
herein), including but not limited to all hard costs, soft costs and all permit
fees, development fees and pre-development fees, shall construct and complete,
in the manner provided herein, the work ("Lessor's Work") in accordance with
the Site Plan and the plans and specifications ("Final Plans") referenced on
Exhibit D attached hereto and made a part hereof and all governmental
requirements.
(b) Lessor shall use best efforts to complete the Lessor's Work in
accordance with the Construction Schedule Chart attached hereto as Exhibit E
("Construction Schedule Chart"). Tenant shall be entitled to attend all
progress meetings regarding the Lessor's Work. Lessor acknowledges that the
timely performance of the Lessor's Work so as to enable Tenant to able to open
for business in the Premises on or before November 11, 1994 is a material
inducement to Tenant in executing this Lease. Therefore, Lessor agrees that, if
for any reason whatsoever, including but not limited to Unavoidable Delays (as
defined in Section 5.5(b) below), any work is not substantially completed by
the date set forth on the Construction Schedule Chart (with Tenant being
reasonably satisfied that final completion of Premises A occurring on or before
November 11, 1994), then Tenant shall have the right, upon 72 hours written
notice to Lessor to complete Lessor's Work or correct deficiencies therein, at
Lessor's expense, provided Lessor shall not be liable for any amount expended
by Tenant over the line item budget as agreed to by Lessor and Tenant, plus
twenty-five percent (25%). Following 30 days of written demand for
reimbursement and submission of proof of expenditure, Tenant shall be permitted
to offset against fixed rent or other sums to be paid by Tenant under this
Lease an amount equal to the costs incurred
4
<PAGE> 9
by Tenant to so complete Lessor's Work (not to exceed the amounts set forth
above) plus a 5% administration fee. The taking of possession of the Premises by
Tenant or its subtenant or assign and/or Tenant's exercise of any self help
rights and/or the opening for business to the public in Premises A shall not
constitute a waiver of any construction defects. Any work undertaken by Tenant
shall be done lien free and consistent with the Final Plans and the standards of
construction imposed on Lessor.
5.2 DELIVERY DATE.
(a) The term "Delivery Date", as used in this Lease, shall mean the date
that all of the following have occurred: (i) Lessor shall have delivered
Premises A to Tenant with the portion of the Lessor's Work which relates to
Premises A completed to the extent that Tenant can commence fixturing and
merchandising Premises A with Lessor's employees, contractors, subcontractors
and agents having only controlled or monitored access to the interior of
Premises A and (ii) Lessor's architect shall have certified to Tenant that the
interior of Premises is substantially complete pursuant to the Final Plans and
(iii) Tenant shall be legally able to commence fixturing and merchandising
Premises A. The taking possession of the Premises by Tenant or its subtenant or
assign and/or the opening for business to the public in the Premises shall not
constitute a waiver of any construction defects.
5.3 PREMISES B IMPROVEMENT WORK.
(a) Lessor agrees to construct and complete in a diligent and expeditious
manner certain tenant improvement work for Premises B (as provided below) for
any subtenant of Premises B to which Tenant subleases; provided such sublease
is executed within twelve (12) months of the date of this Lease ("Premises B
Tenant Improvement Work"). The Premises B Tenant Improvement Work shall be
performed at a reasonable cost in accordance with plans and specifications
submitted to Lessor by Tenant, which plans shall be reasonably acceptable to
Lessor with response within fifteen (15) days of submittal and shall
contemplate construction customarily requiring no more than 60 days time to
complete ("Premises B Plans"); provided Tenant shall also submit two (2) bids
to Lessor together with the Premises B Plans. Lessor and Tenant shall work
together in good faith to, within fifteen (15) days of submittal of the
Premises B Plans, arrive at a reasonable cost for such work, using such bids as
evidence thereof. If, using good faith and due diligence, Lessor and Tenant
cannot agree on such cost figure by such date, then, at the option of Lessor
either (i) this Lease may be terminated as to Premises B and the rent and other
provisions adjusted accordingly or (ii) Lessor shall agree to use the higher of
the two submitted bids as the cost for such work. If the reasonable cost of
such work, as so determined, shall exceed Three Hundred Forty-Two Thousand,
Seven Hundred Seventy-Nine Dollars ($342,779.00) ("Premises B Funds"), then
Tenant, at its option, shall either modify the Premises B Plans or pay such
difference upon the earlier of substantial completion of the Premises B Tenant
Improvement Work or the date the Premises B tenant opens for business. If the
cost of final completion of the work set forth in the Premises B Plans shall be
less than the Premises B Funds, Tenant may require other work to be performed
by Lessor for the Premises for a period of twelve (12) months from the date of
submission of the Premises B Plans, provided the reasonable cost of such work
shall not exceed the remaining Premises B Funds.
(b) If Tenant has not entered into a sublease or assignment for Premises B
within twelve (12) months of the date of this Lease then Tenant may offset
against fixed monthly rent the Premises B Funds in twelve (12) equal monthly
installments.
5.4 REIMBURSEMENT. Notwithstanding the above, within ninety (90) days of
the later of (i) completion of Lessor's Work in a lien free condition and
Tenant being legally able to open for business in Premises A and (ii) the
Premises A Rent Commencement Date, and upon receipt of billing by Lessor for
same, Tenant shall pay to Lessor as Tenant's contribution toward the Lessor
Work, the sum of (A) Four Hundred Ninety-Six Thousand Dollars ($496,000.00)
plus (B) the cost of any Tenant Change Order. Any sums due Lessor shall be
deemed additional rent hereunder.
5.5 GENERAL REQUIREMENTS.
(a) Lessor shall provide or cause to be provided all materials, and
perform or cause to be performed all work, necessary to deliver the Premises to
Tenant in "broom-clean" condition. All heating, ventilating and
air-conditioning equipment servicing the Premises will be new. Lessor hereby
warrants and represents that at such time as it delivers
5
<PAGE> 10
possession of the Premises ????????, Tenant and, as to Lessor's Work, for the
later of (i) one (1) year thereafter or (ii) the warranty period for same,
Lessor's Work, including but not limited to the structure, roof, heating,
air-conditioning, lighting, electrical, plumbing, sewer and other systems and
fixtures serving the Premises will be in good condition and working order, and
there will be sufficient utilities available (including without limitation gas,
water and electricity) to heat, illuminate, ventilate, air-condition and
provide power to the Premises in the quantities or at the capacities required by
Tenant pursuant to the Final Plans, and the roof will be free of leaks.
(b) Unless otherwise provided in this Lease, if either party hereto shall
be delayed or prevented from the performance of any act required hereunder by
reason of acts of God, strikes, lockouts, labor troubles, inability to procure
materials, restrictive governmental laws or regulations or other cause without
fault and beyond the control of the party obligated (financial inability
excepted) ("Unavoidable Delay") performance of such act shall be excused for
the period of the delay and the period for the performance of any such act
shall be extended for a period equivalent to the period of such delay;
provided, however, notice of such delay shall be delivered to the other party
within three (3) days of the occurrence of the delay which notice shall specify
the exact nature of the delay.
6. RIGHT OF PRIOR INSTALLATION.
At any time prior to the Delivery Date, Tenant shall have the right to enter
Premises A for the purposes of measuring the Premises and installing therein
Tenant's fixtures, equipment and merchandise, provided that such operations do
not interfere unreasonably with Lessor's completion of the Premises. Any entry
by Tenant for the purpose of measuring the Premises or of installing its
fixtures and equipment shall not be deemed acceptance of the Premises by Tenant.
7. RENT.
Tenant hereby covenants and agrees to pay Lessor as monthly fixed rent for the
Premises during the Lease Term the sums as set forth in Article A(iv). All
monies payable by Tenant to Lessor hereunder shall be deemed additional rent.
Monthly fixed rent for Premises A shall be payable in advance and without
demand on the first day of every calendar month during the Lease Term from and
after the Premises A Rent Commencement Date. Monthly fixed rent for Premises B
shall be payable in advance and without demand on the first day of every
calendar month during the Lease Term from and after the Premises B Rent
Commencement Date. Rent shall be prorated for any partial month at the
beginning or end of the Lease Term. Tenant shall pay rent to Lessor at the
address provided for Lessor in Article A(vi) hereof, unless otherwise notified
in writing by Lessor.
In determining floor area, measurements shall be from the center of all common
walls and the outside of all exterior walls, excluding mezzanines and
mechanical equipment areas ("floor area"). Lessor and Tenant agree that the
initial floor area of the Premises for purposes of determining fixed monthly
rent and prorata share of Lessor's Operating Costs (as defined in Section 38)
shall be deemed to be one hundred two thousand four hundred seventy
(102,470.00) sq. ft.
8. USE and OPENING.
Tenant shall open on its first day of business as a Best Buy Store and
thereafter shall use the Premises for the sale at retail (including,
incidentally thereto, the display, rental, servicing and installation) of
consumer electronic products and other merchandise incidental thereto in
substantially the same manner as the majority of The Best Buy stores in Los
Angeles County; and for no other purpose except as hereinafter provided. In the
event Tenant (including any permitted assignee or sublessee) elects to change
the principal use of the Premises to a use which is other than the use of a
majority of Tenant's stores in Los Angeles County, Tenant shall notify Lessor of
such election. Lessor, within thirty (30) days thereafter, shall either (i)
consent to such use change, which consent shall not unreasonably be withheld, or
(ii) notify Tenant that it does not consent to such use change with the reason
for Lessor's refusal. Lessor's refusal to consent to the proposed use change
shall be deemed reasonable if the contemplated use of the Premises is not
compatible with a shopping center of this type, is not compatible with the then
current tenant mix at the Shopping Center or would violate a restrictive
covenant covering the Shopping Center or an exclusive which has been granted by
Lessor to any tenant occupying the location identified on the Site Plan as
"existing T.B.A." or to any other tenant in the Shopping Center, which tenant is
open and operating in at least thirty thousand (30,000) square feet of floor
area. Lessor hereby warrants that,
6
<PAGE> 11
at the time of substantial completion of Lessor's Work, and thereafter during
the term of this Lease, the Premises will be in conformance with all applicable
building, health, safety, fire, environmental and zoning codes and other laws,
ordinances and regulations of all public authorities having jurisdiction over
the Premises, and will have been completed as provided in Article 5 hereof.
Tenant shall have no obligation, either express or implied, to open or operate
for business in the Premises, and Tenant shall have sole authority over its
hours of operation and merchandising.
Tenant will use and occupy the Premises and appurtenances in a careful, safe
and proper manner, and shall comply with the lawful requirements of the proper
public authorities regarding the conduct of Tenant's business. Tenant will not
permit the Premises to be used for any unlawful purpose. Tenant shall not
permit the Premises and Lessor shall not permit the remainder of the Shopping
Center to be used for (i) any offensive, noisy or dangerous trade, business or
manufacturing activity or occupation, (ii) any activity which constitutes a
nuisance; (iii) any activity which physically interferes with the business of
any other occupant; or (iv) in violation of any law, ordinance, rule or
regulation of any governmental authority with jurisdiction over any portion of
the Shopping Center.
The Premises shall not be used for the following uses and Lessor shall not
permit the following uses in the Shopping Center: entertainment or recreational
uses (such as but not limited to bowling alleys, billiard parlors, bars, health
spas, game arcades, theaters, off-track betting parlors etc.), "adult" uses
(i.e., "adult" bookstores or "adult" theaters, or massage parlors) training or
educational use (i.e. beauty schools, reading rooms, churches), gas station
use, restaurant or food outlet uses except in areas designated therefor on the
Site Plan (and except as incidental to a retail store of over 40,000 square
feet of floor area and located within such store), the sale, rental or storage
of automobiles, recreational vehicles or boats, flea markets, or offices except
incidental to permitted uses (provided however, that offices providing service
to the general public such as banks, real estate brokerages or insurance
brokers shall be permitted provided the same do not exceed 15% of the floor
area of the Shopping Center).
If Tenant is closed for business to the public in substantially all of Premises
A for a period of one hundred eighty (180) days or more (the "Go Dark Period")
for any reason other than an Exempted Discontinuance and, Tenant fails within
the Go Dark Period to deliver to Lessor a letter of intent from a proposed
assignee or sublessee who proposes to open for business to the public in
Premises A within ninety (90) days after the end of the Go Dark Period (a
"Letter of Intent"), or if the proposed assignee or sublessee fails (subject to
Unavoidable Delay events) to open for business in the Premises within one
ninety (90) days after the end of the Go Dark Period, then Lessor shall have
the right and option to terminate this Lease by giving notice (the
"Cancellation Notice") to Tenant within one hundred eighty (180) days following
the cessation of business in the Premises or the Go Dark Period (the "Initial
Termination Period"); provided cure has not been made prior to the Cancellation
Notice being given and further provided, if the Premises remains closed
following the expiration of the Initial Termination Period, Lessor shall have
the right to terminate the Lease for a period of sixty (60) days (the "Notice
Period") following the expiration of the next succeeding one hundred eighty
(180) day period, and once again following each successive one hundred eighty
(180) day period that the Premises remains closed following the expiration of
each Notice Period; provided cure has not been made prior to the Cancellation
Notice being given. If Lessor, pursuant to the requirements of this Lease, does
not approve the proposed assignee or sublessee, and Tenant does not within
ninety (90) days after Lessor's notice of disapproval deliver another bona fide
letter of intent from an assignee or sublessee which is reasonably acceptable
to Lessor and Tenant cure has not been made, Lessor shall also have the right
to terminate this Lease, by giving a Cancellation Notice to Tenant within the
same time frame as referenced above unless cure has been made prior to the
Cancellation Notice being given. If Lessor exercises its right to terminate
this Lease, Tenant shall vacate the Premises within sixty (60) days after
receipt of the Cancellation Notice and this Lease shall terminate on the date
which is sixty (60) days after the date on which the Cancellation Notice shall
have been served on Tenant (the "Cancellation Date"). Effective as of the
Cancellation date, Tenant shall have no further obligations with respect to
this Lease except for those accruing prior to the Cancellation Date.
In the event of Lease termination pursuant to this Article, Lessor shall pay
Tenant the unamortized amount of all out of pocket costs paid by Tenant (and
not in excess of any cap herein contemplated or not previously reimbursed by
Lessor hereunder) directly or indirectly to contractors or subcontractors or
material suppliers for Tenant's improvements to the Premises or for Tenant's
leasehold improvements not removed by Tenant as determined in accordance with
generally accepted accounting practices.
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The following shall be considered Exempted Discontinuances; any temporary
discontinuance occasioned by strikes, remodeling, walkouts, labor disputes, acts
of God, inability to obtain labor, materials or merchandise, governmental
restrictions, governmental regulations, governmental controls, judicial orders,
enemy or hostile governmental actions, civil commotion, fire or other casualty,
or other cause beyond Tenant's reasonable control (other than lack of or
inability to procure funds to fulfill its commitments and obligations under this
Lease).
9. UTILITIES.
Tenant shall pay when due all bills for gas, water, electricity and other
utilities used on the Premises on and after the Delivery Date and through and
including the date of expiration of this Lease or the earlier termination
hereof. Lessor, at its own expense, shall install separate meters for the
utilities used in the Premises, if same is specified in the Final Plans.
10. REPAIR OF THE PREMISES.
Lessor shall warrant the Lessor's work for the greater of (i) one (1) year from
the Delivery Date or (ii) the period of time that such work is covered by
warranty. Tenant agrees that, thereafter as to Lessor's Work and during the
Lease Term as to items not part of Lessor's Work, except as otherwise provided
in this Article 10, it will perform all necessary non-structural interior
repairs to the Premises, including repair or replacement of damaged or broken
doors and windows and routine maintenance of the heating, ventilating,
air-conditioning, plumbing, gas, electrical and similar systems which are
located in and exclusively the Premises. Tenant further agrees that it will keep
and maintain the interior of the Premises in a clean and sanitary condition.
Tenant shall not be required to make any repairs which are the responsibility of
Lessor pursuant to this Article 10 or elsewhere under this Lease.
As and to the extent specified herein and to the extent not caused by Tenant's
negligent or willful act or omission, Lessor shall (i) make all structural
repairs to the Premises, whether interior or exterior, keep the Premises
watertight, and shall repair, replace and maintain in good condition the
exterior of the Premises including without limitation the slab, roof, walls,
foundations, gutters, utility lines from the point of connection to the Premises
to the main line, and downspouts; (ii) make all necessary replacements of
obsolete or unrepairable heating, ventilation, air conditioning, plumbing, gas,
electrical and other systems and components thereof which service all or any
part of the Premises; (iii) make all repairs to the Premises necessitated by
fire, casualty or the elements as provided in Article 19; and (iv) make any
repairs to the Premises necessitated by any neglect, fault or default of Lessor,
its agents, employees or contractors.
In performing its obligations under this Article 10, Lessor shall not
unreasonably interfere with Tenant's normal business operations. If Lessor fails
to undertake and complete the repairs required under this Article 10 or
elsewhere under this Lease within a reasonable time after written notice from
Tenant, Tenant shall have the right to make such repairs on behalf of Lessor
and, if the reasonable cost thereof, plus five percent 5% of such cost to cover
its overhead and administrative costs is not paid by Lessor within thirty (30)
days of billing thereof (together with invoice(s) for same), Tenant may deduct
same from the fixed rent and other charges otherwise payable hereunder.
Anything in this Lease to the contrary notwithstanding, Lessor agrees that in
the event of an emergency which necessitates prompt maintenance, repair or
replacement of items which are otherwise required by this Lease to be
maintained, repaired to replaced by Lessor, and Tenant is unable to contact
Lessor and advise it of such emergency condition, Tenant may at its option
proceed forthwith to make such repairs and pay the cost thereof. Lessor agrees
to reimburse Tenant for the cost of such repairs, plus five percent (5%) of such
cost for Tenant's overhead and administrative costs, on demand. If Lessor does
not reimburse Tenant within 60 days of written demand and submission of proof of
expenditure, then Tenant may deduct such amount from the fixed rent and other
charges otherwise payable hereunder.
If at any time during the term of this Lease or any extension thereof any
governmental agency or other authority with jurisdiction over the Premises
requires structural modification or repairs of the Premises which are
necessitated by reasons other than Tenant's peculiar use of the Premises, all
such repairs, alterations, and additions or remodeling shall be at Lessor's sole
cost and expense; provided however, if (i) the repair, alteration or remodelling
is so required during the last twenty four (24) months of the Lease Term; or
(ii) if at any time during the Lease Term, the cost of same would exceed one
hundred twenty percent (120%) of one month's fixed rent, at the time or (iii) if
same occurs during the Initial Term and
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the costs exceed such cap and despite Lessor's request, Tenant does not
thereupon elect to exercise its right to extend the Initial Term, then Lessor
may notify Tenant that it elects not to perform such work and, in such event,
Tenant may elect to either perform such work, and pay the excess cost thereof,
or terminate the Lease. If Lessor is required to make such changes and does not
so make such changes, then Tenant may make such repairs and following 60 days
written demand for reimbursement and submission of proof of expenditure, deduct
the amount expended therefor, plus five percent (5%) of such amount for its
overhead and administrative costs, from the fixed rent and other charges
otherwise payable hereunder.
11. ACCESS BY LESSOR.
Lessor shall have free access to the Premises at all reasonable times upon 24
hours' notice for the purpose of examining or making any repairs thereto which
Lessor is required to make under this Lease or which are necessary for safety
or maintenance purposes. In the event of an emergency, Lessor shall not be
required to give Tenant 24 hours' notice, but shall use reasonable efforts to
notify Tenant and its security company prior to entry.
12. TENANT'S FIXTURES AND SIGNS.
Tenant at its sole cost and expense may install and operate prototype interior
and exterior electric and other signs, in and on the Premises of any occupant of
the Premises as same may exist from time to time (including but not limited to,
signs on poles erected by Lessor or Tenant, machinery and any other mechanical
equipment, and, if Tenant is the signatory hereunder, a yellow and black ticket
sign tilted 15 degrees, with dimensions not less than 15' x 26' mounted on the
storefront per the Final Plans), provided that in so doing Tenant complies with
all laws and ordinances of any governmental authority with jurisdiction over the
Premises. Tenant may also install and maintain in the Premises such pipes,
conduits and ventilating ducts as are required or desirable for the business
conducted by Tenant therein. Tenant shall at all times have the right to remove
all signs, fixtures, machinery, equipment, appurtenances or other property
heretofore or hereafter furnished or installed by Tenant, provided it repairs
any damage caused thereby, it being expressly understood and agreed by the
parties that said property shall not become part of the Premises but shall at
all times be and remain the property of Tenant and as such shall not be subject
to any landlord's lien or other creditor's remedy otherwise available to Lessor.
Subject to compliance with all local laws and ordinances, the Premises A Tenant
shall be entitled to the space on any existing pylon or free standing sign, or
which Tenant or Lessor may construct, with space on all such pylons equal to the
largest space allowable by municipal ordinances. At any time that the Shopping
Center contains no usable pylon sign, Tenant, at its sole cost and expense, may
construct one pylon sign in the Common Area of the Shopping Center in a place to
be designated by Tenant, subject to compliance with all local laws and
ordinances. Tenant may place on the interior and exterior of the Premises any
sign which conforms to applicable legal requirements.
Tenant may install, maintain, repair and replace, and at all times have access
to, a satellite dish and supporting equipment or replacement technology on the
roof of the Premises, using sound construction practices. Tenant shall use the
roofing contractor required by Lessor to perform such work; provided Lessor
shall require such contractor to perform such work at commercially reasonable
rates.
13. ALTERATIONS TO THE PREMISES.
At any time after delivery of the Premises to Tenant, Tenant at its own cost
and expense and without Lessor's consent may make changes, alterations,
additions and improvements to the interior of the Premises, provided such work
does not impair the structural integrity of the building in which the Premises
is located. All such work shall be performed in accordance with all applicable
governmental requirements. If so requested by Tenant, Lessor shall cooperate in
securing necessary permits and other government authorizations for Tenant's
changes and alterations, at no cost to Lessor.
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14. SURRENDER OF THE PREMISES.
Tenant will deliver and surrender possession of the Premises to Lessor upon the
expiration of this Lease or its earlier termination, in good condition, loss by
fire, ordinary wear and tear and decay, casualty, neglect or fault or default
of Lessor, and taking by eminent domain excepted, but without obligation to
deliver the Premises in better condition than the Premises were in at the
commencement of the term. Lessor expressly waives any statutory or other lien
or security interest in Tenant's property. Tenant shall repair any damage
occasioned by the removal of its property or inventory.
15. HOLDING OVER; RIGHT OF FIRST NEGOTIATION.
15.1 Holding Over. If Tenant continues its occupancy of the Premises after
the expiration of the Lease Term (or any earlier termination provided or
permitted by this Lease) either with or without the consent of Lessor, such
tenancy shall be month-to-month only, and not year-to-year or based on any other
interval of time. Such continued occupancy shall not defeat Lessor's right to
possession of the Premises, and the month-to-month tenancy provided for herein
may be canceled at the end of any calendar month upon not less than thirty (30)
days' prior written notice from Lessor to Tenant. Except for provisions relating
to Lease term, all covenants, provisions, obligations and conditions of this
Lease shall remain in full force and effect during such month-to-month tenancy.
Notwithstanding the above, if Tenant continues its occupancy of the Premises
after the expiration of the Lease Term (or any earlier termination provided or
permitted by this Lease) without the consent of Lessor then fixed rent during
such holdover period shall be 125% of the fixed rent in effect prior to such
holdover period.
15.2 Right of First Negotiation. Lessor agrees to negotiate with Best Buy
in good faith (i) at the end of the Renewal Term and prior to the expiration of
the Lease Term for the new lease of the Premises then occupied by Best Buy, at
a fair market lease rate for a national retailing, credit worthy tenant such as
Best Buy, or (ii) at the end of the Lease Term and provided Lessor has elected
to raze and redevelop the Shopping Center for retail purposes within six (6)
months following the expiration of the Lease Term, for a lease of space at fair
market rates chargeable to a national retailing, credit worthy tenant such as
Best Buy.
16. REMEDIES UPON DEFAULT.
16.1 Tenant Default. The occurrence of either of the following shall
constitute a default by Tenant pursuant to this Lease: (i) a failure by Tenant
to pay rent on the day the same is due, which failure is not remedied by Tenant
within ten (10) days of Tenant's receipt of written notice from Lessor
specifying such failure; or (ii) a failure by Tenant to perform obligations
pursuant to this Lease other than as specified in (i) above, within thirty (30)
days of Tenant's receipt of written notice from Lessor specifying such failure
or, if it reasonably would require more than thirty (30) days to cure such
failure, within a time reasonably necessary to cure such failure after Tenant's
receipt of such written notice provided Tenant commences to cure such default
within thirty (30) days and thereafter prosecutes such cure diligently to
completion. It is understood that the "default" shall not arise until the
expiration of any applicable cure period therefor, Lessor shall have the right
to exercise any of the following remedies:
(a) Lessor may re-enter and take possession of the Premises on the terms
set forth in subparagraph (b) below, without such re-entry being deemed an
acceptance by Lessor of a surrender of this Lease or an impairment of Tenant's
rights of assignment and subletting as permitted under this Lease. Lessor shall
also have the right, at its option, from time to time, without terminating this
Lease, to relet the Premises, or any part thereof, as the agent and for the
account of Tenant, upon such terms and conditions as Lessor may deem advisable
or satisfactory, in which event the rents received for such reletting shall be
applied first to the reasonable and actual expenses of such reletting and
collection, including but not limited to necessary renovation and alterations
of the Premises, reasonable attorneys' fees, any reasonable brokerage
commissions paid, and thereafter toward payment of all sums due or to become
due Lessor under this Lease; and if a sufficient sum shall not be thus realized
or secured to pay such sums and other charges, at Lessor's option, Tenant shall
pay Lessor any deficiency monthly or at greater intervals as Lessor sees fit,
or Lessor may institute action to exact payment of said deficiency from time to
time, or at Lessor's option, the entire deficiency which is subject to
ascertainment for the remaining Term shall be immediately due and payable by
Tenant. All rights of Lessor to collect from or charge to Tenant any amount
described in this subsection
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(a) shall be based on or subject to determination of the worth at the time
of the award as defined in (b) below. Nothing herein, however, shall be
construed to require Lessor to re-enter and relet in any event. Lessor
shall not, in any event, be required to pay Tenant any sums received by
Lessor on a reletting of the Premises in excess of the rent provided in
this Lease, but such excess will reduce any accrued present or future
obligations of Tenant hereunder. Lessor's re-entry and reletting of the
Premises without termination of this Lease shall not preclude Lessor from
subsequently terminating this Lease as set forth below.
(b) Termination. Lessor may terminate this Lease by written notice to
Tenant specifying a date therefor, which shall be no sooner than thirty
(30) days following receipt of such notice by Tenant, and this Lease shall
then terminate on the date so specified as if such date had been originally
fixed as the expiration date of the Term. In the event of such termination,
Lessor shall be entitled to recover from Tenant:
(i) The worth at the time of award of the amount of any obligation which
has accrued prior to the date of termination reduced by the amount of any
credit or setoff to which Tenant is entitled under the Lease;
(ii) The worth at the time of award of the amount by which the unpaid rent
and any additional charges which could have been earned after termination
until the time of award reduced by the amount of any credit or setoff to
which Tenant is entitled under the Lease exceeds the amount of such rental
loss which Tenant proves could have been reasonably avoided; and
(iii) The worth at the time of award of the amount by which the unpaid rent
and additional charges for the balance of the Term after the time of award
reduced by the amount of any credit or setoff to which Tenant is entitled
under the Lease exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided.
As used in clauses (i) and (ii) of this subparagraph b), the term "worth at
the time of the award" shall be computed by following interest (at the
"Interest Rate", which shall mean the prime lending rate announced from
time to time by Bank of America, N.A. for its preferred commercial
borrowers per annum plus two percent (2%)) on the amount of the obligation
set forth therein, and as used in clause (iii) of this subparagraph (b),
the term "worth at the time of the award" shall be computed by discounting
such amount at the rate of the charge on loans to depository institutions
by the San Francisco Federal Reserve Bank, as such rate is reported in the
Wall Street Journal bearing the date of the award and identified therein as
the Discount Rate, plus 1%."
In the event this Lease is terminated as provided above or by summary
proceedings or otherwise, Lessor or its agents, servants or representatives
may immediately or at any time hereafter peaceably re-enter and resume
possession of the Premises and remove all persons and property therefrom,
either by summary proceedings or other suitable action or proceeding at
law, without liability for damage.
(c) Lessor may recover from Tenant, and Tenant shall pay to Lessor upon
demand, such reasonable expenses as Lessor may incur in recovering
possession of the Premises, placing the same in good order and condition
and repairing the same for reletting, all other reasonable expenses,
commissions and charges incurred by Lessor in exercising any remedy
provided herein, or as a result of or incurring any default by Tenant
hereunder (including without limitation attorneys' fees).
(d) The various rights and remedies reserved to Lessor herein, and any and
all other remedies available at law or in equity, including those not
specifically described herein, in force and effect at the time of the
execution hereof, are cumulative, and Lessor may pursue any and all of such
rights and remedies, whether at the same time or otherwise.
16.2 Lessor Default. If Lessor should be in default in the performance of
any of its obligations under this Lease, which default continues for a period of
more than thirty (30) days (or such longer period as may be otherwise specified
in this Lease) after receipt of written notice from Tenant specifying such
default, or if such default is of a nature to require more than thirty (30) days
for remedy and continues beyond the time reasonably necessary to cure (provided
Lessor must have undertaken procedures to cure the default within such thirty
(30) day or other applicable cure period and diligently pursue
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apply and Lessor shall pay the first One Hundred Thousand Dollars ($100,000) (or
portion thereof) and Tenant shall pay the second One Hundred Thousand Dollars
($100,000) (or portion thereof). If the cost to repair the Premises is over Two
Hundred Thousand Dollars ($200,000) then, in such event Lessor shall notify
Tenant in writing within twenty (20) days of the date of such casualty if it
elects not to pay any costs to repair in excess of its One Hundred Thousand
Dollars ($100,000). Within twenty (20) days thereafter Tenant shall notify
Lessor in writing of its election of either of the following two alternatives:
(i) To terminate this Lease effective as of the date of the casualty; or (ii) To
agree to bear all costs of the repair of the Premises in excess of the Two
Hundred Thousand Dollars ($200,000). Such election by Tenant shall be made in
writing to the Lessor. In event the Tenant elects to terminate, the Lease shall
be deemed terminated effective as of the date of the casualty.
Section 19.5 If this Lease is terminated for any reason pursuant to this
Article, Lessor shall promptly refund to Tenant any rent paid in advance and any
unearned charges.
20. WAIVER OF SUBROGATION.
Lessor and Tenant hereby waive all rights of subrogation which either has or
which may arise hereafter against the other for any damage to the Premises or
any other real or personal property or any business caused by perils required to
be insured hereunder; provided, however, that the foregoing waivers do not
invalidate any policy of insurance of the parties hereto now or hereafter
issued, it being stipulated by the parties hereto that such waiver shall not
apply in any case which would result in the invalidation of any such policy of
insurance. Each party shall notify the other if such party's insurance would be
so invalidated.
21. EMINENT DOMAIN.
If the entire Premises are at any time after execution of this Lease taken by
public or quasi-public use or condemned under eminent domain, then this Lease
shall terminate and expire effective the date of such taking and any rent paid
in advance and any unearned charges shall be refunded to Tenant by Lessor on
such date.
Tenant shall have the right to terminate this Lease and to receive from Lessor
an appropriate refund of rent paid in advance and unearned charges if, as a
result of eminent domain proceeding or other governmental or quasi-public
action, any portion of the Premises or a material portion of the parking or
access area serving the Premises is taken. Should Tenant elect to remain in the
Premises after any partial taking, then rent and other charges shall be reduced
for the remainder of the term thereafter in proportion to the floor area of the
Premises taken, and/or reduced by a mutually agreeable equitable amount for any
non-building area taken and Lessor shall promptly repair and restore the
Premises as nearly as possible to their prior condition. Tenant shall not be
entitled to damages for the taking of its leasehold estate or the diminution of
the value thereof, provided, if Tenant has made any leasehold improvements to
the Premises or material alterations, structural changes or repairs thereto at
its own expenses, regardless of when made, Tenant shall be entitled to claim an
award for the unamortized balance of Tenant's cost thereof provided the
condemning authority makes a separate award therefor. In addition, Tenant shall
be entitled to claim an award for loss of business, damage to merchandise and
fixtures, removal and reinstallation costs and moving expenses.
22. INSURANCE.
22.1 Tenant's Insurance. Tenant shall obtain and keep in force at Tenant's
expense for the term of this Lease (i) commercial general liability insurance
with a combined single limit of Two Million Dollars ($2,000,000.00) for each
occurrence, with said insurance naming Lessor as additional insured, and (ii)
all risk property insurance (except earthquake coverage shall not be required)
written at replacement cost value insuring Tenant's merchandise, trade fixtures,
furnishings, equipment and all items of personal property of Tenant and
including property of Tenant's customers located on or in the Premises. The
insurance required under this Article shall be issued by an insurance company
authorized to do business in the state in which the Premises are located; and
shall provide for at least thirty (30) days' notice, by certified mail return
receipt requested, to Lessor before cancellation, termination or nonrenewal of
such insurance. A certificate evidencing such coverage shall be delivered to
Lessor upon request. Provided, however,
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notwithstanding the foregoing, provided it maintains a net worth of at least
$100 Million Dollars, Tenant may self-insure all or any part of the insurance
it is required to carry hereunder and/or carry such insurance under a "blanket"
policy.
22.2 Lessor's Insurance. Lessor shall procure and maintain throughout the
entire term of this Lease all risk insurance in an amount not less than the full
insurable value of the Shopping Center (including the Premises), on a
replacement cost basis, insuring Lessor and Tenant (as their respective
interests may appear) against loss or damage thereto by fire and other
casualties covered by the standard form of all risk insurance available in the
State in which the Premises are located. Lessor shall also procure and maintain
throughout the entire term of this Lease, public liability insurance coverage
for casualties occurring on the Common Area, having limits of liability of not
less than Two Million Dollars ($2,000,000.00) combined single limit and naming
Tenant as an additional insured. Lessor may carry business interruption or
rental insurance equal to one year's rent hereunder and other insurance as its
lenders may reasonably and customarily require. Lessor's coverage shall be
primary and noncontributory with respect to the Common Areas. Tenant shall pay
its proportionate shares of Lessor's cost of insurance, calculated in the manner
described in Article 38 hereof. In no event shall Tenant pay for Lessor's
earthquake coverage. The insurance required under this Article shall be issued
by an insurance company authorized to do business in the state in which the
Shopping Center is located; and shall provide for at least thirty (30) days'
notice, by certified mail return receipt requested, to Tenant before
cancellation, termination or nonrenewal of such insurance. A certificate
evidencing such coverage shall be delivered to Tenant upon request.
23. SUBORDINATION OF LEASE.
23.1 Existing Liens. Lessor covenants to obtain from each lender the
security for whose loan as of the date hereof encumbers the Shopping Center
("Lender") and each lessor whose interest in the Shopping Center is paramount
to Lessor's ("Overlessor"), to the extent such entity or entities require that
their interests be superior to this Lease, an executed nondisturbance agreement
in form reasonably approved by Tenant ("Nondisturbance Agreement"). If Lessor
breaches its obligation(s) hereunder, Tenant may terminate this Lease by written
notice to Lessor at any time prior to Tenant's receipt of all required
Nondisturbance Agreements.
23.2 Future Liens. Tenant shall, upon Lessor's request, subordinate this
Lease in the future to any mortgage or deed of trust placed by Lessor upon the
Premises in favor of any Lender, provided that such Lender executes a
Nondisturbance Agreement providing that (a) if Tenant is not then in default
under this Lease, this Lease shall not terminate as a result of the foreclosure
of such lien, or conveyance in lieu thereof, Tenant's rights under this Lease
shall continue in full force and effect and its possession be undisturbed except
in accordance with the provisions of this Lease, and (b) the proceeds of any
insurance recovery or condemnation award shall be used for the purposes stated
in this Lease. Tenant will, upon request of the Lender, be a party to a
subordination and attornment agreement, and will agree that if such Lender
succeeds to the interest of Lessor, Tenant will recognize said Lender (or
successor in interest of the Lender) as its Lessor under the terms of this
Lease. Such agreement must be reasonably satisfactory in form and content to all
parties. Notwithstanding the foregoing, Tenant will acknowledge the inferior
interest of a future Lender in the payment of rent without implying that such
future Lender's interest is superior to Tenant's leasehold interest and will
agree to attorn to such future Lender provided such future Lender assume the
performance of the affirmative covenants of Lessor occurring under the Lease
from and after the time such Lender becomes Lessor.
24. TRANSFER OF INTEREST.
Section 24.1. Lessor may, at any time after it shall complete Lessor's Work
in accordance with Article 5 above but not before, transfer its interest in this
Lease and underlying fee. Lessor's transferee shall assume all of Lessor's
obligations under this Lease. Lessor agrees to give Tenant notice of such
transfer.
Section 24.2. Except as otherwise provided below, Tenant shall not assign
this Lease, or sublet the Premises, or any portion thereof, without the prior
written consent of the Lessor, or the waiver thereof as hereinafter stated,
which consent shall not be unreasonably withheld. If Lessor fails to respond to
Tenant's request for consent within thirty (30) days following receipt of a
written request and a description of the assignment or sublease transaction
("Transfer Request"), with a written specification of the precise reasons for
Lessor's refusal to consent, such failure to so respond shall
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constitute a waiver of Lessor's right to deny consent hereunder. Tenant's
description of the assignment or sublet which accompanies its request shall
include the following written information: (a) the name and business experience
of the transferee; (b) the specific use proposed to be conducted by the
transferee in the Premises if such use is other than Tenant's; and (c) the
transferee's most recently available financial statement. The parties
acknowledge and agree that each of the following constitute reasonable grounds
for Lessor to refuse consent to an assignment or sublease: (i) the transferee's
contemplated use of the Premises, if different than Tenant's, is not compatible
with a retail shopping center of this type or compatible with the then current
tenant mix at the Shopping Center; or (ii) the contemplated use of the Premises,
if different than Tenant's, would violate an exclusive which has been granted by
Lessor to any tenant in the "existing T.B.A." space shown on the Site Plan or
any other tenant in the Shopping Center occupying at least 30,000 square feet of
space. Notwithstanding anything to the contrary contained in this Lease, Tenant
shall have the right, without Lessor's consent, to assign this Lease, or sublet
the Premises, to a corporation with which it may merge or consolidate, or in
connection with the sale of all or a portion of its assets, or to any parent or
subsidiary of Tenant, or a subsidiary of Tenant's parent ("Affiliate"). The sale
of stock by Tenant or by any shareholder of it shall not constitute an
assignment under the terms of this Lease. Any provisions of this Lease which
purports to grant to Lessor certain rights to take effect precedent to, or in
event of assignment or subletting shall not apply to an assignment or sublet
within the scope of this Section. Notwithstanding anything herein to the
contrary, Tenant shall have the right to operate departments within the Premises
without Lessor's consent by means of subleases, licenses or concession
agreements provided that such departments shall not be separated by demising
walls from the balance of Tenant's operations in the Premises.
Section 24.3.
(a) Notwithstanding the above, Tenant shall notify Lessor ("Initial
Transferee Notice") of the following information as to its first proposed
subtenant or assignee of Premises B (unless same is an Affiliate): (a) the
proposed date of occupancy, (b) the proposed rent, (d) the name and address of
the proposed transferee, (e) a copy of the deal letter, if any, pertaining to
the proposed transfer, and (f) whatever current financial statements of the
proposed transferee Tenant has obtained.
(b) Notwithstanding anything to the contrary herein contained, Lessor shall
have the right, exercisable by written notice to Tenant within fifteen (15) days
of the date of its receipt of the Initial Transferee Notice, to notify Tenant
("Lessor Notice") that either (i) it desires to have a direct lease of Premises
B between Lessor and the transferee ("Direct Lease") or (ii) that it does not
desire to negotiate a Direct Lease but does not approve the proposed transferee.
If the Lessor Notice indicates disapproval such proposed transferee, such notice
shall state, with particularity, the precise reasons for Lessor's disapproval of
such proposed transferee.
(c) If the Lessor Notice is so given and Lessor indicates therein that it
desires to have a Direct Lease, Tenant shall, working with Lessor, negotiate a
Direct Lease with such proposed transferee. Upon execution of such lease by
such proposed transferee, Tenant shall deliver four (4) execution drafts (with
Lessor being the lessor thereunder) of such lease to Lessor. Lessor shall have
fifteen (15) days after the delivery of same to notify Tenant that it accepts
such Direct Lease. If Lessor so notifies Tenant that it accepts the Direct
Lease, then this Lease shall be amended within 30 days thereafter so as to
eliminate Premises B from the definition of "Premises" and to reduce the fixed
rent accordingly and to modify any other provisions of this Lease which must be
modified to reflect such change in the Premises.
(d) If the Lessor Notice is not given as provided above or if Lessor does
not object to the new transferee or Lessor has not notified Tenant as provided
above that it accepts the Direct Lease, then Lessor shall be deemed to have
consented to such proposed transferee and Tenant, at its option, may sublease
or assign Premises B to such proposed transferee without further approval of
Lessor and this Section 24.3 shall no longer be of force and effect. Such
sublease or assignment shall not be a novation of this Lease nor shall Tenant
be relieved or released from its other obligations hereunder.
25. REAL ESTATE TAXES.
Tenant shall pay its proportionate share of all real estate taxes and all
installments of assessment (collectively, the "Taxes") payable with respect to
the Premises during the Lease Term promptly as the same shall become due and
before interest
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<PAGE> 19
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.
28. MEMORANDUM OF LEASE.
Neither party may record this Lease. However, upon the request of either party
hereto, the other party, within thirty (30) days of such request, shall join in
the execution of a Memorandum or so-called "Short Form" of this Lease for the
purposes of recordation. Said Memorandum or Short Form of this Lease shall
describe the parties, the Premises, the term of this Lease and any special
provisions hereof, and shall incorporate this Lease by reference. Any fees
required to be paid in order to prepare or record such Memorandum or Short Form
of this Lease shall be paid by the party which initiated its preparation.
29. PARKING REQUIREMENTS.
Lessor covenants and agrees that the number of parking spaces in the Shopping
Center shall at all times remain the same as shown on the Site Plan. All such
parking shall be made available at no charge to Tenant and its customers and
employees. The parking areas are for the non-exclusive benefit of the Shopping
Center occupants, and the parties under the REA and their employees, licensees,
customers, and permittees. Accordingly, subject to the REA, Lessor shall not
grant rights to use such parking areas to parties other than those permitted
under this Section 29. Subject to Section 39 below, the layout of the parking
areas and access drives and curb cuts shall at all times be located as shown on
the Site Plan.
30. ENTIRE AGREEMENT.
This instrument shall merge all undertakings between the parties hereto with
respect to the Premises and upon execution by both parties shall constitute the
entire lease agreement, unless thereafter modified by both parties in writing.
31. RELATIONSHIP OF THE PARTIES.
Nothing contained in this Lease shall be deemed or construed by the parties
hereto or by a third party to create the relationship of principal and agent or
of partnership or of joint venture of any association whatsoever between Lessor
and Tenant, it being expressly understood and agreed that neither the method
or computation of rent nor any other provision contained herein, nor any act or
acts of the parties hereto, shall be deemed to create any relationship between
Lessor and Tenant other than the relationship of lessor and tenant.
32. RIGHT OF PROTEST.
Each party shall keep the Premises, Shopping Center and all portions thereof
free from any liens arising out of any work performed, materials furnished or
obligations incurred by it or on behalf of it. Each party may contest any
mechanics' or other liens imposed against the Premises or the Shopping Center
arising out of such party's performance hereunder, provided that the contesting
party believes in good faith that such liens are not proper, and further
provided that the contesting party furnishes the other party reasonable
security to ensure payment and to prevent any sale, foreclosure or forfeiture
of the Premises or the Shopping Center by reason of such nonpayment. The
contesting party shall furnish to other party such security as such other party
may reasonably request pursuant to the foregoing sentence within thirty (30)
days of receiving a written request therefor. Upon a final determination of the
validity of such lien or claim, the contesting party shall promptly pay any
judgment or decree rendered against the contesting party, including without
limitation all proper costs and charges, and shall cause such lien to be
released of record, all without cost to the other party.
33. IMPORTANCE OF EACH COVENANT.
Each covenant and agreement on the part of one party hereto is understood and
agreed to constitute an essential part of the consideration for each covenant
and agreement on the part of the other party.
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<PAGE> 20
34. HEADINGS.
The headings of the Articles of this Lease are for convenience of reference only
and do not form a part hereof, and they shall not be interpreted or construed to
modify, limit, or amplify the intent of such Articles.
35. PARTIES IN INTEREST.
Subject to the provisions of this Lease relating to assignment, subleasing and
other transfers of the parties' interests, this Lease shall inure to the benefit
of and be binding upon the successors in interest and assigns of the parties
hereto.
36. COUNTERPARTS.
This Lease may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same
instrument.
37. NUMBER AND GENDER.
Words in the singular, plural, masculine, feminine and neuter as used herein
shall have the meanings and be construed as required by the context in which
they are used herein.
38. COMMON AREAS.
Lessor will maintain in good order, condition and repair all parking areas and
other areas used in common by tenants of the Shopping Center (the "Common
Area"), and Lessor hereby grants to Tenant, its agents, employees and invitees,
the nonexclusive right to use the Common Area in common with other tenants of
the Shopping Center. Tenant's rights to use the Common Area shall be subject to
reasonable rules and regulations, provided same are enforced against all other
occupants of the Shopping Center and same do not diminish, change or alter any
of the rights or benefits of Tenant or benefiting the Premises as provided in
this Lease and not impose additional obligations or burdens upon Tenant or the
Premises. In each Lease Year Tenant shall pay Lessor, as additional rent, its
proportionate share of Lessor's Operating Costs (as hereinafter defined).
Tenant's proportionate share of Lessor's Operating Costs will be computed by
multiplying Lessor's Operating Costs by a fraction, the numerator of which shall
be the floor area of the Premises and the denominator of which shall be the
total floor area in the Shopping Center. Lessor covenants throughout the Lease
term to engage for the services to be performed hereunder to be performed at
commercially reasonable rates. Lessor shall keep the parking areas lit from dusk
until one hour after Tenant closes for business, and Lessor shall provide
security lighting during all other hours of darkness.
As used herein, the term "Lessor's Operating Costs" shall mean actual expenses
reasonably incurred by Lessor for maintaining the Common Areas in the manner
required of Lessor hereunder including, but not limited to all costs and
expenses of repairing, lighting and cleaning; landscaping; removal of snow, ice
and debris. The following shall be excluded from Lessor's Operating Costs: costs
related to Lessor's Work during the period same is covered by warranty;
depreciation, principal, interest and other charges on debt; the cost of capital
improvements (as defined by generally accepted accounting principles),
management, administrative and overhead fees, including but not limited to wages
and salaries (other than a sum equal to five percent (5%) of Lessor's Operating
Costs, excluding insurance and Taxes), any sums paid for accounting, bookkeeping
and expense collection services, promotional and other similar fees; expenses
that are not paid for by every tenant or occupant of the Shopping Center; costs
of repaving or replacing all or a substantial part of the parking area
(provided, however, that re-coating, re-sealing, installation of a Petro-mat
fabric with asphalt overlay of up to 1" and/or re-striping the parking areas or
minor patchwork such as pot hole repairs may be included in Lessor's Operating
Costs), costs to remove hazardous or toxic substances and costs of maintaining,
repairing and replacing the foundation, exterior walls and roof of the Shopping
Center, including the Premises (provided a one time cost to paint the exterior
of the building of which the Premises is contained may be included, provided
Tenant's share of same shall be the product obtained when the cost of same is
multiplied by a fraction the numerator of which is the remaining Initial Lease
Term, if same occurs during the Initial Term, and the denominator of which is
the normal life
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<PAGE> 21
expectancy of such improvements upon commencement of any renewal term Tenant
shall commence paying the amortized sum related to the portion of such life
expectancy for the item accruing within said renewal term.)
The portion of Lessor's Operating Costs to be paid by Tenant hereunder shall be
due and payable thirty (30) days following receipt of a statement from Lessor
that such expenses have been incurred. Lessor shall maintain complete and
accurate records of Lessor's Operating Costs. Tenant shall have the right to
inspect and audit Lessor's records with respect thereto. If such inspection and
audit reveals overstatements of Lessor's Operating Costs, Lessor shall remit
Tenant's share of the overstated amount (plus interest at the Interest Rate
running from the date of Tenant's overpayment). In addition, if such
overstatement of Lessor's Operating Costs is three percent (3%) or more of the
actual Lessor's Operating Costs, then Lessor shall also reimburse Tenant for its
reasonable costs of such inspection and audit.
39. OBSTRUCTIONS AND CONSTRUCTION.
Lessor will not place or permit to be placed any building, wall, landscaping,
fence or other improvement in the Shopping Center other than improvements shown
as existing or planned on the Site Plan, if same would adversely affect the
access, visibility or parking for the Premises. Lessor agrees that no
construction shall be permitted in the Shopping Center, except for emergency
repairs diligently pursued, during the period from October 1st to December 31st
of any year without the prior written consent of Tenant, which consent may
include conditions designed to eliminate interference with Tenant's business. In
addition to the above, Lessor shall not make any changes to the Shopping Center
buildings or Common Area which may adversely affect access, visibility or
parking for the Premises without the consent of Tenant which may be withheld in
Tenant's sole discretion if such change may have a material adverse effect on
same.
40. RIGHT OF FIRST REFUSAL ON ADJOINING SPACE.
Intentionally Deleted by the Parties.
41. EXCLUSIVITY.
Lessor warrants, covenants and agrees that it shall operate the Shopping Center
as a first-class retail shopping center and that it will not permit any person
or entity (other than Tenant) in space leased directly or indirectly (by way of
sublease or assignment) from Lessor within the Shopping Center or within a
radius of one (1) mile of the Shopping Center, to sell or rent electronic
equipment or appliances (including, without limitation, televisions, stereos,
video recorders, major household appliances (including, without limitation,
refrigerators, freezers, stoves, microwave ovens, dishwashers, washers and
dryers), personal computers and peripherals, computer software, car radios or
phones, entertainment software including compact discs, music videos and
prerecorded tapes, telephones, telecopy, fax and photocopy machines, or
photographic cameras or equipment without Tenant's prior written consent which
may be granted or withheld in Tenant's sole and absolute discretion. Lessor, for
purposes of this Article, shall be defined to include Lessor and (i) if Lessor
is a corporation, its principal shareholders; or (ii) if Lessor is a
partnership, its partners and any principal shareholders or partners of any
partner which is a corporation or shareholders; or (iii) if Lessor is a trust,
the beneficiaries of any such trust including the principal shareholders or
partners of any beneficiary which is a corporation or trust, all of whom shall
execute an agreement to be bound to this Rider. In the event of any breach of
the foregoing covenant, Tenant shall have all remedies given to it at law and in
equity, including the right to injunctive relief and damages and, in addition
thereto, Tenant's fixed rent shall not be due and payable during the period of
such breach.
42. HAZARDOUS SUBSTANCES.
A. Lessor represents and warrants that, except as provided below, to the best of
its knowledge as of the date of this Lease any handling, transportation,
storage, treatment or usage of hazardous or toxic substances in quantities
and/or concentrations which are at or above actionable levels (as defined by any
applicable government authority and hereinafter being referred to as "Hazardous
Materials") that has occurred on the Shopping Center are in compliance with all
applicable federal, state and local laws, regulations and ordinances, and, to
the best of its knowledge, as of the Delivery Date no leak, spill, discharge,
emission or disposal of Hazardous Materials shall have occurred on or onto the
Shopping Center and that the soil and soil vapor on or under the Shopping Center
shall be free of Hazardous Materials as of the date of
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<PAGE> 22
Tenant's opening. Notwithstanding the above, Lessor and Tenant acknowledge that
Lessor is currently performing certain soil remediation on the Shopping Center
and that Lessor shall indemnify Tenant for same as provided below. Lessor agrees
to indemnify, defend and hold Tenant and its officers, partners, directors,
shareholders, employees and agents harmless from any claims, judgments, damages
(other than consequential damages), fines, penalties, costs, liabilities
(including sums paid in settlement of claims) or loss including attorneys' fees,
consultants fees, and expert fees which arise during or after the Term of this
Lease or any renewal term, or in connection with the presence or suspected
presence of Hazardous Materials in the soil, groundwater, or soil vapor on or
under the Shopping Center, unless such Hazardous Materials are present as the
result of the acts of Tenant, its officers, employees or agents. Without
limiting the generality of the foregoing, this indemnification shall survive the
expiration of this Lease and does specifically cover costs incurred in
connection with any investigation of site conditions or any cleanup, remedial,
removal or restoration work required by any federal, state or local governmental
agency or political subdivision because of the presence or suspected presence of
Hazardous Materials in the soil, groundwater or soil vapor on or under the
Shopping Center, unless the Hazardous Materials are present solely as the result
of the acts of Tenant, its officers, agents or employees. Without limiting the
generality of the foregoing, this indemnification shall also specifically cover
costs in connection with:
1. Hazardous Materials present or suspected to be present in the soil,
groundwater or soil vapor on or under the Shopping Center before the
date hereof; or
2. Hazardous Materials that migrate, flow, percolate, diffuse or in any
way move onto or under the Shopping Center after date hereof; or
3. Hazardous Materials present on or under the Shopping Center as a
result of any discharge, dumping, spilling (accidental or otherwise)
onto the Shopping Center during or after the Term of this Lease by
any person or entity.
Tenant agrees not to bring onto the Demised Premises Hazardous Materials
above actionable levels and to indemnify, defend and hold Lessor and its
officers, employees and agents harmless from any claims, judgments, damages
(other than consequential damages), fines, penalties, costs, liabilities
(including sums paid in settlement of claims) or loss including attorneys' fees,
consultants fees, and expert fees which arise during or after the Term of this
Lease in connection with the presence of toxic or Hazardous Materials in the
soil, groundwater, or soil vapor on or under the Shopping Center if and to the
extent the presence of such Hazardous Materials is caused by Tenant, its
officers, employees or agents. Without limiting the generality of the foregoing,
this indemnification does specifically cover costs incurred in connection with
any investigation of site conditions or any cleanup, remedial removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of the presence of Hazardous Materials in the
soil, groundwater or soil vapor on or under the Shopping Center, which Hazardous
Materials are caused by Tenant, its officers, agents or employees.
B. If during the Term of this Lease any governmental authority requires
the remediation of Hazardous Materials from the Demised Premises or the
Shopping Center and such remediation materially affects Tenant's business
operations, then Tenant shall be entitled to an equitable abatement of fixed
rent from the date such interference or safety hazard occurs to the date such
interference and safety hazard are not longer present.
C. In the event Hazardous Materials are present at the Premises or the
Shopping Center due to the acts of any party other than Tenant, its agents,
employees, or officers and/or future remediation work is required to remove
and/or monitor the Hazardous Materials caused to be present by any party other
than Tenant, its agents, employees or officers and the presence, remediation and
monitoring of such Hazardous Materials materially and adversely affects the
operation of Tenant's business, Tenant, upon written notice to Lessor, shall
have the right to terminate this Lease upon written notice to Lessor within one
(1) year after the initial known presence of such Hazardous Materials by Tenant,
in which event this Lease will be of no further force and effect or at its
option, receive a full abatement of Base Annual Rent and other payment
obligations hereunder until such Hazardous Materials are removed or remediated
to the satisfaction of applicable governmental authorities, as documented by
such authorities. If Tenant has not terminated the Lease pursuant to this
paragraph D within one (1) year following the initial known presence by Tenant
of such Hazardous Materials, then Tenant shall resume the full payment of
minimum rent and shall thereafter be deemed conclusively to have waived its
right to terminate this Lease under this Article.
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43. BROKERAGE.
Lessor agrees to pay the brokerage fees, commissions, finder's fees or other
similar charge in connection with this Lease, including a fee in the amount of
$2.00 per square foot of floor area to Retail Brokerage Inc., c/o Mike Navarro,
Navarro Retail Services. Tenant warrants that, other for the aforementioned
broker, it has not had any dealings with any realtor, broker or agent, in
connection with the negotiation of this Lease. Lessor is responsible for any
other broker's commission due to brokers with whom Lessor has dealt in
connection with this Lease.
44. ATTORNEY'S FEES.
In the event Tenant or Lessor defaults in the performance of any of the terms,
covenants, agreements or conditions contained in this Lease and the other party
places in the hands of an attorney the enforcement of all or any part of this
Lease, the defaulting party agrees to pay on demand the other party's
reasonable attorneys' fees for the services of the attorney, whether suit is
actually filed or not.
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<PAGE> 24
B. EXHIBITS AND RIDERS.
Attached hereto and made a part of this Lease are Exhibits A-E and Rider
relating to the Reciprocal Easement Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
first above written.
LESSOR:
MERCHANDISING DEVELOPMENT U.S.A., INC.
By: [illegible signature]
----------------------------------
Its: President
-----------------------------
TENANT:
BEST BUY CO., INC.
By: [illegible signature]
----------------------------------
Its: President
---------------------------------
22
<PAGE> 25
RECIPROCAL EASEMENT R?????
Lessor agrees that Lessor shall not, as owner of the Lessor's Parcel,
execute any documents terminating or modifying any reciprocal easement
agreement granting Tenant easements, rights or restrictions as to the Shopping
Center ("REA") which would adversely affect ingress or egress to or from the
Premises, visibility of the Premises or parking for the Premises. Lessor agrees
that performance by the other parties to the REA, in accordance with the terms
of the REA, may be material to this Lease; therefore Lessor agrees to use
reasonable business efforts to enforce the terms of the REA which are material
to Tenant's rights under this Lease. So long as Lessor uses reasonable business
efforts to enforce such terms of the REA, Lessor shall not have financial
liability to Tenant by reason of nonperformance of REA provisions by any other
parties thereto. The Premises and the rights of Tenant under this Lease are
necessarily subject to the REA. The parties hereto agree that, as between the
parties hereto, all provisions of the REA shall be superior and paramount to
the Lease. Tenant agrees that it shall not violate the terms, covenants,
conditions and agreements set forth in the REA which are of a prohibitory
nature; the obligations imposed by the REA which are of an affirmative nature
in respect of the Premises shall be performed by Lessor unless Tenant is
obligated to perform such under a provision of this Lease.
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<PAGE> 26
EXHIBIT A
LEGAL DESCRIPTION OF SHOPPING CENTER
PARCEL 1:
PARCEL 4, OF PARCEL MAP NO. 3958, IN THE CITY OF TORRANCE, IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 49 PAGE 4 OF PARCEL
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THEREFROM ONE-HALF OF ALL OIL, ORES, MINERALS AND GAS IN AND UNDER SAID
LAND, AS RESERVED BY TAKA NAKANO, GEORGE NAKANO, MISSO NAKANO NAKASHIMA, KAN
NAKANO, MARY NAKANO AND HELEN NAKANO, IN DEED RECORDED IN BOOK 37984 PAGE 113
OFFICIAL RECORDS.
THE SURFACE RIGHTS UNDER THE ABOVE RESERVATION WERE RELEASED BY A QUITCLAIM
DEED RECORDED MAY 14, 1954 IN BOOK 44575 PAGE 160, OFFICIAL RECORDS.
BY DOCUMENT RECORDED JULY 12, 1968 AS INSTRUMENT NO. 352, IN BOOK D4063 PAGE
298, OFFICIAL RECORDS, EXECUTED BY TAKA NAKANO, GEORGE NAKANO, KAN NAKANO, MARY
NAKANO, HELEN NAKANO, AND MISAO NAKANO NAKASHIMA, ALL RIGHT, TITLE INTEREST IN
AND TO THE SURFACE AND SUBSURFACE OF SAID LAND TO A DEPTH OF 500 FEET OF THE
PRESENT SURFACE THEREOF, WERE QUIT CLAIMED TO THE RECORD OWNERS OF THE SURFACE
OF SAID LAND.
ALSO EXCEPT ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS, BY HERETOFORE
RESERVED AND WATER NOR OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER
OR PRODUCIBLE THEREFROM, TOGETHER WITH THE FREE AND UNLIMITED RIGHT TO MINE,
DRILL, BORE, OPERATE, STORE, AND REMOVE FROM BENEATH THE SURFACE OF THE LAND
AT ANY LEVEL OR LEVELS 100 FEET OR MORE BELOW THE SURFACE FOR THE PURPOSE OR
DEVELOPMENT OR REMOVAL OF SAID SUBSTANCES. SELLER WAIVES THE RIGHT TO USE AND
OCCUPANCY OF THE SURFACE AND SUBSURFACE AREA OF THE ABOVE DESCRIBED REAL
PROPERTY TO A DEPTH OF 100 FEET, BUT SUBJECT TO THE LIMITATIONS ABOVE SET FORTH,
RESERVES ALL SUBSURFACE RIGHTS, EASEMENTS, RIGHT OF WAY AND SERVITUDES IN AND
UNDER SAID LAND NECESSARY OR CONVENIENT IN CONNECTION WITH THE FOREGOING
MINERAL RESERVATION AS RESERVED BY CAPITAL COMPANY, A CORPORATION, IN DEED
RECORDED APRIL 7, 1959 AS INSTRUMENT NO. 1893, IN BOOK D423 PAGE 701, OFFICIAL
RECORDS.
ALSO EXCEPT ALL OIL, GAS, MINERALS, AND OTHER HYDROCARBON SUBSTANCES LYING IN
AND UNDER SAID LAND BELOW A DEPTH OF 500 FEET FROM THE SURFACE THEREOF, WITHOUT
RIGHT OF SURFACE ENTRY EXCEPT BELOW SAID DEPTH OF 500 FEET BELOW THE SURFACE
OF SAID LAND FOR THE EXTRACTION OR DEVELOPMENT THEREOF, AS RESERVED BY THE
REDEVELOPMENT AGENCY OF THE CITY OF TORRANCE, CALIFORNIA, A PUBLIC BODY
CORPORATE AND POLITIC, IN DEED RECORDED JUNE 26, 1973 AS INSTRUMENT NO. 208,
OFFICIAL RECORDS.
<PAGE> 27
EXHIBIT B
[EXISTING SITE PLAN & PROPOSED LANDSCAPE]
<PAGE> 28
EXHIBIT C ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
PERMITTED TITLE EXCEPTIONS
ALTA OWNER'S POLICY (4-6-90)
OWNERS POLICY
SCHEDULE B
EXCEPTIONS FROM COVERAGE
THIS POLICY DOES NOT INSURE AGAINST LOSS OR DAMAGE (AND THE COMPANY WILL NOT
PAY COSTS, ATTORNEYS' FEES OR EXPENSES) WHICH ARISE BY REASON OF:
A. PROPERTY TAXES, INCLUDING ANY ASSESSMENTS COLLECTED WITH TAXES, TO BE
LEVIED FOR THE FISCAL YEAR 1991 - 1992 WHICH ARE A LIEN NOT YET PAYABLE.
B. SUPPLEMENTAL ASSESSMENTS OF PROPERTY TAXES, IF ANY, MADE PURSUANT TO THE
PROVISIONS OF PART 0.5, CHAPTER 3.5 (COMMENCING WITH SECTION 75) OF THE
CALIFORNIA REVENUE AND TAXATION CODE AS A RESULT OF THE TRANSFER OF TITLE
TO THE VESTEE NAMED IN SCHEDULE A.
C. SUPPLEMENTAL OR ESCAPED ASSESSMENTS OF PROPERTY TAXES, IF ANY, MADE
PURSUANT TO PART 0.5, CHAPTER 3.5 OR PART 2, CHAPTER 3, ARTICLES 3 AND 4,
RESPECTIVELY, OF THE CALIFORNIA REVENUE AND TAXATION CODE AS A RESULT OF
CHANGES IN OWNERSHIP OR NEW CONSTRUCTION OCCURRING PRIOR TO DATE OF POLICY.
1. RIGHT AND PRIVILEGE TO EXTEND AND MAINTAIN DRAINAGE STRUCTURES AND
EXCAVATION AND EMBANKMENT SLOPES BEYOND THE LIMITS OF THE PARCEL OF LAND
DESCRIBED IN THE DEED, AFFECTING THE SOUTHWESTERLY LINE OF SAID LAND, TO
THE STATE OF CALIFORNIA, RECORDED APRIL 13, 1934 IN BOOK 12693 PAGE 231,
OFFICIAL RECORDS.
2. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
PURPOSE: PUBLIC HIGHWAYS SLOPES
RECORDED: JULY 23, 1953 AS INSTRUMENT NO. 2313, IN
BOOK 42283 PAGE 244, OFFICIAL RECORDS
AFFECTS: A PORTION OF PARCEL B AS MORE PARTICULARLY
DESCRIBED IN SAID DOCUMENT
3. A WAIVER OF ANY CLAIMS FOR DAMAGE TO SAID LAND AS CONTAINED IN A
DOCUMENT
RECORDED: JULY 23, 1953 AS INSTRUMENT NO. 2313 IN
BOOK 42283 PAGE 244, OFFICIAL RECORDS
PAGE 3
<PAGE> 29
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
4. THE PRIVILEGE AND RIGHT TO EXTEND AND MAINTAIN DRAINAGE STRUCTURES,
EXCAVATION SLOPES, IMBANKMENT SLOPES ON SAID LAND, ADJACENT TO SAID PUBLIC
HIGHWAY, AS GRANTED TO THE STATE OF CALIFORNIA, BY THE ABOVE MENTIONED
DEED.
5. THE FACT THAT SAID LAND IS INCLUDED WITHIN A PROJECT AREA OF THE
REDEVELOPMENT AGENCY SHOWN BELOW, AND THAT PROCEEDINGS FOR THE
REDEVELOPMENT OF SAID PROJECT HAVE BEEN INSTITUTED UNDER THE REDEVELOPMENT
LAW (SUCH REDEVELOPMENT TO PROCEED ONLY AFTER THE ADOPTION OF THE
REDEVELOPMENT PLAN) AS DISCLOSED BY A DOCUMENT
REDEVELOPMENT AGENCY: MEADOW PARK REDEVELOPMENT PROJECT
REDEVELOPMENT AREA
RECORDED: MAY 12, 1967 IN BOOK M2553 PAGE 174,
OFFICIAL RECORDS AS INSTRUMENT NO. 2108,
AND RECORDED JUNE 22, 1972 IN BOOK M4095
PAGE 389 AS INSTRUMENT NO. 3963, OFFICIAL
RECORDS
6. COVENANTS, CONDITIONS AND RESTRICTIONS (DELETING THEREFROM ANY
RESTRICTIONS BASED ON RACE, COLOR, OR CREED) AS SET FORTH IN THE
DOCUMENT REFERRED TO IN THE NUMBERED ITEM LAST ABOVE SHOWN.
7. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
GRANTED TO: CITY OF TORRANCE, A MUNICIPAL CORPORATION
PURPOSE: AVIGATION
RECORDED: JANUARY 8, 1971 AS INSTRUMENT NO. 2396, IN
BOOK D4938 PAGE 387, OFFICIAL RECORDS
AFFECTS: A PORTION OF SAID LAND
8. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
GRANTED TO: CITY OF TORRANCE
PURPOSE: AVIGATION
RECORDED: JUNE 4, 1973 AS INSTRUMENT NO. 3724
AFFECTS: A PORTION OF SAID LAND
9. COVENANTS, CONDITIONS AND RESTRICTIONS (DELETING THEREFROM ANY RESTRICTIONS
BASED ON RACE, COLOR OR CREED) AS SET FORTH IN THE DOCUMENT
RECORDED: JUNE 26, 1973 AS INSTRUMENT NO. 208
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: JULY 9, 1974 AS INSTRUMENT NO. 765
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: SEPTEMBER 2, 1975 AS INSTRUMENT NO. 626
PAGE 4
<PAGE> 30
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
10. COVENANTS, CONDITIONS AND RESTRICTIONS (DELETING THEREFROM ANY RESTRICTIONS
BASED ON RACE, COLOR OR CREED) AS SET FORTH IN THE DOCUMENT
RECORDED: JUNE 26, 1973 AS INSTRUMENT NO. 2075 AND
IN BOOK D5922 PAGE 433, OFFICIAL RECORDS
SAID DECLARATION ALSO PROVIDES FOR CERTAIN EASEMENTS.
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2125
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: SEPTEMBER 30, 1987 AS INSTRUMENT NO.
87-1572019, OFFICIAL RECORDS
11. AN UNRECORDED LEASE WITH CERTAIN TERMS, COVENANTS, CONDITIONS AND
PROVISIONS SET FORTH THEREIN
LESSOR: HAWTHORNE-PACIFIC CO., A CALIFORNIA
GENERAL PARTNERSHIP
LESSEE: LUCKY STORES, INC., A CALIFORNIA
CORPORATION
DISCLOSED BY: SHORT FORM LEASE
RECORDED: JUNE 26, 1973 IN BOOK M4405 PAGE 224, AS
INSTRUMENT NO. 2076, OFFICIAL RECORDS
SAID LEASE, AMONG OTHER THINGS, PROVIDES FOR AN OPTION TO RENEW FOR A
PERIOD OF: OPTION TO EXTEND THE TERM THEREOF FOR
FOUR (4) CONSECUTIVE TERMS OF FIVE (5)
YEARS EACH, UPON NOTICE FROM TENANT TO
LANDLORD AS THEREIN PROVIDED
SAID INSTRUMENT, AMONG OTHER THINGS, PROVIDES: SAID LEASE ALSO GRANTS TO
TENANT, ITS CUSTOMERS AND INVITEES CERTAIN PARKING PRIVILEGES AND CONTAINS
RESTRICTIONS AFFECTING THE PATIO BETWEEN THE PARKING AREA AND THE BUILDING
AREA, AND ESTABLISHES REQUIREMENTS CONCERNING THE NATURE OF CONSTRUCTION OF
BUILDINGS, ON THE REAL PROPERTY DESCRIBED IN EXHIBIT A THERETO, AND MADE A
PART THEREOF.
AN AGREEMENT TO AMEND OR MODIFY CERTAIN PROVISIONS OF SAID LEASE, AS SET
FORTH IN THE DOCUMENT EXECUTED BY:
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2126
ASSIGNMENT OF THE LESSEE'S INTEREST UNDER SAID LEASE,
ASSIGNOR: LUCKY STORES, INC., A DELAWARE CORPORATION
(AS SUCCESSOR BY MERGER TO LUCKY STORES,
INC. A CALIFORNIA CORPORATION)
ASSIGNEE: DAYTON HUDSON CORPORATION, A MINNESOTA
CORPORATION
RECORDED: DECEMBER 23, 1986 AS INSTRUMENT NO.
86-1788106, OFFICIAL RECORDS
PAGE 5
<PAGE> 31
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
ASSIGNMENT OF THE LESSEE'S INTEREST UNDER SAID LEASE,
ASSIGNOR: DAYTON HUDSON CORPORATION, A MINNESOTA
CORPORATION
ASSIGNEE: HAAGEN GDH PARTNERSHIP, A CALIFORNIA GENERAL
PARTNERSHIP
RECORDED: JUNE 26, 1987 AS INSTRUMENT NO. 87-1020535,
OFFICIAL RECORDS
ASSIGNMENT OF THE LESSEE'S INTEREST UNDER SAID LEASE,
ASSIGNOR: HAAGEN GDH PARTNERSHIP, A CALIFORNIA GENERAL
PARTNERSHIP
ASSIGNEE: MERCHANDISING DEVELOPMENT U.S.A., INC., A
CALIFORNIA CORPORATION
RECORDED: JUNE 26, 1987 AS INSTRUMENT NO. 87-1020536,
OFFICIAL RECORDS
AN ASSIGNMENT OF ASSIGNMENT OF LEASE UPON THE TERMS AND CONDITIONS THEREIN
PROVIDED
DATED: APRIL 18, 1974
EXECUTED BY: UNIONAMERICA INC., WESTERN MORTGAGE
CORPORATION DIVISION, A DELAWARE CORPORATION
IN FAVOR OF: STATE OF CALIFORNIA PUBLIC EMPLOYEES
RETIREMENT SYSTEMS
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2130
AN AGREEMENT TO AMEND OR MODIFY CERTAIN PROVISIONS OF SAID LEASE, AS SET
FORTH IN THE DOCUMENT EXECUTED BY:
AS LESSOR: THE BANK OF TOKYO OF CALIFORNIA, A STATE
BANKING INSTITUTION
AS LESSEE: UNIONAMERICA, INC., WESTERN MORTGAGE
CORPROATION DIVISION, A DELAWARE CORPORATION
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2128
12. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
GRANTED TO: SOUTHERN CALIFORNIA EDISON COMPANY, A
CORPORATION
PURPOSE: PUBLIC UTILITIES
RECORDED: NOVEMBER 14, 1973 AS INSTRUMENT NO. 3253
AFFECTS: A PORTION OF PARCEL B AS MORE PARTICULARLY
DESCRIBED IN SAID DOCUMENT
PAGE 6
<PAGE> 32
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
13. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS SET
FORTH IN A DOCUMENT
PURPOSE: INGRESS AND EGRESS
RECORDED: DECEMBER 17, 1973 AS INSTRUMENT NO. 230
AFFECTS: A PORTION OF PARCEL B AS MORE PARTICULARLY
DESCRIBED IN SAID DOCUMENT
14. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS SET
FORTH IN A DOCUMENT
GRANTED TO: SOUTHERN CALIFORNIA EDISON COMPANY, A
CORPORATION, ITS SUCCESSORS AND ASSIGNS
PURPOSE: PUBLIC UTILITIES
RECORDED: JANUARY 30, 1975 AS INSTRUMENT NO. 2422
AFFECTS: A PORTION OF PARCEL B
15. ANY RIGHTS, INTERESTS OR CLAIMS WHICH MAY EXIST OR ARISE BY REASON OF THE
FOLLOWING MATTERS DISCLOSED BY AN INSPECTION OR SURVEY:
A. THE FACT THAT A CONCRETE RETAINING WALL ON THE SOUTHERLY PORTION OF THE
WESTERLY LINE OF SAID LAND ENCROACHES 0.50 FEET ONTO PARCEL 1 OF SAID
PARCEL MAP.
B. THE FACT THAT 2 LIGHT STANDARDS EXIST INSIDE THE NORTHERLY PORTION OF THE
WESTERLY LINE OF SAID LAND.
C. THE FACT THAT A FIRE HYDRANT EXISTS INSIDE THE WESTERLY LINE OF SAID
LAND.
D. THE FACT THAT A CATCH BASIN EXISTS INSIDE THE NORTHEASTERLY CORNER OF
SAID LAND.
E. THE FACT THAT A GAS LINE EXISTS INSIDE THE NORTHEASTERLY CORNER OF SAID
LAND.
F. THE FACT THAT A MANHOLE EXISTS INSIDE THE NORTHWESTERLY CORNER OF SAID
LAND.
G. THE FACT THAT A FIRE HYDRANT EXISTS INSIDE THE NORTHWESTERLY PORTION OF
SAID LAND.
H. THE FACT THAT A CONCRETE RETAINING WALL ON PARCELS 5 AND 6 OF SAID PARCEL
MAP ENCROACHES ON THE SOUTH EASTERLY PORTION OF SAID LAND.
PAGE 7
<PAGE> 33
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
I. AN UNRECORDED LEASE WITH CERTAIN TERMS, COVENANTS, CONDITIONS, AND
PROVISIONS SET FORTH THEREIN, AS DISCLOSED BY INSPECTION AND
INVESTIGATION.
LESSOR: UNKNOWN
LESSEE: PANELLI JONES
THE PRESENT OWNERSHIP OF THE LEASEHOLD CREATED BY SAID LEASE AND
OTHER MATTERS AFFECTING THE INTEREST OF THE LESSEE ARE NOT SHOWN
HEREIN.
J. THE FACT THAT UNDERGROUND GASOLINE STORAGE TANKS EXIST IN THE
SOUTHEAST PORTION OF SAID LAND.
16. WATER RIGHTS, CLAIMS OR TITLE TO WATER.
ENDORSEMENTS:
THE FOLLOWING ENDORSEMENTS ARE ATTACHED TO AND MADE A PART OF THIS POLICY:
NONE
PAGE 8
<PAGE> 34
[PARCEL ESTATE INFORMATION MAP]
<PAGE> 35
CLTA FORM 107.9 (10-26-72)
ALTA OR CLTA - OWNER OR LENDER
ENDORSEMENT
ATTACHED TO POLICY NO. 113-00-471-268
ISSUED BY
LAWYERS TITLE INSURANCE CORPORATION
SAID POLICY IS HEREBY AMENDED BY ADDING AS A NAMED INSURED THEREIN
MERCHANDISING DEVELOPMENT U.S.A., INC., A CALIFORNIA CORPORATION,
SUCCESSOR BY MERGER TO MERCHANDISING DEVELOPMENT, INC., A CALIFORNIA
CORPORATION
THIS ENDORSEMENT DOES NOT EXTEND THE COVERAGE OF SAID POLICY TO ANY LATER DATE
THAN THE DATE OF SAID POLICY, NOR DOES IT IMPOSE ANY LIABILITY ON THE COMPANY
FOR LOSS OR DAMAGE RESULTING FROM (1) FAILURE OF SUCH ADDED INSURED TO ACQUIRE
AN INSURABLE ESTATE OR INTEREST IN SAID LAND, OR (2) ANY DEFECT, LIEN OR
ENCUMBRANCE ATTACHING BY REASON OF THE ACQUISITION OF AN ESTATE OR INTEREST IN
THE LAND BY SUCH ADDED INSURED.
THE TOTAL LIABILITY OF THE COMPANY UNDER SAID POLICY AND ANY ENDORSEMENTS
THEREIN SHALL NOT EXCEED, IN THE AGGREGATE, THE FACE AMOUNT OF SAID POLICY AND
COSTS WHICH THE COMPANY IS OBLIGATED UNDER THE CONDITIONS AND STIPULATIONS
THEREOF TO PAY.
THIS ENDORSEMENT IS MADE A PART OF SAID POLICY AND IS SUBJECT TO THE SCHEDULES,
CONDITIONS AND STIPULATIONS THEREIN, EXCEPT AS MODIFIED BY THE PROVISIONS
HEREOF.
DATED: JANUARY 13, 1994
Lawyers Title Insurance Corporation
COUNTERSIGNED BY: By: [Illegible Signature]
[Corporate President
[Illegible Signature] Seal] Attest: [Illegible Signature]
- --------------------------- Secretary
AUTHORIZED OFFICER OR AGENT Countersigned By:
[Illegible Signature]
Authorized Officer or Agent
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
LEASE AGREEMENT
by and between
ESI (CA) QRS 12-6, INC.,
a California corporation
as LANDLORD
and
ETEC SYSTEMS, INC.,
a Nevada corporation,
as TENANT
Premises: Hayward, California
Dated as of: January 31, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
1. Demise of Premises ............................................ 2
2. Certain Definitions ........................................... 2
3. Title and Condition ........................................... 11
4. Use of Leased Premises; Quiet Enjoyment ....................... 13
5. Term .......................................................... 13
6. Basic Rent .................................................... 14
7. Additional Rent ............................................... 15
8. Net Lease; Non-Terminability .................................. 16
9. Payment of impositions ........................................ 17
10. Compliance with Laws and Easement Agreements;
Environmental Matters ......................................... 19
11. Liens; Recording .............................................. 21
12. Maintenance and Repair ........................................ 22
13. Alterations and Improvements .................................. 23
14. Permitted Contests ............................................ 24
15. indemnification ............................................... 25
16. Insurance ..................................................... 26
17. Casualty and Condemnation ..................................... 31
18. Termination Events ............................................ 33
19. Restoration; Reduction of Rent ................................ 34
20. Procedures Upon Purchase ...................................... 36
21. Assignment and Subletting; Prohibition against
Leasehold Financing ........................................... 37
22. Events of Default ............................................. 42
23. Remedies and Damages Upon Default ............................. 45
24. Notices ....................................................... 49
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<PAGE> 3
25. Estoppel Certificate ......................................... 49
26. Surrender .................................................... 50
27. No Merger of Title ........................................... 50
28. Books and Records ............................................ 50
29. Determination of Value ....................................... 52
30. Non-Recourse as to Landlord .................................. 55
31. Financing .................................................... 56
32. Subordination ................................................ 56
33. Financial Covenants; Covenant Breach Offer ................... 57
34. Tax Treatment; Reporting ..................................... 58
35. Right of First Refusal ....................................... 59
36. Financing Major Alterations .................................. 61
37. Security Deposit ............................................. 62
38. Right to Vacate; Rejectable Offer Upon Vacation .............. 63
39. Miscellaneous ................................................ 64
Exhibit A - Premises
Exhibit B - Machinery and Equipment
Exhibit C - Permitted Encumbrances
Exhibit D - Basic Rent Payments
Exhibit E - Financial Covenants
Schedule 1 - Termination Values
Schedule 2 - Approved Alterations to Building Two
and Building Three
-ii-
<PAGE> 4
AMENDED AND RESTATED LEASE AGREEMENT, made as of this 31st day of January,
1997, between ESI (CA) QRS 12-6, INC., a California corporation ("Landlord"),
with an address c/o W. P. Carey & Co., Inc., 50 Rockefeller Plaza, Second Floor,
New York, New York 10020, and ETEC SYSTEMS, INC., a Nevada corporation
("Tenant"), with an address at 26460 Corporate Avenue, Hayward, California
94545.
BACKGROUND
A. Landlord and Tenant entered into a Lease Agreement dated as of February
1, 1995, as amended by the terms of Exhibit 1 to that certain letter agreement
dated August 7, 1996 (said Lease Agreement, as amended, the "Original Lease").
B. As of the date hereof, Landlord has purchased from Tenant an office
building containing approximately 60,000 square feet ("Building One") located on
the Land (as defined in the Original Lease).
C. Landlord desires to demise to Tenant and Tenant desires to lease from
Landlord the Building One and in connection therewith to amend and restate the
Original Lease in its entirety.
In consideration of the rents and provisions herein stipulated to be paid
and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant, and
Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (collectively, the "Land"); (b) the
three office/manufacturing facilities constructed on the Land, known as
"Building One", "Building Two" and "Building Three" and containing approximately
60,000 square feet, 47,000 square feet and 106,000 square feet, respectively,
and all other buildings, structures and other improvements now or hereafter
constructed on the Land (collectively, the "Improvements"); and (c) the
fixtures, machinery, equipment and other property described in Exhibit "B"
hereto (collectively, the "Equipment").
2. Certain Definitions.
(a) "ACQUISITION COST" shall mean $14,321,137.
(b) "ADDITIONAL RENT" shall mean Additional Rent as defined in Paragraph
7.
(c) "ADJOINING PROPERTY" shall mean all sidewalks, driveways, curbs, gores
and vault spaces adjoining any of the Leased Premises.
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<PAGE> 5
(d) "ALTERATIONS" shall mean all changes, additions improvements or
repairs to, all alterations, reconstructions, renewals, replacements or removals
of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.
(e) "APPURTENANCES" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, privileges in and to the Land, including (a) easements
over other lands granted by any Easement Agreement and (b) any streets, ways,
alleys, vaults, gores or strips of land adjoining the Land.
(f) "ASSIGNMENT" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
(g) "BASIC RENT" shall Mean Basic Rent as defined in Paragraph 6.
(h) "BASIC RENT. PAYMENT DATES" shall mean the Basic Rent Payment Dates as
defined in Paragraph 6.
(i) "CASUALTY" shall mean any injury to or death of any person or any loss
of or damage to any property (including the Leased Premises) included within or
related to the Leased Premises or arising from the Adjoining Property.
(j) "COMMENCEMENT DATE", shall mean Commencement Date as defined in
Paragraph 5.
(k) "CONDEMNATION" shall mean a Taking and/or a Requisition.
(l) "CONDEMNATION NOTICE" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
(m) "COSTS" of a Person or associated with a specified transaction shall
mean all reasonable costs and expenses incurred by such Person or associated
with such transaction, including without limitation, attorneys' fees and
expenses, court costs, brokerage fees, escrow fees, title insurance premiums,
mortgage commitment fees, mortgage points, recording fees and transfer taxes, as
the circumstances require.
(n) "COVENANT BREACH" shall mean Covenant Breach as defined in Paragraph
33.
(o) "COVENANTS" shall mean Covenants as defined in Paragraph 33.
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<PAGE> 6
(p) "CPI" shall mean CPI as defined in Exhibit "D".
(q) "DEFAULT TERMINATION AMOUNT" shall mean the Default Termination Amount
as defined in Paragraph 23(a)(iii).
(r) "DEFAULT RATE" shall mean the Default Rate as defined in Paragraph
7(a)(iv).
(s) "DEPOSIT AMOUNT" shall mean Deposit Amount as defined in Paragraph 21.
(t) "EASEMENT AGREEMENT" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.
(u) "ENVIRONMENTAL LAW" shall mean (i) whenever enacted or promulgated,
any applicable federal, state, foreign and local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup thereof), or the
protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.
(v) "ENVIRONMENTAL VIOLATION" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage,
-4-
<PAGE> 7
filtration or transporting of any Hazardous Substance at, upon, under, onto or
within the Leased Premises, or from the Leased Premises to the environment, in
violation of any Environmental Law or which could be reasonably expected to
result in any liability to Landlord, Tenant or Lender, any Federal, state or
local government or any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (b)
any deposit, storage, dumping, placement or use of any Hazardous Substance at,
upon, under or within the Leased Premises or which extends to any Adjoining
Property in violation of any Environmental Law or which could reasonably be
expected to result in any liability to any Federal, state or local government or
to any other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which could be reasonably expected to result in any
liability, cost or expense to Landlord or Lender or any other owner or occupier
of the Leased Premises, or which could be reasonably expected to result in a
creation of a lien on the Leased Premises under any Environmental Law, or (e)
any violation of or noncompliance with any Environmental Law.
(w) "EQUIPMENT" shall mean the Equipment as defined in Paragraph 1.
(x) "EVENT OF DEFAULT" shall mean an Event of Default as defined in
Paragraph 22(a).
(y) "FAIR MARKET RENTAL VALUE" shall mean the fair market rental value of
the Leased Premises for the relevant Renewal Term determined in accordance with
the procedure specified in Paragraph 29.
(z) "FAIR MARKET VALUE" shall mean the fair market value of the Leased
Premises as of the Relevant Date. For all purposes of this Lease, Fair Market
Value shall be determined in accordance with the procedure specified in
Paragraph 29.
(aa) "FAIR MARKET VALUE DATE" shall mean the date when the Fair Market
Value is determined in accordance with Paragraph 29.
(ab) "FEDERAL FUNDS" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of public
and private debts in the United States of America.
(ac) "HAZARDOUS ACTIVITY" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of
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<PAGE> 8
any Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would cause the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.
(ad) "HAZARDOUS CONDITION" means any condition which would support any
claim or liability under any Environmental Law, including the presence of
underground storage tanks.
(ae) "HAZARDOUS SUBSTANCE" means (i) any substance, material, product,
(including, without limitation, petroleum products), derivative (including,
without limitation, petroleum products), compound, mixture, mineral (including,
without limitation, asbestos), chemical, gas, waste, contaminant or pollutant,
in each case whether naturally occurring, man-made or the by-product of any
process, that is toxic, harmful or hazardous or acutely hazardous to public
health or safety or the environment or (ii) any substance supporting a claim
under any Environmental Law, whether or not such substance is defined as
hazardous or toxic as such under any Environmental Law. By way of example, and
not of limitation, Hazardous Substances include, but are not limited to, any
toxic substance, hazardous substance, hazardous waste, hazardous constituent,
pollutant, contaminant, industrial waste, medical waste, petroleum product,
petroleum derivative, petroleum waste, radon, radioactive material, asbestos,
asbestos containing materials, urea formaldehyde, foam insulation, lead or
polychlorinated biphenyl.
(af) "HOLDER" means Landlord or the Initial Lender as a holder of Warrants
or Stock.
(ag) "IMPOSITIONS" shall mean the Impositions as defined in Paragraph 9(a).
(ah) "IMPROVEMENTS" shall mean the Improvements as defined in Paragraph 1.
(ai) "INDEMNITEE" shall mean an Indemnitee as defined in Paragraph 15.
(aj) "INITIAL LENDER" shall mean Creditanstalt-Bankverein, its successors
and assigns.
(ak) "INITIAL LOAN" shall mean the $8,221,345 loan from Lender evidenced by
a Note of even date herewith.
(al) "INITIAL TERM" shall mean Initial Term as defined in Paragraph 5.
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<PAGE> 9
(am) "INSURANCE REQUIREMENTS" shall mean the requirements of all insurance
policies required to be maintained in accordance with this Lease.
(an) "INTENDED ASSIGNMENT OFFER" shall mean Intended Assignment Offer as
defined in Paragraph 21(a)(iv).
(ao) "INTENDED TRANSACTION" shall mean Intended Transaction as defined in
Paragraph 33(b).
(ap) "LAND" shall mean the Land as defined in Paragraph 1.
(aq) "LAW" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
(ar) "LEASE" shall mean this Amended and Restated Lease Agreement.
(as) "LEASE YEAR" shall mean twelve (12) consecutive month period during
the Term except that the first Lease Year commenced on February 16, 1995 and
terminated on February 29, 1996 and the last Lease Year shall end on the last
day of the Term.
(at) "LEASED PREMISES" shall mean the Leased Premises as defined in
Paragraph 1.
(au) "LEGAL REQUIREMENTS" shall mean all present and future Laws (including
but not limited to Environmental Laws and Laws relating to accessibility to,
usability by, and discrimination against, disabled individuals) and all
covenants, restrictions and conditions now or hereafter of record which may be
applicable to Tenant or to any of the Leased Premises, or to the use, manner of
use, occupancy, possession, operation, maintenance, alteration, repair or
restoration of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.
(av) "LENDER" shall mean (a) Initial Lender, and (b) any person or entity
(and their respective successors and assigns) which may, after the date hereof,
make a Loan to Landlord or is the holder of any Note.
(aw) "LOAN" shall mean any loan made by one or more Lenders to Landlord,
which loan is secured by a Mortgage and an Assignment and evidenced by a Note.
(ax) "MAJOR ALTERATIONS" shall mean Major Alterations as defined in
Paragraph 36(a).
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<PAGE> 10
(ay) "MONETARY OBLIGATIONS" shall mean Rent and all other sums payable by
Tenant under this Lease to Landlord, to any third party on behalf of Landlord or
to any Indemnitee.
(az) "MORTGAGE" shall mean any mortgage or deed of trust from Landlord to
a Lender which (a) encumbers any of the Leased Premises and (b) secures
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.
(ba) "NET AWARD" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred by
Landlord and Lender in collecting such award or proceeds.
(bb) "NON-PREAPPROVED ASSIGNEE" shall mean Non-Preapproved Assignee as
defined in Paragraph 21(a)(ii).
(bc) "NON-PREAPPROVED ASSIGNMENT" shall mean Non-Preapproved Assignment as
defined in Paragraph 21(a)(ii).
(bd) "NOTE" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
(be) "OFFER AMOUNT" shall mean (i) prior to the expiration of the Initial
Term, the greater of (a) the Fair Market Value of the Leased Premises as of the
Relevant Date and (b) the sum of the Acquisition Cost and the applicable
Prepayment Premium which Landlord will be required to pay, and (ii) after the
expiration of the Initial Term, the Fair Market Value of the Leased Premises as
of the Relevant Date.
(bf) "PARTIAL CASUALTY" shall mean any Casualty which does not constitute
a Termination Event.
(bg) "PARTIAL CONDEMNATION" shall mean any Condemnation which does not
constitute a Termination Event.
(bh) "PERMITTED ENCUMBRANCES" shall mean those covenants, restrictions,
reservations, liens, conditions and easements and other encumbrances, other than
any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall
not be deemed to revive any such encumbrances that have expired or terminated or
are otherwise invalid or unenforceable).
(bi) "PERSON" shall mean an individual, partnership, association,
corporation or other entity.
(bj) "PREAPPROVED ASSIGNEE" shall mean Preapproved Assignee as defined in
Paragraph 21(a)(i).
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(bk) "PREAPPROVED ASSIGNMENT" shall mean Preapproved Assignment as defined
in Paragraph 21(a)(i).
(bl) "PREAPPROVED SUBLET" shall mean Preapproved Sublet as defined in
Paragraph 21(b).
(bm) "PREPAYMENT PREMIUM" shall mean any payment (other than a payment of
principal and/or interest which Landlord is required to make under a Note or a
Mortgage) by reason of any prepayment by Landlord of any principal due under a
Note or Mortgage, and which may be (in lieu of such prepayment premium or
prepayment penalty) a "make whole" clause requiring a prepayment premium in an
amount sufficient to compensate the Lender for the loss of the benefit of the
Loan due to a prepayment or a "breakage fee" or "funding losses" as a result of
any prepayment; provided, however, that the Prepayment Premium shall not exceed
the amount thereof that would be payable if the outstanding principal amount of
the Loan being prepaid were $8,221,345.
(bn) "PRIME RATE" shall mean the annual interest rate as published, from
time to time, in the Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event the Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.
(bo) "RELEVANT AMOUNT" shall mean the Termination Amount,
Offer Amount or the Default Termination Amount, as the case may be.
(bp) "RELEVANT DATE" shall mean (a) the date immediately prior to the date
on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the date on which Landlord makes an Intended Assignment
Offer, (e) the date immediately prior to the Event of Default giving rise to the
need to determine Fair Market Value in the event Landlord provides Tenant with
notice of its intention to require Tenant to make a termination offer
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under Paragraph 23(a)(iii), (f) the Fair Market Value Date, in the event
Landlord receives an offer to purchase the Leased Premises pursuant to the third
paragraph of Paragraph 35(a), (g) with respect to a Covenant Breach or an
Intended Transaction, the date that is the earlier of (i) the date immediately
prior to the date on which Tenant notifies Landlord that an Intended Transaction
or Covenant Breach will occur or makes a public announcement to such effect, or
(ii) the date immediately prior to the date on which the Covenant Breach or the
Intended Transaction occurs or, but for the acceptance by Landlord of the
rejectable offer under Paragraph 33, would occur, and (h) the date immediately
prior to the date on which Tenant vacates the Leased Premises in the event
Tenant makes a Vacation Offer pursuant to Paragraph 38.
(bq) "REMAINING SUM" shall mean Remaining Sum as defined in Paragraph
19(c).
(br) "RENEWAL TERM" shall mean Renewal Term as defined in Paragraph 5.
(bs) "RENT" shall mean, collectively, Basic Rent and Additional Rent.
(bt) "REQUISITION" shall mean any temporary requisition or confiscation of
the use or occupancy of any of the Leased Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.
(bu) "RETENTION DATE" shall mean the later of the date on which the amount
of the Remaining Sum is finally determined or the date on which Landlord's right
to the Remaining Sum is finally determined.
(bv) "SECURITY DEPOSIT" shall mean Security Deposit as defined in Paragraph
37.
(bw) "SITE ASSESSMENT" shall mean a Site Assessment as defined in Paragraph
10(c).
(bx) "STATE" shall mean the State of California.
(by) "SURVIVING OBLIGATIONS" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the expiration or
prior termination of this Lease or which survive such expiration or termination
by their own terms.
(bz) "TAKING" shall mean (a) any taking or damaging of all or a portion of
any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
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condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Leased Premises.
(ca) "TERM" shall mean the Term as defined in Paragraph 5.
(cb) "TERMINATION AMOUNT" shall mean (i) prior to the expiration of the
Initial Term, the greater of (a) the sum of the applicable Termination Value
specified on Schedule 1 hereto and any Prepayment Premium which Landlord will be
required to pay in prepaying any Loan with proceeds of the Termination Amount or
(b) the Fair market Value of the Leased Premises as of the Relevant Date and
(ii) after the expiration of the Initial Term, the Fair Market Value of the
Leased Premises as of the Relevant Date.
(cc) "TERMINATION DATE" shall mean Termination Date as defined in
Paragraph 18(b).
(cd) "TERMINATION EVENT" shall mean a Termination Event as defined in
Paragraph 18(a).
(ce) "TERMINATION NOTICE" shall mean Termination Notice as defined in
Paragraph 18(a).
(cf) "THIRD PARTY PURCHASER" shall mean Third Party Purchaser as defined
in Paragraph 35.
(cg) "VACATION OFFER" shall mean Vacation Offer as defined in Paragraph
38.
(ch) "WARRANT AGREEMENT" shall mean the Warrant Agreement, of even date,
between Landlord and Tenant.
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the Mortgage
and Assignment presently in effect, (ii) the rights of any Persons in possession
of the Leased Premises, (iii) the existing state of title of any of the Leased
Premises, including any Permitted Encumbrances, (iv) any state of facts which an
accurate survey or physical inspection of the Leased Premises might show, (v)
all Legal Requirements, including any existing violation of any thereof, and
(vi) the condition of the Leased Premises as of the commencement of the Term,
without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises are in acceptable
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD
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(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv)
LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii)
LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii)
DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi)
COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE
LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE
LEASED PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE
BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the title to
the Leased Premises prior to the execution and delivery of this Lease and has
found the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that (i) Tenant has conveyed fee simple title (both legal and
equitable) in the Leased Premises to Landlord and that Tenant has only the
leasehold right of possession and use of the Leased Premises as provided herein,
(ii) to Tenant's knowledge the improvements conform to all material Legal
Requirements and all Insurance Requirements, (iii) to Tenant's knowledge all
easements necessary or appropriate for the use or operation of the Leased
Premises have been obtained, (iv) all contractors engaged by Tenant and to
Tenant's knowledge, all subcontractors who have performed work on or supplied
materials to the Leased Premises have been fully paid or Tenant is holding
retainage sufficient to pay such contractors in full, and all materials and
supplies have been fully paid for or Tenant is holding retainage sufficient to
pay for such materials and supplies in full, (v) to Tenant's knowledge the
Improvements have been fully completed in all material respects in a workmanlike
manner of first class quality, and (vi) to Tenant's knowledge all Equipment
necessary or appropriate for the use or operation of the Leased Premises has
been installed and is presently fully operative in all material respects.
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(d) Landlord hereby assigns to Tenant, without recourse or warranty
whatsoever, all warranties, guaranties, indemnities and similar rights which
Landlord may have against any manufacturer, seller, engineer, contractor or
builder in respect of any of the Leased Premises. Such assignment shall remain
in effect until an Event of Default occurs or until the expiration or earlier
termination of this Lease, whereupon such assignment shall cease and all of said
warranties, guaranties, indemnities and other rights shall automatically revert
to Landlord.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for offices,
manufacturing, warehouse, distribution and research and development and uses
ancillary thereto and for no other purpose without Landlord's consent, which
shall not be unreasonably withheld, delayed or conditioned. Tenant shall not use
or occupy or permit any of the Leased Premises to be used or occupied, nor do or
permit anything to be done in or on any of the Leased Premises, in a manner
which would or might (i) violate any Law or Legal Requirement, (ii) make void or
voidable or cause any insurer to cancel any insurance required by this Lease, or
make it difficult or impossible to obtain any such insurance at commercially
reasonable rates, (iii) cause structural injury to any of the Improvements or
(iv) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of Default has
occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the
Leased Premises throughout the Term, without any hindrance, ejection or
molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord may, upon reasonable prior notice to Tenant,
enter upon and examine any of the Leased Premises at such reasonable times as
Landlord may select and as may be approved by Tenant, for the purpose of
inspecting the Leased Premises, verifying compliance or non-compliance by Tenant
with its obligations hereunder and the existence or non-existence of an Event of
Default or event which with the passage of time and/or notice would constitute
an Event of Default, showing the Leased Premises to prospective Lenders and
purchasers and taking such other action with respect to the Leased Premises as
is permitted by any provision hereof.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and hold the Leased
Premises for an initial term (herein, the "Initial Term", and the Initial Term,
as extended or renewed in accordance with the provisions hereof, being called
the "Term") that commenced on February 16, 1995 (the "Commencement Date") and
that expires on February 29, 2012 (the "Expiration Date"). If all Rent and all
other sums due hereunder shall not have been
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fully paid by the end of the Term, Landlord may, at its option, extend the Term
until all said sums shall have been fully paid.
(b) Provided that if, on or prior to the Expiration Date or any other
Renewal Date (as hereinafter defined) this Lease shall not have been terminated
pursuant to any provision hereof, then on the Expiration Date and on the fifth
(5th) and tenth (10th) anniversaries of the Expiration Date, such anniversary
being a "Renewal Date", the Term shall be deemed to have been automatically
extended for an additional period of five (5) years, and on the fifteenth (15th)
anniversary of the Expiration Date such anniversary being a "Renewal Date", the
Term shall be deemed to have been automatically extended for two (2) years and
eleven (11) months (each such extension period, a "Renewal Term"), unless in any
case Tenant shall notify Landlord in writing at least one (1) year prior to the
next Renewal Date that Tenant is terminating this Lease as of the next Renewal
Date. If Tenant elects not to extend the Term of this Lease then, prior to the
expiration date, Tenant shall, at the request of Landlord, provide to Landlord a
Termination of Lease in recordable form. Any such extension of the Term shall be
subject to all of the provisions of this Lease, as the same may be amended,
supplemented or modified.
(c) if Tenant exercises its option not to extend or further extend the
Term, or if an Event of Default exists, then Landlord shall have the right
during the remainder of the Term then in effect and, in any event, Landlord
shall have the right during the last year of the Term, to (i) advertise the
availability of the Leased Premises for sale or reletting and to erect upon the
Leased Premises signs indicating such availability and (ii) upon reasonable
prior notice to Tenant show the Leased Premises to prospective purchasers or
tenants or their agents at such reasonable times as Landlord may select and as
may be approved by Tenant, such approval not to be unreasonably withheld or
delayed (except that no approval shall be required if an Event of Default
exists) and remains uncured.
6. Basic Rent. Landlord acknowledges that all Basic Rent has been paid
through December 31, 1996. Tenant shall pay to Landlord on February 1, 1997
Basic Rent in the amount of [$86,196] for the period from January 1, 1997
through January 31, 1997. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the portion of the Term remaining after February 1, 1997,
the amounts determined in accordance with Exhibit "D" hereto ("Basic Rent").
Payments shall be made on March 1, 1997 and on the first day of each month
during the remainder of the Term (each such day being a "Basic Rent Payment
Date"). Each such rental payment shall be made, (a) at Landlord's sole
discretion, to Landlord at its address set forth above and/or to such one or
more other Persons, at such addresses and in such proportions as Landlord may
direct by fifteen (15) days' prior written notice to Tenant (in which event
Tenant shall give Landlord notice of each such payment
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concurrent with the making thereof), and (b) in funds available to Landlord on
the applicable Basic Rent Payment Date.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent (collectively,
"Additional Rent"):
(i) except as otherwise specifically provided herein, all costs and
expenses of Tenant and all reasonable costs and expenses of, Landlord and
any other Persons specifically referenced herein which are incurred in
connection or associated with (A) the use, non-use, occupancy, possession,
operation, condition, design, construction, maintenance, alteration, repair
or restoration of any of the Leased Premises, (B) the performance of any of
Tenant's obligations under this Lease, (C) any sale or other transfer of
any of the Leased Premises to Tenant under this Lease, (D) any Condemnation
proceedings, (E) the adjustment, settlement or compromise of any insurance
claims involving or arising from any of the Leased Premises, (F) the
prosecution, defense or settlement of any litigation involving or arising
from any of the Leased Premises, this Lease, or the sale of the Leased
Premises to Landlord, (G) the enforcement by Landlord, its successors and
assigns, of any of its rights under this Lease, (H) any amendment to or
modification or termination of this Lease made at the request of Tenant,
(I) Costs of Landlord's counsel incurred in connection with the
preparation, negotiation and execution of this Lease, Costs of Landlord's
counsel incurred in connection with the review and/or negotiation of
documents requested by Tenant and Costs of third party consultants retained
by Landlord in connection with any act undertaken by Landlord at the
request of Tenant, or incurred in connection with any act of Landlord
performed on behalf of Tenant that Landlord has the right to perform under
the terms of this Lease, (J) the reasonable cost of a consultant retained
by Lender to review plans, specifications, and contracts in connection with
any Alteration for which the approval of Leader is required or permitted
under the terms of the Mortgage and the reasonable costs of Lender in
connection with any inspection of the Leased Premises, and (K) any other
items specifically required to be paid by Tenant under this Lease, which
costs and expenses shall include, without limitation, all Costs, judgments,
settlement amounts, Impositions, insurance premiums, appraisal fees, the
cost of performing and reporting any Site Assessment if an Environmental
Violation is found, the cost of monitoring compliance with the provisions
of Paragraph 10(j) hereof, including the reasonable cost of consultants
retained by Landlord and Lender, the cost of curing any Environmental
Violation, and the cost of complying with all Legal Requirements, fines,
penalties and interest;
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(ii) after the date all or any portion of any installment of Basic
Rent is due and not paid, an amount ("Late Charge") equal to three percent
(3%) of the amount of such unpaid installment or portion thereof; provided,
however, that with respect to the first two late payments of all or any
portion of any installment of Basic Rent in any consecutive twelve (12)
month period the Late Charge shall not be due and payable unless the Basic
Rent has not been paid within three (3) business days following receipt by
Tenant of written notice that such installment has not been received;
(iii) a sum equal to any additional sums (including any late charge,
default penalties, interest and fees of Lender's counsel) which are payable
by Landlord to any Lender under any Note by reason of Tenant's late payment
or non-payment of Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate per annum (the "Default Rate") equal to the
default interest rate per annum in the Note on the following sums until
paid in full: (A) all overdue installments of Basic Rent from the
respective due dates thereof, (B) all overdue amounts of Additional Rent
relating to obligations which Landlord shall have paid on behalf of Tenant,
from the date Tenant receives notice of payment thereof by Landlord, and
(C) all other overdue amounts of Additional Rent, from the date that Tenant
receives notice any such amount has become overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent referred to in
Paragraph 7(a)(i) when the same shall become due, provided that amounts which
are billed to Landlord or any third party, but not to Tenant, shall be paid
within five (5) days after Landlord's demand for payment thereof, and (ii) any
other Additional Rent, immediately upon Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and
(iv) exceed the maximum amount permitted by applicable Law.
8. NET LEASE; NON-TERMINABILITY.
(a) This is a net lease and all Monetary Obligations shall be paid without
notice or demand and without set-off, counterclaim, recoupment, abatement,
suspension, deferment, diminution, deduction, reduction or defense, except as
specifically provided herein to the contrary (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this Lease and the
rights of Landlord and the obligations of Tenant
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hereunder shall not be affected by any event or for any reason, including the
following: (i) any damage to or theft, loss or destruction of any of the Leased
Premises, (ii) any Condemnation, (iii) the prohibition, limitation or
restriction of Tenant's use of any of the Leased Premises, (iv) any eviction by
paramount title or otherwise, (v) Tenant's acquisition of ownership of any of
the Leased Premises other than pursuant to an express provision of this Lease,
(vi) any default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (vii) any latent or other defect in any of
the Leased Premises, (viii) the breach of any warranty of any seller or
manufacturer of any of the Equipment, (ix) any violation of Paragraph 4(b) or
any other provision of this Lease by Landlord, (x) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up of, or other proceeding affecting Landlord, (xi) the exercise of any
remedy, including foreclosure, under any Mortgage or Assignment, (xii) any
action with respect to this Lease (including the disaffirmance hereof) which may
be taken by Landlord, any trustee, receiver or liquidator of Landlord or any
court under the Federal Bankruptcy Code or otherwise, (xiii) any interference
with Tenant's use of the Leased Premises, (xiv) market or economic changes, (xv)
the failure of Landlord to fund the Second Disbursement and/or the Third
Disbursement (as defined in the letter agreement dated August 7, 1996 between
Landlord and Tenant) or (xvi) any other cause, whether similar or dissimilar to
the foregoing, any present or future Law to the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and independent
covenants and agreements, all Monetary Obligations shall continue to be payable
in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and
the obligations of Tenant hereunder shall continue unaffected unless the
requirement to pay or perform the same shall have been terminated pursuant to an
express provision of this Lease. All Rent payable by Tenant hereunder shall
constitute "rent" for all purposes (including Section 502(b)(6) of the
Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant shall have no
right and hereby waives all rights which it may have under any Law (i) to quit,
terminate or surrender this Lease or any of the Leased Premises, or (ii) to any
Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, not later than the due date thereof, or at least five (5)
days prior to the day before any fine, interest, penalty or cost may be added
thereto or imposed, or at least five (5) days prior to the day any lien may be
filed for the non-payment thereof (if such day is used to determine the due date
of the respective item), pay and discharge all taxes (including real and
personal property, franchise, sales and rent
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taxes), all charges for any easement or agreement maintained for the benefit of
any of the Leased Premises, all assessments and levies, all permit, inspection
and license fees, all rents and charges for water, sewer, utility and
communication services relating to the any of Leased Premises, all ground rents
and all other public charges whether of a like or different nature, even if
unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii)
any of the Leased Premises, including any increases in real estate taxes from a
reassessment of the Leased Premises by the applicable taxing authority as a
result of any transfer of the Leased Premises to any affiliate of Landlord or
Landlord's parent of which Landlord's parent directly or indirectly owns
beneficially more than fifty percent (50%) or to Landlord's parent so long as in
any such case Tenant has an opportunity to review and comment upon the structure
of such transfer prior to the occurrence thereof, (iii) Landlord as a result of
or arising in respect of the acquisition, ownership, occupancy, leasing, use,
possession or sale of any of the Leased Premises, any activity conducted on any
of the Leased Premises, or the Rent, or (iv) any Lender by reason of any Note,
Mortgage, Assignment or other document evidencing or securing a Loan and which
(as to this clause (iv)) Landlord has agreed to pay (collectively, the
"Impositions"); provided, that nothing herein shall obligate Tenant to pay (A)
income, excess profits or other taxes of Landlord (or Lender) which are
determined on the basis of Landlord's (or Lender's) net income or net worth
(unless such taxes are a substitute for any then existing tax, assessment or
other charge upon or with respect to the Leased Premises which, if it were in
effect, would be payable by Tenant under the provisions hereof or by the terms
of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift or similar tax imposed on Landlord or Lender, (C) any capital
gains tax imposed on Landlord in connection with the sale of the Leased Premises
to any Person or (D) any increases in real estate taxes from a reassessment of
the Leased Premises by the applicable taxing authority as a result of any sale
or transfer of the Leased Premises except as provided in (ii) above. If any
Imposition may be paid in installments without interest or penalty, Tenant shall
have the option to pay such Imposition in installments; in such event, Tenant
shall be liable only for those installments which accrue or become due and
payable during the Term. Tenant shall prepare and file all tax reports required
by governmental authorities which relate to the Impositions. Tenant shall
deliver to Landlord (1) copies of all settlements and notices pertaining to the
Impositions which may be issued by any governmental authority within ten (10)
days after Tenant's receipt thereof, (2) receipts for payment of all taxes
required to be paid by Tenant hereunder within thirty (30) days after the due
date thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor. Any refunds of Impositions
attributable to any period during the Term shall be payable to, and shall be the
property of, Tenant.
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(b) Landlord shall have the right at any time following the occurrence and
during the continuation of an Event of Default to require Tenant to pay to
Landlord (or Lender if Landlord is so required pursuant to the terms of the
Mortgage) an additional monthly sum (the "Escrow Payments") sufficient to pay
the Escrow Charges (as hereinafter defined) as they become due. As used herein,
"Escrow Charges" shall mean real estate taxes on the Leased Premises or payments
in lieu thereof and premiums on any insurance required by this Lease. Landlord
shall determine the amount of the Escrow Charges and of each Escrow Payment. As
long as the Escrow Payments are being held by Landlord and not Lender, or if
Lender shall hold the Escrow Payments and shall so agree, the Escrow Payments
shall not be commingled with other funds of Landlord or other Persons and
interest shall accrue thereon for the benefit of Tenant, from the date such
monies are received by or on behalf of Landlord to the date such monies are
disbursed to pay Escrow Charges. Landlord or Lender, as the case may be, shall
apply the Escrow Payments to the payment of the Escrow Charges in such order or
priority as Landlord shall determine or as required by law. If at any time the
Escrow Payments theretofore paid to Landlord or Lender, as the case may be,
shall be insufficient for the payment of the Escrow Charges, Tenant, within ten
(10) days after Landlord's demand therefor, which shall include written
verification of such deficiency, shall pay the amount of the deficiency to
Landlord.
10. Compliance with Laws and Easement Agreements; Environmental Matters.
(a) Tenant shall, at its expense, be in material compliance with and
conform to, and cause any other Person occupying any part of the Leased Premises
to be in material compliance with and conform to, all Insurance Requirements and
Legal Requirements (except that Tenant and the Leased Premises shall be in
absolute compliance with all applicable Environmental Laws). Tenant shall not at
any time (i) cause, permit or suffer to occur any material Environmental
Violation or (ii) permit any sublessee, assignee or other Person occupying the
Leased Premises under or through Tenant to cause, permit or suffer to occur any
material Environmental Violation and, at the request of Landlord or Lender,
Tenant shall promptly remediate any existing Environmental Violation, however
immaterial.
(b) Tenant, at its sole cost and expense, will at all times promptly and
faithfully abide by, discharge and perform all of the covenants, conditions and
agreements contained in any Easement Agreement on the part of Landlord or the
occupier to be kept and performed thereunder. Tenant will not alter, modify,
amend or terminate any Easement Agreement, give any consent or approval
thereunder, or enter into any new Easement Agreement without, in each case, the
prior written consent of Landlord, which consent shall not be unreasonably
withheld. Any such new
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Easement Agreement shall automatically be a Permitted Encumbrance.
(c) Not more frequently than once every three (3) years and at any other
time that, in the opinion of Landlord or Lender, a reasonable basis exists to
believe that an Environmental Violation of an Environmental Law or any other
material Environmental Violation exists or a condition that could be reasonably
expected to result in an Environmental Violation exists, upon prior written
notice from Landlord or Lender, Tenant shall permit such persons as Landlord or
Lender may designate ("Site Reviewers") to visit the Leased Premises at
reasonable times agreed to by Tenant and perform, as agents of Tenant,
environmental site investigations and assessments ("Site Assessments") on the
Leased Premises for the purpose of investigating the Leased Premises. In
addition to the permitted Site Assessments, the Site Reviewers shall have the
right to obtain from Tenant information reasonably necessary to update any Site
Assessment. Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be reasonably
necessary; in the opinion of the Site Reviewers, to conduct the Site
Assessments. Tenant shall supply to the Site Reviewers such historical and
operational information regarding the Leased Premises as may be reasonably
requested by the Site Reviewers to facilitate the Site Assessments, and shall
make available for meetings with the Site Reviewers appropriate personnel
having knowledge of such matters. Landlord shall pay the cost of any such Site
Assessment unless an Environmental Violation is found, in which event the cost
shall be paid by Tenant.
(d) If an Environmental Violation occurs or is found to exist and, in
Landlord's reasonable judgment, the cost of remediation of the same is likely to
exceed $250,000, or, if an Event of Default under Paragraph 22(a)(i) hereof has
occurred during the immediately preceding twelve (12) month period, $50,000,
Tenant shall provide to Landlord, and Lender within ten (10) days after
Landlord's request therefor, adequate financial assurances that Tenant will
effect such remediation in accordance with applicable Environmental Laws.
(e) Notwithstanding any other provision of this Lease, if an Environmental
Violation occurs or is found to exist that would render the Leased Premises
untenantable or unmarketable and the Term would otherwise terminate or expire,
then, at the option of Landlord, the Term shall be automatically extended beyond
the date of termination or expiration and this Lease shall remain in full force
and effect beyond such date until the earlier to occur of (i) the completion of
all remedial action in accordance with applicable Environmental Laws or (ii) the
date specified in a written notice from Landlord to Tenant terminating this
Lease.
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(f) If Tenant fails to comply with (or promptly commence to comply with
and diligently pursue to completion) any requirement of any Environmental Law in
connection with any Environmental Violation which occurs or is found to exist,
then after ten (10) days prior notice to Tenant (except that no notice shall be
required if any emergency exists) Landlord shall have the right (but no
obligation) to take any and all actions as Landlord shall deem necessary or
advisable in order to cure such Environmental Violation.
(g) Tenant shall notify Landlord and Lender immediately after becoming
aware of any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord and Lender immediately upon receipt thereof copies of all
orders, claims, reports, notices, permits, applications or other communications
relating to any such violation or noncompliance.
(h) All future leases, subleases or concession agreements relating to the
Leased Premises entered into by Tenant shall contain covenants of the other
party thereto which are comparable to the covenants contained in this Paragraph
10.
(i) Tenant shall not release The Perkin-Elmer Corporation ("PE") from any
of its obligations under the Asset Purchase Agreement, dated March 16, 1990,
between Tenant and PE that relate to clause (f) of Section 6.2 or otherwise
amend said clause (f) or any other applicable provision without having obtained
the prior written approval of Landlord and Lender. Tenant represents and
warrants to Landlord that the indemnity under clause (f) of Section 6.2 includes
1, 1-dichloroethene on the Lease Premises.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit to be
created or to remain and shall promptly discharge or remove any lien, levy or
encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL PROMPTLY, POST
ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.
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(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this
Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased Premises and the
Adjoining Property in substantially as good repair and appearance as they are in
on the date hereof, ordinary wear and tear excepted, and fit to be used for
their intended use in accordance with the practices generally recognized as then
acceptable by other companies in its industry, and, in the case of the
Equipment, in as good mechanical condition as it was on the later of the date
hereof or the date of its installation, except for ordinary wear and tear.
Tenant shall take every other reasonable action necessary or appropriate for the
preservation and safety of the Leased Premises. Tenant shall promptly make all
Alterations of every kind and nature, whether foreseen or unforeseen, which may
be required to comply with the foregoing requirements of this Paragraph 12(a).
Landlord shall not be required to make any Alteration, whether foreseen or
unforeseen, or to maintain any of the Leased Premises or Adjoining Property in
any way, and Tenant hereby expressly waives any right which may be provided for
in any Law now or hereafter in effect to make Alterations at the expense of
Landlord or to require Landlord to make Alterations. Any Alteration made by
Tenant pursuant to this Paragraph 12 shall be made in conformity with the
provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall (i) encroach
upon any setback or any property, street or right-of-way adjoining the Leased
Premises, (ii) violate the provisions of any restrictive covenant affecting the
Leased Premises, (iii) hinder or obstruct any easement or right-of-way to which
any of the Leased Premises is subject or (iv) impair the rights of others in, to
or under any of the foregoing, Tenant shall, promptly after receiving a notice
thereof, correct such condition from the party entitled to make such demand,
either (A) obtain from all necessary parties waivers or settlements of all
claims, liabilities and damages resulting from each such encroachment,
violation, hindrance, obstruction or impairment, whether the same shall affect
Landlord, Tenant or both, or (B) take such action as shall be necessary to
remove all such encroachments, hindrances or obstructions and to end all such
violations or impairments, including, if necessary, making Alterations.
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13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the prior written
consent of Landlord and Lender, to make (i) non-structural Alterations to the
Leased Premises, (ii) structural Alterations or a series of related structural
Alterations that, as to any such Alterations or series of related Alterations,
do not cost in excess of $1,000,000 or, with respect to Alterations to the
"clean room" test area in Building Three and "process laboratory" in Building
Two, $2,500,000, (iii) to install Equipment in the Improvements or accessions to
the Equipment that, as to such Equipment or accessions, do not cost in excess of
$1,000,000 or, with respect to Alterations to the "clean room" test area in
Building Three and "process laboratory" in Building Two, $2,500,000, and (iv)
the Alterations identified in Schedule 2 attached hereto so long as at the time
of construction or installation of any such Equipment or Alterations no Event of
Default exists and the value and utility of the Leased Premises is not
diminished thereby. If the cost of any structural Alterations, series of related
structural Alterations, Equipment or accessions thereto is in excess of
$1,000,000 or, with respect to Alterations to the "clean room" test area in
Building Three and "process laboratory" in Building Two, $2,500,000, the prior
written approval of Lender shall be required, such approval not to be
unreasonably withheld, delayed or conditioned. Tenant shall not construct upon
the Land any additional buildings without having first obtained the prior
written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph 13 or
Paragraph 36 or as required by Paragraph 12 or 17 (such Alterations and actions
being hereinafter collectively referred to as "Work"), whether or not Landlord's
consent is required, then (i) the market value of the Leased Premises shall not
be lessened by any such Work or its usefulness impaired, (ii) all such Work
shall be performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal Requirements,
(iv) all such Work shall comply with the Insurance Requirements, (v) if any such
Work involves the replacement of Equipment or parts thereto, all replacement
Equipment or parts shall have a value and useful life so as not to diminish the
value of the Improvements, (vi) Tenant shall promptly discharge or remove all
liens filed against any of the Leased Premises arising out of such Work, (vii)
Tenant shall procure and pay for all permits and licenses required in connection
with any such Work, (viii) all such Work that constitutes part of the Leased
Premises shall be the property of Landlord and shall be subject to this Lease,
and Tenant shall execute and deliver to Landlord any document requested by
Landlord evidencing the assignment to Landlord of all estate, right, title and
interest (other than the leasehold estate created hereby) of Tenant or any other
Person thereto or therein, and (ix) Tenant shall comply, to the extent requested
by Landlord or required by this Lease, with the
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<PAGE> 26
provisions of Paragraph 19(a), whether or not such Work involves restoration of
the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of this Lease,
Tenant shall not be required to (a) pay any Imposition, (b) comply with any
Legal Requirement, (c) discharge or remove any lien referred to in Paragraph 11
or 13 or (d) take any action with respect to any encroachment, violation,
hindrance, obstruction or impairment referred to in Paragraph 12(b) (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such contest no Event of
Default exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused thereby,
or the extent of its or Landlord's liability therefor by appropriate proceedings
which shall operate during the pendency thereof to prevent or stay (i) the
collection of, or other realization upon, the Permitted Violation so contested,
(ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to
satisfy or to pay any damages caused by any Permitted Violation, (iii) any
material interference with the use or occupancy of any of the Leased Premises,
(iv) any interference with the payment of any Rent, (v) the cancellation or
increase in the rate of any insurance policy or a statement by the carrier that
coverage will be denied or (vi) the enforcement or execution of any injunction,
order or Legal Requirement with respect to the Permitted Violation. Tenant shall
provide Landlord security which is satisfactory, in Landlord's reasonable
judgment, to assure that such Permitted Violation is corrected, including all
Costs, interest and penalties that may be incurred or become due in connection
therewith. While any proceedings which comply with the requirements of this
Paragraph 14 are pending and the required security (if any) is held by Landlord,
Landlord shall not have the right to correct any Permitted Violation thereby
being contested unless Landlord is required by law to correct such Permitted
Violation and Tenant's contest does not prevent or stay such requirement as to
Landlord. Each such contest shall be promptly and diligently prosecuted by
Tenant to a final conclusion, except that Tenant, so long as the conditions of
this Paragraph 14 are at all times complied with, has the right to attempt to
settle or compromise such contest through negotiations. Tenant shall pay any and
all losses, judgments, decrees and Costs in connection with any such contest and
shall, promptly after the final determination of such contest, fully pay and
discharge the amounts which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith, together with all
penalties, fines, interest and Costs thereof or in connection therewith, and
perform all acts the performance of which shall be ordered or decreed as a
result thereof. No such contest shall subject Landlord to the risk of any civil
or criminal liability.
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15. Indemnification.
(a) Tenant shall pay, protect, indemnify, save and hold harmless Landlord,
Lender and all other Persons described in Paragraph 30 (each an "Indemnitee")
from and against any and all liabilities, losses, damages (including punitive
damages), penalties, Costs, causes of action, suits, claims, demands or
judgments of any nature whatsoever, howsoever caused, without regard to the form
of action and whether based on strict liability, gross negligence, negligence or
any other theory of recovery at law or in equity, arising from (i) any matter
pertaining to the acquisition (or the negotiations leading thereto), ownership,
use, non-use, occupancy, operation, condition, design, construction,
maintenance, repair or restoration of the Leased Premises or Adjoining Property,
(ii) any casualty in any manner arising from the Leased Premises or Adjoining
Property, whether or not Landlord has or should have knowledge or notice of any
defect or condition causing or contributing to said casualty, (iii) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance or
(iv) any alleged, threatened or actual Environmental Violation, however
immaterial, including (A) liability for response costs and for costs of removal
and remedial action incurred by the United States Government, any state or local
governmental unit or any other Person, or damages from injury to or destruction
or loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any
successor section or act or provision of any similar state or local Law, (B)
liability for costs and expenses of abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or property
damage arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of a dangerous activity, but excluding in all cases any and all liabilities,
losses, damages (including punitive damages), penalties, costs, causes of
action, suits, claims, demands or judgments caused by the gross negligence or
willful misconduct of any Indemnitee.
(b) In case any action or proceeding is brought against any Indemnitee by
reason of any such claim, such Indemnitee may either (i) retain its own counsel
and defend such action (it being understood that Tenant may employ counsel of
its choice to monitor the defense of any such action) or (ii) notify Tenant to
resist or defend such action or proceeding by retaining counsel reasonably
satisfactory to such Indemnitee, and such Indemnitee will cooperate and assist
in the defense of such action or proceeding if reasonably requested so to do by
Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall survive any
termination or expiration of this Lease.
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16. Insurance.
(a) Tenant shall maintain the following insurance on or in connection with
the Leased Premises:
(i) Insurance against physical loss or damage to the Improvements and
Equipment as provided under a standard "All Risk" property policy including
but not limited to flood (if the Leased Premises is in a flood zone) in
amounts not less than the actual replacement cost of the Improvements and
Equipment. Such policies shall contain replacement cost and agreed amount
endorsements and shall contain deductibles not more than $50,000.00 per
occurrence. (B) Tenant shall maintain earthquake insurance for the
Improvements and Equipment in the amount of not less than $7,000,000 with a
deductible of not more than 10%, provided, however, that in the event of a
substantial change in the availability or cost of earthquake coverage
Landlord and Tenant shall in good faith negotiate a different amount or a
different deductible or other different terms of such insurance (subject to
the consent of Lender), taking into account the cost and availability of
such insurance and the objective of reasonably protecting the interests of
Landlord and Lender.
(ii) Commercial General Liability Insurance against claims for
personal and bodily injury, death or property damage occurring on, in or as
a result of the use of the Leased Premises, in an amount not less than
$15,000,000 per occurrence/annual aggregate including but not limited to
Incidental Medical Malpractice, Garagekeepers Liability, Host Liquor
Liability, Non-Owned and Hired Automobile Liability and all other coverage
extensions that are usual and customary for properties of this size and
type provided, however, that the Landlord shall have the right to require
such higher limits as may be reasonable and customary for properties of
this size and type.
(iii) Workers' Compensation Insurance covering all persons employed by
Tenant in connection with any work done on or about any of the Leased
Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu
of such Worker's Compensation Insurance, a program of self-insurance
complying with the rules, regulations and requirements of the appropriate
agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on any of the
Equipment or any other equipment on or in the Leased Premises including but
not limited to Service Interruption, Expediting Expenses, Ammonia
Contamination, Hazardous Clean-Up and Comprehensive Object Definition, in
an amount not less than $1,000,000 for damage to property, bodily injury or
death resulting from such covered perils
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<PAGE> 29
as found in a standard Comprehensive Boiler & Machinery Policy. Such
policies may contain a deductible not in excess of $50,000.
(v) Business Income/Interruption Insurance to include Loss of Rents on
an Actual Loss Sustained basis with a period of indemnity not less than one
year from the time of loss. Such insurance shall name Landlord and Lender
as "loss payee" solely with respect to Rent payable to or for the benefit
of Landlord under this Lease.
(vi) During any period in which substantial Alterations at the Leased
Premises are being undertaken, Builder's Risk insurance covering the total
completed value including any "soft costs" with respect to the Improvements
being altered or repaired (on a completed value, non-reporting basis),
replacement cost of work performed and equipment, supplies and materials
furnished in connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such other
endorsements as Landlord may reasonably require and General Liability,
Worker's Compensation and Automobile Liability Insurance with respect to
the Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with respect to any
insurance required pursuant to this Paragraph 16, including without
limitation amounts of coverage, deductibles, form of mortgagee clause) on
or in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size and use to the
Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written by companies
which have a Best's rating of A:X or above and are admitted in, and approved to
write insurance policies by, the State Insurance Department for the State. The
insurance policies (i) shall be for such terms as Landlord may reasonably
approve, (ii) shall be in amounts sufficient at all times to satisfy any
coinsurance requirements thereof and (iii) shall (except for the worker's
compensation insurance referred to in Paragraph 16(a)(iii) hereof) name
Landlord, Tenant and Lender as additional insureds or loss payees, as their
respective interests may appear. It said insurance or any part thereof shall
expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall
immediately obtain new or additional insurance reasonably satisfactory to
Landlord.
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(c) Each policy required by any provision of Paragraph 16(a), except clause
(iii) thereof, shall provide that it may not be canceled except after sixty (60)
days' prior notice to Landlord and Lender. Each such policy shall also provide
that any loss otherwise payable thereunder shall be payable notwithstanding (i)
any act or omission of Landlord or Tenant which might, absent such provision,
result in a forfeiture of all or a part of such insurance payment, (ii) the
occupation or use of any of the Leased Premises for purposes more hazardous than
those permitted by the provisions of such policy, (iii) any foreclosure or other
action or proceeding taken by Lender pursuant to any provision of the Mortgage,
Note, Assignment or other document evidencing or securing the Loan upon the
happening of an event of default therein or (iv) any change in title to or
ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums for the insurance
required by Paragraph 16(a), shall renew or replace each policy and deliver to
Landlord evidence of the payment of the full premium therefor or installment
then due prior to the expiration date of such policy, and shall promptly deliver
to Landlord each original policy or a duplicate thereof.
(e) Anything in this Paragraph 16 to the contrary notwithstanding, any
insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be
carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16 and
provided further that such policies shall provide for a reserved amount
thereunder with respect to the Leased Premises so as to assure that the amount
of insurance required by this Paragraph 16 will be available notwithstanding any
losses with respect to other property covered by such blanket policies. The
amount of the total insurance allocated to the Leased Premises, which amount
shall be not less than the amounts required pursuant to this Paragraph 16, shall
be specified either (i) in each such "blanket" or umbrella policy or (ii) in a
written statement, which Tenant shall deliver to Landlord, from the insurer
thereunder. The original or a certified copy of each such "blanket" or umbrella
policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to (i) all provisions of
each insurance policy required by this Paragraph 16 and (ii) all requirements of
the insurers thereunder applicable to Landlord, Tenant or any of the Leased
Premises or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration or repair of any of the Leased Premises, even if such
compliance necessitates Alterations or results in interference with the use or
enjoyment of any of the Leased Premises.
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(g) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as loss payee or additional
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance and shall deliver to
Landlord copies of the policies therefor.
(h) All policies shall contain effective waivers by the carrier against all
claims for insurance premiums against Landlord and shall contain full waivers of
subrogation against the Landlord.
(i) All proceeds of any insurance required under Paragraph 16(a) shall be
payable as follows:
(i) Except for proceeds payable to a Person other than Landlord,
Tenant or Lender and proceeds of less than $500,000, all proceeds of
insurance required under clauses (ii), (iii), (iv) and (vii) of Paragraph
16(a) and proceeds attributable to the general liability coverage
provisions of Builder's Risk insurance under clause (vi) of Paragraph 16(a)
shall be payable to Landlord or, if required by the Mortgage or requested
by Lender pursuant to the Mortgage, to Lender. All proceeds of insurance
required under clause (v) of Paragraph 16(a) shall be payable to Landlord
or, if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required under clause (i) of Paragraph
16(a) and proceeds attributable to Builder's Risk insurance (other than its
general liability coverage provisions) under clause (vi) of Paragraph 16(a)
shall be payable as follows:
(A) In the event of a Casualty that is a Termination Event for
which a Termination Notice has been given under Paragraph 18(a), the
proceeds shall be payable to Landlord or, if required by the Mortgage
or requested by Lender pursuant to the Mortgage, to Lender. Landlord
shall retain or apply the Net Award in accordance with the provisions
of Paragraphs 18 and 20.
(B) In the event of a Casualty that is not a Termination Event
where the proceeds exceed $500,000, the proceeds shall be payable to
Landlord or, if required by the Mortgage or requested by Lender
pursuant to the Mortgage, to Lender. Landlord shall apply the Net
Award in accordance with the provisions of Paragraph 19.
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<PAGE> 32
(C) In the event of a Casualty that is not a Termination
Event where the proceeds are equal to or less than $500,000 and
unless an Event of Default exists and is continuing, or if a fact
or condition exists which with the lapse of time or giving of
notice, of both, would in Landlord's judgment constitute an Event
of Default, at the time such proceeds are paid, the Net Award
shall be payable to Tenant. Tenant shall apply the Net Award to
restoration of the Leased Promises in accordance with the
applicable provisions of this Lease.
(iii) In the event that Tenant is listed as a payee on a check
from an insurance carrier for insurance proceeds which subparagraphs
(i) and (ii) provide are to be payable to Landlord, Lender or another
party or parties, Tenant shall cooperate by promptly endorsing said
check over to the party to whom the proceeds are to be payable under
subparagraphs (i) or (ii). Tenant hereby appoints each of Landlord or
Lender as Tenant's attorneys-in-fact to endorse any such check.
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17. Casualty and Condemnation.
(a) If any Casualty occurs the insurance proceeds for which is reasonably
estimated by Tenant to be equal to or in excess of Fifty Thousand Dollars
($50,000), Tenant shall give Landlord and Lender immediate notice thereof. So
long as no Event of Default exists Tenant is hereby authorized to adjust,
collect and compromise all claims under any of the insurance policies required
by Paragraph 16(a) (except public liability insurance claims payable to a Person
other than Tenant, Landlord or Lender) and to execute and deliver on behalf of
Tenant all necessary proofs of loss, receipts, vouchers and releases required by
the insurers and Landlord shall have the right to join with Tenant therein. Any
adjustment, settlement or compromise of any such claim in excess of $500,000
shall be subject to the prior written approval of Landlord, which shall not be
unreasonably withheld, conditioned or delayed and Landlord shall have the right
to prosecute or contest, or to require Tenant to prosecute or contest, any such
claim, adjustment, settlement or compromise. If an Event of Default exists,
Tenant shall not be entitled to adjust, collect or compromise any such claim or
to participate with Landlord in any adjustment, collection and compromise of the
Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the
request of Landlord, all such proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under said
policies in excess of $500,000 and return of unearned premiums, directly to
Landlord or, if required by the Mortgage or requested by Lender pursuant to the
Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby
appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse
any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be
extended to Lender if and to the extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation Notice, shall notify
Landlord and Lender thereof. So long as no Event of Default exists, Tenant is
authorized to collect, settle and compromise the amount of any Net Award and
Landlord shall have the right to join with Tenant herein. If an Event of Default
exists, Landlord shall be authorized to collect, settle and compromise the
amount of any Net Award and Tenant shall not be entitled to participate with
Landlord in any Condemnation proceeding or negotiations under threat thereof or
to contest the Condemnation or the amount of the Net Award therefor. No
agreement with any condemnor in settlement or under threat of any Condemnation
shall be made by Tenant without the written consent of Landlord which shall not
be unreasonably withheld, conditioned or delayed. Subject to the provisions of
this Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or
payment to which Tenant is or may be entitled by reason of any Condemnation,
whether the same shall be paid or payable for Tenant's leasehold interest
hereunder or otherwise; but nothing in this Lease shall impair Tenant's right to
any
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award or payment on account of Tenant's trade fixtures, equipment or other
tangible property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.
(c) If any Partial Casualty (whether or not insured against) or Partial
Condemnation shall occur, this Lease shall continue, notwithstanding such event,
and there shall be no abatement or reduction of any Monetary Obligations, except
as provided in Paragraph 17(d) and 19(c). Promptly after such Partial Casualty
or Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence
and diligently continue to restore the Leased Premises as nearly as practicable
to their value, condition and character immediately prior to such event. Upon
the receipt by Landlord of the entire Net Award of such Partial Casualty or
Partial Condemnation, Landlord shall make such Net Award available to Tenant for
restoration in accordance with and subject to the provisions of Paragraph 19(a).
If any Casualty or Condemnation which is not a Partial Casualty or Partial
Condemnation shall occur, Tenant shall comply with the terms and conditions of
Paragraph 18.
(d) In the event of a Requisition of any of the Leased Premises, if any Net
Award payable by reason of such Requisition is retained by Landlord or Lender,
each installment of Basic Rent payable on or after the date on which the Net
Award is paid to Landlord shall be reduced by a fraction, the denominator of
which shall be the total amount of all Basic Rent due from such date to and
including the last day such Requisition remains in effect and the numerator of
which shall be the amount of such Net Award retained by Landlord. Upon the
expiration of the Term, any portion of such Net Award which shall not have been
previously credited to Tenant shall be retained by Landlord.
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18. Termination Events.
(a) If (i) the Leased Premises shall be taken by a Taking or (ii) any
substantial portion of the Leased Premises shall be taken by a Taking or all or
any substantial portion of the Leased Premises shall be damaged or destroyed by
a Casualty and, in such case, Tenant certifies to Landlord that it will forever
abandon operations at the Leased Premises (each of the events described in the
above clauses (i) and (ii) shall hereinafter be referred to as a "Termination
Event"), then (x) in the case of (i) above, Tenant shall be obligated, within
thirty (30) days after Tenant receives a Condemnation Notice and (y) in the case
of (ii) above, Tenant shall have the option, within thirty (30) days after
Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as
the case may be, to give to Landlord written notice of the Tenant's option to
terminate this Lease (a "Termination Notice") in the form described in Paragraph
18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's intention to
terminate this Lease on the first Basic Rent Payment Date which occurs at least
ninety (90) days after the Fair Market Value Date (the "Termination Date"), (ii)
a binding and irrevocable offer of Tenant to purchase the Leased Premises for an
amount equal to the Termination Amount and (iii) if the Termination Event is an
event described in Paragraph 18(a)(ii), the certification described therein and
a certified resolution of the Board of Directors of Tenant authorizing the same.
Promptly upon the delivery to Landlord of a Termination Notice, Landlord and
Tenant shall commence to determine the Fair Market Value of the Leased Premises.
(c) If Landlord shall reject such offer to purchase the Leased Premises by
written notice to Tenant (a "Rejection"), which Rejection shall contain the
written consent of Lender, not later than thirty (30) days following the Fair
Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen on or prior
to the Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on which
this Lease may terminate to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall promptly vacate and shall have no further right, title or interest in or
to any of the Leased Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the contrary hereinabove contained, if
Tenant shall have received a Rejection and, on the date when this Lease would
otherwise terminate as provided above, Landlord shall not have received the full
amount of the Net Award payable by reason of the applicable Termination Event,
then on the Termination Date
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Tenant shall assign to Landlord all of its right, title and interest, it any, in
and to the Net Award.
(d) Unless Tenant shall have received a Rejection not later than the
thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is accepted by
Landlord then, on the Termination Date, Tenant shall pay to Landlord (or Lender
if the Mortgage requires or permits Lender to so require) the Termination Amount
and all Remaining Obligations and, if requested by Tenant, Landlord shall (i)
convey to Tenant the Leased Premises or the remaining portion thereof, if any,
and (ii) pay to or assign to Tenant its entire interest in and to the Net Award,
all in accordance with Paragraph 20.
19. Restoration; Reduction of Rent.
(a) So long as no Event of Default exists, any Net Award up to and
including $500,000 shall be paid directly to Tenant and Tenant shall restore the
Leased Premises in accordance with the requirements of Paragraph 13(b) of this
Lease. Any Net Award in excess of $500,000 shall be made available by Landlord
to Tenant for the restoration of any of the Leased Premises, and Landlord (or
Lender if required by any Mortgage or if the Mortgage permits Lender to so
require) shall hold such Net Award in a fund (the "Restoration Fund") and
disburse amounts from the Restoration Fund only in accordance with the following
conditions:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the restoration shall
have been approved by Landlord, such approval not to be unreasonably
withheld, conditioned or delayed and (B) Landlord and Lender shall, upon
reasonable request and based upon a review of the contractor's and prime
subcontractors' credit, be provided with acceptable performance bonds which
insure satisfactory completion of the restoration, are in an amount and
form and have a surety acceptable to Landlord, and name Landlord and Lender
as additional dual obligees;
(ii) at the time of any disbursement, no Event of Default shall exist
and no mechanics' or materialmen's liens shall have been filed against any
of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time in an amount not
exceeding the cost of the work completed since the last disbursement, upon
receipt of (A) satisfactory evidence, including architects' certificates,
of the stage of completion, the estimated total cost of completion and
performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of
liens, (C)
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contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory
bringdown of title insurance and (E) other evidence of cost and payment so
that Landlord and Lender can verify that the amounts disbursed from time
to time are represented by work that is completed, in place and free and
clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president or the
chief financial officer of Tenant, describing the work for which payment
is requested, stating the cost incurred in connection therewith, stating
that Tenant has not previously received payment for such work and, upon
completion of the work, also stating that the work has been fully
completed and complies with the applicable requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the restoration fund
until the restoration is fully completed;
(vi) if the Restoration Fund is held by Lender it may be commingled
with Lender's other funds and shall bear interest unless otherwise
required by Lender; if it is held by Landlord it shall be commingled with
Landlord's other funds and shall bear interest at the best available
interest rate; and
(vii) such other reasonable conditions to insure timely, lien free
completion of the restoration as Landlord or Lender may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as determined by Landlord or if required by a Mortgage or by
Lender pursuant to the terms of a Mortgage, to Lender, exceeds the amount of the
Net Award available for such restoration, the amount of such excess shall, upon
demand by Landlord, be paid by Tenant to Landlord or if required by a Mortgage
or by Lender pursuant to the terms of a Mortgage, to Lender to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.
(c) if any sum remains in the Restoration Fund after completion of the
restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum (the
"Remaining Sum") shall be retained by Landlord or, if required by a Note or
Mortgage or by Lender pursuant to the terms of a Note or Mortgage, paid by
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Landlord to a Lender. If the Remaining Sum is (i) retained by Landlord, each
installment of Basic Rent payable on or after the Retention Date shall be
reduced by a fraction, the denominator of which shall be the total amount of all
Basic Rent due from such date to and including the last Basic Rent Payment Date
for the then existing Term and the numerator of which shall be the Remaining
Sum, or (ii) paid to Lender, then each installment of Basic Rent thereafter
payable shall be reduced in the same amount as payments are reduced under any
Note as if the Loan were reamortized to reflect such payment, in each case until
such Remaining Sum has been applied in full or until the Term has expired,
whichever occurs first. Landlord agrees that if the terms of a Note or Mortgage
permit partial prepayment of the principal balance of the Loan without premium
or penalty and, in such event, require the Lender to thereupon reamortize the
Loan, Landlord shall pay any Remaining Sum to Lender as a partial prepayment of
the Loan and clause (ii) of this Paragraph 19(c) shall apply. Upon the
expiration of the Term, any portion of the Remaining Sum which has not been so
applied shall be retained by Landlord.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to any provision
of this Lease, Landlord need not convey any better title thereto than that which
was conveyed to Landlord, and Tenant shall accept such title, subject, however,
to the Permitted Encumbrances and to all other liens, exceptions and
restrictions on, against or relating to any of the Leased Premises and to all
applicable Laws, but free of the lien of and security interest created by any
Mortgage or Assignment and liens, exceptions and restrictions on, against or
relating to the Leased Premises which have been created by or resulted solely
from acts of Landlord after the date of this Lease, unless the same are
Permitted Encumbrances or customary utility easements benefiting the Leased
Premises or were created with the concurrence of Tenant or as a result of a
default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased Premises
pursuant to any provision of this Lease (any such date the "Purchase Date"),
through an appropriate escrow, Tenant shall pay to Landlord, or to any Person to
whom Landlord directs payment, the Relevant Amount therefor specified herein, in
Federal Funds, less any credit of the Net Award received and retained by
Landlord or a Lender allowed against the Relevant Amount, and Landlord shall
deliver to Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Award not yet received by Landlord or a
Lender) then required to be sold by Landlord to Tenant pursuant to this Lease
and (iii) any Net Award received by Landlord, not credited to Tenant
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against the Relevant Amount and required to be delivered by Landlord to Tenant
pursuant to this Lease; provided, that if any Monetary Obligations remain
outstanding on such date, then Landlord may deduct from the Net Award the amount
of such Monetary Obligations; and further provided, that if any event has
occurred which, in Landlord's reasonable judgment, is likely to subject any
Indemnitee to any liability which Tenant is required to indemnify against
pursuant to Paragraph 15, then an amount shall be deducted from the Net Award
which, in Landlord's reasonable judgment, is sufficient to satisfy such
liability, which amount shall be deposited in an escrow account with a financial
institution reasonably satisfactory to Landlord and Tenant on terms reasonably
satisfactory to Landlord and Tenant pending resolution of such matter. If on the
Purchase Date any Monetary Obligations remain outstanding and no Net Award is
payable to Tenant by Landlord or the amount of such Net Award is less than the
amount of the Monetary Obligations, then Tenant shall pay to Landlord on the
Purchase Date the amount of such Monetary Obligations. Upon the completion of
such purchase, this Lease and all obligations and liabilities of Tenant
hereunder shall terminate, except any Surviving Obligations.
(c) If the Tenant shall cause completion of such purchase to be delayed
after (i) the Termination Date, in the event of a purchase pursuant to Paragraph
18 or, (ii) the date scheduled for such purchase, in the event of a purchase
under any other provision of this Lease then (x) Rent shall continue to be due
and payable until completion of such purchase and (y) at Landlord's sole option,
Fair Market Value shall be redetermined and the Relevant Amount payable by
Tenant pursuant to the applicable provision of this Lease shall be adjusted to
reflect such redetermination. Landlord shall not be deemed to have caused
completion of such purchase to be delayed if it in good faith disputes the
process or methodology for determining Fair Market Value.
(d) Any prepaid Monetary Obligations paid to Landlord shall be prorated as
of the Purchase Date, and the prorated unapplied balance shall be deducted from
the Relevant Amount due to Landlord.
21. Assignment and Subletting; Prohibition against Leasehold Financing.
(a) Tenant shall have the right so long as an Event of Default has not
occurred and is continuing, upon thirty (30) days prior written notice to
Landlord and Lender, with no consent of Landlord or Lender being required or
necessary ("Preapproved Assignment") to assign this Lease to any Person
("Preapproved Assignee") that is a Subsidiary of Tenant on the date hereof or
that, after the date hereof, is a wholly-owned Subsidiary of Tenant or which,
whether or not in connection with the transfer or sale of all or substantially
all of Tenant's business, immediately following such assignment satisfies all
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published criteria necessary to obtain a publicly traded unsecured senior debt
rating of "A" or better from Moody's Investors Services, Inc. or a rating of "A"
or better from Standard & Poor's Corporation, and in the event all of such
rating agencies cease to furnish such ratings, then a comparable rating by any
rating agency reasonably acceptable to Landlord and Lender.
(b) During the Initial Term, if Tenant desires to assign this Lease to a
Person ("Non-Preapproved Assignee") who would not be a Preapproved Assignee
("Non-Preapproved Assignment") then Tenant shall, not less than ninety (90) days
prior to the date on which it desires to make a Non-Preapproved Assignment
submit to Landlord and Lender information regarding the following with respect
to the Non-Preapproved Assignee: (A) credit, (B) capital structure, (C)
management, (D) operating history, (E) proposed use of the Leased Premises and
(F) risk factors associated with the proposed use of the Leased Premises by the
Non-Preapproved Assignee, taking into account factors such as environmental
concerns, product liability and the like. Landlord and Lender shall review such
information and shall approve or disapprove the Non-Preapproved Assignee no
later than the thirtieth (30th) day following receipt of all such information,
and Landlord and Lender shall be deemed to have acted reasonably in granting or
withholding consent if such grant or disapproval is based on their review of the
above-described criteria. Notwithstanding anything to the contrary contained
herein, if the request for consent to a Non-Preapproved Assignment is in
connection with the sale by Tenant of all or substantially all of its assets,
Landlord and Lender shall be deemed to have consented to the Non-Preapproved
Assignment so long an an Event of Default has not occurred and is continuing and
if, immediately after the assignment, the Non-Preapproved Assignee has, on a pro
forma basis, an Adjusted Consolidated Net Worth (as defined in Exhibit "E") of
not less than Fifty-three Million Dollars ($53,000,000).
(c) After the Initial Term, if Tenant desires to carry out a
Non-Preapproved Assignment, then Tenant shall, not less than fifteen (15) days
prior to the date on which it desires to make such Non-Preapproved Assignment,
submit to Landlord (and Lender, if Lender's consent to the Pre-Approved
Assignment is required), reasonable information regarding the identity and
credit of the Non-Preapproved Assignee. Landlord (and Lender, if applicable)
shall review such information and shall, no later than the fifteenth (15th) day
following receipt of such information, approve or disapprove the Non-Preapproved
Assignee. Such approval shall be deemed given if the net worth of the
Non-Preapproved Assignee is greater than or equal to the net worth of the Tenant
as shown on its then most recently prepared financial statements, and otherwise
such approval shall not be unreasonably withheld, conditioned or delayed.
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(d) If Landlord and Lender withhold consent to the Non-Preapproved
Assignment and Tenant desires to complete the Non-Preapproved Assignment, Tenant
shall make a rejectable offer (the "Intended Assignment Offer") to purchase the
Leased Premises for a purchase price equal to the Offer Amount and to consummate
the purchase on the first Basic Rent Payment Date occurring thirty (30) days
after the determination of Fair Market Value (the "Intended Assignment Purchase
Date"). Notwithstanding the foregoing, if the Intended Assignment Offer is
accepted by Landlord and the Non-Preapproved Assignment occurs on a date (the
"Assignment Date") that is prior to the Intended Assignment Purchase Date, then
no later than the Assignment Date, then on the Assignment Date Tenant shall
deposit in escrow with Lender an amount (the "Deposit Amount") equal to one
hundred percent (100%) of the sum of the Acquisition Cost and any Prepayment
Premium. The Deposit Amount shall be held by and invested by Landlord and the
Deposit Amount, together with any interest earned thereon, shall be applied on
the Intended Assignment Purchase Date to payment of the Offer Amount.
(e) If Landlord shall reject the Intended Assignment Offer by notice to
Tenant, such notice to contain the written consent of Lender to such rejection,
no later than the thirtieth (30th) day following receipt of the Intended
Assignment Offer by Landlord, then this Lease shall remain in full force and
effect and Landlord and Lender shall be deemed to have consented to the
Non-Preapproved Assignment. Nothing provided herein shall constitute a waiver by
Landlord of the obligation of Tenant re comply with the requirements of this
Paragraph 21(a)(iii) if a subsequent Non-Preapproved Assignment arises. No
rejection of the Intended Assignment Offer shall be effective for any purpose
unless consented to in writing by Lender.
(f) Unless Landlord shall have rejected the Intended Assignment Offer by
the foregoing notice to Tenant not later than the thirtieth (30th) day following
receipt of information described in the foregoing Paragraph 21(a)(ii), Landlord
shall be conclusively presumed to have accepted the Intended Assignment Offer.
If the Intended Assignment Offer is accepted by Landlord, Tenant shall pay to
Landlord the Offer Amount (less the Deposit Amount and interest thereon paid to
Landlord) on the Intended Assignment Purchase Date and, provided that no Rent
or any other charge is due and unpaid under this Lease as of the Intended
Assignment Purchase Date and Tenant is otherwise in compliance with the terms of
this Lease, Landlord shall convey to Tenant the Leased Premises in accordance
with the provisions of Paragraph 20 of this Lease.
(g) Any assignment of Tenant's interest in this Lease by operation of law
as a result of any merger or consolidation by Tenant shall be governed by the
provisions of Paragraph l(c) of Exhibit "E".
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(h) Tenant shall have the right, upon thirty (30) days prior written notice
to Landlord and Lender, to enter into one or more subleases that demise, in the
aggregate, up to but not in excess of thirty-one percent (31%) of the gross
space in the Improvements with no consent or approval of Landlord being required
or necessary ("Preapproved Sublet"). Other than pursuant to a Preapproved
Sublet, during the Initial Term, no portion of the Leased Premises shall be
subleased during the Term to any other Person without the prior written consent
of Landlord and Lender, which consent shall not be unreasonably withheld or
delayed, and which consent shall be granted or withheld based on a review of the
following criteria as they relate to the proposed sublessee: (i) credit, (2)
capital structure, (3) management, (4) operating history and (5) the proposed
use of the sublet portion of the Improvements, taking into account factors
related to the proposed subtenant's use of the Leased Premises such as
environmental concerns. Landlord and Lender shall be deemed to have acted
reasonably in granting or withholding consent if such grant or disapproval is
based on their reasonable review of the above-described criteria.
(i) After the Initial Term, if Tenant desires to sublet any portion of the
Leased Premises other than as permitted by the first sentence of subparagraph
(i) above, then Tenant shall, not less than fifteen (15) days prior to the date
on which it desires to enter into such sublease, submit to Landlord regarding
the identity and credit of the proposed subtenant. Landlord shall review such
information and shall, no later than the fifteenth (15th) day following receipt
of such information, approve or disapprove the proposed sublease. Such approval
shall be deemed given if the net worth of the proposed subtenant is greater than
or equal to the net worth of the Tenant as shown on its then most recently
prepared financial statements, and otherwise such approval shall not be
unreasonably withheld, conditioned or delayed.
(j) If Tenant assigns all its rights and interest under this Lease, the
assignee under such assignment shall expressly assume all the obligations of
Tenant hereunder, actual or contingent, including obligations of Tenant which
may have arisen on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment. Each sublease
of any of the Leased Premises shall be subject and subordinate to the provisions
of this Lease. No assignment or sublease made as permitted by this Paragraph 21
shall affect or reduce any of the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as obligations of a
principal and not as obligations of a guarantor, as if no assignment or sublease
had been made. No assignment or sublease shall impose any additional obligations
on Landlord under this Lease.
(k) With respect to any Preapproved Assignment or Preapproved Sublet,
Tenant shall provide to Landlord information
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reasonably required by Landlord to establish that any proposed Preapproved
Assignment or Preapproved Sublet satisfies the criteria set forth above.
(l) Tenant shall, within ten (10) days after the execution and delivery of
any assignment or sublease consented to by Landlord, deliver a duplicate
original copy thereof to Landlord which, in the event of an assignment, shall be
in recordable form.
(m) As security for performance of its obligations under this Lease,
Tenant hereby grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all subleases now in existence or hereinafter
entered into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises,
provided, however, that Landlord shall have the absolute right at any time
during the existence of an Event of Default, upon notice to Tenant and any
subtenants, to revoke said license and to collect such rents and sums of money
and to retain the same. Tenant shall not consent to, cause or allow any
modification or alteration of any of the terms, conditions or covenants of any
of the subleases or the termination thereof, without the prior written approval
of Landlord, which consent shall not be unreasonably withheld, nor shall Tenant
do nor permit anything to be done, the doing of which, nor omit or refrain from
doing anything, the omission of which, will or could be a breach of or default
in the terms of any of the subleases.
(n) Tenant shall have the right to grant a first lien leasehold mortgage
on, or to pledge its leasehold interest in, the Leased Premises to its senior
lender, but shall not have the power to otherwise mortgage, pledge or otherwise
encumber its interest under this Lease or any sublease of the Leased Premises,
and any other such mortgage, pledge or encumbrance made in violation of this
Paragraph 21 shall be void. Landlord and Lender shall execute such documents as
may be reasonably requested by Tenant's senior lender and are customarily
acceptable to Landlord and Lender in order to afford to such senior lender
rights of notice and an opportunity to cure an Event of Default and the benefits
of any non-disturbance and attornment agreement in favor of Tenant, provided,
however, that any entity that becomes a successor tenant under this Paragraph
21(g) shall be required to be in compliance with all of the terms of this Lease,
including, during the Initial Term, the Covenants.
(o) Subject to Tenant's rights under Paragraph 35, Landlord may sell or
transfer the Leased Premises at any time without Tenant's consent to any third
party (each a "Third Party Purchaser"), provided, that so long as no Event of
Default
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exists either at the time Landlord enters into an Agreement of Sale for the
purchase of the Leased Premises or on the date of conveyance to a Third Party
Purchaser, Landlord shall not sell the Leased Premises to any Person whose
primary business is the manufacturing of equipment that makes masks for the
semi-conductor industry. In the event of any such transfer, Tenant shall attorn
to any Third Party Purchaser as Landlord so long as such Third Party Purchaser
and Landlord notify Tenant in writing of such transfer and such Third Party
Purchaser assumes in writing the obligations of Landlord under this Lease. At
the request of Landlord, Tenant will execute such documents confirming the
agreement referred to above and such other agreements as Landlord may reasonably
request, provided that such agreements do not increase the liabilities and
obligations of Tenant hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after expiration of
any applicable cure period as provided in Paragraph 22(b)) shall, at the sole
option of Landlord, constitute an "Event of Default" under this Lease:
(i) a failure by Tenant to make any payment of any Monetary
Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe, or a violation
or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant herein or in any
certificate, demand or request made pursuant hereto proves to be incorrect,
now or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or at maturity by
Tenant in any payment of principal or interest on any obligations for
borrowed money having an outstanding principal balance of $10,000,000 or
more in the aggregate, or in the performance of any other provision
contained in any instrument under which any such obligation is created or
secured (including the breach of any covenant thereunder), (x) if such
payment is a payment at maturity or a final payment, or (y) if a result of
such default is to cause such obligation to be accelerated prior to its
stated maturity;
(v) a default by Tenant beyond any applicable cure period in the
payment of rent under, or in the performance of any other material
provision of, any other lease or leases that have, in the aggregate,
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rental obligations over the terms thereof of $10,000,000 or more in the
aggregate if the landlord under any such lease or leases commences to
terminate such lease or leases, dispossess Tenant or accelerate the rent
payable thereunder;
(vi) a final, non-appealable judgment or judgments for the payment of
money in excess of $10,000,000 (less any amounts payable from the proceeds
of insurance in the aggregate shall be rendered against Tenant and the same
shall not be payable from the proceeds of insurance and shall remain
undischarged, unbonded or unsatisfied for a period of sixty (60)
consecutive days;
(vii) Tenant shall breach any Covenant or an Intended Transaction or a
Non-Preapproved Assignment shall occur and Tenant shall have failed to
comply with the provisions of Paragraph 21(a)(iv) through (vi) or Paragraph
33, as applicable;
(viii) Tenant shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a receiver or trustee
for itself or for the Leased Premises, (C) file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state
or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
(ix) a court shall enter an order, judgment or decree appointing,
without the consent of Tenant, a receiver or trustee for it or for any of
the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or decree
shall remain undischarged or unstayed ninety (90) days after it is entered;
(x) the Leased Premises shall have been vacated (i,e., ceased to be
operated on a consistent basis) except as permitted under, and subject to
the terms and conditions of, Paragraph 38 hereof or the Leased Promises
shall have been abandoned;
(xi) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution;
(xii) the estate or interest of Tenant in any of the Leased Premises
shall be levied upon or attached in any proceeding and such estate or
interest is about
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to be sold or transferred or such process shall not be vacated or
discharged within sixty (60) days after it is made,
(xiii) a failure by Tenant, following any notice and an opportunity
to cure, to perform or observe, or a violation or breach of, or a
misrepresentation by Tenant under any provision of any Assignment or any
other document between Tenant and Lender that, as to such Assignment or
other document, (A) recites that a breach, violation or misrepresentation
by Tenant thereunder will cause a default under the Loan and (B) provides
that Lender will give to Tenant any notice of such default that it is
required to give to Landlord, if such failure, violation, breach or
misrepresentation gives rise to a default beyond any applicable cure period
with respect to any Loan; or
(xiv) a failure by Tenant to maintain in effect any occupancy permit
for the Leased Premises or permit required under any Environmental Law.
(b) No notice or cure period shall be required in any one or more of the
following events: (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth below), (v), (vi), (vii), (viii), (ix), (x)
(except as otherwise set forth below), (xi), (xii) or (xiii) of Paragraph 22(a);
(B) the default consists of a failure to pay Basic Rent, a failure to provide
any insurance required by Paragraph 16 or an assignment or sublease entered into
in violation of Paragraph 21; or (C) the default is such that any delay in the
exercise of a remedy by Landlord could reasonably be expected to cause
irreparable non-monetary harm to Landlord. If the default consists of the
failure to pay any Monetary Obligation under clause (i) of Paragraph 22(a), the
applicable cure period shall be five (5) days from the date on which notice is
given, but Landlord shall not be obligated to give notice of, or allow any cure
period for, any such default more than twice within any Lease Year. If the
default consists of a default under clauses (iv), (v) or (x) the applicable cure
period shall be ten (10) days from the date on which notice is given provided
that (X) with respect to a default under clause (iv) or (v) Tenant immediately
gives to Landlord notice of acceleration or the exercise of remedies by a
landlord or (Y) with respect to a default under clause (x) Tenant immediately
give to Landlord notice that it has vacated the Leased Premises. If the default
consists of a default under clauses (ii), (iii) or (xiv) of Paragraph 22(a),
other than the events specified in clauses (B) and (C) of the first sentence of
this Paragraph 22(b), the applicable cure period shall be twenty (20) days from
the date on which notice is given or, if the default cannot be cured within such
twenty (20) day period, the cure period shall be extended for the period
required to cure the default (but such cure period, including any extension,
shall not in the aggregate
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exceed one hundred eighty (180) days), provided that Tenant shall commence to
cure the default within the said twenty-day period and shall actively,
diligently and in good faith proceed with and continue the curing of the default
until it shall be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is continuing, Landlord
shall have the right, at its sole option, then or at any time thereafter, to the
extent permitted by applicable law, to exercise its remedies and to collect
damages from Tenant in accordance with this Paragraph 23, without demand upon or
notice to Tenant except as otherwise provided in Paragraph 22(b) and this
Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's intention to
terminate this Lease on a date specified in such notice. Upon such date,
this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of the Leased Premises, Landlord may re-enter and repossess the
Leased Premises, with or without legal process, by peaceably entering the
Leased Premises and changing locks or by summary proceedings, ejectment or
any other lawful means or procedure. Upon or at any time after taking
possession of the Leased Premises, Landlord may, by peaceable means or
legal process, remove any Persons or property therefrom. Landlord shall be
under no liability for or by reason of any such entry, repossession or
removal. Notwithstanding such entry or repossession, Landlord may (A)
exercise the remedy set forth in and collect the damages permitted by
Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph
23(c).
(ii) After repossession of the Leased Premises pursuant to clause (i)
above, Landlord shall have the right to relet any of the Leased Premises to
such tenant or tenants, for such term or terms, for such rent, on such
conditions and for such uses as Landlord in its sole discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such
reletting as it may deem advisable in its sole discretion. Notwithstanding
any such reletting, Landlord may collect the damages set forth in Paragraph
23(c).
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(iii) To the extent permitted by applicable law, Landlord may, upon
notice to Tenant, require Tenant to make an irrevocable offer to terminate
this Lease upon payment to Landlord of an amount (the "Default Termination
Amount") specified in the next sentence. The "Default Termination Amount"
shall be the greater of (A) the Fair Market Value of the Leased Premises,
or (B) the sum of the Acquisition Cost and Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of the
Default Termination Amount. Upon such notice to Tenant, Tenant shall be
deemed to have made such offer and shall, if requested by Landlord, within
ten (10) days following such request deposit with Landlord as payment
against the Default Termination Amount the amount described in (B) above,
Landlord and Tenant shall promptly commence to determine Fair Market Value.
Within thirty (30) days after the Fair Market Value Date, Landlord shall
accept or reject such offer. If Landlord accepts such offer then, on the
tenth (10th) business day after such acceptance, Tenant shall pay to
Landlord the Default Termination Amount and, at the request of Tenant,
Landlord will convey the Leased Premises to Tenant or its designee in
accordance with Paragraph 20. Any rejection by Landlord of such offer shall
have no effect on any other remedy Landlord may have under this Lease.
(b) In addition to its other rights under this Lease, Landlord has the
remedy described in California Civil Code Section 1951.4 which provides
substantially as follows: Landlord may continue the Lease in effect after
Tenant's breach and abandonment and recover the Rent as it becomes due. In
accordance with California Civil Code Section 1951.4 (or any successor statute),
Tenant acknowledges that in the event Tenant breaches this Lease and abandons
the Leased Premises, this Lease shall continue in effect for so long as Landlord
does not terminate Tenant's right to possession, and Landlord may enforce all of
its rights and remedies under this Lease, including the right to recover the
Rent as it becomes due under this Lease. Tenant acknowledges that the
limitations on subletting and assignment set forth in Paragraph 21 are
reasonable. Acts of maintenance or preservation or efforts to relet the Leased
Premises or the appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession.
(c) If Landlord elects to terminate this Lease upon the occurrence of an
Event of Default, Landlord may collect from Tenant damages computed in
accordance with the following provisions in addition to Landlord's other
remedies under this Lease:
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(i) the worth at the time of award of any unpaid Rent which has been
earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which any unpaid
Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided; plus
(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 amount of such rental loss that Tenant proves could be reasonably
avoided, plus
(iv) any other reasonable Cost necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom including, without limitation,
brokerage commissions, the cost of repairing and reletting the Leased
Premises and reasonable attorneys' fees; plus
(v) at Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
state law. Damages shall be due and payable from the date of termination.
(d) For purposes of clauses (i) and (ii) of this Paragraph, the "worth at
the time of award" shall be computed by adding interest at the Default Rate to
the past due Rent. For the purposes of clause (iii) of this Paragraph 23(d), the
"worth at the time of award" shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award, plus one percent (1%).
(e) Landlord shall be entitled to apply the Security Deposit to any
amounts due under Paragraph 23(c) if this Lease shall be terminated, or, if this
Lease shall remain in full force and effect, to any amounts due under Paragraph
23(b) or in the following order (i) to past due Basic Rent, (ii) to cure any
other monetary Event of Default and (iii) to installments of Basic Rent in
inverse order of maturity commencing with the last installment of the Term.
(f) Notwithstanding anything to the contrary herein contained, in lieu of
or in addition to any of the foregoing remedies and damages, Landlord may
exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
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exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.
(g) Landlord shall not he required to mitigate any of its damages hereunder
unless required to by applicable Law. If any Law shall validly limit the amount
of any damages provided for herein to an amount which is less than the amount
agreed to herein, Landlord shall be entitled to the maximum amount available
under such Law.
(h) No termination of this Lease, repossession or reletting of the Leased
Premises, exercise of any remedy or collection of any damages pursuant to this
Paragraph 23 shall relieve Tenant of any Surviving obligations.
(i) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD HEREUNDER, TENANT
WAIVES ANY RIGHT TO A TRIAL BY JURY. Tenant agrees that this Lease constitutes a
written consent to waiver of trial by jury pursuant to the provisions of
California Code of Civil Procedure Section 631 and Tenant does hereby appoint
Landlord its true and lawful attorney-in-fact, which appointment is coupled with
an interest, and Tenant does hereby authorize and empower Landlord, in the name,
place and stead of Tenant, to file this Lease with the clerk or judge of any
court of competent jurisdiction as statutory written consent to waiver of trial
by jury.
(j) During the existence of any Event of Default, Landlord shall have the
right (but no obligation) to perform any act required of Tenant hereunder and,
if performance of such act requires that Landlord enter the Leased Premises,
Landlord may enter the Leased Premises for such purpose.
(k) No failure of Landlord (i) to insist at any time upon the strict
performance of any provision of this Lease or (ii) to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(l) Tenant hereby waives and surrenders, for itself and all those claiming
under it, including creditors of all kinds, (i) any right and privilege which it
or any of them may have under any present or future Law to redeem any of the
Leased Premises or to have a continuance of this Lease after termination of this
Lease or of Tenant's right of occupancy or possession pursuant to any court
order or any provision hereof, and (ii) the benefits of any present or future
Law which exempts property from liability for debt or for distress for rent.
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(m) Except as otherwise provided heroin, all remedies are cumulative and
concurrent and no remedy is exclusive of any other remedy. Each remedy may be
exercised at any time an Event of Default has occurred and is continuing and may
be exercised from time to time. No remedy shall be exhausted by any exercise
thereof.
24. Notices. All notices, demands, requests, consents, approvals, offers,
statements and other instruments or communications required or permitted to be
given pursuant to the provisions of this Lease shall be in writing and shall be
deemed to have been given for all purposes when delivered in person or by
Federal Express or other reliable 24-hour delivery service or five (5) business
days after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, addressed to the other party at
its address stated above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty
Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For
the purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days, notice of the new address to the other party, in the manner provided
above.
25. Estoppel Certificate. At any time upon not less than ten (10) days'
prior written request by either Landlord, Tenant or Lender (the "Requesting
Party") to Landlord or Tenant, as applicable, (the "Responding Party"), the
Responding Party shall deliver to the Requesting Party a statement in writing,
executed by an authorized officer of the Responding Party, certifying (a) that,
except as otherwise specified, this Lease is unmodified and in full force and
effect, (b) the dates to which Basic Rent, Additional Rent and all other
Monetary Obligations have been paid, (c) that, to the knowledge of the signer of
such certificate and except as otherwise specified, no default by either
Landlord or Tenant exists hereunder, (d) such other matters as the Requesting
Party may reasonably request, and (e) if Tenant is the Responding Party that,
except as otherwise specified, there are no proceedings pending or, to the
knowledge of the signer, threatened, against Tenant before or by any court or
administrative agency which, if adversely decided, would materially and
adversely affect the financial condition and operations of Tenant. Any such
statements by the Responding Party may be relied upon by the Requesting Party,
any Person whom the Requesting Party notifies the Responding Party in its
request for the Certificate is an intended recipient or beneficiary of the
Certificate, any Lender or their assignees and by any prospective purchase or
mortgagee of any of the Leased Premises. Any certificate required under this
Paragraph 25 and delivered by Tenant shall state that, in the opinion of each
person signing the same, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to the subject matter
of such
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certificate, and shall briefly state the nature of such examination or
investigation.
26. Surrender. Upon the expiration or earlier termination of this Lease,
Tenant shall peaceably leave and surrender the Leased Premises to Landlord in
the same condition in which the Leased Premises was at the commencement of this
Lease, except as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased
Premises all property which is owned by Tenant or third parties other than
Landlord and (b) repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, and Landlord may thereafter cause
such property to be removed from the Leased Premises. The cost of removing and
disposing of such property and repairing any damage to any of the Leased
Premises caused by such removal shall be paid by Tenant to Landlord upon demand.
Landlord shall not in any manner or to any extent be obligated to reimburse
Tenant for any such property which becomes the property of Landlord pursuant to
this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold estate
created by this Lease with the fee estate in any of the Leased Premises by
reason of the fact that the same Person may acquire or hold or own, directly or
indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall permit Landlord and Lender by their respective agents,
accountants and attorneys, upon reasonable notice to Tenant, to visit and
inspect the Leased Premises and examine (and make copies of) the records and
books of account and to discuss the finances and business with the officers of
Tenant, at such reasonable times as may be requested by Landlord. Upon the
request of Lender (either telephonically or in writing), Tenant shall provide to
Lender (with a copy to Landlord) such other information as Lender shall
reasonably request.
(b) Tenant shall deliver to Landlord and to Lender within ninety (90) days
of the close of each fiscal year, annual audited financial statements of Tenant
prepared by nationally recognized independent certified public accountants.
Tenant shall also furnish to Landlord and Lender within forty-five (45) days of
the close of each of the remaining three (3) fiscal quarters unaudited financial
statements of Tenant, certified by
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Tenant's chief financial officer, and all other quarterly reports of Tenant, and
all filings, if any, of Form 10-K, Form 10-Q and other required filings with the
Securities and Exchange Commission pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, or any other Law. All financial statements of
Tenant shall be prepared in accordance with GAAP consistently applied. All
annual financial statements shall be accompanied (x) by an opinion of said
accountants stating that (1) there are no qualifications as to the scope of the
audit and (2) the audit was performed in accordance with GAAP and (y) by the
affidavit of the president or a vice president of Tenant, dated within five (5)
days of the delivery of such statement, stating that (i) the affiant knows of no
Event of Default, or event which, upon notice or the passage of time or both,
would become an Event of Default which has occurred and is continuing hereunder
or, if any such event has occurred and is continuing, specifying the nature and
period of existence thereof and what action Tenant has taken or proposes to take
with respect thereto and (ii) except as otherwise specified in such affidavit,
that Tenant has fulfilled all of its obligations under this Lease which are
required to be fulfilled on or prior to the date of such affidavit.
(c) Landlord and its agents, accountants and attorneys, shall consider and
treat on a strictly confidential basis (i) any information contained in the
books and records of Tenant, (ii) any copies of any books and records of Tenant,
and any financial statements of Tenant pursuant to Paragraph 28(b) which are
delivered to or received by them. Landlord and its agents, accountants and
attorneys, shall conspicuously mark all copies of such documents as
"Confidential." Neither Landlord nor its agents, accountants and attorneys,
shall disclose any information contained in Tenant's books and records nor
distribute copies of any of such books and records nor Tenant's financial
statements to any other Persons without the prior written consent of the chief
operating officer of Tenant.
(d) The restrictions contained in this Paragraph 28(c) shall not prevent
disclosure by Landlord any information in any of the following circumstances:
(i) Upon the order of any court or administrative agency to the extent
required by such order and not effectively stayed or by appeal or
otherwise;
(ii) Upon the request, demand or requirement of any regulatory agency
or authority having jurisdiction over such party, including the Securities
and Exchange Commission (whether or not such request or demand has the
force of law);
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(iii) That has been publicly disclosed by Tenant in a press release
or other public announcement of general circulation;
(iv) To counsel or accountants for Landlord or counsel or accountants
for such other Person who has agreed to abide by the provisions of this
Paragraph 28(c);
(v) While an Event of Default exists, in connection with the exercise
of any right or remedy under this Lease or any other related document;
(vi) Independently developed by Landlord to the extent that
confidential information provided by Tenant is not used to develop such
information;
(vii) With respect to financial information and information that
Landlord or its attorneys deem to be material in any reporting to the
shareholders of Landlord or the shareholders or prospective shareholders
(whether through a registered public offering or otherwise) of Landlord's
parent company;
(viii) In connection with any sale or financing of the Leased
Premises, provided that any recipient of such information who is a
prospective purchaser of the Leased Premises (except for a purchaser that
purchases all or substantially all of the assets of Landlord's parent
company) shall agree to be bound by the terms of this Paragraph 28(c);
(ix) From Landlord to Lender; or
(x) As otherwise required by Law.
29. Determination of Value.
(a) Whenever a determination of Fair market Value or Fair Market Rental
Value is required pursuant to any provision of this Lease, such Fair Market
Value or Fair Market Rental Value shall be determined in accordance with the
following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such Fair
Market Value within thirty (30) days after the date (the "Applicable
Initial Date") on which (A) Tenant provides Landlord with notice of its
intention to terminate this Lease and purchase the Leased Premises
pursuant to Paragraph 18, (B) Landlord provides Tenant with notice of its
intention to redetermine Fair Market Value pursuant to Paragraph 20(c),
(C) Landlord provides Tenant with notice of Landlord's intention to
require Tenant to make an offer to terminate this Lease pursuant to
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Paragraph 23(a)(iii), (D) Tenant provides Landlord with an Intended
Transaction Offer under Paragraph 21(a)(iii), (E) the date on which
Landlord accepts Tenant's offer pursuant to Paragraph 33(c), (F) the date
on which Landlord accepts the Third Party Purchaser's offer pursuant to
the third paragraph of Paragraph 35(a) and (G) the date on which Landlord
accepts Tenant's offer pursuant to Paragraph 38(c). Landlord and Tenant
shall endeavor to agree on Fair Market Rental Value on the date (also, an
"Applicable Initial Date") which is six (6) calendar months prior to the
expiration of the then current Term unless Tenant has previously exercised
its option pursuant to Paragraph 5(b) not to have the Term automatically
extended. Upon reaching such agreement, the parties shall execute an
agreement setting forth the amount of such Fair Market Value or Fair
Market Rental Value, as the case may be.
(ii) If the parties shall not have signed such agreement within
thirty (30) days after the Applicable Initial Date, Tenant shall within
fifty (50) days after the Applicable Initial Date select an appraiser and
notify Landlord in writing of the name, address and qualifications of such
appraiser. within twenty (20) days thereafter, Landlord shall select an
appraiser and notify Tenant of the name, address and qualifications of
such appraiser. Such two appraisers shall endeavor to agree upon Fair
Market Value or Fair Market Rental Value, as the case may be, based on an
appraisal made by each of them as of the Relevant Date. If such two
appraisers shall agree upon a Fair Market Value or Fair Market Rental
Value, as the case may be, the amount of such Fair Market Value or Fair
Market Rental Value, as the case may be, as so agreed shall be binding and
conclusive.
(iii) If such two appraisers shall be unable to agree upon a Fair
Market Value or Fair Market Rental value, as the case may be, within
twenty (20) days after the selection of an appraiser by Landlord, then
such appraisers shall advise Landlord and Tenant of their respective
determination of Fair Market Value or Fair Market Rental Value, as the
case may be, and shall select a third appraiser to make the determination
of Fair Market Value or Fair Market Rental Value, as the case may be,
which determination as to the selection of the third appraiser shall be
binding and conclusive upon Landlord and Tenant.
(iv) if such two appraisers shall be unable to agree upon the
designation of a third appraiser within ten (10) days after the expiration
of the twenty (20) day period referred to in clause (iii) above, or if
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such third appraiser does not make a determination of Fair Market Value or
Fair Market Rental Value, as the case may be, within twenty (20) days after
his selection, then such third appraiser or a substituted third appraiser,
as applicable, shall, at the request of either party hereto (with notice to
the other party), be appointed by the President or Chairman of the American
Arbitration Association in San Francisco, California. The determination of
Fair Market Value or Fair Market Rental Value, an the case may be, made by
the third appraiser appointed pursuant hereto shall be made within twenty
(20) days after such appointment.
(v) Fair Market Value or Fair Market Rental Value, as the case may
be, shall be the average of the determination of Fair Market Value or Fair
Market Rental Value, as the case may be, made by the third appraiser and
the determination of Fair Market Value or Fair Market Rental Value, as the
case may be, made by the appraiser (pursuant to Paragraph 29(a)(iii)
hereof) whose determination of Fair Market Value or Fair Market Rental
Value, as the case may be, is nearest to that of the third appraiser. Such
average shall be binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to this Paragraph
29(a) shall (A) be independent qualified MAI appraisers (B) have no right,
power or authority to alter or modify the provisions of this Lease, (C)
utilize the definition of Fair Market Value set forth in Paragraph 2 or the
definition of Fair Market Rental Value as set forth below, and (D) be
registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a)
above shall be borne equally by Landlord and Tenant, except that the Cost
with respect to the appraisals performed under Paragraphs 21, 23, 33 or 38
shall be paid by Tenant and the Cost with respect to the appraisals
performed under Paragraph 35 shall be paid by the Third Party Purchaser.
(b) If, by virtue of any delay, Fair Market Value is not determined by the
expiration or termination of the then current Term, then the date on which the
Term would otherwise expire or terminate shall be extended to the date specified
for termination in the particular provision of this Lease pursuant to which the
determination of Fair Market Value is being made. If, by virtue of any delay,
Fair Market Rental Value is not determined by the expiration or termination of
the then current Term, then until Fair Market Rental Value is determined, Tenant
shall continue to pay Basic Rent during the succeeding Renewal Term in the same
amount which it was obligated under this Lease
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to pay prior to the commencement of the Renewal Term. When Fair Market Rental
Value is determined, the appropriate Basic Rent shall be calculated retroactive
to the commencement of the Renewal Term and Tenant shall either receive a refund
from Landlord (in the case of an overpayment) or shall pay any deficiency to
Landlord (in the case of an underpayment).
(c) Fair Market Value shall be determined as follows: The appraisers shall
add (i) the present value of the Rent for the remaining Term, (with assumed
increases in the CPI to be determined by the appraisers) using a discount rate
(which may be determined by an investment banker) based on the creditworthiness
of Tenant and (ii) the present value of the Fair Market Value of the Leased
Premises as of the end of the then current Term (without necessarily making any
assumption as to whether the Tenant will or will not exercise any remaining
options), using a yield rate required by investors for property having similar
characteristics, without consideration given to Tenant's credit rating or
creditworthiness. In determining the value under (ii), the appraisers shall,
insofar as possible, consider properties having similar characteristics and in
reasonable proximity to the Leased Premises, but the appraisers shall not be
precluded from considering properties that do not have "clean" rooms, properties
that are (or are not) located in Hayward, California or properties having a
different use than the Leased Premises. The appraisers shall further assume that
no default then exists under the Lease, that Tenant has complied (and will
comply) with all provisions of the Lease, and that Tenant has not violated (and
will not violate) any of the Covenants.
(d) In determining Fair Market Rental Value, the appraisers shall determine
the amount that a willing tenant would pay, and a willing landlord of a building
having similar characteristics and in reasonable proximity to the Leased
Premises would accept, at arm's length, taking into account: (a) the age,
quality, and condition of the Improvements; (b) that the Leased Premises will be
leased as a whole or substantially as a whole to a single user; (c) a lease term
of five (5) years; (d) an absolute triple net lease; and (e) such other items
that professional real estate appraisers customarily consider. In determining
Fair Market Rental Value, the appraisers shall, insofar as possible, consider
properties having similar characteristics and in reasonable proximity to the
Leased Premises, but the appraisers shall not be precluded from considering
properties that do not have "clean" rooms, properties that are (or are not)
located in Hayward, or properties having a different use than the Leased
Premises.
30. Non-Recourse as to Landlord. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Landlord
under this Lease shall be enforced only against the Leased Premises and not
against any other assets, properties or funds of (a) Landlord, (b) any
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director, officer, general partner, shareholder, limited partner, advisor,
employee or agent of Landlord or any general partner of Landlord or any of its
general partners (or any legal representative, heir, estate, successor or assign
of any thereof), (c) any predecessor or successor partnership or corporation (or
other entity) of Landlord or any of its general partners, shareholders,
officers, directors, advisors, employees or agents, either directly or through
Landlord or its general partners, shareholders, officers, directors, advisors,
employees or agents or any predecessor or successor partnership or corporation
(or other entity), or (d) any other Person (including W.P. Carey Incorporated)
affiliated with any of the foregoing, or any director, officer, advisor,
employee or agent of any thereof).
31. Financing.
(a) If Landlord desires to obtain or refinance any Loan, Tenant shall
negotiate in good faith with Landlord concerning any request made by any Lender
or proposed Lender for changes or modifications in this Lease. In particular,
Tenant shall agree, upon request of Landlord, to supply any such Lender with
such notices and information as Tenant is required to give to Landlord hereunder
and to extend the rights of Landlord hereunder to any such Lender and to consent
to such financing if such consent is requested by such Lender. Tenant shall
provide any other consent or statement and shall execute any and all other
documents that such Lender requires in connection with such financing, including
any environmental indemnity agreement and subordination, non-disturbance and
attornment agreement, so long as the same do not materially adversely affect any
right, benefit or privilege of Tenant under this Lease or materially increase
Tenant's obligations under this Lease.
(b) Tenant shall not be responsible for any fees or expenses associated
with any of the transactions contemplated by this Paragraph 31. Landlord shall
reimburse Tenant for all reasonable costs and expenses incurred by Tenant in
carrying out its obligations under this Paragraph 31 other than as provided in
the foregoing sentence.
32. Subordination. This Lease and Tenant's interest hereunder shall be
subordinate to any Mortgage or other security instrument hereafter placed upon
the Leased Premises by Landlord, and to any and all advances made or to be made
thereunder, to the interest thereon, and all renewals, replacements and
extensions thereof, provided that any such Mortgage or other security instrument
(or a separate instrument in recordable form duly executed by the holder of any
such Mortgage or other security instrument and delivered to Tenant) shall
provide for the recognition of this Lease and all Tenant's rights hereunder
unless and until an Event of Default exists or Landlord shall have the right to
terminate this Lease pursuant to any applicable provision hereof all as set
forth in a
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Subordination, Non-Disturbance and Attornment Agreement in form and substance
reasonably satisfactory to Tenant.
33. Financial Covenants; Covenant Breach Offer.
(a) Until the expiration of the Initial Term, Tenant hereby covenants and
agrees to comply with all the covenants and agreements (the "Covenants")
described in Paragraphs 1 through 3 in Exhibit "E" hereto.
(b) If (i) Tenant intends to take any action or, with respect to Paragraph
1(b) of Exhibit "E", has knowledge that such action is intended to be taken by
another Person, or such action occurs (such action, an "Intended Transaction")
that would result in a breach of any Covenant set forth in Paragraphs 1 or 2 of
Exhibit "E" attached hereto or (ii) Tenant becomes aware that the Covenant set
forth in Paragraph 3 of Exhibit "E" will be or has been breached (a "Covenant
Breach"), then, not less than ninety (90) days prior to the Intended
Transaction, in the case of (i) above, or immediately upon becoming aware that a
Covenant Breach will occur or has occurred, in the case of (ii) above, Tenant
shall submit to Landlord and Lender a description thereof specifying the
Intended Transaction or the Covenant Breach, as the case may be, together with a
rejectable offer of Tenant to purchase the Leased Premises (as required by, and
in accordance with, the provisions of this Paragraph 33) and, if such offer is
accepted by Landlord, Tenant shall purchase the Leased Premises within the time
prescribed for such purchase (as provided in this Paragraph 33) and otherwise in
accordance with the provisions of Paragraph 20 of this Lease.
(c) Tenant shall make an offer to purchase the Leased Premises no later
than the date (the "Intended Transaction Closing Date") on which the Intended
Transaction will occur (or, in the case of a Covenant Breach, no later than the
earlier of ninety (90) days from the date Tenant becomes aware that a Covenant
Breach has occurred or will occur) for a purchase price equal to the Offer
Amount.
(d) If Landlord shall reject such offer by notice to Tenant, such notice to
contain the written consent of Lender to such rejection, not later than the
thirtieth (30th) day following receipt of such offer by Landlord, then the Lease
shall remain in full force and effect and the Intended Transaction or Covenant
Breach, as the case may be, shall be deemed waived or acceptable by Landlord and
Lender, respectively, and the waiver or acceptance shall remain in effect for
the balance of the Term with respect to the specific Intended Transaction or
specific set of facts giving rise to the Covenant Breach only. No rejection of
an offer under this Paragraph 33 shall be effective for any purpose unless
consented to in writing by Lender.
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(e) Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the thirtieth (30th) day following receipt of Tenant's
offer by Landlord, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Offer Amount on the Intended Transaction Closing Date (except that if the Fair
Market Value of the Leased Premise shall not yet have been determined, Tenant
shall pay to Landlord an amount equal to the Deposit Amount on the Intended
Transaction Closing Date and any excess of the Fair Market Value of the Leased
Premises over such sum shall be paid by Tenant to Landlord within ten (10) days
of the determination of such Fair Market Value) and, provided that no Rent or
any other charge is due and unpaid under the Lease as of the Intended
Transaction Closing Date, and Tenant is otherwise in compliance with the terms
of this Lease, Landlord shall convey to Tenant the Leased Premises in accordance
with the provision of Paragraph 20 of the Lease.
(f) Notwithstanding the foregoing, and only with respect to offers made
solely in anticipation of an Intended Transaction or a Covenant Breach which
Tenant anticipates will occur, if Tenant determines that the Intended
Transaction or Covenant Breach will not occur, Tenant shall have the right to
revoke its offer to purchase the Leased Premises by notice to Landlord received
not later than fifteen (15) days prior to the anticipated Intended Transaction
Closing Date (TIME BEING OF THE ESSENCE), provided that Tenant shall be
obligated to pay all Costs of Landlord and Lender reasonably incurred as a
result of the offer made by Tenant pursuant to this Paragraph 33. Nothing
provided herein shall constitute a waiver by Landlord of the obligation of
Tenant to comply with the requirements of this Paragraph 33 if a subsequent
Covenant Breach or subsequent Intended Transaction will occur or occurs.
34. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each
shall treat this transaction as a true lease for state law purposes and shall
report this transaction as a Lease for Federal income tax purposes. For Federal
income tax purposes each shall treat this Lease as a true lease with Landlord as
the owner of the Leased Premises and Equipment and Tenant as the lessee of such
Leased Premises and Equipment including: (1) treating Landlord as the owner of
the property eligible to claim depreciation deductions under Section 167 or 168
of the Internal Revenue Code of 1986 (the "Code") with respect to the Leased
Premises and Equipment, (2) Tenant reporting its Rent payments as a business
expense under Section 162 of the Code, and (3) Landlord reporting the Rent
payments as rental income.
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35. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this Paragraph 35, and
provided an Event of Default does not then exist, prior to selling the Leased
Premises to any Third Party Purchaser, if Landlord shall enter into a contract
for the sale of the Leased Premises with a Third Party Purchaser, (i) such
contract shall be conditioned upon Tenant's failure to exercise its right under
this Paragraph 35(a) and (ii) Landlord shall give written notice to Tenant of
the contract for sale, together with a copy of the executed offer or contract
and the name and business address of the Third Party Purchaser.
(b) For a period of thirty (30) days following receipt of such notice,
Tenant shall have the right and option, exercisable by written notice to
Landlord given within said thirty (30) day period, to elect to purchase the
Leased Premises at the purchase price and upon all the terms and conditions set
forth in such contract for sale except that no contingencies contained in such
contract for sale as to environmental assessments, engineering studies,
inspection of the Leased Premises, sale of other property, state of the title to
or encumbrances on the Leased Premises which pertains to any exception of title
created by, or suffered to exist by, Tenant, or any other condition or
contingency to the Third Party Purchaser's obligation to purchase the Leased
Premises which pertains to the condition of the Leased Premises, shall apply to
Tenant's obligation to purchase the Leased Premises under this Paragraph 35, and
Tenant shall be obligated to purchase the Leased Premises without any such
condition or contingency.
(c) If at the expiration of the aforesaid thirty (30) day period Tenant
shall have failed to exercise the aforesaid option, Landlord may sell the Leased
Premises to such Third Party Purchaser upon the terms set forth in such
contract. For the purposes of this Paragraph 35(a), the purchase price in any
contract to purchase the Leased Premises which is received by Landlord between
the first day of the last six (6) calendar months of the ninth (9th) Lease Year
or the first six (6) calendar months of the tenth (10th) Lease Year shall be
deemed to be "acceptable to Landlord" if such offer (i) is for an amount equal
to or greater than the greater of (A) Fair Market Value (which shall be
determined in accordance with the procedure set forth in Paragraph 29 of this
Lease, except that references to Tenant in Paragraphs 29(a) and (b) hereof shall
mean Third Party Purchaser) or (B) the sum of (1) the Acquisition Cost reduced
by the principal payments made on the Note to the date of purchase and (2) the
Prepayment Premium, (ii) provides that the purchaser pays all costs in
connection with such purchase, (iii) provides that such purchase price is
payable in cash at the closing of the sale of the Leased Premises and (iv) the
closing date for such purchase will occur within sixty (60) days prior to the
last day of the tenth (10th) Lease Year.
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(d) Except as otherwise specifically provided in the foregoing Paragraph
35(a), the closing date for any purchase of the Leased Premises by Tenant
pursuant to this Paragraph 35 shall be on a date designated by Tenant, but not
later than (i) ninety (90) days after the date of Tenant's notice to Landlord
of its intention to purchase the Leased Premises upon the terms of the contract
for sale with a Third Party Purchaser or (ii) the closing date provided in such
contract for sale. At such closing Landlord shall convey the Leased Premises to
Tenant in accordance with, and Tenant shall pay to Landlord the purchase price
and other consideration set forth in, the applicable offer or contract.
(e) Tenant shall have the right during the Term to exercise the foregoing
right of first refusal upon each proposed sale of the Leased Premises prior to
the last day of the tenth (10th) Lease Year; provided, that if, following
compliance with the procedure described in Paragraph 35(a), a Third Party
Purchaser does not purchase the Leased Premises, such event shall not count as
an exercise of Tenant's right of first refusal. Notwithstanding anything to the
contrary, if Tenant fails to exercise the right of first refusal by the last day
of the tenth (10th) Lease Year, and the sale to a Third Party Purchaser is
consummated or if this Lease terminates or the Term expires, such right shall
terminate and be null and void and of no further force and effect.
(f) If Tenant does not exercise its right of first refusal to purchase the
Leased Premises and the Leased Premises are transferred to a Third Party
Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so long
as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer. At the request of Landlord, Tenant will execute such documents
confirming the agreement referred to above and such other agreements as Landlord
may reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder.
(g) The provisions of Paragraph 35(a) shall not apply to or prohibit (i)
any mortgaging, subjection to deed of trust or other hypothecation of Landlord's
interest in the Leased Premises, (ii) any sale of the Leased Premises pursuant
to a private power of sale under or judicial foreclosure of any Mortgage or
other security instrument or device to which Landlord's interest in the Leased
Premises is now or hereafter subject, (iii) any transfer of Landlord's interest
in the Leased Premises to a Lender, beneficiary under deed of trust or other
holder of a security interest therein by deed in lieu of foreclosure, (iv) any
transfer of the Leased Premises to any governmental or quasi-governmental agency
with power of condemnation, (v) any transfer of the Leased Premises to any
affiliate of Landlord or to any entity for whom W.P. Carey & Co., Inc., W.P.
Carey Incorporated or any of their affiliates provides material management or
investment advice, (vi) any
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Person to whom Landlord sells all or substantially all of its assets, (vii) any
transfer of the Leased Premises to any of the successors or assigns of any of
the Persons referred to in the foregoing clauses (i) through (vi) or (viii) any
transfer, sale or conveyance of any part or all of the stock of Landlord to one
of its affiliates.
36. Financing Major Alterations.
(a) Should Tenant, during the Term of this Lease, desire to make
Alterations to any of the Leased Premises which are not readily removable
without causing material damage to the Leased Premises which cannot be repaired
and which will cost in excess of Five Hundred Thousand Dollars ($500,000)
("Major Alterations"), Tenant may, prior to the commencement of construction of
such Major Alterations, request Landlord (with a copy of such request to Lender)
to reimburse the costs thereof to Landlord (the "Alteration Cost") to Tenant, to
wit: cost of labor and materials, financing fees, legal fees, survey, title
insurance and other normal and customary loan or construction costs.
(b) Should Landlord agree to reimburse such costs, Landlord and Tenant
shall enter into good faith negotiations regarding the execution and delivery of
a written agreement of modification of this Lease, which agreement shall provide
for the following:
(i) payment by Landlord to Tenant of the Alteration Cost within one
hundred twenty (120) days of the date of Landlord's agreement to pay the
Alteration Cost, or in installment payments as agreed, or on the date of
completion of the Major Alterations, whichever shall be the later;
(ii) an increase in the annual Basic Rent payable during the
Amortization Period (as hereinafter defined) to an amount sufficient to
amortize the Alteration Cost ("Total Financing") over a period (the
"Amortization Period") which shall be the remainder of the then current
Term and, if Tenant so elects, any additional extension periods provided
for herein (so long as Tenant shall confirm any such extension periods
included in the Amortization Period by a written waiver of its right to
give notice of its intention not to renew this Lease prior to the
expiration of such extension periods), at such rate of interest and upon
such other terms as shall be agreed upon between Landlord and Tenant, but
which shall be no less favorable than the prevailing interest rate and
terms for unsecured loans in a principal amount equal to the Total
Financings for borrowers with credit ratings equivalent to the lesser of
Landlord's or Tenant's credit rating at that time; and
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(iii) such other changes and amendments to this Lease as may be
necessary and appropriate in view of such payment of the Alteration Cost
by Landlord to Tenant.
(c) Tenant shall pay all Costs incurred by Landlord in connection with any
such modification to this Lease and such financing, including closing costs,
brokerage fees, taxes, recording charges and legal fees and expenses.
(d) If Landlord and Tenant do not reach agreement on Tenant's request to
have Landlord finance the Alteration Costs, Tenant shall, subject to the
provisions of Paragraph 13 of this Lease, have the right to construct the Major
Alterations at Tenant's sole cost and expense. In any event, the construction
of the Major Alterations shall be performed in accordance with the provisions of
Paragraph 13 hereof and the Major Alterations shall be the property of Landlord
and part of the Leased Premises subject to this Lease.
(e) Nothing contained in this Paragraph 36 shall be construed to modify
Paragraph 13 hereof, and the provisions of Paragraph 12 and subparagraphs (i)
and (ii) of Paragraph 13(a) shall apply to all Major Alterations made or
constructed hereunder, including the requirement for Landlord's consent to
Alterations.
37. Security Deposit.
(a) Tenant has delivered to Landlord a security deposit (the "Security
Deposit") in the amount of Three Hundred Forty-two Thousand Five Hundred
Eighty-one and 25/100 ($342,581.25). If not sooner applied as provided in
Paragraph 23(d), the Security Deposit shall be applied (i) to monthly payments
of the Basic Rent in reverse order, commencing with the last month of the
Initial Term, commencing with the last payment due or (ii) if Tenant purchases
the Leased Premises, against Tenant's obligation to pay the Default Termination
Amount, Offer Amount or Termination Amount, as the case may be. The Security
Deposit shall be security for the payment by Tenant of the Rent and all other
charges or payments to be paid hereunder and the performance of the covenants
and obligations contained herein. Landlord shall have the right to commingle the
Security Deposit with other funds of Landlord. Anything herein contained to the
contrary notwithstanding, the Security Deposit shall be credited against Rent or
other obligations of Tenant hereunder.
(b) Landlord shall have the right to assign to Lender or any other holder
of a Mortgage the Security Deposit during the term of the applicable Loan, and
the Lender or such other holder of a Mortgage shall have all of the rights of,
and shall be subject to the terms of, this Paragraph 37. Tenant covenants and
agrees to execute such agreements, consents and
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acknowledgments as may be reasonably requested by Landlord and Lender from time
to time to acknowledge the assignment of the Security Deposit.
38. Right to Vacate; Rejectable Offer Upon Vacation.
(a) Tenant shall have the right to vacate the Leased Premises; provided
that (i) Tenant shall notify Landlord and Lender within ten (10) days after
vacation of the Leased Premises by Tenant, (ii) Tenant shall make reasonable
good faith efforts to sublet the Leased Premises, which sublease or subleases
which shall be subject to the provisions of Paragraph 21(b) hereof and (iii)
Tenant shall continue to perform all of its obligations under this Lease,
including its obligation to maintain the Leased Premises and to pay all Rent as
and when due hereunder.
(b) If, at any time during the Term, the Leased Premises shall be vacant
for twelve (12) consecutive months, Tenant shall, on the first day of the
thirteenth (13th) month that Leased Premises are vacant, make an offer (the
"Vacation Offer") to purchase the Leased Premises on the first Basic Rent
Payment Date occurring thirty (30) days after the determination of Fair Market
Value (the "Vacation Purchase") for a purchase price equal to the Offer Amount.
Promptly upon the delivery to Landlord of the Vacation Offer, Landlord and
Tenant shall commence to determine the Fair Market Value of the Leased Premises.
(c) No rejection of the Vacation Offer shall be effective for any purpose
unless consented to in writing by Lender. If Landlord shall reject the Vacation
Offer by notice to Tenant, containing the written consent of Lender to such
rejection, no later than the thirtieth (30th) day following receipt of the
Vacation Offer by Landlord, then this Lease shall remain in full force and
effect and Landlord and Lender shall be deemed to have waived the Event of
Default described in Paragraph 22(a)(x) with respect to a vacation of the Leased
Premises.
(d) Unless Landlord shall have rejected the Vacation Offer by the foregoing
notice to Tenant not later than the thirtieth (30th) day following receipt of
the Vacation Offer by Landlord, Landlord shall be conclusively presumed to have
accepted the Vacation Offer. If the Vacation Offer is accepted by Landlord,
then, through an appropriate escrow, (i) Tenant shall pay to Landlord the Offer
Amount on the Vacation Purchase Date and, (ii) provided that no Rent or any
other charge is due and unpaid under this Lease as of the Vacation Purchase Date
and Tenant is otherwise in compliance with the terms hereof, Landlord shall
convey to Tenant the Leased Premises in accordance with the provisions of
Paragraph 20.
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39. Miscellaneous.
(a) The paragraph headings in this Lease are used only for convenience in
finding the subject matters and are not part of this Lease or to be used in
determining the intent of the parties or otherwise interpreting this Lease.
(b) As used in this Lease, the singular shall include the plural and any
gender shall include all genders as the context requires and the following words
and phrases shall have the following meanings: (i) "including" shall mean
"including without limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge,
encumbrance, title retention agreement, pledge, security interest, mortgage
and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest therein"; (viii) "any of the Equipment" shall
mean "the Equipment or any part thereof or interest therein"; and (ix) "any of
the Adjoining Property" shall mean "the Adjoining Property or any part thereof
or interest, therein.
(c) Any act which Landlord is permitted to perform under this Lease may be
performed at any time and from time to time by Landlord or any person or entity
designated by Landlord. Each appointment of Landlord as attorney-in-fact for
Tenant hereunder is irrevocable and coupled with an interest. Except as
otherwise specifically provided herein, Landlord shall have the right, at its
sole option, to withhold or delay its consent whenever such consent is required
under this Lease for any reason or no reason. Time is of the essence with
respect to the performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.
(e) This Lease, the August 7, 1996 letter agreement between Landlord and
Tenant with respect to the Second Disbursement and Third Disbursement (as such
terms are defined therein) and any documents which may be executed by Tenant on
or about the effective date hereof at Landlord's request constitute the entire
agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject
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matter of this Lease and have each fully participated in the negotiation and
drafting of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed against
the drafter.
(f) This Lease may be modified, amended, discharged or waived only by an
agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and bind Tenant,
its successors and assigns and all present and subsequent encumbrances and
subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this Lease shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Lease, but this Lease shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
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(i) This Lease shall be governed by and construed and enforced in
accordance with the Laws of the State.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
ATTEST: ESI (CA) QRS 12-6, INC.,
a California corporation
By: [illegible] By: [illegible]
Title: Assistant Secretary Title: Executive Vice President
(Corporate Seal]
TENANT:
ATTEST: ETEC SYSTEMS, INC.
a Nevada corporation
By: /s/ Saul Arnold By: /s/ Melanie Mock
Title: Assistant Secretary Title: Treasurer
[Corporate Seal]
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EXHIBIT A
PREMISES
REAL PROPERTY in the City of Hayward, County of Alameda, State of
California, described as follows:
Beginning on the Northeast line of Corporate Avenue at the common line of
Parcels 1 and 2, Parcel Map No. 461, filed April 10, 1969, Book 58, of Parcel
Maps, Page 96, Alameda County Records; thence from said point of beginning,
North 33 degrees 20 minutes 15 seconds West, along said Northeast line of
Corporate Avenue as shown on said Parcel Map, 564.987 feet and Northwesterly,
along the arc of a tangent curve to the right with a radius of 1166 feet, an arc
distance of 235.490 feet to the common line of Parcels 1 and 2 of Parcel Map No.
1500, filed February 25, 1975, Book 87 of Parcel Maps, Page 23, Alameda County
Records; thence along said last mentioned common line, as follows: North 58
degrees 22 minutes 09 seconds East, 611.160 feet, North 80 degrees 11 minutes 21
seconds East 201.924 feet and South 65 degrees 00 minutes 00 seconds East,
203.000 feet to the most Easterly corner of Parcel 2 of said Parcel Map No. 1500
(87 PM 23), being also the most Northerly corner of Parcels 1 and 2 of the
aforesaid Parcel Map No, 461 (58 PM 96); thence along the exterior line of said
Parcel 2 of said Parcel Map No. 461, South 41 degrees 29 minutes 51 seconds
East, 562.970 feet and South 58 degrees 22 minutes 09 seconds West, 1006.638
feet to the point of beginning.
Being also known as Parcel 2 of Parcel Map 461, filed April 10, 1969 in Book
58 of Parcel Maps, at Page 96; and Parcel 2 of Parcel Map 1500, filed February
25, 1975 in Book 87 of Parcel Maps, at Page 23, Official Records of said County.
<PAGE> 70
EXHIBIT B
MACHINERY AND EQUIPMENT
(a) All fixtures, now or hereafter affixed or attached to or installed in
any of the Leased Premises (except as hereafter provided) including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, air cooling, air conditioning, humidification,
sprinkling, power, plumbing, lifting, cleaning, fire prevention, fire
extinguishing and ventilating systems, devices and machinery and all engines,
pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors,
conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors, windows, loading platforms, lavatory facilities,
stairwells, fencing (including cyclone fencing), passenger and freight
elevators, overhead cranes and garage units;
(b) All personal property now or hereafter affixed or attached to or
installed in the "clean room" and the process laboratory that is integral to the
suitability of such room as a "clean room" and the process laboratory (including
electrical, anti-pollution, heating, lighting, air-conditioning, plumbing and
ventilation systems) and cable, wiring and networking equipment for computer
interface, together with all additions thereto, substitutions therefor and
replacements thereof required or permitted by this Lease,
but excluding all personal property and all trade fixtures and all
machinery, office, manufacturing and warehouse equipment whether or not attached
to or built-in as part of the buildings (except for personal property in the
"clean room" and the process laboratory and described in clause (b) above) that
are not necessary to the operation, as buildings, of the buildings that
constitute part of the Leased Premises.
<PAGE> 71
EXHIBIT C
PERMITTED ENCUMBRANCES
1. Second Installment of TAXES for the fiscal year 1996-1997.
2. TAXES for the fiscal year 1997-1998, a lien not yet due or payable.
3. The Lien of supplemental taxes, if any, assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code.
4. EASEMENT for the purposes stated herein
(a) Purpose: Utilities
(b) Granted to: Pacific Gas and Electric Company
(c) Recorded: June 28, 1951, Book 6474, Page 395, Official Records
(d) Affects: The Northerly 175 feet of the Land
5. EASEMENT for the purposes stated herein
(a) Purpose: Utilities
(b) Granted to: Pacific Gas and Electric Company, a California
corporation
(c) Recorded: August 19, 1954, Book 7403, Page 177, Official Records
(d) Affects: The Southerly 65 feet of the Northerly 24 feet of the
Land
6. EASEMENT as shown on the filed map of Tract 2898
(a) Purpose: Public Utilities
(b) Affects: The Westerly 10 feet of the Land
7. LIMITATIONS, covenants, conditions, restrictions, reservations,
exceptions or terms in the instrument recorded June 30, 1967, Reel 1991, Image
793, Official Records.
8. POSSIBLE EASEMENT for Communication Facilities, as disclosed by the
Grant of Easement from Crow-Spieker #18 to The Pacific Telephone & Telegraph
Company, recorded July 24, 1974, Reel 3736, Image 788, Official Records.
9. Any rights, interests or claims which may exist or arise by reason of
the following facts shown on a survey plat entitled "ETEC, 26460 Corporate
Avenue, Hayward, California,
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<PAGE> 72
Alameda County" prepared by Lea & Sung Engineering, Inc. dated January 29, 1997,
Job No. 96433ALT.
(a) The fact that a chainlink fence is located within the boundaries of
said land in varying distances of up to 2.20 feet from said
boundaries.
(b) The fact that walkways, curbs and storm drain lines are located
within the easements described in documents recorded June 8, 1951,
Book 6474, Page 395 and August 19, 1954, Book 7403, Page 177,
Official Records.
(c) A Water Backflow Preventer located partly on a Southwesterly portion
of said land and partly outside the boundary of said land.
(d) The fact that a PG&E Vault is located within the area identified on
said Survey as " ... under construction as of 1/9/97" (said
improvements being constructioned disclosed by Surveyor as Courtyard
Area).
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EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2, 3,
4 and 5 below, Basic Rent payable in respect of the portion of the Initial Term
remaining after January 31, 1997 shall be $1,604,880 per annum, payable monthly
in arrears commencing on March 1, 1997 and on each Basic Rent Payment Date
thereafter, in equal installments of $133,740.00 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the three (3) year period immediately preceding such
adjustment. No CPI adjustments shall be made during any Renewal Term.
3. Effective Dates of CPI Adjustments. (a) Basic Rent shall be adjusted on
March 1, 1998 (the "First Basic Rent Adjustment Date") to reflect changes in the
CPI. On the First Basic Rent Adjustment Date $1,030,452 of Basic Rent shall be
adjusted to reflect increases in the CPI during the three year period preceding
March 1, 1998 and $574,428 of Basic Rent shall be adjusted to reflect increases
in the CP1 for the one year period preceding March 1, 1998.
(b) Basic Rent shall also be adjusted on March 1, 2001, March 1, 2004,
March 1, 2007 and March 1, 2010 to reflect increases in the CPI during the most
recent three (3) year period immediately preceding each of the foregoing dates
in this subparagraph 3(b) (the First Basic Rent Adjustment Date and each date
referred to in this subparagraph 3(b) being hereinafter referred to as the
"Basic Rent Adjustment Date").
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<PAGE> 74
4. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the average CPI determined
in clause (i) below exceeds the Beginning CPI (as defined in this Paragraph
4(a)), the Basic Rent in effect immediately prior to the applicable Basic Rent
Adjustment Date shall be multiplied by a fraction, the numerator of which shall
be the difference between (i) the average CPI for the three (3) most recent
calendar months (the "Prior Months") ending prior to such Basic Rent Adjustment
Date for which the CPI has been published on or before the forty-fifth (45th)
day preceding such Basic Rent Adjustment Date and (ii) the Beginning CPI, and
the denominator of which shall be the Beginning CPI. An amount equal to the
lesser of (A) the product of such multiplication or (B) $145,960 with respect to
the first Basic Rent Adjustment Date and the product of the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date multiplied by 12% with
respect to each succeeding Basic Rent Adjustment Date, shall be added to the
Basic Rent in effect immediately prior to such Basic Rent Adjustment Date. As
used herein, "Beginning CPI" shall mean the average CPI for the three (3)
calendar months corresponding to the Prior Months, but occurring three (3) years
earlier with respect to each adjustment of Basic Rent, except that with respect
to the $574,428 of Basic Rent to be adjusted on the First Basic Rent Adjustment
Date, "Beginning CPI" shall mean the average CPI for the three (3) calendar
months corresponding to the Prior Months but occurring one (1) year earlier. If
the average CPI determined in clause (i) is the same or less than the Beginning
CPI, the Basic Rent will remain the same for the ensuing three (3) year period.
(b) Effective as of a given Basic Rent Adjustment Date occurring during the
Initial Term, Basic Rent payable under this Lease until the next succeeding
Basic Rent Adjustment Date shall be the Basic Rent in effect after the
adjustment provided for as of such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to Tenant on or
before the tenth (10th) day preceding each Basic Rent Adjustment Date.
5. Basic Rent During Each Renewal Term. During each Renewal Term, annual
Basic Rent for the Renewal Term shall be Fair Market Rental Value as of the
first day of such Renewal Term, as determined in accordance with Paragraph 29 of
the Lease. Basic Rent during each Renewal Term shall be payable monthly in
arrears in installments equal to 1/12 of the annual Basic Rent for such Renewal
Term. If the Fair Market Rental value of the Leased Premises has not been
determined as of the first day of any Renewal Term, Tenant shall pay as monthly
installments of Basic Rent an amount equal to the Basic Rent in effect
immediately prior to such Renewal Date, and shall receive a credit or make an
additional payment, as applicable, on the
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<PAGE> 75
first Basic Rent Payment Date following the determination of Fair Market Rental
Value.
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<PAGE> 76
EXHIBIT E
FINANCIAL COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Tenant shall maintain its corporate existence, rights and franchises in
full force and effect in its jurisdiction of incorporation. Tenant shall, and
shall cause of its Subsidiaries to, qualify and remain qualified as a foreign
corporation in each jurisdiction in which failure to receive or retain such
qualification would have an adverse effect on the business, operations or
financial condition of the enterprise comprised of the Tenant and its
Subsidiaries taken as a whole.
(b) At no time during the Term shall any Person acquire directly or
indirectly more than 50% of any class of Tenant's Voting Stock (other than a
Person owning an equity interest in Tenant as of the commencement of the Term).
(c) The Tenant shall not consolidate with or merge into any other Person
unless an Event of Default does not then exist and, immediately following such
consolidation or merger, (i) the surviving corporation shall have, on a proforma
basis, an Adjusted Consolidated Net Worth of not less than Fifty-three Million
Dollars ($53,000,000), (ii) the Board of Directors of Tenant immediately prior
to such merger or consolidation remains in control following such merger or
consolidation, (iii) the senior management does not change in any material
respect immediately following such merger or consolidation and (iv) after giving
effect thereto, an Event of Default does not then exist. This Section 1(c) shall
not apply to a merger with a Person that is a Subsidiary of Tenant as of
December 31, 1994 nor a wholly-owned Subsidiary of Tenant if, in each case,
Tenant is the surviving entity.
(d) The Tenant shall not, except as specifically permitted under, and in
accordance with the terms of Paragraph 21 of this Lease, in a single transaction
or series of related transactions, sell or convey, transfer, abandon or lease
all or substantially all of its assets to any Person.
(e) The Tenant shall not make any substantial change in the nature of its
business.
2. Debt and Restricted Payments.
(a) Tenant will not, directly or indirectly make, or cause or permit any
Subsidiary of the Tenant to make, any Restricted Payment, unless at the time
thereof, and after giving effect thereto:
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<PAGE> 77
(i) no Event of Default shall have occurred and be continuing; and
(ii) the Tenant's Adjusted Consolidated Net Worth equals or exceeds
$53,000,000 as of the end of the month preceding the date of such
Restricted Payment; and
(iii) such Restricted Payment, together with all other Restricted
Payments made from the commencement date of the Term to the date of such
Restricted Payment does not exceed the sum of 40% of the Tenant's
Consolidated Net Income on a cumulative basis beginning with and including
the fiscal year in which the Term commenced to the month immediately
preceding the date of such Restricted Payment.
(b) The Tenant will not become or be a guarantor or surety of, or otherwise
incur any Contingent Obligation or become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person (except as to
any Subsidiary), or make or permit to exist any loans or advances to, or
investments in, any other Person (except as to any Subsidiary) other than (i)
for an amount outstanding at any time not to exceed Fifteen Million Dollars
($15,000,000) less the amount of Funded Debt outstanding at such time under
clause (iii) of paragraph (c) below and (ii) additional Contingent obligations
up to three (3) times Consolidated EBIDTA on a proforma basis, reduced by the
amount of Funded Debt outstanding under clause (iii) of paragraph (c) below.
(c) Tenant will not, and will not permit any Subsidiary directly or
indirectly to, incur, create, assume any Indebtedness other than (i) Funded Debt
outstanding on the Closing Date and reflected in the audited financial
statements described in Paragraph 28(b), (ii) Funded Debt that replaces or
refinances the Funded Debt described in (i) above and is repayable on the basis
of an amortization schedule substantially similar to, or better than, the
amortization schedule for the Funded Debt outstanding on the Closing Date, (iii)
not more than the amount at any time of Fifteen Million Dollars ($15,000,000) in
Funded Debt in addition to the Funded Debt described in (i) and (ii) above less
the amount of Contingent Obligation outstanding at such time under clause (i) of
paragraph (b) above and (iv) additional Funded Debt up to three (3) times
Consolidated EBIDTA on a proforma basis, reduced by the amount of Contingent
Obligation outstanding at such time under clause (ii) of paragraph (b) above.
3. Consolidated Net Worth. Consolidated Net Worth shall not as of the end
of each fiscal quarter of Tenant that ends on and after January 31, 1997 be less
than an amount equal to the
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<PAGE> 78
sum of (a) $53,000,000 plus (b) commencing with the fiscal quarter of Tenant
that commences August 1, 1996 and continuing for each fiscal quarter thereafter
60% of Consolidated Net Income on a cumulative basis, calculated at the end of
each fiscal quarter.
4. Definitions. For the purpose of this Exhibit "E" the following terms
shall have the following meanings:
(a) "Adjusted Consolidated Net Worth" shall mean, at any date, the net
worth of Tenant and its consolidated Subsidiaries on a consolidated basis,
determined in accordance with GAAP, except that any Qualified Subordinated Debt
shall be computed as equity.
(b) "Closing Date" shall mean January 31, 1997.
(c) "Consolidated EBIDTA" for any period, with respect to Tenant and its
consolidated Subsidiaries, shall mean earnings from continuing operations,
exclusive of extraordinary items, if any, before interest expense, depreciation,
taxes, amortization expense (including amortization of debt issuance costs) and
less capital expenditures.
(d) "Consolidated Fixed Charges" for any period, with respect to Tenant and
its consolidated Subsidiaries, shall mean the sum of the total interest expense
for such period and rent or lease payments for such period, determined on a
consolidated basis in accordance with GAAP, but excluding interest paid in
respect of Qualified Subordinated Debt.
(e) "Consolidated Net Income" shall mean, for any period, the aggregate net
income (or loss) of Tenant, and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP.
(f) "Consolidated Net Worth" shall mean, at any date, the net worth of
Tenant and its consolidated Subsidiaries on a consolidated basis, determined in
accordance with GAAP.
(g) "Contingent Obligation" as to any Person shall mean the undrawn face
amount of any letters of credit issued for the account of such Person and shall
also mean any obligation of such Person guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends, letters of credit or other obligations
("primary obligations") of any other Person other than a Subsidiary (the
"primary obligor") in any manner, whether directly or indirectly including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain
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the financial condition or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the
obligee under any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the obligee under such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include (x) endorsements of instruments for deposit or collection in the
ordinary course of business or (y) usual and customary representations and
warranties contained in loan and other financing agreements. The amount of any
contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation or, where such Contingent
Obligation is specifically limited to a portion of any such primary obligation,
that portion to which it is limited.
(h) "Funded Debt" of any Person shall mean all Indebtedness of such Person
which in accordance with GAAP would be classified on a balance sheet as long
term debt, and shall in any event include (without duplication) all
Indebtedness, whether secured or unsecured, having a final maturity (or which,
pursuant to the terms of a revolving credit agreement or otherwise is renewable
or extendible at the option of the obligor for a period ending) more than one
year after the date of the creation thereof (including, without limitation, any
portion of such Funded Debt maturing in less than one year) and money borrowed
for working capital purposes unless for a period of not less than sixty (60)
consecutive days in any period of twelve (12) consecutive months such
obligations are reduced to zero.
(i) "GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States of America, applied on a consistent
basis.
(j) "Indebtedness" of any Person shall mean, as of any date, all
obligations which would in accordance with GAAP be classified as debt, and shall
include (a) all obligations of such Person for borrowed money, (b) all
obligations of such person in respect of letters of credit, surety bonds or
similar obligations issued for the account of such Person, (c) all obligations
of such Person as lessee, user or obligor under any lease of real or personal
property which, in accordance with GAAP, are or should be capitalized on the
books of the lessee, user or obligor (excluding, in the case of Tenant, any
lease classified in accordance with GAAP as an operating lease), (d) all
obligations of such Person in respect of the deferred purchase price for goods,
property or services acquired by such Person, (e) all obligations of such Person
to purchase goods, property or services where payment therefor is required
regardless of whether delivery of such goods or property or the performance of
such services is ever made or tendered, (f) all obligations of such Person in
respect of any interest rate or
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<PAGE> 80
currency swap, rate cap or other similar transaction (valued in an amount equal
to the highest termination payment, if any, that would be payable by such Person
upon termination for any reason on the date of determination), and (g) all
obligations of others similar in character to those described in clauses (a)
through (f) of this definition to the extent such person is liable, contingently
or otherwise, as obligor, guarantor or in any other capacity, or in respect of
which obligations such Person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including,
without limitation, all obligations of such Person to advance funds to, or to
purchase property or services from, any other Person in order to maintain the
financial condition of such other Person and, in the case of Tenant, all
Indebtedness which is non-recourse to the credit of Tenant but which is secured
by the assets or property of Tenant (but excluding any such non-recourse
Indebtedness of Subsidiaries of Tenant in which Tenant has no liability). Any
Indebtedness which is extended or renewed (other than by an option created with
the original creation of such Indebtedness) will be deemed to have been created
when extended or renewed.
(k) "Person" shall mean an individual, partnership, association,
corporation or other entity.
(l) "Qualified Subordinated Debt" means subordinated debt pursuant to which
the borrower's obligation to pay interest on a current basis is contingent upon
the borrower meeting certain financial tests satisfactory to Landlord and
Lender.
(m) "Restricted Payment" shall mean and include (a) any direct or indirect
purchase, redemption or other acquisition or retirement for value of any equity
security of Tenant or any option, warrant or right to acquire any such equity
security, or any security convertible into or exchangeable for any such equity
security, (b) any dividend, distribution, loan advance, guarantee, extension of
credit or other payment of transfer, whether in cash or property and whether
direct or indirect, to or for the benefit any Person holding an equity interest
in the Tenant, whether or not such interest is evidenced by a security, or any
Affiliate of any such Person, and (c) any direct or indirect purchase,
redemption, prepayment or other acquisition or retirement for value, prior to
its stated maturity, scheduled repayment or scheduled sinking fund payment of
any Qualified Subordinated Debt of the Tenant or any Subsidiary held by any
Person described in clause (b) above; provided, however, that so long as an
Event of Default shall not exist, the term Restricted Payment shall not include
(i) the repurchase by Tenant of stock in Tenant for an amount not to exceed on a
cumulative basis the sum of $2,500,000 and the cash purchase price received by
Tenant from the sale of stock in Tenant to employees, consultants or directors
or prospective employees, consultants or directors, or (ii) the repayment of
Subordinated Debt (including any interest
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thereof, whether current, "blocked" or accrued) from (A) the proceeds of an
initial public offering or (B) from cash balances of Tenant so long as following
such payment Tenant will have cash balances, on a proforma basis, of not less
than $10,000,000 and is otherwise in compliance with the Covenants.
(n) "Subsidiary" of any Person means a corporation a majority of the Voting
Stock of which is at the time owned, or the management of which is otherwise
controlled, directly or indirectly, through one or intermediaries, or both, by
such Person.
(o) "Voting Stock" means shares of stock of a corporation having ordinary
voting power to elect the board of directors or other managers of such
corporation.
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SCHEDULE 1
TERMINATION VALUES
<TABLE>
<CAPTION>
Lease Year Termination Value
<S> <C>
1 $12,000,000
2 $12,000,000
3 $15,329,861
4 $13,829,861
5 $13,371,746
6 $13,371,746
7 $12,371,746
8 $12,371,746
9 $11,874,363
10 $11,874,363
11 $10,874,363
12 $10,874,363
13 $10,795,829
14 $10,795,829
15 $10,795,829
16 $10,795,829
17 $10,795,829
</TABLE>
<PAGE> 83
SCHEDULE 2
APPROVED ALTERATIONS TO
BUILDING TWO AND BUILDING THREE
1. Integrated Facility Management System: Fault Tolerant, Upgradable,
Electronic Direct Digital Control System
2. Water-Cooled Chiller with Cooling Towers and Pumps (Three to replace
existing systems)
3. Main Air Conditioning system and DX to AHU Conversion
4. AHU (Air Handling Unit) and Backup Systems
5. Toxic Gas Control System and HVAC Isolation System
6. Electrical Main replacements
7. Hi-Voltage Monitor
8. Boiler Auto Blowdown Control
9. House Vacuum System and Control
10. Engineering Computer Room--Air Conditioning Backup, Controls and
Monitoring
11. Process Exhaust Monitoring
12. New Cage for Inspection Equipment and Kits
13. Test Cell Enclosures
14. Backup Generator
15. Process Lab Test Cells
16. Process Lab Production Upgrades
17. Patio Area Adjoining Building One
<PAGE> 84
Hayward, California
Recording requested by and
when recorded return to:
Ruth S. Perfido, Esquire
Reed Smith Shaw & McClay
375 Park Avenue
Suite 301
Pittsburgh, PA 15219
AMENDED AND RESTATED MEMORANDUM OF LEASE
THIS AMENDED AND RESTATED MEMORANDUM OF LEASE, made as of the 31st day of
January, 1997, between ESI (CA) QRS 12-6, INC., a California corporation
("Landlord") having an address c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza,
2nd Floor, New York, New York 10020, and ETEC SYSTEMS, INC. ("Tenant"), a Nevada
corporation having an address at 26460 Corporate Avenue, Hayward, California
94545.
A. Landlord and Tenant entered into a certain Lease Agreement dated as of
February 1, 1995 (the "Original Lease"), a memorandum of which was recorded in
the Official Records of Alameda County, California on February 16, 1995 at
Series No. 95-036396 ("Original Memorandum");
B. Landlord and Tenant have amended and restated the Original Lease in its
entirety and desire to amend and restate the Original Memorandum as follows in
order to correctly reflect the terms of the amended and restated Original Lease.
1. Landlord hereby leases to Tenant those certain premises (the
"Leased Premises"), more fully described below, on the terms and conditions of
an Amended and Restated Lease Agreement dated as of the date hereof (the
"Lease") which are incorporated herein as though set forth in full. The Leased
Premises consists of the following described property (collectively, the "Leased
Premises"): (a) certain real property located in the City of Hayward, County of
Alameda, State of California, described in Exhibit "A" attached hereto, together
with the Appurtenances (as defined in the Lease); (b) the Improvements (as
defined in the Lease); and (c) the Equipment (as defined in the Lease).
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<PAGE> 85
2. Under the terms of the Lease, Tenant may have and hold the
Leased Premises, together with the tenements, hereditaments, appurtenances and
easements thereunto belonging, at the rental and upon the terms and conditions
therein stated, for an original term (the "Term") that commenced on February 16,
1995 and will end on February 29, 2012.
3. Under the terms of the Lease, the Term shall be automatically
extended for three (3) separate and additional periods of five (5) years each,
followed by one (1) separate and additional period of two (2) years and eleven
(11) months, after the expiration of the then current Term (each such additional
five-year period is hereinafter referred to as "Renewal Term") unless Tenant
notifies Landlord in writing at least twelve (12) calendar months prior to
expiration of the Term that Tenant is terminating the Lease as of the end of the
then current Term. Each Renewal Term shall be subject to all the terms and
conditions of the Lease as if the Term originally included the Renewal Term.
4. Tenant has certain rights of first refusal during the first ten
(10) Lease Years (as defined in the Lease), all as more particularly set forth
in Paragraph 35 of the Lease.
5. Tenant has the right to or may be required to make certain
rejectable offers to purchase the Leased Premises, subject to the terms and
conditions more particularly set forth in the Lease.
6. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT, OR TO
ANYONE HOLDING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN ANY TO ANY OF THE LEASED PREMISES.
7. This Amended and Restated Memorandum of Lease is executed for
the purpose of recordation in the Office of the County Recorded of Alameda
County, California in order to give notice of all of the terms, provisions and
conditions of the Lease and is not intended, and shall not be construed, to
define, limit or modify the Lease. The leasehold estate created and conveyed
hereby with respect to the Leased Premises is intended to be one and the same
estate as was created with respect to the Leased Premises by the Lease and is
further intended to be governed in all respects solely by the Lease and all of
the provisions thereof.
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<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Lease as of the day and year first above written.
LANDLORD:
ATTEST: ESI (CA) QRS 12-6, INC.,
a California corporation
By: [illegible] By: [illegible]
Title: Assistant Secretary Title: Executive Vice President
[Corporate Seal]
TENANT:
ATTEST: ETEC SYSTEMS, INC.,
a Nevada corporation
By: /s/ Saul Arnold By: /s/ Melanie Mock
Saul Arnold Melanie Mock
Assistant Secretary Treasurer
[Corporate Seal]
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<PAGE> 87
EXHIBIT A
LEGAL DESCRIPTION
REAL PROPERTY in the City of Hayward, County of Alameda, State of California,
described as follows:
Beginning on the Northeast line of Corporate Avenue at the common line of
Parcels 1 and 2, Parcel Map No. 461, filed April 10, 1969, Book 58, of Parcel
Maps, Page 96, Alameda County Records; thence from said point of beginning,
North 33 degrees 20 minutes 15 seconds West, along said Northeast line of
Corporate Avenue as shown on said Parcel Map, 564.987 feet and Northwesterly,
along the arc of a tangent curve to the right with a radius of 1166 feet, an arc
distance of 235.490 feet to the common line of Parcels 1 and 2 of Parcel Map No.
1500, filed February 25, 1975, Book 87 of Parcel Maps, Page 23, Alameda County
Records; thence along said last mentioned common line, as follows: North 58
degrees 22 minutes 09 seconds East, 611.160 feet, North 80 degrees 11 minutes 21
seconds East 201.924 feet and South 65 degrees 00 minutes 00 seconds East,
203.000 feet to the most Easterly corner of Parcel 2 of said Parcel Map No. 1500
(87 PM 23), being also the most Northerly corner of Parcels 1 and 2 of the
aforesaid Parcel Map No. 461 (58 PM 96); thence along the exterior line of said
Parcel 2 of said Parcel Map No. 461, South 41 degrees 29 minutes 51 seconds
East, 562.970 feet and South 58 degrees 22 minutes 09 seconds West, 1006.638
feet to the point of beginning.
Being also know as Parcel 2 of Parcel Map 461, filed April 10, 1969 in Book 58
of Parcel Maps, at Page 96; and Parcel 2 of Parcel Map 1500, filed February 25,
1975 in Book 87 of Parcel Maps, at Page 23, Official Records of said County.
A.P. No. 461-0015-007-09
461-0015-025
<PAGE> 1
Exhibit 10.3
[AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION LOGO]
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only, May
27, 1998, is made by and between Lowe Enterprises Commercial Group, a
California corporation ("Lessor") and Metagenics Incorporated, a California
corporation ("Lessee"), (collectively, the "Parties," or individually a
"Party")
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as the Metagenics building located in the County of Orange, State of
California, and generally described as (describe briefly the nature of the
property and, if applicable, the "Project", if the property is located within a
Project) approximately 9.00 acres (gross) or 6.45 acres (net) of land (the
"Land") and the building (the "Building") consisting of approximately 88,000
sq. feet including approximately 40,000 sq. feet of office, together with
exclusive parking, and which Land, Building and parking are approximately
depicted on the Site Plan attached hereto as Exhibit A ("Site Plan") which Site
Plan is hereby incorporated herein by this reference ("Premises"). (See also
Paragraph 2)
1.3 Term: Ten (10) years and ___ months ("Original Term") commencing upon
Substantial Completion of the Tenant Improvement Work the Commencement Date as
defined in the Work Letter attached hereto as Exhibit B (the "Work Letter"),
which Work Letter is hereby incorporated herein by this reference.
("Commencement Date") and ending on the last day of the calendar month which is
ten (10) years after the Commencement Date occurs, subject to extension
pursuant to Paragraph 39 ("Expiration Date"). (See also Paragraph 3)
1.4 Early Possession: See Article IX of Work Letter ("Early Possession
Date"). (See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $(a) Monthly Base Rent. Commencing upon the Commencement
Date, Lessee, for and in respect of the Premises, shall pay Lessor base annual
rent ("Base Rent") equal to eleven percent (11%) of the Cost of Construction (as
defined in the Work Letter). No Base Rent shall be due or payable prior to the
Commencement Date. Lessee shall pay Base Rent in equal monthly installments in
advance on the Commencement Date and thereafter on the first day of each and
every calendar month during the Term. If the Commencement Date or the date which
is the expiration (earlier termination) of the Term occurs on a day other than
the first or last day, respectively, of a calendar month, the Base Rent for the
month in question shall be prorated on a per diem basis. "(b) Rental Increase.
The Base Rent shall be increased by three and one-half percent (3-1/2%) on ???
of the first day of the first calendar month following the Commencement Date"
(See also Paragraph 4)
[X] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: Within three (3) days after the
commencement of construction of the Improvements, Lessee shall pay to Lessor
the sum of Seventy-Four Thousand Six Hundred Dollars ($74,600.00) ("Estimated
Base Rent") which is the parties' present estimate of the Base Rent per month.
Upon the determination of the actual Base Rent pursuant to Paragraph 1.5 above,
either (a) Lessee shall pay to Lessor the amount by which the actual Base Rent
exceeds the Estimated Base Rent for the first (1st) month of the Term within
fifteen (15) days of Lessor's notice, or (b) Lessor shall credit against the
next month's Base Rent due the amount by which the Estimated Base Rent exceeds
the actual Base Rent. The parties agree to execute a written agreement
acknowledging the actual Base Rent within ten (10) after such determination.
1.7 Security Deposit: $Concurrently with the execution of this Lease,
Lessee shall deposit with Lessor the Security Deposit in an amount equal to one
(1) month of Estimated Base Rent. Upon the determination of the actual Base
Rent pursuant to Paragraph 1.5 above, the Security Deposit shall be adjusted
upward or downward depending upon the actual Base Rent. In the event the actual
Base Rent is greater than the Estimated Base Rent, Lessee shall deposit the
additional funds with Lessor within ten (10) business days after the
determination of the actual Base Rent. In the event that the Estimated Base
Rent is more than the actual Base Rent, Lessor shall either reimburse Lessee
for the excess funds deposited by Lessor or credit such excess amount against
the base Rent next due ("Security Deposit"). (See also Paragraph 5)
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(c) 1997 American Industrial Real Estate Association
<PAGE> 2
1.8 Agreed use: Office, warehousing, and distribution and all allied
legal uses (excluding storage or distribution of Hazardous Substances) (See also
Paragraph 6)
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise
stated herein (See also Paragraph 8)
1.10 Real Estate Brokers: (See also Paragraph 15)
(a) Representation: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction (check
applicable boxes)
/ / None represents Lessor exclusively
----------------------------------------
("Lessor's Broker");
/ / None represents Lessee exclusively
----------------------------------------
("Lessee's Broker"); or
/ / None represents both Lessor and Lessee
----------------------------------------
("Dual Agency")
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by
----------------------------------------------------------------
- ---------------------------------------------------------("Guarantor"). (See
also Paragraph 37)
1.12 Addenda and Exhibits. Attached hereto are Exhibits "A", "B" and "C",
all of which constitute a part of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may
have been used in calculating rental, is an approximation which the Parties
agree is reasonable and the rental based thereon is not subject to revision
whether or not the actual size is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean and
free of debris on the Commencement Date, and, within warrants to Lessee (that
the existing electrical, plumbing, fire sprinkler system, lighting, heating,
ventilating and air conditioning systems ("HVAC"), loading doors, if any, in the
Premises, other than those constructed by Lessee, shall be in good operating
condition on the Commencement Date and that the structural elements of the
roof, bearing walls and foundation of the Building shall be free of material
defects. If a non-compliance with said warranty exists as of the Start
Commencement Date, Lessor shall, as Lessor's sole obligation with respect to
such matter, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense, and not as a
"Cost of Construction" (as defined in the Work Letter). If, after the
Commencement Date, Lessee does not give Lessor written notice of any
non-compliance with this warranty within: (i) four years for any defects that
are apparent by reasonable inspection of the Premises, or (ii) within ten years
for any defects not so apparent (collectively, the "Warranty Period");
correction of such non-compliance shall be the obligation of Lessee at Lessee's
sole cost and expense.
2.3 Compliance. Lessor warrants to Lessee that the improvements on the
Premises comply in all material respects with (a) all applicable laws, covenants
or restrictions of record, applicable building codes, regulations and ordinances
including, without limitation, the provisions of title 3 of the Americans With
Disabilities Act ("ADA") ("Applicable Requirements") in effect on the Start
Commencement Date, and (b) the Base Building Plans and Tenant Improvement Plans
approved by Lessor and Lessee pursuant to the Work Letter. Said warranty does
not apply to the use to which Lessee will put the Premises or to any Alterations
or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee. NOTE: Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense, and not as a "Cost
of Construction" (as defined in the Work Letter). If Lessee does not give Lessor
written notice of a non-compliance with this warranty within the Warranty
Period; correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Commencement Date) so as to
require during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Building ("Capital
Expenditure"), Lessor and Lessee shall allocate the cost of such work as
follows:
(a) Subject to Paragraph 2.3(e) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the responsibility
obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(c);
provided, however, that if such Capital Expenditure is required during the last
two years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon ninety (90) days prior written notice to Lessee unless
Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
interest, from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance of the Rent due
and payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right
to terminate this Lease.
2.4 Acknowledgements. Lessee hereby acknowledges that: (a) it has been
advised by Lessor to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their present and future suitability of the Premises for
Lessee's intended use; (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes, subject to Lessor's
obligation to construct the improvements pursuant to Paragraph 2.5 below and the
Work Letter and Lessor's warranties in Paragraphs 2.2 and 2.3 above and the Work
Letter, all responsibility therefor as the same relate to its occupancy of the
Premises; and (c) neither Lessor, nor Lessor's agents has made any oral or
written representations or warranties with respect to said matters other than as
set forth in this Lease.
2.5
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(C)1997 - American Industrial Real Estate Association REVISED FORM STN-6-2/97E
<PAGE> 3
Improvements. The terms and provisions concerning the construction of the
Building, the Tenant improvements, the landscaping and parking improvements and
all other improvements and work required to prepare the Premises for Lessee's
initial occupancy of the Premises (collectively, the "Improvements") are set
forth in the Work Letter.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3. The parties agree to execute a written
agreement acknowledging the Commencement Date.
3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including, but not limited to, the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect nor advance the
Expiration Date.
3.3 Delay in Possession. If Lessor is unable to deliver possession as
agreed, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee
hereunder, or extend the term hereof, but in such case, Lessee shall not, except
as otherwise provided herein, however, be obligated to pay Rent or perform its
other obligations until it receives possession of the Premises, and Lessee shall
have the rights set forth in Section 8 of the Work Letter.
4. Rent.
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 Payment. Lessee shall cause payment of Rent as the same may be
adjusted from time to time to be received by Lessor in lawful money of the
United States, without offset or deduction (except as specifically permitted in
this Lease), on or before the day on which it is due under the terms of this
Lease Rent for any period during the term hereof which is for less than one (1)
full calendar month shall be prorated based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other persons or place as Lessor may from time to time designate in
writing Acceptance of a payment which is less than the amount then due shall not
be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
4.3 Additional Rent. Lessee shall pay to Lessor on the tenth business day
of each calendar month of the Term, as additional Rent, (a) insurance premiums
paid by Lessor in the previous month for insurance coverage that may be obtained
by Lessor pursuant to Paragraph 8.1 hereof, (b) Real Property Taxes paid by
Lessor in the previous month pursuant to Paragraph 10.2 hereof, (c) of Lessor's
operating expenses pursuant to Paragraph 7.2 hereof with respect to the Premises
for the previous month, (d) Lessee's amortized share of replacements pursuant
to Paragraph 7.1(c); and (e) Lessor's management fee associated with each of the
foregoing items which fee shall be equal to five percent (5%) of the aggregate
of such items. The amount to be paid by Lessee shall be set forth in a statement
prepared by Lessor and delivered to Lessee no later than the first business day
of the month.
5. Base Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of its obligations under this Lease. If Lessee fails to pay
Base Rent, or other rent or charges due hereunder, or otherwise Defaults under
this Lease, Lessor may use, apply or retain all or any portion of said Security
Deposit for the payment of any amount due Lessor or to reimburse or compensate
Lessor for any liability, expense, loss or damage (including attorney's fees)
which Lessor may suffer or incur by reason thereof. If Lessor uses or applies
all or any portion of said Security Deposit, Lessee shall within ten (10) days
after written request therefor deposit monies with Lessor sufficient to restore
said Security Deposit to the full amount required by this Lease. If the Base
Rent increases during the term of this Lease, Lessee shall, upon written request
from Lessor, deposit additional monies with Lessor so that the total amount of
the Security Deposit shall at all times bear the same proportion to the
increased Base Rent as the initial Security Deposit bore to the initial Base
Rent. Lessor shall not be required to keep the Security Deposit separate from
its general accounts. Within fourteen (14) days after the expiration or
termination of this Lease, if Lessor elects to apply the Security Deposit only
to unpaid Rent, and otherwise within thirty (30) days after the Premises have
been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that
portion of the Security Deposit not used or applied by Lessor. No part of the
Security Deposit shall be considered to be held in trust, to bear interest or to
be prepayment for any monies to be paid by Lessee under this Lease. Lessee
waives Civil Code section 1950.7.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is comparable thereto, and for no other purpose.
Lessee shall not use or permit the use of the Premises in a manner that is
unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to neighboring properties. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the Premises
and is otherwise permissible pursuant to this Paragraph G. If Lessor elects to
withhold consent, Lessor shall within five (5) business days after such request
give written notification of same, which notice shall include an explanation of
Lessor's objections to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, so long as such use
is in compliance with all Applicable Requirements, is not a Reportable Use, and
does not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability, including, but not limited to, the installation (and
removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security
Deposit. Notwithstanding the foregoing, in no event shall Lessor condition its
consent upon the deposit of an additional Security Deposit which is more than
two (2) times the existing Security Deposit. Lessor hereby consents to
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1997 - American Industrial Real Estate Association
<PAGE> 4
the use by Lessee of ordinary cleaning supplies in containers and quantities
reasonably necessary for and consistent with normal and ordinary use by Lessee
in the routine janitorial service of the Building and the use by Lessee of
propane stored in a tank for the operation of Lessee's forklifts.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, members, officers, directors, shareholders, partners,
employees, lenders and ground lessor, if any, harmless from and against any and
all loss of rents or profits and/or damages, excluding Lessor's loss of profits,
or consequential damages, liabilities, judgments, claims, expenses, penalties,
and attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or with Lessee's
permission, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from adjacent properties). Lessee's
obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor
in writing at the time of such agreement.
(e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, members, officers,
directors, shareholders, partners, its employees and lenders, harmless from and
against any and all environmental damages, including the cost of remediation,
excluding Lessee's loss of profits, or consequential damages, which existed as a
result of Hazardous Substances on the Premises prior to the Commencement Date or
which are caused by the gross negligence or willful misconduct of Lessor, its
agents or employees. Lessor's obligations, as and when required by the
Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Commencement Start-Date,
provided that all costs incurred for such investigations and remediation shall
be included in the "Cost of Construction" (as defined in the Work Letter),
unless such remediation measure is required as a result of Lessee's use
(including "Alterations", as defined in Paragraph 7.3(a) below) of the Premises,
in which event Lessee shall be responsible for such payment. Lessee shall
cooperate fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor's agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater, give written notice to Lessee, within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such notice. In the event Lessor elects to give a termination
notice, Lessee may, within ten (10) days thereafter, give written notice to
Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within thirty (30) days following such commitment. In such event, this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.
6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau which relate in any manner to the Premises, without regard to
whether said requirements are now in effect or become effective after the
Commencement Date Start-Date. Lessee shall, within ten (10) days after receipt
of Lessor's written request, provide Lessor with copies of all permits and
other documents, and other information evidencing Lessee's compliance with any
Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times,
for the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection
is reasonably related to the violation or contamination.
6.5 Lessor Representations and Warranties.
(a) Land Use Restrictions. The construction of the Premises as
contemplated in this Lease is consistent with all applicable zoning and other
land use laws and with all applicable public and private covenants, conditions
and restrictions and Lessor has obtained all permits, licenses and other
authorizations necessary for such construction.
(b) Pending and Threatened Proceedings. Except as otherwise disclosed
to Lessee in writing prior to the execution of this Lease, Lessor has not
received written notice of any lawsuits, condemnation proceedings, or zoning
changes which could have a material adverse impact on the construction of the
Premises as contemplated in this Lease.
(c) Hazardous Substances. Except as set forth in the [Reference
Environmental Reports], to the best of Lessor's actual knowledge without
further inquiry, the Premises do not presently contain and are free from all
Hazardous Substances. Except for any ordinary and customary materials
reasonably required for construction of the improvements (i) Lessor has not
used the Premises for storage, manufacture or sale of Hazardous Substances,
(ii) Lessor has not transported, or caused to be transported, any Hazardous
Substances on, to or from the Premises, (iii) Lessor has not received any
written notification from any federal, state, county or city agency or
authority relating to Hazardous Substances, in or near the Premises.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction); and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
(regardless of cost and whether or not the portion of the Premises requiring
repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, or adjacent to the
Premises. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph
7.1(b) below. Lessee's obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all improvements thereon or a
part thereof in good order, condition and state of repair. Lessee shall, during
the term of this Lease, keep the exterior fences, walls, roll-up doors and
loading dock equipment, at appearance of the Building in a first-class condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity.
(b) Service Contracts. Lessee shall, at Lessee's solo expense,
procure and maintain contracts, with copies to Lessor, in customary form and
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substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (ii) boiler, and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, (vii)
clarifiers (viii) basic utility feed to the perimeter of the Building, and (ix)
any other equipment, if reasonably required by Lessor ("Tenant Items").
(c) Replacement. Subject to Lessee's indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Tenant Items described in Paragraph 7.1(b) or Landlord Items
described in Paragraph 7.2 (collectively, the "Basic Elements") cannot be
repaired other than at a cost which is in excess of 50% of the cost of
replacing such Basic-Elements, then such Basic Elements shall be replaced by
Lessor, and the cost thereof shall be paid by Lessee, provided, however, Lessee
shall only be obligated to pay, each month during the remainder of the Original
Term of this Lease or any Option Term, on the date on which Base Rent is due,
an amount equal to the product of multiplying the cost of such replacement by a
fraction, the numerator of which is one, and the denominator of which is the
number of months of the useful life of such replacement as such useful life is
determined by reference to the vendor's or manufacturer's suggested useful life
for such Basic Elements or, where such reference does not exist, pursuant to
Federal income tax regulations or guidelines for depreciation thereof but in
any event no more than 120 months (including interest on the unamortized
balance at the annual rate of eleven percent (11%), with Lessee reserving the
right to prepay its obligation at any time.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction), and 14 (Condemnation)
and except as expressly provided in this paragraph 7.2 and paragraph 7.1(c), it
is intended by the Parties hereto that Lessor have no obligation, in any manner
whatsoever, to repair and maintain the Premises, or the equipment therein, all
of which obligations are intended to be that of the Lessee, Lessor shall keep
the following elements at the Premises in good order, condition and repair (i)
roof covering and drains, (ii) certain wall and exterior window systems, (iii)
HVAC equipment (excluding hot/cold calls), (iv) exterior lighting (including
lighting for parking) (v) exterior landscaping and irrigation systems, (vi)
driveways and parking lot (asphalt only) (vii) exterior paint and (viii)
building structure ("Landlord Items"), the entire cost of which shall be
redistributed to Lessor as "operating expenses" pursuant to Paragraph 1.3
hereof. It is the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and repair of the
Premises, and they expressly waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). "Lessee Owned Alterations and/or Utility Installations"
shall not mean Alterations or Utility Installations installed as part of the
Initial buildout of the Premises. Lessee may from time to time, at its sole
expense, upon twenty (20) days prior written notice to Lessor, make Alterations
to the Premises which Lessee reasonably determines to be beneficial. Lessee
shall obtain Lessor's written consent prior to making any Alteration to the
Premises the cost of which exceeds Twenty-Five Thousand Dollars ($25,000.00) or
which affects the structure or major operating systems of the Premises or which
affects the exterior appearance of the Premises, and Lessor shall be entitled to
prohibit Lessee from making any such substantial Alteration, by written notice
to Lessee within twenty (20) days following receipt of Lessee's notice, to the
extent that such Alteration appears likely to have a material adverse impact
upon the structure or major operating systems or appearance of the Premises.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to one and one-half times the amount of such contested lien, claim
or demand, indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end
of the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all or
any part of any Lessee Owned Alterations or Utility Installations made without
the required consent.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good
operating order, condition and state of repair, ordinary wear and tear and
casualty damage arising from perils covered by the Insurance described in
Paragraph 8.3 of this Lease excepted. "Ordinary wear and tear" shall not
include any damage or deterioration that would have been prevented by good
maintenance practice. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee Owned
Alterations and/or Utility Installations, furnishings, and equipment as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or groundwater contaminated
by Lessee. Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent (a) the annual cost of earthquake
insurance exceeds $30,000, and (b) the cost attributable to liability insurance
carried by Lessor under Paragraph 8.2(b) in excess of $5,000,000 per occurrence
(provided, however, if the liability insurance policy maintained by Lessor
covers other property besides the Premises, Lessee shall pay the cost fairly
allocated to the Premises but in no event in excess of the estimated premium
cost for a stand-alone policy of $5,000,000 per occurrence). Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based
upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an "Additional Insured-Managers or Lessors of
Premises Endorsement" and contain the "Amendment of the Pollution Exclusion
Endorsement" for damage caused by heat, smoke or fumes from a hostile fire. The
Policy shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability assumed
under this Lease as an "insured contract" for the performance of Lessee's
indemnity
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obligations under this Lease. The limits of said insurance shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
All insurance carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered
excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
8.3 Property Insurance -- Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party,
however, Lessee Owned Alterations and Utility Installations, Trade Fixtures,
and Lessee's personal property shall be insured by Lessee under Paragraph 8.4
rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood unless elected by Lessor
and/or required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to
where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $10,000 per occurrence, and
Lessee shall be liable to such deductible amount in the event of an Insured
Loss.
(b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide
for one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent to the Premises,
the Lessee shall pay for any increase in the premiums for the property insurance
of such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
8.4 Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee
Owned Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $10,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be reasonably required by Lessor
or Lender (but not in excess of the rating requirements typically required by
Lessors of comparable commercial buildings in South Orange County. Lessee shall
not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Commencement Date, deliver to Lessor
certified copies of policies of such insurance or certificates including the
"Named Insured" endorsement to the policies, evidencing the addition of Lessor
as an additional named insured, evidencing the existence and amounts of the
required insurance. No such policy shall be cancelable or subject to
modification except after thirty (30) days prior written notice to Lessor.
Lessee shall, at least thirty (30) days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.7 Indemnity. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, members,
officers, directors, shareholders, partners and Lenders, from and against any
and all claims, loss of rents and/or damages, liens, judgments, penalties,
attorneys' and consultants' fees, expenses and/or liabilities collectively,
"Claims," arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory
to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need
not have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom or for any consequential or punitive damages.
Subject to the provisions of Paragraphs 8.6 and 20 of the Lease, Lessor's
exemption from liability shall not apply to the extent the injury or damage was
caused by the gross negligence or willful misconduct of Lessor, its agents,
contractors, employees or invitees.
9. Damage or Destruction.
9.1 Definitions. The following definitions shall have the meanings given
for the purposes of this Lease only and are not intended to modify or
supplement any insurance policy.
(a) "Premises Partial Damage" shall mean damage or destruction to the
Improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in eight (8) months or less
from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as
to whether or not the damage is Partial or Total, as reasonably determined by
an independent third party qualified contractor.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in eight (8) months or less
from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as
to whether or not the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to Improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their
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condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by a
Hazardous Substance as defined in Paragraph 6.2(a), in, on or under the
Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. Premises Partial Damage due to flood shall be subject to
Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee or a Default or breach by Lessee hereunder (in which event Lessee shall
make the repairs at Lessee's expense), Lessor may either: (i) repair such damage
as soon as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) terminate this Lease by giving
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage. Such termination shall be effective
sixty (60) days following the date of such notice. In the event Lessor elects to
terminate this Lease, Lessee shall have the right within ten (10) days after
receipt of the termination notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within thirty (30) days after making such commitment. In such event this
Lease shall continue in full force and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible after the required funds are
available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction is an Uninsured Loss
and caused by the gross negligence or willful misconduct of Lessee or a Default
or breach by Lessee hereunder, Lessor shall have the right to recover Lessor's
damages from Lessee, except as provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds needed to make the
repairs on or before the earlier of (i) the date which is ten days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds to cover
any shortage in insurance proceeds, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received by Lessor from the Rental Value insurance.
All other obligations of Lessee hereunder shall be performed by Lessee, and
Lessor shall have no liability for any such damage, destruction, remediation,
repair or restoration except as provided herein.
(b) Remedies. If Lessor or Lessee shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within ninety (90) days after such obligation shall
accrue, the other party may, at any time prior to the commencement of such
repair or restoration, give written notice to Lessor and to any Lenders of which
Lessee has actual notice, of Lessee's election to terminate this Lease on a date
not less than sixty (60) days following the giving of such notice. If Lessee
gives such notice and such repair or restoration is not commenced within thirty
(30) days hereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "Commence" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination - Advance Payments. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of assessment, real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, income or estate taxes); improvement bond; and/or license fee
imposed upon or levied against any legal or equitable interest of Lessor in the
Premises, Lessor's right to other income therefrom, and/or Lessor's business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises.
10.2
(a) Payment of Taxes. Lessor shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. All such payments
shall be made at least ten (10) days prior to any delinquency date. Lessee shall
reimburse Lessor for all Real Property Taxes paid by Lessor pursuant to this
Section 10.2(a) except to the extent of the payment attributable to penalties
for late payments. If any such taxes shall cover any period of time prior to or
after the expiration or termination of this Lease, Lessee's share of such taxes
shall be prorated to cover only that portion of the tax bill applicable to the
period that this Lease is in effect, and Lessor shall reimburse Lessee for any
overpayment. If Lessor shall fail to pay any required Real Property Taxes,
Lessee shall have the right to pay the same, and Lessor shall reimburse Lessee
for any penalties assessed thereon.
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10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent, such consent not to be unreasonably withheld.
(b) A change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of ???? percent (2550%)
or more of the voting control of Lessee shall constitute a change in control for
this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles. Notwithstanding the provisions of Paragraph 12.1(a) or 12.1(b) above
to the contrary and subject to the provisions of Paragraph 12.2 below, Lessee
may assign or sublet the Premises or any portion thereof, without Lessor's
consent to:
(a) any assignee or sublessee which is an entity controlled by
Lessee;
(b) any assignee which holds the Lease for security.
Any such assignment shall not, in any way, affect or limit the liability of
Lessee under the terms of this Lease except as provided in a writing signed by
Lessor. No assignment or subletting pursuant to this paragraph shall constitute
Lessor's consent to any use of the Premises other than the Permitted Use set
forth in paragraph 1.8 of this Lease. Lessor or Lessee hereby acknowledge that
Lessor's disapproval of any proposed transfer pursuant to this Paragraph 12.1
will be deemed reasonably withheld if based upon any commercially reasonable
nonsubjective factor, including, without limitation, any or all of the following
factors: (a) the use of the Premises by the transferee is not permitted by the
use provisions in Paragraph 1.8 of this Lease, (b) the transfer would likely
result in a significant and inappropriate increase in the use of the parking
areas which exceeds its capacity by the transferee's employees or visitors; or
(c) the transferee does not have the financial capability to fulfill the
obligations imposed by the transfer and this Lease.
(d) An assignment or subletting without consent, shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c).
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease; (ii)
release Lessee of any obligations hereunder; or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting. However, Lessor
may consent to subsequent sublettings and assignments of the sublease or any
amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.
(e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's determination as
to the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a fee of
$1,000, as consideration for Lessor's considering and processing said request.
Lessee agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. If Lessee's subletting of the Premises provides
for the receipt by, on behalf or on account of Lessee of any consideration of
any kind whatsoever in excess of the rental and other charges due Lessor under
this Lease, Lessee shall pay fifty percent (50%) of said excess to Lessor.
Lessor shall not, by reason of the foregoing or any assignment of such sublease,
nor by reason of the collection of Rent, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor all Rent due and to become due under the sublease. Sublessee shall rely
upon any such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists, notwithstanding
any claim from Lessee to the contrary.
(b) in the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The sublessee
shall have a right of reimbursement and offset from and against Lessee for any
such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
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13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of five (5) business days
following written notice to Lessee.
(c) The failure of Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (iii)
the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more
than thirty (30) days are reasonably required for its cure, then it shall not
be deemed to be a Breach if Lessee commences such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution
or other judicial seizure of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days, provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.
(f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor; (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty; (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing; (iv) a Guarantor's refusal to honor the guaranty; or (v) A
Guarantor's breach of its guaranty obligation on an anticipatory basis, and
Lessee's failure, within sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within ten (10) days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses,
permits or approvals. The costs and expenses of any such performance by Lessor
shall be due and payable by Lessee upon receipt of invoice therefor. If any
check given to Lessor by Lessee shall not be honored by the bank upon which it
is drawn, Lessor, at its option, may require all future payments to be made by
Lessee to be by cashier's check. In the event of a Breach, Lessor may, with
or without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Lessee shall immediately surrender
possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent 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 rental loss that the Lessee 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 amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and alteration
of the Premises, reasonable attorneys' fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of the District within which the Premises are located at the time of award
plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's
Breach of this Lease shall not waive Lessor's right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a
notice and grace period required under Paragraph 13.1 was not previously given,
a notice to pay rent or quit, or to perform or quit given to Lessee under the
unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and
the unlawful detainer statue shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any
Rent shall not be received by Lessor within five (5) days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a one-time late charge equal to ten percent (10%) of each such
overdue amount. The Parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such overdue
amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of Base Rent,
then notwithstanding any provision of this Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor when due as to scheduled payments (such as Base
Rent) or within thirty (30) days following the date on which it was due ????
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when ???? ???? four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than thirty (30) days after receipt
by Lessor, and
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any Lender whose name and address shall have been furnished Lessee in writing
for such purpose, of written notice specifying wherein such obligation of
Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in breach if performance
is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of
the Premises not occupied by any building, is taken by Condemnation, Lessee or
Lessor may, at such party's option, to be exercised in writing within ten (10)
days after Lessor shall have given Lessee written notice of such taking (or in
the absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee or Lessor does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the Base
Rent shall be reduced in proportion to the reduction in utility of the Premises
caused by such Condemnation. Condemnation awards and/or payments shall be the
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold, the value of the part taken, or for
severance damages; provided, however, that Lessee shall be entitled to that
portion of the award specifically designated for Lessee's relocation expenses,
loss of business goodwill and/or Trade Fixtures, without regard to whether or
not this Lease is terminated pursuant to the provisions of this Paragraph. All
Alterations and Utility Installations made to the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee
and Lessee shall be entitled to any and all compensation which is payable
therefor. In the event that this Lease is not terminated by reason of the
Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. Brokers' Fee.
15.3 Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the Indemnifying Party, including any costs,
expenses, and/or attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
(a) Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one month's Rent has
been paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including, but not limited to,
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor. Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only
upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of
any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual members or partners of Lessor or its or
their individual partners, directors, officers or shareholders, and Lessee
shall look to the Premises, and to no other assets of Lessor, for the
satisfaction of any liability of Lessor with respect to this Lease, and shall
not seek recourse against the individual partners of Lessor, or its or their
individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be
effective.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on
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the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon
telephone confirmation of receipt, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday, Sunday or legal holiday,
it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over with Lessor's consent, then the Base
Rent shall be increased to (i) for the first three (3) months of such holdover,
one hundred twenty-five percent (125%) of the Base Rent applicable during the
month immediately preceding the expiration or termination, and (ii) after such
three (3) month period, at one hundred fifty percent (150%) of the Base Rent
applicable during the month immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor
to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease
together referred to as "Lessor's Lender") shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior
to the lien of its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or recordation
thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide
the Non-Disturbance Agreement within a reasonable time, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys' Fees. If any Party brings an action or proceeding involving the
Premises to enforce the terms hereof or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not
such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party who substantially
obtains or defeats the relief sought, as the case may be, whether by
compromise, settlement, judgment, or the abandonment by the other Party of its
claim or defense. The attorneys' fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys' fees, costs and expenses incurred in the preparation and service of
notices of Default and consultations in connection therewith, whether or not a
legal action is subsequently commenced in connection with such Default or
resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary. All such activities shall be without abatement of rent or
liability to Lessee. Lessor may at any time place on the Premises any ordinary
"For Sale" signs and Lessor may during the last six (6) months of the term
hereof place on the Premises any ordinary "For Lease" signs. Lessee may at any
time place on or about the Premises any ordinary "For Sublease" sign.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
34. Signs. Except for ordinary "For Sublease" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. All signs
must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, that Lessor may elect to continue any one
or all existing subtenancies. Lessor's failure within ten (10) days following
any such event to elect to the contrary by written notice to the holder of any
such lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including, but not limited to, architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including, but not limited to, consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor-; provided, however, that
in connection with any assignment or sublease, such costs, expenses and fees
shall not exceed Two Thousand Dollars ($2,000.00) in each instance. Lessor's
consent to any act, assignment or subletting shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party
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shall furnish its reasons in writing and in reasonable detail within ten (10)
business days following such request.
37. GUARANTOR.
37.1 EXECUTION. The Guarantors, if any, shall each execute a guaranty in
the form agreed to by the parties.
37.2 DEFAULT. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide, (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor's behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) a Tenancy Statement, or (d)
written confirmation that the guaranty is still in effect.
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. OPTIONS.
39.1 DEFINITION. "Option" shall mean: the right to extend the term of
this Lease pursuant to this Paragraph 39.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing
until said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given three (3) or more notices of separate Default, whether or not the
Defaults are cured, during the twelve (12) month period immediately preceding
the exercise of the Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) If a Lessee Breach exists on the date of given written notice to
exercise the Option, such notice shall be null and void and have no effect. If
a Lessee Breach exists on the date preceding the Commencement Date,
respectively, of the first Option Term or the second Option Term, then the
representative Option Term shall not commence and the Lease shall expire at the
end, respectively, of the original Lease Term or the first Option Term.
39.5 OPTIONS TO EXTEND.
(a) Subject to the provisions of this Paragraph 39, Lessee shall have two
(2) options (each, an "Option") to extend the Original Term of this Lease for
a period of five (5) years each (each, an "Option Term"), upon all the terms
and conditions of this Lease, except that the Base Rent shall be adjusted in
the first year of such Option Term to the greater of (a) ninety-five percent
(95%) of the "Fair Market Rental Rate" (as defined below) or (b) the previous
year's Base Rent in the Original Term or first Option Term, as applicable, and
thereafter increased in each successive year of the Option Term by the increase
in the C.P.I. (as hereinafter defined), as measured by the C.P.I. for the first
month of the Option Term as compared to the first month of the second year of
the Option Term (and each succeeding year thereafter.) As used herein, the term
"C.P.I." shall mean the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for Urban Wage Earners and Clerical Workers, Los
Angeles - Long Beach - Anaheim, California (1984=100), "All Items." Each Option
to Extend may be exercised, if at all, only in the following manner: (i) Lessee
shall deliver written notice to Lessor not more than twenty-four (24) months nor
less than eighteen (18) months prior to the expiration of the Original Term or
first Option Term, as applicable, stating that Lessee may be interested in
exercising its Option to Extend; (ii) Lessor, after receipt of Lessee's interest
notice, shall deliver notice (the "Option Rent Notice") to Lessee not less than
fifteen (15) months prior to the expiration of the Original Term or first Option
Term, as the case may be, setting forth Lessor's determination of the "Fair
Market Rental Rate" (as that term is defined below), which may be applicable to
the Premises during the applicable Option Term; and (iii) if Lessee wishes to
exercise such Option to Extend, Lessee shall, on or before the date occurring
twelve (12) months prior to the end of the Original Term or the end of the first
Option Term, as applicable, exercise the Option to Extend by delivering written
notice thereof (the "Option to Extend Notice") to Lessor. Concurrently with
Lessee's delivery of the Option to Extend Notice, Lessee may, at its option,
object to Lessor's determination of the Fair Market Rental Rate contained in
Lessor's Option Rent Notice, in which case, the parties shall follow the
procedure, and the Fair Market Rental Rate shall be determined, as set forth in
Paragraph 39.5(b) below. The Base Rent for each Option Term shall be the Fair
Market Rental Rate determined as follows, but in no event less than the rental
rate in effect in the last month of the Original Term. The term "Fair Market
Rental Rate" for the purposes of this Lease shall mean the current annual rental
rate being accepted by owners of comparable buildings in South Orange County on
a net basis, for a comparable period of time, from non-equity tenants.
(b) If Lessee timely exercises the applicable Option to Extend, the
Original Term of this Lease, or first Option Term, as the case may be, shall be
extended by the applicable Option Term, and all the terms, covenants and
conditions of this Lease shall remain unmodified and in full force and effect
during the applicable Option Term, except that the Base Rent payable during the
applicable Option Term shall be as determined pursuant to this Paragraph 39.5.
In the event Lessee objects in writing to the Fair Market Rental Rate initially
determined by Lessor, Lessor and Lessee shall attempt to agree upon such Fair
Market Rental Rate using their best good faith efforts. If Lessor and Lessee
fail to reach agreement within fifteen (15) days following Lessee's delivery of
its written objection (the "Outside Agreement Date"), then each party shall
place in a separate sealed envelope their final proposal as to Fair Market
Rental Rate and such determination shall be submitted to arbitration in
accordance with subparagraphs (i) through (v) below.
(i) Lessor and Lessee shall meet with each other within five (5)
business days of the Outside Agreement Date and exchange the sealed envelopes
and then open such envelopes in each other's presence. If Lessor and Lessee do
not mutually agree upon the Fair Market Rental Rate within one (1) business day
of the exchange and opening of envelopes, then, within ten (10) business days of
the exchange and opening of envelopes, Lessor and Lessee shall agree upon and
jointly appoint, a single arbitrator who shall by profession be a real estate
appraiser or broker who shall have been active over the five (5) year period
ending on the date of such appointment in the leasing of properties in South
Orange County. Neither Lessor nor Lessee shall consult with such broker or
appraiser as to his or her opinion as to Fair Market Rental Rate prior to the
appointment. The determination of the arbitrator shall be limited solely to the
issue of whether Lessor's or Lessee's submitted Fair Market Rental Rate for the
Premises is the closest to the actual Fair Market Rental Rate for the Premises
as determined by the arbitrator, taking into account requirements of this
provision regarding same. Such arbitrator may hold such hearings and require
such briefs as the arbitrator, in his or her sole discretion, determines are
necessary.
(ii) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to whether the parties shall use Lessor's or
Lessee's submitted Fair Market Rental Rate, and shall notify Lessor and Lessee
thereof.
(iii) The decision of the arbitrator shall be binding upon Lessor and
Lessee, except as provided below.
(iv) If Lessor and Lessee fail to agree upon and appoint an arbitrator
within ten (10) business days of the exchange and opening of envelopes, then the
appointment of the arbitrator shall be made by the Presiding Judge of the Orange
County Superior Court, or, if he or she refuses to act, by any judge having
jurisdiction over the parties and Lessor and Lessee shall take such actions as
necessary to cause such judge to reach a decision within thirty (30) days after
the exchange and opening of envelopes.
(v) The cost of arbitration shall be paid by Lessor and Lessee
equally.
(c) Any exercise by an assignee of Lessee of an Option shall not release
Lessee of any obligations under the Lease during the Option Term or alter the
primary liability of Lessee for the payment of Base Rent and other sums due
Lessor hereunder or for the performance of any other obligations to be performed
by Lessee under the Lease during the Option Term.
40. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other
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security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lease assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee, are required in connection with the approval of or construction of the
improvements (as defined in Paragraph 2.5), do not impede Lessee's access to and
from the Premises, and do not reduce Lessee's parking capacity. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.
44. Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, with thirty (30) days after request, deliver to the other Party
satisfactory evidence of such authority.
46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease / / is / / is not attached to this Lease.
50. Waiver of Lessor's Lien. All of Lessee's trade fixtures, furnishings and
equipment installed in or used by Lessee in the Premises and paid for by Lessee,
together with all personal property owned or used by Lessee in the Premises
(collectively, "Lessee's Property"), shall not be subject to an lien or claim of
ownership by Lessor and may be removed by Lessee from time to time. If
reasonably acceptable in form and content to Lessor, Lessor agrees to execute
any document reasonably requested from time to time by any supplier, lessor or
lender in connection with Lessee's property, pursuant to which Lessor expressly
waives any lien Lessor might otherwise have or acquire upon Lessee's Property.
51. Lessee's Financial Statements. (a) Lessee shall deliver to Lessor, as soon
as available, but not later than ninety (90) days following the end of its
fiscal year, the following financial statements each audited by an independent
certified public accounting firm acceptable to Lessor and certified by a senior
financial officer of Lessee as true, correct and complete in all material
respects as of the end of and for such period and as having been prepared in
accordance with generally accepted accounting principles consistently applied,
in each case in such detail as Lessor may reasonably request and setting forth
in comparative form the corresponding figures for the immediately preceding
fiscal year of Lessee:
(i) a balance sheet of Lessee as of the end of such fiscal year;
(ii) a statement of income and expenses of Lessee for such fiscal
year;
(iii) a statement of cash flows of Lessee for such fiscal year; and
(iv) a statement of changes in owner's equity of Lessee for such
fiscal year;
(b) Lessee shall deliver to Lessor, as soon as available, but not later
than forty-five (45) days following the end of each of its first three fiscal
quarters of each fiscal year, an unaudited copy of each of the foregoing
financial statements as of the end of such quarter and certified by a senior
financial officer of Lessee as true, correct and complete in all material
respects as of the end of and for such period and as having been prepared in
accordance with generally accepted accounting principles consistently applied,
in each case in such detail as Lessor may reasonably request;
(c) Lessee shall deliver to Lessor, concurrently with the filing thereof,
the federal and state tax returns for Lessee.
Any information obtained from Lessee's financial statements shall be
confidential and shall not be disclosed other than to carry out the purposes of
this Lease; provided, however, Lessor shall incur no liability for the
inadvertent disclosure of any such information Lessor may divulge the contents
of any financial statements in connection with any financing arrangement or
sale of Lessor's interest in the Premises or in connection with any
administrative or judicial proceedings.
52. Memorandum of Lease. Upon the Commencement Date, Lessor and Lessee shall
execute, acknowledge and deliver to each other, a memorandum of Lease in the
form attached hereto as Exhibit "C" and made a part hereof. Such Memorandum of
Lease may be recorded by either party, at their sole cost and expense. Lessee
shall execute and deliver to Lessor on the expiration or termination of this
Lease, immediately upon Lessor's request, in recordable form, a quitclaim deed,
to the Premises or such other documentation reasonably requested by Lessor
evidencing termination of this Lease.
53. Notice of Sale. Lessor shall provide Lessee with written notice (a "Sale
Notice") from time to time when (a) Lessor determines that the Premises will be
listed for sale to third parties, or (b) Lessor receives an unsolicited offer to
purchase the Premises, provided such offer contains sufficient information as to
permit the offer to be evaluated by Lessor. Lessor shall provide the Sale Notice
at least ten (10) days prior to listing the Premises for sale as provided in (a)
above, and not more than ten (10) days after any definitive unsolicited offer is
received as provided in (b) above. The Sale Notice shall generally inform Lessee
of the terms of such proposed sale, Lessor shall not be required to give a Sale
Notice for any transfer of the Premises to an entity controlled by, controlling
or under the common control of, Lessor. Except for the Sale Notice required
pursuant to this paragraph 50, Lessor shall be under no obligation to offer,
advise, negotiate or consult with Lessee in any manner whatsoever with respect
to a sale of the Premises. Lessor and Lessee agree that the requirement for
notice pursuant to this paragraph 53 shall never be deemed or construed to
constitute an option to purchase, first right of refusal or first right to
negotiate.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
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ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at:
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on:
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Metagenics Incorporated, a California corporation
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By:
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Name Printed:
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Title:
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By:
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Name Printed:
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Title:
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Address:
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Telephone: ( )
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Facsimile: ( )
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Federal ID No.
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Executed at: Brea, CA
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on: 5/28/98
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Lowe Enterprises Commercial Group, a
- ------------------------------------------------------
California corporation
- ------------------------------------------------------
By: /s/ Michael W. McNerney
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Name Printed: Michael W. McNerney
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Title: SVP
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By:
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Name Printed:
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Title:
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Address:
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Telephone: ( )
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Facsimile: ( )
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Federal ID No.
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NOTE: These forms are often modified to meet the changing requirements of law
and industry needs. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
Street, Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No. (213)
687-8616
Page 14 of 14 Initials MWM
Revised ---------
(C) 1997 - American Industrial Real Estate Association
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EXHIBIT "A"
VICINITY MAP
METAGENICS CORPORATE HEADQUARTERS
CITY OF SAN CLEMENTE, CALIFORNIA
5/14/98
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EXHIBIT "B"
WORK LETTER
The terms, conditions and covenants made and set forth herein are intended
to and shall have the same force and effect as if set forth at length in the
body of the Lease. If there is any conflict between the Lease and this Work
Letter with respect to the construction of the Improvements, then the terms,
covenants and conditions of this Work Letter shall control. All capitalized
terms used in this Work Letter and not defined herein shall have the meaning
ascribed thereto in the Lease to which this Work Letter is annexed. All
references to "Days" shall mean calendar days.
ARTICLE I
SCOPE OF IMPROVEMENTS
Lessor and Lessee hereby acknowledge that it is the intent hereof that
Lessor construct or cause to be constructed, at Lessor's sole cost and expense,
on the Premises a concrete tilt-up building consisting of approximately
eighty-eight thousand (88,000) square feet of floor space ("Building") which
includes approximately forty-three thousand (43,000) square feet of office space
(the "Office Improvements") and appropriate landscaping and parking improvements
on the Premises. The Building, Office Improvements and landscaping and parking
improvements to be constructed by Lessor are sometimes collectively referred to
herein as the "Improvements." The general concept ("Concept") for the Building,
the parking spaces and the landscaping associated therewith as well as the
Building footprint are as identified on the Site Plan attached to the Lease as
Exhibit "A" and by this reference incorporated herein, and the Concept is hereby
approved by Lessor and Lessee. The Concept may be modified to meet reasonable
requirements imposed by the City of San Clemente in connection with the design
and construction of the Improvements or to make other changes as are mutually
approved by Lessor and Lessee.
ARTICLE II
BASE BUILDING WORK
2.1 Base Building Plans.
(a) Preliminary Base Building Plans. Prior to execution of this Lease,
Lessor and Lessee have approved schematic drawings and outline specifications
dated May 14, 1998 ("Preliminary Base Building Plans") for construction of
Building, landscaping and parking improvements, which Preliminary Base Building
Plans were prepared by GAA Architects ("the Architect").
(b) Base Building Plans. Within sixty (60) Days after the execution of the
Lease, Lessor shall cause the Architect to prepare final plans and
specifications for the Building (the "Base Building Plans") which shall (i)
constitute a complete set of construction documents necessary for the
prosecution of the Base Building Work, (ii) are internally consistent and that
each portion thereof complies in all respects with all other portions thereof,
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(iii) provide for a Building that will contain approximately ninety thousand
(88,000) square feet, such square footage number to be determined by the
measurement standard utilized by the Architect and reasonably approved by Lessor
and Lessee, (iv) comply with all Applicable Requirements then in effect, and (v)
provide all detailed information necessary to obtain a building permit to
perform the Base Building Work. Within five (5) Days after Lessee's receipt of
the Base Building Plans, Lessee shall approve or disapprove the Base Building
Plans. Lessee shall not unreasonably withhold its approval, and any disapproval
or requested modification shall be limited to items not contained in the
Preliminary Base Building Plans. Should Lessee disapprove the Base Building
Plans, such disapproval shall be accompanied by a detailed list of requested
modifications. Lessor shall cause the Architect to revise the Base Building
Plans to incorporate any such Lessees requested reasonable modifications and
submit the revised Base Building Plans to Lessee for Lessee's approval within
five (5) Days after Lessor's receipt of Lessee's requested modifications. Lessee
shall, within three (3) Days after receipt of the revised Base Building Plans,
either approve or disapprove the revised Base Building Plans or notify Lessor of
any further corrections or changes still necessary to bring the Base Building
Plans into substantial conformity with the approved Preliminary Base Building
Plans, which process shall continue until the Base Building Plans are reasonably
approved by Lessee and Lessor, which the parties agree they shall use, their
best efforts to accomplish on or before July 1, 1998. Failure of Lessee to
deliver to Lessor written notice of such corrections or changes within the time
specified in this Paragraph 2, shall be conclusively deemed to constitute
Lessee's approval of the Base Building Plans. Following such approval of the
Base Building Plans, both parties shall endorse such approval thereon for filing
purposes, in duplicate.
(c) "Base Building Work" shall mean all of the work, materials and
equipment necessary to (i) construct the Building (including, without
limitation, the primary electrical, plumbing, HVAC and other mechanical systems
of the Building) on the Land in the location designated on the Site Plan, (ii)
construct the parking improvements, including grading, paving and striping for
approximately four (4) parking spaces for each one thousand (1,000) rentable
square feet of space in the Building, in the locations generally designated on
the Site Plan, (iii) perform certain landscaping work, and (iv) connect all
utility and sewer services to the Building. "Base Building Work" shall not
include the "Tenant Improvement Work."
(d) Changes. After the parties' approval of the Base Building Plans, Lessor
shall not make any changes to the Base Building Plans without the prior written
mutual consent of Lessor and Lessee in each instance; provided, however, that
Lessor may, without Lessee's consent, make changes to the Base Building Plans,
provided such changes (i) are de minimis in nature, (ii) are required by field
conditions which were not known by Lessor as of the date of the Lease, or (iii)
are required to comply with Applicable Requirements, or any changes thereto.
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2.2 Construction of Base Building Work.
(a) Construction Commencement. Lessor, as a Cost of Construction, shall
cause the general contractor selected in the manner described in Section 4.1 of
this Work Letter to perform the Base Building Work. Lessor shall commence the
Base Building Work promptly after Lessor obtains the necessary permits therefor
and shall prosecute the same with diligence and continuity until completion.
Lessor shall perform the Base Building Work in accordance with (i) the Base
Building Plans, (ii) accepted standard construction practices and (iii) all
Applicable Requirements. Notwithstanding the foregoing, Lessor agrees to
commence the Base Building Work on or before November 1, 1998, and in the event
Lessor fails to commence construction of the Base Building Work on or before
November 1, 1998 (subject to Force Majeure Delays, and Tenant Delays), Lessee
shall have the right to terminate this Lease by written notice to Lessor, within
five (5) Days thereafter; provided, however, if written notice is not received
by Lessor within said five (5) Days the right to terminate shall expire. This
assumes Lessor shall receive all governmental approvals by August 1, 1998
necessary to commence construction.
(b) Approvals. Lessor shall, at its sole cost and expense and as part of
the Base Building Work, obtain all Approvals from all necessary governmental
authorities for the prosecution of the Base Building Work.
2.3 Completion of Base Building Work.
(a) Substantial Completion. The Base Building Work shall be deemed to be
substantially completed ("Base Building Substantial Completion") only when all
of the following conditions have been satisfied:
(1) Lessor shall have substantially completed all of the Base Building
Work in accordance with the Base Building Plans, as modified in accordance with
Paragraph 2.1(d) above, and all Applicable Requirement, except for minor or
insubstantial details of construction and mechanical adjustment (the "Base
Building Work Punchlist Items");
(2) Lessor shall have delivered to Lessee a certificate addressed to
Lessee and executed by the Architect, stating (x) that the Base Building Work,
has been completed, except for the Base Building Work Punchlist Items and (y)
that the Base Building Work has been so completed in accordance with the Base
Building Plans, as modified in accordance with Paragraph 2.1(c) above, and all
Applicable Requirements.
(3) Lessor shall have delivered to Lessee all governmental
certificates, permits, approvals and sign-offs necessary to evidence that the
Base Building Work has been completed in accordance with all Applicable
Requirements;
(4) Lessor shall have given Lessee written notice that the conditions
set forth in clauses (1), (2), and (3), above have been satisfied.
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ARTICLE III
TENANT IMPROVEMENT WORK
3.1 Tenant Improvement Plans.
(a) Preliminary Tenant Improvement Plan. Within sixty (60) Days after the
execution of the Lease, Lessor shall provide Lessee (i) a detailed space plan
for the Premises, prepared by the Architect for the Tenant Improvement Work,
which includes interior partitions, ceilings, interior finishes, interior doors,
floor coverings, window coverings, lighting, electrical and telephone outlets,
plumbing connections, heavy floor loads and other reasonable special
requirements ("Preliminary Tenant Improvement Plan"), and (ii) an estimate,
prepared by Lessor, of the cost for which Lessor will complete or cause to be
completed the Tenant Improvement Work ("Preliminary Tenant Improvement Cost
Estimate"). Lessee shall approve or disapprove the Preliminary Tenant
Improvement Plan and the Preliminary Tenant Improvement Cost Estimate by signing
copies of each and delivering same to Lessor within five (5) Days of its receipt
by Lessee. If Lessee disapproves any matter, Lessee shall specify in detail the
reasons for disapproval and Lessor shall modify the Preliminary Tenant
Improvement Plan and the Preliminary Tenant Improvement Cost Estimate to
incorporate Lessee's suggested revisions in a mutually satisfactory manner and
submit the revised Preliminary Tenant Improvement Plan and the Preliminary
Tenant Improvement Cost Estimate to Lessee for Lessee's reasonable approval.
Lessee shall within three (3) Days after receipt of the revised Preliminary
Tenant Improvement Plan and the Preliminary Tenant Improvement Cost Estimate,
either approve the revised Preliminary Tenant Improvement Plan and Preliminary
Tenant Improvement Cost Estimate or notify Lessor of any corrections or changes
still necessary, which process shall continue until the Preliminary Tenant
Improvement Plan and the Preliminary Tenant Improvement Cost Estimate are
reasonably approved by Lessee. Failure to deliver to Lessor written notice of
such corrections or changes within said time periods, as applicable, shall be
conclusively deemed to constitute Lessee's approval of the Preliminary Tenant
Improvement Plan and Preliminary Tenant Improvement Cost Estimate.
(b) Lessee Information. Within five (5) Days of Lessee's approval of the
Preliminary Tenant Improvement Plan and Preliminary Tenant Improvement Cost
Estimate, Lessee shall provide in writing to Lessor and the Architect all
specifications and information requested by Lessor for the preparation of final
construction documents and costing, including, without limitation, Lessee's
final selection of wall and floor finishes, complete specifications and
locations (including load and HVAC requirements) of Lessee's equipment to be
installed in the Premises, and such other information reasonably required from
Lessee by Lessor.
(c) Tenant Improvement Plans. Within sixty (60) Days after Lessee's
approval of the Preliminary Tenant Improvement Plan and Preliminary Tenant
Improvement Cost Estimate and delivery of the specifications and information
described in subparagraph 3.1(b) above, the Architect and engineers shall
prepare and deliver to Lessee working drawings and specifications (the "Tenant
Improvement Plans"), and Lessor's contractor shall prepare a final construction
cost estimate ("Tenant Improvement Cost Estimate") for the Tenant
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Improvement Work in conformity with the Tenant Improvement Plans. Lessee shall
have three (3) Days from the receipt thereof to approve or disapprove the Tenant
Improvement Plans and the Tenant Improvement Cost Estimate. Lessee shall not
unreasonably withhold or delay its approval, and any disapproval or requested
modification shall be limited to items not contained in the approved Preliminary
Tenant Improvement Plan or Preliminary Tenant Improvement Cost Estimate. Should
Lessee disapprove the Tenant Improvement Plans and the Tenant Improvement Cost
Estimate, such disapproval shall be accompanied by a detailed list of requested
modifications. Lessee shall within three (3) Days after receipt of the revised
Tenant Improvement Plan approve or disapprove the revised Tenant Improvement
Plans or notify Lessor of any further corrections or changes still necessary to
bring the Tenant Improvement Plans into substantial conformity with the approved
Preliminary Tenant Improvement Plan which process shall continue until the
Tenant Improvement Plans and Tenant Improvement Cost Estimate are reasonable
approved by Lessee. Failure of Lessee to approve or disapprove the Tenant
Improvement Plans or the Tenant Improvement Cost Estimate within the time
specified in this Paragraph 3 shall be conclusively deemed to constitute
Lessee's approval of the Tenant Improvement Plans or the Tenant Improvement Cost
Estimate as applicable.
(d) "Tenant Improvement Work" shall include all work, materials and
equipment that are necessary to prepare the Premises for Lessee's occupancy per
a mutually approved Preliminary Tenant Improvement Plan, other than the Tenant
Improvement Work.
(e) Changes. After the parties' approval of the Tenant Improvement Plans,
Lessor shall not make any changes to the Tenant Improvement Plans without the
prior written consent of Lessor and Lessee in each instance; provided, however,
that Lessor may, without Lessee's consent, make changes to the Tenant
Improvement Plans, provided such changes (i) are de minimis in nature, (ii) are
required by field conditions which were not known by Lessor as of the date of
the Lease, or (iii) are required to comply with Applicable Requirements, or any
changes thereto.
3.2 Construction of Tenant Improvement Work.
(a) Construction Commencement. Lessor shall cause the general contractor
selected in the manner described in Section 4.1 of this Work Letter to perform
the Tenant Improvement Work in accordance with (i) the Tenant Improvement Plans
approved by both Lessor and Lessee, (ii) accepted standard construction
practices, and (iii) all Applicable Requirements then in effect.
(b) Approvals. Lessor shall as part of the Tenant Improvement Work obtain
all Approvals from all necessary governmental authorities for the prosecution of
the Tenant Improvement Work.
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3.3 Completion of Tenant Improvement Work.
(a) Substantial Completion. The Tenant Improvement Work shall be deemed to
be substantially completed ("Tenant Improvement Substantial Completion") only
when all of the following conditions have been satisfied.
(1) Lessor shall have substantially completed all of the Tenant
Improvement Work in accordance with the Tenant Improvement Plans, as modified in
accordance with Paragraph 3.1 (e) above, and all Applicable Requirements then in
effect, except for minor or insubstantial details of construction and mechanical
adjustment (the "Tenant Improvement Work Punchlist Items");
(2) Lessor shall have delivered to Lessee a certificate, addressed to
Lessee and executed by the Architect, stating (x) that the Tenant Improvement
Work has been completed, except for the Tenant Improvement Work Punchlist Items
and (y) that the Tenant Improvement Work has been so completed in accordance
with the Tenant Improvement Plans as modified in accordance with Paragraph
3.1(e) above and all Applicable Requirements;
(3) Lessor shall have delivered to Lessee all governmental
certificates, permits, approvals and sign-offs necessary to evidence that the
Tenant Improvement Work has been completed in accordance with all Applicable
Requirements;
(4) Lessor shall have given Lessee written notice that the conditions
set forth in clauses (1), (2) and (3) above have been satisfied.
(b) "As-Built" Plans. Within sixty (60) Days after the Tenant Improvement
Work is substantially completed, Lessor shall deliver to Lessee four (4) copies
of "as-built" drawings and plans for the Tenant Improvement Work showing all
changes made during the course of performing the Tenant Improvement Work.
ARTICLE IV
COST OF CONSTRUCTION
4.1 Competitive Bidding. All of the Base Building Work and the Tenant
Improvement Work shall be performed by a general contractor selected by Lessor
in accordance with the procedures and requirements set forth in this Work
Letter. Lessor shall cause at least three (3) qualified general contractors
selected by Lessor and reasonably approved by Lessee to competitively bid the
Base Building Work and the Tenant Improvement Work. Lessee may notify Lessor of
the designation of one (1) licensed, responsible (financially and otherwise) and
qualified commercial general contractor, which general contractor may, subject
to Lessor's reasonable approval of such contractor, participate in said
competitive bid process. All bids must be complete and for the same work to
ensure a valid comparison. Copies of all bids shall be delivered or made
available to Lessee.
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4.2 Guaranteed Maximum Price Contract. Lessor shall execute a "lump sum" or
"guaranteed maximum price" contract with the general contractor selected by
Lessor in the amount of the lowest qualified bid for the Base Building Work and
the Tenant Improvement Work.
4.3 Cost of Construction. For purposes of determining the Base Rent, the "Cost
of Construction" shall mean all costs of Lessor in completing the Base Building
Work and the Tenant Improvement Work, including, but not limited to, the
following: (a) land, pre-development (b) off-sites, (c) core and shell, (d)
lobby, (e) tenant improvements, (f) drive-in cooler, (g) trash compactor/baler,
(h) on-sites, (i) parking, (j) landscape (k) general conditions, (l) general
contractor fee, (m) architecture and engineering, (n) bonds, city fees and
permits, (o) legal, title & survey, (p) testing and inspection, (q) insurance,
(r) construction management fees and overhead, (s) development fees and
overhead, (t) property taxes and association fees, and (u) financing costs which
includes 1.25% of Cost of Construction to cover fees, points, and other finance
related costs and nine percent (9%) interest calculated monthly on the Cost of
Construction, assuming all Costs of Construction incurred during the month and
outstanding as of the fifteenth of the month. All construction management and
development fees and overhead to be paid to Lowe Enterprises Commercial Group
shall be in accordance with the memorandum of understanding dated February 4,
1998.
ARTICLE V
LESSEE INSPECTION RIGHTS
5.1 Lessee's Inspection Rights, Subject to and in accordance with the provisions
of this Article V, Lessee and its employees and agents shall have access to the
Building from time to time during the prosecution of the Base Building Work and
the Tenant Improvement Work in order to inspect the same; provided that Lessee
shall comply with all reasonable rules and regulations of Lessor and the general
contractor regarding access to the construction site.
5.2 Project Meetings. From and after the date hereof, Lessor shall conduct
regularly scheduled project meeting to discuss the performance and progress of
the Base Building Work and the Tenant Improvement Work; Lessee shall be given
reasonable advance notice of each such meeting and Lessee and its employees and
agents shall have the right to attend such meetings. Lessee shall receive a copy
of the minutes of all project meetings, which minutes Lessor shall cause to be
prepared. Lessor shall (i) keep Lessee apprised of the progress of the Base
Building Work and the Tenant Improvement Work, (ii) promptly notify Lessee of
any actual or anticipated delays, and (iii) promptly notify Lessee of any
problems or anticipated problems with respect to the Base Building Work and the
Tenant Improvement Work or any portion thereof.
5.3 Construction Management. Lessor shall be responsible for all phases of
management of construction of the Improvements. Lessor shall maintain at its
offices for inspection by Lessee and its employees and agents during business
hours one record copy of (i)
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the Base Building Plans and the Tenant Improvement Plans, together with all
field notes and changes of Lessor's contractor marked on said plans during the
course of construction, (ii) the Work Schedule, any progress schedules prepared
by any subcontractor, and all updates, supplements and amendments thereto; (iii)
specifications and samples prepared in connection with the Base Building Work
and the Tenant Improvement Work; and (iv) all drawings, diagrams, schedules,
brochures and other data or information specially prepared for or otherwise
provided in connection with the Base Building Work and the Tenant Improvement
Work to illustrate some portion of the Base Building Work and the Tenant
Improvement Work or any product, material or system to be installed or utilized
in connection therewith. All of the foregoing shall be maintained in good order
and marked currently to record all changes made during the prosecution of the
Base Building Work and the Tenant Improvement Work.
5.4 Project Schedule. Attached hereto as Attachment "A" is a schedule (the
"Project Schedule") setting forth an estimated timetable for the planning and
completion of the installation of the Improvements to be constructed on the
Premises in accordance with the terms of this Work Letter. The Project Schedule
shall be revised and updated periodically by mutual approval of Lessor and
Lessee to reflect revisions in the timetable for the completion of the
improvements.
ARTICLE VI
CORRECTING BASE BUILDING AND
TENANT IMPROVEMENT WORK
PUNCHLIST ITEMS AND DEFECTIVE WORK
6.1 Punchlist Work. Within thirty (30) Days after substantial completion of the
Base Building Work and the Tenant Improvement Work, Lessor shall install,
complete, repair or otherwise remedy all such Punchlist Work unless the
Punchlist Work is of such a nature that the same cannot be connected within said
thirty (30) day period, then Lessor will commence the Punchlist Work within five
(5) Days after its receipt of such notice and proceed diligently and in good
faith to complete the Punchlist Work.
6.2 Equipment Warranty. Lessor warrants that for equipment furnished and/or
installed but not manufactured by Lessor, Lessor, on or prior to the
Commencement Date, shall (i) obtain from the manufacturer thereof the
manufacturer's standard warranty and (ii) (A) if such warranty shall be
assignable to Lessee, assign such warranty to Lessee, and agree to cooperate
with Lessee's efforts to enforce such warranty, pursuant to an instrument
reasonably satisfactory to Lessee and (B) if such warranty shall not be
assignable to Lessee, extend to Lessee the same warranty terms and conditions
which Lessor receives from the manufacturer of said equipment pursuant to an
instrument reasonably satisfactory to Lessee.
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ARTICLE VII
INSURANCE
7.1 Construction Insurance. Throughout the prosecution of the Base Building Work
and the Tenant Improvement Work, Lessor, at its expense and as a Cost of
Construction, shall carry, or cause to be carried the following:
(a) Workers, Compensation Insurance with coverage applicable in the State
of California with limits in accordance with the statutory requirements of the
State of California.
(b) Broad Form Comprehensive General Liability Insurance (including
Contractor's Protective Liability) with a minimum combined aggregate total limit
of liability of Two Million Dollars ($2,000,000.00). The Comprehensive General
Liability Insurance shall provide for explosion, collapse and underground
coverage.
(c) Complete Value Builder's Risk Material Damage Insurance Coverage.
Lessor shall provide an "All Physical Loss" Builder's Risk Insurance policy with
regard to construction of the Base Building Work and the Tenant Improvement
Work. The policy shall include as named insureds Lessor, Lessee, Lessor's
contractors, and Lessor's lender (if any), agents, architects, representatives,
management agents and contractors, as their interests may appear. The amount of
insurance to be provided shall be one hundred percent (100%) of the replacement
cost of the Base Building Work and the Tenant Improvement Work.
All such insurance shall name Lessee as an additional insured and shall insure
Lessor's contractor against any and all claims for bodily injury, including
death resulting therefrom, and damage to or destruction of property of any kind
whatsoever and to whomsoever belonging, and arising from its operations under
the contract and whether such operations are performed by Lessor's contractor,
subcontractors or any of their sub-subcontractors, or by anyone directly or
indirectly employed by any of them. Lessor shall require its general contractor,
and, if commercially reasonable, its subcontractors or any of their
sub-subcontractors, to carry the coverages described in Paragraphs 7.1(a) and
(b) above throughout the prosecution of the Base Building Work and the Tenant
Improvement Work. Lessee acknowledges and agrees that Lessor's general
contractor's insurance coverages shall be written as primary policies,
non-contributing with or in excess of any insurance coverage which Lessor
carries.
ARTICLE VIII
LATE DELIVERY
8.1 Late Delivery.
(a) Subject to Force Majeure Delays and Tenant Delays, Lessor shall
endeavor to substantially complete the Improvements by March 31, 1999 ( the
"Target Date").
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This assumes Lessor shall receive all governmental approvals by August 1, 1998
which are necessary to commence construction.
(b) Subject to Force Majeure Delays and Tenant Delays, in the event that
the date of Substantial Completion of the Improvements has not occurred by May
31, 1999 (the "First Outside Date"), Landlord shall pay monthly to Lessee,
commencing on the First Outside Date and continuing until the earlier of (i)
the date of Substantial Completion of the Improvements, and (ii) July 31, 1999
(the "Holdover Period"), an amount equal to Two Thousand Dollars ($2,000) per
Day.
(c) Subject to Force Majeure Delays and Tenant Delays, in the event that
the date of Substantial Completion of the Improvements has not occurred by
August 1, 1999 (the "Second Outside Date"), then (i) Landlord shall pay monthly
to Lessee, commencing on the Second Outside Date and continuing until the
earlier of (i) the date of Substantial Completion of the Improvements and (ii)
August 31, 1999 (the "Second Holdover Period"), an amount equal to Three
Thousand Dollars ($3,000) per Day.
(d) Subject to Force Majeure Delays and Tenant Delays, in the event that
the date of Substantial Completion of the Improvements has not occurred by
September 1, 1999 (the "Third Outside Date"), then (i) Landlord shall pay
monthly to Lessee, commencing on the Third Outside Date and continuing until the
earlier of (i) the date of Substantial Completion of the Improvements and (ii)
September 30, 1999 (the "Third Holdover Period"), an amount equal to Four
Thousand Dollars ($4,000) per Day.
(e) Subject to Force Majeure Delays and Tenant Delays, in the event that
the date of Substantial Completion of the Improvements as described herein has
not occurred by October 1, 1999 (the "Final Outside Date"), then this Lease
shall terminate, at the option of Lessee, as of the Final Outside Date, and the
parties shall be released from any further obligations hereunder to the extent
such obligations accrue from and after the Final Outside Date. Except as
expressly provided in this Subparagraph 8.1, Lessor shall not be liable for any
damages suffered by Lessee as a result of Lessor's failure to Substantially
Complete the Improvements by any of the delivery dates hereinabove described.
8.2 Tenant Delays. The following shall constitute a "Tenant Delay": any actual
delay in the Substantial Completion of the Improvements as described herein
resulting from (a) materials and supplies necessary to perform the Improvements
to the extent they are not normal or not typical of general office purposes or
are not readily available in the Southern California area at the time of
installation; (b) laborers and artisans necessary for the installation of the
Improvements to the extent they are not normal or not typical for general office
purposes or are not readily available in the United States for shipment to
Southern California in which the Improvements are to be performed; (c) Lessee's
request for changes to the Improvements where not required by Applicable Law for
general office use; (d) Lessee's interfering with or delaying the processing of
the Base Building Plans or Tenant Improvement Plans or the completion of the
Base Building or Tenant Improvements; (e) Lessee's delaying the preparation or
approval of the Base Building or Tenant Improvement Plans for any reason
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whatsoever other than Lessor's default under this Lease or as otherwise provided
for in this Work Letter; (f) any actions of Lessee, or inaction by Lessee, or
Lessee's agents, contractors or employees which delays Lessor in completing the
Base Building shown on the Base Building Plans or the Tenant Improvements shown
on the Tenant Improvement Plans; or (g) Lessee's, or Lessee's agent's,
contractor's, or employee's negligence or willful misconduct.
8.3 Force Majeure Delay. The term "Force Majeure Delay" as used in this Work
Letter (as opposed to the Force Majeure definition in the Lease) shall mean any
delay in the completion of the Base Building or Tenant Improvements which
results directly from causes beyond the reasonable control of Lessor or Lessee,
or either of their respective agents, employees or contractors. These causes
shall include for purposes of example only, strikes, fire, earthquakes, adverse
weather conditions, riots, civil unrest and disturbances including governmental
delays encountered by Lessor in connection with the issuance of all necessary
permits, certificates and approvals required as a condition to Lessor's
construction and/or completion of the Improvements, or Lessee's occupancy of the
Premises or any portion thereof. Any prevention, delay or stoppage due to any
Force Majeure Delay shall excuse the performance of the party affected for a
period of time equal to any such prevention, delay or stoppage.
ARTICLE IX
EARLY POSSESSION
Lessor shall permit Lessee and its agents to enter the Premises at least
thirty (30) Days prior to the projected date for Substantial Completion of the
Tenant Improvements in order that Lessee may perform any work to be performed by
Lessee hereunder through its own contractors (which work may include, but not
be limited to, the installation of furniture, fixtures, equipment, computers and
network systems), subject to Lessor's reasonable prior written approval, and in
a manner and upon terms and conditions and at times satisfactory to Lessor. The
foregoing license to enter the Premises prior to the Commencement Date is,
however, conditioned upon Lessee's contractors and their subcontractors and
employees working in harmony and not interfering with the work being performed
by Lessor. If at any time that entry shall cause disharmony or interfere with
the work being performed by Lessor, this license may be withdrawn by Lessor upon
twenty-four (24) hours written notice to Lessee. That license is further
conditioned upon the compliance by Lessee's contractors with all rules and
requirements imposed by Lessor on third party contractors, including, without
limitation, the maintenance by Lessee and its contractors and subcontractors of
workers' compensation and public liability and property damage insurance in
amounts and with companies and on forms satisfactory to Lessor, with
certificates of such insurance being furnished to Lessor prior to proceeding
with any such entry. The entry shall be deemed to be under all of the provisions
of the Lease, including any insurance and indemnity obligations, except as to
the covenants to pay rent. Lessor shall not be liable in any way for any injury,
loss or damage which may occur to any such work being performed by Lessee, the
same being solely at Lessee's risk unless such injury, loss or damage is caused
by the gross negligence or willful misconduct of Lessor, its contractor, agents
or employees.
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[Lowe Enterprises/Metagenics Development
Milestone & Activities Chart]
<PAGE> 28
EXHIBIT "C"
RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:
Attn:
space above line for recorder's use only
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made effective as of ,
19 , by and among , a ("Landlord"), and
Metagenics Incorporated, a California corporation ("Tenant"), who agree as
follows:
1. Premises. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord upon and subject to the terms of that certain unrecorded Lease, dated
as of May , 1998 (the "Lease") all of Landlord's right, title and interest
in and to that certain real property situated in the County of Orange, State of
California, more particularly described in Exhibit A attached hereto and
incorporated herein by reference, commonly known as
. The terms and provisions of the Lease
are incorporated into this Memorandum of Lease by this reference as though fully
set forth herein.
2. Initial Term. The initial term of the Lease will commence on
("Commencement Date"), and will expire ten (10) years thereafter.
3. Option Terms. Landlord has granted to Tenant two successive options to
extend the term of the Lease by five years each.
4. No Modification. This Memorandum of Lease has been executed for purposes
of recordation only and shall not modify the terms and provisions of the Lease
in any manner.
1
<PAGE> 29
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as
of the day and year first above written.
"LANDLORD" "TENANT"
METAGENICS INCORPORATED,
a California corporation
By: By:
Print Name: Print Name:
Its: Its:
2
<PAGE> 30
STATE OF CALIFORNIA )
)ss.
COUNTY OF )
On May , 1998, before me, , a notary public in
and for said State, personally appeared personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [SEAL]
STATE OF CALIFORNIA )
)ss.
COUNTY OF )
On May , 1998, before me, , a notary public in
and for said State, personally appeared personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [SEAL]
3
<PAGE> 31
Exhibit A
All those plots, pieces and parcels of land situate, lying or being in the
County of Orange, State of California, more particularly described as follows:
LOT 4 OF TRACT 12125, IN THE CITY OF SAN CLEMENTE, COUNTY OF ORANGE, STATE
OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 541, PAGES 1 THROUGH 8
INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, AS
CORRECTED BY THAT CERTAIN CERTIFICATE OF CORRECTION RECORDED NOVEMBER 13,
1985 AS INSTRUMENT NO. 85-458677 AND MAY 3,1988 AS INSTRUMENT NO.
88-204245, BOTH OF OFFICIAL RECORDS OF SAID ORANGE COUNTY.
EXCEPTING THEREFROM ONE-HALF OF ALL OIL, GAS AND OTHER HYDROCARBON
SUBSTANCES AND MINERALS, AS RESERVED BY CLARENCE C. REED AND MARGARET V.
REED IN DEED RECORDED MAY 3,1951 IN BOOK 2183, PAGE 579 OF OFFICIAL
RECORDS.
ALSO EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN,
GEOTHERMAL STEAM AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING THAT
MAY BE WITHIN OR UNDER THE PROPERTY, TOGETHER WITH THE PERPETUAL RIGHTS OF
DRILLING, MINING EXPLORING AND OPERATING THEREFOR AND STORING IN AND
REMOVING THE SAME FROM THE PROPERTY OR ANY OTHER LAND, INCLUDING THE RIGHT
TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THE
PROPERTY, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE
SUBSURFACE OF THE PROPERTY, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY
DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMIT THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN
AND OPERATE ANY SUCH WELLS OR MINES WITHOUT, HOWEVER, THE RIGHT TO DRILL,
MINE, STORE, EXPLORE OR OPERATE THROUGH THE SURFACE OR THE UPPER FIVE
HUNDRED (500) FEET OF THE SUBSURFACE OF THE PROPERTY, AS RESERVED BY
WESTERN PROPERTIES SERVICE CORPORATION IN DEED RECORDED DECEMBER 21, 1988
AS INSTRUMENT NO. 88-666748 OF OFFICIAL RECORDS.
<PAGE> 32
FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("First Amendment") dated as of July 28,
1998, is entered into by and between Lowe Enterprises Commercial Group, a
California corporation ("Lessor") and Metagenics Incorporated, a California
corporation ("Lessee").
RECITALS
WHEREAS, Lessor and Lessee have entered into that certain Standard
Industrial/Commercial Single-Tenant Lease-Net (the "Lease") dated as of the
27th day of May, 1998 for a building consisting of approximately Eighty-eight
thousand (88,000) rentable square feet to be constructed on land located on the
northeast corner of Avenida Pico and Avenida La Pata, San Clemente, CA (the
"Premises"); and
WHEREAS, Lessor and Lessee desire to amend the Lease as particularly set
forth herein.
NOW, THEREFORE, in reliance upon the foregoing and for good and valuable
consideration, the receipt of which is hereby acknowledged, Lessor and Lessee
agree and hereby amend the Lease as follows:
AGREEMENT
1. Definitions. All capitalized terms used and not otherwise defined
herein shall have the same meanings ascribed to them in the Lease.
2. Paragraph 1.3 Term is hereby amended by deleting "ten (10) years"
where it appears and inserting in lieu thereof "twelve (12) years".
3. Paragraph 1.5 Base Rent is hereby amended by deleting subsection (b)
"Rental Increase" and inserting the following in lieu thereof: "(b)"Rental
Increase." The Base Rent shall be increased by three and one-half percent
(3.5%), and increases in Base Rent shall occur on each anniversary of the
Commencement Date throughout the Original Term."
4. Paragraph 1.6 Base Rent Paid Upon Execution is hereby amended by
deleting the stated amount of "seventy-four thousand six hundred dollars
($74,600.00)" and inserting in lieu thereof "seventy-four thousand nine hundred
seventy dollars ($74,970.00)".
5. Paragraph 4.3 Additional Rent is hereby amended by adding the
following: "Notwithstanding the foregoing, Lessor shall have the option, upon
not less than ten (10) days prior written notice to Lessee, to require Lessee
to directly pay to the applicable payee Real Property Taxes pursuant to
Paragraph 10.2 of the Lease, insurance premiums pursuant to Paragraph 8.1 of
the Lease and operating expenses pursuant to Paragraph 7.2 of the Lease. If
such payments are made directly by Lessee, Lessee shall deliver to Lessor
evidence of payment
<PAGE> 33
of Real Estate Taxes within thirty (30) days after the due date thereof,
evidence of payment of insurance premiums at least thirty (30) days prior to the
expiration date of each policy together with a copy of each such policy and, if
requested by Lessee, evidence of payment of operating expenses within thirty
(30) days after such request".
6. Paragraph 7.2 Lessor's Obligations is hereby amended by
adding thereto the following sentence after the second sentence which ends with
the phrase "pursuant to Paragraph 1.3 hereof": "Notwithstanding the foregoing,
Lessor shall have the right, upon not less than ten (10) days prior written
notice to Lessee, to require Lessee to maintain those elements of the Premises
for which Lessee is obligated to reimburse Lessor under the terms of the
foregoing sentence".
7. Paragraph 14 Condemnation is hereby amended by deleting the
following sentence: "All Alterations and Utility Installations made to the
Premises by Lessee, for purposes of Condemnation only, shall be considered the
property of the Lessee and Lessee shall be entitled to any and all compensation
which is payable therefor."
8. Section 4.3 of Exhibit B Work Letter is hereby amended by
adding thereto the following sentence: "Lessee shall sign a certification on a
monthly basis acknowledging the Cost of Construction to date."
9. Section 4.3 clause (u) of Exhibit B Work Letter is hereby
amended by deleting "nine percent (9%) interest" where it appears and inserting
in lieu thereof "construction rent equal to nine percent (9%) ("Lessee
Construction Rent")."
10. A new subsection (c) is hereby added to Section 3.3 as
follows:
(a) Lessee's Obligation to Take Possession. Upon
Substantial Completion of the Tenant Improvements, Lessee agrees to
promptly take possession of the Premises and to occupy the same
pursuant to the Lease.
11. The following is hereby added to Section 31 to the Lease:
Tenant hereby acknowledges and agrees that the Premises may be annexed
to the Rancho San Clemente Business Park and, in such event, the
Premises shall be subject to the Master Declaration of Covenants,
Conditions, Restrictions and Reservation of Easements for Rancho San
Clemente Business Park, as amended (the "Declaration"), and Tenant
shall perform and comply with the covenants set forth therein.
12. Except as expressly modified herein, the Lease shall remain
unmodified and in full force and effect. In the event a conflict exists between
the terms and conditions of this
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<PAGE> 34
Amendment and the terms and conditions of the Lease, the terms and conditions
of this Amendment shall control.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Amendment as
of this date set forth above.
LESSOR: LESSEE:
Date: July 28 , 1998 Date: 7/28 , 1998
------------------------ ------------------------
LOWE ENTERPRISES COMMERCIAL METAGENICS INCORPORATED, a
GROUP, a California corporation California corporation
By: /s/ Stan Wendzel By: /s/ Jerry H. Morey
-------------------------------- --------------------------------
Name: Stan M. Wendzel Name: Jerry H. Morey
Its: Vice President ------------------------------
Its: CFO, Treasurer & Secretary
-------------------------------
By:
--------------------------------
Name:
------------------------------
Its:
-------------------------------
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<PAGE> 35
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this "Assignment") is made and
entered into as of the 28th day of July, 1998, by and between LOWE ENTERPRISES
COMMERCIAL GROUP, INC., a California corporation having an address 145 S. State
College Boulevard, Suite 145, Brea, California 92821 ("Assignor"), and META
(CA) QRS 14-6, INC., a Delaware corporation having an address c/o W.P. Carey &
Co., Inc., 50 Rockefeller Plaza, Second Floor, New York, New York 10020
("Assignee").
W I T N E S S E T H :
WHEREAS, Assignor has this day conveyed to Assignee certain real property
situate in Orange County, California, more particularly described on Schedule
A attached hereto and made a part hereof, together with all improvements
thereon (the "Real Property");
WHEREAS, the Real Property is subject to a certain Lease Agreement, dated
May 27, 1998, as amended by First Amendment to Lease dated July 28, 1998,
between Assignor and Metagenics Incorporated, a California corporation (the
"Lease"); and
WHEREAS, in conjunction with the conveyance of the Real Property, Assignor
has agreed to assign all of its right, title and interest in and to the Lease
to Assignee, and Assignee has agreed to assume and perform certain of
Assignor's liabilities and obligations arising under the Lease on and after the
date hereof, all in accordance with this Assignment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties agree as follows:
1. Assignment. Assignor hereby assigns, transfers, and conveys to
Assignee all of Assignor's right, title and interest as landlord or lessor in
and to the Lease and all of the rights, benefits and privileges of the landlord
or lessor thereunder, including without limitation all of Assignor's right,
title and interest in and to all security deposits and rentals thereunder.
2. Representations and Warranties. Assignor hereby represents and
warrants that it has not (a) sold, assigned or otherwise transferred its
interest in the Lease, (b) granted any other party any right or option to
acquire the Real Property, (c) amended, modified, supplemented or terminated
the Lease or (d) given or received any notice of default under the Lease.
3. Indemnity by Assignor. Assignor hereby agrees to indemnify and hold
Assignee harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys' fees and costs) arising out of (a) any
obligation or liability of the landlord or lessor under the Lease which was to
be performed or which became due during the period in
<PAGE> 36
which Assignor owned the Real Property, or (b) any obligations or liability of
landlord or lessor under the Lease arising after the date hereof relating to
acts or omissions occurring during the period Assignor owned the Real Property
or which relate to the obligations of Assignor under that certain Construction
Management Agreement of even date herewith between Assignor and Assignee.
4. Assumption. Assignee hereby assumes all liabilities and obligations
of Assignor under the Lease which arise on or after the date hereof and agrees
to perform all obligations of Assignor under the Lease which are to be
performed or which become due on or after the date hereof (except those
obligations for which Assignee is indemnified pursuant to Paragraph 1 above for
which Assignor shall remain liable and except for those obligations arising due
to acts or omissions occurring prior to the date hereof).
5. Indemnity by Assignee. Assignee shall indemnify and hold Assignor
harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys' fees) arising out of Assignee's failure to
perform any obligation or liability of the landlord or lessor under the Lease
which is assumed by Assignee hereunder. Assignee shall be released from its
obligations under this Paragraph 4 on the date Assignee conveys the Real
Property to another party and such other party assumes the obligations of
Assignee as landlord under the Lease.
6. Further Assurances. Assignor covenants with Assignee that it will
execute or procure any additional documents necessary to establish the rights
of Assignee hereunder.
7. Binding Effect. This Assignment shall be binding upon and inure to
the benefit of Assignor, Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the
date set forth above.
LOWE ENTERPRISES COMMERCIAL
GROUP, a California corporation
By: /s/ Stan M. Wendzel
----------------------------
Title: Vice President
-------------------------
META (CA) QRS 14-6, INC.,
a Delaware corporation
By: [Illegible Signature]
----------------------------
Title: First Vice President
-------------------------
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<PAGE> 1
FINAL
Exhibit 10.4
LEASE AGREEMENT
by and between
TRUCK (IN) QRS 14-3, INC.,
a Delaware Corporation
as LANDLORD
and
BURLINGTON MOTOR CARRIERS INC.
a Delaware corporation,
as TENANT
Premises: Daleville, Indiana
Dated as of: June 29, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
----
Parties............................................................... 1
1. Demise of Premises.................................................... 1
2. Certain Definitions................................................... 1
3. Title and Condition................................................... 6
4. Use of Leased Premises; Quiet Enjoyment............................... 8
5. Term.................................................................. 8
6. Basic Rent............................................................ 9
7. Additional Rent....................................................... 9
8. Net Lease; Non-Terminability.......................................... 10
9. Payment of Impositions................................................ 11
10. Compliance with Laws and Easement Agreements; Environmental Matters.. 12
11. Liens; Recording..................................................... 13
12. Maintenance and Repair............................................... 14
13. Alterations and Improvements......................................... 14
14. Permitted Contests................................................... 15
15. Indemnification...................................................... 16
16. Insurance............................................................ 16
17. Casualty and Condemnation............................................ 19
18. Termination Events................................................... 20
19. Restoration.......................................................... 21
20. Procedures Upon Purchase............................................. 22
21. Assignment and Subletting; Prohibition Against Leasehold Financing... 23
22. Events of Default.................................................... 24
23. Remedies and Damages Upon Default.................................... 26
24. Notices.............................................................. 29
25. Estoppel Certificate................................................. 29
26. Surrender............................................................ 29
27. No Merger of Title................................................... 30
28. Books and Records.................................................... 30
29. Determination of Value............................................... 31
30. Non-Recourse as to Landlord.......................................... 32
31. Financing............................................................ 33
32. Subordination, Non-Disturbance and Attornment........................ 33
33. Financial Covenants.................................................. 34
34. Tax Treatment; Reporting............................................. 34
35. Miscellaneous........................................................ 34
-i-
<PAGE> 3
EXHIBITS
- --------
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Financial Covenants
Schedule 1 - Post Closing Obligation
-ii-
<PAGE> 4
LEASE AGREEMENT, made as of this 29th day of June, 1998, between
TRUCK (IN) QRS 14-3, INC., a Delaware corporation ("Landlord"), with an address
c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor, New York, New York
10020, and BURLINGTON MOTOR CARRIERS INC., a Delaware corporation ("Tenant"),
with an address at 14611 W. Commerce Road, Daleville, Indiana 47334-9702.
In consideration of the rents and provisions herein stipulated
to be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon
the provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"); (a) the premises described in Exhibit
"A" hereto, together with the Appurtenances (collectively, the "Land"); (b) the
buildings, structures and other improvements now or hereafter constructed on
the Land (collectively, the "Improvements"); and (c) the fixtures, machinery,
equipment and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
2. Certain Definitions.
"Acquisition Cost" shall mean $7,539,267.
"Additional Rent" shall mean Additional Rent as defined
in Paragraph 7.
"Adjoining Property" shall mean all sidewalks,
driveways, curbs, gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions,
improvements or repairs to, all alterations, reconstructions, renewals,
replacements or removals of and all substitutions or replacements for any of
the Improvements or Equipment, both interior and exterior, structural and
non-structural, and ordinary and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and
leases from Landlord to a Lender which (a) encumbers any of the Leased Premises
and (b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in
Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent
Payment Dates as defined in Paragraph 6.
"Casualty" shall mean any injury to or death of any
person or any loss of or damage to any property (including the Leased Premises)
included within or related to the Leased Premises or arising from the Adjoining
Property.
<PAGE> 5
"Commencement Date" shall mean Commencement Date as
defined in Paragraph 5.
"Condemnation" shall mean a Taking.
"Condemnation Notice" shall mean notice or knowledge of
the institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified
transaction shall mean all reasonable costs and expenses incurred by such Person
or associated with such transaction, including without limitation, attorneys'
fees and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"Covenants" shall mean the covenants and agreements
described on Exhibit "E".
"CPI" shall mean CPI as defined in Exhibit "D" hereto.
"Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23(a)(iii).
"Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).
"Easement Agreement" shall mean any conditions,
covenants, restrictions, easements, declarations, licences and other agreements
listed as Permitted Encumbrances or as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, licence, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or
local Law.
-2-
<PAGE> 6
"Environmental Violation" shall mean (a) any direct or
indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (b) any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which extends to any
Adjoining Property in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or which could
result in any liability to any Federal, state or local government or to any
other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which creates any liability, cost or expense to Landlord
or Lender or any other owner or occupier of the Leased Premises, or which could
result in a creation of a lien on the Leased Premises under any Environmental
Law, or (e) any violation of or noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as defined in
Paragraph 1.
"Event of Default" shall mean an Event of Default as
defined in Paragraph 22(a).
"Fair Market Value" shall mean the higher of (a) the fair
market value of the Leased Premises as of the Relevant Date as if unaffected and
unencumbered by this Lease or (b) the fair market value of the Leased Premises
as of the Relevant Date as affected and encumbered by this Lease and assuming
that the Term has been extended for all extension periods provided for herein.
For all purposes of this Lease, Fair Market Value shall be determined in
accordance with the procedure specified in Paragraph 9.
"Fair Market Value Date" shall mean the date when the
Fair Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Hazardous Activity" means any activity, process,
procedure or undertaking which directly or indirectly (i) procures, generates or
creates any Hazardous Substance; (ii) causes or results in (or threatens to
cause or result in) the release, seepage, spill, leak, flow, discharge or
emission of any Hazardous Substance into the environment (including the air,
ground water, watercourses or water systems), (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would cause the Leased Premises or
any portion thereof to become a hazardous waste treatment, recycling,
reclamation, processing, storage or disposal facility within the meaning of any
Environmental Law.
"Hazardous Condition" means any condition which would
support any claim or liability under any Environmental Law, including the
presence of underground storage tanks.
"Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether man-made or the
-3-
<PAGE> 7
by-product of any process, that is toxic, harmful or hazardous or acutely
hazardous to the environment or public health or safety or (ii) any substance
supporting a claim under any Environmental Law, whether or not defined as
hazardous as such under any Environmental Law. Hazardous Substances include,
without limitation, any toxic or hazardous waste, pollutant, contaminant,
industrial waste, petroleum or petroleum-derived substances or waste, radon,
radiologically-contaminated materials, asbestos, asbestos containing materials,
urea formaldehyde foam insulation, lead and polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in
Paragraph 15.
"Insurance Requirements" shall mean the requirements of
all insurance policies required to be maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law,
code, ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first Lease
Year, the period commencing on the Commencement Date and ending at midnight on
the last day of the twelfth (12th) consecutive calendar month following the
month in which the Commencement Date occurred, and each succeeding twelve (12)
month period during the Term.
"Leased Premises" shall mean the Leased Premises as
defined in Paragraph 1.
"Legal Requirements" shall mean the requirements of all
present and future Laws (including but not limited to Environmental Laws and
Laws relating to accessibility to, usability by, and discrimination against,
disabled individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the Leased
Premises, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or restoration of any of the Leased Premises,
even if compliance therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any person or entity (and their
respective successors and assigns) which may, after the date hereof, make a
Loan to Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more Lenders
to Landlord, which loan is secured by a Mortgage and an Assignment and
evidenced by a Note.
"Monetary Obligations" shall mean Rent and all other
sums payable by Tenant under this Lease to Landlord, to any third party on
behalf of Landlord or to any Indemnitee.
-4-
<PAGE> 8
"Mortgage" shall mean any mortgage or deed of trust from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable to
Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or
by agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred by
Landlord and Lender in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which
does not constitute a Termination Event.
"Permitted Assignee" shall mean Permitted Assignee as
defined in Paragraph 21(a).
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership,
association, corporation or other entity.
"Prepayment Premium" shall mean any payment (other than a
payment of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) by reason of any prepayment by Landlord of any principal due
under a Note or Mortgage, and which may be (in lieu of such prepayment premium
or prepayment penalty) a "make whole" clause requiring a prepayment premium in
an amount sufficient to compensate the Lender for the loss of the benefit of the
Loan due to a prepayment.
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) six percent (6%) per annum.
"Prime Rate" shall mean the annual interest rate as
published, from time to time, in The Wall Street Journal as the "Prime Rate" in
its column entitled "Money Rate". The Prime Rate may not be the lowest rate of
interest charged by any "large U.S. money center commercial banks" and Landlord
makes no representations or warranties to that effect. In the event The Wall
Street Journal ceases publication or ceases to publish the "Prime Rate" as
described above, the Prime Rate shall be the average per annum discount rate
(the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued
from time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.
"Relevant Amount" shall mean the Termination Amount or
the Default Termination Amount, as the case may be.
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"Relevant Date" shall mean (a) the date immediately prior
to the date on which the applicable Condemnation Notice is received, in the
event of a Termination Notice under Paragraph 18 which is occasioned by a
Taking, (b) the date immediately prior to the date on which the applicable
Casualty occurs, in the event of a Termination Notice under Paragraph 18 which
is occasioned by a Casualty, (c) the date when Fair Market Value is
redetermined, in the event of a redetermination of Fair Market Value pursuant to
Paragraph 20(c), or (d) the date immediately prior to the Event of Default
giving rise to the need to determine Fair Market Value in the event Landlord
provides Tenant with notice of its intention to require Tenant to make a
termination offer under Paragraph 23(a)(iii).
"Renewal Term" shall mean Renewal Term as defined in
Paragraph 5.
"Rent" shall mean, collectively, Basic Rent and
Additional Rent.
"Site Assessment" shall mean a Site Assessment as defined
in Paragraph 10(c).
"State" shall mean the State of Indiana.
"Surviving Obligations" shall mean any obligations of
Tenant under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
"Taking" shall mean (a) any taking or damaging of all or
a portion of any of the Leased Premises (i) in or by condemnation or other
eminent domain proceedings pursuant to any Law, general or special, or (ii) by
reason of any agreement with any condemnor in settlement of or under threat of
any such condemnation or other eminent domain proceeding, or (iii) by any other
means, or (b) any de facto condemnation. The Taking shall be considered to have
taken place as of the later of the date actual physical possession is taken by
the condemnor, or the date on which the right to compensation and damages
accrues under the law applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a) Fair
Market Value or (b) the sum of the Acquisition Cost and any Prepayment Premium
which Landlord will be required to pay in prepaying any Loan with proceeds of
the Termination Amount.
"Termination Date" shall mean Termination Date as defined
in Paragraph 18.
"Termination Event" shall mean a Termination Event as
defined in Paragraph 18.
"Termination Notice" shall mean Termination Notice as
defined in Paragraph 18(a).
3. Title and Condition.
(a) The Leased Premises are demised and let
subject to (i) the rights of any Persons in possession of the Leased Premises,
(ii) the existing state of title of any of the Leased Premises, including any
Permitted Encumbrances, (iii) any state of facts which an accurate survey or
physical inspection of the Leased Premises might show, (iv) all Legal
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Requirements, including any existing violation of any thereof, and (v) the
condition of the Leased Premises as of the commencement of the Team, without
representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises is
in condition and repair sufficient for the operation of Tenant's business at
the inception of this Lease. LANDLORD LEASES AND WILL LEASE AND TENANT TAKES
AND WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE
AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT,
(iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS,
(vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY,
(xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF
ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi)
COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE
LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE
LEASED PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b)
HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION
OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER
LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has
examined the title to the Leased Premises prior to the execution and delivery
of this Lease and has found the same to be satisfactory for the purposes
contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal
and equitable) is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) to the best
of its knowledge, the Improvements conform to all material Legal Requirements
and all Insurance Requirements, (iii) to the best of its knowledge, all
easements necessary or appropriate for the use or operation of the Leased
Premises have been obtained, (iv) all contractors and subcontractors who have
performed work on or supplied materials to the Leased Premises have been fully
paid, and all materials and supplies have been fully paid for, (v) to the best
of its knowledge, the Improvements have been completed in all material respects
in a workmanlike manner of first class quality, and (vi) all Equipment
necessary or appropriate for the use or operation of the Leased Premises has
been installed and is presently operative in all material respects.
(d) Landlord hereby assigns to Tenant, without
recourse or warranty whatsoever, all assignable warranties, guaranties,
indemnities and similar rights (collectively, "Warranties") which Landlord may
have against any manufacturer, seller, engineer, contractor or builder in
respect of any of the Leased Premises. Such assignment shall remain in effect
until an Event of Default occurs or until the expiration or earlier termination
of this Lease, whereupon such assignment shall cease and all of Warranties,
guaranties, indemnities and other rights shall
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automatically revert to Landlord unless at that time there is an outstanding
claim with respect thereto, in which event such reversion shall be stayed until
such claim is resolved. Tenant, applying prudent business judgment, shall
enforce the Warranties in accordance with their respective terms.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for
corporate headquarters, driver training, recruiting, telemarketing, storage of
trailers and maintenance facilities and activities incident thereto and to the
operation of a trucking company and for no other purpose. Tenant shall not use
or occupy or permit any of the Leased Premises to be used or occupied, nor do or
permit anything to be done in or on any of the Leased Premises, in a manner
which would or might (i) violate any Law or Legal Requirement, (ii) make void or
voidable or cause any insurer to cancel any insurance required by this Lease, or
make it difficult or impossible to obtain any such insurance at commercially
reasonable rates, (iii) make void or voidable, cancel or cause to be cancelled
or release any warranty, guaranty or indemnity that relates to the Leased
Premises, (iv) cause structural injury to any of the Improvements or (v)
constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no
Event of Default has occurred and is continuing, Tenant shall quietly hold,
occupy and enjoy the Leased Premises throughout the Term, without any hindrance,
ejection or molestation by Landlord, Lender or any of their successors or
assigns with respect to matters that arise after the date hereof, provided that
Landlord or its agents may enter upon and examine any of the Leased Premises at
such reasonable times as Landlord may select and upon reasonable notice to
Tenant (except in the case of an emergency, in which no notice shall be
required) for the purpose of inspecting the Leased Premises, verifying
compliance or non-compliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof, subject only to Tenant's ordinary security requirements.
5. Term.
(a) Subject to the provisions hereof, Tenant shall
have and hold the Leased Premises for an initial term (such term, as extended or
renewed in accordance with the provisions hereof, being called the "Term")
commencing on the date hereof (the "Commencement Date") and ending on the last
day of the two hundred and fortieth (240th) calendar month next following the
date hereof (the "Expiration Date"). If all Rent and all other sums due
hereunder shall not have been fully paid by the end of the Term, Landlord may,
at its option, extend the Term until all said sums shall have been fully paid.
(b) Provided that if, on or prior to the Expiration
Date or any other Renewal Date (as hereinafter defined) this Lease shall not
have been terminated pursuant to any provision hereof, then on the Expiration
Date and on the fifth (5th) anniversary of the Expiration Date (the Expiration
Date and such anniversary being a "Renewal Date"), the Term shall be deemed to
have been automatically extended for an additional period of five (5) years,
unless Tenant shall notify Landlord in writing in recordable form at least one
(1) year prior to the next Renewal Date that Tenant is terminating this Lease as
of the next Renewal Date. Any such extension of the Term shall be subject to all
of the provisions of this Lease, as the same may be amended, supplemented or
modified.
(c) If Tenant exercises its option not to extend or
further extend the Term, or if an Event of Default occurs, then Landlord shall
have the right during the remainder of
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the Term then in effect and, in any event, Landlord shall have the right during
the last year of the Term, to (i) advertise the availability of the Leased
Premises for sale or reletting and to erect upon the Leased Premises signs
indicating such availability and (ii) show the Leased Premises to prospective
purchasers or tenants or their agents upon reasonable notice and at such
reasonable times as Landlord may select subject to Tenant's ordinary security
procedures.
6. Basic Rent. Tenant shall pay to Landlord, as
annual rent for the Leased Premises during the Term, the amounts determined in
accordance with Exhibit "D" hereto ("Basic Rent"), commencing on the first day
of July, 1998, and continuing on the first day of each, October, January, April
and July thereafter during the Term (each such day being a "Basic Rent Payment
Date"). Each such rental payment shall be made, at Landlord's sole discretion,
(a) to Landlord at its address set forth above and/or to such one or more other
Persons, at such addresses and in such proportions as Landlord may direct by
fifteen (15) days' prior written notice to Tenant (in which event Tenant shall
give Landlord notice of each such payment concurrent with the making thereof),
and (b) by a check to be received on or before the applicable Basic Rent Payment
Date, or in Federal Funds. Pro rata Basic Rent for the period from the date
hereof through the last day of the month hereof shall be paid on the
date hereof.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional
rent (collectively, "Additional Rent"):
(i) except as otherwise specifically provided
herein, all costs and expenses of Tenant, Landlord and any other Persons
specifically referenced herein which are incurred in connection or associated
with (A) the ownership, use, non-use, occupancy, possession, operation,
condition, design, construction, maintenance, alteration, repair or restoration
of any of the Leased Premises, (B) the performance of any of Tenant's
obligations under this Lease, (C) any sale or other transfer of any of the
Leased Premises to Tenant under this Lease, (D) any Condemnation proceedings,
(E) the adjustment, settlement or compromise of any insurance claims involving
or arising from any of the Leased Premises, (F) the prosecution, defense or
settlement of any litigation involving or arising from any of the Leased
Premises, this Lease, or the sale of the Leased Premises to Landlord, (G) the
exercise or enforcement by Landlord, its successors and assigns, of any of its
rights under this Lease, (H) any amendment to or modification or termination of
this Lease made at the request of Tenant, (I) Costs of Landlord's counsel and
reasonable internal Costs of Landlord incurred in connection with any act
undertaken by Landlord (or its counsel) at the request of Tenant, or, if an
Event of Default exists, incurred in connection with any act of Landlord
performed on behalf of Tenant, and any other items specifically required to be
paid by Tenant under this Lease;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to four percent
(4%) of the amount of such unpaid installment or portion thereof ("Late
Charge"), provided, however, that with respect to the first late payment of all
or any portion of any installment of Basic Rent in any consecutive twelve (12)
month period, the Late Charge shall not be due and payable unless the Basic Rent
has not been paid within five (5) days' following the due date hereof;
(iii) in addition to the amounts payable under
Paragraph 7 clauses (a)(ii) and (iv) a sum equal to any additional sums
(including any late charge payable on the portion of Basic Rent equal to
installments of principal and interest on the then outstanding Loan, default
penalties, interest and fees of Lender's counsel) which are payable by Landlord
to any Lender under any Note by reason of Tenant's late payment or non-payment
of Basic Rent or by
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reason of an Event of Default, provided, however, that Tenant shall not be
required to pay an amount equal to any late fee payable by Landlord to a Lender
if, under clause (ii) above, Tenant pays any past due installment of Basic Rent
within any grace period permitted in (and as limited by) clause (ii) above, and,
provided further, that Tenant shall receive as a credit against any late charge
or default interest payable on the then outstanding Loan equal to the product of
(i) the sum of the Late Charge and the amount paid pursuant to Paragraph 7,
clause (a)(iv) and (ii) the ratio of the amount of the Loan and the Acquisition
Cost; and
(iv) interest at the rate (the "Default Rate") of
three percent (3%) over the Prime Rate per annum on the following sums until
paid in full; (A) all overdue installments of Basic Rent from the respective due
dates hereof, (B) all overdue amounts of Additional Rent relating to obligations
which Landlord shall have paid on behalf of Tenant, from the date of payment
thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from
the date when any such amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional
Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided
that amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within fifteen (15) days after Landlord's demand for payment
thereof, and (ii) any other Additional Rent, within five (15) days after
Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations
shall be paid without notice or demand and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction or defense
(collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein,
this Lease and the rights of Landlord and the obligations of Tenant hereunder
shall not be affected by any event or for any reason, including the following:
(i) any damage to or theft, loss or destruction of any of the Leased Premises,
(ii) any Condemnation, (iii) Tenant's acquisition of ownership of any of the
Leased Premises other than pursuant to an express provision of the Lease, (iv)
any default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (v) any latent or other defect in any of the
Leased Premises, (vi) the breach of any warranty of any seller or manufacturer
of any of the Equipment, (vii) any violation of any provision of this Lease by
Landlord, (viii) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution or winding-up of, or other proceeding
affecting Landlord, (ix) the exercise of any remedy, including foreclosure,
under any Mortgage or Assignment, (x) any action with respect to this Lease
(including the disaffirmance hereof) which may be taken by Landlord, any
trustee, receiver or liquidator of Landlord or any court under the Federal
Bankruptcy Code or otherwise, (xi) any interference with Tenant's use of the
Leased Premises, (xii) market or economic changes or (xiii) any other cause,
whether similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be
separate and independent covenants and agreements, all Monetary Obligations
shall continue to be payable in all events (or, in lieu thereof, Tenant shall
pay amounts equal thereto), and the obligations of Tenant hereunder shall
continue unaffected unless the requirement to pay or perform the same shall have
been terminated pursuant to an express provision of this Lease. All Rent payable
by Tenant hereunder shall constitute "rent" for all purposes (including Section
502(b)(6) of the Federal Bankruptcy Code).
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(d) Except as otherwise expressly provided herein,
Tenant shall have no right and hereby waives all rights which it may have under
any Law (i) to quit, terminate or surrender this Lease or any of the Leased
Premises, or (ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are
due thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen of extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's leasehold interest in the Leased Premises,
(iii) any of the Leased Premises, (iv) Landlord as a result of or arising in
respect of the acquisition, ownership, occupancy, leasing, use, possession or
sale of any of the Leased Premises, any activity conducted on any of the Leased
Premises, or the Rent, or (v) any Lender by reason of any Note, Mortgage,
Assignment or other document evidencing or securing a Loan and which (as to this
clause (v)) Landlord has agreed to pay (collectively, the "Impositions");
provided, that nothing herein shall obligate Tenant to pay (A) income, excess
profits, franchise or other taxes of Landlord (or Lender) which are determined
on the basis of Landlord's (or Lender's) net income or net worth (unless such
taxes are in lieu of or a substitute for any other tax, assessment or other
charge upon or with respect to the Leased Premises which, if it were in effect,
would be payable by Tenant under the provisions hereof or by the terms of such
tax, assessment or other charge), (B) any estate, inheritance, succession, gift
or similar tax imposed on Landlord or (C) any capital gains tax imposed on
Landlord in connection with the sale of the Leased Premises to any Person. If
any Imposition may be paid in installments without interest or penalty, Tenant
shall have the option to pay such Imposition in installments; in such event,
Tenant shall be liable only for those installments which accrue or become due
and payable during the Term. Tenant shall prepare and file all tax reports
required by governmental authorities which relate to the Impositions. Tenant
shall deliver to Landlord (1) copies of all settlements and notices pertaining
to the Impositions which may be issued by any governmental authority within
twenty (20) days after Tenant's receipt thereof, (2) receipts for payment of all
taxes required to be paid by Tenant hereunder within forty (40) days after the
due date thereof and (3) receipts for payment of all other Impositions within
twenty (20) days after Landlord's request therefor.
(b) Landlord shall have the right at any time
following a default or request by a Lender to require Tenant to pay to Landlord
an additional monthly sum (each an "Escrow Payment") sufficient to pay the
Escrow Charges (as hereinafter defined) as they become due. As used herein,
"Escrow Charges" shall mean real estate taxes on the Leased Premises or payments
in lieu thereof and premiums on any insurance required by this Lease. Landlord
shall determine the amount of the Escrow Charges and of each Escrow Payment. As
long as the Escrow Payments are being held by Landlord the Escrow Payments shall
not be commingled with other funds of Landlord or other Persons and interest
thereon shall accrue for the benefit of Tenant from the date such monies are
received and invested until the date such monies are disbursed to pay Escrow
Charges. Landlord shall apply the Escrow Payments to the payment of the Escrow
Charges in such order or priority as Landlord shall determine or as required by
law. If at any time the Escrow Payments theretofore paid to Landlord shall be
insufficient for the payment of the Escrow Charges, Tenant, within fifteen (15)
days after Landlord's demand therefor, shall pay the amount of the deficiency to
Landlord.
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10. Compliance with Laws and Easement Agreements;
Environmental Matters.
(a) Tenant shall, at its expense, comply with and
conform to, and cause the Leased Premises and any other Person occupying part of
the Leased Premises to comply with and conform to, all Insurance Requirements
and Legal Requirements (including all applicable Environmental Laws), Tenant
shall not at any time (i) cause, permit or suffer to occur any Environmental
Violation or (ii) permit any sublessee, assignee or other Person occupying the
Leased Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation and, at the request of Landlord or Lender, Tenant shall
promptly remediate or undertake any other appropriate response action to correct
any existing Environmental Violation, however immaterial.
(b) Tenant, at its sole cost and expense, will at all
times promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement on the
part of Landlord or the occupier to be kept and performed thereunder. Tenant
will not alter, modify, amend or terminate any Easement Agreement, give any
consent or approval thereunder, or enter into any new Easement Agreement
without, in each case, the prior written consent of Landlord which will not be
unreasonably withheld.
(c) In connection with a sale, financing or
refinancing of the Leased Premises, if required by the terms of any Loan, or if
Landlord has reasonable cause to believe that an Environmental Violation, or any
condition if required by the terms of any Loan which could result in any
Environmental Violation, exists on the Leased Premises Tenant shall, upon prior
written notice from Landlord permit such persons as Landlord may designate
("Site Reviewers") to visit the Leased Premises and perform, as agents of
Tenant, environmental site investigations and assessments ("Site Assessments")
on the Leased Premises for the purpose of determining whether there exists on
the Leased Premises any Environmental Violation. Such Site Assessments may
include both above and below ground testing for Environmental Violations and
such other tests as may be necessary, in the opinion of the Site Reviewers, to
conduct the Site Assessments. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Leased Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site Assessments,
and shall make available for meetings with the Site Reviewers appropriate
personnel having knowledge of such matters. The cost of performing and reporting
Site Assessments shall be paid by Landlord unless (i) it has been determined in
the Site Assessment that an Environmental Violation exists on the Leased
Premises or (ii) in connection with the first Loan made to Landlord. Landlord
shall not use an Environmental Violation that has been found to exist at the
Leased Premises but is being timely remediated by Tenant as justification for
conducting multiple Site Assessments at Tenant's expense based solely upon the
continuing existence of such Environmental Violation, as long as Tenant
continues to timely remediate such Environmental Violation; however, Landlord's
reasonable costs and expenses incurred in monitoring Tenant's remediation of
such Environmental Violation shall be paid by Tenant.
(d) If an Environmental Violation occurs or is found
to exist and, in Landlord's reasonable judgment, the cost of remediation of, or
other response action with respect to, the same is likely to exceed $100,000,
Tenant shall provide to Landlord, within ten (10) days after Landlord's request
therefor, adequate financial assurances that Tenant will effect such
remediation in accordance with applicable Environmental Laws. Such financial
assurances shall be a bond or letter of credit reasonably satisfactory to
Landlord in form and substance and in an amount equal to or greater than
Landlord's reasonable estimate, based upon a Site Assessment performed pursuant
to Paragraph 10(c), of the anticipated cost of such remedial action.
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(e) Notwithstanding any other provision of this
Lease, if an Environmental Violation occurs or is found to exist and the Term
would otherwise terminate or expire, and if by the expiration of the Term
Landlord, after using commercially reasonable efforts to relet the Leased
Premises for its fair rental value is unable to do so, then, at the option of
Landlord, the Term shall be automatically extended beyond the date of
termination or expiration and this Lease shall remain in full force and effect
beyond such date until the earlier to occur of (i) the completion of all
remedial action in accordance with applicable Environmental Laws or (ii) the
date specified in a written notice from Landlord to Tenant terminating this
Lease. For purposes of this Paragraph 10(e) only, any Environmental Violation
which is found to exist and (i) which Tenant establishes by clear and convincing
evidence is solely attributable to the origination and/or migration of Hazardous
Substances under the Leased Premises from a source and location outside of the
Leased Premises and unrelated to Tenant; and (ii) as to such Environmental
Violation neither Landlord nor Tenant has been requested or required by any
Governmental Authority to investigate, abate or otherwise remediate such
Environmental Violation, shall not be grounds for an automatic extension of the
lease term.
(f) If Tenant fails to correct any Environmental
Violation which occurs or is found to exist within a reasonable period of time,
Landlord shall have the right (but no obligation) to take any and all actions as
Landlord shall deem necessary or advisable in order to cure such Environmental
Violation.
(g) Tenant shall notify Landlord promptly after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord immediately upon receipt thereof
copies of all orders, reports, notices, permits, applications or other
communications relating to any such violation or noncompliance.
(h) All future leases, subleases or concession
agreements relating to the Leased Premises entered into by Tenant shall contain
covenants of the other party not to at any time (i) cause any Environmental
Violation to occur or (ii) permit any Person occupying the Leased Premises
through said subtenant or concessionaire to cause any Environmental Violation
to occur.
(i) Tenant shall comply with the requirements and
within the time periods set forth in Schedule 1.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create
or permit to be created or to remain and shall promptly discharge or remove any
lien (except for liens for real estate taxes not due and payable), levy or
encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord, Lender or
their agents, successors or assigns. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL
NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED
TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH
OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND
TO ANY OF THE LEASED PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S
REQUEST TENANT SHALL PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING
SUCH NON-LIABILITY OF LANDLORD.
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(b) Tenant shall execute, deliver and record, file or
register (collectively, "record") all such instruments as may be required or
permitted by any present or future Law in order to evidence the respective
interests of Landlord and Tenant in the Leased Premises, and shall cause a
memorandum of this Lease (or, if such a memorandum cannot be recorded, this
Lease), and any supplement hereto or thereto, to be recorded in such manner and
in such places as may be required or permitted by any present or future Law in
order to protect the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Lease
Premises and the Adjoining Property in as good repair and appearance as they are
in on the date hereof except for ordinary wear and tear and fit to be used for
their intended use in accordance with the better of the practices generally
recognized as then acceptable by other companies in its industry or observed by
Tenant with respect to the other real properties owned or operated by it, and,
in the case of the Equipment, in as good mechanical condition as it was on the
later of the date hereof or the date of its installation, except for ordinary
wear and tear. Tenant shall take every other action reasonably necessary or
appropriate for the preservation and safety of the Leased Premises. Tenant shall
promptly make all Alterations of every kind and nature, whether foreseen or
unforeseen which may be reasonably required to comply with the foregoing
requirements of this Paragraph 12(a). Landlord shall not be required to make any
Alteration, whether foreseen or unforeseen, or to maintain any of the Leased
Premises or Adjoining Property in any way, and Tenant hereby expressly waives
any right which may be provided for in any Law now or hereafter in effect to
make Alterations at the expense of Landlord or to require Landlord to make
Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed,
shall (i) encroach upon any setback or any property, street or right-of-way
adjoining the Leased Premises, (ii) violate the provisions of any restrictive
covenant affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing. Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be reasonably necessary to
remove all such encroachments, hindrances or obstructions and to end all such
violations or impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having
obtained the prior written consent of Landlord and Lender and provided that no
Event of Default then exists, to make Alterations or a series of related
Alterations that, as to any such Alterations or series of related Alterations,
do not cost in excess of $250,000 and (ii) to install Equipment in the
Improvements or accessions to the Equipment that, as to such Equipment or
accessions, do not cost in excess of $250,000, so long as the time of
construction or installation of any such Equipment or Alterations no Event of
Default exists and the value and utility of the Leased Premises is not
diminished thereby. If the cost of any Alterations, series of related
Alterations, Equipment or accessions thereto is in excess of $250,0000, the
prior written approval of Landlord and Lender shall be required, such approval
not to be unreasonably withheld or delayed. Tenant shall not construct upon the
Land any additional buildings without having first obtained the prior written
consent of Landlord and Lender, which consent shall not be unreasonably withheld
or delayed.
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(b) If Tenant makes any Alterations pursuant to this
Paragraph 13 or as required by Paragraph 12 or 17 (such Alterations and actions
being hereinafter collectively referred to as ''Work''), whether or not
Landlord's consent is required, then (i) the market value of the Leased Premises
shall not be lessened by any such Work or its usefulness impaired, (ii) all such
Work shall be performed by Tenant in a good and workmanlike manner, (iii) all
such Work shall be expeditiously completed in compliance with all Legal
Requirements, (iv) all such Work shall comply with the Insurance Requirements,
(v) if any such Work involves the replacement of Equipment or parts thereto, all
replacement Equipment or parts shall have a value and useful life equal to the
greater of (A) the value and useful life on the date hereof of the Equipment
being replaced or (B) the value and useful life of the Equipment being replaced
immediately prior to the occurrence of the event which required its replacement,
(vi) Tenant shall promptly discharge or remove all liens filed against any of
the Leased Premises arising out of such Work, (vii) Tenant shall procure and pay
for all permits and licenses required in connection with any such Work, (viii)
all such Work shall be the property of Landlord and shall be subject to this
Lease, and Tenant shall execute and deliver to Landlord any document requested
by Landlord evidencing the assignment to Landlord of all estate, right, title
and interest (other than the leasehold estate created hereby) of Tenant or any
other Person thereto or therein, and (ix) Tenant shall comply, to the extent
requested by Landlord or required by this Lease, with the provisions of
Paragraph 19(a), whether or not such Work involves restoration of the Leased
Premises.
14. Permitted Contests. Notwithstanding any other provision
of this Lease, Tenant shall not be required to (a) pay any Imposition, (b)
discharge or remove any lien referred to in Paragraph 11 or 13 or (c) take any
action with respect to any encroachment, violation, hindrance, obstruction or
impairment referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as ''Permitted Violations''),
so long as at the time of such contest no Event of Default exists and so long as
Tenant shall contest, in good faith, the existence, amount or validity thereof,
the amount of the damages caused thereby, or the extent of its or Landlord's
liability therefor by appropriate proceedings which shall operate during the
pendency thereof to prevent or stay (i) the collection of, or other realization
upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of
any of the Leased Premises or any Rent to satisfy or to pay any damages caused
by any Permitted Violation, (iii) any interference with the use or occupancy of
any of the Leased Premises, (iv) any interference with the payment of any Rent,
or (v) the cancellation or increase in the rate of any insurance policy or a
statement by the carrier that coverage will be denied Tenant shall provide
Landlord security which is satisfactory, in Landlord's reasonable judgment, to
assure that such Permitted Violation is corrected, including all Costs, interest
and penalties that may be incurred or become due in connection therewith. While
any proceedings which comply with the requirements of this Paragraph 14 are
pending and the required security is held by Landlord, Landlord shall not have
the right to correct any Permitted Violation thereby being contested unless
Landlord is required by law to correct such Permitted Violation and Tenant's
contest does not prevent or stay such requirement as to Landlord. Each such
contest shall be promptly and diligently prosecuted by Tenant to a final
conclusion, except that Tenant, so long as the conditions of this Paragraph 14
are at all times complied with, has the right to attempt to settle or compromise
such contest through negotiations. Tenant shall pay any and all losses,
judgments, decrees and Costs in connection with any such contest and shall,
promptly after the final determination of such contest, fully pay and discharge
the amounts which shall be levied, assessed, charged or imposed or be determined
to be payable therein or in connection therewith, together with all penalties,
fines, interest and Costs thereof or in connection therewith, and perform all
acts the performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord to the risk of any civil or criminal
liability.
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15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend,
save and hold harmless Landlord, Lender and all other Persons described in
Paragraph 30 (each an "Indemnitee") from and against any and all liabilities,
losses, damages (including punitive damages), penalties, Costs (including
attorneys' fees and costs), causes of action, suits, claims, demands or
judgments of any nature whatsoever, howsoever caused, unless caused by the gross
negligence or willful conduct of the Indemnitee seeking indemnification, without
regard to the form of action and whether based on strict liability, negligence
or any other theory of recovery at law or in equity, arising from (i) any matter
pertaining to the acquisition (or the negotiations leading thereto), ownership,
use, non-use, occupancy, operation, condition, design, construction,
maintenance, repair or restoration of the Leased Premises or Adjoining Property,
(ii) any casualty in any manner arising from the Leased Premises or Adjoining
Property, whether or not Indemnitee has or should have knowledge or notice of
any defect or condition causing or contributing to said casualty, (iii) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance or
any encumbrance Tenant consented to or the Mortgage or Assignment or (iv) any
alleged, threatened or actual Environmental Violation, including (A) liability
for response costs and for costs of removal and remedial action incurred by the
United States Government, any state or local governmental unit or any other
Person, or damages from injury to or destruction or loss of natural resources,
including the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or act or
provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C) liability for personal injury or property damage arising under any
statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity.
(b) In case any action or proceeding is brought
against any Indemnitee by reason of any such claim, (i) Tenant may, except in
the event of a conflict of interest or a dispute between Tenant and any such
Indemnitee or during the continuance of an Event of Default, retain its own
counsel and defend such action (it being understood that Landlord may employ
counsel of its choice to monitor the defense of any such action) and (ii) such
Indemnitee shall notify Tenant to resist or defend such action or proceeding by
retaining counsel reasonably satisfactory to such Indemnitee, and such
Indemnitee will cooperate and assist in the defense of such action or proceeding
if reasonably requested so to do by Tenant. In the event of a conflict of
interest or dispute or during the continuance of an Event of Default, Landlord
shall have the right to select counsel, and the cost of such counsel shall be
paid by Tenant.
(c) The obligations of Tenant under this Paragraph 15
shall survive any termination, expiration or rejection in bankruptcy of this
Lease with respect to any matter that occurred or existed prior to the
termination, expiration or rejection in bankruptcy of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on
or in connection with the Leased Premises:
(i) Insurance against physical loss or damage to
the Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (if the Leased Premises is in a flood
zone) and earthquake coverage in amounts not less than the actual replacement
cost of the Improvements and Equipment. Such policies shall
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contain Replacement Cost and Agreed Amount Endorsements and shall contain
deductibles not more than $50,000 per occurrence.
(ii) Commercial General Liability Insurance and
Business Automobile Liability Insurance (including Non-Owned and Hired
Automobile Liability) against claims for personal and bodily injury, death or
property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $15,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and type.
(iii) Workers' compensation insurance covering
all persons employed by Tenant in connection with any work done on or about any
of the Leased Premises for which claims for death, disease or bodily injury may
be asserted against Landlord, Tenant or any of the Leased Premises or, in lieu
of such Workers' Compensation Insurance, a program of self-insurance complying
with the rules, regulations and requirements of the appropriate agency of the
State.
(iv) Comprehensive Boiler and Machinery Insurance
on any of the Equipment or any other equipment on or in the Leased Premises, in
an amount not less than $5,000,000 per accident for damage to property. Such
policies shall include at least $5,000,000 per accident for Off-Premises Service
Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous
Materials Clean-Up Expense and may contain a deductible not to exceed $50,000.
(v) Business Income/Extra Expense Insurance at
limits sufficient to cover 100% of the period of indemnity not less than one
year from time of loss. Such insurance shall name Landlord as loss payee solely
with respect to Rent payable to or for the benefit of Landlord as its interest
appears under this Lease.
(vi) During any period in which substantial
Alterations at the Leased Premises are being undertaken, builder's risk
insurance covering the total completed value including any "soft costs" with
respect to the Improvements being altered or repaired (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction or repair of
Improvements or Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general liability,
worker's compensation and automobile liability insurance with respect to the
Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee clause)
on or in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size, use and location to
the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall
be written by companies which have a Best's rating of A:X or above and are
admitted in, and approved to write insurance policies by, the State Insurance
Department for the State. The insurance policies (i) shall be for such terms as
Landlord may reasonably approve and (ii) shall be in amounts sufficient at all
times to satisfy any coinsurance requirements thereof. The insurance referred to
in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and
Lender as loss payee and Tenant as its interest may appear. The insurance
referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional
insureds, and the insurance referred to in
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Paragraph 16(a)(v) shall name Landlord as insured and Lender and Landlord as
loss payee. If said insurance or any part thereof shall expire, be withdrawn,
become void, voidable, unreliable or unsafe for any reason, including a breach
of any condition thereof by Tenant or the failure or impairment of the capital
of any insurer, or if for any other reason whatsoever said insurance shall
become reasonably unsatisfactory to Landlord, Tenant shall promptly obtain new
or additional insurance reasonably satisfactory to Landlord
(c) Each insurance policy referred to in clauses (i),
(iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be cancelled substantially modified or allowed to lapse on any
renewal date except after thirty (30) days' prior notice to Landlord and Lender.
Each such policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or Tenant
which might, absent such provision, result in a forfeiture of all or a part of
such insurance payment, (ii) the occupation or use of any of the Leased Premises
for purposes more hazardous than those permitted by the provisions of such
policy, (iii) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment or other document
evidencing or securing the Loan upon the happening of an event or default
therein or (iv) any change in title to or ownership of any of the Leased
Premises.
(d) Tenant shall pay as they become due all premiums
for the insurance required by Paragraph 16(a), shall renew or replace each
policy and deliver to Landlord evidence of the payment of the full premium
therefor or installment then due at least thirty (30) days prior to the
expiration date of such policy, and shall promptly deliver to Landlord all
original certificates of insurance.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to Landlord a
Statement of Values which shall be reviewed annually and amended as necessary
based on a Replacement Cost Valuations. The original or a certified copy of each
such "blanket" or umbrella policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to
(i) all provisions of each insurance policy required by this Paragraph 16 and
(ii) all requirements of the insurers thereunder applicable to Landlord, Tenant
or any of the Leased Premises or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration or repair of any of the Leased
Premises, even if such compliance necessitates Alterations or results in
interference with the use or enjoyment of any of the Leased Premises.
(g) Tenant shall not carry separate insurance
concurrent in form or contributing in the event of a Casualty with that
required in this Paragraph 16 unless (i) Landlord and Lender are included
therein as named insureds, with loss payable as provided herein, and (ii) such
separate insurance complies with the other provisions of this Paragraph 16.
Tenant shall immediately notify Landlord of such separate insurance and shall
deliver to Landlord the original policies thereof.
(h) All policies shall contain effective waivers by
the carrier against all claims for insurance premiums against Landlord and
shall contain full waivers of subrogation against the Landlord.
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(i) All proceeds of any insurance required under
Paragraph 16(a) shall be payable as follows:
(i) Proceeds payable under clauses (ii), (iii)
and (iv) of Paragraph 16(a) and proceeds attributable to the general liabilities
coverage of Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall
be payable to the Person entitled to receive such proceeds.
(ii) All proceeds of insurance payable under
clauses (ii), (iii), (iv), (v) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of Builder's Risk
insurance under clause (vi) of Paragraph 16(a) shall be payable to Landlord or,
if required by the Mortgage, to Lender.
(iii) Proceeds of insurance required under
clause (i) of Paragraph 16(a) and proceeds attributable to Builder's Risk
insurance (other than its general liability coverage provisions) under clause
(vi) of Paragraph 16(a) shall be payable to Landlord (or Lender) and applied as
set forth in Paragraph 17. Tenant shall apply the Net Award to restoration of
the Leased Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty to the Leased Premises occurs,
Tenant shall give Landlord and Lender immediate notice thereof. So long as no
Event of Default exists Tenant is hereby authorized to adjust, collect and
compromise all claims under any of the insurance policies required by Paragraph
16(a) (except public liability insurance claims payable to a Person other than
Tenant, Landlord or Lender) and to execute and deliver on behalf of Landlord all
necessary proofs of loss, receipts, vouchers and releases required by the
insurers and Landlord shall have the right to join with Tenant therein. Any
final adjustment, settlement or compromise of any such claim shall be subject to
the prior written approval of Landlord, and Landlord shall have the right to
prosecute or contest, or to require Tenant to prosecute or contest, any such
claim, adjustment, settlement or compromise. If an Event of Default exists,
Tenant shall not be entitled to adjust, collect or compromise any such claim or
to participate with Landlord in any adjustment, collection and compromise of the
Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the
request of Landlord, all such proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under said
policies, including return of unearned premiums, directly to Landlord or, if
required by the Mortgage, to Lender instead of to Landlord and Tenant jointly,
and Tenant hereby appoints each of Landlord and Lender as Tenant's
attorneys-in-fact to endorse any draft therefor. The rights of Landlord under
this Paragraph 17(a) shall be extended to Lender if and to the extent that any
Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation
Notice, shall notify Landlord and Lender thereof. So long as no Event of Default
exists, Tenant is authorized to collect, settle and compromise the amount of any
Net Award and Landlord shall have the right to join with Tenant herein. If an
Event of Default exists, Landlord shall be authorized to collect, settle and
compromise the amount of any Net Award and Tenant shall not be entitled to
participate with Landlord in any Condemnation proceeding or negotiations under
threat thereof or to contest the Condemnation or the amount of the Net Award
therefor. No agreement with any condemnor in settlement or under threat of any
Condemnation shall be made by Tenant without the written consent of Landlord.
Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably
assigns to Landlord any award or payment to which Tenant is or may be entitled
by reason of any Condemnation, whether the same shall be paid or payable for
Tenant's leasehold interest hereunder or otherwise; but nothing in this Lease
shall impair Tenant's right to any award or payment on account of Tenant's trade
fixtures, equipment or other tangible property which is
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not part of the Equipment, moving expenses or loss of business, if available, to
the extent that and so long as (i) Tenant shall have the right to make, and does
make a separate claim therefor against the condemnor and (ii) such claim does
not in any way reduce either the amount of the award otherwise payable to
Landlord for the Condemnation of Landlord's fee interest in the Leased Premises
or the amount of the award (if any) otherwise payable for the Condemnation of
Tenant's leasehold interest hereunder. The rights of Landlord under this
Paragraph 17(b) shall also be extended to Lender if and to the extent that any
Mortgage so provides.
(c) If any Partial Casualty (whether or not insured
against) or Partial Condemnation shall occur, this Lease shall continue,
notwithstanding such event, and there shall be no abatement or reduction of any
Monetary Obligations. Promptly after such Partial Casualty or Partial
Condemnation, Tenant, as required in Paragraphs 12(a) and 13(b), shall commence
and diligently continue to restore the Leased Premises as nearly as possible to
their value, condition and character immediately prior to such event (assuming
the Leased Premises to have been in the condition required by this Lease). So
long as no Event of Default exists, any Net Award up to and including $250,000
shall be paid by Landlord to Tenant and Tenant shall restore the Leased Premises
in accordance with the requirements of Paragraph 12(a) and 13(b) of this Lease.
Any Net Award in excess of $250,000 shall (unless such Casualty resulting in the
Net Award is a Termination Event) be made available by Landlord (or Lender, if
required by the terms of any Mortgage) to Tenant for the restoration of any of
the Leased Premises pursuant to and in accordance with the provisions of
Paragraph 19 hereof. If any Casualty or Condemnation which is not a Partial
Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms
and conditions of Paragraph 18.
18. Termination Events.
(a) If (i) the entire Leased Premises shall be taken
by a Taking or (ii) any substantial portion of the Leased Premises shall be
taken by a Taking or all or any substantial portion of the Leased Premises shall
be damaged or destroyed by a Casualty and, in such case, Tenant certifies and
covenants to Landlord that it will forever abandon operations at the Leased
Premises (each of the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as a "Termination Event"), then (x) in the case of
(i) above, Tenant shall be obligated, within forty five (45) days after Tenant
receives a Condemnation Notice and (y) in the case of (ii) above, Tenant shall
have the option, within forty five (45) days after Tenant receives a
Condemnation Notice or thirty (30) days after the Casualty, as the case may be,
to give to Landlord written notice of the Tenant's option to terminate this
Lease (a "Termination Notice") in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice
of Tenant's intention to terminate this Lease on the first Basic Rent Payment
Date which occurs at least sixty (60) days after the Fair Market Value Date
(the "Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay
to Landlord the Termination Amount and (iii) if the Termination Event is an
event described in Paragraph 18(a)(ii), the certification and covenants
described therein and a certified resolution of the Board of Directors of
Tenant authorizing the same. Promptly upon the delivery to Landlord of a
Termination Notice, Landlord and Tenant shall commence to determine the Fair
Market Value.
(c) If Landlord shall reject such offer to
terminate this Lease by written notice to Tenant (a "Rejection"), which
Rejection shall contain the written consent of Lender, not later than thirty
(30) days following the Fair Market Value Date, then this Lease shall terminate
on the Termination Date; provided that, if Tenant has not satisfied all
Monetary Obligations and all other obligations and liabilities under this Lease
which have arisen on or prior to the Termination Date (collectively, "Remaining
Obligations") on the Termination Date, then Landlord may, at its option, extend
the date on which this Lease may terminate to a date which is
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no later than the first Basic Rent Payment Date after the Termination Date on
which Tenant has satisfied all Remaining Obligations. Upon such termination (i)
all obligations of Tenant hereunder shall terminate except for any Surviving
Obligations, (ii) Tenant shall immediately vacate and shall have no further
right, title or interest in or to any of the Leased Premises and (iii) the Net
Award shall be retained by Landlord. Notwithstanding anything to the contrary
hereinabove contained, if Tenant shall have received a Rejection and, on the
date when this Lease would otherwise terminate as provided above, Landlord shall
not have received the full amount of the Net Award payable by reason of the
applicable Termination Event, then the date on which this Lease is to terminate
automatically shall be extended to immediately following receipt by Landlord of
the full amount of the Net Award and the Basic Rent for such period shall be
prorated accordingly provided that, if Tenant has not satisfied all Remaining
Obligations on such date, then Landlord may, at its option, extend the date on
which this Lease may terminate to a date which is no later than the first Basic
Rent Payment Date after such date on which Tenant has satisfied all such
Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not
later than the thirtieth (30th) day following the Fair Market Value Date,
Landlord shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord then, on the Termination Date, Tenant shall pay to
Landlord the Termination Amount and all Remaining Obligations and, if requested
by Tenant, Landlord shall (i) convey to Tenant the Leased Premises or the
remaining portion thereof, if any, and (ii) pay to or assign to Tenant
Landlord's entire interest in and to the Net Award, all in accordance with
Paragraph 20.
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage)
shall hold Net Award in excess of $250,000 in a fund (the "Restoration Fund")
and disburse amounts from the Restoration Fund only in accordance with the
following conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord, which approval shall not be unreasonably
withheld, (B) Landlord and Lender shall be provided with mechanics' lien
insurance (if available) and acceptable performance and payment bonds which
insure satisfactory completion of and payment for the restoration, are in an
amount and form and have a surety acceptable to Landlord, and name Landlord and
Lender as additional dual obligees, and, if applicable, (C) appropriate waivers
of mechanics' and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged, except with
respect to any liens are being contested in good faith in accordance with
Paragraph 14 hereof;
(iii) disbursements shall be made from time to
time in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance, if required by Lender, and (E) other evidence of cost and
payment so that Landlord can verify that the amounts disbursed from time to time
are represented by work that is completed, in place and free and clear of
mechanics' and materialmen's lien claims;
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(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is requested, stating
the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies with the applicable
requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
restoration fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord,
the Restoration Fund shall not be commingled with Landlord's other funds and
shall bear interest at a rate agreed to by Landlord and Tenant, and Tenant shall
be entitled to use the interest to cover the expenses of the restoration; and
(vii) such other reasonable conditions as
Landlord or Lender may impose.
(b) Prior to commencement of restoration and at any
time during restoration, if the estimated cost of completing the restoration
work free and clear of all liens, as determined by Landlord, exceeds the amount
of the Net Award available for such restoration, the amount of such excess
shall, upon demand by Landlord, be paid by Tenant to Landlord to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund together with any interest applicable thereto upon completion of
restoration shall be refunded to Tenant. For purposes of determining the source
of funds with respect to the disposition of funds remaining after the completion
of restoration, the Net Award shall be deemed to be disbursed prior to any
amount added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum shall be retained by Landlord or, if required by a Note or
Mortgage, paid by Landlord to a Lender.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant
pursuant to any provision of this Lease, Landlord need not convey any better
title thereto than that which was conveyed to Landlord, and Tenant shall accept
such title, subject, however, to the Permitted Encumbrances and to all other
liens, exceptions and restrictions on, against or relating to any of the Leased
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises which have been
created by or resulted solely from acts of Landlord after the date of this
Lease, unless the same are Permitted Encumbrances or customary utility easements
benefiting the Leased Premises or were created with the concurrence of Tenant or
as a result of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the
Leased Premises pursuant to any provision of this Lease (any such date the
"Purchase Date"), Tenant shall pay to Landlord, or to any Person to whom
Landlord directs payment, the Relevant Amount therefor specified herein, in
Federal Funds, less any credit of the Net Award received and retained by
Landlord or a Lender allowed against the Relevant Amount, and Landlord shall
deliver to Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Award not yet received by Landlord or a
Lender) then required to be sold by Landlord to Tenant pursuant to this Lease
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and (iii) any Net Award received by Landlord, not credited to Tenant against
the Relevant Amount and required to be delivered by Landlord to Tenant pursuant
to this Lease; provided, that if any Monetary Obligations remain outstanding on
such date, then Landlord may deduct from the Net Award the amount of such
Monetary Obligations; and further provided, that if any event has occurred
which, in Landlord's reasonable judgment, is likely to subject any Indemnitee
to any liability which Tenant is required to indemnify against pursuant to
Paragraph 15, then an amount shall be deducted from the Net Award which, in
Landlord's reasonable judgment, is sufficient to satisfy such liability, which
amount shall be deposited in an escrow account with a financial institution
reasonably satisfactory to Landlord and Tenant pending resolution of such
matter. If on the Purchase Date any Monetary Obligations remain outstanding and
no Net Award is payable to Tenant by Landlord or the amount of such Net Award
is less than the amount of the Monetary Obligations, then Tenant shall pay to
Landlord on the Purchase Date the amount of such Monetary Obligations. Upon the
completion of such purchase, this Lease and all obligations and liabilities of
Tenant hereunder shall terminate, except any Surviving Obligations.
(c) If the completion of such purchase shall be
delayed after (i) the Termination Date, in the event of a purchase pursuant to
Paragraph 18 or, (ii) the date scheduled for such purchase, in the event of a
purchase under any other provision of this Lease then (x) Rent shall continue to
be due and payable until completion of such purchase and (y) at Landlord's sole
option, Fair Market Value shall be redetermined and the Relevant Amount payable
by Tenant pursuant to the applicable provision of this Lease shall be adjusted
to reflect such redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord
shall be prorated as of the Purchase Date, and the prorated unapplied balance
shall be deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.
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21. Assignment and Subletting: Prohibition against Leasehold
Financing.
(a) Tenant shall have the right, upon thirty (30)
days prior written notice to Landlord and Lender, with no consent of Landlord or
Lender being required or necessary to assign this Lease to any person (a
"Permitted Assignee") that immediately following such assignment will have a
publicly traded unsecured senior debt rating of "A" or better from Moody's
Investors Services, Inc. or a rating of "A" or better from Standard & Poor's
Corporation, and in the event all of such rating agencies cease to furnish such
ratings, then a comparable rating by any rating agency reasonably acceptable to
Landlord and Lender. Tenant may not, voluntarily or involuntarily, whether by
operation of law or otherwise, assign this Lease without the prior written
consent of Landlord which may be withheld for any or no reason.
(b) Tenant shall have the right, upon thirty (30)
days prior written notice to Landlord and Lender, to enter into one or more
subleases that demise, in the aggregate, up to but not in excess of twenty five
percent (25%) of the gross space in the Improvements (inclusive of the space
leased to Transcom USA, Inc. pursuant to a Lease Agreement dated April 22, 1997
which is satisfactory to Landlord) with no consent or approval of Landlord being
required or necessary ("Preapproved Sublet"). Other than pursuant to Preapproved
Sublets, at no time during the Term shall subleases for more than twenty five
percent (25%) of the gross space in the Leased Premises without the prior
written consent of Landlord, which consent shall be granted or withheld based on
a review of the Review Criteria as they relate to the proposed sublessee and the
terms of the proposed sublease. Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on their review of the Review Criteria.
(c) If Tenant assigns all its rights and interest
under this Lease, the assignee under such assignment shall expressly assume all
the obligations of Tenant hereunder, actual or contingent, including obligations
of Tenant which may have arisen on or prior to the date of such assignment, by a
written instrument delivered to Landlord at the time of such assignment. Each
sublease of any of the Leased Premises shall be subject and subordinate to the
provisions of this Lease. No assignment or sublease shall affect or reduce any
of the obligations of Tenant hereunder, and all such obligations shall continue
in full force and effect as obligations of a principal and not as obligations of
a guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.
(d) Tenant shall, within (10) days after the
execution and delivery of any assignment or sublease consented to by Landlord,
deliver a duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(e) As security for performance of its obligations
under this Lease, Tenant hereby grants, conveys and assigns to Landlord all
right, title and interest of Tenant in and to all subleases now in existence or
hereafter entered into for any or all of the Leased Premises, any and all
extensions, modifications and renewals thereof and all rents, issues and profits
therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all
rents and other sums of money payable under any sublease of any of the Leased
Premises, provided, however, that Landlord shall have the absolute right at any
time upon notice to Tenant and any subtenants to revoke said license and to
collect such rents and sums of money and to retain the same. Tenant shall not
consent to, cause or allow any modification or alteration of any of the terms,
conditions or covenants of any of the subleases or the termination thereof,
without the prior written approval of Landlord, which consent shall not be
unreasonably withheld, nor shall Tenant accept any rents more than thirty (30)
days in advance of the accrual thereof nor do nor permit anything to be done,
the doing of which, or omit or refrain from doing anything, the omission of
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which, will or could be a breach of or default in any material respect of the
terms of any of the subleases.
(f) Tenant shall not have the power to mortgage,
pledge or otherwise encumber its interest under this Lease or any sublease of
the Leased Premises, and any such mortgage, pledge or encumbrance made in
violation of this Paragraph 21 shall be void and of no force and effect.
(g) Landlord may sell or transfer the Leased Premises
at any time without Tenant's consent to any third party (each a "Third Party
Purchaser"). In the event of any such transfer, Tenant shall attorn to any Third
Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord
notify Tenant in writing of such transfer. At the request of Landlord, Tenant
will execute such documents confirming the agreement referred to above and such
other agreements as Landlord shall reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the
following (after expiration of any applicable cure period as provided in
Paragraph 22(b)) shall, at the sole option of Landlord, constitute an "Event of
Default" under this Lease:
(i) a failure by Tenant to make any payment of
any Monetary Obligation, regardless of the reason of such failure;
(ii) a failure by Tenant duly to perform and
observe, or a violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by
Tenant herein or in any certificate, demand or request made pursuant hereto
proves to be incorrect in any material respect as of the date made;
(iv) a default beyond any applicable cure period
or at maturity by Tenant in any payment of principal or interest on any
obligations for borrowed money having an original principal balance of
$10,000,000 or more in the aggregate, or in the performance of any other
provision contained in any instrument under which any such obligation is created
or secured (including the breach of any covenant thereunder), (x) if such
payment is a payment at maturity or a final payment, or (y) if an effect of such
default if to cause, or permit any Person to cause, such obligation to become
due prior to its stated maturity;
(v) a default by Tenant beyond any applicable
cure period in the payment of rent under, or in the performance of any other
material provision of, any other lease or leases that have, in the aggregate,
rental obligations over the terms thereof of $3,000,000 or more if the Landlord
under any such lease or leases commences to exercise its remedies thereunder;
(vi) a final, non-appealable judgment or
judgments for the payment of money in excess of $3,000,000 in the aggregate
shall be rendered against Tenant and the same shall remain undischarged for a
period of sixty (60) consecutive days;
(vii) The breach of any Covenant shall occur;
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(viii) Tenant shall (A) voluntarily be
adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a
receiver or trustee for itself or for the Leased Premises, (C) file a petition
seeking relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
(ix) a court shall enter an order, judgment or
decree appointing, without the consent of Tenant, a receiver or trustee for it
or for any of the Leased Premises or approving a petition filed against Tenant
which seeks relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or decree shall
remain undischarged or unstayed sixty (60) days after it is entered;
(x) the Leased Premises shall have been vacated
or abandoned;
(xi) Tenant shall be liquidated or dissolved or
shall begin proceedings towards its liquidation or dissolution;
(xii) the estate or interest of Tenant in any of
the Leased Premises shall be levied upon or attached in any proceeding and such
estate or interest is about to be sold or transferred or such process shall not
be vacated or discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant to perform or observe,
or a violation or breach of, or a misrepresentation by Tenant under any
provision of any Assignment or any other document between Tenant and Lender, if
such failure, violation, breach or misrepresentation gives rise to a default
beyond any applicable cure period with respect to any Loan;
(xiv) a failure by Tenant to maintain in effect
any other license or permit necessary for the use, occupancy or operation of
the Leased Premises, under such failure would not have a materially adverse
effect on Tenant or the Leased Premises; or
(b) No notice or cure period shall be required in any
one or more of the following events: (A) the occurrence of an Event of Default
under clauses (i) except as otherwise set forth below) of Paragraph 22(a),
(iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), or (xiv);
(B) the default consists of a failure to pay Basic Rent, a failure to provide
any insurance required by Paragraph 16 or any assignment or sublease entered
into in violation of Paragraph 21; or (C) the default is such that any delay in
the exercise of a remedy by Landlord could reasonably be expected to cause
irreparable hard to Landlord. If the default consists of the failure to pay any
Monetary Obligation under clause (i) of Paragraph 22(a), the applicable cure
period shall be three (3) days from the date on which notice is give, but
Landlord shall not be obligated to give notice of, or allow any cure period for,
any such default more than once within any Lease Year. If the default consists
of a default under clause (ii) of Paragraph 22(a), other than the events
specified in clauses (B) and (C) of the first sentence of the Paragraph 22(b),
the applicable cure period shall be thirty (30) days from the date on which
notice is given or, if the default cannot be cured with such thirty (30) day
period and delay in the exercise of a remedy would not (in Landlord's reasonable
judgment) cause any material adverse harm to Landlord or any of the Leased
Premises, the cure period shall be extended for the period required to cure the
default (but such cure period, including any extension, shall not in the
aggregate exceed ninety (90) days, provided that Tenant shall commence to cure
the default within the said thirty-day period and shall actively, diligently and
in good faith proceed with and continue the curing of the default until it shall
be fully cured.
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23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon such
date, this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of the Leased Premises, Landlord may re-enter and repossess the
Leased Premises, with or without legal process, by peaceably entering the Leased
Premises and changing locks or by summary proceedings, ejectment or any other
lawful means or procedure. Upon or at any time after taking possession of the
Leased Premises, Landlord may, by peaceable means or legal process, remove any
Persons or property therefrom. Landlord shall be under no liability for or by
reason of any such entry, repossession or removal. Notwithstanding such entry or
repossession, Landlord may (A) exercise the remedy set forth in and collect the
damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth
in Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right to relet any of the
Leased Premises to such tenant or tenants, for such term or terms, for such
rent, on such conditions and for such uses as Landlord in its sole discretion
may determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may, upon notice to Tenant,
require Tenant to make an irrevocable offer to terminate this Lease upon payment
to Landlord of an amount (the "Default Termination Amount") specified in the
next sentence. The "Default Termination Amount" shall be the greatest of (A) the
Fair Market Value of the Leased Premises, (B) the sum of the Acquisition Cost
and Prepayment Premium which Landlord will be required to pay in prepaying any
Loan with proceeds of the Default Termination Amount or (C) an amount equal to
the Present Value of the entire Basic Rent from the date of such purchase to the
date on which the Term would expire, assuming that the Term has been extended
for all extension periods, if any, provided for in this Lease. Upon such notice
to Tenant, Tenant shall be deemed to have made such offer and shall, if
requested by Landlord, within ten (10) days following such request deposit with
Landlord as payment against the Default Termination Amount the amount described
in (B) above and Landlord and Tenant shall promptly commence to determine Fair
Market Value. Within thirty (30) days after the Fair Market Value Date, Landlord
shall accept or reject such offer. If Landlord accepts such offer then, on the
tenth (10th) business day after such acceptance, Tenant shall pay to Landlord
the Default Termination Amount and, at the request of Tenant, Landlord will
convey the Leased Premises to Tenant or its designee in accordance with
Paragraph 20. Any rejection by Landlord of such offer shall have no effect on
any other remedy Landlord may have under this Lease.
(iv) Landlord may declare by notice to Tenant the
entire Basic Rent (in the amount of Basic Rent then in effect) for the remainder
of the then current Term to be immediately due and payable. Tenant shall
immediately pay to Landlord all such Basic Rent discounted to its Present Value,
all accrued Rent then due and unpaid, all other Monetary Obligations which are
then due and unpaid and all Monetary Obligations which arise or become
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due by reason of such Event of Default (including any Costs of Landlord). Upon
receipt by Landlord of all such accelerated Basic Rent and Monetary Obligations,
this Lease shall remain in full force and effect and Tenant shall have the right
to possession of the Leased Premises from the date of such receipt by Landlord
to the end of the Term, and subject to all the provisions of this Lease,
including the obligation to pay all increases in Basic Rent and all Monetary
Obligations that subsequently become due, except that (A) no Basic Rent which
has been prepaid hereunder shall be due thereafter during the said Term, and (B)
Tenant shall have no option to extend or renew the Term.
(b) The following constitute damages to which
Landlord shall be entitled if Landlord exercises its remedies under Paragraph
23(a)(i) or 23(a)(ii):
(i) If Landlord exercises its remedy under
Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to
exercise such remedy and is unsuccessful in reletting the Leased Premises) then,
upon written demand from Landlord, Tenant shall pay to Landlord, as liquidated
and agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, re-entry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses attorneys' fees, employees'
expenses, costs of Alterations and expenses and preparation for reletting.
(ii) If Landlord exercises its remedy under
Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then
Tenant shall, until the end of what would have been the Term in the absence of
the termination of the Lease, and whether or not any of the Leased Premises
shall have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages all Monetary Obligations which would be
payable under this Lease by Tenant in the absence of such termination less the
net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after
deducting from such proceeds all of Landlord's Costs (including the items listed
in the last sentence of Paragraph 23 (b)(i) hereof) incurred in connection with
such repossessing and reletting; provided, that if Landlord has not relet the
Leased Premises, such Costs of Landlord shall be considered to be Monetary
Obligations payable by Tenant. Tenant shall be and remain liable for all sums
aforesaid, and Landlord may recover such damages from Tenant and institute and
maintain successive actions or legal proceedings against Tenant for the recovery
of such damages. Nothing herein contained shall be deemed to require Landlord to
wait to begin such action or other legal proceedings until the date when the
Term would have expired by its own terms had there been no such Event of
Default.
(c) Notwithstanding anything to the contrary herein
contained, in lieu of or in addition to any of the foregoing remedies and
damages, Landlord may exercise any remedies and collect any damages available to
it at law or in equity. If Landlord is unable to obtain full satisfaction
pursuant to the exercise of any remedy, it may pursue any other remedy which it
has hereunder or at law or in equity.
(d) Landlord shall not be required to mitigate any of
its damages hereunder unless required to by applicable Law. If any Law shall
validly limit the amount of any damages provided for herein to an amount which
is less than the amount agreed to herein, Landlord shall be entitled to the
maximum amount available under such Law.
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(e) Non termination of this Lease, repossession or
reletting of the Leased Premises, exercise of any remedy or collection of any
damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving
Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF
LANDLORD HEREUNDER, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default,
Landlord shall have the right (but no obligation) to perform any act required of
Tenant hereunder and, if performance of such act requires that Landlord enter
the Leased Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time
upon the strict performance of any provision of this Lease or (ii) to exercise
any option, right, power or remedy contained in this Lease shall be construed as
a waiver, modification or relinquishment thereof. A receipt by Landlord of any
sum in satisfaction of any Monetary Obligation with knowledge of the breach of
any provision hereof shall not be deemed a waiver of such breach, and no waiver
by Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders to the
fullest extent permitted by Law, for itself and all those claiming under it,
including creditors of all kinds, (i) any right and privilege which it or any of
them may have under any present or future Law to redeem any of the Leased
Premises or to have a continuance of this Lease after termination of this Lease
or of Tenant's right of occupancy or possession pursuant to any court order or
any provision hereof, and (ii) the benefits of any present or future Law which
exempts property from liability for debt or for distress for rent.
(j) Except as otherwise provided herein, all remedies
are cumulative and concurrent and no remedy is exclusive of any other remedy.
Each remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents,
approvals, offers, statements and other instruments or communications required
or permitted to be given pursuant to the provisions of this Lease shall be in
writing and shall be deemed to have been given and received for all purposes
when delivered in person or by Federal Express or other reliable 24-hour
delivery service or five (5) business days after being deposited in the United
States mail, by registered or certified mail, return receipt requested, postage
prepaid, addressed to the other party at its address stated above or when
delivery is refused. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty
Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. A
copy of any notice given by Landlord to Tenant shall simultaneously be given by
Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place, Philadelphia, PA
19103, Attention: Lori L. Lasher, Esq. For the purposes of this Paragraph, any
party may substitute another address stated above (or substituted by a previous
notice) for its address by giving fifteen (15) days' notice of the new address
to the other party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten
(10) days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the "Responding Party"), the Responding Party shall
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which
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Basic Rent, Additional Rent and all other Monetary Obligations have been paid,
(c) that, to the knowledge of the signer of such certificate and except as
otherwise specified, no default by either Landlord or Tenant exists hereunder,
(d) such other matters as the Requesting Party may reasonably request, and (e)
if Tenant is the Responding Party that, except as otherwise specified, there
are no proceedings pending or, to the knowledge of the signer, threatened,
against Tenant before or by any court or administrative agency which, if
adversely decided, would materially and adversely affect the financial
condition and operations of Tenant. Any such statements by the Responding Party
may be relied upon by the Requesting Party, any Person whom the Requesting
Party notifies the Responding Party in its request for the Certificate is an
intended recipient or beneficiary of the Certificate, any Lender or their
assignees and by any prospective purchaser or mortgagee or any of the Leased
Premises. Any certificate required under this Paragraph 25 and delivered by
Tenant shall state that, in the opinion of each person signing the same, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as the subject matter of such certificate, and shall
briefly state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier
termination of this Lease, Tenant shall peaceably leave and surrender the Leased
Premises to Landlord in the same condition in which the Leased Premises was at
the commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The
reasonable cost of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall be paid by
Tenant to Landlord upon demand. Landlord shall not in any manner or to any
extent be obligated to reimburse Tenant for any such property which becomes the
property of Landlord pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of
the leasehold estate created by this Lease with the fee estate in any of the
Leased Premises by reason of the fact that the same Person may acquire or hold
or own, directly or indirectly, (a) the leasehold estate created hereby or any
part thereof or interest therein and (b) the fee estate in any of the Leased
Premises or any part thereof or interest therein, unless and until all Persons
having any interest in the interests described in (a) and (b) above which are
sought to be merged shall join in a written instrument effecting such merger and
shall duly record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of
account with respect to the finances and business of Tenant generally and with
respect to the Leased Premises, in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and shall permit Landlord and Lender
by their respective agents, accounts and attorneys, upon reasonable notice to
Tenant and at Landlord's cost, to visit and inspect the Leased Premises and
examine (and make copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant, at such reasonable times as
may be requested by Landlord. Upon the request of Lender or Landlord (either
telephonically or in writing). Tenant shall provide the requesting party with
copies of any information to which such party would be entitled in the course of
a personal visit.
(b) Tenant shall deliver to Landlord and to Lender
within ninety (120) days of close of each fiscal year, annual audited financial
statement of Tenant prepared by a nationally recognized firm of independent
certified public accountants. Tenant shall also furnish
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to Landlord within forty-five (45) days after the end of each of the three
remaining quarters unaudited financial statements and all other quarterly
reports of Tenant, certified by Tenant's chief financial officer, and all
filings, if any, of Form 10-K, Form 10-Q and other required filings with the
Securities and Exchange Commission pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, or any other Law. All annual financial
statements shall be accompanied (i) by an opinion of said accountants stating
that (A) there are no qualifications as to the scope of the audit and (B) the
audit was performed in accordance with GAAP and (ii) by the affidavit of the
president or a vice president of Tenant, dated within five (5) days of the
delivery of such statement, stating that (C) the affiant knows of no Event of
Default, or event which, upon notice or the passage of time or both, would
become an Event of Default which has occurred and is continuing hereunder or, if
any such event has occurred and is continuing, specifying the nature and period
of existence thereof and what action Tenant has taken or proposes to take with
respect thereto and (D) except as otherwise specified in such affidavit, that
Tenant has fulfilled all of its obligations under this Lease which are required
to be fulfilled on or prior to the date of such affidavit.
(c) Landlord, Lender and their respective agents,
accountants and attorneys, shall consider and treat on a strictly confidential
basis (i) any information contained in the books and records of Tenant, (ii)
any copies of any books and records of Tenant, and (iii) any financial
statements of Tenant pursuant to Paragraph 28(b) which are delivered to or
received by them and which are conspicuously stamped "CONFIDENTIAL". In no
event shall confidential information include matters related to the size, use
or construction of the Improvements. Landlord, Lender, and their respective
agents, accountants and attorneys, shall not disclose any information contained
in Tenant's books and records nor distribute copies of any such books and
records nor Tenant's financial statements to any other Persons without the
prior written consent of the chief operating officer of Tenant.
The restrictions contained in this Paragraph 28(c) shall not prevent disclosure
by Landlord or Lender of any information in any of the following circumstances:
(i) Upon the order of any court or
administrative agency to the extent required by such order and not effectively
stayed or by appeal or otherwise;
(ii) Upon the request, demand or requirement of
any regulatory agency or authority having jurisdiction over such party,
including the Securities and Exchange Commission (whether or not such request
or demand has the force of law);
(iii) That has been publicly disclosed other than
by breach of this Paragraph 28(c) by Lender or Landlord or by any other Person
who has agreed with Landlord or Lender the abide by the provisions of this
Paragraph 28(c);
(iv) To counsel or accountants for Lender or
Landlord or counsel or accountants for such other Person who has agreed to abide
by the provisions of this Paragraph 28(c);
(v) While an Event of Default exists, in
connection with the exercise of any right or remedy under this Lease or any
other related document;
(vi) Independently developed by Landlord or
Lender to the extent that confidential information provided by Tenant is not
used to develop such information;
(vii) In any reporting to shareholders of
Landlord or to the shareholders of such Shareholder;
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(viii) As otherwise required by Law
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is
required pursuant to any provision of this Lease, such Fair Market Value shall
be determined in accordance with the following procedure:
(i) Landlord and Tenant (or Third Party Purchaser
with respect to a determination under clause (D) below) shall endeavor to agree
upon such Fair Market Value within thirty (30) days after the date (the
"Applicable Initial Date") on which (A) Tenant provides Landlord with notice of
its intention to terminate this Lease and purchase the Leased Premises pursuant
to Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c), or (C) Landlord
provides Tenant with notice of Landlord's intention to require Tenant to make an
offer to terminate this Lease pursuant to Paragraph 23(a)(iii). Upon reaching
such agreement, the parties shall execute an agreement setting forth the amount
of such Fair Market Value.
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable Initial Date, Tenant
shall within fifty (50) days after the Applicable Initial Date select an
appraiser and notify Landlord in writing of the name, address and qualifications
of such appraiser. Within twenty (20) days following Landlord's receipt of
Tenant's notice of the appraiser selected by Tenant, Landlord shall select an
appraiser and notify Tenant of the name, address and qualifications of such
appraiser. Such two appraisers shall endeavor to agree upon Fair Market Value
based on a written appraisal made by each of them (and given to Landlord by
Tenant) as of the Relevant Date. If such two appraisers shall agree upon a Fair
Market Value, the amount of such Fair Market as so agreed shall be binding and
conclusive upon Landlord and Tenant.
(iii) If such two appraisers shall be unable to
agree upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The selection of the
third appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to
agree upon the designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value
within twenty (20) days after his selection, then such third appraiser or a
substituted third appraiser, as applicable, shall, at the request of either
party hereto, be appointed by the President or Chairman of the American
Arbitration Association in New York, New York. The determination of Fair Market
Value made by the third appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.
(v) If a third appraiser is selected, Fair Market
Value shall be the average of the determination of Fair Market Value made by the
third appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Values is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed
pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI
appraisers (B) have no right, power or authority to alter or modify the
provisions of this Lease, (C) utilize the definition of Fair Market Value
hereinabove set forth above, and (D) be registered in the State if the State
provides for or requires
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such resignation. The Cost of the procedure described in this Paragraph 29(a)
above shall be borne by Tenant.
(b) If, by virtue of any delay, Fair Market Value is
not determined by the expiration or termination of the then current Term, then
the date on which the Term would otherwise expire or terminate shall be extended
to the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made.
(c) In determining Fair Market Value as defined in
clause (b) of the definition of Fair Market Value, the appraisers shall add (a)
the present value of the Rent for the remaining Term, assuming the Term has been
extended for all extension periods provided herein (with assumed increases in
the CPI to be determined by the appraisers) using a discount rate (which may be
determined by an investment banker retained by each appraiser) based on the
creditworthiness of Tenant and (b) the present value of the Leased Premises as
of the end of such Term (having assumed the Term has been extended for all
extension periods provided herein). The appraisers shall further assume that no
default then exists under the Lease, that Tenant has complied (and will comply)
with all provisions of the Lease, and that Tenant has not violated (and will not
violate) any of the Covenants.
30. Non-Recourse as to Landlord. Anything contained herein to
the contrary notwithstanding, any claim based on or in respect of any liability
of Landlord under this Lease shall be enforced only against the Leased Premises
and not against any other assets, properties or funds of (i) Landlord, (ii) any
director, officer, member, general partner, shareholder, limited partner,
beneficiary, employee or agent of Landlord or any general partner of Landlord or
any of its members or general partners (or any legal representative, heir,
estate, successor or assign of any thereof), (iii) any predecessor or successor
partnership or corporation (or other entity) of Landlord or any of its general
partners, shareholders, officers, directors, members, employees or agents,
either directly or through Landlord or its general partners, shareholders,
officers, directors, employees or agents or any predecessor or successor
partnership or corporation (or other entity), or (iv) any Person affiliated with
any of the foregoing, or any director, officer, employee or agent of any
thereof.
31. Financing.
(a) Tenant agrees (i) to pay all costs and expenses
incurred by Landlord in connection with the purchase, leasing and initial
financing of the Leased Premises including, without limitation, the cost of
appraisals, environmental reports, title insurance, surveys, legal fees and
expenses of Landlord and Lender and commitment fees or "points" payable to
Lender (as to such commitment fees or points, not in excess of 1% of the
principal amount of the Loan) and (ii) to cooperate with Landlord to obtain a
mortgage loan guaranty from the Indiana Development Finance Authority and to
provide any required information and documentation in connection therewith.
(b) Tenant agrees to pay, within ten (10) business
days of written demand therefor, any cost, charge or expense (other than the
principal of the Note and interest thereon at the contract rate of interest
specified therein) imposed upon Landlord by Lender pursuant to the Note, the
Mortgage or the Assignment which is not caused solely by the gross negligence or
willful misconduct of Landlord and which is not otherwise reimbursed by Tenant
to Landlord pursuant to any other provision of this Lease.
(c) If Landlord desires to obtain or refinance any
Loan, Tenant shall negotiate in good faith with Landlord concerning any request
made by any Lender or proposed Lender for changes or modifications in this
Lease. In particular, Tenant shall agree, upon request
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<PAGE> 37
of Landlord, to supply any such Lender with such notices and information as
Tenant is required to give to Landlord hereunder and to extend the rights of
Landlord hereunder to any such Lender and to consent to such financing if such
consent is requested by such Lender. Tenant shall provide any other consent or
statement and shall execute any and all other documents that such Lender
requires in connection with such financing, including any environmental
indemnity agreement and subordination, non-disturbance and attornment
agreement, so long as the same do not materially adversely affect any right,
benefit or privilege of Tenant under this Lease or materially increase Tenant's
obligations under this Lease. Such subordination, nondisturbance and attornment
agreement may require Tenant to confirm that (a) Lender and its assigns will
not be liable for any misrepresentation, act or omission of Landlord and (b)
Lender and its assigns will not be subject to any counterclaim, demand or
offset which Tenant may have against Landlord.
32. Subordination, Non-Disturbance and Attornment. This
Lease and Tenant's interest hereunder shall be subordinate to any Mortgage or
other security instrument hereafter placed upon the Leased Premises by
Landlord, and to any and all advances made or to be made thereunder, to the
interest thereon, and all renewals, replacements and extensions thereof,
provided that any such Mortgage or other security instrument (or a separate
instrument in recordable form duly executed by the holder of any such Mortgage
or other security instrument and delivered to Tenant) shall provide for the
recognition of this Lease and all Tenant's rights hereunder unless and until an
Event of Default exists or Landlord shall have the right to terminate this
Lease pursuant to any applicable provision hereof.
33. Financial Covenants. Tenants hereby covenants and agrees
to comply with all the covenants and agreements described in Exhibit "E" hereto.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true lease for state
law purposes and shall report this transaction as a Lease for Federal income
tax purposes. For Federal income tax purposes each shall report this Lease as a
true lease with Landlord as the owner of the Leased Premises and Equipment and
Tenant as the lessee of such Leased Premises and Equipment including: (1)
treating Landlord as the owner of the property eligible to claim depreciation
deductions under Section 167 or 168 of the Internal Revenue Code of 1986 (the
"Code") with respect to the Leased Premises and Equipment, (2) Tenant reporting
its Rent payments as rent expense under Section 162 of the Code, and (3)
Landlord reporting the Rent payments as rental income.
35. Miscellaneous.
(a) The paragraph headings in this Lease are used
only for convenience in finding the subject matters and are not part of this
Lease or to be used in determining the intent of the parties or otherwise
interpreting this Lease.
(b) As used in this Lease, the singular shall include
the plural and any gender shall include all genders as the context requires and
the following words and phrases shall have the following meanings: (i)
"including" shall mean "including without limitation"; (ii) "provisions" shall
mean "provisions, terms, agreements, covenants, and/or conditions"; (iii) "lien"
shall mean "lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein."
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<PAGE> 38
(c) Any act which Landlord is permitted to perform
under this Lease may be performed at any time and from time to time by Landlord
or any person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall have
the right, at its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason. Time is of the essence with
respect to the performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any
purpose to be a partner, joint venturer or associate of Tenant or of any
subtenant, operator, concessionaire or licensee of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be
executed by Tenant on or about the effective date hereof at Landlord's request
constitute the entire agreement between the parties and supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the Leased Premises and the transactions provided for herein.
Landlord and Tenant are business entities having substantial experience with
the subject matter of this Lease and have each fully participated in the
negotiation and drafting of this Lease. Accordingly, this Lease shall be
construed without regard to the rule that ambiguities in a document are to be
construed against the drafter.
(f) This Lease may be modified, amended, discharged
or waived only by an agreement in writing signed by the party against whom
enforcement of any such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall bind Tenant,
its successors and assigns and all present and subsequent encumbrancers and
subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in
this Lease shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and
enforced in accordance with the Laws of the State.
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<PAGE> 39
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to
be duly executed under seal as of the day and year first above written.
LANDLORD:
TRUCK (IN) QRS 14-3, INC.,
a Delaware corporation
By: "A"
---------------------
Senior Vice President
ATTEST: TENANT:
BURLINGTON MOTOR CARRIERS INC.
a Delaware corporation
By: By: "A"
----------------------- ------------------------
Secretary Vice President
[Corporate Seal]
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<PAGE> 40
EXHIBIT A
PREMISES
<PAGE> 41
EXHIBIT A
Situated in the State of Indiana, in the County of Delaware and in the Town of
Daleville.
Part of the Northeast Quarter of the Southeast Quarter of Section 12, Township
19 North, Range 8 East in the Town of Daleville, Delaware County, Indiana,
described as follows:
Beginning at a 5/8 inch rebar on the South line of the Northeast quarter of the
Southeast Quarter of Section 12, Township 19 North, Range 8 East, said rebar
being North 88 degrees 20 minutes 40 seconds West 40.01 feet (assumed bearing)
from a spike at the Southeast corner of said quarter-quarter section; thence
North 88 degrees 20 minutes 40 seconds West 1270.71 feet to a 5/8 inch rebar
with cap at the Southwest corner of said quarter-quarter section; thence North
00 degrees 27 minutes 41 seconds East 1154.95 feet along the West line of said
quarter-quarter section to a point on the Southerly right-of-way line of State
Highway #67; thence South 86 degrees 59 minutes 04 seconds East 107.20 feet
along the limited access right-of-way line of said highway; thence South 86
degrees 59 minutes 04 seconds East 78.70 feet along the controlled access
right-of-way line; thence South 86 degrees 59 minutes 04 seconds East 281.02
feet along the limited access right-of-way line to a highway right-of-way
marker; thence South 87 degrees 02 minutes 11 seconds East 45.87 feet along said
right-of-way line being a controlled access line to a highway right-of-way
marker; thence North 89 degrees 27 minutes 23 seconds East 53.15 feet along said
right-of-way line to a right-of-way marker which marks the beginning of the
limited access right-of-way line; thence North 89 degrees 27 minutes 23 seconds
East 392.75 feet along said right-of-way line; thence South 79 degrees 44
minutes 14 seconds East 66.67 feet along said right-of-way line to a highway
right-of-way marker; thence South 88 degrees 30 minutes 30 seconds East 45.98
feet along said right-of-way line to a 5/8 inch rebar; thence South 00 degrees
25 minutes 47 seconds West 94.47 feet along the West line of a tract of ground
described in Deed Record 1991 page 3580, Records of Delaware County, Indiana to
an iron pipe; thence South 88 degrees 21 minutes 19 seconds East 200.00 feet
along the South line of said
<PAGE> 42
tract to a 5/8 inch rebar that is 40.01 feet West of the East line of said
quarter-quarter section; thence South 00 degrees 25 minutes 47 seconds West
1064.53 feet to the point of beginning, containing 33.25 acres, more or less.
<PAGE> 43
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation,
as buildings, of the buildings which constitute part of the Leased Premises.
Equipment shall not include all trade fixtures, machinery, office, manufacturing
and warehouse equipment which are not necessary to the operation, as buildings,
of the buildings which constitute part of the Leased Premises, including,
without limitation, shelves, parts bins, cabinets, bulk oil & antifreeze tanks &
pumps, tire changers, balancers, sand blasters, parts washers, alignment racks,
hose reels, vices, vehicles wash system & components, racks, oil evacuation
systems, refrigerators, waste oil heaters, recycling stations, air compressors &
dryers, filter crushers, water coolers, grease totes & pumps, water softeners,
work tables, wall display shelves, drill presses, grinders, arbor & hydraulic
presses, file cabinets, safes, and tire spreaders.
<PAGE> 44
EXHIBIT C
Permitted Encumbrances
1. Taxes for 1997 November installments: $54,284.35
2. Taxes for 1998 payable 1999, now a lien but not yet due and payable.
3. Matters shown on ALTA/ACSM Land Title Survey of Burlington Motor Carriers
Inc. performed by Ashton Land Surveyor dated, April 7, 1998 and last
revision June 29, 1998 (the "Survey").
4. Utility easement from BNMC Real Estate, Inc. to Indiana Michigan Power Co.,
dated December 20, 1994 and recorded January 9, 1995 in Deed Record 1995
pages 177-178, as shown on the Survey.
5. Utility easement from Jeffery Stoops to Indiana & Michigan Electric Company
and Indiana Bell Telephone Company, Inc., dated February 9, 1978 and
recorded February 16, 1978 in Deed Record 1978, page 619, as shown on the
Survey.
6. Utility easement from Jeffery Stoops to Indiana & Michigan Electric Company
and Indiana Bell Telephone Company, Inc., dated July 2, 1981 and recorded
August 14, 1981 in Deed Record 1981, page 2423, as shown on the Survey.
7. Distribution easement from Stoops Express, Inc. to Indiana & Michigan
Electric Company, dated December 27, 1984 and recorded December 31, 1984,
in Deed Record 1984, page 4572.
8. Limited Access right of way for S.R. 67 as established in Deed Record 1995
pages 6765-6767 and in Deed Record 1996, pages 6745-6746, as shown on the
Survey.
9. Easement to Indiana Bell Telephone recorded in Deed Record 1985, page 3210,
as shown on the Survey
10. Easement to Indiana Bell Telephone recorded in Deed Record 1996, page 6109.
<PAGE> 45
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in
Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Term shall be
$792,000 per annum, payable quarterly in advance on each Basic Rent Payment
Date, in equal installments of $198,000 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be
subject to adjustment, in the manner hereinafter set forth, for increases in
the index known as United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index, All Urban Consumers, United States City
Average, All Items, (1982-84=100)("CPI") or the successor index that most
closely approximates the CPI. If the CPI shall be discontinued with no
successor or comparable successor index, Landlord and Tenant shall attempt to
agree upon a substitute index or formula, but if they are unable to so agree,
then the matter shall be determined by arbitration in accordance with the rules
of the American Arbitration Association then prevailing in New York City. Any
decision or award resulting from such arbitration shall be final and binding
upon Landlord and Tenant and judgment thereon may be entered in any court of
competent jurisdiction. In no event will the Basic Rent as adjusted by the CPI
adjustment be less than the Basic Rent in effect for the two (2) year period
immediately preceding such adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not
be adjusted to reflect changes in the CPI until the second (2nd) anniversary of
the Basic Rent Payment Date on which the first full quarterly installment of
Basic Rent shall be due and payable (the "First Full Basic Rent Payment Date").
As of the second (2nd) anniversary of the First Full Basic Rent Payment Date
and thereafter on the fourth (4th), sixth (6th), eighth (8th), tenth (10th),
twelfth (12th), fourteenth (14th), sixteenth (16th), and eighteenth (18th) and,
if the initial Term is extended, on the twentieth (20th), twenty second (22nd),
twenty fourth (24th), twenty sixth (26th) and twenty eighth (28th)
anniversaries of the First Full Basic Rent Payment Date. Basic Rent shall be
adjusted to reflect increases in the CPI during the most recent two (2) year
period immediately preceding each of the foregoing dates (each such date being
hereinafter referred to as the "Basic Rent Adjustment Date").
4. Method of Adjustment for CPI Adjustment
(a) As of each Basic Rent Adjustment Date when the
average CPI determined in clause (i) below exceeds the Beginning CPI (as defined
in this Paragraph 4 (a)), the Basic Rent in effect immediately prior to the
applicable Basic Rent Adjustment Date shall be multiplied by a fraction, the
numerator of which shall be the difference between (i) the average CPI for the
three (3) most recent calendar months (the "Prior Months") ending prior to such
Basic Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. An
amount equal to the lesser of (x) the product of such multiplication or 6.09% of
the Basic Rent in effect immediately prior to such Basic Rent Adjustment Date
shall be added to the Basic Rent in effect immediately prior to such Basic Rent
Adjustment Date. As used herein, "Beginning CPI" shall mean the average CPI for
the three (3) calendar months corresponding to the Prior Months but occurring
two (2) years earlier. If the average CPI determined in clause (i) is the same
or less than the Beginning CPI, the Basic Rent will remain the same for the
ensuing two (2) year period.
(b) Effective as of a given Basic Rent Adjustment
Date, Basic Rent payable under this Lease until the next succeeding Basic Rent
Adjustment Date shall be the Basic Rent in effect after the adjustment provided
for as of such Basic Rent Adjustment Date.
<PAGE> 46
(c) Notice of the new annual Basic Rent shall be
delivered to Tenant on or before the tenth (10th) day preceding each Basic Rent
Adjustment Date, but any failure to do so by Landlord shall not be or be deemed
to be a waiver by Landlord of Landlord's rights to collect such sums. Tenant
shall pay to Landlord, within ten (10) days after a notice of the new annual
Basic Rent is delivered to Tenant, all amounts due from Tenant, but unpaid,
because the stated amount as set forth above was not delivered to Tenant at
least ten (10) days preceding the basic Rent Adjustment Date in question.
-2-
<PAGE> 47
EXHIBIT E
FINANCIAL COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Borrower shall maintain its corporate existence,
rights and franchises in full force and effect in its jurisdiction of
incorporation. Borrower shall, and shall cause its Subsidiaries to, qualify and
remain qualified as a foreign corporation in each jurisdiction in which failure
to receive or retain such qualification would have a material adverse effect on
the business, operations or financial condition of the enterprise comprised of
the Borrower and their respective Subsidiaries taken as a whole.
(b) At no time during the Term shall any Person other
than a Person who owns Voting Interests in Tenant as of the date hereof or an
Affiliate of such Person acquire directly or indirectly more than 50% of any
class of Borrower's Voting Interest.
(c) Borrower shall not consolidate with or merge with
any other Person, unless an Event of Default does not then exist and,
immediately following such consolidation or merger (i) the surviving corporation
with respect to a merger or consolidation of Borrower shall have, on a pro forma
basis, a Consolidated Net Worth of not less than the Consolidated Net Worth of
Borrower on the date hereof, (ii) unless Borrower is not subject to the Credit
Agreement or a Senior Credit Agreement, such consolidation or merger shall have
been consented to by Senior Lender or otherwise permitted by the terms of the
Credit Agreement or then existing Senior Credit Agreement, as the case may be,
and the Credit Agreement or then existing Senior Credit Agreement shall remain
in full force and effect following such merger or consolidation, (iii) the Board
of Directors of Borrower immediately prior to such merger or consolidation
remains in control following such merger or consolidation, (iv) the senior
management of the surviving corporation with respect to a merger or
consolidation of Borrower does not substantially change immediately following
such merger or consolidation and (v) after giving effect thereto, an Event of
Default does not then exist.
(d) Borrower shall not, in a single transaction or
series of related transactions, sell or convey, transfer, abandon or lease all
or substantially all of its assets to any Person, except for a sale, conveyance
or transfer to a Permitted Assignee as defined in and in accordance with
Paragraph 21 of the Lease, provided that this Lease shall be assigned, sold or
conveyed in such transaction.
(e) Borrower shall not make any substantial change
in the nature of its business.
2. Credit Agreement Covenants. Borrower shall not, and shall
not permit any of its Subsidiaries to take any action or permit or suffer to
exist any state of facts in contravention of (i) any of the negative covenants
set forth in Sections 7.1, 7.2, 7.5, 7.7, 7.8, 7.10, 7.11, 7.12, 7.13, 7.14,
7.15, 7.17 and 7.18 (the "Credit Agreement Covenants") or (ii) any of the
financial covenants set forth in Section 7.19 (the "Financial Covenants"), all
in the form attached hereto as Schedule 1 of the Loan and Security Agreement,
dated as of December 18, 1996 between Foothill Capital Corporation ("Senior
Lender") and Borrower, as amended by amendments dated as of July 22, 1997,
August 31, 1997, November 6, 1997 and July 29, 1998 (said Agreement, as amended,
the "Credit Agreement") or the applicable provisions of the credit agreement
that replaces the Credit Agreement (the "Senior Credit Agreement") pertaining to
the matters addressed in the Credit Agreement Covenants and to any financial
covenants that replace the Financial Covenants (the "Replacement Financial
Covenants") which need not pertain to the same financial covenants as the
Financial Covenants, as the case may be, in the same manner and
<PAGE> 48
to the same effect as if the terms of the Credit Agreement Covenants and
Financial Covenants or applicable provisions of the Senior Credit Agreement
including the Replacement Financial Covenants were set forth in full herein, and
after giving effect to any modification, amendment or waiver of the Credit
Agreement Covenants or Senior Credit Agreement, as the case may be, and such
other provisions and definitions of the Credit Agreement or Senior Credit
Agreement, as the case may be, a copy of which has been delivered to Landlord,
and for such purpose such terms of the Credit Agreement Covenants or applicable
provisions of the Senior Credit Agreement, as the case may be, and such other
provisions and definitions of the Credit Agreement or Senior Credit Agreement,
as the case may be, as are expressly referenced therein amendments,
modifications and waivers thereto are incorporated herein by reference; it being
expressly agreed by Landlord, that without any further action on the part of
Landlord, that the covenants referenced in this Section 2 will be modified
automatically to reflect all amendments, modifications and waivers (including,
without limitation, any waiver of an Event of Default) to the Credit Agreement
or the Senior Credit Agreement, as the case may be. If at any time Borrower
shall not be subject to the Credit Agreement or any Senior Credit Agreement that
contains covenants pertaining to the matters addressed in the Credit Agreement
Covenants addressed in the Financial Covenants or most recent Replacement
Financial Covenants, as the case may be, Borrower shall, and shall cause each of
its Subsidiaries to, comply with each of the negative covenants set forth in the
most recent Senior Credit Agreement pertaining to the matters addressed in the
Credit Agreement Covenants and Financial Covenants or most recent Replacement
Financial Covenants, as the case may be, in the same manner and the same effect
as if the applicable provisions of such Senior Credit Agreement were set forth
in full herein, it being the intent and agreement of Landlord and Borrower that,
at all times during the Term, Borrower shall be subject to negative covenants
pertaining to the matters addressed in the Credit Agreement Covenants and to the
Financial Covenants or most recent Replacement Financial Covenants, as the case
may be.
3. Definitions. For the purpose of this Exhibit "E" the
following terms shall have the following meanings:
(a) "Accounts" shall mean all currently existing and
hereafter arising accounts, contract rights, and all other forms of obligations
owing to Borrower arising out of the sale or lease of goods or the rendition of
services by Borrower; irrespective of whether earned by performance, and any
and all credit insurance, guaranties, or security therefor.
(b) "Affiliate" shall mean, as applied to any
Person, any other Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For purposes of this definition,
"control" as applied to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract, or otherwise.
(c) "Borrower" shall mean the Tenant when such term
is used in this Exhibit E.
(d) "Borrower's Books" shall mean Borrower's books
and records including: ledgers; records indicating, summarizing, or evidencing
Borrower's properties or assets (including the Collateral or the Real Property)
or liabilities; all information relating to Borrower's business operations or
financial condition; and all computer programs, disc or tape files, printouts,
runs, or other computer prepared information.
(e) "Capital Lease" shall mean, with respect to any
Person, any lease of any property (whether real, personal or mixed) by such
Person as lessee that, in accordance with GAAP, either would be required to be
classified and accounted for as a capital lease on a
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<PAGE> 49
balance sheet of such Person or otherwise be disclosed as such in a note to
such balance sheet, other than any such lease as to which such Person is the
lessor.
(f) "Collateral" shall mean of the following: the
Accounts; Borrower's Books; the Equipment (including the trailers identified in
the Credit Agrement but excluding the Excluded Rolling Stock); the General
Intangibles; the Inventory; the Negotiable Collateral; any money, or other
assets of Borrower which now or hereafter come into the possession, custody, or
control of Senior Lender; and the proceeds and products, whether tangible or
intangible, of any of the foregoing including proceeds of insurance covering any
or all of the Collateral, and any and all Accounts, Borrower's Books, Equipment,
General Intangibles, Inventory, Negotiable Collateral, money, deposit accounts,
or other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion thereof
or interest therein, and the proceeds thereof.
(g) "Consolidated Current Assets" shall mean, as of
any date of determination, the aggregate amount of all current assets of
Borrower and its Subsidiaries calculated on a consolidated basis that would, in
accordance with GAAP, be classified on a balance sheet as current assets.
(h) "Consolidated Current Liabilities" shall mean, as
of any date of determination, the aggregate amount of all current liabilities of
Borrower and its Subsidiaries, calculated on a consolidated basis that would, in
accordance with GAAP, be classified on a balance sheet as current liabilities.
(i) "Consolidated Net Income" shall mean, for any
period, the aggregate net income (or loss) of Borrower, and its Subsidiaries for
such period on a consolidated basis, determined in accordance with GAAP.
(j) "Consolidated Net Worth" shall mean, at any date,
the net worth of Borrower and its consolidated Subsidiaries on a consolidated
basis, determined in accordance with GAAP.
(k) "Equipment" shall mean all of Borrower's present
and hereafter acquired machinery, machine tools, motors, equipment, furniture,
furnishings, fixtures, vehicles (including motor vehicles, tractors, trailers,
and other rolling stock), tires, tubes, tools, parts, dies, jigs, goods (other
than consumer goods, farm products, or Inventory), wherever located, and any
interest of Borrower in any of the foregoing, and all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing, wherever located.
(l) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, or any predecessor,
successor, or superseding laws of the United States of America, together with
all regulations promulgated thereunder.
(m) "ERISA Affiliate" shall mean any trade or
business (whether or not incorporated) which, within the meaning of Section 414
of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder, is: (i) under common control with Borrower; (ii) treated, together
with Borrower, as a single employer; (iii) treated as a member of an affiliated
service group of which Borrower is also treated as a member; or (iv) is
otherwise aggregated with Borrower for purposes of the employee benefits
requirements listed in IRC Section 414(m)(4).
(n) "FEIN" shall mean Federal Employer Identification
Number.
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<PAGE> 50
(o) "GAAP" shall mean generally accepted accounting
principles as in effect from time to time in the United States of America,
applied on a consistent basis.
(p) "General Intangibles" shall mean all of
Borrower's present and future general intangibles and other personal property
(including contract rights, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill, patents, trade names,
trademarks, service marks, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing agreements,
infringements, claims, computer programs, computer discs, computer tapes,
literature, reports, catalogs, deposit accounts, insurance premium rebates, tax
refunds, tax refund claims, and remainder interests in and to trusts or other
estates, expressly including all rights of Borrower to receive the rest,
remainder, or residue from any Plan), other than goods, Accounts, and Negotiable
Collateral.
(q) "Indebtedness" shall mean: (a) all obligations of
Borrower for borrowed money; (b) all obligations of Borrower evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations of Borrower in respect of letters of credit, letter of credit
guaranties, bankers acceptances, interest rate swaps, controlled disbursement
accounts, or other financial products; (c) all obligations of Borrower under
Capital Leases; (d) all obligations or liabilities of others secured by a lien
or security interest on any property or asset of Borrower, irrespective of
whether such obligation or liability is assumed; and (e) any obligation of any
Borrower guaranteeing or intended to guarantee (whether guaranteed, endorsed,
co-made, discounted, or sold with recourse to Borrower) any indebtedness, lease,
dividend, letter of credit, or other obligation of any other Person.
(r) "Inventory" shall mean all present and future
inventory in which Borrower has any interest, including goods held for sale or
lease or to be furnished under a contract of service and all of Borrower's
present an future raw materials, work in process, finished goods, and packing
and shipping materials, wherever located, and any documents of title
representing any of the above.
(s) "Negotiable Collateral" shall mean all of
Borrower's present and future letters of credit, notes, drafts, instruments,
certificated and uncertificated securities, documents, personal property leases
(wherein Borrower is the lessor), chattel paper, and Borrower's Books relating
to any of the foregoing.
(t) "Obligations" shall mean all loans, advances,
debts, principal, interest, contingent reimbursement obligations owing to any
third party senior lender under any outstanding guarantees, premiums,
liabilities, fees, lease payments, guaranties, covenants, and duties owing by
Borrower to any Senior Lender of any kind and description, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that such senior lender may have obtained by assignment or
otherwise, and further including all interest not paid when due and all expenses
that Borrower is recruited to pay or reimburse by any documents, by law, or
otherwise.
(u) "Permitted Liens" shall mean: (a) liens and
security interests held by Senior Lender; (b) liens for unpaid taxes that are
not yet due and payable; (c) liens and security interests permitted under the
Credit Agreement or Senior Credit Agreement, as the case may be; (d) purchase
money security interests and liens of lessors under Capital Leases to the extent
that the acquisition or lease of the underlying asset was permitted under
Section 7.10 of the Credit Agreement, as the same may be amended from time to
time, and so long as the
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<PAGE> 51
security interest or lien only secures the purchase price of the asset; (e)
easements, rights of way, reservations, covenants, conditions, restrictions,
zoning variances, and other similar encumbrances that do not materially
interfere with the use or value of the property subject thereto; (f) obligations
and duties as lessee under any lease existing on the date of this Agreement; (g)
mechanics', materialmen's, warehousemen's, or similar liens that arise by
operation of law; (h) liens and security interest on Excluded Rolling Stock in
favor of Persons providing acquisition or lease financing of same; and (i)
exceptions listed in the title insurance or commitment therefor to be delivered
by Borrower hereunder in respect of the Real Property and as are approved in the
reasonable discretion of Senior Lender.
(v) "Plan" shall mean an employee benefit plan (as
defined in Section 3(3) of ERISA) which Borrower or any ERISA Affiliate sponsors
or maintains or to which Borrower or any ERISA Affiliate makes, is making, or is
obligated to make contributions, including any Multiemployer Plan or Qualified
Plan.
(w) "Real Property" shall mean the parcel or parcels
of real property and the related improvements thereto owned by Borrower.
(x) "Senior Lender" shall mean the lender under the
Credit Agreement or Senior Credit Agreement, as the case may be.
(y) "Subsidiary" of any Person (the "Parent") means
another Person a majority of the Voting Interest in which is owned, or the
management of which is otherwise controlled, directly or indirectly, through one
or intermediaries, or both, by the Parent.
(z) "Tangible Net Worth" shall mean, as of any date
of determination, the difference of (a) Borrower's total stockholder's equity,
minus (b) the sum of; (i) net unamortized goodwill of Borrower, (ii) net
unamortized deferred organizational expenses of Borrower, and (iii) all amounts
due to Borrower from Affiliates.
(aa) "Voting Interest" shall mean shares of stock of a
corporation or other interest in other types of Person having ordinary voting
power to elect the board of directors of such corporation or similarly direct or
control the management of such other Person.
If, at any time or from time to time, the Credit Agreement Covenants shall
be amended or replaced by comparable covenants in a Senior Credit Agreement or
the Financial Covenants shall be amended or replaced by Replacement Financial
Covenants (which need not be comparable) the relevant definitions in this
Section 3 shall likewise be added, amended or replaced, as the case may be.
-5-
<PAGE> 52
SCHEDULE 1 TO EXHIBIT E
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that during the Term,
Borrower will not do any of the following without Landlord's prior written
consent:
7.1 Indebtedness. Create, incur, assume, permit, guarantee,
or otherwise become or remain, directly or indirectly, liable with respect to
any Indebtedness, except:
(a) Indebtedness evidenced by the Credit Agreement
or any refinancing thereof;
(b) Indebtedness set forth on Schedule 7.1 attached
hereto the Credit Agreement;
(c) Indebtedness that is used to finance capital
expenditures permitted by Section 7.10;
(d) [intentionally omitted];
(e) Indebtedness secured by Permitted Liens;
(f) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b), (c), or (e) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings,
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<PAGE> 53
renewals, or extensions do not materially impair the prospects of repayment of
the Obligations borrower, (ii) the net cash proceeds of such refinancings,
renewals, or extensions do not result in an increase in the aggregate principal
amount of the Indebtedness so refinanced, renewed, or extended (except for
non-material increases related to capitalization of accrued interest fees, or
transactional expenses related to such refinancing, renewal, or extension),
(iii) such refinancings, renewals, refundings, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, and (iv) to the extent that Indebtedness that is
refinanced was subordinated in right of payment to the Obligations, then the
subordination terms and conditions of the refinancing Indebtedness must be at
least as favorable to the senior lender of Tenant as those applicable to the
refinanced Indebtedness;
(g) [INTENTIONALLY OMITTED];
(h) Indebtedness that is used, in whole or in part,
to repay in full all Obligations.
7.2 LIENS. Create, incur, assume, or permit to exist,
directly or indirectly, any lien on or with respect to any of its property or
assets, of any kind, whether now owned or hereafter acquired, or any income or
profits therefrom, except for Permitted Liens (including liens that are
replacements of Permitted Liens to the extent that the original Indebtedness is
refinanced under Section 7.1(f) and so long as the replacement liens secure only
those assets or property that secured the original Indebtedness).
7.4 [INTENTIONALLY OMITTED]
7.5 CHANGE NAME. Except as contemplated by the Burlington
Plan and by this Agreement, change Borrower's name, FEIN, business structure, or
identity, or add any new fictitious name.
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<PAGE> 54
7.6 [INTENTIONALLY OMITTED]
7.7 RESTRUCTURE. Make any change in Borrower's financial structure, the
principal nature of Borrower's business operations, or the date of its fiscal
year.
7.8 PREPAYMENTS. Except in connection with a refinancing permitted by
Section 7.1(f), prepay any Indebtedness owing to any third Person. The foregoing
notwithstanding, Borrower may prepay any Indebtedness that is secured solely by
valid, perfected liens in favor of such third Person on an item of Excluded
Rolling Stock to the extent such prepayment is made from the proceeds of the
sale of such item of Excluded Rolling Stock.
7.10 CAPITAL EXPENDITURES. Make any capital expenditure, or any commitment
therefor, where the aggregate amount of such capital expenditures, made or
committed for in any year, is in excess of $10,000,000 for Borrower's fiscal
year 1997, $12,000,000 for Borrower's fiscal year 1998, or $35,000,000 for
Borrower's fiscal year 1999.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than capital stock) on, or purchase, acquire,
redeem, or retire any of Borrower's capital stock, of any class, whether now or
hereafter outstanding.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Landlord information
regarding the Collateral, and the Real Property or Borrower's financial
condition. Borrower waives the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any information requested by Landlord pursuant to or in accordance with this
Lease, and agrees that Landlord may contact directly any such accounting firm or
service bureau in order to obtain such information.
7.13 INVESTMENTS. Directly or indirectly make or acquire any beneficial
interest in (including stock, partnership interest, or other securities of), or
make any loan (other than loans to employees of Borrower in the ordinary course
of business as currently conducted), advance, or capital contribution to, any
Person.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit
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<PAGE> 55
to exist any material transaction with any Affiliate of Borrower except for
transactions that are ??? the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Landlord, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.17 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
WITH BAILEES. Without thirty (30) days prior written notification to Landlord,
relocate its chief executive office to a new location unless, at the time of
such written notification, the Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected Landlord's security
interests. The Inventory and Equipment shall not at any time now or hereafter
be stored with a bailee, warehouseman, or similar party without Landlord's
prior written consent.
7.18 NEW SUBSIDIARIES. Create any new Subsidiaries, unless Landlord in its
sole discretion has consented to the creation of such new Subsidiary.
7.19 FINANCIAL COVENANTS. Fail to maintain:
(a) CURRENT RATIO. A ratio of Consolidated Current Assets divided by
Consolidated Current Liabilities, measured on a fiscal quarter-end basis, of at
least the amount set forth on Schedule 7.19 opposite the corresponding fiscal
quarter of Borrower;
(b) WORKING CAPITAL. Working Capital, measured on a fiscal
quarter-end basis, of at least the amount set forth on Schedule 7.19 opposite
the corresponding fiscal quarter of Borrower; and
(c) TANGIBLE NET WORTH. Tangible Net Worth, measured on a fiscal
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<PAGE> 56
quarter-end basis, of at least the amount set forth on Schedule 7.19 opposite
the corresponding ????? quarter of Borrower.
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<PAGE> 57
Schedule 7.19 to AMENDMENT NUMBER FOUR
TO LOAN AND SECURITY AGREEMENT
Financial Covenants
<TABLE>
<CAPTION>
Relevant Fiscal Minimum Current Minimum Working Minimum Tangible
Quarter of Borrower Ratio ( :1.00) Capital (in Dollars) Net Worth (in
Dollars)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
1st Qtr. 1997 0.50 -25,000,000 -15,000,000
2nd Qtr. 1997 0.50 -25,000,000 -13,000,000
3rd Qtr. 1997 0.50 -22,000,000 -10,500,000
4th Qtr. 1997 0.50 -19,000,000 -9,500,000
1st Qtr. 1998 0.55 -16,000,000 -6,500,000
2nd Qtr. 1998 0.40 -49,500,000 -14,000,000
3rd Qtr. 1998 0.42 -45,000,000 -13,000,000
4th Qtr. 1998 0.43 -44,000,000 -11,500,000
1st Qtr. 1999 0.43 -43,000,000 -10,500,000
2nd Qtr. 1999 0.45 -40,000,000 -9,000,000
3rd Qtr. 1999 0.47 -38,000,000 -7,500,000
4th Qtr. 1999 0.50 -36,000,000 -6,000,000
1st Qtr. 2000 0.52 -34,000,000 -4,500,000
2nd Qtr. 2000 0.54 -32,000,000 -3,000,000
3rd Qtr. 2000 0.56 -30,000,000 -1,500,000
4th Qtr. 2000 0.58 -28,000,000 -0-
1st Qtr. 2001 0.60 -26,000,000 1,500,000
2nd Qtr. 2001 0.60 -24,000,000 3,000,000
3rd Qtr. 2001 0.61 -22,000,000 4,500,000
4th Qtr. 2001 0.61 -20,000,000 6,000,000
1st Qtr. 2002 0.63 -18,000,000 7,500,000
2nd Qtr. 2002 0.63 -16,000,000 9,000,000
</TABLE>
8
<PAGE> 58
SCHEDULE 1
TENANT'S POST-CLOSING ENVIRONMENTAL OBLIGATIONS
Tenant shall conduct the following actions and provide Landlord with a
written status report, on or before the tenth day of each month commencing
with the second month after the month in which the Closing occurs, with the
first report due on or before August 10, 1998, until satisfactory completion of
all of the activities listed below. Tenant shall reimburse Landlord for all of
Landlord's reasonable costs, including reasonable attorneys fees, incurred by
Landlord in reviewing Tenant's progress in completing the activities listed
below. Tenant's failure to timely comply with any of the obligations hereunder
shall constitute an Event of Default.
A. Onsite Septic System
1. On or before August 3, 1998, Tenant shall provide Landlord with a
scope of work proposal from an experienced environmental consulting firm
acceptable to Landlord for the subsurface investigation of soils in the area of
the former septic system to evaluate whether releases from the septic system
have adversely impacted soils and/or groundwater. The scope of work shall
provide for a minimum of four sample locations and shall identify the parameters
which the consultant recommends be analyzed for together with an explanation for
the selection of these parameters. The scope of work, including the parameters
to be analyzed for, shall be subject to Landlord's reasonable approval. Landlord
may modify the scope of work to expand the parameters to be analyzed for or may
disapprove Tenant's selection of an environmental consulting firm and substitute
a firm acceptable to Landlord in Landlord's sole discretion.
2. Within 30 days of Tenant's receipt of Landlord's approval or
modification of the scope of work, Tenant shall arrange for the designated
environmental consulting firm to conduct the sampling in accordance with the
scope of work.
3. Within 30 days of the conclusion of onsite sampling activities,
Tenant shall provide to Landlord a written report which documents the
subsurface sampling activities and the results of such sampling. The report
shall contain a site location map showing the sampling locations as well as
copies of the analytical reports. If the results of the soil sampling document
the existence of an Environmental Violation, Tenant shall, within 30 days of
receipt of notice from Landlord that an Environmental Violation exists at the
site, submit to Landlord for Landlord's approval a proposed scope of work for
remediation of the Environmental Violation.
B. Underground Storage Tanks
1. On or before August 17, 1998, Tenant shall have conducted tightness
testing of the two underground diesel storage tanks located at the Leased
Premises and shall have submitted the results of such testing to Landlord. If
the results of the tightness testing indicate the possibility of a release from
either of the underground storage tanks, Tenant shall promptly notify the
Indiana Department of Environmental Management (IDEM) and shall implement
corrective action in accordance with the underground storage tank corrective
action program requirements. In the event that a release from either or both
tanks is indicated, Tenant's responsibility for implementing corrective action
shall continue until such time as Tenant either obtains written approval from
the IDEM that corrective action has been satisfactorily completed or provides
Landlord, in Landlord's sole discretion, with other evidence that no further
action is required.
<PAGE> 59
2. a. On or before August 17, 1998, Tenant shall provide Landlord with
a written report from a certified tank installation company which states
whether any upgrading of either the existing underground storage tanks or other
portions of the tank system is required to meet the December 22, 1998 deadline
for upgrading of existing underground storage tanks.
b. On or before September 1, 1998, if additional upgrading of the
tanks or any portion of the system is required, Tenant shall provide Landlord
with a schedule for implementation of such upgrades. Tenant shall provide
Landlord with a written report on or before November 22, 1998 which documents
that all required upgrades have been completed.
C. BIOREMEDIATION OF EXISTING RELEASE
1. Tenant shall continue bioremediation in the area of the diesel tank
pit and shall provide Landlord with the results of all sample data within 10
days of Tenant's receipt of such data. Such bioremediation shall continue until
such time as Tenant obtains written approval from IDEM that the bioremediation
has been successfully completed. Landlord shall have the right to require
Tenant to investigate alternative remediation technologies if such
bioremediation activities have not resulted in a decrease in soil
concentrations below applicable Indiana soil cleanup levels by July 1, 2001.
D. TIRE SHOP DRAIN PIPE
1. On or before September 1, 1998, Tenant shall have disconnected the
drain pipe which protrudes from the wall of the tire shop building so that no
discharges to the ground surface can occur. The sink to which the drain pipe
was connected shall either be replumbed to connect to the sanitary sewer system
or its use shall be discontinued.
E. MISCELLANEOUS
1. On or before September 1, 1998, Tenant shall provide Landlord with a
written report from an environmental consulting firm acceptable to Landlord or
from Tenant's counsel regarding each of the following onsite activities:
* Whether the facility discharges industrial waste into the sanitary sewer
system and if so, whether any permit or pretreatment authorization is
required;
* Whether the burning of waste oil as a source of fuel for heaters in the
trailer and tire shops requires a permit or other authorization under
the Indiana Air Pollution Control regulations;
* Whether the onsite well is used for potable purposes.
F. REPORTING
1. Monthly status reports and all other written reports or submissions
required to be made by Tenant shall be addressed to:
Jessica B. Simon
Asset Management Associate
W.P. Carey & Co., Inc.
Environmental and Asset Management Department
50 Rockefeller Plaza
New York, NY 10020
2
<PAGE> 60
Phone: 212-492-8962
Fax: 212-492-3022
with a second copy to:
Louis A. Naugle, Esq.
Reed Smith Shaw & McClay LLP
435 Sixth Avenue
Pittsburgh, PA 15219-1886
Phone: 412-288-8586
Fax: 412-288-3246/3063
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<PAGE> 61
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, made as of the 29th day of June, 1998, between
TRUCK (IN) QRS 14-3, INC., a Delaware corporation ("Landlord") having an
address c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza, Second Floor, New
York, New York 10020, and BURLINGTON MOTOR CARRIERS INC. ("Tenant"), a Delaware
corporation having an address at 14611 W. Commerce Road, Daleville, Indiana
47334-9702.
1. Lease. Landlord has demised and let to Tenant pursuant to the terms
and conditions of a Lease Agreement dated as of the date hereof (the "Lease"),
the terms and conditions of which are incorporated herein as though set forth
in full, certain real property located in the City of Daleville, County of
Delaware, State of Indiana, described in Exhibit "A" attached hereto (the
"Leased Premises").
2. Original Term. Under the terms of the Lease, Tenant may have and
hold the Leased Premises, together with the tenements, hereditaments,
appurtenances and easements thereunto belonging, at the rental and upon the
terms and conditions therein stated, for an original term (the "Term")
commencing as of June 30, 1998 and ending on June 30, 2018.
3. Renewal Term(s). Under the terms of the Lease, the Term shall be
automatically extended for two (2) separate and additional periods of five (5)
years each after the expiration of the then Term (each such additional
five-year period is hereinafter referred to as "Renewal Term") unless Tenant
notifies Landlord in writing at least twelve (12) calendar months prior to
expiration of the Term that Tenant is terminating this Lease as of the then
current Term. Each Renewal Term shall be subject to all the terms and
conditions of the Lease as if the Term originally included the Renewal Term.
4. No Responsibility for Liens. NOTICE IS HEREBY GIVEN THAT LANDLORD
SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO TENANT, OR TO ANYONE HOLDING ANY OF THE LEASED PREMISES THROUGH OR
UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND
TO ANY OF THE LEASED PREMISES.
5. Purpose and Intention. This Memorandum of Lease is executed for the
purpose of recordation in the Office of the County Recorder of Delaware County,
State of Indiana in order to give notice of all of the terms, provisions and
conditions of the Lease and is not intended, and shall not be construed, to
define, limit or modify the Lease. The leasehold estate created and conveyed
hereby with respect to the Leased Premises is intended to be one and the same
estate as was created with respect to the Leased Premises by the Lease and is
further intended to be governed in all respects solely by the Lease and all of
the provisions thereof.
FILED FOR RECORD
10:00 o'clock AM.
Record 1998 Page 2370.74
JUL 06 1998
/s/ Phylis Muskone
Recorder, Delaware County
<PAGE> 62
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, made as of the 29th day of June, 1998, between
TRUCK (IN) QRS 14-3, INC., a Delaware corporation ("Landlord") having an
address c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza, Second Floor, New
York, New York 10020, and BURLINGTON MOTOR CARRIERS INC. ("Tenant"), a Delaware
corporation having an address at 14611 W. Commerce Road, Daleville, Indiana
47334-9702.
1. Lease. Landlord has demised and let to Tenant pursuant to the terms
and conditions of a Lease Agreement dated as of the date hereof (the "Lease"),
the terms and conditions of which are incorporated herein as though set forth
in full, certain real property located in the City of Daleville, County of
Delaware, State of Indiana, described in Exhibit "A" attached hereto (the
"Leased Premises").
2. Original Term. Under the terms of the Lease, Tenant may have and hold
the Leased Premises, together with the tenements, hereditaments, appurtenances
and easements thereunto belonging, at the rental and upon the terms and
conditions therein stated, for an original term (the "Term") commencing as of
June 30, 1998 and ending on June 30, 2018.
3. Renewal Term(s). Under the terms of the Lease, the Term shall be
automatically extended for two (2) separate and additional periods of five (5)
years each after the expiration of the then Term (each such additional
five-year period is hereinafter referred to as "Renewal Term") unless Tenant
notifies Landlord in writing at least twelve (12) calendar months prior to
expiration of the Term that Tenant is terminating this Lease as of the then
current Term. Each Renewal Term shall be subject to all the terms and
conditions of the Lease as if the Term originally included the Renewal Term.
4. No Responsibility for Liens. NOTICE IS HEREBY GIVEN THAT LANDLORD
SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO TENANT, OR TO ANYONE HOLDING ANY OF THE LEASED PREMISES THROUGH OR
UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND
TO ANY OF THE LEASED PREMISES.
5. Purpose and Intention. This Memorandum of Lease is executed for the
purpose of recordation in the Office of the County Recorder of Delaware County,
State of Indiana in order to give notice of all of the terms, provisions and
conditions of the Lease and is not intended, and shall not be construed, to
define, limit or modify the Lease. The leasehold estate created and conveyed
hereby with respect to the Leased Premises is intended to be one and the same
estate as was created with respect to the Leased Premises by the Lease and is
further intended to be governed in all respects solely by the Lease and all of
the provisions thereof.
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum
of Lease as of the day and year first above written.
LANDLORD:
TRUCK (IN) QRS 14-3, INC.
a Delaware corporation
By: /s/ Gordon J. Whiting
----------------------
Its: Senior Vice President
----------------------
TENANT:
BURLINGTON MOTOR CARRIERS INC.
a Delaware corporation
By: /s/ Illegible
------------------------
Its: Vice President
-----------------------
[Corporate Seal]
INSTRUMENT PREPARED BY
AND WHEN RECORDED MAIL TO:
Ruth S. Perfido, Esquire
Reed Smith Shaw & McClay
375 Park Avenue
New York, NY 10152
- 2 -
<PAGE> 64
State of New York )
) ss:
County of New York )
On June 29, 1998, before me, Werner Achatz, personally appeared GORDON J.
WHITING, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument,
and acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the persons, or the
entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Werner S. Achatz
------------------------------
Signature of Notary
WERNER S. ACHATZ
Notary Public, State of New York
No. 31-5052556
Qualified in New York County
Commission Expires 1-21-2000
State of New York )
) ss:
County of New York )
On June 29, 1998, before me, Werner Achatz, personally appeared BRIAN
GAST, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument,
and acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the persons, or the
entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Werner S. Achatz
------------------------------
Signature of Notary
WERNER S. ACHATZ
Notary Public, State of New York
No. 31-5052556
Qualified in New York County
Commission Expires 1-21-2000
-1-
<PAGE> 65
DESCRIPTION OF REAL ESTATE
-1-
<PAGE> 66
EXHIBIT A
Situated in the State of Indiana, in the County of Delaware and in the Town of
Daleville.
Part of the Northeast Quarter of the Southeast Quarter of Section 12, Township
19 North, Range 8 East in the Town of Daleville, Delaware County, Indian,
described as follows:
Beginning at a 5/8 inch rebar on the South line of the Northeast quarter of the
Southeast Quarter of Section 12, Township 19 North, Range 8 East, said rebar
being North 88 degrees 20 minutes 40 seconds West 40.01 feet (assumed bearing)
from a spike at the Southeast corner of said quarter-quarter section; thence
North 88 degrees 20 minutes 40 seconds West 1270.71 feet to a 5/8 inch rebar
with cap at the Southwest corner of said quarter-quarter section; thence North
00 degrees 27 minutes 41 seconds East 1154.95 feet along the West line of said
quarter-quarter section to a point on the Southerly right-of-way line of State
Highway #67; thence South 86 degrees 59 minutes 04 seconds East 107.20 feet
along the limited access right-of-way line of said highway; thence South 86
degrees 59 minutes 04 seconds East 78.70 feet along the controlled access
right-of-way line; thence South 86 degrees 59 minutes 04 seconds East 281.02
feet along the limited access right-of-way line to a highway right-of-way
marker, thence South 87 degrees 02 minutes 11 seconds East 45.87 feet along
said right-of-way line being a controlled access line to a highway right-of-way
marker; thence North 89 degrees 27 minutes 23 seconds East 53.15 feet along said
right-of-way line to a right-of-way marker which marks the beginning of the
limited access right-of-way line; thence North 89 degrees 27 minutes 23 seconds
East 392.75 feet along said right-of-way line; thence South 79 degrees 44
minutes 14 seconds East 66.67 feet along said right-of-way line to a highway
right-of-way marker; thence South 88 degrees 30 minutes 30 seconds East 45.98
feet along said right-of-way line to a 5/8 inch rebar; thence South 00 degrees
25 minutes 47 seconds West 94.47 feet along the West line of a tract of ground
described in Deed Record 1991 page 3580, Records of Delaware County, Indiana to
an iron pipe; thence South 88 degrees 21 minutes 19 seconds East 200.00 feet
along the South line of said
<PAGE> 67
tract to a 5/8 inch rebar that is 40.01 feet West of the East line of said
quarter-quarter section; thence South 00 degrees 25 minutes 47 seconds West
1064.53 feet to the point of beginning, containing 33.25 acres, more or less.
<PAGE> 1
Exhibit 10.5
LEASE AGREEMENT
by and between
BAC (MO) QRS 14-10, INC.
a Delaware corporation
as LANDLORD
and
THE BENJAMIN ANSEHL COMPANY
a Missouri corporation,
as TENANT
Premises: 1555 Page Industrial Boulevard
St. Louis, Missouri
Dated as of: November 24, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties............................................................... 1
1. Demise of Premises................................................ 1
2. Certain Definitions............................................... 1
3. Title and Condition............................................... 7
4. Use of Leased Premises; Quiet Enjoyment........................... 8
5. Term.............................................................. 8
6. Basic Rent........................................................ 8
7. Additional Rent................................................... 9
8. Net Lease; Non-Terminability...................................... 10
9. Payment of Impositions............................................ 10
10. Compliance with Laws and Easement Agreements; Environmental
Matters.......................................................... 11
11. Liens; Recording.................................................. 13
12. Maintenance and Repair............................................ 13
13. Alterations and Improvements...................................... 14
14. Permitted Contests................................................ 14
15. Indemnification................................................... 15
16. Insurance......................................................... 17
17. Casualty and Condemnation......................................... 19
18. Termination Events................................................ 20
19. Restoration....................................................... 21
20. Procedures Upon Purchase.......................................... 22
21. Assignment and Subletting; Prohibition Against Leasehold
Financing........................................................ 23
22. Events of Default................................................. 24
23. Remedies and Damages Upon Default................................. 26
24. Notices........................................................... 28
25. Estoppel Certificate.............................................. 29
26. Surrender......................................................... 29
27. No Merger of Title................................................ 29
28. Books and Records................................................. 29
29. Determination of Value............................................ 30
30. Non-Recourse as to Landlord....................................... 31
31. Financing......................................................... 32
32. Subordination, Non-Disturbance and Attornment..................... 32
32. Tax Treatment; Reporting.......................................... 33
33. Right of First Refusal............................................ 33
34. Miscellaneous..................................................... 35
</TABLE>
EXHIBITS
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
-i-
<PAGE> 3
Exhibit "D" - Rent Schedule
Exhibit "E" - Financial Covenants
-ii-
<PAGE> 4
LEASE AGREEMENT, made as of this 24th day of November, 1998, between
BAC (MO) QRS 14-10, INC., a Delaware corporation ("Landlord"), with an address
c/o W. P. Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor, New York, New York
10020, and THE BENJAMIN ANSEHL COMPANY, a Missouri corporation ("Tenant"), with
an address at 1555 Page Industrial Boulevard, St. Louis, Missouri 63132.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant,
and Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (collectively, the "Land"); (b) the
buildings, structures and other improvements now or hereafter constructed on the
Land (collectively, the "Improvements"); and (c) the fixtures, machinery,
equipment and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
2. Certain Definitions.
"Acquisition Cost" shall mean $6,021,000.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.
"Adjoining Property" shall mean sidewalks, driveways, curbs,
gores and vault spaces adjoining any of the Leased Premises and for which
Landlord has legal responsibility to repair, replace or maintain.
"Alterations" shall mean all changes, additions, improvements
or repairs to, all alterations, reconstructions, renewals, replacements or
removals of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph
6.
"Basic Rent Payment Dates" shall mean the Basic Rent
Payment Dates as defined in Paragraph 6.
"Business Day" shall mean any day except Saturday, Sunday and
holidays on which national banks located in the State are closed for business.
<PAGE> 5
"Casualty" shall mean any injury to or death of any person or
any loss of or damage to any property (including the Leased Premises) included
within or related to the Leased Premises or arising from the Adjoining Property.
"Commencement Date" shall mean Commencement Date as defined
in Paragraph 5.
"Condemnation" shall mean a Taking.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"Covenants" shall mean the covenants and agreements
described on Exhibit "E".
"CPI" shall mean CPI as defined in Exhibit "D" hereto.
"Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23(a)(iii).
"Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).
"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity having jurisdiction over Landlord, Tenant or the Leased
Premises, (x) relating to pollution (or the cleanup thereof), or the protection
of air, water vapor, surface water, groundwater, drinking water supply, land
(including land surface or subsurface), plant, aquatic and animal life from
injury caused by a Hazardous Substance or (y) concerning exposure to, or the
use, containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, handling, labeling, production, disposal
or remediation of Hazardous Substances, Hazardous Conditions or Hazardous
Activities, in each case as amended and as now or hereafter in effect, and (ii)
any common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations or injuries or damages due
to or threatened as a result of the presence of, exposure to, or ingestion of,
any Hazardous Substance. The term Environmental Law includes, without
limitation, the federal Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the
federal Water Pollution Control Act, the federal Clean Air Act, the federal
Clean Water Act, the federal Resources Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments to RCRA), the federal Solid
Waste Disposal Act, the federal Toxic Substance Control Act, the federal
Insecticide, Fungicide and Rodenticide Act, the federal Occupational Safety and
Health Act of
-2-
<PAGE> 6
1970, the federal National Environmental Policy Act and the federal Hazardous
Materials Transportation Act, each as amended and as now or hereafter in effect
and any similar state or local Law.
"Environmental Violation" shall mean (a) any direct or
indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (b) any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which extends to any
Adjoining Property in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or which could
result in any liability to any Federal, state or local government or to any
other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which could result in any liability, cost or expense to
Landlord or Lender or any other owner or occupier of the Leased Premises, or
which could result in a creation of a lien on the Leased Premises under any
Environmental Law, or (e) any violation of or noncompliance with any
Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph
1.
"Event of Default" shall mean an Event of Default as defined
in Paragraph 22(a).
"Fair Market Value" shall mean the higher of (a) the fair
market value of the Leased Premises as of the Relevant Date as if unaffected and
unencumbered by this Lease or (b) the fair market value of the Leased Premises
as of the Relevant Date as affected and encumbered by this Lease. For all
purposes of this Lease, Fair Market Value shall be determined in accordance with
the procedure specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would cause the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition which would support
any claim or liability under any Environmental Law, including the presence of
underground storage tanks.
-3-
<PAGE> 7
"Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety as determined under any Environmental Law or (ii) any
substance supporting a claim under any Environmental Law, whether or not defined
as hazardous as such under any Environmental Law. Hazardous Substances include,
without limitation, any toxic or hazardous waste, pollutant, contaminant,
industrial waste, petroleum or petroleum-derived substances or waste, radon,
radioactive materials, asbestos, asbestos containing materials, urea
formaldehyde foam insulation, lead and polychlorinated biphenyls as determined
under any Environmental Law.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in
Paragraph 15.
"Insurance Requirements" shall mean the requirements of all
insurance policies required to be maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Commencement Date and ending at midnight on the
last day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased Premises as defined
in Paragraph 1.
"Legal Requirements" shall mean the requirements of all
present and future Laws (including but not limited to Environmental Laws and
Laws relating to accessibility to, usability by, and discrimination against,
disabled individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the Leased
Premises, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or restoration of any of the Leased Premises,
even if compliance therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any person or entity (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by
a Note.
-4-
<PAGE> 8
"Monetary Obligations" shall mean Rent and all other sums
payable by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable to
Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or
by agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any third party expenses
incurred by Landlord and Lender in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Offer Amount" shall mean the greater of (a) Fair Market Value
or (b) the sum of the Acquisition Cost and any Prepayment Premium which Landlord
will be required to pay in prepaying any Loan with proceeds of the Offer Amount.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does
not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prepayment Premium" shall mean any payment (other than a
payment of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) by reason of any prepayment by Landlord of any principal due
under a Note or Mortgage, and which may be (in lieu of such prepayment premium
or prepayment penalty) a "make whole" clause requiring a prepayment premium in
an amount sufficient to compensate the Lender for the loss of the benefit of the
Loan due to a prepayment.
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) eight percent (8%) per annum.
"Prime Rate" shall mean the annual interest rate as published,
from time to time, in The Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event The Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-
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<PAGE> 9
day Treasury Bills are then being issued, the Discount Rate shall be the
discount rate on Treasury Bills then being issued for the period of time closest
to ninety-one (91) days.
"Relevant Amount" shall mean the Termination Amount or the
Default Termination Amount, as the case may be.
"Relevant Date" shall mean (a) the date immediately prior to
the date on which the applicable Condemnation Notice is received, in the event
of a Termination Notice under Paragraph 18 which is occasioned by a Taking, (b)
the date immediately prior to the date on which the applicable Casualty occurs,
in the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a termination offer under Paragraph
23(a)(iii), or (e) the date which Tenant exercise its right of first refusal
under Paragraph 35(d).
"Rent" shall mean, collectively, Basic Rent and Additional
Rent.
"Sales Contract" shall mean Sales Contract as defined in
Paragraph 35.
"Site Assessment" shall mean a Site Assessment as defined
in Paragraph 10(c).
"State" shall mean the State of Missouri.
"Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a
portion of any of the Leased Premises (i) in or by condemnation or other eminent
domain proceedings pursuant to any Law, general or special, or (ii) by reason of
any agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a) Fair Market
Value or (b) the sum of the Acquisition Cost and any Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of the
Termination Amount.
"Termination Date" shall mean Termination Date as defined
in Paragraph 18.
"Termination Event" shall mean a Termination Event as
defined in Paragraph 18.
"Termination Notice" shall mean Termination Notice as
defined in Paragraph 18(a).
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3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment presently in effect, (ii) the rights of any Persons in
possession of the Leased Premises, (iii) the existing state of title of any of
the Leased Premises, including any Permitted Encumbrances, (iv) any state of
facts which an accurate survey or physical inspection of the Leased Premises
might show, (v) all Legal Requirements, including any existing violation of any
thereof, and (vi) the condition of the Leased Premises as of the commencement of
the Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises is in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF
THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY
OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT;
AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES
THAT THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT
THE LEASED PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN
THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY
NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE
BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby.
Tenant acknowledges that (i) fee simple title (both legal and equitable) is in
Landlord and that Tenant has only the leasehold right of possession and use of
the Leased Premises as provided herein, (ii) to the best of its knowledge and
belief, the Improvements conform to all material Legal Requirements and all
Insurance Requirements, (iii) all easements necessary or appropriate for the use
or operation of the Leased Premises have been obtained, (iv) all contractors and
subcontractors who have performed work on or supplied materials to the Leased
Premises have been fully paid, and all materials and supplies have been fully
paid for, (v) the Improvements have been fully completed in all material
respects in a workmanlike manner of first class quality, and (vi) all Equipment
necessary or appropriate for the use or operation of the Leased Premises has
been installed and is presently fully operative in all material respects.
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(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all assignable warranties, guaranties, indemnities and
similar rights (collectively, "Warranties") which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this Lease,
whereupon such assignment shall cease and all of Warranties, guaranties,
indemnities and other rights shall automatically revert to Landlord. Tenant
shall enforce the Warranties in accordance with their respective terms.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for offices
and the manufacturing of soaps, lotions, cosmetics, health and beauty aids, and
personal hygiene products and for no other purpose without the prior written
consent of Landlord which shall not be unreasonably withheld, delayed or
conditioned. Tenant shall not use or occupy or permit any of the Leased Premises
to be used or occupied, nor do or permit anything to be done in or on any of the
Leased Premises, in a manner which would or might (i) violate any Law or Legal
Requirement, (ii) make void or voidable or cause any insurer to cancel any
insurance required by this Lease, or make it difficult or impossible to obtain
any such insurance at commercially reasonable rates, (iii) make void or
voidable, cancel or cause to be cancelled or release any warranty, guaranty or
indemnity, (iv) cause structural injury to any of the Improvements or (v)
constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord or anyone claiming by, through or under Landlord,
with respect to matters that arise after the date hereof, provided that Landlord
or its agents may enter upon and examine any of the Leased Premises at such
reasonable times as Landlord may select and upon reasonable notice to Tenant
(except in the case of an emergency, in which no notice shall be required) for
the purpose of inspecting the Leased Premises, verifying compliance or
non-compliance by Tenant with its obligations hereunder and the existence or
non-existence of an Event of Default or event which with the passage of time
and/or notice would constitute an Event of Default, showing the Leased Premises
to prospective Lenders and purchasers and taking such other action with respect
to the Leased Premises as is permitted by any provision hereof.
5. Term.
Subject to the provisions hereof, Tenant shall have
and hold the Leased Premises for an initial term (such term, as extended or
renewed in accordance with the provisions hereof, being called the "Term")
commencing on the date hereof (the "Commencement Date") and ending on the last
day of the one hundred eightieth (180th) calendar month next following the date
hereof.
If an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect and, in any
event, Landlord shall have the right during the last year of the Term, to (i)
advertise the availability of the Leased Premises for sale or reletting and to
erect upon the Leased Premises signs indicating such availability and (ii) show
the Leased Premises to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may select.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent"), commencing on the first day of December, 1998
and continuing on the first day
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of each December, March, June and September thereafter during the Term (each
such day being a "Basic Rent Payment Date"). Each such rental payment shall be
made either (a) to Landlord at its address set forth above or to such one other
Person, at such address and as Landlord may direct by fifteen (15) days' prior
written notice to Tenant, and (b) by a check delivered on or before the
applicable Basic Rent Payment Date or by wire transfer on or before each Basic
Rent Payment Date. Pro rata Basic Rent for the period from the date hereof
through the last day of the month hereof shall be paid on the Commencement Date.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of Tenant's obligations under this
Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant
under this Lease, (D) any Condemnation proceedings, (E) the adjustment,
settlement or compromise of any insurance claims involving or arising from any
of the Leased Premises, (F) the prosecution, defense or settlement of any
litigation involving or arising from any of the Leased Premises, this Lease, or
the sale of the Leased Premises by Tenant to Landlord, (G) the exercise or
enforcement by Landlord, its successors and assigns, of any of its rights under
this Lease, (H) any amendment to or modification or termination of this Lease
made at the request of Tenant, (I) Costs of Landlord's counsel incurred in
connection with any act undertaken by Landlord (or its counsel) at the request
of Tenant, or incurred in connection with any act of Landlord performed on
behalf of Tenant, (J) the reasonable third party Costs of Landlord incurred in
connection with any act undertaken by Landlord at the request of Tenant or
Tenant's failure to act promptly in an emergency situation, and (K) any other
items specifically required to be paid by Tenant under this Lease;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to five percent
(5%) of the amount of such unpaid installment or portion thereof, provided,
however, that with respect to the first late payment of all or any portion of
any installment of Basic Rent in any consecutive twelve (12) month period, the
Late Charge shall not be due and payable unless the Basic Rent has not been paid
within five (5) days' following the due date thereof;
(iii) a sum equal to any additional sums (including any
late charge, default penalties, interest and fees of Lender's counsel) which are
payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate (the "Default Rate") of three
percent (3%) over the Prime Rate per annum on the following sums until paid in
full: (A) all overdue installments of Basic Rent from the respective due dates
thereof, (B) all overdue amounts of Additional Rent relating to obligations
which Landlord shall have paid on behalf of Tenant, from the date of payment
thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from
the date when any such amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due, provided that
amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within thirty (30) days after
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Landlord's demand for payment thereof, and (ii) any other Additional Rent,
within thirty (30) days after Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations shall be
paid without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any damage
to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) Tenant's acquisition of ownership of any part of the Leased
Premises other than pursuant to an express provision of this Lease, (iv) any
default on the part of Landlord hereunder or under any Note, Mortgage or
Assignment, (v) any latent or other defect in any of the Leased Premises, (vi)
the breach of any warranty of any seller or manufacturer of any of the
Equipment, (vii) any violation of any provision of this Lease by Landlord,
(viii) the bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution or winding-up of, or other proceeding affecting
Landlord, (ix) the exercise of any remedy, including foreclosure, under any
Mortgage or Assignment, (x) any action with respect to this Lease (including the
disaffirmance hereof) which may be taken by Landlord, any trustee, receiver or
liquidator of Landlord or any court under the Federal Bankruptcy Code or
otherwise, (xi) any interference with Tenant's use of the Leased Premises, (xii)
market or economic changes or (xiii) any other cause, whether similar or
dissimilar to the foregoing, any present or future Law to the contrary
notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants, conditions and agreements, all Monetary Obligations shall
continue to be payable in all events (or, in lieu thereof, Tenant shall pay
amounts equal thereto), and the obligations of Tenant hereunder shall continue
unaffected unless the requirement to pay or perform the same shall have been
terminated pursuant to an express provision of this Lease. All Rent payable by
Tenant hereunder shall constitute "rent" for all purposes (including Section
502(b)(6) of the Federal Bankruptcy Code). The covenants of this Lease shall run
with the land and all covenants of Tenant shall be deemed and construed to be
"conditions" as well as "covenants" as though the words specifically expressing
or importing covenants and conditions are used in each instance.
(d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's leasehold interest in the
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<PAGE> 14
Leased Premises, (iii) any of the Leased Premises, and (iv) Landlord as a result
of or arising in respect of the acquisition, ownership, occupancy, leasing, use,
possession or sale of any of the Leased Premises, any activity conducted on any
of the Leased Premises, or the Rent, (collectively, the "Impositions");
provided, that nothing herein shall obligate Tenant to pay (A) income, excess
profits or other taxes of Landlord (or Lender) which are determined on the basis
of Landlord's (or Lender's) net income or net worth (unless such taxes are in
lieu of or a substitute for any other tax, assessment or other charge upon or
with respect to the Leased Premises which, if it were in effect, would be
payable by Tenant under the provisions hereof or by the terms of such tax,
assessment or other charge), (B) any estate, inheritance, succession, gift or
similar tax imposed on Landlord or (C) any capital gains tax imposed on Landlord
in connection with the sale of the Leased Premises to any Person. If any
Imposition may be paid in installments without interest or penalty, Tenant shall
have the option to pay such Imposition in installments; in such event, Tenant
shall be liable only for those installments which accrue or become due and
payable during the Term. Tenant shall prepare and file all tax reports required
by governmental authorities which relate to the Impositions. Tenant shall
deliver to Landlord (1) copies of all settlements and notices pertaining to the
Impositions which may be issued by any governmental authority within ten (10)
Business Days after Tenant's receipt thereof, (2) receipts for payment of all
taxes required to be paid by Tenant hereunder within thirty (30) days after the
due date thereof and (3) receipts for payment of all other Impositions within
ten (10) Business Days after Landlord's request therefor.
(b) Landlord shall have the right following the occurrence of
an Event of Default or if required by Lender, to require Tenant to pay to
Landlord an additional monthly sum (each an "Escrow Payment") sufficient to pay
the Escrow Charges (as hereinafter defined) as they become due (provided that
Landlord shall request that the Lender not require the escrow described herein
unless an Event of Default exists). As used herein, "Escrow Charges" shall mean
real estate taxes on the Leased Premises or payments in lieu thereof and
premiums on any insurance required by this Lease. Landlord shall determine the
amount of the Escrow Charges and of each Escrow Payment based on the most recent
charges for Escrow Charges. As long as the Escrow Payments are being held by
Landlord the Escrow Payments shall not be commingled with other funds of
Landlord or other Persons and interest thereon shall accrue for the benefit of
Tenant from the date such monies are received and invested until the date such
monies are disbursed to pay Escrow Charges. Landlord shall apply the Escrow
Payments to the payment of the Escrow Charges in such order or priority as
Landlord shall determine or as required by law. If at any time the Escrow
Payments theretofore paid to Landlord shall be insufficient for the payment of
the Escrow Charges, Tenant, within thirty (30) days after Landlord's demand
therefor, shall pay the amount of the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and conform to,
and cause the Leased Premises and any other Person occupying any part of the
Leased Premises to comply with and conform to, all Insurance Requirements and
Legal Requirements (including all applicable Environmental Laws). Tenant shall
not at any time (i) cause, permit or suffer to occur any Environmental Violation
or (ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation and, at the request of Landlord or Lender, Tenant shall
promptly remediate or undertake any other appropriate response action to correct
any existing Environmental Violation, however immaterial.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and
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performed thereunder. Neither party will alter, modify, amend or terminate any
Easement Agreement, give any consent or approval thereunder, or enter into any
new Easement Agreement without, in each case, the prior written consent of the
other party.
(c) Upon prior written notice from Landlord, Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises and perform environmental site investigations and assessments
("Site Assessments") on the Leased Premises for the purpose of determining
whether there exists on the Leased Premises any Environmental Violation or any
condition which could result in any Environmental Violation. Such Site
Assessments may include both above and below the ground testing for any
Environmental Violation and such other tests as may be necessary, in the opinion
of the Site Reviewers, to conduct the Site Assessments. Tenant shall supply to
the Site Reviewers such historical and operational information regarding the
Leased Premises as may be reasonably requested by the Site Reviewers to
facilitate the Site Assessments, and shall make available for meetings with the
Site Reviewers appropriate personnel having knowledge of such matters.
Notwithstanding anything in this Paragraph 10(c) to the contrary, in no event
shall Landlord designate Site Reviewers to visit the Leased Premises for the
purpose of performing Site Assessments more than once in any calendar year
unless Landlord has reasonable cause to believe that an Environmental Violation
exists or unless required by a Lender or by prospective purchaser or Lender. The
cost of performing and reporting Site Assessments if an Environmental Violation
exists or in connection with the initial Loan shall be paid by Tenant (subject
to the limitation in Paragraph 31 hereof); otherwise, the cost of performing and
reporting Site Assessments shall be paid by Landlord.
(d) If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of, or other
response action with respect to, the same is likely to exceed $100,000, Tenant
shall provide to Landlord, within forty five (45) days after Landlord's request
therefor, adequate financial assurances that Tenant will effect such remediation
in accordance with applicable Environmental Laws. Such financial assurances
shall be a bond or letter of credit reasonably satisfactory to Landlord in form
and substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire, then, at the option of Landlord, the Term shall be
automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to correct or commence to correct any
Environmental Violation which occurs or is found to exist within thirty (30)
days after written notice from Landlord, Landlord shall have the right (but no
obligation) to take any and all actions as Landlord shall deem necessary or
advisable in order to cure such Environmental Violation.
(g) Tenant shall notify Landlord promptly after becoming aware
of any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord promptly after receipt thereof copies of all orders,
reports, notices, permits, applications or other communications relating to any
such violation or noncompliance.
(h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party not to at
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any time (i) cause any Environmental Violation to occur or (ii) permit any
Person occupying the Leased Premises through said subtenant or concessionaire to
cause any Environmental Violation to occur.
(i) No later than January 10, 1999 Tenant shall provide to
Landlord evidence that the stained soil in the transformer area has been removed
satisfactorily and properly disposed of and shall provide to Landlord no later
than December 10, 1998 exhibits to the Shifrin report that have not previously
been provided to Landlord.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain and shall promptly discharge or remove any lien, levy
or encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL PROMPTLY, POST
ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this
Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased Premises and
the Adjoining Property in as good repair and appearance as they are in on the
date hereof and fit to be used for their intended use in accordance with the
better of (i) the practices generally recognized as then acceptable by other
companies in its industry or (ii) practices observed by Tenant with respect to
the other real properties owned or operated by it, and, in the case of the
Equipment, in as good mechanical condition as it was on the later of the date
hereof or the date of its installation, except for ordinary wear and tear.
Tenant shall take every other action necessary or appropriate for the
preservation and safety of the Leased Premises. Tenant shall promptly make all
Alterations of every kind and nature, which may be required to comply with the
foregoing requirements of this Paragraph 12(a). Landlord shall not be required
to make any Alteration, or to maintain any of the Leased Premises or Adjoining
Property in any way, and Tenant hereby expressly waives any right which may be
provided for in any Law now or hereafter in effect to make Alterations at the
expense of Landlord or to require Landlord to make Alterations. Any Alteration
made by Tenant pursuant to this Paragraph 12 shall be made in conformity with
the provisions of Paragraph 13.
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(b) If any Improvement, now or hereafter constructed, shall
(i) encroach upon any setback or any property, street or right-of-way adjoining
the Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the
prior written consent of Landlord and Lender and provided that no Event of
Default then exists, to make Alterations or a series of related Alterations
that, as to any such Alterations or series of related Alterations, do not cost
in excess of $300,000 and (ii) to install Equipment in the Improvements or
accessions to the Equipment that, as to such Equipment or accessions, do not
cost in excess of $300,000, so long as at the time of construction or
installation of any such Equipment or Alterations no Event of Default exists and
the value and utility of the Leased Premises is not diminished thereby. If the
cost of any Alterations, series of related Alterations, Equipment or accessions
thereto is in excess of $300,000, the prior written approval of Landlord and
Lender shall be required, such approval not to be unreasonably withheld or
delayed. Tenant shall not construct upon the Land any additional buildings
without having first obtained the prior written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph
13 or as required by Paragraph 12 or 17 (such Alterations and actions being
hereinafter collectively referred to as "Work"), whether or not Landlord's
consent is required, then (i) the market value of the Leased Premises shall not
be lessened by any such Work or its usefulness impaired, (ii) all such Work
shall be performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal Requirements,
(iv) all such Work shall comply with the Insurance Requirements, (v) if any such
Work involves the replacement of Equipment or parts thereto, all replacement
Equipment or parts shall have a value and useful life equal to the greater of
(A) the value and useful life on the date hereof of the Equipment being replaced
or (B) the value and useful life of the Equipment being replaced immediately
prior to the occurrence of the event which required its replacement, (vi) Tenant
shall promptly discharge or remove all liens filed against any of the Leased
Premises arising out of such Work, (vii) Tenant shall procure and pay for all
permits and licenses required in connection with any such Work, (viii) all such
Work shall be the property of Landlord and shall be subject to this Lease, and
Tenant shall execute and deliver to Landlord any document requested by Landlord
evidencing the assignment to Landlord of all estate, right, title and interest
(other than the leasehold estate created hereby) of Tenant or any other Person
thereto or therein, and (ix) Tenant shall comply, to the extent requested by
Landlord or required by this Lease, with the provisions of Paragraph 19(a), if
such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or
remove any lien referred to in Paragraph 11 or 13 or (c) take any action with
respect to any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) (such non-compliance with the terms hereof being
hereinafter referred to individually as a "Permitted Violation", and
collectively as "Permitted Violations"), so long as at the time of such contest
no Event of Default exists and so long as Tenant shall contest, in good faith,
the existence, amount or validity thereof,
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the amount of the damages caused thereby, or the extent of its or Landlord's
liability therefor by appropriate proceedings which shall operate during the
pendency thereof to prevent or stay (i) the collection of, or other realization
upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of
any of the Leased Premises or any Rent to satisfy or to pay any damages caused
by any Permitted Violation, (iii) any interference with the use or occupancy of
any of the Leased Premises, (iv) any interference with the payment of any Rent,
or (v) the cancellation of any insurance policy or a statement by the carrier
that coverage will be denied. Tenant shall provide Landlord security which is
satisfactory, in Landlord's reasonable judgment, to assure that such Permitted
Violation is corrected, including all Costs, interest and penalties that may be
incurred or become due in connection therewith. While any proceedings which
comply with the requirements of this Paragraph 14 are pending and the required
security is held by Landlord, Landlord shall not have the right to correct any
Permitted Violation thereby being contested unless Landlord is required by law
to correct such Permitted Violation and Tenant's contest does not prevent or
stay such requirement as to Landlord. Each such contest shall be promptly and
diligently prosecuted by Tenant to a final conclusion, except that Tenant, so
long as the conditions of this Paragraph 14 are at all times complied with, has
the right to attempt to settle or compromise such contest through negotiations.
Tenant shall pay any and all losses, judgments, decrees and Costs in connection
with any such contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interest and Costs thereof or in
connection therewith, and perform all acts the performance of which shall be
ordered or decreed as a result thereof. No such contest shall subject Landlord
to the risk of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend, save and
hold harmless Landlord, Lender and all other Persons described in Paragraph 30
(each an "Indemnitee") from and against any and all liabilities, losses, damages
(including punitive damages), penalties, Costs (including attorneys' fees and
costs), causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and whether
based on strict liability, negligence or any other theory of recovery at law or
in equity [(unless caused by the gross negligence (if such indemnification is
permitted under applicable Law) or negligence (if indemnification against gross
negligence is not so permitted) or willful misconduct of the Indemnitee seeking
indemnification], arising from (i) any matter pertaining to the acquisition (or
the negotiations leading thereto), ownership, use, non-use, occupancy,
operation, condition, design, construction, maintenance, repair or restoration
of the Leased Premises or Adjoining Property, (ii) any casualty in any manner
arising from the Leased Premises or Adjoining Property, whether or not
Indemnitee has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant of any
provision of this Lease, any contract or agreement to which Tenant is a party,
any Legal Requirement or any Permitted Encumbrance or any encumbrance Tenant
consented to or the Mortgage or Assignment or (iv) any alleged, threatened or
actual Environmental Violation, including (A) liability for response costs and
for costs of removal and remedial action incurred by the United States
Government, any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to Section 107 of CERCLA, or any successor section or act or provision
of any similar state or local Law, (B) liability for costs and expenses of
abatement, correction or clean-up, fines, damages, response costs or penalties
which arise from the provisions of any of the other Environmental Laws and (C)
liability for personal injury or property damage arising under any statutory or
common-law tort theory, including damages assessed for the maintenance of a
public or private nuisance or for carrying on of a dangerous activity.
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(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may at its expense, except as
provided below, employ counsel of its choice to monitor the defense of any such
action) and (ii) such Indemnitee shall notify Tenant to resist or defend such
action or proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense of such
action or proceeding if reasonably requested so to do by Tenant. In the event of
a conflict of interest or dispute or during the continuance of an Event of
Default, Landlord shall have the right to select counsel reasonably satisfactory
to Tenant, and the cost of such counsel shall by paid by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall
survive any termination, expiration or rejection in bankruptcy of this Lease for
a period of five (5) years, except that with respect to any alleged
environmental violation the obligations of Tenant shall survive without any
limitation as to time.
(d) (i) In the event that any claim or demand for which Tenant
would be liable to Landlord hereunder is asserted against or sought to be
collected from Landlord by a third party, Landlord shall with reasonable
promptness give notice (the "Claim Notice") to Tenant of such claim or demand,
specifying the nature of and specific basis for such claim or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and demand).
Tenant shall not be obligated to indemnify Landlord with respect to any such
claim or demand if Landlord fails to notify Tenant thereof in accordance with
the provisions of this Paragraph 15 and, as a result of such failure, Tenant's
ability to defend against the claim or demand is materially prejudiced. Tenant
shall have ten (10) days from its receipt of the Claim Notice (the "Notice
Period") to notify Landlord (i) whether or not it disputes the liability of
Tenant to Landlord hereunder with respect to such claim or demand, and (ii)
whether or not it desires, at the cost and expense of Tenant, to defend Landlord
against such claim or demand; provided, however, that Landlord is hereby
authorized, but is not obligated, prior to and during the Notice Period, to file
any motion, answer or other pleading that it shall deem necessary or appropriate
to protect its interests or those of Tenant. If Tenant notifies Landlord within
the Notice Period that it desires to defend Landlord against such claim or
demand, Tenant shall, subject to the last sentence of this paragraph (i), have
the right to control the defense against the claim by all appropriate
proceedings and any settlement negotiations. If Landlord desires to participate
in, but not control, any such defense or settlement, it may do so at its sole
cost and expense. If Tenant fails to respond to Landlord within the Notice
Period, elects not to defend Landlord, or after electing to defend fails to
commence or reasonably pursue such defense, then Landlord shall have the right,
but not the obligation, to undertake or continue the defense of, and to
compromise or settle (exercising reasonable business judgment), the claim or
other matter all on behalf, for the account and at the risk of Tenant.
(ii) If requested by Tenant, Landlord agrees, at
Tenant's expense, to cooperate with Tenant and its counsel in contesting any
third party claim or demand which Tenant elects to contest, or, if appropriate
and related to the claim in question, in making any counterclaim against the
person asserting the third party claim or demand, or any cross-complaint against
any person. Except as expressly provided in paragraph (i) above, no claim as to
which indemnification is sought under this Paragraph 15 may be settled without
the consent of Tenant.
(iii) If Landlord should have a claim against Tenant
hereunder which does not involve a claim or demand being asserted against or
sought to be collected from it by a third party, Landlord shall send a Claim
Notice with respect to such claim to Tenant. If
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Tenant disputes such claim, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (if the Leased Premises is in a flood
zone) and earthquake coverage in amounts not less than the actual replacement
cost of the Improvements and Equipment. Such policies shall contain Replacement
Cost and Agreed Amount Endorsements and shall contain deductibles not more than
$25,000 per occurrence.
(ii) Commercial General Liability Insurance (including
but not limited to Incidental Medical Malpractice and Host Liquor Liability) and
Business Automobile Liability Insurance (including Non-Owned and Hired
Automobile Liability) against claims for personal and bodily injury, death or
property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $10,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and type.
(iii) Workers' compensation insurance covering all
persons employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Workers' Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on any
of the Equipment or any other equipment on or in the Leased Premises, in an
amount not less than $5,000,000 per accident for damage to property. Such
policies shall include at least $50,000 per accident for Off-Premises Service
Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous
Materials Clean-Up Expense and may contain a deductible not to exceed $25,000.
(v) Business Income/Extra Expense Insurance at limits
sufficient to cover 100% of the period of indemnity not less than one year from
time of loss. Such insurance shall name Landlord as loss payee solely with
respect to Rent payable to or for the benefit of Landlord as its interest
appears under this Lease.
(vi) During any period in which substantial Alterations
at the Leased Premises are being undertaken, builder's risk insurance covering
the total completed value including any "soft costs" with respect to the
Improvements being altered or repaired (on a completed value, non-reporting
basis), replacement cost of work performed and equipment, supplies and materials
furnished in connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such other
endorsements as Landlord may reasonably require and general liability, worker's
compensation and automobile liability insurance with respect to the Improvements
being constructed, altered or repaired.
(vii) Such other insurance (or other terms with respect
to any insurance required pursuant to this Paragraph 16, including without
limitation amounts of coverage, deductibles, form of mortgagee clause) on or in
connection with any of the Leased
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Premises as Landlord or Lender may reasonably require, which at the time is
usual and commonly obtained in connection with properties similar in type of
building size, use and location to the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written
by companies which have a Best's rating of A:X or above and are admitted in, and
approved to write insurance policies by, the State Insurance Department for the
State. The insurance policies (i) shall be for a minimum term of at least one
(1) year and such terms as Landlord may reasonably approve and (ii) shall be in
amounts sufficient at all times to satisfy any coinsurance requirements thereof.
The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall
name Landlord as Owner and Lender as loss payee and Tenant as its interest may
appear. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord and
Lender as additional insureds, and the insurance referred to in Paragraph
16(a)(v) shall name Landlord as insured and Lender and Landlord as loss payee.
If said insurance or any part thereof shall expire, be withdrawn, become void,
voidable, unreliable or unsafe for any reason, including a breach of any
condition thereof by Tenant or the failure or impairment of the capital of any
insurer, or if for any other reason whatsoever said insurance shall become
reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or
additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv),
(v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be cancelled substantially modified or allowed to lapse on any
renewal date except after thirty (30) days' prior notice to Landlord and Lender.
Each such policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or Tenant
which might, absent such provision, result in a forfeiture of all or a part of
such insurance payment, (ii) the occupation or use of any of the Leased Premises
for purposes more hazardous than those permitted by the provisions of such
policy, or (iii) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment or other document
evidencing or securing the Loan upon the happening of an event of default
therein.
(d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord evidence of the payment of the full premium therefor or
installment then due at least thirty (30) days prior to the expiration date of
such policy, and shall promptly deliver to Landlord all original certificates of
insurance or, if requested by Lender, certified copies of policies.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to Landlord a
Statement of Values which shall be reviewed annually and amended as necessary
based on Replacement Cost Valuations. The original or a certified copy of each
such "blanket" or umbrella policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
requirements of the insurers thereunder applicable to Landlord, Tenant or any of
the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates Alterations or results in interference with the
use or enjoyment of any of the Leased Premises.
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(g) Tenant shall not carry separate insurance concurrent in
form or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as named
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance and shall deliver to
Landlord the original policies thereof.
(h) All policies shall contain effective waivers by the
carrier against all claims for insurance premiums against Landlord and shall
contain full waivers of subrogation against the Landlord.
(i) All proceeds of any insurance required under Paragraph
16(a) shall be payable as follows:
(i) Proceeds payable under clauses (ii), (iii) and (iv)
of Paragraph 16(a) and proceeds attributable to the general liabilities coverage
of Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall be
payable to the Person entitled to receive such proceeds.
(ii) All proceeds of insurance payable under clauses
(ii), (iii), (iv), (v) and (vii) of Paragraph 16(a) and proceeds attributable to
the general liability coverage provisions of Builder's Risk insurance under
clause (vi) of Paragraph 16(a) shall be payable to Landlord or, if required by
the Mortgage, to Lender.
(iii) Proceeds of insurance required under clause (i) of
Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16(a) shall be payable to Landlord (or Lender) and applied as set forth in
Paragraph 17. Tenant shall apply the Net Award to restoration of the Leased
Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty occurs to the Leased Premises, Tenant
shall give Landlord and Lender immediate notice thereof. So long as no Event of
Default exists Tenant is hereby authorized to adjust, collect and compromise all
claims under any of the insurance policies required by Paragraph 16(a) (except
public liability insurance claims payable to a Person other than Tenant,
Landlord or Lender) and to execute and deliver on behalf of Landlord all
necessary proofs of loss, receipts, vouchers and releases required by the
insurers and Landlord shall have the right to join with Tenant therein. Any
final adjustment, settlement or compromise or any such claim shall be subject to
the prior written approval of Landlord, and Landlord shall have the right to
prosecute or contest, or to require Tenant to prosecute or contest, any such
claim, adjustment, settlement or compromise. If an Event of Default exists,
Tenant shall not be entitled to adjust, collect or compromise any such claim or
to participate with Landlord in any adjustment, collection and compromise of the
Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the
request of Landlord, all such proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under said
policies, including return of unearned premiums, directly to Landlord or, if
required by the Mortgage, to Lender instead of to Landlord and Tenant jointly,
and Tenant hereby appoints each of Landlord and Lender as Tenant's
attorneys-in-fact to endorse any draft therefor. The rights of Landlord under
this Paragraph 17(a) shall be extended to Lender if and to the extent that any
Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. So long as no Event of Default exists,
Tenant is authorized
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to collect, settle and compromise the amount of any Net Award and Landlord shall
have the right to join with Tenant herein. If an Event of Default exists,
Landlord shall be authorized to collect, settle and compromise the amount of any
Net Award and Tenant shall not be entitled to participate with Landlord in any
Condemnation proceeding or negotiations under threat thereof or to contest the
Condemnation or the amount of the Net Award therefor. No agreement with any
condemnor in settlement or under threat of any Condemnation shall be made by
Tenant without the written consent of Landlord. Subject to the provisions of
this Paragraph 17(b) and Paragraph 17(c), Tenant hereby irrevocably assigns to
Landlord any award or payment to which Tenant is or may be entitled by reason of
any Condemnation, whether the same shall be paid or payable for Tenant's
leasehold interest hereunder or otherwise; but nothing in this Lease shall
impair Tenant's right to any award or payment on account of Tenant's trade
fixtures, equipment or other tangible property which is not part of the
Equipment, moving expenses or loss of business, if available, to the extent that
and so long as (i) Tenant shall have the right to make, and does make, a
separate claim therefor against the condemnor and (ii) such claim does not in
any way reduce either the amount of the award otherwise payable to Landlord for
the Condemnation of Landlord's fee interest in the Leased Premises or the amount
of the award (if any) otherwise payable for the Condemnation of Tenant's
leasehold interest hereunder. The rights of Landlord under this Paragraph 17(b)
shall also be extended to Lender if and to the extent that any Mortgage so
provides.
(c) If any Partial Casualty (whether or not insured against)
or Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations. Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraphs 12(a) and 13(b), shall commence and diligently
continue to restore the Leased Premises as nearly as possible to their value,
condition and character immediately prior to such event (assuming the Leased
Premises to have been in the condition required by this Lease). So long as no
Event of Default exists, any Net Award up to and including $300,000 shall be
paid by Landlord to Tenant and Tenant shall restore the Leased Premises in
accordance with the requirements of Paragraphs 12(a) and 13(b) of this Lease.
Any Net Award in excess of $300,000 shall (unless such Casualty resulting in the
Net Award is a Termination Event) be made available by Landlord (or Lender, if
required by the terms of any Mortgage) to Tenant for the restoration of any of
the Leased Premises pursuant to and in accordance with the provisions of
Paragraph 19 hereof. If any Casualty or Condemnation which is not a Partial
Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms
and conditions of Paragraph 18.
18. Termination Events.
(a) If (i) the entire Leased Premises shall be taken by a
Taking or (ii) any substantial portion of the Leased Premises shall be taken by
a Taking or all or any substantial portion of the Leased Premises shall be
damaged or destroyed by a Casualty and, in such case, Tenant certifies and
covenants to Landlord that it will forever abandon operations at the Leased
Premises (each of the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as a "Termination Event"), then (x) in the case of
(i) above, Tenant shall be obligated, within thirty (30) days after Tenant
receives a Condemnation Notice and (y) in the case of (ii) above, Tenant shall
have the option, within thirty (30) days after Tenant receives a Condemnation
Notice or thirty (30) days after the Casualty, as the case may be, to give to
Landlord written notice of the Tenant's exercise of its option to terminate this
Lease (a "Termination Notice") in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date which
occurs at least sixty (60) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay to
Landlord the Termination Amount and (iii) if the Termination Event is an event
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described in Paragraph 18(a)(ii), the certification and covenants described
therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine the Fair Market Value.
(c) If Landlord shall reject such offer to terminate this
Lease by written notice to Tenant (a "Rejection"), which Rejection shall contain
the written consent of Lender, not later than thirty (30) days following the
Fair Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen on or prior
to the Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on which
this Lease may terminate to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall immediately vacate and shall have no further right, title or interest in
or to any of the Leased Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the contrary hereinabove contained, if
Tenant shall have received a Rejection and, on the date when this Lease would
otherwise terminate as provided above, Landlord shall not have received the full
amount of the Net Award payable by reason of the applicable Termination Event,
then the date on which this Lease is to terminate automatically shall be
extended to the first Basic Rent Payment Date after the receipt by Landlord of
the full amount of the Net Award provided that, if Tenant has not satisfied all
Remaining Obligations on such date, then Landlord may, at its option, extend the
date on which this Lease may terminate to a date which is no later than the
first Basic Rent Payment Date after such date on which Tenant has satisfied all
such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not later
than the thirtieth (30th) day following the Fair Market Value Date, Landlord
shall be conclusively presumed to have accepted such offer. If such offer is
accepted by Landlord then, on the Termination Date, Tenant shall pay to Landlord
the Termination Amount and all Remaining Obligations and, if requested by
Tenant, Landlord shall (i) convey to Tenant the Leased Premises or the remaining
portion thereof, if any, and (ii) pay to or assign to Tenant Landlord's entire
interest in and to the Net Award, all in accordance with Paragraph 20.
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage) shall
hold Net Award in excess of $300,000 in a fund (the "Restoration Fund") and
disburse amounts from the Restoration Fund only in accordance with the following
conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord, and (B) Landlord and Lender shall be
provided with acceptable performance and payment bonds which insure satisfactory
completion of and payment for the restoration, are in an amount and form and
have a surety reasonably acceptable to Landlord, and name Landlord and Lender as
additional dual obligees;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A)
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satisfactory evidence, including architects' certificates, of the stage of
completion, the estimated total cost of completion and performance of the work
to date in a good and workmanlike manner in accordance with the contracts, plans
and specifications, (B) waivers of liens, (C) contractors' and subcontractors'
sworn statements as to completed work and the cost thereof for which payment is
requested, (D) a satisfactory bringdown of title insurance and (E) other
evidence of cost and payment so that Landlord can verify that the amounts
disbursed from time to time are represented by work that is completed, in place
and free and clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied
by a certificate of Tenant, signed by the president or a vice president of
Tenant, describing the work for which payment is requested, stating the cost
incurred in connection therewith, stating that Tenant has not previously
received payment for such work and, upon completion of the work, also stating
that the work has been fully completed and complies with the applicable
requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
restoration fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other funds and shall
bear interest at a rate agreed to by Landlord and Tenant; and
(vii) such other reasonable conditions as Landlord or
Lender may impose.
(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as reasonably determined by Landlord, exceeds the
amount of the Net Award available for such restoration, the amount of such
excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be added
to the Restoration Fund. Any sum so added by Tenant which remains in the
Restoration Fund upon completion of restoration shall be refunded to Tenant. For
purposes of determining the source of funds with respect to the disposition of
funds remaining after the completion of restoration, the Net Award shall be
deemed to be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum shall be retained by Landlord or, if required by a Note or
Mortgage, paid by Landlord to a Lender. If such sum is paid to Lender, then
Landlord shall use reasonable efforts to cause each installment of Basic Rent
thereafter payable to be reduced in the same amount as payments are reduced
under any Note if the Loan corresponding to such Note is reamortized to reflect
such payment, in each case until such remaining sum has been applied in full or
until the Term has expired, whichever occurs first. Upon the expiration of the
Term, any portion of the remaining sum which has not been so applied shall be
retained by Landlord.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to
any provision of this Lease, Landlord need not convey any better title thereto
than that which was conveyed to Landlord, and Tenant shall accept such title,
subject, however, to the Permitted Encumbrances and to all other liens,
exceptions and restrictions on, against or relating to any of the Leased
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or
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relating to the Leased Premises which have been created by or resulted solely
from acts of Landlord after the date of this Lease, unless the same are
Permitted Encumbrances or customary utility easements benefiting the Leased
Premises or were created with the concurrence of both Landlord and Tenant or as
a result of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the "Purchase
Date"), Tenant shall pay to Landlord, or to any Person to whom Landlord directs
payment, the Relevant Amount therefor specified herein, in Federal Funds, less
any credit of the Net Award received and retained by Landlord or a Lender
allowed against the Relevant Amount, and Landlord shall deliver to Tenant (i) a
special warranty deed which describes the premises being conveyed and conveys
the title thereto as provided in Paragraph 20(a), (ii) such other instruments as
shall be necessary to transfer to Tenant or its designee any other property (or
rights to any Net Award not yet received by Landlord or a Lender) then required
to be sold by Landlord to Tenant pursuant to this Lease and (iii) any Net Award
received by Landlord, not credited to Tenant against the Relevant Amount and
required to be delivered by Landlord to Tenant pursuant to this Lease; provided,
that if any Monetary Obligations accruing up to the Purchase Date remain
outstanding on such date, then Landlord may deduct from the Net Award the amount
of such Monetary Obligations; and further provided, that if any event has
occurred which, in Landlord's reasonable judgment, is likely to subject any
Indemnitee to any liability which Tenant is required to indemnify against
pursuant to Paragraph 15, then an amount shall be deducted from the Net Award
which, in Landlord's reasonable judgment, is sufficient to satisfy such
liability, which amount shall be deposited in an escrow account with a financial
institution reasonably satisfactory to Landlord and Tenant pending resolution of
such matter. If on the Purchase Date any Monetary Obligations accruing up to the
Purchase Date remain outstanding and no Net Award is payable to Tenant by
Landlord or the amount of such Net Award is less than the amount of the Monetary
Obligations, then Tenant shall pay to Landlord on the Purchase Date the amount
of such Monetary Obligations. Upon the completion of such purchase, this Lease
and all obligations and liabilities of Tenant hereunder shall terminate, except
any Surviving Obligations.
(c) If the completion of such purchase shall be delayed after
(i) the Termination Date, in the event of a purchase pursuant to Paragraph 18
or, (ii) the date scheduled for such purchase, in the event of a purchase under
any other provision of this Lease then (x) Rent shall continue to be due and
payable until completion of such purchase and (y) at Landlord's sole option,
Fair Market Value shall be redetermined and the Relevant Amount payable by
Tenant pursuant to the applicable provision of this Lease shall be adjusted to
reflect such redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.
21. Assignment and Subletting; Prohibition against Leasehold
Financing.
(a) Except as specifically provided in Paragraph 1,
subparagraphs (b), (c) and (d) of Exhibit E, Tenant may not assign this Lease,
voluntarily or involuntarily, whether by operation of law or otherwise, or
sublet any of the Leased Premises at any time to any other Person without the
prior written consent of Landlord, which consent, in the event of an assignment,
may be withheld by Landlord for any or no reason.
(b) If Tenant assigns all its rights and interest under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including obligations of
Tenant which may have arisen on or prior to the
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date of such assignment and whether actual or contingent, which remain
unsatisfied or unperformed by a written instrument delivered to Landlord at the
time of such assignment. Each sublease of any of the Leased Premises shall be
subject and subordinate to the provisions of this Lease. No assignment or
sublease shall affect or reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and effect as obligations of a
principal and not as obligations of a guarantor, as if no assignment or sublease
had been made. No assignment or sublease shall impose any additional obligations
on Landlord under this Lease.
(c) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease consented to by Landlord, deliver a
duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(d) As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all subleases now in existence or hereafter
entered into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises,
provided, however, that Landlord shall have the absolute right at any time upon
notice to Tenant and any subtenants or at any time following the occurrence of
an Event of Default to revoke said license and to collect such rents and sums of
money and to retain the same. Tenant shall not consent to, cause or allow any
modification or alteration of any of the terms, conditions or covenants of any
of the subleases or the termination thereof, without the prior written approval
of Landlord, which consent shall not be unreasonably withheld, nor shall Tenant
accept any rents more than thirty (30) days in advance of the accrual thereof
nor do nor permit anything to be done, the doing of which, nor omit or refrain
from doing anything, the omission of which, will or could be a breach of or
default in the terms of any of the subleases.
(e) Tenant shall not have the power to mortgage, pledge or
otherwise encumber its interest under this Lease or any sublease of the Leased
Premises, and any such mortgage, pledge or encumbrance made in violation of this
Paragraph 21 shall be void and of no force and effect.
(f) Landlord may sell or transfer the Leased Premises at any
time without Tenant's consent to any third party (each a "Third Party
Purchaser"). In the event of any such transfer, Tenant shall attorn to any Third
Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord
notify Tenant in writing of such transfer. At the request of Landlord, Tenant
will execute such documents confirming the agreement referred to above and such
other agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:
(i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and
observe, or a violation or breach of, any other provision hereof not
otherwise specifically mentioned in this Paragraph 22(a);
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<PAGE> 28
(iii) any representation or warranty made by Tenant
herein or in any certificate, demand or request made pursuant hereto proves
to be incorrect, now or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or
at maturity by Tenant in any payment of principal or interest on any obligations
for borrowed money having an original principal balance of $2,000,000 or more in
the aggregate, or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment, or (y) if an effect of such default is to cause such
obligation to become due prior to its stated maturity;
(v) The breach of any Covenant or condition shall
occur;
(vi) Tenant shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for the Leased Premises, (C) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
(vii) a court shall enter an order, judgment or
decree appointing, without the consent of Tenant, a receiver or trustee for it
or for any of the Leased Premises or approving a petition filed against Tenant
which seeks relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or decree shall
remain undischarged or unstayed ninety (90) days after it is entered;
(viii) the Leased Premises shall have been vacated or
abandoned;
(ix) Tenant shall be liquidated or dissolved or shall
begin proceedings towards its liquidation or dissolution;
(x) the estate or interest of Tenant in any of the
Leased Premises shall be levied upon or attached in any proceeding and such
estate or interest is about to be sold or transferred or such process shall not
be vacated or discharged within ninety (90) days after it is made;
(xi) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under any provision of
any Assignment or any other document between Tenant and Lender, if such failure,
violation, breach or misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan; or
(xii) a failure by Tenant to maintain in effect any
other license or permit necessary for the use, occupancy or operation of the
Leased Premises.
(b) No notice or cure period shall be required in any one or
more of the following events: (A) the occurrence of an Event of Default under
clause, (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) or (xii), of
Paragraph 22(a); (B) the default consists of a failure to pay Basic Rent, a
failure to provide any insurance required by Paragraph 16 or an assignment or
sublease entered into in violation of Paragraph 21; or (C) the default is such
that any delay in the exercise of a remedy by Landlord could reasonably be
expected to cause irreparable harm to Landlord. If the default consists of the
failure to pay any Monetary Obligation (except Basic Rent) under clause (i) of
Paragraph 22(a), the applicable cure period shall be five (5) Business Days from
the date on which notice is given. If the default consists of the failure to pay
any Basic Rent under clause (i) of Paragraph 22(a), the applicable cure period
shall be five (5)
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Business Days from the date on which notice is given, but Landlord shall not be
obligated to give notice of, or allow any cure period for, any such default more
than one time within any Lease Year. If the default consists of a default under
clause (ii) of Paragraph 22(a), other than the events specified in clauses (B)
and (C) of the first sentence of this Paragraph 22(b), the applicable cure
period shall be thirty (30) days from the date on which notice is given or, if
the default cannot be cured within such thirty (30) day period and delay in the
exercise of a remedy would not (in Landlord's reasonable judgment) cause any
material adverse harm to Landlord or any of the Leased Premises, the cure period
shall be extended for the period required to cure the default (but such cure
period, including any extension, shall not in the aggregate exceed ninety (90)
days), provided that Tenant shall commence to cure the default within the said
thirty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon such
date, this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of the Leased Premises, Landlord may re-enter and repossess the
Leased Premises, with legal process, or by summary proceedings, ejectment or any
other lawful means or procedure. Upon or at any time after taking possession of
the Leased Premises, Landlord may, by peaceable means or legal process, remove
any Persons or property therefrom. Landlord shall be under no liability for or
by reason of any such entry, repossession or removal. Notwithstanding such entry
or repossession, Landlord may (A) exercise the remedy set forth in and collect
the damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set
forth in Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises pursuant
to clause (i) above, Landlord shall have the right to relet any of the Leased
Premises to such tenant or tenants, for such term or terms, for such rent, on
such conditions and for such uses as Landlord in its reasonable discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its reasonable discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may, upon notice to Tenant, require
Tenant to make an irrevocable offer to terminate this Lease upon payment to
Landlord of an amount (the "Default Termination Amount") specified in the next
sentence. The "Default Termination Amount" shall be the greatest of (A) the Fair
Market Value of the Leased Premises, (B) the sum of the Acquisition Cost and
Prepayment Premium which Landlord will be required to pay in prepaying any Loan
with proceeds of the Default Termination Amount or (C) an amount equal to the
Present Value of the entire Basic Rent from the date of such purchase to the
date on which the Term would expire. Upon such notice to Tenant, Tenant shall be
deemed to have made such offer and shall, if requested by Landlord, within ten
(10) days following such request deposit with Landlord as payment against the
Default Termination Amount the amount described in (B) above and Landlord and
Tenant shall promptly commence to determine Fair Market Value.
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Within thirty (30) days after the Fair Market Value Date, Landlord shall accept
or reject such offer. If Landlord accepts such offer then, on the tenth (10th)
Business Day after such acceptance, Tenant shall pay to Landlord the Default
Termination Amount and, at the request of Tenant, Landlord will convey the
Leased Premises to Tenant or its designee in accordance with Paragraph 20. Any
rejection by Landlord of such offer shall have no effect on any other remedy
Landlord may have under this Lease.
(iv) Landlord may declare by notice to Tenant the entire
Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the
then current Term to be immediately due and payable. Tenant shall immediately
pay to Landlord all such Basic Rent discounted to its Present Value, all accrued
Rent then due and unpaid, all other Monetary Obligations which are then due and
unpaid and all Monetary Obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that no Basic Rent which has been prepaid
hereunder shall be due thereafter during the Term.
(b) The following constitute damages to which Landlord shall
be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):
(i) If Landlord exercises its remedy under Paragraph
23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise
such remedy and is unsuccessful in reletting the Leased Premises) then, upon
written demand from Landlord, Tenant shall pay to Landlord, as liquidated and
agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, re-entry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses attorneys' fees, employees'
expenses, costs of Alterations and expenses and preparation for reletting.
(ii) If Landlord exercises its remedy under Paragraph
23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant
shall, until the end of what would have been the Term in the absence of the
termination of the Lease, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages all Monetary Obligations which would be
payable under this Lease by Tenant in the absence of such termination less the
net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after
deducting from such proceeds all of Landlord's Costs (including the items listed
in the last sentence of Paragraph 23(b)(i) hereof) incurred in connection with
such repossessing and reletting; provided, that if Landlord has not relet the
Leased Premises, such Costs of Landlord shall be considered to be Monetary
Obligations payable by Tenant. Tenant shall be and remain liable for all sums
aforesaid, and Landlord may recover such damages from Tenant and institute and
maintain successive actions or legal proceedings against Tenant for the recovery
of such damages. Nothing herein contained shall be deemed to require Landlord to
wait to begin such action or other legal proceedings until the date when the
Term would have expired by its own terms had there been no such Event of
Default.
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(c) Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.
(d) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.
(e) No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD OR
TENANT HEREUNDER, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.
(j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place,
Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. A copy of
any notice given by Landlord to Tenant shall simultaneously be given by
Landlord to
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Stinson, Mag & Fizzell, P.C., 100 South Fourth Street, Suite 700, St. Louis, \
Missouri 63102, Attention: John Finger, Esq. For the purposes of this Paragraph,
any party may substitute another address stated above (or substituted by a
previous notice) for its address by giving fifteen (15) days' notice of the new
address to the other party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the "Responding Party"), the Responding Party shall
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by any court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchaser or mortgagee of any
of the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear and damage by Casualty which results in a
Termination Event. Upon such surrender, Tenant shall (a) remove from the Leased
Premises all property which is owned by Tenant or third parties other than
Landlord and (b) repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, and Landlord may thereafter cause
such property to be removed from the Leased Premises. The cost of removing and
disposing of such property and repairing any damage to any of the Leased
Premises caused by such removal shall be paid by Tenant to Landlord upon demand.
Landlord shall not in any manner or to any extent be obligated to reimburse
Tenant for any such property which becomes the property of Landlord pursuant to
this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of account
with respect to the finances and business of Tenant generally and with respect
to the Leased Premises, in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and shall permit Landlord and Lender
by their respective agents, accountants and attorneys, upon
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<PAGE> 33
reasonable notice to Tenant, to visit and inspect the Leased Premises and
examine (and make copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant, at such reasonable times as
may be requested by Landlord. Upon the request of Lender or Landlord (either
telephonically or in writing), Tenant shall provide the requesting party with
copies of any information to which such party would be entitled in the course of
a personal visit.
(b) Tenant shall deliver to Landlord and to Lender within one
hundred twenty (120) days of the close of each fiscal year, annual audited
financial statements of Tenant prepared by a nationally recognized firm of
independent certified public accountants. Tenant shall also furnish to Landlord
within sixty (60) days after the end of each of the three remaining quarters
unaudited financial statements and all other quarterly reports of Tenant,
certified by Tenant's chief financial officer, and all filings, if any, of Form
10-K, Form 10-Q and other required filings with the Securities and Exchange
Commission pursuant to the provisions of the Securities Exchange Act of 1934, as
amended, or any other Law. All annual financial statements shall be accompanied
(i) by an opinion of said accountants stating that (A) there are no
qualifications as to the scope of the audit and (B) the audit was performed in
accordance with GAAP and (ii) by the affidavit of the president or a vice
president of Tenant, dated within five (5) Business Days of the delivery of such
statement, stating that (C) the affiant knows of no Event of Default, or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (D) except as otherwise specified in such affidavit, that Tenant has
fulfilled all of its obligations under this Lease which are required to be
fulfilled on or prior to the date of such affidavit.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:
(i) Landlord and Tenant (or Third Party Purchaser with
respect to a determination under clause (D) below) shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the date (the "Applicable
Initial Date"") on which (A) Tenant provides Landlord with notice of its
intention to terminate this Lease and purchase the Leased Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c), (C) Landlord provides
Tenant with notice of Landlord's intention to require Tenant to make an offer to
terminate this Lease pursuant to Paragraph 23(a)(iii) or (D) Landlord receives a
Sales Contract acceptable to Landlord as described in the fourth paragraph of
Paragraph 35(a). Upon reaching such agreement, the parties shall execute an
agreement setting forth the amount of such Fair Market Value.
(ii) If the parties shall not have signed such agreement
within thirty (30) days after the Applicable Initial Date, Tenant shall within
fifty (50) days after the Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications of such appraiser.
Within twenty (20) days following Landlord's receipt of Tenant's notice of the
appraiser selected by Tenant, Landlord shall select an appraiser and notify
Tenant of the name, address and qualifications of such appraiser. Such two
appraisers shall endeavor to agree upon Fair Market Value based on a written
appraisal made by each of them (and given to Landlord by Tenant) as of the
Relevant Date. If such two appraisers shall agree upon a Fair Market Value, the
amount of such Fair Market Value as so agreed shall be binding and conclusive
upon Landlord and Tenant.
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(iii) If such two appraisers shall be unable to agree
upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The selection of the
third appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree
upon the designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value
within twenty (20) days after his selection, then such third appraiser or a
substituted third appraiser, as applicable, shall, at the request of either
party hereto, be appointed by the President or Chairman of the American
Arbitration Association in New York, New York. The determination of Fair Market
Value made by the third appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.
(v) If a third appraiser is selected, Fair Market Value
shall be the average of the determination of Fair Market Value made by the third
appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Value is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have
no right, power or authority to alter or modify the provisions of this Lease,
(C) utilize the definition of Fair Market Value hereinabove set forth above, and
(D) be registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a) above
shall be borne by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made.
(c) In determining Fair Market Value as defined in clause (b)
of the definition of Fair Market Value, the appraisers shall add (a) the present
value of the Rent for the remaining Term (with assumed increases in the CPI to
be determined by the appraisers) using a discount rate (which may be determined
by an investment banker retained by each appraiser) based on the
creditworthiness of Tenant and (b) the present value of the Leased Premises as
of the end of such Term. The appraisers shall further assume that no default
then exists under the Lease, that Tenant has complied (and will comply) with all
provisions of the Lease, and that Tenant has not violated (and will not violate)
any of the Covenants.
30. Non-Recourse as to Landlord (a). Anything contained herein to
the contrary notwithstanding, any claim based on or in respect of any liability
of Landlord under this Lease shall be enforced only against the Leased Premises
and not against any other assets, properties or funds of (i) Landlord, (ii) any
director, officer, member, general partner, shareholder, limited partner,
beneficiary, employee or agent of Landlord or any general partner of Landlord or
any of its members or general partners (or any legal representative, heir,
estate, successor or assign of any thereof), (iii) any predecessor or successor
partnership or corporation (or other entity) of Landlord or any of its general
partners, shareholders, officers, directors, members, employees or agents,
either directly or through Landlord or its general partners, shareholders,
officers, directors, employees or agents or any predecessor or successor
partnership
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<PAGE> 35
or corporation (or other entity), or (iv) any Person affiliated with any of the
foregoing, or any director, officer, employee or agent of any of the foregoing.
(b) Notwithstanding the foregoing limitation of liability, Tenant
shall have all rights and remedies available at law or in equity for any breach
of this Lease by Landlord which rights and remedies shall be limited, however,
by the terms of Paragraph 8 and by the foregoing Paragraph 30 (a).
31. Financing.
(a) Tenant agrees to pay, within thirty (30) days following
written request from Landlord, all reasonable costs and expenses incurred by
Landlord in connection with the financing of the initial Loan, not to exceed
$100,000 in the aggregate, including any "points" or commitment fees, survey and
title costs and the fees and expenses of Landlord's and Lender's counsel.
(b) If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this Lease or
materially increase Tenant's obligations under this Lease. Such subordination,
nondisturbance and attornment agreement may require Tenant to confirm that (a)
Lender and its assigns will not be liable for any misrepresentation, act or
omission of Landlord and (b) Lender and its assigns will not be subject to any
counterclaim, demand or offset which Tenant may have against Landlord.
32. Subordination, Non-Disturbance and Attornment. This Lease and
Tenant's interest hereunder shall be subordinate to any Mortgage or other
security instrument hereafter placed upon the Leased Premises by Landlord, and
to any and all advances made or to be made thereunder, to the interest thereon,
and all renewals, replacements and extensions thereof, provided that any such
Mortgage or other security instrument (or a separate instrument in recordable
form duly executed by the holder of any such Mortgage or other security
instrument and delivered to Tenant) shall provide for the recognition of this
Lease and all Tenant's rights hereunder unless and until an Event of Default
exists or Landlord shall have the right to terminate this Lease pursuant to any
applicable provision hereof.
33. Financial Covenants
(a) Tenant hereby covenants and agrees to comply with all the
covenants and agreements described in Exhibit "E" hereto.
(b) If Tenant intends to take any action or, with respect to
Paragraph 1, subparagraphs (b), (c) or (d) of Exhibit "E", has knowledge that
such action is intended to be taken by another Person, or such action occurs
(such action, an "Intended Transaction) that would result in a breach of any
Covenant set forth in Paragraph 1, subparagraphs (b), (c) or (d) of Exhibit "E"
attached hereto then, immediately following the date on which Tenant determines
that it will undertake or has knowledge that another Person intends to undertake
an Intended Transaction, Tenant shall notify Landlord of such Intended
Transaction not less than thirty (30)
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<PAGE> 36
days prior to the Intended Transaction, or if the Intended Transaction occurs
without the prior knowledge of Tenant, immediately following the Intended
Transaction, Tenant shall submit to Landlord and Lender a description thereof
specifying the Intended Transaction, together with a rejectable offer from
Tenant to purchase the Leased Premises (as required by, and in accordance with,
the provisions of this Paragraph 33 Financial Covenants. Tenant shall make an
offer to purchase the Leased Premises no later than the date (the "Intended
Transaction Closing Date") on which the Intended Transaction will occur for a
purchase price equal to the Offer Amount. If such offer is accepted by Landlord,
Tenant shall purchase the Leased Premises within the time prescribed for such
purchase (as provided in this Paragraph 33) and otherwise in accordance with the
provisions of Paragraph 20 of this Lease.
(c) If Landlord shall reject such offer by notice to Tenant,
such notice to contain the written consent of Lender to such rejection, not
later than the thirtieth (30th) day following receipt of such offer by Landlord,
then the Lease shall remain in full force and effect and the Intended
Transaction shall be deemed waived or acceptable by Landlord and Lender,
respectively, and the waiver or acceptance shall remain in effect for the
balance of the Term with respect to the specific Intended Transaction. No
rejection of an offer under this Paragraph 33 shall be effective for any purpose
unless consented to in writing by Lender.
(d) Unless Landlord shall have rejected such offer by the
foregoing notice to Tenant not later than the thirtieth (30th) day following
receipt of Tenant's offer by Landlord, Landlord shall be conclusively presumed
to have accepted such offer. If such offer is accepted by Landlord, Tenant shall
pay to Landlord the Offer Amount on the Intended Transaction Closing Date
(except that if the Fair Market Value of the Leased Premise shall not yet have
been determined, Tenant shall pay to Landlord an amount equal to 110% of the
Acquisition Cost on the Intended Transaction Closing Date (which shall be held
in an interest bearing account) and any excess of the Fair Market Value of the
Leased Premises over such sum shall be paid by Tenant to Landlord within ten
(10) days of the determination of such Fair Market Value) and, provided that no
Rent or any other charge is due and unpaid under the Lease as of the Intended
Transaction Closing Date, and Tenant is otherwise in compliance with the terms
of this Lease, Landlord shall convey to Tenant the Leased Premises in accordance
with the provision of Paragraph 20 of the Lease.
34. Tax Treatment; Reporting. Landlord and Tenant each acknowledge
that each shall treat this transaction as a true lease for state law purposes
and shall report this transaction as a Lease for Federal income tax purposes.
For Federal income tax purposes each shall report this Lease as a true lease
with Landlord as the owner of the Leased Premises and Equipment and Tenant as
the lessee of such Leased Premises and Equipment including: (1) treating
Landlord as the owner of the property eligible to claim depreciation deductions
under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
35. Right of First Refusal.
(a) Except as otherwise provided in subparagraph (g) of this
Paragraph 35, and provided an Event of Default does not then exist, if Landlord
shall enter into a contract for the sale (the "Sale Contract") of the Leased
Premises with a Third Party Purchaser, which Sale Contract must be conditioned
upon Tenant's failure to exercise its right under this Paragraph 35, Landlord
shall give written notice to Tenant of the Sale Contract, together with a copy
of the executed Sale Contract and the name and business address of the Third
Party Purchaser.
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<PAGE> 37
(b) For a period of fifteen (15) days following receipt of
such notice, Tenant shall have the right and option, exercisable by written
notice to Landlord given within said fifteen (15) day period, to elect to
purchase the Leased Premises at the purchase price and upon all the terms and
conditions set forth in such Sale Contract except that no contingencies
contained in such Sale Contract as to environmental assessments, engineering
studies, inspection of the Leased Premises, availability of financing, sale of
other property, state of the title to or encumbrances on the Leased Premises, or
any other condition or contingency to the Third Party Purchaser's obligation to
purchase the Leased Premises which pertains to the condition of the Leased
Premises, the Third Party Purchaser's ability to take certain action or any
other factor beyond the control of Landlord, shall apply to Tenant's obligation
to purchase the Leased Premises under this Paragraph 35, and Tenant shall be
obligated to purchase the Leased Premises without any such condition or
contingency. If, at the expiration of the aforesaid fifteen (15) day period,
Tenant shall have failed to exercise the aforesaid option, Landlord may sell the
Leased Premises to such Third Party Purchaser upon the terms set forth in such
Sale Contract.
(c) For the purposes of this paragraph 35, any Sale Contract
which is received by Landlord between the tenth (10th) and eleventh (11th)
anniversaries of the date of this Lease shall be acceptable to Landlord if the
terms of such contract provide (i) for a purchase price for an amount equal to
or greater than the greater of (A) Fair Market Value (which shall be determined
in accordance with the procedure set forth in Paragraph 29 of this Lease, except
that references to Tenant in Paragraphs 29(a) and (b) hereof shall mean the
Third Party Purchaser) or (B) the Acquisition Cost plus Prepayment Premium, (ii)
that the Third Party Purchaser pays all costs in connection with such purchase,
(iii) that such purchase price is payable in cash at the closing of the sale of
the Leased Premises and (iv) the closing date for such purchase will occur
within sixty (60) days prior to the eleventh (11th) anniversary of the date of
this Lease and (iv) title will be conveyed subject to the matters specified in
Paragraph 20(a).
(d) Except as otherwise specifically provided herein, the
closing date for any purchase of the Leased Premises by Tenant pursuant to this
Paragraph 35 shall be the earlier to occur of (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the Leased
Premises upon the terms of a Sale Contract with a Third Party Purchaser or (ii)
the closing date provided in such Sale Contract. At such closing Landlord shall
convey the Leased Premises to Tenant in accordance with, and Tenant shall pay to
Landlord the purchase price and other consideration set forth in, the applicable
contract.
(e) Tenant shall have the right during the Term to exercise
the foregoing right of first refusal upon (i) each proposed sale of the Leased
Premises prior to the eleventh (11th) anniversary of the date of this Lease and
(ii) one (1) time after the eleventh (11th) anniversary of the date of this
Lease; provided, that if, following compliance with the procedure described in
Paragraph 35(b), a Third Party Purchaser does not purchase the Leased Premises,
such event shall not count as an exercise of Tenant's right of first refusal.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, IF TENANT FAILS TO EXERCISE THE RIGHT
OF FIRST REFUSAL GRANTED PURSUANT TO THIS PARAGRAPH 35, AFTER THE ELEVENTH
(11TH) ANNIVERSARY OF THE DATE OF THIS LEASE AND THE SALE TO THE THIRD PARTY
PURCHASER IS CONSUMMATED OR IF THIS LEASE TERMINATES OR THE TERM EXPIRES, SUCH
RIGHT SHALL TERMINATE AND BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT.
IN SUCH EVENT TENANT SHALL EXECUTE A QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS
LANDLORD SHALL REASONABLY REQUEST EVIDENCING THE TERMINATION OF ITS RIGHT OF
FIRST REFUSAL.
(f) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to a Third
Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and
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<PAGE> 38
Landlord notify Tenant in writing of such transfer. At the request of Landlord,
Tenant will execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.
(g) The provisions of this Paragraph 35 shall not apply to or
prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the Leased Premises, (ii) any sale of the Leased
Premises pursuant to a private power of sale under or judicial foreclosure of
any Mortgage or other security instrument or device to which Landlord's interest
in the Leased Premises is now or hereafter subject, (iii) any transfer of
Landlord's interest in the Leased Premises to a Lender, beneficiary under deed
of trust or other holder of a security interest therein or their designees by
deed in lieu of foreclosure, (iv) any transfer of the Leased Premises to any
governmental or quasi-governmental agency with power of condemnation, (v) any
transfer of the Leased Premises to any affiliate of Landlord or to any entity
for whom W.P. Carey & Co., Inc., W.P. Carey Incorporated or any of their
affiliates provides management services or investment advice, (vi) any Person to
whom Landlord sells all or substantially all of its assets, or (vii) any
transfer of the Leased Premises to any of the successors or assigns of any of
the Persons referred to in the foregoing clauses (i) through (iv).
36. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
(b) As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall not
unreasonably withhold or delay its consent whenever such consent is required
under this Lease for any reason. Time is of the essence with respect to the
performance by Landlord or Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of the Leased
Premises or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by
Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or
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<PAGE> 39
oral, between the parties hereto relating to the Leased Premises and the
transactions provided for herein. Landlord and Tenant are business entities
having substantial experience with the subject matter of this Lease and have
each fully participated in the negotiation and drafting of this Lease.
Accordingly, this Lease shall be construed without regard to the rule that
ambiguities in a document are to be construed against the drafter.
(f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom enforcement of
any such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and
bind Tenant, its successors and assigns and all present and subsequent
encumbrancers and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this
Lease shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.
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<PAGE> 40
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
BAC (MO) QRS 14-10, INC.
a Delaware corporation
By: /s/ Gordon J. Whiting
--------------------------------
Gordon J. Whiting,
Executive Vice President
ATTEST: TENANT:
THE BENJAMIN ANSEHL COMPANY
a Missouri corporation
By: By: /s/ Paul A. Wappelhorst
-------------------------------- --------------------------------
Paul A. Wappelhorst,
Title: Vice President and Chief
---------------------------- Financial Officer
[Corporate Seal]
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<PAGE> 41
EXHIBIT A
PREMISES
<PAGE> 42
EXHIBIT A
A tract of land being part of Section 1 of Page Industrial Center, a
Subdivision according to the plat thereof recorded in Plat Book 87 page 9 of
the St. Louis County Records in Township 46 North, Range 6 East, St. Louis
County, Missouri, and being more particularly described as follows: Beginning
at the intersection of the North line of said Section 1 of Page Industrial
Center with the West line of Page Industrial Boulevard, 40 feet wide; thence
Southwardly along said West line of Page Industrial Boulevard South 07 degrees
32 minutes 27 seconds West 612.03 feet to a point; thence Westwardly along the
North line of said property conveyed to Floyd Sweeney and wife by deed recorded
in Book 1187 page 56 of the St. Louis County Records and along the North line
of property conveyed to The Benjamin Ansehl Company by deed recorded in Book
7850 page 1864 of the St. Louis County Records and along the North line of
property conveyed to Mendel Rosenburg and wife by deed recorded in Book 6754
page 886 of the St. Louis County Records, North 82 degrees 29 minutes 36
seconds West 600.78 feet to a point in the East line of property conveyed to
General Electric Company by deed recorded in Book 4201 page 217 of the St.
Louis County Records; thence Northwardly along said East line of the General
Electric Company and along the East line of property conveyed to Sun Chemical
Corporation by deed recorded in Book 4293 page 283 of the St. Louis County
Records, North 07 degrees 28 minutes 00 seconds East 618.09 feet to a point in
the South line of property conveyed to P.B. Joint Venture by deed recorded in
Book 7831 page 1661 of the St. Louis County Records; thence Eastwardly along
the North line of aforesaid Section 1 of Page Industrial Center being also
along the South line of the following properties, said P.B. Joint Venture
Property, property conveyed to Arthur D. Katz and wife by deed recorded in Book
7853 page 68 of the St. Louis County Records, property conveyed to Herbert
Condie, Jr. and wife by deed recorded in Book 7494 page 1166 of the St. Louis
County Records, property conveyed to Jack H. Skay and Daryl G. Budderndeyer by
deed recorded in Book 7276 page 304 of the St. Louis County Records and Lot 3
of Center Gardens, a subdivision according to plat thereof recorded as Daily
No. 207 on May 6, 1959, in the St. Louis County Records, South 81 degrees 55
minutes 01 seconds East 601.61 feet to the point of beginning.
<PAGE> 43
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation,
as buildings, of the buildings which constitute part of the Leased Premises.
<PAGE> 44
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE> 45
EXHIBIT C
1. Defects, liens, encumbrances, adverse claims or other matters, if any,
created, first appearing in the public records or attaching subsequent to the
effective date hereof but prior to the date the proposed insured acquires for
value of record the estate or interest or mortgage thereon covered by.
2. Rights or claims of parties in possession not shown by the public
records.
3. Easements, or claims of easements, not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, and any facts which a correct survey and inspection of the
premises would disclose and which are not shown by the public records.
5. Any lien, or right to a lien, for services, labor, or material
heretofore or hereafter furnished, imposed by law and not shown by the public
records.
6. Taxes or assessments which are not shown as existing liens by the
records of any taxing authority that levies taxes or assessments on real
property or by the public records.
7. All assessments and taxes for the year 1998 and all subsequent years
for the County of St. Louis and City of Overland.
8. Building lines, easements, covenants and restrictions established by
the plat recorded in Plat Book 87 page 9.
9. Covenants and restrictions contained in the instrument recorded in Book
3974 page 130, including a provision for subdivision assessments.
10. Subdivision Assessments, if any.
11. Easement granted to St. Louis County Water Company, by instrument
recorded in Book 3925 page 100.
12. Easement granted to Union Electric Company, by instrument recorded in
Book 4125 page 300 and Book 4227 page 122.
13. Easement granted to The Metropolitan St. Louis Sewer District, by
instrument recorded in Book 4581 page 352.
<PAGE> 46
14. Easement granted to Chicago, Rock Island and Pacific Railroad Company,
for construction, operation, and maintenance of railroad tracks by instrument
recorded in Book 5600 page 234.
15. Any lien or right to a lien filed by a licensed real estate broker,
real estate sales person or state certified real estate appraiser, pursuant to
the provision of the Commercial Real Estate Brokers and State Certified Real
Estate Appraisers Lien Act.
<PAGE> 47
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2,
3 and 4 below, Basic Rent payable in respect of the Term shall be $649,750 per
annum, payable, quarterly in advance on each Basic Rent Payment Date, in equal
installments of $162,437.50 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100)("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the two (2) year period immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted
to reflect changes in the CPI until the second (2nd) anniversary of the Basic
Rent Payment Date on which the first full quarterly installment of Basic Rent
shall be due and payable (the "First Full Basic Rent Payment Date"). As of the
second (2nd) anniversary of the First Full Basic Rent Payment Date and on each
second (2nd) anniversary of the First Full Basic Rent Payment Date thereafter
during the Term and, if the initial Term is, Basic Rent Payment Date, Basic Rent
shall be adjusted to reflect increases in the CPI during the most recent two (2)
year period immediately preceding each of the foregoing dates (each such date
being hereinafter referred to as the "Basic Rent Adjustment Date").
4. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be the difference between (i) the average CPI for the three (3) most
recent calendar months (the "Prior Months") ending prior to such Basic Rent
Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. As used herein, "Beginning
CPI" shall mean the average CPI for the three (3) calendar months corresponding
to the Prior Months, but occurring two (2) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing two (2) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the thirtieth (30th) day preceding each Basic Rent
Adjustment Date, but any failure to do so by Landlord shall not be or be deemed
to be a waiver by Landlord of Landlord's rights to
<PAGE> 48
collect such sums. Tenant shall pay to Landlord, within thirty (30) days after a
notice of the new annual Basic Rent is delivered to Tenant, all amounts due from
Tenant, but unpaid, because the stated amount as set forth above was not
delivered to Tenant at least thirty (30) days preceding the basic Rent
Adjustment Date in question.
<PAGE> 49
EXHIBIT E
FINANCIAL COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Borrower shall maintain its corporate existence, rights
and franchises in full force and effect in its jurisdiction of incorporation.
Borrower shall, and shall cause its Subsidiaries to, qualify and remain
qualified as a foreign corporation in each jurisdiction in which failure to
receive or retain such qualification would have a material adverse effect on the
business, operations or financial condition of the enterprise comprised of the
Borrower and their respective Subsidiaries taken as a whole.
(b) At no time during the Term shall any Person other than a
Person who owns Voting Interests in Tenant as of the date hereof or an Affiliate
of such Person acquire directly or indirectly more than 50% of any class of
Borrower's Voting Interest.
(c) Borrower shall not consolidate with or merge with any
other Person without having first obtained the prior written consent of
Landlord. Borrower shall submit to Landlord not less than sixty (60) days prior
to the date of the proposed merger or consolidation (the "Event") information
regarding the following with respect to the proposed Event: (the "Review
Criteria"): (a) a financial pro forma of Borrower immediately following the
Event and after having given effect thereto, (b) the senior management team of
Borrower and (c) the operating history and financials of the Person with whom
the Borrower will merge or consolidate. Landlord shall review such information
and shall approve or disapprove the Event no later than the thirtieth (30th) day
following receipt of all such information, and Landlord shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on its review of the Review Criteria applying prudent business
judgment.
(d) Borrower shall not, in a single transaction or series of
related transactions, sell or convey, transfer, abandon or lease all or
substantially all of its assets to any Person.
2. Credit Agreement Covenants. Borrower shall not, and shall not
permit any of its Subsidiaries to, take any action or permit or suffer to exist
any state of facts in contravention of any of the covenants set forth in
Sections 7.1(i), 7.2(a), 7.2(j), 7.2(k) or 7.2(n) (the "Credit Agreement
Covenants") or any breach of the financial covenants set forth in Section 7.2(i)
(the "Financial Covenants") of the Revolving Credit and Term Loan Agreement
dated June 19, 1996 between Mercantile Bank of St. Louis National Association
("Mercantile") and Fleet Capital Association ("Lenders") with Mercantile, as
agent, and Borrower, as amended, (the "Credit Agreement") or the applicable
provisions of the credit agreement that replaces the Credit Agreement (the
"Senior Credit Agreement") pertaining to the matters addressed in the Credit
Agreement Covenants and to any financial covenants that replace the Financial
Covenants (the "Replacement Financial Covenants") which need not pertain to the
same financial covenants as the Financial Covenants, as the case may be, (as
amended or waived by the Lenders from time to time) in the same manner and to
the same effect as if the terms of the Credit Agreement Covenants and Financial
Covenants or applicable provisions of the Senior Credit Agreement including the
Replacement Financial Covenants were set forth in full herein, and after giving
effect to any modification, amendment or waiver of the Credit Agreement
Covenants, Senior Credit Agreement, Financial Covenants or Replacement Financial
Covenants as the case may be, a copy of which has been delivered to Landlord,
and for such purpose such terms of the Credit Agreement Covenants, Financial
Covenants or applicable provisions of the Senior Credit Agreement, as the case
may be, and such other provisions and definitions of the Credit Agreement or
Senior Credit Agreement, as the case may be as are expressly referenced therein
and amendments, modifications and waivers thereto are incorporated herein by
reference; it being expressly agreed by Landlord, that without any further
action on the part of Landlord, that
<PAGE> 50
the covenants referenced in this Section 2 will be modified automatically to
reflect all amendments, modifications and waivers to the Credit Agreement or the
Senior Credit Agreement, as the case may be made by the Senior Lender. Likewise,
Landlord agrees that in the event the Required Lenders under the Credit
Agreement or Senior Credit Agreement waive any noncompliance by Borrower and/or
any of its Subsidiaries with any of the Credit Agreement Covenants, Financial
Covenants or Replacement Financial Covenants, then Landlord shall automatically
and irrevocably be deemed to have waived such noncompliance hereunder as well.
If at any time Borrower shall not be subject to the Credit Agreement or any
Senior Credit Agreement that contains covenants pertaining to the matters
addressed in the Credit Agreement Covenants or addressed in the Financial
Covenants or most recent Replacement Financial Covenants, as the case may be,
Borrower shall, and shall cause each of its Subsidiaries to, comply with each of
the covenants set forth in the most recent Senior Credit Agreement pertaining to
the matters addressed in the Credit Agreement Covenants and Financial Covenants
or most recent Replacement Financial Covenants, as the case may be, in the same
manner and to the same effect as if the applicable provisions of such Senior
Credit Agreement were set forth in full herein, it being the intent and
agreement of Landlord and Borrower that, at all times during the Term, Borrower
shall be subject to covenants pertaining to the matters addressed in the Credit
Agreement Covenants and to the Financial Covenants or most recent Replacement
Financial Covenants, as the case may be.
3. Definitions. In addition to the terms defined elsewhere in this
Lease or Schedule I hereto, when used in this Exhibit E, the following terms
shall have the following meanings (such meanings shall be equally applicable to
the singular and plural forms of the terms used, as the context requires):
"Borrower" shall mean the Tenant when such term is used in Exhibit E.
"Capital Expenditure" shall mean any expenditure which, in accordance
with generally accepted accounting principles consistently applied, is or should
be capitalized on the balance sheet of the Person making the same.
"Capitalized Lease" shall mean any lease which, in accordance with
generally accepted accounting principles consistently applied, is or should be
capitalized on the balance sheet of the lessee.
"Consolidated EBITDA" shall mean on any date the Borrower's and its
Consolidated Subsidiaries' net income (exclusive of any extraordinary gains or
losses) plus interest expense, plus expenses for income taxes, plus
depreciation, plus amortization, all for the twelve month period included in any
such calculation and ending on the date of any such calculation, all as
determined on a consolidated basis in accordance with generally accepted
accounting principles in effect as of the date of this Agreement, consistently
applied; provided, however, that the foregoing calculation, the non-cash charges
recorded by the Borrower under generally accepted accounting principles in
connection with the award by Borrower of exercisable stock options, shall be
added back to consolidated EBITDA for the purpose of making any such calculation
with respect to any twelve-month period during which such charge was incurred.
"Consolidated Fixed Charges" shall mean the sum of all of the
Borrower's and its Consolidated Subsidiaries' payments of principal scheduled
within the specified period of any such calculation on all borrowed money
Indebtedness (other than on the Term Loans made under the Credit Agreement, but
specifically including principal payments scheduled during such period on any
Subordinated Debt unless any such Subordinate Debt scheduled principal payment
is deferred by agreement of Borrower and the holder of such Subordinate Debt),
plus interest paid during such specified period, including without limitation,
interest charges during such
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<PAGE> 51
period under any Capitalized Leases, plus all income taxes paid during the
specified period of such calculation, plus Capital Expenditures made during the
specified period of any such calculation (other than that portion of any Capital
Expenditures which were financed by the Seller or lessor in the case of a
Capitalized Lease, including the lease of Borrower's premises located at 1555
Page Industrial Boulevard, St. Louis, Missouri if characterized as Capitalized
Lease of the capital asset acquired with such Capital Expenditure).
"Consolidated Senior Funded Debt" shall mean, at any date, all of the
Borrower's and its Consolidated Subsidiaries' borrowed money Indebtedness
outstanding on any such date, including, without limitation, amounts due under
any Capitalized Leases (other than amounts due under the lease of Borrower's
premises located at 1555 Page Industrial Boulevard, St. Louis, Missouri), minus
any Subordinated Debt outstanding as of such date.
"Consolidated Subsidiaries" shall mean with respect to any Person at
any date, any Subsidiary or other entity the assets and liabilities of which are
or should be consolidated with those of such Person in its consolidated
financial statements as of such date in accordance with generally accepted
accounting principles consistently applied.
"Guarantee" by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person or
in any manner providing for the payment of any Indebtedness of any other Person
or otherwise protecting the holder of such Indebtedness against loss (whether by
agreement to keep-well, to purchase assets, goods, securities or services, or to
take-or-pay or otherwise); provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb shall have a correlative meaning.
"Indebtedness" of any person shall mean and include, without
duplication, any and all indebtedness (principal, interest, fees and other
amounts), liabilities and obligations of such Person which in accordance with
generally accepted accounting principles in effect as of the date of this Lease,
consistently applied are or should be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event shall include all (i)
obligations of such Person for borrowed money or which have been incurred in
connection with the acquisition of Property, (ii) obligations secured by any
Lien or other charge upon any Property owned by such Person, provided that if
such Person has not assumed or become liable for the payment of such
obligations, such obligations shall still be included in Indebtedness but the
determination of the amount of Indebtedness evidenced by such obligations shall
be limited to the book value of such Property, (iii) obligations created or
arising under any conditional sale or other title retention agreement with
respect to any Property acquired by such Person, provided that if the rights and
remedies of the seller, lender or lessor in the event of default under such
agreement are limited solely to repossession or sale of such Property, such
obligations shall still be included in Indebtedness but the determination of the
amount of Indebtedness evidenced by such obligations shall be limited to the
book value of such Property, (iv) all Guarantees and other contingent
indebtedness, liabilities and obligations of such Person whether or not
reflected on the balance sheet of such Person and (v) all obligations of such
Person as lessee under any Capitalized Lease.
"Lien" shall mean any interest in Property securing any obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract, including, without
limitation, any security interest, mortgage, deed of trust, pledge,
hypothecation, judgment lien or trust receipt and any lease, consignment or
bailment for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property.
"Notes" shall mean the Revolving Credit Notes and the Term Notes.
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<PAGE> 52
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible. Properties shall
mean the plural of Property. For purposes of this Lease, the Borrower and each
Subsidiary of the Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement, financing
lease or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.
"Revolving Credit Notes" shall mean each of the Revolving Credit Notes
of the Borrower to be executed and delivered to each of the Lenders pursuant to
Section 3.1(a) of the Credit Agreement, as the same may from time to time be
amended, modified, extended or renewed.
"Senior Lender" shall mean the Lenders under the Credit Agreement or
the lender or lenders under the Senior Credit Agreement, as the case may be.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which fifty percent (50%) or more of the issued and outstanding capital stock
entitled to vote for the election of directors (other than by reason of default
in the payment of dividends) is at the time owned directly or indirectly by such
Person.
"Subordinated Debt" shall mean any borrowed money Indebtedness of
Borrower which has been duly subordinated by the holder thereof to all of
Borrower's Obligations under this Lease and Subordinated Debt permitted under
the terms of the Credit Agreement.
"Term Notes" shall mean each of the Term Loan Promissory Notes of the
Borrower to be executed and delivered to each of the Lenders pursuant to Section
3.2 of the Credit Agreement, as the same may from time to time be amended,
modified, extended or renewed.
"Voting Interests" shall mean shares of stock of a corporation or other
interests in other types of Person having ordinary voting power to elect the
board of directors of such corporation or similarly direct or control the
management of such other Person.
If, at any time or from time to time, the Credit Agreement Covenants
shall be amended or replaced by comparable covenants in a Senior Credit
Agreement or the Financial Covenants shall be amended or replaced by Replacement
Financial Covenants (which need not be comparable) the relevant definitions in
this Section 3 shall likewise be added, amended or replaced, as the case may be.
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<PAGE> 1
LEASE AGREEMENT
by and between
DELAWARE CHIP LLC,
a Delaware limited liability company
as LANDLORD
and
ADVANCED MICRO DEVICES, INC.,
a Delaware corporation,
as TENANT
Premises: One AMD Place
Sunnyvale, California
Dated as of: December 22, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties................................................................................................... 2
1. Demise of Premises.................................................................................... 2
2. Certain Definitions................................................................................... 2
3. Title and Condition................................................................................... 7
4. Use of Leased Premises; Quiet Enjoyment............................................................... 8
5. Term.................................................................................................. 9
6. Basic Rent............................................................................................ 10
7. Additional Rent....................................................................................... 10
8. Net Lease; Non-Terminability.......................................................................... 11
9. Payment of Impositions................................................................................ 12
10. Compliance with Laws and Easement Agreements; Environmental Matters.................................. 13
11. Liens; Recording..................................................................................... 15
12. Maintenance and Repair............................................................................... 16
13. Alterations and Improvements......................................................................... 17
14. Permitted Contests................................................................................... 17
15. Indemnification...................................................................................... 18
16. Insurance............................................................................................ 19
17. Casualty and Condemnation............................................................................ 22
18. Termination Events................................................................................... 23
19. Restoration.......................................................................................... 24
20. INTENTIONALLY DELETED................................................................................ 25
21. Assignment and Subletting; Prohibition against Leasehold Financing................................... 25
22. Events of Default.................................................................................... 27
23. Remedies and Damages Upon Default.................................................................... 28
24. Notices.............................................................................................. 31
25. Estoppel Certificate................................................................................. 32
26. Surrender............................................................................................ 32
27. No Merger of Title................................................................................... 32
28. Books and Records.................................................................................... 32
29. INTENTIONALLY DELETED................................................................................ 34
30. Non-Recourse as to Landlord.......................................................................... 34
31. Financing............................................................................................ 35
32. Subordination, Non-Disturbance and Attornment........................................................ 35
33. INTENTIONALLY DELETED................................................................................ 35
34. Tax Treatment; Reporting............................................................................. 35
35. Excess Land.......................................................................................... 35
36. Financing Major Alterations.......................................................................... 36
37. Security Deposit..................................................................................... 37
38. Right of First Refusal............................................................................... 39
39. Miscellaneous........................................................................................ 41
</TABLE>
EXHIBITS
Exhibit "A-1" - Premises
Exhibit "A-2" - Excess Land
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Intentionally Deleted
-i-
<PAGE> 3
Exhibit"F" - Form of Subordination, Non-Disturbance and
Attornment Agreement
Exhibit "G" - Schedule of Termination Amounts
-ii-
<PAGE> 4
LEASE AGREEMENT, made as of the 22nd day of December, 1998,
between DELAWARE CHIP LLC, a Delaware limited liability company ("Landlord"),
with an address c/o W. P. Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor,
New York, New York 10020, and ADVANCED MICRO DEVICES, INC., a Delaware
corporation ("Tenant"), with an address at One AMD Place, Sunnyvale, California
94088.
In consideration of the rents and provisions herein stipulated
to be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant, and
Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (collectively, the "Land"); (b) the
buildings, structures and other improvements now or hereafter constructed on the
Land (collectively, the "Improvements"); and (c) the fixtures, machinery,
equipment and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
2. Certain Definitions.
"Additional Rent" shall mean Additional Rent as
defined in Paragraph 7.
"Adjoining Property" shall mean all sidewalks,
driveways, curbs, gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions,
improvements or repairs to, all alterations, reconstructions, renewals,
replacements or removals of and all substitutions or replacements for any of the
Improvements or Equipment, both interior and exterior, structural and
non-structural, and ordinary and extraordinary.
"Appurtenances" shall mean all tenements,
hereditaments, easements, rights-of-way, rights, privileges in and to the Land,
including (a) easements over other lands granted by any Easement Agreement and
(b) any streets, ways, alleys, vaults, gores or strips of land adjoining the
Land.
"Assignment" shall mean any assignment of rents and
leases from Landlord to a Lender which (a) encumbers any of the Leased Premises
and (b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in
Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent
Payment Dates as defined in Paragraph 6.
"Casualty" shall mean any loss of or damage to any
property (including the Leased Premises) included within or related to the
Leased Premises or arising from the Adjoining Property.
"Commencement Date" shall mean Commencement Date as
defined in Paragraph 5.
"Condemnation" shall mean a Taking and/or a
Requisition.
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<PAGE> 5
"Condemnation Notice" shall mean notice or knowledge
of the institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified
transaction shall mean all reasonable costs and expenses incurred by such Person
or associated with such transaction, including, without limitation, reasonable
attorneys' fees and expenses, court costs, brokerage fees, escrow fees, title
insurance premiums, mortgage commitment fees, mortgage points, recording fees
and transfer taxes, as the circumstances require.
"CPI" shall mean CPI as defined in Exhibit "D"
hereto.
"Default Rate" shall mean the Default Rate as defined
in Paragraph 7(a)(iv).
"Easement Agreement" shall mean any conditions,
covenants, restrictions, easements, declarations, licenses and other agreements,
including any site access agreements, listed as Permitted Encumbrances or as may
hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted
or promulgated, any applicable federal, state, and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.
"Environmental Violation" shall mean (a) any direct
or indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law
which results, directly or indirectly, in any liability to Landlord, Tenant or
Lender, any Federal, state or local government or any other Person for the costs
of any removal or remedial action or natural resources damage or for bodily
injury or property damage, (b) any transport to or from or deposit, storage,
dumping, placement or use of any Hazardous Substance at, upon, under or within
the Leased Premises or which extends to any Adjoining Property in violation of
any Environmental Law which results in any liability to any Federal, state or
local government or to any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (c)
the abandonment or discarding of any barrels,
-3-
<PAGE> 6
containers or other receptacles containing any Hazardous Substances in violation
of any Environmental Laws, (d) any environmental activity, occurrence or
condition at, on, under or from the Leased Premises which results in any
liability, cost or expense to Landlord or Lender or any other owner or occupier
of the Leased Premises, or which results in a creation of a lien on the Leased
Premises under any Environmental Law, or (e) any violation of or noncompliance
with any Environmental Law.
"Equipment" shall mean the Equipment as defined in
Paragraph 1.
"Event of Default" shall mean an Event of Default as
defined in Paragraph 22(a).
"Excess Land" shall mean that portion of the Land
described in Exhibit "A-2".
"Federal Funds" shall mean federal or other
immediately available funds which at the time of payment are legal tender for
the payment of public and private debts in the United States of America.
"Hazardous Activity" means any activity, process,
procedure or undertaking which directly or indirectly (i) procures, generates or
creates any Hazardous Substance; (ii) causes or results in (or threatens to
cause or result in) the release, seepage, spill, leak, flow, discharge or
emission of any Hazardous Substance into the environment (including the air,
ground water, watercourses or water systems), (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would cause the Leased Premises or
any portion thereof to become a hazardous waste treatment, recycling,
reclamation, processing, storage or disposal facility within the meaning of any
Environmental Law.
"Hazardous Condition" means any condition which would
support any claim or liability under any Environmental Law, including the
presence of underground storage tanks.
"Hazardous Substance" means (i) any substance,
material, product, petroleum, petroleum product, derivative, compound or
mixture, mineral (including asbestos), chemical, gas, medical waste, or other
pollutant, in each case whether naturally occurring, man-made or the by-product
of any process, that is toxic, harmful or hazardous or acutely hazardous to the
environment or public health or safety or (ii) any substance supporting a claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law. Hazardous Substances include, without limitation, any
toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined
in Paragraph 9(a).
"Improvements" shall mean the Improvements as defined
in Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in
Paragraph 15.
"Initial Lender" shall mean GMAC Commercial Mortgage
Corporation, its successors and assigns.
"Initial Loan" shall mean the $68,250,000 loan from
Initial Lender to Landlord.
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<PAGE> 7
"Insurance Requirements" shall mean the requirements
of all insurance policies required to be maintained in accordance with this
Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law(s)" shall mean any constitution, statute, rule
of law, code, ordinance, order, judgment, decree, injunction, rule, regulation,
policy, requirement or administrative or judicial determination, even if
unforeseen or extraordinary, of every duly constituted governmental authority,
court or agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first
Lease Year, the period commencing on the Commencement Date and ending at
midnight on the last day of the twelfth (12th) consecutive calendar month
following the month in which the Commencement Date occurred, and each succeeding
twelve (12) month period during the Term.
"Leased Premises" shall mean the Leased Premises as
defined in Paragraph 1.
"Legal Requirements" shall mean the requirements of
all present and future Laws (including but not limited to Environmental Laws and
Laws relating to accessibility to, usability by, and discrimination against,
disabled individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the Leased
Premises, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or restoration of any of the Leased Premises,
even if compliance therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the Leased Premises.
"Lender" shall mean (a) Initial Lender, its
successors and assigns, and (b) any person or entity (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or is the holder of any Note.
"Loan" shall mean the Initial Loan and any other loan
made by one or more Lenders to Landlord, which loan is secured by a Mortgage and
an Assignment and evidenced by a Note.
"Monetary Obligations" shall mean Rent and all other
sums payable or reimbursable by Tenant under this Lease to Landlord, to any
third party on behalf of Landlord or to any Indemnitee.
"Moody's" shall mean Moody's Investors Services, Inc.
"Mortgage" shall mean any mortgage or deed of trust
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable
to Landlord or Lender by reason of a Condemnation whether pursuant to a judgment
or by agreement or otherwise, or (b) the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent payable to Landlord or Lender),
(iv), (v) (to the extent of the Rent) or (vi) of Paragraph 16(a), as the case
may be, less any expenses incurred by Landlord and Lender in collecting such
award or proceeds.
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"Note" shall mean any promissory note evidencing
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.
"Partial Condemnation" shall mean any Condemnation
which does not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership,
association, corporation or other entity.
"Prepayment Premium" shall mean any payment (other
than a payment of principal and/or interest which Landlord is required to make
under a Note or a Mortgage) by reason of any prepayment by Landlord of any
principal due under a Note or Mortgage, and which may be (in lieu of such
prepayment premium or prepayment penalty) a "make whole" or yield maintenance
clause requiring a prepayment premium or a defeasance premium (such defeasance
premium to be an amount equal to the positive difference between (a) the total
amount required to defease a Loan and (b) the outstanding principal balance of
the Loan as of the date of such defeasance, in either case in an amount
sufficient to compensate the Lender for the loss of the benefit of the Loan due
to a prepayment.
"Prime Rate" shall mean the annual interest rate as
published, from time to time, in The Wall Street Journal as the "Prime Rate" in
its column entitled "Money Rate". The Prime Rate may not be the lowest rate of
interest charged by any "large U.S. money center commercial banks" and Landlord
makes no representations or warranties to that effect. In the event The Wall
Street Journal ceases publication or ceases to publish the "Prime Rate" as
described above, the Prime Rate shall be the average per annum discount rate
(the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued
from time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.
"Renewal Period" shall mean Renewal Period as defined
in Paragraph 5.
"Rent" shall mean, collectively, Basic Rent and
Additional Rent.
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.
"S&P" shall mean Standard & Poors Corporation.
"Site Assessment" shall mean a Site Assessment as
defined in Paragraph 10(c).
"State" shall mean the State of California.
"Surviving Obligations" shall mean any obligations of
Tenant under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
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"Taking" shall mean (a) any taking or damaging of all
or a portion of any of the Leased Premises (i) in or by condemnation or other
eminent domain proceedings pursuant to any Law, general or special, or (ii) by
reason of any agreement with any condemnor in settlement of or under threat of
any such condemnation or other eminent domain proceeding, or (iii) by any other
means, or (b) any de facto condemnation. The Taking shall be considered to have
taken place as of the later of the date actual physical possession is taken by
the condemnor, or the date on which the right to compensation and damages
accrues under the law applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the amount specified
in Exhibit "G" for the applicable Lease Year.
"Termination Date" shall mean Termination Date as
defined in Paragraph 18.
"Termination Event" shall mean a Termination Event as
defined in Paragraph 18.
"Termination Notice" shall mean Termination Notice as
defined in Paragraph 18(a).
"Third Party Purchaser" shall mean Third Party
Purchaser as defined in Paragraph 21(g).
3. Title and Condition.
(a) The Leased Premises are demised and let subject
to (i) the Mortgage and Assignment presently in effect, (ii) the rights of any
Persons in possession of the Leased Premises, (iii) the existing state of title
of any of the Leased Premises, including any Permitted Encumbrances, (iv) any
state of facts which an accurate survey or physical inspection of the Leased
Premises might show, (v) all Legal Requirements, including any existing
violation of any thereof, and (vi) the condition of the Leased Premises as of
the commencement of the Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises is
in good condition and repair at the inception of this Lease. LANDLORD LEASES AND
WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF
THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY
OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT;
AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES
THAT THE LEASED PREMISES IS OF ITS
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<PAGE> 10
SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAS BEEN
INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR
DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR
PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT
LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED,
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY
LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR
HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby.
Tenant acknowledges that (i) fee simple insurable title (both legal and
equitable) is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) to the
knowledge of Tenant, the Improvements conform to all material Legal Requirements
and all Insurance Requirements, (iii) to the knowledge of Tenant, all easements
necessary or appropriate for the use or operation of the Leased Premises have
been obtained, (iv) all contractors and subcontractors who have performed work
on or supplied materials to the Leased Premises have been or will have been
fully paid, and all materials and supplies have been or will have been fully
paid for, and no dispute currently exists with respect to any such contractor,
subcontractor or materials and supplies, (v) the Improvements have been fully
completed in all material respects in a workmanlike manner of first class
quality, and (vi) all Equipment necessary or appropriate for the use or
operation of the Leased Premises has been installed and is presently fully
operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all assignable warranties, guaranties, indemnities and
similar rights (collectively, "Warranties") which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this Lease,
whereupon such assignment shall cease and all such Warranties shall
automatically revert to Landlord. Tenant shall enforce the Warranties in
accordance with their respective terms. Landlord agrees, at Tenant's expense, to
cooperate with Tenant and take all other action necessary as specifically
requested by Tenant to enable Tenant to enforce all of Tenant's rights under any
of the Warranties, such rights of enforcement to be exclusive to Tenant, and
Landlord will not, during the Term, amend, modify or waive, or take any action
under, any of the Warranties without Tenant's prior written consent.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for
office and administrative functions, including those functions typically
occurring in Tenant's headquarters complex, and uses incidental thereto,
including, without limitation, auditoriums, conference facilities, classrooms,
computer and data centers, engineering labs, product showrooms and sales
centers, technical support centers, employee cafeterias and dining facilities,
fitness facilities and similar amenities, and for no other purpose. Tenant shall
not use or occupy or permit any of the Leased Premises to be used or occupied,
nor do or permit anything to be done in or on any of the Leased Premises, in a
manner which would or might (i) violate any Law or Legal Requirement applicable
to the Leased Premises or occupancy thereof, (ii) make void or voidable or cause
any insurer to cancel any insurance required by this Lease, or make it
impossible to obtain any such
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<PAGE> 11
insurance at commercially reasonable rates, (iii) cause structural injury to any
of the Improvements or (iv) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no
Event of Default has occurred and is continuing, Tenant shall quietly hold,
occupy and enjoy the Leased Premises throughout the Term, without any hindrance,
ejection or molestation by Landlord with respect to matters that arise after the
date hereof; provided that Landlord, Lender or their respective agents may enter
upon and examine any of the Leased Premises at such reasonable times as Landlord
or Lender may select and upon reasonable notice to Tenant (except in the case of
an emergency, in which no notice shall be required) for the purpose of
inspecting the Leased Premises, verifying compliance or non-compliance by Tenant
with its obligations hereunder and the existence or non-existence of an Event of
Default or event which with the passage of time and/or notice would constitute
an Event of Default, showing the Leased Premises to prospective Lenders and
purchasers and taking such other action with respect to the Leased Premises as
is permitted by any provision hereof, and any such entry by Landlord or Lender
or their agents onto the Leased Premises shall be subject to Tenant's security
requirements and restrictions, and, if required by Tenant, a representative of
Tenant shall accompany Landlord during any such entry onto the Leased Premises.
(c) Tenant may from time to time own or hold under
lease or license from Persons other than Landlord furniture, equipment, trade
fixtures and personal property located on or about the Leased Premises, which
shall not be subject to this Lease. Landlord shall from time to time, promptly
upon Tenant's request, execute such instruments or agreements as Tenant or any
equipment lessor, supplier, vendor, lender or creditor may reasonably require
acknowledging that Landlord does not own or have any other right or interest in
or to such furniture, equipment, trade fixtures or personal property, and
Landlord hereby waives any right, title, lien or interest therein.
5. Term.
(a) Subject to the provisions hereof, Tenant shall
have and hold the Leased Premises for an initial term (as extended or renewed in
accordance with the provisions hereof, being called the "Term") commencing on
the date hereof (the "Commencement Date") and ending on the last day of the two
hundred fortieth (240th) calendar month next following the date hereof (the
"Expiration Date").
(b) Provided that if, on or prior to the Expiration
Date or any other Renewal Date (as hereinafter defined) this Lease shall not
have been terminated pursuant to any provision hereof, then on the Expiration
Date and on the tenth (10th) anniversary of the Expiration Date (the Expiration
Date and such anniversary being a "Renewal Date"), the Term shall be deemed to
have been automatically extended for an additional period of ten (10) years
(each such period a "Renewal Period"), unless Tenant shall notify Landlord in
writing in recordable form at least eighteen (18) months prior to such upcoming
Renewal Date that Tenant is terminating this Lease as of such upcoming Renewal
Date. Any such extension of the Term shall be subject to all of the provisions
of this Lease, as the same may be amended, supplemented or modified. If a
Casualty occurs within the period that is between eighteen (18) and twelve (12)
months prior to the expiration of the then current Term, the Leased Premises
cannot be restored by the expiration of the then current Term and Tenant has
elected not to extend the Term pursuant to Paragraph 5(b) for a Renewal Period
then, within the thirty (30) day period following the Casualty, Tenant shall
have the option by written notice to Landlord to further extend the Term for
such Renewal Period. Any such additional extension shall be subject to the terms
of this Lease, as the same may be amended.
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<PAGE> 12
(c) If Tenant exercises its option not to extend or
further extend the Term, or if an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect and, in any
event, Landlord shall have the right during the last year of the Term, to (i)
advertise the availability of the Leased Premises for sale or reletting and to
erect upon the Leased Premises signs indicating such availability and (ii) show
the Leased Premises to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may select (and subject to the security provisions
of Tenant as provided for in Paragraph 4(b)).
6. Basic Rent. Tenant shall pay to Landlord, as basic rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent"), commencing on the first day of the first
month following the date hereof and continuing on the same day of each month
thereafter during the Term (each such day being a "Basic Rent Payment Date").
Each such rental payment shall be made during the term of the Initial Loan by
wire transfer of Federal Funds to the following account: First Union National
Bank, Philadelphia, PA; ABA: 031-2014-67; Account Name: GMAC Commercial Mortgage
Clearing House; Account No. 21000125-3771-5; Reference: GMACCM Loan # 18931 -
One AMD Place; Attn: Customer Service or such other address as Initial Lender,
in its sole discretion shall direct (with notice of each such payment to
Landlord concurrent with the making thereof). After payment of the Initial Loan
in full, each such rental payment shall be made at Landlord's sole discretion,
(a) to Landlord at its address set forth above and/or to not more than one
Person in addition to Landlord, at such address and in such proportions as
Landlord may direct by thirty (30) days' prior written notice to Tenant (in
which event Tenant shall give Landlord notice of each such payment concurrent
with the making thereof), or (b) by wire transfer of Federal Funds to such
account(s) as Landlord may direct by thirty (30) days' prior notice to Tenant.
Pro rata Basic Rent for the period from the date hereof through the last day of
the month hereof shall be paid on the date hereof.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional
rent (collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of Tenant's obligations under this
Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant
under this Lease, (D) any Condemnation proceedings, (E) the adjustment,
settlement or compromise of any insurance claims involving or arising from any
of the Leased Premises, (F) the prosecution, defense or settlement of any
litigation involving or arising from any of the Leased Premises, this Lease, or
the sale of the Leased Premises to Landlord, (G) the exercise or enforcement by
Landlord, its successors and assigns, of any of its rights under this Lease, (H)
any amendment to or modification or termination of this Lease made at the
request of Tenant, (I) Costs of Landlord's counsel and reasonable internal Costs
of Landlord incurred in connection with any act undertaken by Landlord (or its
counsel) at the request of Tenant, or incurred in connection with any act of
Landlord performed on behalf of Tenant, (J) the reasonable internal Costs of
Landlord incurred in connection with Tenant's failure to act promptly in an
emergency situation, and (K) any other items specifically required to be paid by
Tenant under this Lease;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to two percent
(2%) of the amount of such unpaid installment or portion thereof ("Late
Charge"), provided, however, that with respect to the first two late payments of
all or any portion of any installment of Basic Rent in any consecutive
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twelve (12) month period, the Late Charge shall not be due and payable unless
the Basic Rent has not been paid within five (5) days following the due date
thereof;
(iii) a sum equal to any additional sums that are
payable by Landlord to a Lender under a Note by reason of Tenant's late payment
or non-payment of Basic Rent or by reason of an Event of Default (including any
late charge, default penalties, interest and fees of Lender's counsel), (A)
which are payable under the documents evidencing and securing the Initial Loan
and (B) which are payable under the documents evidencing and securing any
subsequent Loan (after payment in full of the Initial Loan), to the extent
typically charged by a lender;
(iv) interest at the rate (the "Default Rate") of two
percent (2%) over the Prime Rate per annum on the following sums until paid in
full: (A) all overdue installments of Basic Rent from the respective due dates
thereof, (B) all overdue amounts of Additional Rent relating to obligations
which Landlord shall have paid on behalf of Tenant, from the date of payment
thereof by Landlord, and (C) all other overdue amounts of Additional Rent that
are payable to Landlord, from the date when any such amount becomes overdue;
(v) typical and customary charges of a lender in the
administration and servicing of a Loan and oversight of Lender's collateral
(e.g., escrow costs, property inspections, lockbox fees, trustee fees, tax
service costs, fees and expenses related to the resale of the Initial Loan by
Initial Lender, appraisal costs); and
(vi) costs required to maintain an independent
director for the managing member of Landlord.
(b) Tenant shall pay and discharge (i) any Additional
Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided
that amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within thirty (30) days after Landlord's demand for payment
thereof or, if later, when the same are due, and (ii) any other Additional Rent,
within thirty (30) days after Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
Further, in no event shall Tenant be required to pay to Landlord any item of
Additional Rent that Tenant is obligated to pay to any third party pursuant to
any provision of this Lease.
(d) Tenant shall have no obligation to pay for costs
arising as a result of Landlord's actions or decisions as long as such actions
or decisions do not arise as a result of Tenant's failure to perform its
obligations under this Lease (e.g., defeasance or assumption charges or costs in
connection with loan modifications requested by Landlord), costs associated with
Landlord's required reporting to Lender (e.g., financial statements), costs of
refinancing any Loan (e.g., commitment fees, loan fees, due diligence and
transaction costs) or costs arising as a consequence of a dispute between
Landlord and Lender or a default by Landlord under any Loan not, in either
event, caused by a corresponding default by Tenant under this Lease.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations
shall be paid without notice or demand (except as otherwise provided herein) and
without set-off, counterclaim, recoupment, abatement, suspension, deferment,
diminution, deduction, reduction or defense (collectively, a "Set-Off").
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(b) Except as otherwise expressly provided herein,
this Lease and the rights of Landlord and the obligations of Tenant hereunder
shall not be affected by any event or for any reason, including the following:
(i) any damage to or theft, loss or destruction of any of the Leased Premises,
(ii) any Condemnation, (iii) any default on the part of Landlord hereunder or
under any Note, Mortgage, Assignment or any other agreement, (iv) any latent or
other defect in any of the Leased Premises, (v) the breach of any warranty of
any seller or manufacturer of any of the Equipment, (vi) any violation of any
provision of this Lease by Landlord, (vii) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up of, or other proceeding affecting, Landlord, (viii) the exercise of
any remedy, including foreclosure, under any Mortgage or Assignment, (ix) any
action with respect to this Lease (including the disaffirmance hereof) which may
be taken by Landlord, any trustee, receiver or liquidator of Landlord or any
court under the Federal Bankruptcy Code or otherwise, (x) any interference with
Tenant's use of the Leased Premises, (xi) market or economic changes or (xii)
any other cause, whether similar or dissimilar to the foregoing, any present or
future Law to the contrary notwithstanding; provided, however that the foregoing
is not intended to release Landlord of liability in the event of any breach or
default by Landlord under this Lease.
(c) The obligations of Tenant hereunder shall be
separate and independent covenants and agreements, all Monetary Obligations
shall continue to be payable in all events (or, in lieu thereof, Tenant shall
pay amounts equal thereto), and the obligations of Tenant hereunder shall
continue unaffected unless the requirement to pay or perform the same shall have
been terminated pursuant to an express provision of this Lease. All Rent payable
by Tenant hereunder shall constitute "rent" for all purposes (including Section
502(b)(6) of the Federal Bankruptcy Code).
(d) Except as otherwise expressly provided herein,
Tenant shall have no right and hereby waives all rights which it may have under
any Law (i) to quit, terminate or surrender this Lease or any of the Leased
Premises, or (ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are
due thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, and all other public charges whether of a like or different nature,
even if unforeseen or extraordinary, which arise during the Term and are imposed
upon or assessed against (i) Tenant, (ii) Tenant's leasehold interest in the
Leased Premises, (iii) any of the Leased Premises, (iv) Landlord as a result of
or arising in respect of the acquisition, ownership, occupancy, leasing, use or
possession of any of the Leased Premises, any activity conducted on any of the
Leased Premises, or the Rent, or (v) any Lender by reason of any Note, Mortgage,
Assignment or other document evidencing or securing a Loan and which (as to this
clause (v)) a borrower would customarily agree to pay (collectively, the
"Impositions"); provided, that nothing herein shall obligate Tenant to pay (A)
income, excess profits or other taxes of Landlord (or Lender) which are
determined on the basis of Landlord's (or Lender's) net income or net worth
(unless such taxes are in lieu of or a substitute for any other tax, assessment
or other charge upon or with respect to the Leased Premises which, if it were in
effect, would be payable by Tenant under the provisions hereof or by the terms
of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift or similar tax imposed on Landlord or (C) any capital gains,
transfer or deed tax imposed on Landlord in connection with the sale, exchange
or other disposition of the Leased Premises to any Person, except that Tenant
shall be responsible to pay any increase in real estate taxes and assessments
that are imposed as a result of a change of ownership of the Leased Premises
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occurring after the tenth (10th) Lease Year, but not with respect to any change
of ownership occurring prior thereto. If any Imposition may be paid in
installments without interest or penalty, Tenant shall have the option to pay
such Imposition in installments; in such event, Tenant shall be liable only for
those installments which accrue or become due and payable during the Term.
Tenant shall prepare and file all tax reports required by governmental
authorities which relate to the Impositions. Tenant shall deliver to Landlord
(1) copies of all settlements and notices pertaining to the Impositions which
may be issued by any governmental authority within twenty (20) days after
Tenant's receipt thereof, (2) satisfactory evidence (which may be written notice
from a tax service acceptable to Landlord and Lender) of payment of all taxes
required to be paid by Tenant hereunder no later than thirty (30) days following
the date the same would become delinquent, showing the same to have been paid
prior to delinquency and (3) receipts for payment of all other Impositions
promptly following Landlord's request therefor.
(b) Landlord shall have the right, (i) following the
occurrence of an Event of Default with respect to Escrow Charges described in
clause (A) of the following sentence and (ii) if Landlord or Lender determines
that the Leased Premises are not being maintained in accordance with current
standards for similarly situated office buildings prudently managed so that the
condition of the Leased Premises is not as required by Paragraph 12 (a) hereof,
to require Tenant to pay to Landlord, or to Lender if directed by Landlord, an
additional monthly sum (each an "Escrow Payment") sufficient to pay the Escrow
Charges (as hereinafter defined) as they become due. As used herein, "Escrow
Charges" shall mean (A) real estate taxes on the Leased Premises or payments in
lieu thereof and premiums on any insurance required by this Lease, and (B)
amounts required by a Lender on the basis of an inspection of the Leased
Premises or as otherwise reasonably determined by Lender which shall be
deposited in a reserve or reserves such as a capital improvement reserve, a
replacement reserve and/or a repair reserve (such amounts in this clause (B)
collectively referred to as "Reserve Funds"). Landlord shall determine the
amount of the Escrow Charges and of each Escrow Payment. As long as the Escrow
Payments are being held by Landlord the Escrow Payments shall not be commingled
with other funds of Landlord or other Persons and interest thereon shall accrue
for the benefit of Tenant from the date such monies are received and invested
until the date such monies are disbursed to pay Escrow Charges. If the Escrow
Payments are held by the Lender, they shall be held and administered in
accordance with Lender's customary procedures for similar accounts. Landlord
shall apply the Escrow Payments to the payment of the Escrow Charges in such
order or priority as Landlord shall determine or as required by law; provided,
however, that any Reserve Funds shall only be used for improvements or repairs
for which such Reserve Funds have been deposited, and any remaining balance of
any such Reserve Funds shall be disbursed to Tenant at such time as such
improvements or repairs have been completed so long as no Event of Default then
exists. If at any time the Escrow Payments theretofore paid to Landlord shall be
insufficient for the payment of the Escrow Charges, Tenant, within fifteen (15)
days after Landlord's demand therefor, shall pay the amount of the deficiency to
Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and
conform to, and cause the Leased Premises and any other Person occupying any
part of the Leased Premises to comply with and conform to, all Insurance
Requirements and Legal Requirements (including all applicable Environmental
Laws). Tenant shall not at any time (i) cause, permit or suffer to occur any
Environmental Violation. or (ii) permit any sublessee, assignee or other Person
occupying the Leased Premises under or through Tenant to cause, permit or suffer
to occur any Environmental Violation and, at the request of Landlord or Lender,
Tenant shall promptly remediate or undertake any other appropriate response
action to correct any existing Environmental Violation. Tenant shall permit
Persons who are potentially responsible (any such Person, a "PRP") for existing
Environmental Violations on upgradient properties and their agents
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access to the Leased Premises for the purpose of conducting Site Assessments
upon and remediation to the Leased Premises. Tenant shall upon Landlord's or
Lender's request provide Landlord and Lender with copies of all filings which
Tenant is required to submit to governmental agencies and all permits, licenses
and certificates which Tenant is required to obtain from governmental agencies,
in both cases with respect to the Leased Premises. Tenant shall give prompt
notice to Landlord and Lender of receipt by Tenant of any notice related to any
Legal Requirements and of the commencement of any proceedings or investigations
which relate to compliance with Legal Requirements. Any and all reports prepared
for or by Landlord with respect to the Leased Premises shall be for the sole
benefit of Landlord and Lender and no other Person shall have the right to rely
on any such reports.
(b) Tenant, at its sole cost and expense, will at all
times promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement on the
part of Landlord or the occupier to be kept and performed thereunder and shall
enter into access agreements for the purposes described in the foregoing
Paragraph 10(a), such agreements to be subject to the reasonable approval of
Landlord. Tenant will not alter, modify, amend or terminate any Easement
Agreement, give any consent or approval thereunder, or enter into any new
Easement Agreement without, in each case, the prior written consent of Landlord,
which consent shall not be unreasonably withheld (provided, however, that
Landlord hereby consents to the Site Access Agreement dated March 21, 1997
between AMD International Sales & Service, Ltd., and Advanced Micro Devices,
Inc. and 999 Arques Corporation and consents to the Site Access Agreement dated
March 17, 1997 between AMD International Sales & Service, Ltd. and Advanced
Micro Devices, Inc. and CAE Electronics Inc.). Landlord shall cooperate with
Tenant with respect to the creation of easements and/or rights of way for
ingress and egress to and from the Leased Premises or in favor of municipal or
other governmental authorities or public service or utility companies for the
installation of water lines, sewers, electricity, telephone, gas, steam or
easements for other facilities and utilities reasonably required for the use and
occupancy of the Leased Premises.
(c) Upon prior written notice from Landlord, Tenant
shall permit such persons as Landlord may designate (who shall be a regional or
national environmental audit firm designated by Lender and who shall be Eckland
Consulting or another firm reasonably acceptable to Tenant) ("Site Reviewers")
to visit the Leased Premises and perform environmental site investigations,
audits and assessments ("Site Assessments") on the Leased Premises for the
purpose of determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in any Environmental
Violation. Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be necessary,
in the reasonable opinion of the Site Reviewers, to conduct the Site
Assessments; provided, however, that any such testing to be undertaken in
connection with any Site Assessment shall be conducted in such a manner as to
minimize any interference with Tenant's business operations at the Leased
Premises; and provided, further, that such Site Assessments shall not be
conducted more frequently than once every 24 months unless Landlord is required
to undertake a Site Assessment as a condition of obtaining financing or
refinancing, or in connection with a sale of the Leased Premises or if required
by a Lender. In such cases, the Site Assessment may be conducted by Landlord at
any time. The Site Assessment shall be limited to a visual inspection and review
of records unless (i) Landlord or Lender has reasonable cause to believe that an
Environmental Violation exists at the Leased Premises; (ii) intrusive testing is
required to be undertaken as a condition of Landlord obtaining financing or
refinancing or of a proposed sale of the Leased Premises or if required by a
Lender; or (iii) such testing is conducted within nine (9) months of the
expiration of the Lease Term, in which case such Site Assessment may include the
testing described above. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Leased Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site Assessments,
and shall make available for meetings with the Site Reviewers appropriate
personnel having
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knowledge of such matters. The reasonable cost of performing and reporting Site
Assessments shall be paid by Tenant, except that Tenant shall not be responsible
to pay the cost of performing and reporting Site Assessments required in
connection with any sale of the Leased Premises.
(d) If an Environmental Violation (other than ground
water contamination which has migrated to the Leased Premises from off-site
sources unless Tenant is or has been required by a governmental authority to
remediate such contamination) occurs or is found to exist and, in Landlord's
reasonable judgment, the cost of remediation of, or other response action with
respect to, the same is likely to exceed $1,000,000 and at the time of such
remediation Tenant does not have a publicly traded, unsecured senior debt rating
of "Baa2" or better from Moody's or a rating of "BBB" or better from S&P, Tenant
shall provide to Landlord, within thirty (30) days after Landlord's request
therefor, adequate financial assurances that Tenant will effect such remediation
in accordance with applicable Environmental Laws. Such financial assurances
shall be a bond or letter of credit reasonably satisfactory to Landlord in form
and substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this
Lease, if an Environmental Violation occurs (other than ground water
contamination which has migrated to the Leased Premises from off-site sources
unless Tenant is or has been required by a governmental authority to remediate
such contamination) or is found to exist and the Term would otherwise terminate
or expire, then, at the option of Landlord, the Term shall be automatically
extended beyond the date of termination or expiration and this Lease shall
remain in full force and effect beyond such date until the earlier to occur of
(i) the completion of all remedial action in accordance with applicable
Environmental Laws or (ii) one (1) year from the date on which this Lease would
otherwise terminate or expire so long as on or before such date Tenant deposits
with Landlord an amount determined by the Site Reviewer to be reasonably
required to complete such remediation.
(f) If Tenant fails to correct any Environmental
Violation which occurs or is found to exist, Landlord shall have the right (but
no obligation) to take any and all actions as Landlord shall deem reasonably
necessary or advisable in order to cure such Environmental Violation.
(g) Tenant shall notify Landlord promptly after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord immediately upon receipt thereof
copies of all orders, reports, notices, permits, applications or other
communications relating to any such violation or noncompliance.
(h) All future leases, subleases or concession
agreements relating to the Leased Premises entered into by Tenant shall contain
covenants of the other party not to at any time (i) cause any Environmental
Violation to occur or (ii) permit any Person occupying the Leased Premises
through said subtenant or concessionaire to cause any Environmental Violation to
occur.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly whether
by any act or omission, create or permit to be created or to remain and shall
promptly discharge or remove any lien, levy or encumbrance on any of the Leased
Premises or on any Rent or any other sums payable by Tenant under this Lease,
other than any Mortgage or Assignment, the Permitted Encumbrances and any
mortgage, lien, encumbrance or other charge created by or resulting from
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<PAGE> 18
any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT
BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR
UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES
OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF
THE LEASED PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT
SHALL PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH
NON-LIABILITY OF LANDLORD.
(b) Landlord and Tenant shall execute, acknowledge,
deliver and record, file or register (collectively, "record") all such
instruments as may be required or permitted by any present or future Law in
order to evidence the respective interests of Landlord and Tenant in the Leased
Premises, and shall cause a memorandum of this Lease (or, if such a memorandum
cannot be recorded, this Lease), and any supplement hereto or thereto, to be
recorded in such manner and in such places as may be required or permitted by
any present or future Law in order to protect the validity and priority of this
Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased
Premises and the Adjoining Property in as good repair and appearance as they are
in on the date hereof and after completion of any deferred maintenance items
required by Initial Lender and fit to be used for their intended use in
accordance with the better of the practices generally recognized as then
acceptable by other companies in its industry or the then current standards for
similarly situated office buildings prudently managed, and, in the case of the
Equipment, in as good mechanical condition as it was on the later of the date
hereof or the date of its installation, except for ordinary wear and tear.
Tenant shall take every other action necessary or appropriate for the
preservation and safety of the Leased Premises. Tenant shall make all
Alterations of every kind and nature, whether foreseen or unforeseen, which may
be required to comply with the foregoing requirements of this Paragraph 12(a)
whether disclosed by Landlord or Tenant or as a consequence of any inspection by
Lender promptly after the need for such Alterations becomes known to Landlord or
Tenant. Any Alterations required to be made as a result of any inspection by
Lender shall be commenced within thirty (30) days from receipt of notice from
Landlord or Lender and thereafter diligently pursued to completion. Landlord
shall not be required to make any Alteration, whether foreseen or unforeseen, or
to maintain any of the Leased Premises or Adjoining Property in any way, and
Tenant hereby expressly waives any right which may be provided for in any Law
now or hereafter in effect to make Alterations at the expense of Landlord or to
require Landlord to make Alterations. Any Alteration made by Tenant pursuant to
this Paragraph 12 shall be made in conformity with the provisions of Paragraph
13 and the requirements of any Lender.
(b) If any Improvement, now or hereafter constructed,
shall (i) encroach upon any setback or any property, street or right-of-way
adjoining the Leased Premises, (ii) violate the provisions of any restrictive
covenant affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
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<PAGE> 19
(c) No later than June 30, 1999, Tenant shall repair
the roof membrane in the Improvements, and no later than June 30, 2000 shall
remove the tree roots in the parking lot or otherwise repair the damage to the
parking lot caused by tree roots, both as specified in that certain report
prepared by Eckland Consulting, Inc. and dated October 28, 1998.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having
obtained the prior written consent of Landlord and Lender and provided that no
Event of Default then exists, to make (i) non-structural Alterations that do not
affect the structural integrity of the Improvements, or adversely affect any of
the mechanical or electrical systems of the Improvements, (ii) Alterations that
are required in order to comply with Law, (iii) structural Alterations or a
series of related structural Alterations that, as to any such structural
Alterations or series of related structural Alterations, do not cost in excess
of $500,000 and that do not affect the structural integrity of the Improvements
or adversely affect any of the mechanical or electrical systems in the
Improvements and (iv) to install Equipment in the Improvements or accessions to
the Equipment that, as to such Equipment or accessions, do not cost in excess of
$500,000, so long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value and utility of
the Leased Premises is not diminished thereby. If the cost of any structural
Alterations, series of related structural Alterations, Equipment or accessions
thereto is in excess of $500,000, the prior written approval of Landlord and
Lender shall be required, such approval not to be unreasonably withheld or
delayed. Tenant shall not construct upon the Land any additional buildings
without having first obtained the prior written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this
Paragraph 13 or Paragraph 36 or as required by Paragraph 12 or 17 (such
Alterations and actions being hereinafter collectively referred to as "Work"),
whether or not Landlord's consent is required, then (i) the market value of the
Leased Premises shall not be lessened by any such Work or its usefulness
impaired, (ii) all such Work shall be performed by Tenant in a good and
workmanlike manner, (iii) all such Work shall be expeditiously completed in
compliance with all Legal Requirements, (iv) all such Work shall comply with the
Insurance Requirements, (v) if any such Work involves the replacement of
Equipment or parts thereto, all replacement Equipment or parts shall have a
value and useful life equal to the greater of (A) the value and useful life on
the date hereof of the Equipment being replaced or (B) the value and useful life
of the Equipment being replaced immediately prior to the occurrence of the event
which required its replacement, (vi) Tenant shall promptly discharge or remove
all liens filed against any of the Leased Premises arising out of such Work,
(vii) Tenant shall procure and pay for all permits and licenses required in
connection with any such Work, (viii) all such Work shall be the property of
Landlord and shall be subject to this Lease, and Tenant shall execute and
deliver to Landlord any document requested by Landlord evidencing the assignment
to Landlord of all estate, right, title and interest (other than the leasehold
estate created hereby) of Tenant or any other Person thereto or therein, and
(ix) with respect to Alterations or a series of related Alterations that cost in
excess of $500,000, Tenant shall comply, to the extent reasonably requested by
Landlord or required by this Lease, with the provisions of Paragraph 19(a),
whether or not such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or
remove any lien referred to in Paragraph 11 or 13 or (c) take any action with
respect to any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) (such non-compliance with the terms hereof being
hereinafter referred to collectively as "Permitted Violations"), so long as at
the time of such contest no Event of Default exists and so long as Tenant shall
contest, in good faith, the existence, amount or validity thereof, the amount of
the damages caused thereby, or the
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extent of its or Landlord's liability therefor by appropriate proceedings which
shall operate during the pendency thereof to prevent or stay (i) the collection
of, or other realization upon, the Permitted Violation so contested, (ii) the
sale, forfeiture or loss of any of the Leased Premises or any Rent to satisfy or
to pay any damages caused by any Permitted Violation, (iii) any interference
with the use or occupancy of any of the Leased Premises, (iv) any interference
with the payment of any Rent, or (v) the cancellation or increase in the rate of
any insurance policy or a statement by the carrier that coverage will be denied.
Tenant shall provide Landlord security which is satisfactory, in Landlord's
reasonable judgment, to assure that such Permitted Violation is corrected,
including all Costs, interest and penalties that may be incurred or become due
in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.
15. Indemnification.
(a) With respect to any action or event which arises
or occurs prior to the expiration of the Term or any earlier termination of this
Lease and/or any consequences thereof, whether ascertainable prior to or at any
time after such expiration of the Term or earlier termination of the Lease,
Tenant shall pay, protect, indemnify, defend, save and hold harmless Landlord,
Lender and all other Persons described in Paragraph 30 (each an "Indemnitee")
from and against any and all liabilities, losses, damages (including punitive
damages), penalties, Costs (including reasonable attorneys' fees and costs),
causes of action, suits, claims, demands or judgments of any nature whatsoever,
howsoever caused, unless caused by the gross negligence or willful misconduct of
the Landlord or any other Indemnitee, without regard to the form of action and
whether based on strict liability, negligence or any other theory of recovery at
law or in equity, arising from (i) any matter pertaining to the acquisition (or
the negotiations leading thereto), ownership, use, non-use, occupancy,
operation, condition, design, construction, maintenance, repair or restoration
of the Leased Premises or Adjoining Property, (ii) any casualty in any manner
arising from the Leased Premises or Adjoining Property, whether or not
Indemnitee has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant of any
provision of this Lease, any contract or agreement relating to the Leased
Premises to which Tenant is a party, any Legal Requirement or any Permitted
Encumbrance or any encumbrance Tenant consented to or any provision of the
Mortgage or Assignment that is binding upon Tenant or (iv) any alleged,
threatened or actual Environmental Violation, including (A) liability for
response costs and for costs of removal and remedial action incurred by the
United States Government, any state or local governmental unit or any other
Person, or damages from injury to or destruction or loss of natural resources,
including the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or act or
provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C) liability for personal injury or property damage arising under
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any statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity.
(b) In case any action or proceeding is brought
against any Indemnitee by reason of any such claim, (i) Tenant may, except in
the event of a conflict of interest or a dispute between Tenant and any such
Indemnitee or during the continuance of an Event of Default, retain its own
counsel and defend such action (it being understood that Landlord may, at its
own cost, employ counsel of its choice to monitor the defense of any such
action) and (ii) such Indemnitee shall notify Tenant to resist or defend such
action or proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense of such
action or proceeding if reasonably requested so to do by Tenant. In the event of
a conflict of interest or dispute or during the continuance of an Event of
Default, Landlord shall have the right to select counsel, and the reasonable
cost of such counsel shall by paid by Tenant.
(c) The obligations of Tenant under this Paragraph 15
with respect to any action or event which arises or occurs prior to the
expiration of the Term or any earlier termination of this Lease and/or the
consequences thereof, shall survive any termination, expiration or rejection in
bankruptcy of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on
or in connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (if the Leased Premises is in a flood
zone) in amounts not less than the actual replacement cost of the Improvements
and Equipment. Such policies shall contain Replacement Cost and Agreed Amount
Endorsements and shall contain deductibles as may be recommended by Tenant's
insurance broker and approved by Landlord and Lender, such approval not to be
unreasonably withheld and in any event not less than $100,000. In addition,
Tenant shall maintain earthquake coverage (which may include California real
estate in addition to the Leased Premises) of not less than $25,000,000 with a
deductible equal to the lesser of $10,000,000 or 5% of the casualty loss,
provided that proceeds received from any earthquake casualty in an amount equal
to the product of the probable maximum loss factor for the Improvements
multiplied by the replacement cost of the Improvements (but in no event more
than the cost of the restoration of the Improvements) shall be allocated by
Tenant for restoration of the Leased Premises prior to allocation of such
proceeds to restoration of any other improvements insured under such policy.
(ii) Commercial General Liability Insurance
(including but not limited to Incidental Medical Malpractice and Host Liquor
Liability) and Business Automobile Liability Insurance (including Non-Owned and
Hired Automobile Liability) against claims for personal and bodily injury, death
or property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $15,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and type.
(iii) Workers' compensation insurance covering
employees of Tenant in connection with their employment on or about any of the
Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Workers' Compensation Insurance, a program of
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self-insurance complying with the rules, regulations and requirements of the
appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the Leased Premises, in an
amount not less than $5,000,000 per accident for damage to property. Such
policies shall include at least $5,000,000 per accident for Off-Premises Service
Interruption, "System Breakdowns" and Expediting Expenses.
(v) Business Income/Extra Expense Insurance at limits
sufficient to cover 100% of the period of indemnity not less than eighteen (18)
months from time of loss. Such insurance shall name Landlord as loss payee
solely with respect to Rent payable to or for the benefit of Landlord as its
interest appears under this Lease.
(vi) During any period in which substantial
Alterations at the Leased Premises are being undertaken, builder's risk
insurance covering the total completed value including any "soft costs" with
respect to the Improvements being altered or repaired (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction or repair of
Improvements or Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general liability,
worker's compensation and automobile liability insurance with respect to the
Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee clause)
on or in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size, use and location to
the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall
be written by one or more (i) domestic primary insurer(s) having an investment
grade rating of "AA" or a comparable claims paying ability assigned by S&P or
equivalent credit rating agency approved by Landlord and Lender, and approved to
write insurance policies by the State Insurance Department for the State or (ii)
such other insurer(s) as may be otherwise approved by Landlord and Lender, such
approval not to be unreasonably withheld. The insurance policies (i) shall be
for such terms as Landlord may reasonably approve and (ii) shall be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof. The
insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name
Landlord as Owner and Lender as loss payee and Tenant as its interest may
appear. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord and
Lender as additional insureds, and the insurance referred to in Paragraph
16(a)(v) shall name Landlord (or Lender, if requested by Landlord) as loss payee
to the extent provided in Paragraph 16(a)(v). If said insurance or any part
thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe
for any reason, including a breach of any condition thereof by Tenant or the
failure or impairment of the capital of any insurer, or if for any other reason
whatsoever said insurance shall become reasonably unsatisfactory to Landlord,
Tenant shall immediately obtain new or additional insurance reasonably
satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i),
(iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be cancelled or terminated, substantially modified or allowed to
lapse on any renewal date except after thirty (30) days' prior notice to
Landlord and Lender. Each such policy shall also provide that any loss otherwise
payable thereunder shall be
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payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of such
insurance payment, (ii) the occupation or use of any of the Leased Premises for
purposes more hazardous than those permitted by the provisions of such policy,
(iii) any foreclosure or other action or proceeding taken by Lender pursuant to
any provision of the Mortgage, Note, Assignment or other document evidencing or
securing the Loan upon the happening of an event of default therein or (iv) any
change in title to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums
for the insurance required by Paragraph 16(a) (and in any event not less than 30
days prior to cancellation for non-payment), shall renew or replace each policy
and deliver to Landlord evidence of the renewal or replacement of each such
policy prior to the stated expiration thereof (which evidence may consist of a
binder, certificate or replacement policy) and, upon receipt shall promptly
deliver to Landlord all original certificates of insurance.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to Landlord a
Statement of Values which shall be reviewed annually and amended as necessary
based on Replacement Cost Valuations. A certified copy of each such "blanket" or
umbrella policy shall promptly be delivered to Landlord, or if requested by
Landlord, to Lender.
(f) Tenant shall promptly comply with and conform to
(i) all provisions of each insurance policy required by this Paragraph 16 and
(ii) all requirements of the insurers thereunder applicable to Landlord, Tenant
or any of the Leased Premises or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration or repair of any of the Leased
Premises, even if such compliance necessitates Alterations or results in
interference with the use or enjoyment of any of the Leased Premises.
(g) Tenant shall not carry separate insurance
concurrent in form or contributing in the event of a Casualty with that required
in this Paragraph 16 unless (i) Landlord and Lender are included therein as
named insureds, with loss payable as provided herein, and (ii) such separate
insurance complies with the other provisions of this Paragraph 16. Tenant shall
promptly notify Landlord of such separate insurance and shall deliver to
Landlord a certified copy of policies thereof.
(h) All policies shall contain effective waivers by
the carrier against all claims for insurance premiums against Landlord and
Lender and shall contain full waivers of subrogation against the Landlord and
Lender.
(i) All proceeds of insurance payable under clause
(v) with respect to the Rent shall be payable to Landlord or, if required by the
Mortgage, to Lender. Proceeds of insurance required under clauses (i) and (iv)
of Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16(a) shall be payable to Landlord (or Lender) and applied as set forth in
Paragraph 17. Tenant shall apply the Net Award to restoration of the Leased
Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty to the Leased Premises occurs,
Tenant shall give Landlord and Lender immediate notice thereof. So long as no
Event of Default exists Tenant is
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hereby authorized to adjust, collect and compromise all claims under any of the
insurance policies required by Paragraph 16(a) and to execute and deliver on
behalf of Landlord all necessary proofs of loss, receipts, vouchers and releases
required by the insurers and Landlord shall have the right to join with Tenant
therein. Any final adjustment, settlement or compromise of any such claim shall
be subject to the prior written approval of Landlord, which approval shall not
be unreasonably withheld. If an Event of Default exists, Tenant shall not be
entitled to adjust, collect or compromise any such claim or to participate with
Landlord in any adjustment, collection and compromise of the Net Award payable
in connection with a Casualty. Tenant agrees to sign, upon the request of
Landlord, all such proofs of loss, receipts, vouchers and releases. Each insurer
is hereby authorized and directed to make payment under said policies directly
to Landlord or, if required by the Mortgage, to Lender instead of to Landlord
and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as
Tenant's attorneys-in-fact to endorse any draft therefor. The rights of Landlord
under this Paragraph 17(a) shall be extended to Lender if and to the extent that
any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation
Notice, shall notify Landlord and Lender thereof and will promptly deliver to
Landlord and Lender copies of any and all served papers it receives in
connection therewith. So long as no Event of Default exists, Tenant is
authorized to collect, settle and compromise the amount of any Net Award and
Landlord shall have the right to join with Tenant therein. If an Event of
Default exists, Landlord shall be authorized to collect, settle and compromise
the amount of any Net Award and Tenant shall not be entitled to participate with
Landlord in any Condemnation proceeding or negotiations under threat thereof or
to contest the Condemnation or the amount of the Net Award therefor. No
agreement with any condemnor in settlement or under threat of any Condemnation
shall be made by Tenant without the written consent of Landlord, which consent
shall not be unreasonably withheld. Subject to the provisions of this Paragraph
17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to
which Tenant is or may be entitled by reason of any Condemnation, whether the
same shall be paid or payable for Tenant's leasehold interest hereunder or
otherwise; but nothing in this Lease shall impair Tenant's right to any award or
payment on account of Tenant's trade fixtures, equipment or other tangible
property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.
(c) If any Casualty (whether or not insured against)
or Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations, except as provided in Paragraph 17(d). Promptly after such Casualty
or Partial Condemnation, Tenant, as required in Paragraphs 12(a) and 13(b),
shall commence and diligently continue to restore the Leased Premises as nearly
as possible to their value, condition and character immediately prior to such
event and will promptly deliver to Landlord and Lender copies of any and all
served papers it receives in connection therewith (assuming the Leased Premises
to have been in the condition required by this Lease). So long as no Event of
Default exists, upon completion the Leased Premises will be in compliance with
all Legal Requirements and Environmental Laws and access to the Leased Premises
will not be materially impaired on a permanent basis, any Net Award up to and
including $1,000,000 shall be paid by Landlord to Tenant and shall be held in a
segregated account, and Tenant shall restore the Leased Premises in accordance
with the requirements of Paragraphs 12(a) and 13(b) of this Lease. Any Net Award
in excess of $1,000,000 shall be made available by Landlord (or Lender, if
required by the terms of any Mortgage) to Tenant for the restoration of any of
the Leased Premises pursuant to and in accordance with the provisions of
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Paragraph 19 hereof. If any Condemnation which is not a Partial Condemnation
shall occur, Tenant shall comply with the terms and conditions of Paragraph 18.
Landlord and Tenant waive the provisions of California Civil Code Sections 1932
and 1933 and California Code of Civil Procedure Section 1265.130.
(d) In the event of a Requisition of any of the
Leased Premises, if any Net Award payable by reason of such Requisition or
Partial Condemnation is (i) retained by Landlord (and not applied to restoration
in the case of a Partial Condemnation), each installment of Basic Rent payable
on or after the date on which the Net Award is paid to Landlord shall be reduced
by a fraction, the denominator of which shall be the total amount of all Basic
Rent due from such date to and including the last Basic Rent Payment Date for
the then existing Term and the numerator of which shall be the amount of such
Net Award retained by Landlord, or (ii) paid to Lender, then each installment of
Basic Rent thereafter payable shall be reduced in the same amount and for the
same period as payments are reduced under the Note until such Net Award has been
applied in full or until the Term has expired, whichever first occurs.
18. Termination Events.
(a) If (i) the entire Leased Premises shall be taken
by a Taking or (ii) any substantial portion of the Leased Premises shall be
taken by a Taking and in the prudent business judgment of Tenant cannot be
restored to an integrated unit sufficient for Tenant's business (each of the
events described in the above clauses (i) and (ii) shall hereinafter be referred
to as a "Termination Event"), then (x) in the case of (i) above, Tenant shall be
obligated, within thirty (30) days after Tenant receives a Condemnation Notice
and (y) in the case of (ii) above, Tenant shall have the option, within thirty
(30) days after Tenant receives a Condemnation Notice, to give to Landlord
written notice of the Tenant's election to terminate this Lease (a "Termination
Notice") in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of
Tenant's intention to terminate this Lease on the first Basic Rent Payment Date
which occurs at least sixty (60) days after receipt of the Termination Notice
(the "Termination Date") and (ii) a binding and irrevocable offer of Tenant to
pay to Landlord the Termination Amount.
(c) If Landlord shall reject such offer to pay the
Termination Amount pursuant to Paragraph 18(b) above by written notice to Tenant
(a "Rejection"), which Rejection shall contain the written consent of Lender,
not later than thirty (30) days following the receipt of the Termination Notice,
then this Lease shall terminate on the Termination Date; provided that, if
Tenant has not satisfied all Monetary Obligations on the Termination Date, then
Landlord may, at its option, extend the date on which this Lease may terminate
to a date which is no later than the first Basic Rent Payment Date after the
Termination Date on which Tenant has satisfied all Monetary Obligations. Upon
such termination (i) all obligations of Tenant hereunder shall terminate except
for any Surviving Obligations, (ii) Tenant shall immediately vacate and shall
have no further right, title or interest in or to any of the Leased Premises and
(iii) the Net Award shall be retained by Landlord. Notwithstanding anything to
the contrary hereinabove contained, if Tenant shall have received a Rejection
and, on the date when this Lease would otherwise terminate as provided above,
Landlord shall not have received the full amount of the Net Award payable by
reason of the applicable Termination Event, then the date on which this Lease is
to terminate automatically shall be extended to the first Basic Rent Payment
Date after the receipt by Landlord of the full amount of the Net Award (but in
no event shall any such extension exceed a maximum of three months) provided
that, if Tenant has not satisfied all Monetary Obligations on such date, then
Landlord may, at its option, extend the date on which this Lease may terminate
to a date which is no later than the first Basic Rent Payment Date after such
date on which Tenant has satisfied all such Monetary Obligations.
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(d) Unless Tenant shall have received a Rejection not later
than the thirtieth (30th) day following receipt of the Termination Notice,
Landlord shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord then, on the Termination Date, Tenant shall pay to
Landlord the Termination Amount and all remaining obligations (including
Monetary Obligations) and, if requested by Tenant, Landlord shall pay to or
assign to Tenant Landlord's entire interest in and to the Net Award.
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage) shall hold
Net Award in excess of $1,000,000 in a fund (the "Restoration Fund") and
disburse amounts from the Restoration Fund only in accordance with the following
conditions and, if the Restoration Fund is held by a Lender, it shall be held
and administered in accordance with Lender's customary procedures for similar
accounts:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, budget (which shall include Lender's
administration costs if Lender holds the Restoration Fund), plans and
specifications for the restoration shall have been approved by Landlord and
Lender which approval shall not be unreasonably withheld and (B) Landlord and
Lender shall be provided with performance and payment bonds which insure
satisfactory completion of and payment for the restoration, are in an amount and
form and have a surety reasonably acceptable to Landlord, and name Landlord and
Lender as additional dual obligees;
(ii) at the time of any disbursement, no Event of Default
shall exist, Tenant shall otherwise comply with the requirements imposed by
Lender for disbursement of the Net Award and no mechanics' or materialmen's
liens shall have been filed against any of the Leased Premises and remain
uncontested or undischarged;
(iii) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last disbursement,
upon receipt of (A) satisfactory evidence, including architects' certificates,
of the stage of completion, the estimated total cost of completion and
performance of the work to date in a good and workmanlike manner in accordance
with the contracts, plans and specifications, (B) waivers of liens, (C)
contractors' and subcontractors' sworn statements as to completed work and the
cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Landlord can
verify that the amounts disbursed from time to time are represented by work that
is completed, in place and free and clear of mechanics' and materialmen's lien
claims, notices of pendency, stop orders or notices of intention to file same
which have not either been fully bonded and discharged of record or in the
alternative fully insured to the satisfaction of Landlord and Lender by the
title company insuring the Mortgage;
(iv) each request for disbursement shall be accompanied by
a certificate of Tenant, signed by an officer of Tenant, describing the work for
which payment is requested, stating the cost incurred in connection therewith,
stating that Tenant has not previously received payment for such work and, upon
completion of the work, also stating that the work has been fully completed and
complies with the applicable requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
restoration fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other funds and shall
bear interest at a rate agreed to by Landlord and Tenant; and
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(vii) such other reasonable conditions as Landlord or
Lender may impose.
(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as reasonably determined by Landlord, exceeds the
amount of the Net Award available for such restoration, the amount of such
excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be added
to the Restoration Fund. Any sum so added by Tenant which remains in the
Restoration Fund upon completion of restoration shall be refunded to Tenant. For
purposes of determining the source of funds with respect to the disposition of
funds remaining after the completion of restoration, the Net Award shall be
deemed to be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum shall be retained by Landlord or, if required by a Note or
Mortgage, paid by Landlord to a Lender.
20. INTENTIONALLY DELETED.
21. Assignment and Subletting; Prohibition against Leasehold
Financing.
(a) (i) Tenant shall have the right, upon thirty (30) days
prior written notice to Landlord and Lender, with no consent of Landlord or
Lender being required or necessary ("Preapproved Assignment") to assign this
Lease, by operation of law or otherwise, to any Person ("Preapproved Assignee")
(A) that is a wholly-owned United States subsidiary of Tenant on the date of the
assignment (except that an assignment to Vantis Corp. shall not be permitted) or
(B) that immediately following such assignment will have a publicly traded
unsecured senior debt rating of "Baa3" or better from Moody's or a rating of
"BBB-" or better from S&P, provided that the rating from the other agency (i.e.
Moody's or S&P, as the case may be) shall not be less than Ba1 or BB+ and in the
event all of such rating agencies cease to furnish such ratings, then a
comparable rating by any rating agency reasonably acceptable to Landlord and
Lender or (C) that is the surviving entity after a merger or consolidation in
which Tenant is a party, so long as the net worth of such surviving entity is
not less than the net worth of Tenant immediately prior thereto.
(ii) If Tenant desires to assign this Lease, whether by
operation of law or otherwise, to a Person ("Non-Preapproved Assignee") who
would not be a Preapproved Assignee ("Non-Preapproved Assignment") then Tenant
shall, not less than forty-five (45) days prior to the date on which it desires
to make a Non-Preapproved Assignment submit to Landlord and Lender information
regarding the following with respect to the Non-Preapproved Assignee
(collectively, the "Review Criteria"): (A) credit, (B) capital structure, (C)
management, (D) operating history, (E) proposed use of the Leased Premises and
(F) risk factors associated with the proposed use of the Leased Premises by the
Non-Preapproved Assignee, taking into account factors such as environmental
concerns, product liability and the like. Landlord and Lender shall review such
information and shall approve or disapprove the Non-Preapproved Assignee no
later than the thirtieth (30th) day following receipt of all such information,
and Landlord and Lender shall be deemed to have acted reasonably in granting or
withholding consent if such grant or disapproval is based on their review of the
Review Criteria applying prudent business judgment.
(b) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, to enter into one or more subleases that
demise, in the aggregate, up to but not in excess of thirty percent (30%) of the
leaseable space in the Improvements with no consent or approval of Landlord
being required or necessary ("Preapproved Sublet"). Other than pursuant to
Preapproved Sublets, at no time during the Term shall subleases for more than
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thirty percent (30%) of the gross space in the Leased Premises without the prior
written consent of Landlord, which consent shall be granted or withheld based on
a review of the Review Criteria as they relate to the proposed sublessee and the
terms of the proposed sublease. Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on their review of the Review Criteria applying prudent business
judgment.
(c) If Tenant assigns all its rights and interest under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including obligations of
Tenant which may have arisen on or prior to the date of such assignment, by a
written instrument delivered to Landlord at the time of such assignment. Each
sublease of any of the Leased Premises shall be subject and subordinate to the
provisions of this Lease. No assignment or sublease made as permitted by this
Paragraph 21 shall affect or reduce any of the obligations of Tenant hereunder,
and all such obligations shall continue in full force and effect as obligations
of a principal and not as obligations of a guarantor, as if no assignment or
sublease had been made. No assignment or sublease shall impose any additional
obligations on Landlord under this Lease.
(d) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease deliver a duplicate original copy thereof
to Landlord which, in the event of an assignment, shall be in recordable form.
(e) As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all subleases now in existence or hereafter
entered into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises,
provided, however, that Landlord shall have the absolute right to revoke said
license and to collect such rents and sums of money, to retain the same and to
the extent received the same shall be credited against Basic Rent as the same
shall be due and owing.
(f) Tenant shall not have the power to mortgage, pledge or
otherwise encumber its interest under this Lease or any sublease of the Leased
Premises, and any such mortgage, pledge or encumbrance made in violation of this
Paragraph 21 shall be void and of no force and effect.
(g) Tenant shall transfer its interest in this Lease to any
Person who purchases all or substantially all of the assets of Tenant.
(h) Landlord may sell or transfer the Leased Premises at any
time without Tenant's consent to any third party (each a "Third Party
Purchaser"); provided, however, so long as no monetary Event of Default exists,
in no event may Landlord sell or transfer to Intel Corporation, National
Semiconductor, Inc. or to any Person directly engaged in the design, engineering
or manufacturing of integrated circuits, including, without limitation,
micro-processors, memory, networking, logic and communications devices (any of
the foregoing a "Prohibited Purchaser"). The foregoing conditions shall not
apply to any sale of the Leased Premises that occurs during the last eighteen
months of the Term, or to any sale to a pension fund or finance affiliate of a
Prohibited Purchaser (excluding, however, a pension fund or finance affiliate of
Intel Corporation or National Semiconductor, Inc.), and, in any event, the
aforesaid conditions shall be null and void and of no force and effect upon any
foreclosure of a Loan or acceptance by a Lender of a deed in lieu thereof. In
the event of any such transfer, Tenant shall attorn to any Third Party Purchaser
as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in
writing of such transfer and such Third Party Purchaser expressly
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assumes in writing the obligations of the Landlord hereunder. At the request of
Landlord and at Landlord's cost, Tenant will execute such documents confirming
the agreement referred to above and such other agreements as Landlord may
reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder. Tenant shall not bear any costs
or expenses in connection with any sale or transfer of the Leased Premises to a
Third Party Purchaser. In no event shall the terms of this Paragraph 21(g) be or
be deemed to be in effect following the termination or expiration of this Lease.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:
(i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision of this Lease not otherwise
specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant herein
or in any certificate, demand or request made pursuant hereto proves to be
incorrect, when made, in any material respect;
(iv) a default beyond any applicable cure period or at
maturity by Tenant in any payment of principal or interest on any obligations
for borrowed money having an original principal balance of $10,000,000 or more
in the aggregate, or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment, or (y) if an effect of such default is to cause, or permit
any Person to cause, such obligation to become due prior to its stated maturity
and Tenant is not diligently and in good faith contesting such default or has
paid such obligation in full;
(v) a default by Tenant beyond any applicable cure period
in the payment of rent under, or in the performance of any other material
provision of, any other lease or leases that have, in the aggregate, rental
obligations over the terms thereof of $10,000,000 or more if the Landlord under
any such lease or leases actually terminates such lease;
(vi) a final, non-appealable judgment or judgments for the
payment of money in excess of $10,000,000 in the aggregate shall be rendered
against Tenant and the same shall remain undischarged for a period of sixty (60)
consecutive days;
(vii) Tenant shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for the Leased Premises, (C) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
(viii) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or
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other similar laws of the United States, any state or any jurisdiction, and such
order, judgment or decree shall remain undischarged or unstayed ninety (90) days
after it is entered;
(ix) the Leased Premises shall have been vacated or
abandoned;
(x) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution;
(xi) the estate or interest of Tenant in any of the Leased
Premises shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be vacated
or discharged within ninety (90) days after it is made;
(xii) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under any or any
document between Tenant and Lender or from Tenant to Lender, if such failure,
violation, breach or misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan; or
(xiii) a failure by Tenant to maintain in effect any
license or permit necessary for the use, occupancy or operation of the Leased
Premises.
(b) No notice or cure period shall be required in any one or
more of the following events: (A) the occurrence of an Event of Default under
clause (i) (except as otherwise set forth below), (iii), (iv), (v), (vi), (vii),
(viii), (ix), (x), (xi) or (xii) of Paragraph 22(a); (B) if Tenant shall fail to
comply with the provisions of Paragraph 16(d) of this Lease or an assignment or
sublease entered into in violation of Paragraph 21; or (C) the default is such
that any delay in the exercise of a remedy by Landlord could reasonably be
expected to cause irreparable harm to Landlord. If the default consists of the
failure to pay any Monetary Obligation under clause (i) of Paragraph 22(a), the
applicable cure period shall be five (5) days from the date on which notice is
given, but, if the default consists of a failure to pay Basic Rent, Landlord
shall not be obligated to give notice of, or allow any cure period for, any such
default more than twice within any Lease Year. If the default consists of a
default under clauses (ii) or (xiv) of Paragraph 22(a), other than the events
specified in clauses (B) and (C) of the first sentence of this Paragraph 22(b),
the applicable cure period shall be twenty (20) days from the date on which
notice is given or, if the default cannot be cured within such twenty (20) day
period and delay in the exercise of a remedy would not (in Landlord's reasonable
judgment) cause any material adverse harm to Landlord or any of the Leased
Premises, the cure period shall be extended for the period required to cure the
default (but such cure period, including any extension, shall not in the
aggregate exceed ninety (90) days), provided that Tenant shall commence to cure
the default within the said twenty-day period and shall actively, diligently and
in good faith proceed with and continue the curing of the default until it shall
be fully cured. The notices described in this Paragraph 22(b) are in lieu and
not in addition to the notice under California Civil Code 1161.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's intention
to terminate this Lease on a date specified in such notice. Upon such date, this
Lease, the estate
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hereby granted and all rights of Tenant hereunder shall expire and terminate.
Upon such termination, Tenant shall immediately surrender and deliver possession
of the Leased Premises to Landlord in accordance with Paragraph 26. If Tenant
does not so surrender and deliver possession of the Leased Premises, Landlord
may re-enter and repossess the Leased Premises or by summary proceedings,
ejectment or any other lawful means or procedure. Upon or at any time after
taking possession of the Leased Premises, Landlord may, by peaceable means or
legal process, remove any Persons or property therefrom. Landlord shall be under
no liability for or by reason of any such entry, repossession or removal.
Notwithstanding such entry or repossession, Landlord may (A) exercise the remedy
set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B)
collect the damages set forth in Paragraph 23(b) or (c).
(ii) After repossession of the Leased Premises pursuant to
clause (i) above, Landlord shall have the right to relet any of the Leased
Premises to such tenant or tenants, for such term or terms, for such rent, on
such conditions and for such uses as Landlord in its sole discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may pay such leasing commissions, retain such management and
make such Alterations in connection with such reletting as it may deem advisable
in its sole discretion. Notwithstanding any such reletting, Landlord may collect
the damages set forth in Paragraph 23(c).
(iii) Landlord may declare by notice to Tenant the entire
Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the
then current Term to be immediately due and payable. Tenant shall immediately
pay to Landlord all such Basic Rent discounted to its present value, using a
discount factor of eight percent (8%) per annum, all accrued Rent then due and
unpaid, all other Monetary Obligations which are then due and unpaid and all
Monetary Obligations which arise or become due by reason of such Event of
Default (including any Costs of Landlord). Upon receipt by Landlord of all such
accelerated Basic Rent and Monetary Obligations, this Lease shall remain in full
force and effect and Tenant shall have the right to possession of the Leased
Premises from the date of such receipt by Landlord to the end of the Term, and
subject to all the provisions of this Lease, including the obligation to pay all
increases in Basic Rent and all Monetary Obligations that subsequently become
due, except that (A) no Basic Rent which has been prepaid hereunder shall be due
thereafter during the said Term, (B) Tenant shall have no option to extend or
renew the Term.
(b) In addition to its other rights under this Lease, Landlord
has the remedy described in California Civil Code Section 1951.4 which provides
substantially as follows: Landlord may continue the Lease in effect after
Tenant's breach and abandonment and recover the Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations. In accordance with California Civil Code Section 1951.4 (or any
successor statute), Tenant acknowledges that in the event Tenant breaches this
Lease and abandons the Leased Premises, this Lease shall continue in effect for
so long as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all of its rights and remedies under this Lease, including
the right to recover the Rent as it becomes due under this Lease. Tenant
acknowledges that the limitations on subletting and assignment set forth in
Paragraph 21 are reasonable. Acts of maintenance or preservation or efforts to
relet the Leased Premises or the appointment of a receiver upon initiative of
Landlord to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession.
(c) If Landlord elects to terminate this Lease upon the
occurrence of an Event of Default, Landlord may collect from Tenant damages
computed in accordance with the following provisions in addition to Landlord's
other remedies under this Lease:
(i) the worth at the time of award of any unpaid Rent which
has been earned at the time of such termination; plus
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(ii) the worth at the time of award of the amount by which
any unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(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
amount of such rental loss that Tenant proves could be reasonably avoided; plus
(iv) any other reasonable Cost necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
its obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom including, without limitation, brokerage
commissions, the cost of repairing and reletting the Leased Premises and
reasonable attorneys' fees; plus
(v) at Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable state law. Damages shall be due and payable from the date of
termination.
For purposes of clauses (i) and (ii) of this Paragraph, the
"worth at the time of award" shall be computed by adding interest at the Default
Rate to the past due Rent. For the purposes of clause (iii) of this Paragraph
23(d), the "worth at the time of award" shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award, plus one percent (1%).
(d) Landlord shall be entitled to apply the Security Deposit
to any amounts due under Paragraph 23(c) if this Lease shall be terminated, or,
if this Lease shall remain in full force and effect, to any amounts due under
Paragraph 23(b) or in the following order: (i) to past due Basic Rent, (ii) to
other past due Monetary Obligations and (iii) to Basic Rent and Monetary
Obligations thereafter due and owing.
(e) Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.
(f) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.
(g) No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(h) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, LANDLORD AND TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY. Landlord and
Tenant agree that this Lease constitutes a written consent to waiver of trial by
jury pursuant to the provisions of California Code and Civil Procedure Section
631, and each of Landlord and Tenant does appoint the other Person as its true
and lawful attorney-in-fact, which appointment is coupled with an interest, and
does hereby authorize and empower the other Person, in its name, place and
stead, to file this Lease with the clerk of any court of competent jurisdiction
as statutory written consent to waiver of trial by jury. Landlord and Tenant
agree that this Lease constitutes a written consent to waiver of trial by jury
pursuant
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to the provisions of California Code of Civil Procedure Section 631,
and each of Landlord and Tenant does appoint the other Person as its true and
lawful attorney-in-fact, which appointment is coupled with an interest, and does
hereby authorize and empower the other Person, in its name, place and stead, to
file this Lease with the clerk of any court of competent jurisdiction as
statutory written consent to waiver of trial by jury.
(i) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder, including the right to retain a third party manager to manage the
Leased Premises and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(j) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(k) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent; provided that the foregoing shall not preclude or prevent
Tenant from seeking relief under California Code of Civil Procedure Section 1179
in any action brought by Landlord for termination of this Lease.
(l) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place,
Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. A copy of
any notice given by Landlord to Tenant shall be sent to the attention of the
Tenant's Real Estate Manager, and a copy of any such notice shall simultaneously
be given by Landlord to Advanced Micro Devices, Inc., One AMD Place, Sunnyvale,
California 94088, Attention: General Counsel. Copies of all notices sent by
Landlord or Tenant shall be sent to Lender at GMAC Commercial Mortgage
Corporation, 650 Dresher Road, Horsham, PA 19044-8015, Attention: Executive Vice
President, Commercial Loan Servicing, with copies to Commercial Capital
Initiatives, Inc., Wall Street Plaza, 88 Pine Street, New York, NY 10005,
Attention: Manager - Loan administration and Pepe & Hazard LLP, Goodwin Square,
225 Asylum Street, Hartford, CT 06103, Attention: Adam F. Zweifler, Esq. For the
purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a
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previous notice) for its address by giving fifteen (15) days' notice of the new
address to the other party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the "Responding Party"), the Responding Party shall
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by any court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchaser or mortgagee of any
of the Leased Premises.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The cost
of removing and disposing of such property and repairing any damage to any of
the Leased Premises caused by such removal shall be paid by Tenant to Landlord
upon demand. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of account
with respect to the finances and business of Tenant generally and with respect
to the Leased Premises, in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and shall permit Landlord and Lender
by their respective agents, accountants and attorneys, upon reasonable notice to
Tenant, to visit and inspect the Leased Premises and to discuss the finances and
business with the officers of Tenant, at such reasonable times as may be
requested by Landlord. Upon the request of Lender or Landlord (either
telephonically or in writing), Tenant shall provide the requesting party with
copies of any information to which such party would be entitled in the course of
a personal visit.
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(b) Tenant shall deliver to Landlord and to Lender within one
hundred twenty (120) days of the close of each fiscal year, annual audited
financial statements of Tenant prepared by a nationally recognized firm of
independent certified public accountants. Tenant shall also furnish to Landlord
within forty-five (45) days after the end of each of the three remaining
quarters unaudited financial statements and all other quarterly reports of
Tenant, certified by Tenant's chief financial officer, and all filings, if any,
of Form 10-K, Form 10-Q and other required filings with the Securities and
Exchange Commission pursuant to the provisions of the Securities Exchange Act of
1934, as amended, or any other Law. All annual financial statements shall be
accompanied (i) by an opinion of said accountants stating that (A) there are no
qualifications as to the scope of the audit and (B) the audit was performed in
accordance with GAAP and (ii) by the affidavit of a duly authorized officer of
Tenant, dated within five (5) days of the delivery of such statement, stating
that (C) the affiant knows of no Event of Default, or event which, upon notice
or the passage of time or both, would become an Event of Default which has
occurred and is continuing hereunder or, if any such event has occurred and is
continuing, specifying the nature and period of existence thereof and what
action Tenant has taken or proposes to take with respect thereto and (D) except
as otherwise specified in such affidavit, that Tenant has fulfilled all of its
obligations under this Lease which are required to be fulfilled on or prior to
the date of such affidavit.
(c) Landlord, Lender and their respective management, agents,
accountants, attorneys, and advisors, shall consider and treat on a strictly
confidential basis Tenant's "Confidential Information." "Confidential
Information" as used in this Lease, shall mean all information disclosed by
Tenant that is not generally known in the Tenant's trade or industry and shall
include, without limitation, (a) information relating to the development and
distribution of the current, future and proposed products or services of Tenant
or its subsidiaries or affiliates; (b) trade secrets, drawings, inventions, mask
works, know-how, software programs, and software source documents; (c)
information regarding plans for research, development, new service offerings or
products, marketing and selling, business plans, business forecasts, budgets and
unpublished financial statements, licenses and distribution arrangements, prices
and costs, suppliers and customers; (d) existence of any business discussions,
negotiations or agreements between the parties; (e) any information contained in
the books and records of Tenant relating to the foregoing items; (f) any copies
of any books and records of Tenant relating to the foregoing items; (g) any
financial statements of Tenant; and (h) any other information of the Tenant
which is designated by Tenant as CONFIDENTIAL. All Confidential Information
shall be conspicuously stamped "CONFIDENTIAL"; in the case where such
information cannot reasonably be marked CONFIDENTIAL, for example verbal
disclosures, Tenant shall advise Landlord or Lender at the time of disclosure
that such information is Confidential Information and shall confirm such
designation in writing within five (5) days of disclosure. Neither Landlord,
Lender, nor their respective management, agents, accountants, attorneys and
advisors, shall disclose any information contained in Tenant's books and records
nor distribute copies of any such books and records nor Tenant's financial
statements to any other Persons without the prior consent of the chief operating
officer of Tenant.
The restrictions contained in this Paragraph 28(c) shall not prevent disclosure
by Landlord or Lender of any information in any of the following circumstances:
(i) Upon the order of any court or administrative agency to
the extent required by such order and not effectively stayed or by appeal or
otherwise in which case Landlord shall promptly notify Tenant of the request for
disclosure received by Landlord;
(ii) Upon the request, demand or requirement of any
regulatory agency or authority having jurisdiction over such party, including
the Securities and Exchange Commission (whether or not such request or demand
has the force of law) in which case Landlord shall promptly notify Tenant of the
request for disclosure received by Landlord;
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(iii) That has been publicly disclosed other than by breach
of this Paragraph 28(c) by Lender or Landlord or by any other Person referenced
in the first sentence of this Paragraph 28(c);
(iv) To counsel or accountants for Lender or Landlord;
(v) While an Event of Default exists, in connection with
the exercise of any right or remedy under this Lease or any other related
document;
(vi) The information is developed by Landlord or Lender,
independently and without reference to any Confidential Information communicated
to Landlord by Tenant, as shown by demonstrable proof;
(vii) To any Person to whom Initial Lender may disclose
information under Section 18.1 of the Mortgage who shall be subject to the
confidentiality requirements of this Paragraph 28(c); or
(viii) As otherwise required by Law.
All Confidential Information furnished to Landlord by Tenant is the sole and
exclusive property of Tenant. Upon request by Tenant, Landlord agrees to
promptly deliver to Tenant the original and any copies of such Confidential
Information to Tenant.
The rights and obligations set forth in this Paragraph 28(c) shall survive
according to the terms hereof and continue after any expiration or termination
of this Agreement or the service specified herein. In the event of a breach or
threatened breach by Landlord or Lender of the provisions of this Paragraph
28(c), Tenant shall be entitled to an injunction restraining Landlord or Lender
from disclosing, in whole or in part, any of such Confidential Information.
29. INTENTIONALLY DELETED.
30. Non-Recourse as to Landlord and Lender. Anything contained
herein to the contrary notwithstanding, any claim based on or in respect of any
liability of Landlord or Lender under this Lease shall be enforced only against
the Leased Premises and not against any other assets, properties or funds of (i)
Landlord or Lender, (ii) any director, officer, member, general partner,
shareholder, limited partner, beneficiary, employee or agent of Landlord or
Lender or any general partner of Landlord or any of its members or general
partners (or any legal representative, heir, estate, successor or assign of any
thereof), (iii) any predecessor or successor partnership or corporation (or
other entity) of Landlord or Lender or any of its general partners,
shareholders, officers, directors, members, employees or agents, either directly
or through Landlord or Lender or their general partners, shareholders, officers,
directors, employees or agents or any predecessor or successor partnership or
corporation (or other entity), or (iv) any Person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof.
31. Financing.
(a) Tenant agrees to pay all Costs incurred by Landlord in
connection with the purchase, leasing and initial financing of the Leased
Premises including, without limitation, the cost of appraisals, environmental
reports, title insurance, surveys, legal fees and expenses and Lender's
commitment fees.
(b) If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed
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Lender for changes or modifications in this Lease. In particular, Tenant shall
agree, upon request of Landlord, to supply any such Lender with such notices and
information as Tenant is required to give to Landlord hereunder and to extend
the rights of Landlord hereunder to any such Lender and to acknowledge such
financing and the assignment of this Lease to Lender if such acknowledgment is
requested by such Lender.
32. Subordination, Non-Disturbance and Attornment. This Lease
shall be subject and subordinate to any Mortgage which is hereafter executed or
recorded securing a Loan, provided, however, such subordination shall only be
effective if the Lender agrees in a written subordination of substantially the
same substance as the document attached hereto as Exhibit "F", with such
non-material changes as the Landlord may reasonably request, that so long as
there exists no outstanding Event of Default at the time the Mortgage terminates
by foreclosure or otherwise: (i) this Lease shall survive such termination; (ii)
the Lender or any purchaser acquires Landlord's interest under this Lease
pursuant to or in lieu of proceedings for enforcement of any Mortgage, the
Lender or any purchaser shall assume all of Landlord's obligations hereunder
arising during the period commencing on the date of such acquisition and ending
on the date such interest is conveyed or transferred to a subsequent party that
assumes the obligations of Landlord hereunder arising during the period such
party so holds Landlord's interest, subject in all events to the terms of
Paragraph 30 of this Lease. Provided the conditions of the preceding sentence
are satisfied, Tenant covenants and agrees to execute and deliver, upon request
by Landlord, the subordination described above, and any additional documents
evidencing the subordination of this Lease with respect to any such Mortgage
reasonably required by the Lender and the agreement of Tenant to attorn to the
Lender or any such purchaser.
33. INTENTIONALLY DELETED.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true lease for state law
purposes and shall report this transaction as a Lease for Federal income tax
purposes. For Federal income tax purposes each shall report this Lease as a true
lease with Landlord as the owner of the Leased Premises and Equipment and Tenant
as the lessee of such Leased Premises and Equipment including: (1) treating
Landlord as the owner of the property eligible to claim depreciation deductions
under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
35. Excess Land.
(a) Landlord acknowledges that the Excess Land is not
necessary for Tenant's current and contemplated use of the Leased Premises.
Landlord shall, upon not less than thirty (30) days prior written notice to
Landlord and Lender, convey the Excess Land to or as directed by Tenant for no
consideration (other than having entered into this Lease with Tenant); provided,
that no Event of Default under this Lease or under the documents evidencing and
securing the Loan exists and the following conditions are satisfied: (i) the
Leased Premises shall have been subdivided in compliance with all applicable
subdivision laws, Legal Requirements and Easement Agreements so that the Excess
Land and the remainder of the Leased Premises (the "Retained Premises") are
separate tracts, (ii) after such sale both the Excess Land and the Retained
Premises shall comply with all applicable Laws, Legal Requirements and Easement
Agreements, (iii) the release of the Excess Land does not materially impact the
functional use, legal use or viability of the Retained Premises, (iv) Tenant
shall have complied with all requirements of Lender set forth in the Mortgage
with respect to the release of the Excess Land, and (v) all Costs of Landlord,
Lender and Tenant in connection with the conveyance of the Excess Land and in
complying with the above conditions, including reasonable attorneys' fees,
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shall be borne solely by Tenant. Landlord, as record title holder to the Excess
Land, shall cooperate with Tenant in obtaining a lawful subdivision of the
Leased Premises with separate parcels consisting of the Excess Land and the
Retained Premises, at no cost to Landlord. If Landlord conveys the Excess Land,
then, except for Surviving Obligations this Lease shall terminate with respect
to the Excess Land, but shall remain in full force and effect with respect to
the Retained Premises, provided, however, that in no event will the release of
the Excess Land from this Lease amend, reduce or modify any of the obligations
and liabilities of Tenant hereunder, including the obligations to pay Basic Rent
in the amount set forth in Exhibit "D" hereto.
(b) In the event at any time during the term Tenant determines
to construct or cause to be constructed improvements on the Excess Land, Tenant
shall so notify Landlord, and Landlord and Tenant shall negotiate in good faith
for Landlord to purchase the Excess Land from Tenant, construct such
improvements and lease the same to Tenant.
36. Financing Major Alterations.
(a) Should Tenant, during the Term of this Lease, desire to
make Alterations to any of the Leased Premises which are not readily removable
without causing material damage to the Leased Premises or to expand the
Improvements and which will cost in excess of $500,000 ("Major Alterations"),
Tenant may, prior to the commencement of construction of such Major Alterations,
request Landlord to reimburse the costs thereof (the "Alteration Cost") to
Tenant, to wit: cost of labor and materials, financing fees, legal fees, survey,
title insurance and other normal and customary loan or construction costs.
(b) Should Landlord agree to reimburse such costs, Landlord
and Tenant shall enter into good faith negotiations regarding the execution and
delivery of a written agreement of modification of this Lease, which agreement
shall provide for the following:
(i) payment by Landlord to Tenant of the Alteration Cost
within one hundred twenty (120) days of the date of Landlord's agreement to pay
the Alteration Cost, or in installment payments as agreed, or on the date of
completion of the Major Alterations, whichever shall be the later;
(ii) an increase in the annual Basic Rent payable during
the Amortization Period (as hereinafter defined) to an amount sufficient to
amortize the Alteration Cost ("Total Financing") over a period (the
"Amortization Period") which shall be the remainder of the then current Term
and, if Tenant so elects, any additional extension periods provided for herein
(so long as Tenant shall confirm any such extension periods included in the
Amortization Period by a written waiver of its right to give notice of its
intention not to renew this Lease prior to the expiration of such extension
periods), at such rate of interest and upon such other terms as shall be agreed
upon between Landlord and Tenant, but which shall be no less favorable than the
prevailing interest rate and terms for first unsecured loans in a principal
amount equal to the Total Financing for borrowers with credit ratings equivalent
to that of Tenant's at that time;
(iii) provide a rate of return to Landlord on Landlord's
equity investment in the Leased Premises equal to that enjoyed by Landlord
hereunder immediately prior to such proposed increase in Basic Rent; and
(iv) such other changes and amendments to this Lease as may
be necessary and appropriate in view of such payment of the Alteration Cost by
Landlord to Tenant.
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(c) Tenant shall pay all Costs incurred by Landlord in
connection with any such modification to this Lease and such financing,
including closing costs, brokerage fees, taxes, recording charges and reasonable
legal fees and expenses.
(d) To the extent that the terms of the Mortgage or any other
document encumbering any of the Leased Premises shall require the consent of
Lender and/or the holder or holders of any encumbrance on any of the Leased
Premises (the "Encumbrancers") to the addition or construction of any Major
Alterations or to the financing thereof by Landlord, the rights and obligations
of Landlord and Tenant under Paragraph 13 and this Paragraph 36 are expressly
conditioned upon Tenant's obtaining, prior to the commencement of any
construction, the Encumbrancers' written consent to such construction and to
Landlord's obtaining, in the event Landlord has agreed to pay for the Major
Alterations, the Encumbrancers' written consent to such financing.
(e) If Landlord and Tenant do not reach agreement on Tenant's
request to have Landlord finance the Alteration Costs, Tenant shall, subject to
the provisions of Paragraph 13 of this Lease, have the right to construct the
Major Alterations at Tenant's sole cost and expense. In any event, the
construction of the Major Alterations shall be performed in accordance with the
provisions of Paragraph 13 hereof and the Major Alterations shall be the
property of Landlord and part of the Leased Premises subject to this Lease.
(f) Nothing contained in this Paragraph 36 shall be construed
to modify Paragraph 13 hereof, and the provisions of Paragraph 12 and
subparagraphs (i) and (ii) of Paragraph 13(a) shall apply to all Major
Alterations made or constructed hereunder, including the requirement for
Landlord's consent to Alterations.
37. Security Deposit.
(a) Concurrently with the execution of this Lease, Tenant has
delivered to Landlord cash in the amount of Ten Million Dollars ($10,000,000)
(the "Security Deposit") which shall be deposited in a segregated
interest-bearing account (the "Account") with a financial institution or
institutions selected by Lender or Landlord. The Security Deposit shall secure
the payment by Tenant of the Rent and all other charges or payments to be paid
hereunder and the performance of the covenants and obligations contained herein.
(b) If at any time an Event of Default shall have occurred and
be continuing beyond the applicable grace period, if any, Landlord shall be
entitled, at its sole discretion, at any time and from time to time, to withdraw
the Security Deposit or any portion thereof from the Account and to apply the
proceeds in payment of (i) any Rent or other charges for the payment of which
Tenant shall be in default, (ii) any expense incurred by Landlord in curing any
default of Tenant, (iii) any other sums due to Landlord in connection with any
default or the curing thereof, including, without limitation, any damages
incurred by Landlord by reason of such default, including maintenance expenses
and management fees and/or (iv) the payment of leasing commissions and tenant
improvements for any substitute tenant. If any portion of the Security Deposit
is used, retained or applied by Landlord for any purpose set forth above, Tenant
shall, within fifteen (15) days after demand therefor is made by Landlord,
provide to Landlord cash which complies with the requirements of this Paragraph
37 so that the Security Deposit is in the original principal amount thereof.
Landlord shall deliver to Tenant copies of all statements regarding the
account(s) in which the Security Deposit is held promptly after receipt thereof
by Landlord.
(c) So long as no Event of Default exists, at any time
following the later to occur of payment in full of the Initial Loan or the
expiration of the tenth (10th) Lease Year, the balance of the Security Deposit
shall be returned to Tenant upon the earlier to occur of:
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(i) the expiration of the Term or
(ii) no later than fifteen (15) days after the date on
which Tenant receives a rating ("Required Rating")on its publicly-traded
unsecured senior debt of Baa3 or better from Moody's, provided that at the time
of such rating Tenant has a rating from S&P of not less than BB+.
(d) Notwithstanding the foregoing, if at any time or from time
to time following the release of the Security Deposit pursuant to Subsection
(ii) of this Paragraph 37(c) (A) Tenant's publicly-traded unsecured debt rating
shall be downgraded to Ba1 or Ba2 from Moody's, and is BB or BB+ from S&P,
Tenant shall redeposit with Landlord a security deposit in the amount of Five
Million Dollars ($5,000,000) or (B) if such debt rating from Moody's shall be
less than Ba2 and from S&P shall be less than BB, Tenant shall redeposit with
Landlord Ten Million Dollars ($10,000,000) (or if the deposit described in
clause (A) has been made, Five Million Dollars $5,000,000). Any such amounts
shall be deposited within fifteen (15) days following the downgrade of Tenant's
rating and any amounts so deposited shall be considered the "Security Deposit"
for the purposes of this Lease and shall thereafter be subject to the applicable
provisions of this Lease, including this subparagraph (c).
(e) At the request of Tenant (so long as no Event of Default
exists) the Security Deposit shall be invested in:
(i) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof having maturities of not more
than 12 months from the date of acquisition;
(ii) certificates of deposit, time deposits, Eurodollar
time deposits, repurchase agreements, reverse repurchase agreements, or bankers'
acceptances, having in each case a tenor of not more than 12 months, issued by
any Bank, or by any U.S. commercial bank or any branch or agency of a non-U.S.
bank licensed to conduct business in the U.S. having combined capital and
surplus of not less than $100,000,000 and whose short-term securities are rated
at least A-1 by S&P or at least P-1 by Moody's;
(iii) taxable and tax-exempt commercial paper of an issuer
rated at least A-1 by S&P or at least P-1 by Moody's and in either case having a
tenor of not more than 270 days;
(iv) medium term notes of an issuer rated at least AA by
S&P or at lease Aa2 by Moody's and having a remaining term of not more than 12
months after the date of acquisition by the Company or its Subsidiaries;
(v) municipal notes and bonds which are rated at least SP-1
or AA by S&P or at least MIG-2 or Aa by Moody's with tenors of not more than 12
months;
(vi) investments in taxable or tax-exempt money market
funds with assets greater than $500,000,000 and whose assets have average
maturities less than or equal to 180 days and are rated at least A-1 by S&P or
at least P-1 by Moody's;
(vii) money market preferred instruments of an issuer rated
at least A-1 by S&P or at least P-1 by Moody's with tenors of not more than 12
months; or
(viii) such other comparable investments as may be
requested by Tenant and approved by Landlord and Lender, such approval not to be
unreasonably withheld.
-38-
<PAGE> 41
(f) As long as no Event of Default exists, all interest
accrued on the Security Deposit shall be paid to Tenant as and when such
interest is received from the investment of the Security Deposit, but in no
event more than once per calendar quarter.
(g) Landlord shall have the right to designate Lender as the
holder of the Security Deposit during the term of the applicable Loan in which
event Lender shall have all of the rights of Landlord under this Paragraph 37.
Tenant covenants and agrees to execute such agreements, consents and
acknowledgments as may reasonably be requested by Landlord from time to time to
change the holder of the Security Deposit as hereinabove provided.
38. Right of First Refusal.
(a) Except as otherwise provided in clause (h) of this
Paragraph 38, and provided an Event of Default does not then exist, if Landlord
shall enter into a bona fide, arms-length contract for the sale (the "Sale
Contract") of the Leased Premises with a Third Party Purchaser (which Sale
Contract may include other property owned by Landlord so long as a specific
purchase price is allocated to the Leased Premises), such Sale Contract must be
conditioned upon Tenant's failure to exercise its right under this Paragraph 38,
Landlord shall give written notice to Tenant of the Sale Contract, together with
a copy of the executed Sale Contract and the name and business address of the
Third Party Purchaser.
(b) For a period of thirty (30) days following receipt of such
notice, Tenant shall have the right, exercisable by written notice to Landlord
given within said thirty (30) day period, to elect to purchase the Leased
Premises at the purchase price (calculated on a comparable after-tax basis with
respect to capital gains, including depreciation and in cash) and upon all the
terms and conditions set forth in such Sale Contract except that no
contingencies contained in such Sale Contract as to environmental assessments,
engineering studies, inspection of the Leased Premises, availability of
financing, sale of other property, state of the title to or encumbrances on the
Leased Premises, or any other condition or contingency to the Third Party
Purchaser's obligation to purchase the Leased Premises which pertains to the
condition of the Leased Premises, the Third Party Purchaser's ability to take
certain action or any other factor beyond the control of Landlord, shall apply
to Tenant's obligation to purchase the Leased Premises under this Paragraph 38,
and Tenant shall be obligated to purchase the Leased Premises without any such
condition or contingency.
(c) If at the expiration of the aforesaid thirty (30) day
period Tenant shall have failed to exercise the aforesaid right of first
refusal, Landlord may sell the Leased Premises to such Third Party Purchaser
upon the terms set forth in such contract.
(d) Except as otherwise specifically provided herein, the
closing date for any purchase of the Leased Premises by Tenant pursuant to this
Paragraph 38 shall be the earlier to occur of (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the Leased
Premises upon the terms of a Sale Contract with a Third Party Purchaser and (ii)
the closing date provided in such Sale Contract. At such closing Landlord shall
convey the Leased Premises to Tenant in accordance with, and Tenant shall pay to
Landlord the purchase price and other consideration set forth in, the applicable
contract.
(e) Tenant shall have the right during the Term to exercise
the foregoing right of first refusal upon (i) each proposed sale of the Leased
Premises prior to the tenth (10th) anniversary of the date of this Lease and
(ii) one (1) time during the period commencing with the tenth (10th) anniversary
of the date of this Lease and ending with the last day of the Term; provided,
that if, following compliance with the procedure described in Paragraph 38(b), a
Third Party Purchaser does not purchase the Leased Premises, such event shall
not count as an exercise of Tenant's right of first refusal.
-39-
<PAGE> 42
(f) NOTWITHSTANDING ANYTHING TO THE CONTRARY, SUCH RIGHT SHALL
TERMINATE AND BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT IF (1) TENANT
FAILS TO EXERCISE THE RIGHT OF FIRST REFUSAL GRANTED PURSUANT TO THIS PARAGRAPH
38(e)(ii), AND THE SALE TO THE THIRD PARTY PURCHASER IS CONSUMMATED OR IF (2)
THIS LEASE TERMINATES OR THE TERM EXPIRES OR (3) IF THE LEASED PREMISES ARE SOLD
OR TRANSFERRED PURSUANT TO THE EXERCISE OF A PRIVATE POWER OF SALE OR JUDICIAL
FORECLOSURE OR ACCEPTANCE OF A DEED IN LIEU THEREOF. IN SUCH EVENT TENANT SHALL
EXECUTE A QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS LANDLORD SHALL REASONABLY
REQUEST EVIDENCING THE TERMINATION OF ITS RIGHT OF FIRST REFUSAL.
(g) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to a Third
Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer. At the request of Landlord, Tenant will execute such documents
confirming the agreement referred to above and such other agreements as Landlord
may reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder.
(h) The provisions of this Paragraph 38 shall not apply to or
prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the Leased Premises, (ii) any sale of the Leased
Premises pursuant to a private power of sale under or judicial foreclosure of
any Mortgage or other security instrument or device to which Landlord's interest
in the Leased Premises is now or heareafter subject, (iii) any transfer of
Landlord's interest in the Leased Premises to a Lender, beneficiary under deed
of trust or other holder of a security interest therein or their designees by
deed in lieu of foreclosure; (iv) any transfer of the Leased Premises to any
governmental or quasi-governmental agency with power of condemnation, (v) any
transfer of the Leased Premises to any affiliate of Landlord, Carey
Institutional Properties Incorporated ("CIP") , Corporate Property Associates 12
Incorporated ("CPA12"), Corporate Property Associates 14 Incorporated ("CPA14")
or to any entity for whom W.P. Carey & Co., Inc., Carey Diversified LLC or any
of their affiliates provides management or advisory services or investment
advice, (vi) any transfers of interests in Landlord by any member to any other
member, (vii) any Person to whom any one or more of CIP, CPA12 and/or CPA14
sells all or substantially all of its assets, or (viii) any transfer of the
Leased Premises to any of the successors or assigns of any of the Persons
referred to in the foregoing clauses (i) through (iv).
39. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
(b) As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean
-40-
<PAGE> 43
"the Equipment or any part thereof or interest therein"; and (ix) "any of the
Adjoining Property" shall mean "the Adjoining Property or any part thereof or
interest therein".
(c) Any act which Landlord is permitted to perform under this
Lease may be performed at any reasonable time and from time to time upon prior
written notice to Tenant (except in the event of an emergency in which case no
notice shall be required) by Landlord or any person or entity designated by
Landlord. Each appointment of Landlord as attorney-in-fact for Tenant hereunder
is irrevocable and coupled with an interest. Time is of the essence with respect
to the performance by each party of their respective obligations under this
Lease.
(d) Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of the Leased
Premises or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by
Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein. Landlord and
Tenant are business entities having substantial experience with the subject
matter of this Lease and have each fully participated in the negotiation and
drafting of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed against
the drafter.
(f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom enforcement of
any such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and
bind Tenant, its successors and assigns and all present and subsequent
encumbrancers and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this
Lease shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.
(j) In the event that either Landlord or Tenant is delayed,
interrupted or prevented, despite it best efforts, from performing any of its
obligations under this Lease (excluding any obligation to make any payment
required hereunder), and such delay, interruption or prevention is due to fire
or other casualty, acts of God, governmental act, embargo, strike or labor
dispute, unavailability of materials, or any other cause outside the reasonable
control of such party (financial inability, unavailability of sources of
financing, or changes in market conditions excepted), then the time for
performance of the affected obligations of Landlord or Tenant, as the case may
be, shall be extended for a period equivalent to the period of such delay,
interruption or prevention.
-41-
<PAGE> 44
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease
to be duly executed as of the day and year first above written.
LANDLORD:
DELAWARE CHIP LLC, a Delaware limited
liability company
By:____________________________
Title:_________________________
TENANT:
ADVANCED MICRO DEVICES, INC.,
a Delaware corporation
By:____________________________
Title:_________________________
-42-
<PAGE> 45
EXHIBIT A
PREMISES
<PAGE> 46
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease; but
excluding all personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation,
as buildings, of the buildings which constitute part of the Leased Premises,
including, without limitation, the following items of personal property of
Tenant:
1. audio/visual equipment;
2. artwork; and
3. furniture and furniture systems.
<PAGE> 47
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE> 48
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2,
3 and 4 below, Basic Rent payable in respect of the Term shall be $9,145,500 per
annum, payable monthly in advance on each Basic Rent Payment Date, in equal
installments of $762,125 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in San Francisco, California. Any decision or award
resulting from such arbitration shall be final and binding upon Landlord and
Tenant and judgment thereon may be entered in any court of competent
jurisdiction. In no event will the Basic Rent as adjusted by the CPI adjustment
be less than the Basic Rent in effect for the three (3) year period immediately
preceding such adjustment.
3. Arbitration of Disputes. NOTICE: BY INITIALING IN THE SPACE BELOW
YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN
PARAGRAPH 2 ABOVE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN PARAGRAPH 2 ABOVE. IF YOU REFUSE TO SUBMIT THE
ARBITRATION AFTER AGREEMENT TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE
FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN
PARAGRAPH 2 ABOVE TO NEUTRAL ARBITRATION.
_________________ ______________
Landlord Tenant
4. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted
to reflect changes in the CPI until the third (3rd) anniversary of the Basic
Rent Payment Date on which the first full monthly installment of Basic Rent
shall be due and payable (the "First Full Basic Rent Payment Date"). As of the
third (3rd) anniversary of the First Full Basic Rent Payment Date and thereafter
on the sixth (6th), ninth (9th), twelfth (12th), fifteenth (15th) and eighteenth
(18th) and, if the initial Term is extended, on the twenty-first (21st),
twenty-fourth (24th), and twenty-seventh (27th), and, if the Term is further
extended, on the thirtieth (30th), thirty-third (33rd), thirty-sixth (36th) and
thirty-ninth (39th) anniversaries of the First Full Basic Rent Payment Date and,
if the Term is further extended pursuant to Paragraph 5(c), on each third (3rd )
anniversary of the First Full Rent Payment Date thereafter, Basic Rent shall be
adjusted to reflect increases in the CPI during the most recent three (3) year
period immediately preceding each of the foregoing dates (each such date being
hereinafter referred to as the "Basic Rent Adjustment Date").
<PAGE> 49
5. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 5(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be two (2) times the difference between (i) the average CPI for the
three (3) most recent calendar months (the "Prior Months") ending prior to such
Basic Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. An
amount equal to the lesser of (x) the product of such multiplication or 6.903%
of the Basic Rent in effect immediately prior to such Basic Rent Adjustment Date
shall be added to the Basic Rent in effect immediately prior to such Basic Rent
Adjustment Date. As used herein, "Beginning CPI" shall mean the average CPI for
the three (3) calendar months corresponding to the Prior Months, but occurring
three (3) years earlier. If the average CPI determined in clause (i) is the same
or less than the Beginning CPI, the Basic Rent will remain the same for the
ensuing three (3) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic Rent
payable under this Lease until the next succeeding Basic Rent Adjustment Date
shall be the Basic Rent in effect after the adjustment provided for as of such
Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to Tenant
on or before the tenth (10th) day preceding each Basic Rent Adjustment Date, but
any failure to do so by Landlord shall not be or be deemed to be a waiver by
Landlord of Landlord's rights to collect such sums. Tenant shall pay to
Landlord, within ten (10) days after a notice of the new annual Basic Rent is
delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated
amount as set forth above was not delivered to Tenant at least ten (10) days
preceding the Basic Rent Adjustment Date in question.
-2-
<PAGE> 50
EXHIBIT E
INTENTIONALLY DELETED
<PAGE> 51
EXHIBIT F
FORM OF SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
<PAGE> 52
EXHIBIT G
SCHEDULE OF TERMINATION AMOUNTS
The Termination Amount shall equal the following amounts for the specified lease
year plus the Prepayment Premium.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Lease Year Amount
- ------------------------------------------------------------------------
<S> <C>
1 $ 99,546,291.00
- ------------------------------------------------------------------------
2 $ 99,546,291.00
- ------------------------------------------------------------------------
3 $ 99,546,291.00
- ------------------------------------------------------------------------
4 $ 99,546,291.00
- ------------------------------------------------------------------------
5 $101,405,445.00
- ------------------------------------------------------------------------
6 $101,405,445.00
- ------------------------------------------------------------------------
7 $101,405,445.00
- ------------------------------------------------------------------------
8 $101,405,445.00
- ------------------------------------------------------------------------
9 $ 98,194,241.00
- ------------------------------------------------------------------------
10 $ 98,194,241.00
- ------------------------------------------------------------------------
11 $ 98,194,241.00
- ------------------------------------------------------------------------
12 $ 98,194,241.00
- ------------------------------------------------------------------------
13 $ 96,429,228.00
- ------------------------------------------------------------------------
14 $ 96,429,228.00
- ------------------------------------------------------------------------
15 $ 94,295,854.00
- ------------------------------------------------------------------------
16 $ 94,295,854.00
- ------------------------------------------------------------------------
17 $ 93,815,960.00
- ------------------------------------------------------------------------
18 $ 93,815,960.00
- ------------------------------------------------------------------------
19 $ 93,815,960.00
- ------------------------------------------------------------------------
20 $ 93,815,960.00
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 1
LEASE AGREEMENT
by and between
CBS (PA) QRS 14-12, INC.
a Delaware Corporation
as LANDLORD
and
CONTRAVES BRASHEAR SYSTEMS, L.P.,
a Delaware limited partnership
as TENANT
Premises: Pittsburgh, PA
Dated as of: December __, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties..................................................................................................1
1. Demise of Premises...................................................................................1
2. Certain Definitions..................................................................................1
3. Title and Condition..................................................................................8
4. Use of Leased Premises; Quiet Enjoyment..............................................................9
5. Term................................................................................................10
6. Basic Rent..........................................................................................11
7. Additional Rent.....................................................................................11
8. Net Lease; Non-Terminability........................................................................12
9. Payment of Impositions..............................................................................13
10. Compliance with Laws and Easement Agreements; Environmental Matters................................15
11. Liens; Recording...................................................................................16
12. Maintenance and Repair.............................................................................17
13. Alterations and Improvements.......................................................................18
14. Permitted Contests.................................................................................18
15. Indemnification....................................................................................19
16. Insurance..........................................................................................20
17. Casualty and Condemnation..........................................................................23
18. Termination Events.................................................................................25
19. Restoration........................................................................................26
20. Procedures Upon Purchase...........................................................................27
21. Assignment and Subletting; Prohibition against Leasehold Financing.................................28
22. Events of Default..................................................................................30
23. Remedies and Damages Upon Default..................................................................32
24. Notices............................................................................................35
25. Estoppel Certificate...............................................................................36
26. Surrender..........................................................................................36
27. No Merger of Title.................................................................................36
28. Books and Records..................................................................................37
29. Determination of Value.............................................................................38
30. Non-Recourse as to Landlord........................................................................40
31. Financing..........................................................................................41
32. Subordination, Non-Disturbance and Attornment......................................................41
33. Financial Covenants................................................................................42
34. Tax Treatment; Reporting...........................................................................42
35. Option to Purchase.................................................................................43
36. Right of First Refusal.............................................................................43
37. Miscellaneous......................................................................................45
</TABLE>
EXHIBITS
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Financial Covenants
<PAGE> 3
LEASE AGREEMENT, made as of December , 1998, between CBS (PA) QRS
14-12, INC., a Delaware Corporation ("Landlord"), with an address c/o W. P.
Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020,
and CONTRAVES BRASHEAR SYSTEMS, L.P., a Delaware limited partnership ("Tenant"),
with an address at 615 Epsilon Drive, Pittsburgh, PA 15238.
In consideration of the rents and provisions herein stipulated
to be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon
the provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (collectively, the "Land"); (b) the
buildings, structures and other improvements now or hereafter constructed on the
Land (collectively, the "Improvements"); and (c) the fixtures, machinery,
equipment and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
2. Certain Definitions.
"Acquisition Cost" shall mean $6,806,283.
"Additional Rent" shall mean Additional Rent as
defined in Paragraph 7.
"Adjoining Property" shall mean all sidewalks,
driveways, curbs, gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions,
improvements or repairs to, all alterations, reconstructions, renewals,
replacements or removals of and all substitutions or replacements for any of the
Improvements or Equipment, both interior and exterior, structural and
non-structural, and ordinary and extraordinary.
"Appurtenances" shall mean all tenements,
hereditaments, easements, rights-of-way, rights, privileges in and to the Land,
including (a) easements over other lands granted by any Easement Agreement and
(b) any streets, ways, alleys, vaults, gores or strips of land adjoining the
Land.
"Assignment" shall mean any assignment of rents and
leases from Landlord to a Lender which (a) encumbers any of the Leased Premises
and (b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in
Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent
Payment Dates as defined in Paragraph 6.
<PAGE> 4
"Casualty" shall mean any injury to or death of any
person or any loss of or damage to any property (including the Leased Premises)
included within or appurtenant to the Leased Premises or arising from the
Adjoining Property.
"Commencement Date" shall mean Commencement Date as
defined in Paragraph 5.
"Condemnation" shall mean a Taking and/or a
Requisition.
"Condemnation Notice" shall mean written notice or
actual knowledge of the institution of or intention to institute any proceeding
for Condemnation.
"Costs" of a Person or associated with a specified
transaction shall mean all reasonable costs and expenses incurred by such Person
or associated with such transaction, including without limitation, attorneys'
fees and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"Covenants" shall mean the covenants and agreements
described on Exhibit "E".
"CPI" shall mean CPI as defined in Exhibit "D"
hereto.
"Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23(a)(iii).
"Default Rate" shall mean the Default Rate as defined
in Paragraph 7(a)(iv).
"Easement Agreement" shall mean any conditions,
covenants, restrictions, easements, declarations, licenses and other agreements
listed as Permitted Encumbrances or as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted
or promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
2
<PAGE> 5
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.
"Environmental Violation" shall mean (a) any direct
or indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (b) any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which extends to any
Adjoining Property in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or which could
result in any liability to any Federal, state or local government or to any
other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which could result in any liability, cost or expense to
Landlord or Lender or any other owner or occupier of the Leased Premises, or
which could result in a creation of a lien on the Leased Premises under any
Environmental Law, or (e) any violation of or noncompliance with any
Environmental Law.
"Equipment" shall mean the Equipment as defined in
Paragraph 1.
"Event of Default" shall mean an Event of Default as
defined in Paragraph 22(a).
"Fair Market Value" shall mean the higher of (a) the
fair market value of the Leased Premises as of the Relevant Date as if
unaffected and unencumbered by this Lease or (b) the fair market value of the
Leased Premises as of the Relevant Date as affected and encumbered by this Lease
and assuming that the Term has been extended for all extension periods provided
for herein. For all purposes of this Lease, Fair Market Value shall be
determined in accordance with the procedure specified in Paragraph 29.
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"Fair Market Rental Value" shall mean the fair market
rental value of the Leased Premises for the relevant Renewal Term determined in
accordance with the procedure specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the
Fair Market Value or the Fair Market Rental Value is determined in accordance
with Paragraph 29.
"Federal Funds" shall mean federal or other
immediately available funds which at the time of payment are legal tender for
the payment of public and private debts in the United States of America.
"Hazardous Activity" means any activity, process,
procedure or undertaking which directly or indirectly (i) procures, generates or
creates any Hazardous Substance; (ii) causes or results in (or threatens to
cause or result in) the release, seepage, spill, leak, flow, discharge or
emission of any Hazardous Substance into the environment (including the air,
ground water, watercourses or water systems), (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would cause the Leased Premises or
any portion thereof to become a hazardous waste treatment, recycling,
reclamation, processing, storage or disposal facility within the meaning of any
Environmental Law.
"Hazardous Condition" means any condition which would
support any claim or liability under any Environmental Law, including the
presence of underground storage tanks.
"Hazardous Substance" means (i) any substance,
material, product, petroleum, petroleum product, derivative, compound or
mixture, mineral (including asbestos), chemical, gas, medical waste, or other
pollutant, in each case whether naturally occurring, man-made or the by-product
of any process, that is toxic, harmful or hazardous or acutely hazardous to the
environment or public health or safety or (ii) any substance supporting a claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law. Hazardous Substances include, without limitation, any
toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined
in Paragraph 9(a).
"Improvements" shall mean the Improvements as defined
in Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in
Paragraph 15.
"Initial Term" shall mean Initial Term as defined in
Paragraph 5.
"Insurance Requirements" shall mean the requirements
of all insurance policies required to be maintained in accordance with this
Lease.
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"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of
law, code, ordinance, order, judgment, decree, injunction, rule, regulation,
policy, requirement or administrative or judicial determination, even if
unforeseen or extraordinary, of every duly constituted governmental authority,
court or agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first
Lease Year, the period commencing on the Commencement Date and ending at
midnight on the last day of the twelfth (12th) consecutive calendar month
following the month in which the Commencement Date occurred, and each succeeding
twelve (12) month period during the Term.
"Leased Premises" shall mean the Leased Premises as
defined in Paragraph 1.
"Legal Requirements" shall mean the requirements of
all present and future Laws (including but not limited to Environmental Laws and
Laws relating to accessibility to, usability by, and discrimination against,
disabled individuals) and all covenants, restrictions and conditions now or
hereafter of record which are or purport to be applicable to Tenant or to any of
the Leased Premises, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or restoration of any of the Leased
Premises, even if compliance therewith necessitates structural changes or
improvements or results in interference with the use or enjoyment of any of the
Leased Premises.
"Lender" shall mean any person or entity (and their
respective successors and assigns) which may, after the date hereof, make a Loan
to Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more
Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and
evidenced by a Note.
"Monetary Obligations" shall mean Rent and all other
sums payable by Tenant under this Lease to Landlord, to any third party on
behalf of Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable
to Landlord or Lender by reason of a Condemnation whether pursuant to a judgment
or by agreement or otherwise, or (b) the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent
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payable to Landlord or Lender), (iv), (v) or (vi) of Paragraph 16(a), as the
case may be, less any expenses incurred by Landlord and Lender in collecting
such award or proceeds.
"Note" shall mean any promissory note evidencing
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.
"Offer Amount" shall mean the greater of (a) the Fair
Market Value of the Leased Premises as of the Relevant Date and (b) the sum of
the Acquisition Cost and the applicable Prepayment Premium which Landlord will
be required to pay in prepaying any Loan with the proceeds of the Offer Amount.
"Option Exercise Notice" shall mean Option Exercise
Notice as defined in Paragraph 35.
"Partial Casualty" shall mean any Casualty which does
not constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation
which does not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership,
association, corporation or other entity.
"Prepayment Premium" shall mean any payment (other
than a payment of principal and/or interest which Landlord is required to make
under a Note or a Mortgage) by reason of any prepayment by Landlord of any
principal due under a Note or Mortgage, and which may be (in lieu of such
prepayment premium or prepayment penalty) a "make whole" clause requiring a
prepayment premium in an amount sufficient to compensate the Lender for the loss
of the benefit of the Loan due to a prepayment (the "YMP"); provided, however,
such prepayment premium shall not exceed the greater of (x) one (1%) percent of
the then outstanding principal balance of the Loan and (y) the YMP that would be
due on a loan with an original principal balance equal to the lesser of (A) the
actual principal Loan balance or (B) 70% of the Acquisition Cost.
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) seven percent (7%) per annum.
"Prime Rate" shall mean the annual interest rate as
published, from time to time, in The Wall Street Journal as the "Prime Rate" in
its column entitled "Money Rate". The
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Prime Rate may not be the lowest rate of interest charged by any "large U.S.
money center commercial banks" and Landlord makes no representations or
warranties to that effect. In the event The Wall Street Journal ceases
publication or ceases to publish the "Prime Rate" as described above, the Prime
Rate shall be the average per annum discount rate (the "Discount Rate") on
ninety-one (91) day bills ("Treasury Bills") issued from time to time by the
United States Treasury at its most recent auction, plus three hundred (300)
basis points. If no such 91-day Treasury Bills are then being issued, the
Discount Rate shall be the discount rate on Treasury Bills then being issued for
the period of time closest to ninety-one (91) days.
"Relevant Amount" shall mean the Termination Amount
or the Default Termination Amount, or the Offer Amount, as the case may be.
"Relevant Date" shall mean (a) the date immediately
prior to the date on which the applicable Condemnation Notice is received, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Taking, (b) the date immediately prior to the date on which the applicable
Casualty occurs, in the event of a Termination Notice under Paragraph 18 which
is occasioned by a Casualty, (c) the date when Fair Market Value is
redetermined, in the event of a redetermination of Fair Market Value pursuant to
Paragraph 20(c), (d) the date immediately prior to the Event of Default giving
rise to the need to determine Fair Market Value in the event Landlord provides
Tenant with notice of its intention to require Tenant to make a termination
offer under Paragraph 23(a)(iii) and (d) the date immediately prior to the date
on which Tenant's Option Exercise Notice is delivered to Landlord.
"Remaining Sum" shall mean Remaining Sum as defined
in Paragraph 19(c).
"Renewal Term" shall mean Renewal Term as defined in
Paragraph 5.
"Rent" shall mean, collectively, Basic Rent and
Additional Rent.
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether (i) pursuant to an agreement
with such governmental authority in settlement of or under threat of any such
requisition or confiscation or (ii) otherwise.
"Site Assessment" shall mean a Site Assessment as
defined in Paragraph 10(c).
"State" shall mean the Commonwealth of Pennsylvania.
"Surviving Obligations" shall mean any obligations of
Tenant under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
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"Taking" shall mean (a) any taking or damaging of all
or a portion of any of the Leased Premises (i) in or by condemnation or other
eminent domain proceedings pursuant to any Law, general or special, or (ii) by
reason of any agreement with any condemnor in settlement of or under threat of
any such condemnation or other eminent domain proceeding, or (iii) by any other
lawful governmental or quasi-governmental action, or (b) any de facto
condemnation. The Taking shall be considered to have taken place as of the later
of the date actual physical possession is taken by the condemnor, or the date on
which the right to compensation and damages accrues under the law applicable to
the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a)
Fair Market Value or (b) the sum of the Acquisition Cost and any Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Termination Amount
"Termination Date" shall mean Termination Date as
defined in Paragraph 18.
"Termination Event" shall mean a Termination Event as
defined in Paragraph 18.
"Termination Notice" shall mean Termination Notice as
defined in Paragraph 18(a).
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
rights of any Persons in possession of the Leased Premises, (ii) the existing
state of title of any of the Leased Premises, including any Permitted
Encumbrances, (iii) any state of facts which an accurate survey or physical
inspection of the Leased Premises might show, (iv) all Legal Requirements,
including any existing violation of any thereof, and (v) the condition of the
Leased Premises as of the commencement of the Term, without representation or
warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises is in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF
THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LANDLORD'S TITLE
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THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii)
USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION,
(xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS
SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE OF THE
LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL RISKS INCIDENT
THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES
IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAS
BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT
OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR
PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT
LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED,
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY
LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR
HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby.
Tenant acknowledges that (i) fee simple title (both legal and equitable) is in
Landlord and except, as provided in Paragraph(s) 35 and 36 hereof with respect
to an option and certain rights of refusal to purchase the Leased Premises that
Tenant has only the leasehold right of possession and use of the Leased Premises
as provided herein, (ii) the Improvements conform to all material Legal
Requirements and all Insurance Requirements, (iii) all easements necessary or
appropriate for the use or operation of the Leased Premises have been obtained,
(iv) all contractors and subcontractors who have performed work on or supplied
materials to the Leased Premises have been fully paid, and all materials and
supplies have been fully paid for, (v) the Improvements have been fully
completed in all material respects in a workmanlike manner of first class
quality, and (vi) all Equipment necessary or appropriate for the use or
operation of the Leased Premises has been installed and is presently fully
operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all assignable warranties, guaranties, indemnities and
similar rights (collectively, "Warranties") which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this Lease,
whereupon such assignment shall cease and all of Warranties, guaranties,
indemnities and other rights shall automatically revert to Landlord. Tenant
shall enforce the Warranties in accordance with their respective terms.
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4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for general,
executive and administrative offices, light manufacturing and uses incidental
thereto in connection with Tenant's business and for no other purpose without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed so long as the proposed use (A) is not, in Landlord's
reasonable business judgment, likely to increase any liability on the part of
Landlord or Lender, taking into account factors such as environmental concerns,
product liability and the like, (B) does not violate the prohibitions in clauses
(i) through (v) below, and (C) is consented to by Lender, if such consent is
required under the Mortgage. Tenant shall not use or occupy or permit any of the
Leased Premises to be used or occupied, nor do or permit anything to be done in
or on any of the Leased Premises, in a manner which would or might (i) violate
any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to
cancel any insurance required by this Lease, or make it difficult or impossible
to obtain any such insurance at commercially reasonable rates, (iii) make void
or voidable, cancel or cause to be cancelled or release any warranty, guaranty
or indemnity, (iv) cause structural injury to any of the Improvements or (v)
constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord or its agents may enter upon and examine any of
the Leased Premises at such reasonable times during business hours as Landlord
may select and upon reasonable notice to Tenant (except in the case of an
emergency, in which no notice shall be required) for the purpose of inspecting
the Leased Premises, verifying compliance or non-compliance by Tenant with its
obligations hereunder and the existence or non-existence of an Event of Default
or event which with the passage of time and/or notice would constitute an Event
of Default, showing the Leased Premises to prospective Lenders and purchasers
and taking such other action with respect to the Leased Premises as is permitted
by any provision hereof.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and
hold the Leased Premises for an initial term ("Initial Term", the Initial Term,
as extended or renewed in accordance with the provisions hereof, being called
the "Term") commencing on the date hereof (the "Commencement Date") and ending
on the last day of the one hundred eightieth (180th) calendar month next
following the date hereof (the "Expiration Date"). If all Rent and all other
liquidated sums due hereunder shall not have been fully paid by the end of the
Term, Landlord may, at its option, upon written notice to Tenant, extend the
Term until all said sums shall have been fully paid.
(b) Provided that if, on or prior to the Expiration Date or
any other Renewal Date (as hereinafter defined) this Lease shall not have been
terminated pursuant to any
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provision hereof, then on the Expiration Date and on the fifth (5th),
anniversary of the Expiration Date (the Expiration Date and each such
anniversary being a "Renewal Date"), the Term shall be deemed to have been
automatically extended for an additional period of five (5) years (each such
extension, a "Renewal Term"), unless Tenant shall notify Landlord in writing in
recordable form at least fifteen (15) months prior to the next Renewal Date that
Tenant is terminating this Lease as of the next Renewal Date. Any such extension
of the Term shall be subject to all of the provisions of this Lease, as the same
may be amended, supplemented or modified.
(c) If Tenant exercises its option not to extend or further
extend the Term, or if an Event of Default occurs, then Landlord shall have the
right during the remainder of the Term then in effect and, in any event,
Landlord shall have the right during the last year of the Term, to (i) advertise
the availability of the Leased Premises for sale or reletting and to erect upon
the Leased Premises signs indicating such availability and (ii) upon reasonable
notice to Tenant, show the Leased Premises to prospective purchasers or tenants
or their agents at such reasonable times during business hours as Landlord may
select; provided that, Landlord shall use reasonable efforts to minimize any
interference with the operation of Tenant's business during any such showing.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent"), commencing on the first day of January, 1999,
and continuing on the first day of each April, July, October and January
thereafter during the Term (each such day being a "Basic Rent Payment Date");
provided that, pro rata Basic Rent for the period from the date hereof through
and including December 31, 1998 shall be paid on the date hereof. Each such
rental payment shall be made, at Landlord's sole discretion, (a) to Landlord at
its address set forth above and/or to such one or more other Persons, (but in no
event more than four (4) persons, including Landlord) at such addresses and in
such proportions as Landlord may direct by fifteen (15) days' prior written
notice to Tenant (in which event Tenant shall give Landlord notice of each such
payment concurrent with the making thereof), and (b) by a check hand delivered
at least five (5) business days before or mailed at least ten (10) days before
the applicable Basic Rent Payment Date, or in Federal Funds.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of Tenant's obligations under this
Lease, (C) the sale or other transfer of the Leased Premises to Tenant pursuant
to the terms of this Lease, (D) any Condemnation proceedings, (E) the
adjustment, settlement or
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compromise of any insurance claims involving or arising from any of the Leased
Premises, except to the extent arising solely from the negligence, willful
misconduct or criminal conduct of Landlord at or about the Premises, (F) the
prosecution, defense or settlement of any litigation involving or arising from
any of the Leased Premises, this Lease, or the sale of the Leased Premises to
Landlord, except to the extent arising solely from the negligence, willful
misconduct or criminal conduct of Landlord at or about the Premises, (G) the
exercise or enforcement by Landlord, its successors and assigns, of any of its
rights under this Lease, (H) any amendment to or modification or termination of
this Lease made at the request of Tenant, (I) Costs of Landlord's counsel and
reasonable internal Costs of Landlord incurred in connection with any act
undertaken by Landlord (or its counsel) at the request of Tenant, or incurred in
connection with any act of Landlord performed on behalf of Tenant, (J) the
reasonable internal Costs of Landlord incurred in connection with any act
undertaken by Landlord at the request of Tenant or Tenant's failure to act
promptly in an emergency situation, and (K) any other items specifically
required to be paid by Tenant under this Lease;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to five percent
(5%) of the amount of such unpaid installment or portion thereof;
(iii) a sum equal to any additional sums (including
any late charge, default penalties, interest and fees of Lender's counsel) which
are payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate (the "Default Rate") of
five percent (5%) over the Prime Rate per annum on the following sums until paid
in full: (A) all overdue installments of Basic Rent from the respective due
dates thereof, (B) all overdue amounts of Additional Rent relating to
obligations which Landlord shall have paid on behalf of Tenant, from the date of
payment thereof by Landlord, and (C) all other overdue amounts of Additional
Rent, from the date when any such amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due, provided that
amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within five (5) days after Landlord's demand for payment thereof,
and (ii) any other Additional Rent, within five (5) days after Landlord's demand
for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
(d) Notwithstanding anything to the contrary contained herein,
Landlord acknowledges that it is the intent of this Lease that Tenant shall only
be obligated to pay any applicable Prepayment Premium with respect to (i) the
payment of the Termination Amount under Paragraph 18, (ii) the payment of the
Default Termination Amount under
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Paragraph 23 and (iii) the payment of the Offer Amount in connection with the
exercise by Tenant of the option to purchase under Paragraph 37.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations shall be
paid without notice or demand (except in the case of Additional Rent) and
without set-off, counterclaim, recoupment, abatement, suspension, deferment,
diminution, deduction, reduction or defense (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any damage
to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased
Premises other than pursuant to an express provision of this Lease, (iv) any
default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (v) any latent or other defect in any of the
Leased Premises, (vi) the breach of any warranty of any seller or manufacturer
of any of the Equipment, (vii) any violation of any provision of this Lease by
Landlord, (viii) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution or winding-up of, or other proceeding
affecting Landlord, (ix) the exercise of any remedy, including foreclosure,
under any Mortgage or Assignment, (x) any action with respect to this Lease
(including the disaffirmance hereof) which may be taken by Landlord, any
trustee, receiver or liquidator of Landlord or any court under the Federal
Bankruptcy Code or otherwise, (xi) any interference with Tenant's use of the
Leased Premises, (xii) market or economic changes or (xiii) any other cause,
whether similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding. Nothing herein shall, however, prevent Tenant from
seeking injunctive relief against Landlord if Landlord breaches its obligations
under Paragraph 4(b) or from seeking equitable relief against Landlord if it
breaches its obligations under Paragraphs 35 or 36.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. The obligation to pay Rent or
amounts equal thereto shall not be affected by any collection of rents by any
governmental body pursuant to a tax lien or otherwise, even though such
obligation results in a double payment of Rent. All Rent payable by Tenant
hereunder shall constitute "rent" for all purposes (including Section 502(b)(6)
of the Federal Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.
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9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's leasehold interest in the Leased Premises,
(iii) any of the Leased Premises, (iv) Landlord, solely as a result of or
arising in respect of the acquisition (subject to any limitation in respect
thereof set forth in Paragraph 31 hereof), ownership, occupancy, leasing, use,
possession or sale of the Leased Premises to Tenant pursuant to the provisions
hereof any activity conducted on any of the Leased Premises, or the Rent, or (v)
any Lender by reason of any Note, Mortgage, Assignment or other document
evidencing or securing a Loan (subject to any limitation in respect thereof set
forth in Paragraph 31 hereof) and which (as to this clause (v)) Landlord has
agreed to pay (collectively, the "Impositions"); provided, that nothing herein
shall obligate Tenant to pay (A) income, excess profits or other taxes of
Landlord or Lender solely which are determined on the basis of Landlord's (or
Lender's) net income or net worth (unless such taxes are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
the Leased Premises which, if it were in effect, would be payable by Tenant
under the provisions hereof or by the terms of such tax, assessment or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed on
Landlord, (C) any capital gains tax imposed on Landlord in connection with the
sale of the Leased Premises to any Person or (D) any transfer tax imposed on
Landlord in connection with the sale of the Lease Premises to any Person other
than Tenant or an Affiliate of Tenant and subject to the negotiated terms of
Tenant's exercise of its right of first refusal under Paragraph 36. If any
Imposition may be paid in installments without interest or penalty, Tenant shall
have the option to pay such Imposition in installments; in such event, Tenant
shall be liable only for those installments which accrue or become due and
payable during the Term. Tenant shall prepare and file all tax reports required
by governmental authorities which relate to the Impositions. Tenant shall
deliver to Landlord (1) copies of all settlements and notices pertaining to the
Impositions which may be issued by any governmental authority within ten (10)
days after Tenant's receipt thereof, (2) receipts for payment of all taxes
required to be paid by Tenant hereunder within thirty (30) days after the due
date thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor.
(b) Landlord shall have the right, at any time if required by
Lender (provided that Landlord shall use its good faith efforts to preclude the
requirement for Escrow Payments in connection with a Loan), and at any time
following the occurrence of an Event of Default, to require Tenant to pay to
Landlord an additional monthly sum (each an "Escrow Payment") sufficient to pay
the Escrow Charges (as hereinafter defined) as they become due. As used herein,
"Escrow Charges" shall mean real estate taxes on the Leased Premises or payments
in lieu thereof and premiums on any insurance required by this Lease. Landlord
shall determine the amount of the Escrow Charges and of each Escrow Payment. As
long as the Escrow
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Payments are being held by Landlord the Escrow Payments shall not be commingled
with other funds of Landlord or other Persons and interest thereon shall accrue
for the benefit of Tenant from the date such monies are received and invested
until the date such monies are disbursed to pay Escrow Charges. Landlord shall
apply the Escrow Payments to the payment of the Escrow Charges in such order or
priority as Landlord shall determine or as required by law. If at any time the
Escrow Payments theretofore paid to Landlord shall be insufficient for the
payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and conform to,
and cause the Leased Premises and any other Person occupying any part of the
Leased Premises to comply with and conform to, all Insurance Requirements and
Legal Requirements (including all applicable Environmental Laws). Tenant shall
not at any time (i) cause, permit or suffer to occur any Environmental Violation
or (ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation and, at the request of Landlord or Lender, Tenant shall
promptly remediate or undertake any other appropriate response action to correct
any existing Environmental Violation, however immaterial.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and performed thereunder. Tenant will not
alter, modify, amend or terminate any Easement Agreement, give any consent or
approval thereunder, or enter into any new Easement Agreement without, in each
case, the prior written consent of Landlord.
(C) In connection with any sale or financing of the Leased
Premises or if an Event of Default exists and in any event at any time that, in
the opinion of Landlord or Lender, a reasonable basis exists to believe that an
Environmental Violation exists, upon prior written notice from Landlord, Tenant
shall permit such persons as Landlord may designate ("Site Reviewers") to visit
the Leased Premises and perform, as agents of Tenant, environmental site
investigations and assessments ("Site Assessments") on the Leased Premises for
the purpose of determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in any Environmental
Violation. Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be necessary,
in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant
shall supply to the Site Reviewers such historical and operational information
regarding the Leased Premises as may be reasonably requested by the Site
Reviewers to facilitate the Site Assessments, and shall make available for
meetings with the Site Reviewers appropriate personnel having knowledge of such
matters. The cost of performing and reporting any Site Assessments shall be paid
by Tenant with respect to (i) the first Site Assessment in any five (5)
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year period, (ii) any Site Assessment required by Lender or any governmental
authority, (iii) any Site Assessment following a known Environmental Violation
at the Leased Premises and (iv) any Site Assessment in which an Environmental
Violation is discovered.
(d) If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of, or other
response action with respect to, the same is likely to exceed $100,000, Tenant
shall provide to Landlord, within ten (10) days after Landlord's request
therefor, adequate financial assurances that Tenant will effect such remediation
in accordance with applicable Environmental Laws. Such financial assurances
shall be a bond or letter of credit reasonably satisfactory to Landlord in form
and substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire, then, at the option of Landlord, the Term shall be
automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to correct any Environmental Violation
which occurs or is found to exist, Landlord shall have the right (but no
obligation) to take any and all actions as Landlord shall deem necessary or
advisable in order to cure such Environmental Violation.
(g) Tenant shall notify Landlord immediately after becoming
aware of any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord immediately upon receipt thereof copies of all orders,
reports, notices, permits, applications or other communications relating to any
such violation or noncompliance.
(h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party not to at any time (i) cause any Environmental Violation to
occur or (ii) permit any Person occupying the Leased Premises through said
subtenant or concessionaire to cause any Environmental Violation to occur.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain and shall promptly discharge or remove any lien, levy
or encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of
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Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND
THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY
OF LANDLORD, TO THE EXTENT THEN ENFORCEABLE UNDER THE LAWS OF THE STATE.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this
Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased Premises and
the Adjoining Property in as good repair and appearance as they are in on the
date hereof and fit to be used for their intended use in accordance with the
better of the practices generally recognized as then acceptable by other
companies in its industry or observed by Tenant with respect to the other real
properties owned or operated by it, and, in the case of the Equipment, in as
good mechanical condition as it was on the later of the date hereof or the date
of its installation, except for ordinary wear and tear. Tenant shall take every
other action necessary or appropriate for the preservation and safety of the
Leased Premises. Tenant shall promptly make all Alterations of every kind and
nature, whether foreseen or unforeseen, which may be required to comply with the
foregoing requirements of this Paragraph 12(a) and to insure that the
Improvements are year 2000 compliant. Landlord shall not be required to make any
Alteration, whether foreseen or unforeseen, or to maintain any of the Leased
Premises or Adjoining Property in any way, and Tenant hereby expressly waives
any right which may be provided for in any Law now or hereafter in effect to
make Alterations at the expense of Landlord or to require Landlord to make
Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall
(i) encroach upon any setback or any property, street or right-of-way adjoining
the Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from
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all necessary parties waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance, obstruction
or impairment, whether the same shall affect Landlord, Tenant or both, or (B)
take such action as shall be necessary to remove all such encroachments,
hindrances or obstructions and to end all such violations or impairments,
including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the
prior written consent of Landlord and Lender and provided that no Event of
Default then exists, to make (i) any single non-structural Alteration or any
series of related non-structural Alterations to the Leased Premises that do not,
in either event, cost in excess of $250,000 and to install Equipment in the
Improvements or accessions to the Equipment that, as to such Equipment or
accessions, do not cost in excess of $250,000, so long as at the time of
construction or installation of any such Equipment or Alterations no Event of
Default exists and the value and utility of the Leased Premises is not
diminished thereby. If the cost of any Alterations, series of related
Alterations, Equipment or accessions thereto is in excess of $250,000, the prior
written approval of Landlord and Lender shall be required, such approval not to
be unreasonably withheld or delayed. Tenant shall not construct upon the Land
any additional buildings without having first obtained the prior written consent
of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph
13 or as required by Paragraph 12 or 17 (such Alterations and actions being
hereinafter collectively referred to as "Work"), whether or not Landlord's
consent is required, then (i) the market value of the Leased Premises shall not
be lessened by any such Work or its usefulness impaired, (ii) all such Work
shall be performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal Requirements,
(iv) all such Work shall comply with the Insurance Requirements, (v) if any such
Work involves the replacement of Equipment or parts thereto, all replacement
Equipment or parts shall have a value and useful life equal to the greater of
(A) the value and useful life on the date hereof of the Equipment being replaced
or (B) the value and useful life of the Equipment being replaced immediately
prior to the occurrence of the event which required its replacement, (vi) Tenant
shall promptly discharge or remove all liens filed against any of the Leased
Premises arising out of such Work, (vii) Tenant shall procure and pay for all
permits and licenses required in connection with any such Work, (viii) all such
Work shall be the property of Landlord and shall be subject to this Lease, and
Tenant shall execute and deliver to Landlord any document requested by Landlord
evidencing the assignment to Landlord of all estate, right, title and interest
(other than the leasehold estate created hereby) of Tenant or any other Person
thereto or therein, and (ix) Tenant shall comply, to the extent requested by
Landlord or required by this Lease, with the provisions of Paragraph 19(a),
whether or not such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or
remove any lien referred to in Paragraph 11 or 13 or (c) take any action with
respect to any encroachment, violation,
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hindrance, obstruction or impairment referred to in Paragraph 12(b) (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such contest no Event of
Default exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused thereby,
or the extent of its or Landlord's liability therefor by appropriate proceedings
which shall operate during the pendency thereof to prevent or stay (i) the
collection of, or other realization upon, the Permitted Violation so contested,
(ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to
satisfy or to pay any damages caused by any Permitted Violation, (iii) any
interference with the use or occupancy of any of the Leased Premises, (iv) any
interference with the payment of any Rent, or (v) the cancellation or increase
in the rate of any insurance policy or a statement by the carrier that coverage
will be denied. Tenant shall provide Landlord security which is satisfactory, in
Landlord's reasonable judgment, to assure that such Permitted Violation is
corrected, including all Costs, interest and penalties that may be incurred or
become due in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend, save and
hold harmless Landlord, Lender and all other Persons described in Paragraph 30
(each an "Indemnitee") from and against any and all liabilities, losses, damages
(including punitive damages), penalties, Costs (including attorneys' fees and
costs), causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and whether
based on strict liability, negligence or any other theory of recovery at law or
in equity, arising from (i) any matter pertaining to the acquisition (or the
negotiations leading thereto), ownership, use, non-use, occupancy, operation,
condition, design, construction, maintenance, repair or restoration of the
Leased Premises or Adjoining Property, (ii) any casualty in any manner arising
from the Leased Premises or Adjoining Property, whether or not Indemnitee has or
should have knowledge or notice of any defect or condition causing or
contributing to said casualty, (iii) any violation by Tenant of any provision of
this Lease, any contract or agreement to which Tenant is a party (including any
agreement, document or instrument executed by Tenant for the benefit of any
Lender), any Legal Requirement or any
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Permitted Encumbrance or any other encumbrance consented to by Tenant or (iv)
any alleged, threatened or actual Environmental Violation, including (A)
liability for response costs and for costs of removal and remedial action
incurred by the United States Government, any state or local governmental unit
or any other Person, or damages from injury to or destruction or loss of natural
resources, including the reasonable costs of assessing such injury, destruction
or loss, incurred pursuant to Section 107 of CERCLA, or any successor section or
act or provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C) liability for personal injury or property damage arising under any
statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity.
(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may employ counsel of its choice
to monitor the defense of any such action) and (ii) such Indemnitee shall notify
Tenant to resist or defend such action or proceeding by retaining counsel
reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate
and assist in the defense of such action or proceeding if reasonably requested
so to do by Tenant. In the event of a conflict of interest or dispute or during
the continuance of an Event of Default, Landlord shall have the right to select
counsel, and the cost of such counsel shall by paid by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall
survive any termination, expiration or rejection in bankruptcy of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (if the Leased Premises is in a flood
zone) and earthquake coverage in amounts not less than the actual replacement
cost of the Improvements and Equipment. Such policies shall contain Replacement
Cost and Agreed Amount Endorsements and shall contain deductibles not more than
$50,000 per occurrence.
(ii) Commercial General Liability Insurance
(including but not limited to Incidental Medical Malpractice and Host Liquor
Liability) and Business Automobile Liability Insurance (including Non-Owned and
Hired Automobile Liability) against claims for personal and bodily injury, death
or property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $11,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type
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provided, however, that the Landlord shall have the right to require such higher
limits as may be reasonable and customary for properties of this size and type.
(iii) Workers' compensation insurance covering all
persons employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Workers' Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the Leased Premises, in an
amount not less than $5,000,000 per accident for damage to property. Such
policies shall include at least $5,000,000 per accident for Off-Premises Service
Interruption, Ammonia Contamination and Hazardous Materials Clean-Up Expense
(including $25,000 for Expediting Expenses), and may contain a deductible not to
exceed $50,000.
(v) Business Income/Extra Expense Insurance at limits
sufficient to cover 100% of the period of indemnity not less than one year from
time of loss. Such insurance shall name Landlord as loss payee solely with
respect to Rent payable to or for the benefit of Landlord as its interest
appears under this Lease.
(vi) During any period in which substantial
Alterations at the Leased Premises are being undertaken, builder's risk
insurance covering the total completed value including any "soft costs" with
respect to the Improvements being altered or repaired (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction or repair of
Improvements or Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general liability,
worker's compensation and automobile liability insurance with respect to the
Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee clause)
on or in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size, use and location to
the Leased Premises, including, without limitation, if available, earthquake
insurance to the extent of any significant geotechnical changes in the regional
area surrounding the Leases Premises.
(b) The insurance required by Paragraph 16(a) shall be written
by companies which have a Best's rating of A:X or above and are admitted in, and
approved to write insurance policies by, the State Insurance Department for the
State. The insurance policies (i) shall be for such terms as Landlord may
reasonably approve and (ii) shall be in amounts sufficient at all times to
satisfy any coinsurance requirements thereof. The insurance referred to
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in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and
Lender as loss payee and Tenant as its interest may appear. The insurance
referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional
insureds, and the insurance referred to in Paragraph 16(a)(v) shall name
Landlord as insured and Lender and Landlord as loss payee. If said insurance or
any part thereof shall expire, be withdrawn, become void, voidable, unreliable
or unsafe for any reason, including a breach of any condition thereof by Tenant
or the failure or impairment of the capital of any insurer, or if for any other
reason whatsoever said insurance shall become reasonably unsatisfactory to
Landlord, Tenant shall immediately obtain new or additional insurance reasonably
satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv),
(v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be cancelled, substantially modified or allowed to lapse on any
renewal date except after thirty (30) days' prior notice to Landlord and Lender.
Each such policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or Tenant
which might, absent such provision, result in a forfeiture of all or a part of
such insurance payment, (ii) the occupation or use of any of the Leased Premises
for purposes more hazardous than those permitted by the provisions of such
policy, (iii) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment or other document
evidencing or securing the Loan upon the happening of an event of default
therein or (iv) any change in title to or ownership of any of the Leased
Premises.
(d) Tenant shall keep and maintain the insurance coverage
required by Paragraph 16(a), in force and effect throughout the Term and shall
renew or replace each policy and deliver to Landlord evidence of such policies
and the renewals thereof, and shall deliver to Landlord all original
certificates of such required insurance coverage at least twenty (20) days prior
to the expiration date of such policy.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to Landlord a
Statement of Values which shall be reviewed annually and amended as necessary
based on Replacement Cost Valuations. The original or a certified copy of each
such "blanket" or umbrella policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
requirements of the insurers thereunder applicable to Landlord, Tenant or any of
the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the
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Leased Premises, even if such compliance necessitates Alterations or results in
interference with the use or enjoyment of any of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent in
form or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as named
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance and shall deliver to
Landlord original certificates of insurance therefor and, upon the written
request of Landlord shall deliver the original policies thereof.
(h) All policies shall contain effective waivers by the
carrier against all claims for insurance premiums against Landlord and shall
contain full waivers of subrogation against the Landlord.
(i) All proceeds of any insurance required under Paragraph
16(a) shall be payable as follows:
(i) Proceeds of insurance payable under clauses (ii)
and (iii) of Paragraph 16(a) and proceeds attributable to the general liability
coverage of Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall
be payable to the Person entitled to receive such proceeds.
(ii) All proceeds of insurance payable under clauses,
(iv) and (vii) of Paragraph 16(a) shall be payable to Landlord or, if required
by the Mortgage, to Lender and that portion of any proceeds of insurance payable
under clause (v) of Paragraph 16(a) to which Landlord is entitled to hereunder
shall be payable to Landlord or, if required by the Mortgage, to Lender.
(iii) Proceeds of insurance required under clause (i)
of Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16(a) shall be payable to Landlord or, if required by the Mortgage, to Lender,
and applied as set forth in Paragraph 17. Tenant shall apply the Net Award to
restoration of the Leased Premises in accordance with the applicable provisions
of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty to the Leased Premises occurs, Tenant
shall give Landlord and Lender immediate notice thereof. Landlord and Lender are
hereby authorized to adjust, collect and compromise, in their discretion and
upon written notice to Tenant (except that no notice to Tenant shall be required
if an Event of Default has occurred and is continuing), all claims under any of
the insurance policies required by Paragraph 16(a) (except public liability
insurance claims payable to a Person other than Tenant, Landlord or Lender) and
to execute and deliver on behalf of Tenant all necessary proofs of loss,
receipts, vouchers and releases required
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by the insurers. Provided that no Event of Default has occurred and is
continuing, Tenant shall be entitled to participate with Landlord and Lender in
any adjustment, collection and compromise of the Net Award payable in connection
with a Casualty. Tenant agrees to sign, upon the request of Landlord and Lender,
all such proofs of loss, receipts, vouchers and releases. If Landlord or Lender
so requests, Tenant shall adjust, collect and compromise any and all such
claims, and Landlord and Lender shall have the right to join with Tenant
therein. Any adjustment, settlement or compromise of any such claim shall be
subject to the prior written approval of Landlord and Lender, and Landlord and
Lender shall have the right to prosecute or contest, or to require Tenant to
prosecute or contest, any such claim, adjustment, settlement or compromise. Each
insurer is hereby authorized and directed to make payment under said policies,
including return or unearned premiums, directly to Landlord or, if required by
the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant
hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to
endorse any draft therefor. The rights of Landlord under this Paragraph 17(a)
shall be extended to Lender if and to the extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. Landlord and Lender are authorized to
collect, settle and compromise, in their discretion (and, if no Event of Default
exists, upon notice to Tenant), the amount of any Net Award. Provided that no
Event of Default has occurred and is continuing, Tenant shall be entitled to
participate with Landlord and Lender in any Condemnation proceeding or
negotiations under threat thereof and to contest the Condemnation or the amount
of the Net Award therefor. No agreement with any condemnor in settlement or
under threat of any Condemnation shall be made by Tenant without the written
consent of Landlord and Lender. Subject to the provisions of this Paragraph
17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to
which Tenant is or may be entitled by reason of any Condemnation, whether the
same shall be paid or payable for Tenant's leasehold interest hereunder or
otherwise; but nothing in this Lease shall impair Tenant's right to any award or
payment on account of Tenant's trade fixtures, equipment or other tangible
property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.
(c) If any Partial Casualty (whether or not insured against)
or Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations. Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraphs 12(a) and 13(b), shall commence and diligently
continue to restore the Leased Premises as nearly as possible to their value,
condition and character immediately prior to such event (assuming the Leased
Premises to have been in the condition required by this Lease). So long as no
Event of Default exists, any Net Award up to
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and including $250,000 shall be paid by Landlord to Tenant and Tenant shall
restore the Leased Premises in accordance with the requirements of Paragraphs
12(a) and 13(b) of this Lease. Any Net Award in excess of $250,000 shall (unless
such Casualty resulting in the Net Award is a Termination Event) be made
available by Landlord (or Lender, if required by the terms of any Mortgage) to
Tenant for the restoration of any of the Leased Premises pursuant to and in
accordance with the provisions of Paragraph 19 hereof. If any Casualty or
Condemnation which is not a Partial Casualty or Partial Condemnation shall
occur, Tenant shall comply with the terms and conditions of Paragraph 18.
18. Termination Events.
(a) If (i) the entire Leased Premises shall be taken by a
Taking or (ii) any substantial portion of the Leased Premises shall be taken by
a Taking or all or any substantial portion of the Leased Premises shall be
damaged or destroyed by a Casualty and, in such case, Tenant certifies and
covenants to Landlord that it will forever abandon operations at the Leased
Premises (each of the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as a "Termination Event"), then (x) in the case of
(i) above, Tenant shall be obligated, within thirty (30) days after Tenant
receives a Condemnation Notice and (y) in the case of (ii) above, Tenant shall
have the option, within thirty (30) days after Tenant receives a Condemnation
Notice or thirty (30) days after the Casualty, as the case may be, to give to
Landlord written notice of the Tenant's option to terminate this Lease (a
"Termination Notice") in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date which
occurs at least sixty (60) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay to
Landlord the Termination Amount and (iii) if the Termination Event is an event
described in Paragraph 18(a)(ii), the certification and covenants described
therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine the Fair Market Value.
(c) If Landlord shall reject such offer to terminate this
Lease by written notice to Tenant (a "Rejection"), which Rejection shall contain
the written consent of Lender, not later than thirty (30) days following the
Fair Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen on or prior
to the Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on which
this Lease may terminate to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall immediately vacate and shall have no further right, title or interest in
or to any of the Leased Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the
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contrary hereinabove contained, if Tenant shall have received a Rejection and,
on the date when this Lease would otherwise terminate as provided above,
Landlord shall not have received the full amount of the Net Award payable by
reason of the applicable Termination Event, then the date on which this Lease is
to terminate automatically shall be extended to the first Basic Rent Payment
Date after the receipt by Landlord of the full amount of the Net Award provided
that, if Tenant has not satisfied all Remaining Obligations on such date, then
Landlord may, at its option, extend the date on which this Lease may terminate
to a date which is no later than the first Basic Rent Payment Date after such
date on which Tenant has satisfied all such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not later
than the thirtieth (30th) day following the Fair Market Value Date, Landlord
shall be conclusively presumed to have accepted such offer. If such offer is
accepted by Landlord then, on the Termination Date, Tenant shall pay to Landlord
the Termination Amount and all Remaining Obligations and, if requested by
Tenant, Landlord shall (i) convey to Tenant the Leased Premises or the remaining
portion thereof, if any, and (ii) pay to or assign to Tenant Landlord's entire
interest in and to the Net Award, all in accordance with Paragraph 20.
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage) shall
hold Net Award in excess of $250,000 in a fund (the "Restoration Fund") and
disburse amounts from the Restoration Fund only in accordance with the following
conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord, (B) Landlord and Lender shall be provided
with mechanics' lien insurance (if available) and acceptable performance and
payment bonds which insure satisfactory completion of and payment for the
restoration, are in an amount and form and have a surety acceptable to Landlord,
and name Landlord and Lender as additional dual obligees, and (C) appropriate
waivers of mechanics' and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Landlord can
verify that the amounts disbursed from time to time are
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represented by work that is completed, in place and free and clear of mechanics'
and materialmen's lien claims;
(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is requested, stating
the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies with the applicable
requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
Restoration Fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other funds and shall
bear interest at a rate agreed to by Landlord and Tenant; and
(vii) such other reasonable conditions as Landlord or
Lender may impose.
(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord, exceeds the amount of
the Net Award available for such restoration, the amount of such excess shall,
upon demand by Landlord, be paid by Tenant to Landlord to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and the payment of any refund due Tenant pursuant
to Paragraph 19(b), such sum (the "Remaining Sum") shall be retained by Landlord
or, if required by a Note or Mortgage, paid by Landlord to a Lender. If the
Remaining Sum is (i) retained by Landlord, each installment of Basic Rent
payable for the period commencing with the first Basic Rent Payment Date after
completion of the Alterations and ending with the twelfth (12th) Basic Rent
Payment Date after such date shall be reduced by an amount equal to one-twelfth
(1/12th) of such Remaining Sum, or (ii) paid to Lender, then each installment of
Basic Rent thereafter payable shall be reduced in the same amount as payments
are reduced under any Note if the Loan corresponding to such Note is reamortized
to reflect such payment, in each case until such Remaining Sum has been applied
in full or until the Term has expired, whichever occurs first. Upon the
expiration of the Term, any portion of the Remaining Sum which has not been so
applied shall be retained by Landlord.
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20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to
any provision of this Lease, Landlord need not convey any better title thereto
than that which was conveyed to Landlord, and Tenant shall accept such title,
subject, however, to the Permitted Encumbrances and to all other liens,
exceptions and restrictions on, against or relating to any of the Leased
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises which have been
created by or resulted solely from acts of Landlord after the date of this
Lease, unless the same are Permitted Encumbrances or customary utility easements
benefiting the Leased Premises or were created with the concurrence of Tenant or
as a result of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the "Purchase
Date"), Tenant shall pay to Landlord, or to any Person to whom Landlord directs
payment, the Relevant Amount therefor specified herein, in Federal Funds, less
any credit of the Net Award received and retained by Landlord or a Lender
allowed against the Relevant Amount, and Landlord shall deliver to Tenant (i) a
special warranty deed which describes the premises being conveyed and conveys
the title thereto as provided in Paragraph 20(a), (ii) such other instruments as
shall be necessary to transfer to Tenant or its designee any other property (or
rights to any Net Award not yet received by Landlord or a Lender) then required
to be sold by Landlord to Tenant pursuant to this Lease and (iii) any Net Award
received by Landlord, not credited to Tenant against the Relevant Amount and
required to be delivered by Landlord to Tenant pursuant to this Lease; provided,
that if any Monetary Obligations remain outstanding on such date, then Landlord
may deduct from the Net Award the amount of such Monetary Obligations; and
further provided, that if any event has occurred which, in Landlord's reasonable
judgment, is likely to subject any Indemnitee to any liability which Tenant is
required to indemnify against pursuant to Paragraph 15, then an amount shall be
deducted from the Net Award which, in Landlord's reasonable judgment, is
sufficient to satisfy such liability, which amount shall be deposited in an
escrow account with a financial institution reasonably satisfactory to Landlord
and Tenant pending resolution of such matter. If on the Purchase Date any
Monetary Obligations remain outstanding and no Net Award is payable to Tenant by
Landlord or the amount of such Net Award is less than the amount of the Monetary
Obligations, then Tenant shall pay to Landlord on the Purchase Date the amount
of such Monetary Obligations. Upon the completion of such purchase, this Lease
and all obligations and liabilities of Tenant hereunder shall terminate, except
any Surviving Obligations.
(c) If the completion of such purchase shall be delayed after
(i) the Termination Date, in the event of a purchase pursuant to Paragraph 18
or, (ii) the date scheduled for such purchase, in the event of a purchase under
any other provision of this Lease then (x) Rent shall continue to be due and
payable until completion of such purchase and (y) at Landlord's sole option,
Fair Market Value shall be redetermined and the Relevant Amount
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payable by Tenant pursuant to the applicable provision of this Lease shall be
adjusted to reflect such redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.
21. Assignment and Subletting; Prohibition against Leasehold Financing.
(a) Tenant may not assign this Lease, voluntarily or
involuntarily, whether by operation of law or otherwise, or sublet any of the
Leased Premises (except as expressly provided below) at any time to any other
Person without the prior written consent of Landlord, which consent, in the
event of an assignment, may be withheld by Landlord for any or no reason and any
such purported sublease or assignment in violation of this Paragraph 21(a) shall
be null and void.
(i) Tenant shall have the right, upon thirty (30)
days prior written notice to Landlord and Lender, to enter into one or more
subleases that demise, in the aggregate, up to but not in excess of twenty-five
percent (25%) of the gross space in the Improvements with no consent or approval
of Landlord being required or necessary ("Pre-approved Sublet"). Other than
pursuant to Pre-approved Sublets, at no time during the Term shall Tenant enter
into subleases for more than twenty-five percent (25%) of the gross space in the
Lease Premises without the prior written consent of Landlord, which consent
shall be granted or withheld based on a review of the Review Criteria (as
defined below) as they relate to the proposed sublessee and the terms of the
proposed sublease. Landlord and Lender shall be deemed to have acted reasonably
in granting or withholding consent if such grant or disapproval is based on
their review of the Review Criteria.
(ii) As used herein, "Review Criteria" shall mean,
collectively, information regarding the: (A) credit, (B) management, (C)
operating history, (D) proposed use of the Leased Premises and (E) risk factors
associated with the proposed use of the Leased Premises by the proposed
sublessee taking into account factors such as environmental concerns, product
liability and the like. Landlord and Lender shall review such information and
shall approve or disapprove no later than the thirtieth (30th) day following
receipt of all such information, and Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on their review of the Review Criteria applying prudent business
judgment.
(b) If Tenant assigns all its rights and interest under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including obligations of
Tenant which may have arisen on or prior to the date of such assignment, by a
written instrument delivered to Landlord at the time of such assignment. Each
sublease of any of the Leased Premises shall be subject and subordinate to the
provisions of this Lease. No assignment or sublease shall affect or reduce any
of the obligations
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of Tenant hereunder, and all such obligations shall continue in full force and
effect as obligations of a principal and not as obligations of a guarantor, as
if no assignment or sublease had been made. No assignment or sublease shall
impose any additional obligations on Landlord under this Lease.
(c) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease consented to by Landlord, deliver a
duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(d) As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all subleases now in existence or hereafter
entered into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises,
provided, however, that Landlord shall have the absolute right at any time upon
notice to Tenant and any subtenants if required by a Lender, or at any time
following the occurrence of an Event of Default, to revoke said license and to
collect such rents and sums of money and to retain the same. Tenant shall not
consent to, cause or allow any modification or alteration of any of the terms,
conditions or covenants of any of the subleases or the termination thereof,
without the prior written approval of Landlord, which consent shall not be
unreasonably withheld, nor shall Tenant accept any rents more than thirty (30)
days in advance of the accrual thereof nor do nor permit anything to be done,
the doing of which, nor omit or refrain from doing anything, the omission of
which, will or could be a breach of or default in the terms of any of the
subleases.
(e) Tenant shall not have the power to mortgage, pledge or
otherwise encumber its interest under this Lease or any sublease of the Leased
Premises, and any such mortgage, pledge or encumbrance made in violation of this
Paragraph 21 shall be void and of no force and effect.
(f) Subject to the provisions of Paragraphs 35 and 36 hereof,
option to purchase/right of first refusal, Landlord may sell or transfer the
Leased Premises at any time without Tenant's consent to any third party (each a
"Third Party Purchaser"). In the event of any such transfer, Tenant shall attorn
to any Third Party Purchaser as Landlord so long as such Third Party Purchaser
and Landlord notify Tenant in writing of such transfer. At the request of
Landlord, Tenant will execute such documents confirming the agreement referred
to above and such other agreements as Landlord may reasonably request, provided
that such agreements do not increase the liabilities and obligations of Tenant
hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:
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(i) a failure by Tenant to make any payment of any Monetary
Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant herein or
in any certificate, demand or request made pursuant hereto proves to be
incorrect, now or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or at
maturity by Tenant or Guarantor in any payment of principal or interest on any
obligations for borrowed money having an original principal balance of
$3,000,000 or more in the aggregate, or in the performance of any other
provision contained in any instrument under which any such obligation is created
or secured (including the breach of any covenant thereunder), (x) if such
payment is a payment at maturity or a final payment, or (y) if an effect of such
default is to cause, or permit any Person to cause, such obligation to become
due prior to its stated maturity;
(v) a default by Tenant beyond any applicable cure period in
the payment of rent under, or in the performance of any other material provision
of, any other lease or leases that have, in the aggregate, rental obligations
over the terms thereof of $1,000,000 or more if the landlord under any such
lease or leases commences to exercise its remedies thereunder;
(vi) a final, non-appealable judgment or judgments for the
payment of money in excess of $1,000,000 in the aggregate shall be rendered
against Tenant and the same shall remain undischarged for a period of sixty (60)
consecutive days;
(vii) The breach of any Covenant shall occur;
(viii) Tenant shall (A) voluntarily be adjudicated a bankrupt
or insolvent, (B) seek or consent to the appointment of a receiver or trustee
for itself or for the Leased Premises, (C) file a petition seeking relief under
the bankruptcy or other similar laws of the United States, any state or any
jurisdiction, (D) make a general assignment for the benefit of creditors, or (E)
be unable to pay its debts as they mature;
(ix) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;
(x) the Leased Premises shall have been vacated or abandoned;
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(xi) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution;
(xii) the estate or interest of Tenant in any of the Leased
Premises shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be vacated
or discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under any provision of
any Assignment or any other document between Tenant and Lender, if such failure,
violation, breach or misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan;
(xiv) a failure by Tenant to maintain in effect any other
license or permit necessary for the use, occupancy or operation of the Leased
Premises; or
(xv) Tenant shall sell or transfer or enter into an agreement
to sell or transfer all or substantially all of its assets or Voting Stock other
than in accordance with the provisions and limitations in the Covenants on
Exhibit E;
(b) No notice or cure period shall be required in any one or more of
the following events: (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth below), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xiv) or (xv) of Paragraph 22(a); (B) the
default consists of a failure to provide any insurance required by Paragraph 16
or an assignment or sublease entered into in violation of Paragraph 21; or (C)
the default is such that any delay in the exercise of a remedy by Landlord could
reasonably be expected to cause irreparable harm to Landlord. If the default
consists of the failure to pay any Monetary Obligation under clause (i) of
Paragraph 22(a), the applicable cure period shall be three (3) business days
from the date on which notice is given, but Landlord shall not be obligated to
give notice of, or allow any cure period for, any such default more than one (1)
time within any Lease Year. If the default consists of a default under clause
(ii) or clause (xiv) of Paragraph 22(a), other than the events specified in
clauses (B) and (C) of the first sentence of this Paragraph 22(b), the
applicable cure period shall be twenty (20) days from the date on which notice
is given or, if the default cannot be cured within such twenty (20) day period
and delay in the exercise of a remedy would not (in Landlord's reasonable
judgment) cause any material adverse harm to Landlord or any of the Leased
Premises, the cure period shall be extended for the period required to cure the
default (but such cure period, including any extension, shall not, in the
aggregate, exceed the lesser of (1) one hundred twenty (120) days or (2) such
shorter period required under a Mortgage, but in no event less than sixty (60)
days); provided that, Tenant shall commence to cure the default within the said
twenty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured.
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23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon such
date, this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of the Leased Premises, Landlord may re-enter and repossess the
Leased Premises, with or without legal process, by peaceably entering the Leased
Premises and changing locks or by summary proceedings, ejectment or any other
lawful means or procedure. Upon or at any time after taking possession of the
Leased Premises, Landlord may, by peaceable means or legal process, remove any
Persons or property therefrom. Landlord shall be under no liability for or by
reason of any such entry, repossession or removal. Notwithstanding such entry or
repossession, Landlord may (A) exercise the remedy set forth in and collect the
damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth
in Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises pursuant to
clause (i) above, Landlord shall have the right to relet any of the Leased
Premises to such tenant or tenants, for such term or terms, for such rent, on
such conditions and for such uses as Landlord in its sole discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may, upon notice to Tenant, require Tenant
to make an irrevocable offer to terminate this Lease upon payment to Landlord of
an amount (the "Default Termination Amount") specified in the next sentence. The
"Default Termination Amount" shall be the greatest of (A) the Fair Market Value
of the Leased Premises, (B) the sum of the Acquisition Cost and Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Default Termination Amount or (C) an amount equal to the Present
Value of the entire Basic Rent from the date of such purchase to the date on
which the Term would expire, assuming that the Term has been extended for all
extension periods, if any, provided for in this Lease. Upon such notice to
Tenant, Tenant shall be deemed to have made such offer and shall, if requested
by Landlord, within ten (10) days following such request deposit with Landlord
as payment against the Default Termination Amount the amount described in (B)
above and Landlord and Tenant shall promptly commence to determine Fair Market
Value. Within thirty (30) days after the Fair Market Value Date, Landlord shall
accept or reject such offer. If Landlord accepts such offer then, on the tenth
(10th) business day after such
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acceptance, Tenant shall pay to Landlord the Default Termination Amount and, at
the request of Tenant, Landlord will convey the Leased Premises to Tenant or its
designee in accordance with Paragraph 20. Any rejection by Landlord of such
offer shall have no effect on any other remedy Landlord may have under this
Lease.
(iv) Landlord may declare by notice to Tenant the entire
Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the
then current Term to be immediately due and payable. Tenant shall immediately
pay to Landlord all such Basic Rent discounted to its Present Value, all accrued
Rent then due and unpaid, all other Monetary Obligations which are then due and
unpaid and all Monetary Obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has been prepaid
hereunder shall be due thereafter during the said Term, (B) Tenant shall have no
option to extend or renew the Term and (C) Tenant shall have no further rights
under Paragraph 35 (Option to Purchase).
(b) The following constitute damages to which Landlord shall
be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):
(i) If Landlord exercises its remedy under Paragraph
23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise
such remedy and is unsuccessful in reletting the Leased Premises) then, upon
written demand from Landlord, Tenant shall pay to Landlord, as liquidated and
agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, re-entry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses attorneys' fees, employees'
expenses, costs of Alterations and expenses and preparation for reletting.
(ii) If Landlord exercises its remedy under Paragraph
23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant
shall, until the end of what would have been the Term in the absence of the
termination of the Lease, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages all Monetary Obligations which would be
payable under this Lease by Tenant in the absence of such termination less the
net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after
deducting from such proceeds all of Landlord's
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Costs (including the items listed in the last sentence of Paragraph 23(b)(i)
hereof) incurred in connection with such repossessing and reletting; provided,
that if Landlord has not relet the Leased Premises, such Costs of Landlord shall
be considered to be Monetary Obligations payable by Tenant. Tenant shall be and
remain liable for all sums aforesaid, and Landlord may recover such damages from
Tenant and institute and maintain successive actions or legal proceedings
against Tenant for the recovery of such damages. Nothing herein contained shall
be deemed to require Landlord to wait to begin such action or other legal
proceedings until the date when the Term would have expired by its own terms had
there been no such Event of Default.
(c) Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.
(d) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.
(e) No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, LANDLORD AND TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of
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them may have under any present or future Law to redeem any of the Leased
Premises or to have a continuance of this Lease after termination of this Lease
or of Tenant's right of occupancy or possession pursuant to any court order or
any provision hereof, and (ii) the benefits of any present or future Law which
exempts property from liability for debt or for distress for rent.
(j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place,
Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For the
purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days' notice of the new address to the other party, in the manner provided
above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the "Responding Party"), the Responding Party shall
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by any court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchaser or mortgagee of any
of the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.
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26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The cost
of removing and disposing of such property and repairing any damage to any of
the Leased Premises caused by such removal shall be paid by Tenant to Landlord
upon demand. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of account
with respect to the finances and business of Tenant generally and with respect
to the Leased Premises, in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and shall permit Landlord and Lender
by their respective agents, accountants and attorneys, upon reasonable notice to
Tenant, to visit and inspect the Leased Premises and examine (and make copies
of) the records and books of account and to discuss the finances and business
with the officers of Tenant, at such reasonable times as may be requested by
Landlord. Upon the request of Lender or Landlord (either telephonically or in
writing), Tenant shall provide the requesting party with copies of any
information to which such party would be entitled in the course of a personal
visit.
(b) Tenant shall deliver to Landlord and to Lender one hundred
twenty (120) days of the close of each fiscal year, annual audited financial
statements of Tenant prepared by a nationally recognized firm of independent
certified public accountants. Tenant shall also furnish to Landlord within
forty-five (45) days after the end of each of the three remaining quarters
unaudited financial statements and all other quarterly reports of Tenant,
certified by Tenant's chief financial officer, and all filings, if any, of Form
10-K, Form 10-Q and other required filings with the Securities and Exchange
Commission pursuant to the provisions of the Securities Exchange Act of 1934, as
amended, or any other Law. All annual financial statements shall be accompanied
(i) by an opinion of said accountants stating that (A) there are
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no qualifications as to the scope of the audit and (B) the audit was performed
in accordance with GAAP and (ii) by the affidavit of the president or a vice
president of Tenant, dated within five (5) days of the delivery of such
statement, stating that (C) the affiant knows of no Event of Default, or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (D) except as otherwise specified in such affidavit, that Tenant has
fulfilled all of its obligations under this Lease which are required to be
fulfilled on or prior to the date of such affidavit.
(c) Landlord, Lender and their respective agents, accountants
and attorneys, shall consider and treat on a strictly confidential basis (i) any
information contained in the books and records of Tenant, (ii) any copies of any
books and records of Tenant, and any financial statements of Tenant pursuant to
Paragraph 28(b) which are delivered to or received by them and which are
conspicuously stamped "CONFIDENTIAL". Landlord, Lender, and their respective
agents, accountants and attorneys, shall conspicuously mark all copies of such
documents as "Confidential". Neither Landlord, Lender, nor their respective
agents, accountants and attorneys, shall disclose any information contained in
Tenant's books and records nor distribute copies of any of such books and
records nor Tenant's financial statements to any other Persons without the prior
written consent of the chief operating officer of Tenant. The restrictions
contained in this Paragraph 28(c) shall not prevent disclosure by Landlord or
Lender of any information in any of the following circumstances:
(i) Upon the order of any court or administrative agency
to the extent required by such order and not effectively stayed or by appeal or
otherwise;
(ii) Upon the request, demand or requirement of any
regulatory agency or authority having jurisdiction over such party, including
the Securities and Exchange Commission (whether or not such request or demand
has the force of law);
(iii) That has been publicly disclosed other than by
breach of this Paragraph 28(c) by Lender or Landlord or by any other Person who
has agreed with Landlord or Lender to abide by the provisions of this Paragraph
28(c);
(iv) To counsel or accountants for Lender or Landlord or
counsel or accountants for such other Person who has agreed to abide by the
provisions of this Paragraph 28(c);
(v) While an Even of Default exist, in connection with the
exercise of any right or remedy under this Lease or any other related document;
(vi) Independently developed by Landlord or Lender to the
extent that confidential information provided by Tenant is not used to develop
such information'
(vii) In any reporting to the beneficiaries;
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(viii) As otherwise required by Law.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value or Fair
Market Rental Value is required pursuant to any provision of this Lease, such
Fair Market Value or Fair Market Rental Value shall be determined in accordance
with the following procedure:
(i) Landlord and Tenant (or Third Party Purchaser with
respect to a determination under clause (D) below) shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the date (the "Applicable
Initial Date"") on which (A) Tenant provides Landlord with notice of its
intention to terminate this Lease and purchase the Leased Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c), (C) Landlord provides
Tenant with notice of Landlord's intention to require Tenant to make an offer to
terminate this Lease pursuant to Paragraph 23(a)(iii) or (D) Tenant provides
Landlord with Tenant's Option Exercise Notice pursuant to Paragraph 35(a).
Landlord and Tenant shall endeavor to agree on Fair Market Rental Value on the
date (also, an "Applicable Initial Date") which is six (6) calendar months prior
to the expiration of the then current Term unless Tenant has previously
exercised its option pursuant to Paragraph 5(b) not to have the Term
automatically extended. Upon reaching such agreement, the parties shall execute
an agreement setting forth the amount of such Fair Market Value or Fair Market
Rental Value.
(ii) If the parties shall not have signed such agreement
within thirty (30) days after the Applicable Initial Date, Tenant shall within
fifty (50) days after the Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications of such appraiser.
Such appraiser shall determine a Fair Market Value or Fair Market Rental Value,
as applicable, based upon a written appraisal as of the Relevant Date, within
twenty (20) days after the later to occur of (A) the date of selection of such
appraiser by Tenant and (B) the date that Landlord notifies Tenant that such
appraiser is acceptable and the determination of such appraiser shall be binding
and conclusive upon Landlord and Tenant. If such appraiser shall not be
acceptable to Landlord, in its sole and absolute discretion, or if such
appraiser shall fail to make its determination as required herein within such
twenty (20) day period, then within twenty-five (25) days following Landlord's
receipt of Tenant's notice of the appraiser selected by Tenant, Landlord shall
select an appraiser and notify Tenant of the name, address and qualifications of
such appraiser. Such two appraisers shall endeavor to agree upon Fair Market
Value or Fair Market Rental Value, as applicable, based on a written appraisal
made by each of them (and given to Landlord by Tenant) as of the Relevant Date.
If such two appraisers shall agree upon a Fair Market Value or Fair Market
Rental Value, as applicable, the amount of such Fair Market Value or Fair Market
Rental Value, as applicable, as so agreed shall be binding and conclusive upon
Landlord and Tenant.
(iii) If such two appraisers shall be unable to agree upon
a Fair Market Value or Fair Market Rental Value, as applicable, within twenty
(20) days after the
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selection of an appraiser by Landlord, then such appraisers shall advise
Landlord and Tenant of their respective determination of Fair Market Value or
Fair Market Rental Value, as applicable, and shall select a third appraiser to
make the determination of Fair Market Value or Fair Market Rental Value, as
applicable. The selection of the third appraiser shall be binding and conclusive
upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree upon
the designation of a third appraiser within ten (10) days after the expiration
of the twenty (20) day period referred to in clause (iii) above, or if such
third appraiser does not make a determination of Fair Market Value or Fair
Market Rental Value, as applicable, within twenty (20) days after his selection,
then such third appraiser or a substituted third appraiser, as applicable,
shall, at the request of either party hereto, be appointed by the President or
Chairman of the American Arbitration Association in New York, New York. The
determination of Fair Market Value or Fair Market Rental Value, as applicable,
made by the third appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.
(v) If a third appraiser is selected, Fair Market Value or
Fair Market Rental Value, as applicable, shall be the average of the
determination of Fair Market Value or Fair Market Rental Value, as applicable,
made by the third appraiser and the determination of Fair Market Value or Fair
Market Rental Value, as applicable, made by the appraiser (selected pursuant to
Paragraph 29(a)(ii) hereof) whose determination of Fair Market Value is nearest
to that of the third appraiser. Such average shall be binding and conclusive
upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to this
Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no
right, power or authority to alter or modify the provisions of this Lease, (C)
utilize the definition of Fair Market Value or Fair Market Rental Value, as
applicable, hereinabove set forth above, and (D) be registered in the State if
the State provides for or requires such registration. The Cost of the procedure
described in this Paragraph 29(a) above shall be borne entirely by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made. If, by
virtue of any delay, Fair Market Rental Value is not determined by the
expiration or termination of the then current Term, then until Fair Market
Rental Value is determined, Tenant shall continue to pay Basic Rent during the
succeeding Renewal Term in the same amount which it was obligated under this
Lease to pay prior to the commencement of the Renewal Term. When Fair Market
Rental Value is determined, the appropriate Basic Rent shall be calculated
retroactive to the commencement of the Renewal Term and Tenant shall either
receive a refund from Landlord (in the case of an overpayment) or shall pay any
deficiency to Landlord (in the case of an underpayment).
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(c) In determining Fair Market Value as defined in clause (b) of
the definition of Fair Market Value, each appraiser shall add (a) the Present
Value of the Rent for the remaining Term, assuming the Term has been extended
for all extension periods provided herein (with assumed increases in the CPI to
be determined by the appraisers) using a discount rate (which may be determined
by an investment banker retained by each appraiser) based on the
creditworthiness of Tenant and (b) the Present Value of the Leased Premises as
of the end of such Term (having assumed the Term has been extended for all
extension periods provided herein). The appraisers shall further assume that no
default then exists under the Lease, that Tenant has complied (and will comply)
with all provisions of the Lease, and that Tenant has not violated (and will not
violate) any of the Covenants.
(d) In determining Fair Market Rental Value, each appraiser shall
determine the amount that a willing tenant would pay, and a willing landlord of
a comparable building located in a radius of five (5) miles of the Leased
Premises would accept, at arm's length, to rent a building of comparable size
and quality as the Improvements, taking into account: (a) the age, quality,
condition (as required by the Lease) of the Improvements; (b) that the Leased
Premises will be leased as a whole or substantially as a whole to a single user;
(c) a lease term of five (5) years; (d) an absolute triple net lease; and (e)
such other items that professional real estate appraisers customarily consider.
30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (i) Landlord, (ii) any
director, officer, member, general partner, shareholder, limited partner,
beneficiary, employee or agent of Landlord or any general partner of Landlord or
any of its members or general partners (or any legal representative, heir,
estate, successor or assign of any thereof), (iii) any predecessor or successor
partnership or corporation (or other entity) of Landlord or any of its general
partners, shareholders, officers, directors, members, employees or agents,
either directly or through Landlord or its general partners, shareholders,
officers, directors, employees or agents or any predecessor or successor
partnership or corporation (or other entity), or (iv) any Person affiliated with
any of the foregoing, or any director, officer, employee or agent of any
thereof.
31. Financing.
(a) Tenant agrees to pay, at the closing of the purchase of the
Leased Premises, if incurred at or prior thereto, or otherwise within ten (10)
days following written request from Landlord, all costs and expenses incurred by
Landlord in connection with the purchase and leasing of the Leased Premises and
the financing of the initial Loan, including, without limitation, (1) the cost
of appraisals, environmental reports, legal fees and expenses of Landlord's and
Lender's counsel and any mortgage "points" or commitment fees, in an aggregate
amount not to exceed $80,000 and (2) all survey costs and title insurance
charges, fees and premiums.
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(b) Tenant agrees to pay, within three (3) business days of
written demand therefor, any cost, charge or expense (other than the principal
of the Note and interest thereon at the contract rate of interest specified
therein) imposed upon Landlord by Lender pursuant to the Note, the Mortgage or
the Assignment which is not caused solely by the gross negligence or willful
misconduct of Landlord and which is not otherwise reimbursed by Tenant to
Landlord pursuant to any other provision of this Lease.
(c) If Landlord desires to obtain or refinance any Loan, Tenant
shall negotiate in good faith with Landlord concerning any request made by any
Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this Lease or
increase any of Tenant's monetary obligations under this Lease or materially
increase any of Tenant's non-monetary obligations under this Lease. Such
subordination, nondisturbance and attornment agreement may require Tenant to
confirm that (a) Lender and its assigns will not be liable for any
misrepresentation, act or omission of Landlord and (b) Lender and its assigns
will not be subject to any counterclaim, demand or offset which Tenant may have
against Landlord.
32. Subordination, Non-Disturbance and Attornment.
(a) This Lease and Tenant's interest hereunder shall be
subordinate to any Mortgage or other security instrument hereafter placed upon
the Leased Premises by Landlord, and to any and all advances made or to be made
thereunder, to the interest thereon, and all renewals, replacements and
extensions thereof, provided that any such Mortgage or other security instrument
(or a separate instrument in recordable form duly executed by the holder of any
such Mortgage or other security instrument and delivered to Tenant) shall
provide that, so long as no Event of Default has occurred and is continuing
under the terms of this Lease and if Landlord shall not otherwise have the right
to terminate this Lease pursuant to any applicable provision hereof, (i) the
successor-in -interest to Landlord under this Lease ( the "Successor Landlord")
shall recognize this Lease and Tenant's rights hereunder, (ii) Tenant will not
be joined as a party defendant in any foreclosure action or proceeding which may
be instituted or taken by any Lender (other than for the purpose of instituting
such action against Landlord, if required by Law), and (iii) Tenant's use and
possession of the Leased Premises shall not be disturbed nor shall Tenant's
leasehold estate or rights under this Lease be affected in any way by reason of
any default by Landlord under any Mortgage.
(b) If the interest of Landlord under this Lease shall be
transferred by reason of a foreclosure action (or deed in lieu thereof) or other
proceeding, then, except as provided below, Lender, as the Successor Landlord,
shall be bound to Tenant under all of the
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terms and covenants of this Lease with the same force and effect as if such
Successor Landlord were the Landlord hereunder. The provisions of this Paragraph
32 shall be effective and self operative without the execution of any further
instruments. However, the Successor Landlord, upon request, shall execute and
deliver a certificate or other instrument which Tenant may reasonably request to
confirm that such Successor Landlord is bound by the provisions hereof.
(c) The Successor Landlord shall not and shall not be deemed to
(a) adopt or in any other manner be responsible or liable for any
representations or warranties made by Landlord, or be liable for any act,
omission or default of Landlord, or be subject to any offsets or defenses which
Tenant might have against Landlord, in each such case to the extent arising
prior to the date the Successor Landlord acquires title to the Leased Premises,
(b) be bound by any prepayment of rents or other charges under the lease for
more than one (1) month in advance unless such amendment, modification or
prepayment was approved in writing by the Successor Landlord, (c) be liable to
Tenant for any refund of any security deposit made by Tenant or any sublessee
pursuant to any sublease, except to the extent that the Successor Landlord has
actually received such security deposit, or (d) be liable to Tenant in any event
for any matter relating to the use, operation, repair, maintenance, condition or
legal compliance of the Leased Premises, except to extent expressly provided in
this Lease and then only from after the date Successor acquires legal title to
the Leased Premises.
33. Financial Covenants. Tenants hereby covenants and agrees to
comply with all the covenants and agreements described in Exhibit "E" hereto.
34. Tax Treatment; Reporting. Landlord and Tenant each acknowledge
that each shall treat this transaction as a true lease for state law purposes
and shall report this transaction as a Lease for Federal income tax purposes.
For Federal income tax purposes each shall report this Lease as a true lease
with Landlord as the owner of the Leased Premises and Equipment and Tenant as
the lessee of such Leased Premises and Equipment including: (1) treating
Landlord as the owner of the property eligible to claim depreciation deductions
under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
35. Option to Purchase.
(a) Landlord does hereby give and grant to Tenant the option to
purchase the Leased Premises (i) for a purchase price (the "Purchase Price")
equal to the Offer Amount and (ii) on any date (the "Option Purchase Date")
between six (6) months prior to the fifteenth (15th) anniversary of the date
hereof and the fifteenth (15th) anniversary date hereof which is mutually
agreeable to Landlord and Tenant, but in any event not sooner than thirty (30)
days after the Fair Market Value Date. If Tenant intends to exercise such
option, Tenant shall give written notice ("Tenant's Option Exercise Notice") to
Landlord to such effect not earlier than twenty-four (24) months prior to the
fifteenth (15th) anniversary of the date hereof and not later than eighteen (18)
months prior to fifteenth (15th) anniversary of the date hereof. Promptly
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<PAGE> 46
upon receipt of such notice by Landlord, the parties shall commence to determine
Fair Market Value.
(b) If Tenant shall exercise the foregoing option to purchase the
Leased Premises, on the later to occur of (i) the Option Purchase Date or (ii)
the date when Tenant has paid the Offer Amount and has satisfied all other
Monetary Obligations, Landlord shall convey the Leased Premises to Tenant in
accordance with Paragraph 20 hereof; provided, that if an Event of Default has
occurred and is continuing on the Option Purchase Date, Landlord, at its sole
option, may terminate Tenant's option to purchase hereunder. IF THIS LEASE SHALL
TERMINATE FOR ANY REASON PRIOR TO THE DATE ORIGINALLY FIXED HEREIN FOR THE
EXPIRATION OF THE TERM, OR IF TENANT SHALL FAIL TO GIVE THE AFORESAID NOTICE OF
INTENTION TO PURCHASE, TIME BEING OF THE ESSENCE, THE OPTION PROVIDED IN THIS
PARAGRAPH 35 AND ANY EXERCISE THEREOF BY TENANT SHALL CEASE AND TERMINATE AND
SHALL BE NULL AND VOID. IN SUCH EVENT TENANT SHALL EXECUTE A QUITCLAIM DEED AND
SUCH OTHER DOCUMENTS AS LANDLORD SHALL REASONABLY REQUEST EVIDENCING THE
TERMINATION OF ITS OPTION.
36. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this Paragraph
36, and provided an Event of Default does not then exist if Landlord shall enter
into a contract for the sale (the "Sale Contract") of the Leased Premises with a
Third Party Purchaser (such Sale Contract to be conditioned upon Tenant's
failure to exercise its right under Paragraph 36(b)), Landlord shall give
written notice to Tenant of the Sale Contract, together with a copy of the
executed Sale Contract and the name and business address of the Third Party
Purchaser.
(b) For a period of thirty (30) days following receipt of such
notice, Tenant shall have the right and option, exercisable by written notice to
Landlord given within said thirty (30) day period, to elect to purchase the
Leased Premises at the purchase price and upon all the terms and conditions set
forth in such Sale Contract except that no contingencies contained in such Sale
Contract as to environmental assessments, engineering studies, inspection of the
Leased Premises, availability of financing, sale of other property, state of the
title to or encumbrances on the Leased Premises, or any other condition or
contingency to the Third Party Purchaser's obligation to purchase the Leased
Premises which pertains to the condition of the Leased Premises, the Third Party
Purchaser's ability to take certain action or any other factor beyond the
control of Landlord, shall apply to Tenant's obligation to purchase the Leased
Premises under this Paragraph 36, and Tenant shall be obligated to purchase the
Leased Premises without any such condition or contingency.
(c) If at the expiration of the aforesaid thirty (30) day period
Tenant shall have failed to exercise the aforesaid option, Landlord may sell the
Leased Premises to such Third Party Purchaser upon the terms set forth in such
contract.
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(d) Except as otherwise specifically provided herein, the closing
date for any purchase of the Leased Premises by Tenant pursuant to this
Paragraph 36 shall be the earlier to occur of (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the Leased
Premises upon the terms of a Sale Contract with a Third Party Purchaser or (ii)
the closing date provided in such Sale Contract. At such closing Landlord shall
convey the Leased Premises to Tenant in accordance with, and Tenant shall pay to
Landlord the purchase price and other consideration set forth in, the applicable
contract.
(e) Tenant shall have the right during the Term to exercise the
foregoing right of first refusal upon (i) each proposed sale of the Leased
Premises during the Term hereof. NOTWITHSTANDING ANYTHING TO THE CONTRARY, IF
TENANT FAILS TO TIMELY EXERCISE THE RIGHT OF FIRST REFUSAL GRANTED PURSUANT TO
THIS PARAGRAPH 36, OR IF THIS LEASE TERMINATES OR THE TERM EXPIRES, SUCH RIGHT
SHALL TERMINATE AND BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT. IN SUCH
EVENT TENANT SHALL EXECUTE A QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS LANDLORD
SHALL REASONABLY REQUEST EVIDENCING THE TERMINATION OF ITS RIGHT OF FIRST
REFUSAL.
(f) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to a Third
Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer. At the request of Landlord, Tenant will execute such documents
confirming the agreement referred to above and such other agreements as Landlord
may reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder.
(g) The provisions of this Paragraph 36 shall not apply to or
prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the Leased Premises, (ii) any sale of the Leased
Premises pursuant to a private power of sale under or judicial foreclosure of
any Mortgage or other security instrument or device to which Landlord's interest
in the Leased Premises is now or hereafter subject, (iii) any transfer of
Landlord's interest in the Leased Premises to a Lender, beneficiary under deed
of trust or other holder of a security interest therein or their designees by
deed in lieu of foreclosure, (iv) any transfer of the Leased Premises to any
governmental or quasi-governmental agency with power of condemnation, (v) any
transfer of the Leased Premises to any affiliate of Landlord or to any entity
for whom W. P. Carey & Co., Inc., Carey Diversified LLC or any of their
affiliates provides management services or investment advice, (vi) any Person to
whom Landlord sells all or substantially all of its assets, or (vii) any
transfer of the Leased Premises to any of the successors or assigns of any of
the Persons referred to in the foregoing clauses (i) through (iv). Nothing in
this subparagraph (g) shall be deemed to be a waiver of the applicable
substantive and procedural rules of the State relating to notice of the
institution of foreclosure proceedings or, except as otherwise expressly
provided in this Lease, be deemed to require any payment by Tenant as a
consequence of any of the transfers listed in this subparagraph (g).
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<PAGE> 48
37. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
(b) As used in this Lease, the singular shall include the plural
and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Except as otherwise
expressly provided in this Lease, Landlord shall have the right, at its sole
option, to withhold its consent whenever such consent is required under this
Lease for any reason or no reason. Time is of the essence with respect to the
performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any purpose to be
a partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by Tenant
on or about the effective date hereof at Landlord's request constitute the
entire agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without regard to the
rule that ambiguities in a document are to be construed against the drafter.
(f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom enforcement of
any such modification, amendment, discharge or waiver is sought.
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<PAGE> 49
(g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrancers
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and enforced in
accordance with the Laws of the State.
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<PAGE> 50
IN WITNESS WHEREOF, Landlord and Tenant have caused
this Lease to be duly executed under seal as of the day and year first above
written.
LANDLORD:
CBS (PA) QRS 14-12, INC.
By:_______________________
Title:____________________
WITNESS: TENANT:
CONTRAVES BRASHEAR SYSTEMS, L. P.
By: Optics Acquisition Company, L.L.C.
General Partner
By:__________________ By:___________________________
Title:_______________ Nicki T. Baldini,
Secretary
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<PAGE> 51
EXHIBIT A
PREMISES
<PAGE> 52
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances
of every kind and nature whatsoever now or hereafter affixed or attached to or
installed in any of the Leased Premises (except as hereafter provided),
including all electrical, anti-pollution, heating, lighting (including hanging
fluorescent lighting), incinerating, power, air cooling, air conditioning,
humidification, sprinkling, plumbing, cleaning, fire prevention, fire
extinguishing and ventilating systems, devices and machinery and all engines,
pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors,
conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors, windows, loading platforms, lavatory facilities,
stairwells, fencing (including cyclone fencing), passenger and freight elevators
and garage units, together with all additions thereto, substitutions therefor
and replacements thereof required or permitted by this Lease, but excluding all
personal property and trade fixtures of any sublessee of Tenant and all of
Tenant's personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation,
as buildings, of the buildings which constitute part of the Leased Premises; and
specifically excluding Tenant's overhead crane, lifting equipment, portable
clean rooms and telephone equipment.
<PAGE> 53
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE> 54
EXHIBIT D
BASIC RENT PAYMENTS
1. Initial Term; Basic Rent. Subject to the adjustments provided
for in Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Initial
Term shall be $643,500.00 per annum, payable quarterly in advance on each Basic
Rent Payment Date, in equal installments of $160,875.00 each.
2. Basic Rent During Each Renewal Term. Subject to the adjustments
provided for in Paragraphs 2, 3 and 4 below, Basic Rent for each Renewal Term,
shall be payable quarterly in advance in an amount equal to the greater of (A)
one hundred percent (100%) of the Fair Market Rental Value (as determined in
accordance with Paragraph 29 of this Lease) as of the first day of the
applicable Renewal Term and (B) (i) for the first Renewal Term, the sum of Basic
Rent in effect as of the last calendar quarter immediately prior to the
Expiration Date, any increase as a result of any adjustment to Basic Rent on the
fifteenth (15th) anniversary of the First Full Basic Rent Payment Date as
provided below and (ii) for the Second Renewal Term, if applicable, the Basic
Rent in effect as of the last calendar quarter immediately prior to the
expiration of the first Renewal Term.
3. CPI Adjustments to Basic Rent. The Basic Rent shall be subject
to adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the three (3) year period immediately preceding such
adjustment.
4. Effective Dates of CPI Adjustments. Basic Rent shall not be
adjusted to reflect changes in the CPI until the third (3rd) anniversary of the
Basic Rent Payment Date on which the first full quarterly installment of Basic
Rent shall be due and payable (the "First Full Basic Rent Payment Date"). As of
the third (3rd) anniversary of the First Full Basic Rent Payment Date and
thereafter on the sixth (6th), ninth (9th) and twelfth (12th) and, if the
Initial Term is extended, on the fifteenth (15th), eighteenth (18th),
twenty-first (21st), and twenty-fourth (24th) anniversaries of the First Full
Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent three (3) year period immediately preceding each
of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").
<PAGE> 55
5. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 5(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be the difference between (i) the average CPI for the three (3) most
recent calendar months (the "Prior Months") ending prior to such Basic Rent
Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI (the
product of such multiplication, divided by the Basic Rent, and expressed as a
percentage increase, the "Actual CPI Increase"). An amount equal to the lesser
of (x) the Actual CPI Increase and (y) 9.27% of the Basic Rent (based upon 3%
per annum compounded) in effect immediately prior to such Basic Rent Adjustment
Date shall be added to the Basic Rent in effect immediately prior to such Basic
Rent Adjustment Date. As used herein, "Beginning CPI" shall mean the average CPI
for the three (3) calendar months corresponding to the Prior Months, but
occurring three (3) years earlier. If the average CPI determined in clause (i)
is the same or less than the Beginning CPI, the Basic Rent will remain the same
for the ensuing three (3) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the tenth (10th) day preceding each Basic Rent Adjustment
Date, but any failure to do so by Landlord shall not be or be deemed to be a
waiver by Landlord of Landlord's rights to collect such sums. Tenant shall pay
to Landlord, within ten (10) days after a notice of the new annual Basic Rent is
delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated
amount as set forth above was not delivered to Tenant at least ten (10) days
preceding the basic Rent Adjustment Date in question.
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<PAGE> 56
COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Tenant shall, and shall cause each of its Subsidiaries to,
maintain its corporate existence, rights and franchises in full force and effect
in its jurisdiction of incorporation. Tenant shall, and shall cause its
Subsidiaries to qualify and remain qualified as a corporation in each
jurisdiction in which failure to receive or retain such qualification would have
an adverse effect on the business, operations or financial condition of the
enterprise comprised of the Tenant and its Subsidiaries taken as a whole.
(b) At all times during the Term, William E. Conway, Jr. shall,
directly or indirectly, own and control the voting rights with respect to at
least 51% of Tenant's Voting Stock; provided that, Tenant shall be permitted to
sell, convey or transfer all of Tenant's Voting Stock to a Person if such Person
shall have a publicly traded unsecured debt rating of (i) Baa or better from
Moody's Investor Services, Inc., or (ii) BBB or better from Standard and Poor's
Corporation, or (iii) in the event both such rating agencies cease to furnish
such ratings, a comparable rating by a rating agency acceptable to Landlord and
Lender.
(c) The Tenant shall not consolidate with or merge into any
other Person unless, immediately following such consolidation or merger (i) the
surviving corporation shall have, on a proforma basis, either [(1)(A) an
Adjusted Consolidated Net Worth of not less than the greater of (x) Five Million
Dollars ($5,000,000) and (y) the Tenant's Consolidated Net Worth immediately
preceding such consolidation or merger and (B) the ratio of Tenant's shareholder
equity to long term debt shall not be less than 1:1 or (2) an Adjusted
Consolidated Net Worth of not less than Twenty Million Dollars ($20,000,000)],
(ii) the Board of Directors of Tenant immediately prior to such merger or
consolidation remains in control following such merger or consolidation; and
(iii) the senior management does not change in any material respect following
such merger or consolidation; provided, however, that the provisions of clauses
(ii) and (iii) hereof shall not be applicable if the surviving corporation
following such merger or consolidation has a publicly traded unsecured debt
rating of (A) Baa or better from Moody's Investor Services, Inc., or (B) BBB or
better from Standard and Poor's Corporation, or (C) in the event both such
rating agencies cease to furnish such ratings, a comparable rating by a rating
agency acceptable to Landlord and Lender.
(d) The Tenant shall not in a single transaction or series of
related transactions, sell or convey, transfer, abandon or lease all or
substantially all of its assets to any Person. Notwithstanding the foregoing,
Tenant shall have the right in a single transaction or a series of related
transactions to sell or convey all or substantially all of its assets to a
Person if (i) this Lease and the obligations of Tenant hereunder shall be
transferred to, and assumed by, such Person as part of such transaction and (ii)
immediately after such transaction, on a proforma basis, such Person shall have
a publicly traded unsecured debt rating of (i) Baa or better from Moody's
Investor Services, Inc., or (ii) BBB or better from Standard and Poor's
Corporation, or (iii) in the event both such rating agencies cease to furnish
such ratings, a comparable rating by a rating agency acceptable to Landlord and
Lender.
<PAGE> 57
(e) The Tenant shall not make any substantial change in the
nature of its business.
2. Restricted Payments.
(a) Tenant shall not, directly or indirectly make, or cause or
permit any Subsidiary of the Tenant to make, any Restricted Payment, unless at
the time thereof, and after giving effect thereto:
(i) no Event of Default shall have occurred and be
continuing; and
(ii) the Tenant's Consolidated Net Worth equals or exceeds
$5,000,000; and
(iii) such Restricted Payment, together with all other
Restricted Payments made from the commencement date of the Term to the
date of such Restricted Payment does not exceed the sum of fifteen
percent (15%) of the Tenant's Consolidated Net Income on a cumulative
basis beginning with an including the fiscal year in which the Term
commenced to the month immediately preceding the date of such
Restricted Payment.
(b) The Tenant shall not, and shall not permit any Subsidiary,
to compensate directors, officers and employees of Tenant and its Subsidiaries
for services rendered in such capacity unless such compensation is in good faith
and on terms no less favorable to the Tenant or such Subsidiary than those that
could have been obtained in a comparable transaction on an arm's-length basis
from an unrelated Person, and the board of directors of the Tenant or such
Subsidiary approve the same.
3. Definitions. For the purpose of this Exhibit "E" the following
terms shall have the following meanings:
"Consolidated Net Income: shall mean, for any period, the
aggregate net income (or loss) of Tenant and its Subsidiaries for such period on
a consolidated basis, determined in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date, the net
worth of Tenant and its Subsidiaries on a consolidated basis, determined in
accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States of America, applied on a
consistent basis.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
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<PAGE> 58
"Restricted Payment" shall mean and include (a) any direct or
indirect purchase, redemption or other acquisition or retirement for value of
any equity security of Tenant or any option, warrant or right to acquire any
such equity security, or any security convertible into or exchangeable for any
such equity security, (b) any dividend, distribution, loan advance, guarantee,
extension of credit or other payment or transfer, whether in cash or property
and whether direct or indirect, to or for the benefit any Person holding an
equity interest in the Tenant (other than a payment or distribution to or for
the benefit of such Person for the purpose of the payment of income taxes),
whether or not such interest is evidenced by a security, or any affiliate of any
such Person, and (c) any direct or indirect purchase, redemption, prepayment or
other acquisition or retirement for value, prior to its stated maturity,
scheduled repayment or scheduled sinking fund payment of any subordinated debt
of the Tenant or any Subsidiary held by any Person described in clause (b)
above.
"Subsidiary" of any Person means a corporation a majority of
the Voting Stock of which is at the time owned, or the management of which is
otherwise controlled, directly or indirectly, through one or intermediaries, or
both, by such Person.
"Voting Stock" means shares of stock of a corporation having
ordinary voting power to elect the board of directors or other managers of such
corporation.
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