<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934. For the period ended April 1, 2000
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the transition period from to
Commission file number 000-26133
STREAMLINE.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3187302
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27 DARTMOUTH STREET
WESTWOOD, MASSACHUSETTS 02090
(Address of principal executive offices)
(781) 407-1900
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports)
Yes X No__
(2) has been subject to such filing requirements for the past 90 days
Yes X No__
As of May 3, 2000, there were 22,336,212 shares outstanding of the
Company's common stock, $0.01 per value per share.
<PAGE>
STREAMLINE.COM, INC.
INDEX
<TABLE>
<CAPTION>
ITEM PAGE
NUMBER NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of January 1, 2000 and April 1, 2000..... 3
Consolidated Statements of Operations for the three months ended
March 31, 1999 and April 1, 2000........................................ 4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and April 1, 2000.................................. 5
Notes to the Unaudited Consolidated Financial Statements................ 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk ................. 13
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds................................... 14
Item 6. Exhibits and Reports on Form 8-K............................................ 15
SIGNATURE................................................................... 16
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
STREAMLINE.COM, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
(unaudited)
<TABLE>
<CAPTION>
JANUARY 1, APRIL 1,
2000 2000
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and marketable securities.................... $ 35,307 $ 19,027
Restricted cash..................................................... - 1,699
Accounts receivable, net of allowance for doubtful accounts of $88
at January 1, 2000 and $65 at April 1, 2000...................... 455 769
Inventory........................................................... 1,179 1,510
Prepaid expenses and other current assets........................... 1,693 1,777
-------- --------
Total current assets................................. 38,634 24,782
Property and equipment, net......................................... 13,351 16,562
Purchased and capitalized software, net............................. 4,547 4,822
Goodwill, net of accumulated amortization........................... 818 741
Other assets, net................................................... 7,691 1,473
-------- --------
Total assets......................................... $ 65,041 $ 48,380
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease obligations........................................... $ 1,139 $ 1,615
Accounts payable.................................................... 3,030 2,622
Notes payable....................................................... 7,432 -
Accrued expenses.................................................... 2,319 3,050
-------- --------
Total current liabilities............................ 13,920 7,287
Long-term portion of capital lease obligations......................... 5,701 6,767
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000 authorized and none
outstanding at January 1, 2000 and April 1, 2000.................. - -
Common stock, $0.01 par value;
Authorized: 50,000,000 at January 1, 2000 and April 1, 2000
Issued and outstanding: 22,143,252 issued and 22,109,252
outstanding at January 1, 2000, and 22,349,667 issued and
22,315,667 outstanding at April 1, 2000........................... 221 224
Additional paid-in capital........................................... 101,888 102,529
Treasury stock, at cost: 34,000 shares at January 1, 2000 and
April 1, 2000...................................................... (238) (238)
Accumulated other comprehensive loss................................ (8) (24)
Accumulated deficit................................................. (56,443) (68,165)
-------- --------
Total stockholders' equity........................... 45,420 34,326
-------- --------
Total liabilities and stockholders' equity........... $ 65,041 $ 48,380
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
STREAMLINE.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, APRIL 1,
1999 2000
---- ----
<S> <C> <C>
Revenue:
Product and service revenue, net.................................... $ 4,252 $ 7,906
Subscription fees................................................... 140 276
Advertising, research and marketing fees............................ 233 279
-------- --------
Total revenue.......................................................... 4,625 8,461
Operating expenses:
Cost of revenue..................................................... 3,213 5,909
Fulfillment center operations....................................... 1,991 4,720
Sales and marketing................................................. 805 3,402
Technology systems and development.................................. 1,035 1,579
General and administrative.......................................... 2,199 4,611
-------- --------
Total operating expenses............................................... 9,243 20,221
-------- --------
Loss from operations................................................ (4,618) (11,760)
Other income (expense):
Interest income...................................................... 205 392
Interest expense..................................................... (24) (315)
Loss on sale of assets............................................... - (39)
-------- --------
Total other income net................................................ 181 38
-------- --------
Net loss............................................................... $ (4,437) $(11,722)
Dividends on preferred stock........................................... 286 -
-------- --------
Net loss attributable to common stockholders........................... $ (4,723) $(11,722)
Basic and diluted net loss per common share............................ $ (0.64) $ (0.53)
Shares used in computing basic and diluted net loss
per common share..................................................... 7,342,876 22,251,002
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
STREAMLINE.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, APRIL 1,
1999 2000
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................. $(4,437) $(11,722)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization..................................... 552 1,328
Amortization of goodwill and other assets......................... 62 77
Loss on sale of equipment......................................... - 39
Issuance of options for the purchase of common stock in exchange
for services................................................... 25 -
Changes in assets and liabilities
Accounts receivable, net.......................................... (510) (314)
Inventory......................................................... (11) (331)
Prepaid expenses and other current assets......................... (184) (84)
Other assets...................................................... (23) (282)
Accounts payable.................................................. 515 (408)
Accrued expenses.................................................. 794 731
------- --------
Net cash used in operating activities.................................. (3,217) (10,966)
Cash flows from investing activities:
Purchase of marketable securities.................................... - (5,316)
Proceeds from sale of marketable securities.......................... - 13,188
Proceeds from sale and leaseback of property......................... - 6,500
Purchases of property and equipment.................................. (501) (1,932)
Additions to purchased and capitalized software...................... (802) (1,046)
Increase in restricted cash.......................................... - (1,699)
------- --------
Net cash (used in) provided by investing activities.................... (1,303) 9,695
Cash flows from financing activities:
Proceeds from the exercise of stock options.......................... 643
Payments on notes payable............................................ (7,432)
Principal payments on capital lease obligations...................... (99) (333)
------- --------
Net cash used in financing activities.................................. (99) (7,122)
------- --------
Net decrease in cash and cash equivalents............................. $(4,619) $ (8,393)
Cash and cash equivalents beginning of period.......................... 19,834 14,561
======= ========
Cash and cash equivalents end of period................................ $15,215 $ 6,168
======= ========
Supplemental non-cash transactions:
Assets acquired with capital lease obligations....................... $ 416 $ 1,875
Accrual of preferred stock dividends................................. 286 -
Unrealized loss on marketable securities............................. (24)
Issuance of warrants in connection with sale and leaseback of
property.......................................................... - 190
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
STREAMLINE.COM, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation. The unaudited interim financial statements
included herein have been prepared by the Company, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain notes and other
information normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
from the interim financial statements presented in this quarterly report on Form
10-Q in accordance with such rules and regulations. In the opinion of the
Company's management, the accompanying financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to state
fairly the financial position of the Company as of April 1, 2000 and the results
of its operations and cash flows for the periods indicated. The results of
operations for the periods covered are not necessarily indicative of the results
to be expected for the full year.
These financial statements should be read in conjunction with the
audited financial statements and notes thereto of the Company for the year ended
January 1, 2000, which are included in the Company's annual report on Form 10-K,
filed with the Securities and Exchange Commission.
2. Reclassifications. Certain prior year balances have been
reclassified to conform with the current year presentation.
3. Restricted Cash. The Company has invested approximately $1.7 million
in certificates of deposit pledged to collateralize letters of credit issued as
security for certain leasing transactions.
4. Acquisition of Beacon Home Direct d/b/a Scotty's Home Market
("Scotty's"). On January 5, 2000, the Company acquired Scotty's pursuant to the
Agreement and Plan of Merger and Reorganization, dated as of October 18, 1999.
The Company issued 3,710,456 shares of its common stock in exchange for all of
the common stock of Scotty's. In addition, outstanding options and warrants to
acquire Scotty's common stock were converted into options and warrants to
acquire a total of approximately 597,595 shares of Streamline common stock.
Approximately $1.3 million of merger related costs were expensed in the quarter
ended April 1, 2000. The transaction was accounted for as a pooling of
interests. Accordingly, the Company's consolidated financial statements have
been restated to include the accounts and operations of Scotty's for all periods
presented.
5. Sale and Leaseback Transaction. On January 5, 2000 the Company
entered into a sale and leaseback transaction for its Chicago distribution
facility. The gross selling price for this transaction was $6.5 million and,
concurrent with the sale, the Company leased the property back for an initial
term of 20 years. No gain or loss was recorded in connection with the
transaction.
6. Net Loss Per Share. Net loss per share is presented under Statement
of Financial Accounting Standards No. 128, "Earnings per Share."
The following is the calculation of the net loss per share:
(in thousands, except for share and per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999 APRIL 1, 2000
-------------- -------------
<S> <C> <C>
Numerator:
Net loss $(4,437) $(11,722)
Dividends on preferred stock 286 -
==================== ===================
Net loss attributable to
common stockholders $(4,723) $(11,722)
==================== ===================
Denominator:
Weighted average common shares outstanding 7,342,876 22,251,002
Basic and diluted net loss per common share $ (0.64) $ (0.53)
-------------------- -------------------
</TABLE>
Outstanding options of 1,410,258 and 2,798,526 as of March 31,
1999 and April 1, 2000, respectively, were not included in the diluted
loss per share computation because their effect would be
anti-dilutive. Outstanding warrants of 1,043,861 and 1,044,717 as of March
31, 1999 and April 1, 2000, respectively, were not included in the diluted
loss per share calculation because their effect would be anti-dilutive.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THIS QUARTERLY
REPORT ON FORM 10-Q MAY CONTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, INCLUDING, BUT NOT LIMITED TO, (I) STATEMENTS ABOUT THE
ADEQUACY OF THE COMPANY'S CASH, CASH EQUIVALENTS, OTHER CAPITAL RESOURCES,
INTEREST INCOME AND FUTURE REVENUES AND (II) CERTAIN STATEMENTS IDENTIFIED OR
QUALIFIED BY WORDS SUCH AS "LIKELY," "WILL," "SUGGESTS," "MAY," "WOULD,"
"COULD," "SHOULD," "EXPECTS," "ANTICIPATES," "ESTIMATES," "PLANS," "PROJECTS,"
"BELIEVES," OR SIMILAR EXPRESSIONS (AND VARIANTS OF SUCH WORDS OR EXPRESSIONS).
THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN REPRESENT THE COMPANY'S JUDGMENT
AS OF THE DATE OF THIS QUARTERLY REPORT ON FORM 10-Q, AND THE COMPANY CAUTIONS
READERS NOT TO PLACE UNDUE RELIANCE ON SUCH STATEMENTS. INVESTORS ARE CAUTIONED
THAT FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN. ACTUAL PERFORMANCE AND
RESULTS OF OPERATIONS MAY DIFFER MATERIALLY FROM THOSE PROJECTED OR SUGGESTED IN
THE FORWARD-LOOKING STATEMENTS DUE TO CERTAIN RISKS AND UNCERTAINTIES,
INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING:
- RISKS RELATING TO STREAMLINE'S LIMITED OPERATING HISTORY AND HISTORY OF
LOSSES
- RISKS PERTAINING TO OUR ABILITY TO EXECUTE OUR EXPANSION STRATEGY
- RISKS THAT WE MAY HAVE DIFFICULTY RAISING ADDITIONAL CAPITAL
- RISKS ASSOCIATED WITH OUR RELIANCE ON THE GROWTH OF E-COMMERCE AND THE
INFRASTRUCTURE OF THE INTERNET
- RISKS OF INCREASED COMPETITION
- RISKS RELATING TO OUR DEPENDENCE ON CUSTOMER ACCEPTANCE OF DIRECT,
UNATTENDED DELIVERY OF GOODS AND SERVICES
OVERVIEW
Streamline.com, Inc. ("Streamline" or the "Company") simplifies the
lives of busy suburban families by providing Internet-based ordering and home
delivery of a wide range of consumer goods and services such as groceries,
household goods, health and beauty care items, dry cleaning, video rentals and
film processing. Our typical customer tends to be a dual income household with
at least one child and access to the Internet. We also provide consumer packaged
goods companies insight into consumer Internet purchasing behavior to help
facilitate the development of their Internet merchandising capabilities and to
broaden other research and marketing programs.
Streamline has grown rapidly, with revenue increasing to $22.8 million
in 1999 from $6.5 million in 1997. During this same period, our net loss
increased to $26.5 million in 1999 from $10.3 million in 1997. We expect to
continue to incur losses as we increase expenditures in all areas of operations
in order to execute our business plan. In particular, we expect to incur costs
related to:
- expanding into new markets
- increasing our sales and marketing efforts
- continuing our investment in technology
Due to our history of net operating losses, we currently pay no federal
or state income tax. As of April 1, 2000, we had significant federal and state
net operating loss carry forwards. These net operating losses are available to
offset future income tax obligations unless federal or state tax law
restrictions, such as those related to an ownership change as defined in the
Internal Revenue Code, limit us from doing so.
<PAGE>
HISTORY OF GROWTH
Streamline was founded in April 1993. From 1993 through 1995 we focused
primarily on testing the viability of the consumer home delivery market. We
developed our current business concept during that period.
In 1996 we began offering a full range of products and services to a
test group of approximately 100 customers. In October 1996 we completed the
development of our first consumer resource center in the greater Boston area and
commenced marketing our services.
In 1997 we continued to expand our product and service offerings and
launched our Consumer Learning Center, which provides research and merchandising
opportunities to consumer packaged goods companies. In addition, we acquired
substantially all of the assets of Shopping Alternatives, Inc., a consumer
direct company based in the Washington, DC area.
In June 1999, the Company completed an initial public offering of its
stock (NASDAQ: SLNE) raising approximately $45 million to fund its expansion
plans and in October 1999, entered into a definitive agreement to acquire Beacon
Home Direct, Inc. d/b/a Scotty's Home Market, a grocery home delivery company
located in the Chicago, Illinois area. The Scotty's acquisition was completed in
January 2000. In addition, in October 1999, the Company signed a lease for a
102,000 square foot distribution facility in Carlstadt, New Jersey, which will
facilitate a May 2000 entry into the northern New Jersey marketplace.
In April 2000, the Company announced the signing of a lease for a
108,000 square foot facility in Shakopee, Minnesota, in order to facilitate
entry into the Minneapolis market in late 2000. This will be the fifth major
market in its plan to serve customers in the top 20 US metropolitan markets by
year-end 2004. In addition, the Company has also recently signed a lease for a
147,000 square foot building in Norwood, Massachusetts which will replace its
existing facility in Westwood, Massachusetts. This facility will include
approximately 47,000 square feet of space for the Company's corporate offices
and a 100,000 square foot distribution facility adequate to meet its growing
needs in the Boston marketplace for the foreseeable future.
COMPONENTS OF REVENUE
Streamline has three primary sources of revenue. The majority of our
revenue is generated by the sale of consumer products and services that we
aggregate in our fulfillment center and deliver to our customers' homes on a
weekly basis. Our product and service revenue is comprised of the retail prices
we charge our customers for these products and services. The wholesale prices we
pay our distributors and suppliers for such products and services are included
as a cost of revenue. Our customers that elect scheduled delivery service also
pay us a monthly subscription fee of $30. In addition, we receive advertising,
research and marketing fees through arrangements with consumer packaged goods
companies and e-commerce companies. Revenue from products and services is
recognized upon delivery to the customer; subscription fees are recognized
monthly; and advertising, research and marketing fees are recognized over the
life of the applicable arrangement or as services are performed.
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 2000 AND MARCH 31, 1999
TOTAL REVENUE. Total revenue increased to $8.5 million in the three
months ended April 1, 2000 from $4.6 million in the comparable period ended
March 31, 1999, an increase of 82.9%. This increase was primarily due to the
continuing expansion of our customer base and the opening of operations in the
Washington, DC area.
PRODUCT AND SERVICE REVENUE, NET. Product and service revenue, net is
comprised of the retail prices our customers pay us for the products and
services we sell to them, net of returns. Sale of products and services, net of
returns increased to $7.9 million in the three months ended April 1, 2000 from
$4.3 million in the comparable period ended March 31, 1999, an increase of
85.9%. The increase in revenue was the result of an increase in our customer
base to approximately 11,000 at April 1, 2000 from approximately 6,200 at
<PAGE>
March 31, 1999 and an increase in the number of invoices for product and service
revenue to approximately 73,000 in the three months ended April 1, 2000 from
38,000 in the comparable period ended March 31, 1999. Average product and
service revenue per invoice decreased to approximately $108 in the three months
ended April 1, 2000 from approximately $112 in the three month period ended
March 31, 1999. Product and service revenue, net as a percentage of total
revenue increased to 93.4% in the three months ended April 1, 2000 from 91.9% in
the comparable period ended March 31, 1999.
SUBSCRIPTION FEES. Scheduled delivery customers pay monthly
subscription fees in addition to the amounts paid for the products and services
we deliver to their homes. Revenue from these fees increased to $276,000 in the
three months ended April 1, 2000 from $140,000 in the comparable period ended
March 31, 1999, an increase of 97.4%, due to our expanded customer base.
Subscription fees as a percentage of total revenue increased to 3.3% in the
three months ended April 1, 2000 from 3.0% in the comparable period ended March
31, 1999.
ADVERTISING, RESEARCH AND MARKETING FEES. Revenue from advertising,
research and marketing fees includes Consumer Learning Center membership fees
paid by consumer packaged goods companies for the opportunity to participate in
research and marketing programs. Advertising, research and marketing fees
increased to $279,000 in the three months ended April 1, 2000 from $233,000 in
the comparable period ended March 31, 1999, an increase of 19.9%.
TOTAL OPERATING EXPENSES. Total operating expenses increased to $20.2
million, or 239.0% of total revenues, in the three months ended April 1, 2000
from $9.2 million, or 199.8% of total revenues, in the comparable period ended
March 31, 1999, an increase of 118.8%. The increase in operating expenses is a
result of an increase in order volume and the opening of operations in the
Washington, DC area.
COST OF REVENUE. The cost of revenue is comprised of wholesale costs of
products and services we sell to our customers and the costs associated with
generating advertising, research and marketing fees. The cost of revenue
increased to $5.9 million, or 69.8% of total revenues, in the three months ended
April 1, 2000 from $3.2 million, or 69.5% of total revenues in the comparable
period ended March 31, 1999, an increase of 83.9%. The increased cost of revenue
is attributable to the increase in revenue.
FULFILLMENT CENTER OPERATIONS. Expenses attributable to fulfillment
center operations include all costs associated with installing the customer,
managing the facility and processing orders including salaries and wages,
employee benefits, facility rent, utility costs, vehicle expenses and order
processing fees. These expenses increased to $4.7 million, or 55.8% of total
revenue, in the three months ended April 1, 2000 from $2.0 million, or 43.0% of
total revenue, in the comparable period ended March 31, 1999, an increase of
137.1%. The increase in fulfillment center expense was primarily attributable to
an increase in the number of orders processed. The increase in fulfillment
center expense as a percentage of total revenue was primarily attributable to
the opening of the Company's new facility in Gaithersburg, Maryland. New
facilities typically incur operating expenses at a higher percentage of revenue
than more mature facilities until sufficient order volume is achieved to allow
the facility to begin to leverage fixed costs such as rent, depreciation and
utility expense.
SALES AND MARKETING. Sales and marketing expenses include general
marketing expenses and the sale and marketing costs associated with acquiring
customers. Sales and marketing expenses increased to $3.4 million, or 40.2% of
total revenue, for the three months ended April 1, 2000 from $805,000, or 17.4%
of total revenue, for the comparable period ended March 31, 1999, an increase of
322.7%. This increase, as well as the higher percentage of total revenue was due
to additional advertising and promotional activities undertaken to acquire new
customers.
TECHNOLOGY SYSTEMS AND DEVELOPMENT. Expenses attributable to technology
systems and development include costs associated with development of technology
prior to capitalization, maintenance, implementation of minor enhancements,
information system personnel and consultants, and amortization of purchased and
capitalized software costs. These expenses increased to $1.6 million, or 18.7%
of total revenue, for the three months ended April 1, 2000 from $1.0 million, or
22.4% of total revenue, for the comparable period ended March 31, 1999, an
increase of 52.6%, due to the costs associated with maintaining, enhancing and
integrating our technology systems, along with the respective increased
depreciation expense. The decrease
<PAGE>
in technology costs as a percentage of total revenue reflects the leveraging of
these costs as revenues increase.
GENERAL AND ADMINISTRATIVE. General and administrative costs include
corporate salaries and wages, employee benefits, corporate facility costs and
depreciation, amortization and general and administrative expenses including
office equipment and supplies, telephone expenses, travel costs and legal, audit
and other consulting fees. These costs increased to $4.6 million, or 54.5% of
total revenues, for the three months ended April 1, 2000 from $2.2 million, or
47.5% of total revenues, for the comparable period ended March 31, 1999, an
increase of 109.7%, due to the expenditure of approximately $1.3 million in
merger costs associated with the acquisition of Scotty's and the addition of
necessary infrastructure and corporate staff to support the Company's continued
expansion. The increase in general and administrative costs as a percentage of
total revenue was primarily attributable to the merger costs associated with the
acquisition of Scotty's. General and administrative expense, excluding the one
time merger related costs, as a percentage of total revenue decreased to 39.3%
for the three month period ended April 1, 2000 from 47.5% for the comparable
period ended March 31, 1999. This decrease reflects the leveraging of these
costs as revenues increase.
OTHER INCOME (EXPENSE), NET. Other income, net decreased to $38,000 in
the three months ended April 1, 2000 from $181,000 in the comparable period
ended March 31, 1999, a decrease of 78.8%, primarily due to increased interest
expense from capitalized equipment leases.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities used cash of $11.0 million in the three months
ended April 1, 2000 as compared to $3.2 million in the three months ended March
31, 1999, primarily due to the increased net loss incurred in the period.
Investing activities provided cash of $9.7 million in the three month period
ended April 1, 2000: net purchases and sales of marketable securities provided
approximately $7.9 million, proceeds from the sale and leaseback of the
company's Chicago distribution facility provided $6.5 million, and approximately
$3.0 million was used for the purchase of equipment and capitalized software. In
addition, the Company invested approximately $1.7 million in certificates of
deposit pledged as collateral for letters of credit issued to secure certain
lease financing arrangements. Investing activities in the three month period
ended March 31, 1999 used cash of approximately $1.3 million for the purchase of
equipment and capitalized software.
Financing activities used approximately $7.1 million in the three
months ended April 1, 2000 and included the payment of approximately $7.4
million in notes payable primarily related to the construction of the Chicago
distribution facility. In addition, the Company made approximately $333,000 in
principal payments for capitalized equipment leases and received proceeds of
approximately $642,000 from the exercise of stock options.
The Company has incurred cumulative losses through April 1, 2000
of approximately $68.2 million and continues to have recurring
operating losses and negative cash flows from operating activities. The
Company expects to incur additional losses and will require additional
financing as it expands its service into new and existing markets.
The Company's plans for 2000 are based upon an aggressive expansion
strategy including the introduction of new facilities in New Jersey and
Minnesota, a replacement facility for its existing corporate office and
distribution facility currently located in Westwood, Massachusetts, and the
acquisition of a significant number of new customers by year end. In addition,
the 2000 plan includes funding the operating losses of a Chicago fulfillment
center, which was acquired in connection with the Company's merger with Beacon
Home Direct, Inc., d/b/a Scotty's Home Market, on January 5, 2000. In order to
implement the 2000 plan, the Company will need additional financing, and has
engaged an investment banker to assist in securing additional private funding.
In the event the Company is unable to secure additional financing, an
alternative plan has been developed to significantly reduce cash expenditures
including delaying the capital expenditure costs and pre-opening expenses for
one of the planned new facilities. In addition, the Company would significantly
reduce marketing expenditures, reduce corporate headcount costs including all
incentive compensation and reduce consulting and other miscellaneous spending.
Furthermore, most corporate capital projects would be postponed until additional
financing was obtained and the Company would pursue financing for certain asset
<PAGE>
purchases, which were not originally anticipated to be financed. The Company
believes that its current cash, cash equivalents and marketable securities,
along with either obtaining additional amounts of capital from financing
activities or aggressively implementing the initiatives described above, will
allow the Company to fund its operations through the end of the current fiscal
year.
The Company believes that access to additional capital in future
periods will be necessary to continue current operations and expand into
additional markets. The Company's future financing requirements will depend upon
many factors, including the successful acceptance of its products and services
into new markets, expansion of its marketing efforts, the Company's results of
operations and the status of its competitors success in new markets. The Company
believes that it will require substantial amounts of additional capital over the
next several years and anticipates that this capital will be derived from a mix
of strategic partnering arrangements or public offerings and private placements
of debt or equity securities or both. There can be no assurance, however, that
the Company will obtain additional funding to fund its operations and capital
expenditures.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
To date, Streamline.com has not utilized derivative financial
instruments or derivative commodity instruments. Streamline.com invests its cash
in high quality (i.e., A1/P1), short-term commercial paper, corporate bonds,
money market funds and United States government securities, which are subject to
minimal credit, market and interest rate risk, and have no debt. Due to its
short-term duration, the fair value of the Company's cash and investment
portfolio at April 1, 2000 approximated carrying value. Therefore,
Streamline.com believes the market and interest rate risks associated with these
financial instruments are not material.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 17, 1999 in connection with the Company's initial public
offering, a Registration Statement on Form S-1 (Reg. No. 333-76383) was declared
effective by the Securities and Exchange Commission, pursuant to which 4,500,000
shares of the Company's common stock were offered and sold at a price of $10.00
per share, generating gross offering proceeds of $45,000,000. The managing
underwriters were Banc of America Securities LLC, PaineWebber Incorporated and
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated. After deducting
approximately $3.15 million in underwriting discounts and $1.10 million in other
related expenses, the net proceeds to the Company were approximately $40.75
million.
On July 16, 1999 the underwriters of the initial public offering
exercised their over-allotment option to purchase an additional 498,482 shares
from the Company at a price of $10.00 per share, generating gross proceeds of
$4,984,820. The net proceeds to the Company, after deducting the underwriters'
discount, was approximately $4.6 million.
Through April 1, 2000, Streamline.com spent $32 million of the $45
million net proceeds received from the initial public offering for the following
uses and in the following amounts per use: $2.0 million for the construction of
plant, building and facilities; $1.3 million for merger-related costs; $3.6
million to pay off Scotty's notes payable; $2.0 million paid to Genco, a former
third party CRC operations partner; $3.3 million paid for advertising services
to Ogilvy; $1.9 million for fees and services related to the implementation of
the SAP enterprise system; $300,000 for general software maintenance; and $17.6
million for working capital. None of these amounts entailed direct or indirect
payments to directors, officers, or persons holding 10% or more of the Company's
outstanding common stock, other than payments for salaries and reimbursements to
officers and directors, and payments aggregating $400,000 to Elm Square
Technologies, Inc. for technology consulting services. Thomas Jones, a director
of the Company, is President of Elm Square Technologies.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.34 Employment offer, dated August 27, 1999, by and
between the Registrant and Edward Albertian.
10.35 Employment offer, dated November 12, 1999, by and
between the Registrant and J. Gregory Ambro.
10.36 Shakopee, Minnesota lease dated as of March 25,
2000, by and between the Registrant and Wispark
Corporation, as amended.
10.37 Norwood, Massachusetts lease dated February 14,
2000, by and between the Registrant and Leonard J.
Jacobs, Trustee of 825 University Avenue Trust.
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Company on
January 20, 2000 to report that on January 5, 2000, Streamsub, Inc.,
a Delaware corporation and a wholly-owned subsidiary of
Streamline.com merged with and into Beacon Home Direct, Inc.,
d/b/a Scotty's Home Market, an Illinois corporation. The financial
statements of Scotty's incorporated by reference therein to
Streamline.com Proxy/Private Placement Memorandum dated December 13,
1999, as filed with the Securities and Exchange Commission on
December 15, 1999 were as follows:
- Consolidated Statements of Operations for the Years Ended December 31,
1996 (unaudited)
- 1997 and 1998 and the Nine Months Ended September 30, 1998 and 1999
(unaudited)
- Consolidated Balance Sheets at December 31, 1997, 1998 and September
30, 1999 (unaudited)
- Consolidated Statements of Stockholders' Equity (Deficit) for the Years
Ended December 31, 1996 (unaudited), 1997 and 1998 and the Nine Months
ended September 30, 1999 (unaudited)
- Consolidated Statements of Cash Flows for the Years Ended December 31,
1996 (unaudited), 1997 and 1998 and the Nine Months Ended September 30,
1998 and 1999 (unaudited)
- Notes to Financial Statements
- Report of Independent Accountants
- Pro forma Financial Information was filed on February 11, 2000 on a
report on Form 8-K/A.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
STREAMLINE.COM, INC.
May 16, 2000 By: /s/ J. Gregory Ambro
-----------------------------------------------
J. Gregory Ambro,
Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)
<PAGE>
Exhibit 10.34
August 27, 1999
Mr. Edward Albertian
17 Pendulum Pass
Hopkinton, MA 01748
Dear Eddie:
On behalf of Streamline's Management Team, I am pleased to offer you the
position of President and Chief Operating Officer. This position reports
directly to the Chief Executive Officer.
<TABLE>
<S> <C>
START DATE: September 27, 1999
SALARY: Starting annualized salary of $275,000 or $10,576.92
bi-weekly.
EQUITY: You will receive a stock option grant totaling 300,000
options which vest, 25% each year, over a 4-year period
on the anniversary of your hire date. The options will
have an exercise price of the fair market value on your
hire date.
BONUS: For the calendar year 2000 you will be eligible to
receive an annual bonus of up to 50% of your base
salary. Your bonus will be based upon mutually agreed
upon performance metrics. In addition, for the calendar
year 1999 you will receive a bonus of $50,000, 50% of
which will be paid on your hire date and 50% of which
will be paid in January 2000.
SEVERANCE: If you are terminated without cause within 180 days
from your hire date the company will pay 6 months base
pay. After 180 days of employment, if you are
terminated without cause the company will pay you one
year's base salary plus target bonus. You will continue
to vest outstanding stock options during this period
and will be eligible for the company's employee
benefits.
BENEFITS: MEDICAL - Tufts HMO, available on date of hire, the
company will pay 2/3 of the cost of a family premium.
DENTAL - Delta Dental, available on date of hire, the
company will pay 1/2 the cost of a family premium.
LIFE/AD&D - Principal Insurance Co., available after 30
days. In addition, the company will pay the premium,
based on standard rates, on a policy in the amount of
$3,000,000 for the beneficiary of your choosing.
<PAGE>
401(k) - Available after 6 months and the next
available enrollment date (1/1, 4/1, 7/1, or 10/1).
PAID TIME OFF: Regular Full Time - will begin to accrue 13.3 hours per
month as of the first full month of employment. Four
weeks per year.
HOLIDAYS: Recognize 6 paid holidays.
</TABLE>
Eddie, we feel that your background and experience is, and will continue to be,
a valuable addition to our Streamline team, and welcome the opportunity for us
to work together in developing Streamline's business.
If you have any questions, please feel free to review these with me. If you
agree to the terms stated above, please sign the enclosed copy of this letter
and return to me.
Sincerely,
/s/ Timothy A. DeMello
- --------------------------
Timothy A. DeMello
Chairman & CEO
Enclosures
ACKNOWLEDGED BY:
/s/ Edward Albertian 8/28/99
- ----------------------------------------------
EDWARD ALBERTIAN DATE
<PAGE>
Exhibit 10.35
November 12, 1999
Mr. Gregory Ambro
10727 Coyle Circle
Charlotte, NC 28277
Dear Greg:
On behalf of Streamline's Management Team, I am pleased to offer you the
position of Chief Financial Officer. This position reports directly to the Chief
Executive Officer.
<TABLE>
<S> <C>
START DATE: December 6, 1999
SALARY: Starting annualized salary of $200,000 or $7,692.31
bi-weekly.
EQUITY: You will receive a stock option grant totaling 150,000
options which vest, 25% each year, over a 4-year period
on the anniversary of your hire date. The options will
have an exercise price of the fair market value on your
hire date.
BONUS: For the calendar year 2000 you will be eligible to
receive an annual bonus of up to 25% of your base
salary. Your bonus will be based upon mutually agreed
upon performance metrics.
RELOCATION: The company will reimburse you for the costs incurred
in moving your household goods from North Carolina to
Boston. In addition, the company will reimburse you for
fees associated with the sale of your home. The
reimbursement payments will be limited up to $40,000.
TEMP. LIVING EXPENSES: The company will reimburse you for the costs incurred
in temporary housing.
ANNUAL REVIEW: You will be granted an annual compensation review each
February 15th to discuss base salary for the upcoming
year, your performance for the prior year, and the
amount of the cash bonus to be paid.
SEVERANCE: If you are terminated without cause within 180 days
from your hire date the company will pay 6 months base
pay. If you have relocated before 180 days of
employment, the company will pay one year's base salary
as a result of termination without cause. After 180
days of employment, if you are terminated without cause
the company will pay you one year's base salary. You
will continue to vest outstanding stock options during
this period and will be eligible for the company's
employee benefits.
<PAGE>
BENEFITS: MEDICAL - Tufts HMO, available on date of hire, the
company will pay 2/3 of the cost of a family premium.
DENTAL - Delta Dental, available on date of hire, the
company will pay 1/2 the cost of a family premium.
LIFE/AD&D - Principal Insurance Co., available after 30
days. In addition, the company will pay the premium,
based on standard rates, on a policy in the amount of
$3,000,000 for the beneficiary of your choosing.
401(k) - Available after 6 months and the next
available enrollment date (1/1, 4/1, 7/1, or 10/1).
STOCK PURCHASE PLAN - Expected to become available on
January 1, 2000
PAID TIME OFF: Regular Full Time - will begin to accrue 13.3 hours per
month as of the first full month of employment. Four
weeks per year.
HOLIDAYS: Recognize 6 paid holidays.
</TABLE>
Greg, we feel that your background and experience is, and will continue to be, a
valuable addition to our Streamline team, and welcome the opportunity for us to
work together in developing Streamline's business.
If you have any questions, please feel free to review these with me. If you
agree to the terms stated above, please sign the enclosed copy of this letter
and return to me.
Sincerely,
/s/ Timothy A. DeMello
- --------------------------
Timothy A. DeMello
Chairman & CEO
Enclosures
ACKNOWLEDGED BY:
/s/ Gregory Ambro 11/14/99
- ----------------------------------------------
GREGORY AMBRO DATE
<PAGE>
EXHIBIT 10.36
LEASE AGREEMENT
<TABLE>
<S> <C> <C>
Building: WISPARK Distribution Center at Shakopee
Landlord: WISPARK Corporation
Address: 860 Blue Gentian Road, Ste. 175
Eagan, MN 55121
Tenant: Streamline.com, Inc.
Address for notices
prior to Commencement Date: Streamline.com, Inc.
27 Dartmouth Street
Westwood, MA 02090
Attention: Real Estate Department
Address for notices
after Commencement Date: Streamline.com, Inc.
WISPARK Distribution Center at Shakopee
4241 12th Ave. E.
Shakopee, MN 55379
Attention: Real Estate Department
</TABLE>
THIS LEASE AGREEMENT (this "Lease") is made as of this 25th day of March, 2000,
by and between WISPARK CORPORATION, a Wisconsin corporation ("Landlord"), and
STREAMLINE.COM, INC., a Massachusetts corporation ("Tenant").
<TABLE>
<S> <C>
1.0 BASIC TERMS
The following terms shall have the meaning set forth in this Section
unless specifically modified by other provisions of this Lease:
1.1 PROJECT: The land, building (as described in Section 1.2
below), and all associated parking areas, drive areas, exits,
entrances, improvements and appurtenances, as shown on
attached Exhibit A.
1.2 BUILDING: The building in which the Premises are located, and
whose address is 4241 12th Avenue East, Shakopee, Minnesota.
Under this lease the Building is commercially known as the
WISPARK Distribution Center at Shakopee, and contains 161,995
rentable square feet.
1.3 PREMISES: Landlord hereby demises and leases to Tenant, and
Tenant hereby accepts and leases from Landlord 107,953
rentable square feet ("RSF") in the Building identified on
Exhibit A, including the area specifically marked from column
lines 1 through 11 on said Exhibit A and attached hereto and
incorporated herein by reference, and all rights appurtenant
thereto and owned by Landlord.
1.4 LEASE TERM: One hundred twenty (120) months, commencing on the
Commencement Date and terminating on the Termination Date,
provided that if the Commencement Date is not the first day of
a calendar month, the Lease Term shall end One hundred twenty
<PAGE>
(120) months from the last day of the calendar month in which
the Commencement Date occurs.
1.5 COMMENCEMENT DATE: Shall have the meaning set forth in Section
4 below.
1.6 TERMINATION DATE: 120 months after the Commencement Date,
subject to adjustment as set forth in Section 4 below.
1.7 MONTHLY RENT PAYMENT SCHEDULE: See Exhibit C attached hereto.
1.8 TENANT'S PROPORTIONATE SHARE: "Tenant's Proportionate Share"
as used in this lease shall mean a fraction, the numerator of
which is the rentable square footage ("RSF") of the Premises
and the denominator of which is the rentable square footage of
the Building in each case as determined by Landlord. For the
purposes hereof, the numerator is 107,953 RSF and the
denominator is 161,995 RSF and Tenant's proportionate share is
66.64%. All measurements of the Building and Premises shall be
done in accordance with BOMA standards.
1.9 PERMITTED USE: Light manufacturing, warehouse, office, and all
other ancillary uses as approved by the City of Shakopee,
Minnesota.
1.10 SECURITY DEPOSIT: INTENTIONALLY OMITTED
1.11 EXHIBITS: A - Description of the Project Building and Premises
B - Project Schedule
C - Monthly Rent Payment Schedules
D - Work Letter
E - Project Architectural Drawings
</TABLE>
2.0 DEMISE OF PREMISES
Landlord hereby lets and demises to Tenant and Tenant hereby rents from
Landlord the Premises, subject to the terms and conditions set forth
below. The Premises are more particularly described in Exhibit A
attached hereto.
3.0 CONSTRUCTION
Landlord will construct Tenant improvements ("Tenant Improvements") as
described on Exhibit D, including approximately 6,000 square feet of
office space and 101,953 square feet of warehouse space, in accordance
with Exhibit D attached hereto. Landlord will provide Six Hundred
Eighty-nine Thousand Seven Hundred Sixty-five Dollars ($689,765) for
the construction of the improvements as set forth on Exhibit D.
Additionally, Landlord will pay the architectural and engineering fees
to prepare the Tenant Improvement drawings. At Landlord's discretion,
and after written request from Tenant, additional finished office
space, or other improvements in addition to those contained in Exhibits
E and D will either be 1.) paid by Tenant or 2.) amortized over the
term of the lease. Tenant shall have the option to pay for any
additional improvements, subject to Landlord's approval of such
improvements
4.0 TERM
a.) The initial term of this Lease (the "Lease Term") shall be for a
period of One hundred twenty (120) months, commencing on the
Commencement Date (as hereinafter defined)
2 of 24
<PAGE>
and ending at 11:59 p.m. of the day immediately preceding the one
hundred twentieth month anniversary of the Commencement Date
thereafter; provided, however, that if the Lease Commencement
Date is other than the first day of a calendar month, the term
shall end at 11:59 p.m. on the last day of the calendar month
containing the one hundred twentieth month anniversary of the
Commencement Date, unless sooner terminated as hereinafter
provided. The date on which the Lease Term ends shall be referred
to as the "Termination Date."
b.) The "Commencement Date" shall be the date when the Premises are
available for the operation of Tenant's business after
Substantial Completion provided, however, that the Commencement
Date shall not be earlier than July 31, 2000. The Premises shall
be deemed Substantially Complete upon the occurrence of the
following: (x.) the time when the Premises (including the Tenant
Improvements) are in fact substantially complete as determined by
the project architect in accordance with the contract for
construction thereof and evidenced by the issuance of an
Architect's Certificate and (y.) the time of issuance of a
Certificate of Occupancy by the City of Shakopee, Minnesota. In
no event will incomplete landscaping or a punchlist of minor
items not exceeding $50,000 in the aggregate to be completed be a
cause for deeming the Project not Substantially Complete,
provided that the Project and all parking areas, driveways and
loading areas on the Project necessary for Tenant to conduct its
business are Substantially Complete. Landlord will be responsible
for obtaining the Certificate of Occupancy for the Premises.
Tenant shall be permitted access to the Premises for fixturing
and set-up beginning May 1, 2000. Tenant shall provide proof of
insurance and be liable for all damage that results from such
fixturing and set-up. Tenant shall also be liable for any delays
to Landlord's work as a result of any fixturing and set-up work
performed by Tenant or Tenant's contractor(s). Occupancy of the
Premises for the purpose of fixturing or installing Tenant's
furniture and equipment and otherwise making the Premises ready
for the conduct of Tenant's business shall not be deemed to be
"taking occupancy" for the purposes of establishing the
Commencement Date in this Lease.
c.) On the Commencement Date, the parties shall enter into a
supplement to this Lease confirming that the Premises are
Substantially Complete, specifying the amount of the rental
hereunder if different from that contained on Exhibit C, and
specifying the Commencement Date and Termination Date of the
Lease Term.
d.) Landlord agrees to construct the premises in accordance with the
schedule attached as Exhibit B. In the event the Landlord fails
to Substantially Complete the Premises by July 15, 2000, Landlord
shall provide Tenant with a rent credit equal to the amount of
rent which would have been due under this Lease for each day that
Landlord is late in its delivery. In the event that Landlord
fails to Substantially Complete the Premises by November 1, 2000,
Tenant shall have the right to terminate this Lease.
5.0 USE
During the entire Lease Term, the Premises shall be leased, used and
occupied by Tenant for a manufacturing, office, and
warehouse/distribution facility in accordance with all applicable
governmental laws and regulations. Tenant shall not use the Premises in
a manner that would constitute a public or private nuisance or
constitute waste.
3 of 24
<PAGE>
6.0 RENT
a.) As for rental of the Premises during the Lease Term, Tenant shall
pay the following amounts (all of which collectively, together
with other amounts due under this Lease shall be referred to
herein as the "Rent"), and the obligation to pay such amounts
shall survive the expiration or termination of this Lease.
(i.) Base Rent, as defined in Exhibit C attached hereto,
is payable to Landlord at the address set forth below
for the giving of notices. Base Rent is due in equal
monthly installments paid in advance, on or before
the first day of each month of the Lease Term,
without set-off, counterclaim or deduction of any
type and without demand or presentment therefor being
made, and in lawful money of the United States. In
the event the Lease Term commences on a day other
than the first day of a month, Base Rent for the
partial month shall be prorated based on the actual
number of days of the Term during such month and paid
in advance. The parties hereto agree that, except as
otherwise set forth in this Lease, the Base Rent
payable under the terms of this Lease shall be an
absolute net return to the Landlord for the Lease
Term free from any expense, charge, deduction, offset
or counterclaim by reason of any obligation of
Landlord or any other reason and all of the
provisions of this Lease shall be construed an
interpreted to such end.
(ii.) Except as set forth in this Lease, Tenant shall pay
as additional rent, Tenant's Proportionate Share of
all of the costs, expenses, and obligations of
operating and maintaining the Project which may arise
or become due during the Lease Term (as further
described in this Lease), including, but not limited
to, all utilities, heat, Insurance, Taxes and
Assessments, management fees, Operating Charges, and
all of the costs and expenses of maintenance, repair,
replacement and care of the Premises.
b.) In the event that Tenant does not pay any Base Rent within five
(5) days after the due date, Tenant shall pay to Landlord as
additional Rent interest thereon until paid at the rate of three
percentage points in excess of the prime rate of interest as
announced by the WALL STREET JOURNAL (the "Applicable Rate") for
the day when such Base Rent was due.
c.) In the event that Tenant does not pay any other item of
additional rent within five (5) days after the due date, Landlord
shall have the option, but not the obligation, to pay for any
such item, whereupon Tenant shall owe Landlord such amount paid
by Landlord plus interest upon the unpaid amount from the date of
payment by Landlord until repayment by Tenant at the Applicable
Rate for the date when such item was due, which amount shall be
paid by Tenant as additional rent immediately upon receipt of an
invoice therefor from Landlord.
d.) Notwithstanding the foregoing in Sections (b.) and (c.) above,
Landlord shall provide five (5) days prior written notice to
Tenant twice in any given calendar year before the late fee
herein is charged to Tenant. No such notice shall be required for
subsequent late payments in the same calendar year.
4 of 24
<PAGE>
7.0 OPERATING CHARGES
a.) Tenant shall pay to Landlord, as additional rent, Tenant's
Proportionate Share of Operating Charges as defined below.
Estimated amounts of such Operating Charges shall be paid in
monthly installments in advance on the first day of each month
during the term. The initial estimated payment of Tenant's
Proportionate Share of Operating Charges is set forth in Exhibit
C of this Lease. From time to time during the Term, Landlord may
notify Tenant in writing of any adjustments to the monthly
installments to be paid by Tenant hereunder and thereafter as is
reasonably practicable, Landlord shall notify Tenant of the
actual Operating Charges for such calendar year and provide
Tenant a statement thereof in reasonable detail. Within thirty
(30) days after such notice, Tenant shall pay to Landlord or
Landlord shall credit against the obligations of Tenant, or pay
to Tenant (if in last year of Term) as the case may be, the
difference between the estimated payments made by Tenant during
the prior calendar year and the actual amount of the Tenant's
Proportionate Share of the Operating Charges as shown on such
statement. Tenant's Proportionate Share of the Operating Charges
for the years in which the Term commences and ends shall be
prorated based on the number of days of the Term during such
years. Tenant's obligation for the Tenant's Proportionate Share
of Operating Charges through the Termination Date shall survive
termination.
b.) "Operating Charges" as used herein shall mean all sums expended
or obligations incurred by Landlord with respect to the Project,
whether or not now foreseen, determined on an accrual basis,
including, but not limited to, personal property taxes (but not
including those described in Section 7.0e), assessments and/or
charges under any owners association covenants; security
services; salaries, fringe benefits and related costs of
employees engaged on site in operation, maintenance or security
or costs of contractors providing such services, including
management fees not to exceed 3% of the sum of Base Rent,
Operating Charges and all items of the additional rent for the
Project; insurance covering liability, hazards, and casualties;
license, permit and inspection fees; auditors' fees, accounting
services and legal fees incurred in the maintenance and operation
of the Project; materials and supplies, including charges for
telephone, facsimile transmission, postage and supplies, which
materials and supplies were used in or charges were incurred in
maintenance and operation of the Project; repairs, maintenance,
including but not limited to, landscaping, snow removal, parking
lot sweeping, window washing, parking lot lighting and trash
removal, including costs of materials, supplies, tools and
equipment used in connection therewith, including leasing as
appropriate; and including the repaving of parking areas,
replanting of landscaped areas and maintaining building
components; costs incurred in connection with the operation,
maintenance, repair, replacing, inspection and servicing
(including maintenance contracts) of electrical, plumbing,
heating, air conditioning and mechanical equipment and the cost
of materials, supplies, tools and equipment used in connection
therewith, including leasing as appropriate; cost of services
including heat, air conditioning, electricity, gas, water and
sewer and other utilities; all other expenses and costs of every
kind and nature necessary or desirable to be incurred for the
purpose of operating and maintaining the Project, whether or not
similar to the foregoing. Operating Charges shall not include (i)
Landlord's cost of utilities or other services, if any,
separately sold by Landlord to tenants or separately metered for
the Premises, (ii) costs incurred by Landlord for any alterations
for other tenants, (iii) depreciation of the Building and major
components, (iv) special assessments to the extent such
assessments can be paid in installments and such installments are
not then due, and (v) debt service on indebtedness of Landlord.
Replacements of the original components of the Building and
Building's systems shall be included in Operating Charges;
provided
5 of 24
<PAGE>
that, if the cost of any single component is greater than
$25,000.00, such cost shall be charged ratably over the useful
life of the component as reasonably determined by generally
accepted accounting standards.
d.) Landlord reserves the right to increase or decrease the size of
the Project. If changes are made to this Lease or to the Project
changing the number of rentable square feet contained in the
Premises or in the Project, Tenant's Proportionate Share shall be
appropriately adjusted and the computations of Tenant's
Proportionate Share of Operating Charges shall be appropriately
adjusted so as to take into account the different Tenant's
Proportionate Share figures applicable during each portion of the
applicable calendar year of the Lease.
e.) PERSONAL PROPERTY TAXES. Tenant agrees to timely pay when due all
personal property taxes, whether assessed against Landlord to
Tenant, on Tenant's furniture, equipment and other items of
personal property owned by Tenant and located in or about the
Premises.
f.) Tenant or its accountants shall have the right to inspect, at
reasonable times and locations and in a reasonable manner, during
the forty-five (45) day period following the delivery of
Landlord's statement of operating expenses for a given calendar
year, such of Landlord's books and records as pertain to and
contain information concerning such costs and expenses in order
to verify the amounts thereof. Unless Tenant takes written
exception to any item within forty-five (45) days after the
furnishing of the statement (which shall be noted on the item as
"paid in protest"), such statement shall be considered as final
and accepted by Tenant. If Tenant shall dispute any item or items
included in the determination of Landlord's Operating Expenses
for a given calendar year, and such dispute is not resolved by
the parties hereto within sixty (60) days after the statement for
such year was delivered to Tenant, then either party may, within
thirty (30) days thereafter, request that a firm of certified
public accountants render an opinion as to whether or not the
disputed item or items may properly be included in the
determination of Landlord's Operating Expenses of the Project for
such year; and the opinion of such firm on the matter shall be
conclusive and binding upon the parties hereto. The fees and
expenses incurred in obtaining such an opinion shall be borne by
Tenant unless Landlord's statement contains an error of greater
than five percent (5%) of Landlord's Operating Expenses for the
Project adversely affecting Tenant. If Tenant shall not dispute
any item or items included in the determination of Landlord's
Operating Expenses of the Project for a given calendar year
within forty-five (45) days after the statement for such year was
delivered to it, Tenant shall be deemed to have approved such
statement.
g.) The following additional costs and expenses shall be excluded
from Operating Charges:
(i.) Costs incurred in connection with the construction of the
original Building improvements.
(ii.) The cost of defects in the construction, design or
equipping of the Building which are wholly covered by a
warranty or guaranty then in effect from the contractor
or supplier responsible for such defect, so long as the
contractor or supplier honors said warranty or guaranty.
(iii.) Costs incurred in connection with the making of repairs
which are the obligation of another tenant in the
Building.
6 of 24
<PAGE>
(iv.) Costs or expenses (including fines, penalties and legal
fees) incurred due to the violation by Landlord, its
employees, agents and/or contractors, and tenant (other
than Tenant) or other occupant of the Building, of any
terms and conditions (other than by Tenant) of this Lease
or of the leases of other tenants in the Building, and/or
any valid, applicable laws, rules, regulations a codes of
any federal, state, county, municipal or other
governmental authority having jurisdiction over the
Property that would not have been incurred but for such
violation by Landlord, its employees, agents, and/or
contractors, it being intended that each party shall be
responsible for the costs resulting from its own
violation of such leases and laws, rules, regulations and
codes as same shall pertain to the Property.
(v.) Any other expense which, under generally accepted
accounting principles, consistently applied, would not be
considered to be a maintenance or operating expense of
the Building.
(vi.) Costs of environmental remediation or costs incurred to
comply with applicable environmental laws (unless such
release or noncompliance was due to activities of
Tenant).
8.0 TAXES, ASSESSMENTS, AND UTILITY CHARGES
a.) Tenant shall bear, pay and discharge as additional rent Tenant's
Proportionate Share of (i.) taxes and assessments, general or
special, and all water, sewer and other charges, taxes and
assessments, of every kind or nature whatsoever which shall be
charged, assessed, imposed or levied, or become a lien upon or on
account of the Premises or any appurtenances thereof or personal
property thereon, during the Lease Term (the "Taxes and
Assessments"), whether imposed on Tenant or Landlord or against
any right, title or interest of Landlord or Tenant or either of
them, by virtue of or under any present or future law or
requirement of any governmental or quasi-governmental body or
authority, or pursuant to any recorded restrictions or covenants,
and (ii) all other lawful charges for water, gas, electricity,
light, power or other services or utilities ("Utility Charges")
furnished to the common areas of the Project ("Common Areas" as
defined in Section 9.0 of this Lease) or in connection with the
use and occupancy thereof during the Lease Term. Taxes and
Assessments during the first and last years of the Lease Term
shall be prorated on a daily basis. Assessments shall be paid
over the longest period permitted by law. During each month of
the term of this Lease, Tenant shall make a monthly escrow
deposit with Landlord equal to 1/12th of Tenant's Proportionate
Share of the Taxes and Assessments on the Project which will be
due and payable for that particular year. Tenant authorizes
Landlord to use the funds deposited by him with Landlord under
this Section 8.0 to pay the above items levied or assessed
against the Project. Each Tax Escrow Payment shall be due and
payable at the same time and in the same manner as the time and
manner of the payment of Base Rent as provided herein. Landlord
will establish an Initial Estimated Tax Escrow Payment (as
depicted in Exhibit C of this Lease). This Initial Estimated Tax
Escrow Payment is based upon the estimated Taxes and Assessments
on the Premises for the year in question, and the monthly Tax
Escrow Payment is subject to increase or decrease as determined
by Landlord to reflect an accurate escrow of the estimated Taxes
and Assessments. The Tax Escrow Payment account of Tenant shall
be reconciled annually. If Tenant's total Tax Escrow Payments are
less than the actual Taxes and Assessments on the Premises,
Tenant shall pay to Landlord upon demand the difference; if the
total Tax Escrow Payments by Tenant are more than the actual
Taxes and Assessments on the Premises, Landlord shall retain such
excess and credit it to Tenant's
7 of 24
<PAGE>
Tax Escrow Payment account or paid to Tenant (if final year of
Term). If requested by Landlord, Tenant shall provide
satisfactory evidence of Tenant's discharge of any obligations
provided by this Section that may be billed directly to Tenant.
No interest shall accrue on any such escrow accounts. Tenant
shall also be entitled to its proportionate share of any tax
abatements received by Landlord attributed to the tax payments
made during the Term that the Tenant is in occupancy of the
Premises.
b.) Taxes and Assessments shall mean all real estate taxes and
assessments, special or otherwise, levied or assessed upon or
with respect to the land or improvements comprising the Premises
or Rent or other sums payable hereunder. If, at any time during
the Lease Term, a tax or excise on rents or income or other tax
however described is levied or assessed by the United States or
the State of Minnesota, or any political subdivision thereof, on
account of the Rent hereunder or the interest of Landlord under
this Lease, such tax or excise shall constitute and be included
as a tax hereunder. Should the State of Minnesota or any
political subdivision thereof, or any other governmental
authority having jurisdiction over the Premises impose a tax,
assessment, charge, or fee, which Landlord shall be required to
pay, wholly or partially, in substitution for or as a supplement
to such real estate taxes or levy against the land, or building,
to the extent that the same is in substitution for or as a
supplement to said real estate taxes, such taxes, assessments,
fees or charges shall be deemed to constitute taxes hereunder.
Notwithstanding the foregoing, taxes shall not include any tax on
Landlord's income.
c.) In the event Landlord does not contest any real estate tax
assessment for any calendar year during the Term of this Lease,
then Tenant may, with Landlord's consent, contest in good faith
and with reasonable diligence, such real estate tax assessment,
provided Landlord shall not suffer any loss or damage as a result
of such contest, no interest, penalties, or costs will be
assessed against Landlord or the Project as a result of such
contest, there shall be no sale or forfeiture of the Project or
any part thereof or interest therein as a result of such contest,
and such contest shall not cause any real estate tax payment to
become delinquent. Notwithstanding Tenant's contest of such real
estate tax assessment, Landlord may pay any real estate taxes or
any portion thereof then unpaid, at any time.
d.) Throughout the Lease Term, Tenant shall provide and pay for
adequate utilities in the Premises so as to protect the same from
damage. In addition, Tenant shall pay all utility bills at the
time the same become due or payable, and Tenant shall pay for any
other goods or services incident to occupancy or use of the
Premises during the Lease Term. Tenant shall pay its
Proportionate Share of all charges for sewage disposal and water
charges to the Project, and all charges for electricity, gas or
other fuel or utility consumed on the Premises during the Lease
Term.
e.) Landlord shall not be liable to Tenant should the furnishing of
water, gas, electricity, heat or air conditioning, trash removal
or any other service be interrupted because of repairs,
installation of improvements or for any other cause not caused by
Landlord. Notwithstanding the foregoing, should any service that
is essential for Tenant's operation of the Premises be
interrupted for more than five (5) business days, then Tenant
shall be entitled to abate its Rent for the time period following
said five (5) days until the services have been reestablished.
f.) Within thirty (30) days after a written request by Landlord,
Tenant shall furnish Landlord with receipts showing the payment
of items covered by this Section 8.
8 of 24
<PAGE>
9.0 COMMON AREAS
Tenant and its employees, customers and invitees shall have the
nonexclusive right to use, in common with Landlord and the other
tenants and occupants of the Project and their respective employees,
customers and invitees, the Common areas as may from time to time
exist. Landlord shall at all times have full control, management and
direction of the Common Areas. Tenant shall not cause or allow any
storage of materials or equipment outside of the Premises on any of the
Common Areas. Landlord reserves the right at any time and from time to
time to reduce, increase, enclose or otherwise change the size, number,
location, layout and nature of the Common Areas, to close portions of
the Common Areas for maintenance, repair or replacement, to place signs
in Common Areas and on the Building or in the Project, to change the
name or address of the Project and to change the nature of the use of
any portion of the Project, so long as there is no material impact to
Tenant's operations, parking, and access.
10.0 REPAIRS AND MAINTENANCE
Notwithstanding the foregoing and except to the extent necessitated by
the gross negligence or willful misconduct of Tenant, its agents,
contractors, invitees or employees, Landlord shall maintain the Common
Areas and the exterior walls (excluding glass), and the structural
elements (roof, foundation, etc.) of the Building in the Project, the
cost of which shall be included in Operating Charges subject to certain
limitations as set forth in Section 7. Except as set forth herein,
Tenant shall, at its expense, keep the Premises and every part thereof,
in good condition and repair and shall make all repairs to the heating,
air conditioning, electrical and plumbing equipment and facilities
servicing the Premises and, such other repairs in the Project which may
be required by reason of acts or negligence of Tenant, its agents,
employees, customers or invitees, or the particular nature of Tenant's
use of the Premises. Tenant shall be responsible for repairing any
damage to the Project caused by the installation or moving of Tenant's
furniture, equipment and personal property. Tenant shall, at its
expense, also repair or replace with glass of equal quality any broken
or cracked plate or other glass in doors, windows, and elsewhere in the
Premises and any other broken or cracked plate or other glass located
adjacent to the Premises to the extent such glass located adjacent to
the Premises was broken or cracked by Tenant, its employees, agents,
invitees or customers. Tenant shall not defer any repairs or
replacements to the Premises by reason of the anticipated expiration of
the Term. Landlord, at Landlord's option (if Tenant does not perform
the same in accordance with this Lease), may elect to perform all or
part of the maintenance, repairs and servicing which is the obligation
of the Tenant hereunder and/or the obligation of all of the other
tenants of the Project with respect to the respective premises occupied
by them, in which event the costs thereof shall be at Landlord's option
either billed directly to and paid by Tenant as additional rent or
included in Operating Charges. Except as aforesaid, in the event that,
at the request of Tenant, Landlord at its option performs any
maintenance, repairs or servicing of the Premises which is the
obligation of the Tenant hereunder, then Tenant shall pay Landlord
directly therefor. In the event there is any warranty in effect in
connection with repairs or replacements made by Tenant and if Landlord
is unwilling to pursue the warranty claim, then Tenant shall have the
right to pursue the warranty claim in connection with the repair and/or
replacement made by Tenant. Tenant shall be responsible for all snow
and ice removal on all sidewalks adjacent to the Premises. Tenant shall
contract with a responsible third party reasonably acceptable to
Landlord for regular and periodic maintenance of all HVAC systems
serving the Premises throughout the Lease Term. Upon expiration or
earlier termination of this Lease, Tenant shall surrender the Premises
to Landlord broom clean and in good condition and repair, normal wear
and tear and damage by fire or other casualty and condemnation only
excepted. Upon request by Landlord, Tenant shall provide Landlord with
any or all (as requested by Landlord) service or maintenance contracts
pertaining to the Premises, which contracts shall be subject to
Landlord's reasonable review, and Tenant's obligation so to deliver the
Premises
9 of 24
<PAGE>
shall survive the expiration or termination of this lease. Landlord
shall be responsible to deliver and maintain the Property in compliance
with all laws as set forth in Section 14.
11.0 ALTERATIONS BY TENANT
a.) Tenant may not make any alterations, additions or improvements
(collectively, "Alterations" and individually, an "Alteration")
in or to the Premises without Landlord's prior written consent in
each instance, which consent will not be unreasonably withheld,
conditioned, or delayed for non-structural Alterations which are
not visible from the exterior of the Premises or do not affect
the exterior appearance of the Premises. Landlord will not be
deemed to be unreasonably withholding its consent if it requires
Tenant to remove the alteration as a condition to approving the
request and Tenant refuses to remove the alteration. In the event
Landlord approves an Alteration, (i) the Alteration shall be
constructed in a good and workmanlike manner, (ii) the structural
integrity of the Facility and the exterior appearance shall not
be impaired by the Alteration or the construction thereof, (iii)
no liens shall attach to the Premises by reason thereof, and (iv)
Tenant shall carry or cause its contractors to carry any required
worker's compensation insurance. All Alterations made by Tenant
shall be at its sole cost and expense. Landlord's consent to an
Alteration may be conditioned upon the receipt by Landlord of
such information as Landlord may reasonably require, and upon the
furnishing of certificates of insurance, waivers of lien, and
receipted bills covering any and all labor and materials utilized
in connection therewith, and such other conditions as Landlord
may reasonably require.
b.) Upon the written request by Tenant for Landlord approval of
Alterations, Landlord shall notify Tenant in writing at the time
of approval which Alterations must be removed from the Premises
upon termination of the Lease; all other Alterations shall remain
on the Premises and shall become the property of Landlord. Tenant
shall remove the Alterations so designated by Landlord for
removal, all at Tenant's sole expense, on or before the
Termination Date and Tenant shall repair any damage to the
Premises caused by such removal. Tenant's obligations under this
Section 11.0 shall survive the expiration or termination of this
Lease. If Tenant fails to remove the Alterations as required
hereunder, Landlord may remove the Alterations and may, at
Landlord's option, store or destroy them and all costs incurred
by Landlord shall be promptly reimbursed by Tenant.
c.) Notwithstanding the foregoing, Tenant may make non-structural
improvements to the interior of their space up to $25,000 in the
aggregate without Landlord's prior written consent.
12.0 FIXTURES AND SIGNS
Landlord shall provide a monument sign to identify tenants of the
Project, in such location and of such size and type as may be permitted
under applicable local ordinances, other covenants running with the
Land, and acceptable to Landlord. Tenant shall have the right, at
Tenant's sole cost, to have its name displayed on a share of said
monument sign as determined by Landlord. All monument signage shall
remain as personal property of Landlord upon expiration or termination
of this Lease. Tenant may also have other signage approved by Landlord.
Tenant shall not, without Landlord's prior written consent, install,
fix or use any other signs or other advertising or identifying media
which is visible from the exterior of the Premises. Such consent shall
be given or withheld at Landlord's sole discretion. Tenant may, with
reasonable approval by Landlord and subject to any necessary city
approvals, place a sign on the Building at its sole cost and expense
which is visible from Highway 169.
10 of 24
<PAGE>
13.0 INSURANCE
a.) Insurance Maintained by Tenant
Tenant shall provide and maintain in full force and effect at no cost
to Landlord the following insurance coverages with minimum limits as
indicated, (which may also be revised to reasonable amounts consistent
with similar industry practice in the same geographic location at the
Landlord's discretion from time to time) at all times during the term
of this Lease, and beyond, as required.
Tenant shall maintain commercial general liability (CGL) insurance (or
its equivalent satisfactory to Landlord) and, if necessary, commercial
umbrella or excess insurance with a total limit of not less than
$2,000,000 each occurrence as described below. If such CGL insurance
contains a general aggregate limit, it shall apply separately to this
Lease.
(1) CGL insurance shall be written on an occurrence form and shall
cover liability arising from premises, operations, independent
contractors, products-completed operations, personal injury and
advertising injury, and liability assumed under an insured contract
(including the tort liability of another assumed in a business
contract).
(2) Landlord shall be included as an ADDITIONAL INSURED under the CGL
insurance, using an ISO additional insured endorsement or a substitute
providing equivalent coverage, and under the commercial umbrella or
excess, if any. This insurance shall apply as primary insurance with
respect to any other insurance or self-insurance programs afforded to
Landlord. There shall be no endorsement or modification of the
insurance to make it excess over other available insurance;
alternatively, if the insurance states that it is excess or pro rata,
the policy shall be endorsed to be primary with respect to the
additional insured.
(3) There shall be no endorsement or modification of the insurance
limiting the scope of coverage for liability arising from pollution or
employment-related practices.
(4) So long as Landlord has restoration obligation, Tenant shall
maintain the ISO special causes of loss form commercial property
insurance (or its equivalent) on all leasehold improvements therein for
their full replacement value, naming the Landlord as INSURED and LOSS
PAYEE as its interest may appear.
(5) Tenant may, at its option, purchase business income, business
interruption, extra expense or similar coverage as part of this
commercial property insurance, and in no event shall Landlord be liable
for any business interruption or other consequential loss sustained by
Tenant, whether or not it is insured, even if such loss is caused by
the negligence of Landlord, its employees, officers, directors, or
agents.
(6) Tenant may, at its option, purchase insurance to cover its personal
property. In no event shall Landlord be liable for any damage to or
loss of personal property sustained by Tenant, whether or not it is
insured, unless such loss is caused by the gross negligence or willful
misconduct of Landlord, its employees, officers, directors, or agents.
Tenant waives all rights against Landlord and its agents, officers,
directors and employees for recovery of damages to the extent these
damages are covered by any of the insurance required above except to
the extent covered by gross negligence or willful misconduct by
Landlord.
11 of 24
<PAGE>
(7) All insurance shall be placed and maintained with insurers
authorized to do business in the State of Minnesota (or equivalent
satisfactory to Landlord) which have an A.M. Best rating of A-, VII. or
better. Tenant agrees to furnish copies of any insurance policies for
Landlord's review if requested.
Tenant shall furnish the Landlord with duly executed Certificates of
Insurance certifying that such insurance has been provided and that the
insurance companies will give the Landlord thirty (30) days prior
written notice of any material change in, or cancellation of, such
insurance coverage. Such certificate shall also specify the dates when
such insurance commences and expires. Certificates should be delivered
to the following address: WISPARK Corporation, 860 Blue Gentian Road,
Ste. 175, Eagan, MN 55121. The Tenant agrees that such insurance shall
be maintained throughout the entire term of this Lease. New
certificates shall be provided within one week of the renewal date of
any expiring insurance coverage giving evidence of continuing coverage.
Insurance policies of Tenant shall be on an occurrence basis. If any
insurance is written on a "claims made" basis, the Tenant shall
maintain the coverage for a minimum of five years after the termination
of this Lease. The Landlord may require the Tenant to furnish copies of
any "claims made" policies and to institute measures to guarantee
further coverage for claims as contemplated by this Lease.
(b) Insurance Maintained by Landlord.
Landlord shall provide and maintain in full force and effect the
following insurance coverages with minimum limits as indicated, (which
may also be revised to reasonable amounts consistent with similar
industry practice at the Landlord's discretion from time to time) at
all times during the term of this Lease, and beyond, as required.
(1) Landlord shall maintain the ISO special causes of loss form
commercial property insurance (or its equivalent) on the building and
all improvements therein (other than leasehold improvements) for their
full replacement value; including, at Landlord's option, a loss of rent
endorsement.
(2) Landlord shall maintain commercial general liability (CGL)
insurance (or its equivalent) and, if necessary, commercial umbrella or
excess insurance with a total limit of not less than $1,000,000 each
occurrence as described below. If such CGL insurance contains a general
aggregate limit, it shall apply separately to this Lease. Landlord
agrees to name Tenant as additional insured on its CGL insurance.
(3) CGL insurance shall be written on an occurrence form and shall
cover liability arising from premises, operations, independent
contractors, products-completed operations, personal injury and
advertising injury, and liability assumed under an insured contract
(including the tort liability of another assumed in a business
contract).
(i.) All insurance policies shall be endorsed to protect
Landlord and Tenant, as their respective interests may
appear, and be obtained by Landlord under valid and
enforceable standard policies issued by responsible
insurance companies licensed to do business in the
State of Minnesota.
12 of 24
<PAGE>
(ii.) Tenant's Proportionate Share of the cost of all
insurance obtained by Landlord hereunder shall be
reimbursed by Tenant monthly in advance as additional
rent at a rate equal to 1/12 of the annual amount of
the insurance premium in the same manner and at the
same time as prescribed for Base Rent.
(iii.) All insurance required prior to the Commencement Date
shall be carried by Landlord, at its expense, and added
to the budget for the Facility except for any insurance
required for work performed by Tenant and for any
insurance associated with improvements for Tenant
within the Premises.
(iv.) To the extent permitted by law, Landlord and Tenant
hereby waive any and all claims against each other for
damage to or destruction of any improvements upon the
Premises and contents (including inventory, machinery,
furniture, furnishings and trade fixtures) thereof
(whether or not resulting from the negligence of the
other party) that are covered by insurance which Tenant
or Landlord is required to carry pursuant to this
Lease.
14.0 COMPLIANCE WITH LAWS
Subject to the obligations imposed on Landlord in Section 10.0 above,
Tenant shall, at its sole cost and expense, comply with any and all
laws, statutes, ordinances, regulations, fire codes, building codes and
restrictions and easements of record, now or hereafter in force,
applicable to the Premises, relating to the use and occupancy thereof
or to the making of repairs thereto, or of changes, alterations, or
improvements thereto. Tenant also covenants to comply, at its sole cost
and expense, with any and all rules and regulations applicable to the
Premises issued by Landlord (which are not inconsistent with the terms
and provisions of this Lease) or by insurance companies (including
Landlord's fire underwriters, if any) writing policies covering the
Premises. If the use of the Premises should at any time be prohibited
by law, regulation or injunction, this Lease shall not be terminated,
Rent hereunder shall not abate and the respective obligations of
Landlord and Tenant shall not be affected. Notwithstanding the
foregoing, in the event that such use prohibition is due to an act or
omission of Landlord, Rent shall abate from the date of cessation of
Tenant's use. However, if any such laws require the making of changes,
alterations, or improvements not particular to Tenant specific use, the
useful life of which will extend beyond the Lease Term, Landlord and
Tenant shall each be responsible for to pay their proportionate share
thereof based on the ratio that the remaining number of years in the
Lease Term bears to the useful life of the required changes,
alterations or improvements. Notwithstanding the foregoing, if any such
changes, alterations or improvements are required in the last two (2)
years of the Lease Term or any extension thereof, and cost more than
$5,000, Landlord may elect not to pay the entire cost thereof, in which
event Tenant may elect to pay the entire cost thereof. For the purposes
hereof, the Lease Term will be deemed to expire at the end of the then
existing Term unless Tenant exercises then available options to extend
the Term, in which event the Lease Term will be deemed to include the
relevant option period or periods. Notwithstanding the foregoing,
Landlord hereby warrants and represents, to the best of his knowledge,
to Tenant that the construction of the facility (as defined on Exhibit
D) and all related site improvements on the Premises will be completed
in accordance with all applicable laws, ordinances, rules and
regulations applicable to such construction and the use and occupancy
thereof by Tenant and Landlord shall be solely responsible for all
costs incurred in connection with the improvements complying with said
laws, ordinances, rules and regulations.
13 of 24
<PAGE>
15.0 PARKING
Tenant and Tenant's employees, customers and invitees shall have the
exclusive right to use 100 parking spaces located within the Common
Areas and the right in common with other Tenants to use the balance of
spaces available on the site, which in no event shall be less than an
additional twenty-five (25) spaces, all as shown on Exhibit A. Landlord
reserves the right to regulate parking within the Common Areas,
including the right to preclude Tenant from parking in certain
nonexclusive parking spaces or requiring Tenant to use certain parking
spaces. Tenant shall not permit vehicles and/or trailers to be
abandoned or stored in the Project's parking and loading areas.
Landlord covenants that they will provide the Tenant with the following
parking capacities: (i) car parking for 125 employees; (ii) overnight
parking for 50 step vans; and (iii) overnight parking for 5 trailers.
16.0 JANITORIAL SERVICES
Tenant shall provide janitor service for the Premises and arrange for
trash removal from the Premises to the Project trash dumpster on a
daily basis or otherwise in a manner sufficient to keep and maintain
the Premises and the Project in a first-class and clean condition.
17.0 ENVIRONMENTAL MATTERS
a.) "Environmental Laws" means any or all of the following: the
Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. Sections 9601 et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Sections 6941 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Sections 300h et seq.; the
Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the Clean
Air Act, 42 U.S.C. Sections 401 et seq.; regulations under
any of the foregoing statutes; and any other laws and
regulations of the United States, the State of Minnesota or
any political subdivision or agency of either of them, which
are now in effect or hereinafter enacted or amended that deal
with the regulation or protection of the environment, including
ambient air, groundwater, surface water and land use,
including sub-strata land.
b.) Tenant shall comply in all respects with all present and
hereinafter enacted Environmental Laws, and any amendments
thereto, relating to Tenant's operations on the Premises. Tenant
shall immediately notify Landlord of any correspondence or
communication from any governmental entity regarding the
application of Environmental Laws to the Premises or Tenant's
operations on the Premises or any change in Tenant's operations
on the Premises that will change Tenant's or Landlord's
obligations or liabilities under the Environmental Laws. Tenant
hereby agrees to indemnify and hold harmless Landlord, and
Landlord's officers, directors, agents, employees and mortgagees
from and against any and all loss, damage, and expense
(including, but not limited to, reasonable investigation and
legal fees and expenses), including, but not limited to, any
claim or action for injury, liability, or damage to persons or
property, and any and all claims or actions brought by any
person, firm, governmental body, or other entity, alleging or
resulting from or arising from or in connection with
contamination of or adverse effects on the environment, or
violation of any Environmental Law or other statute, ordinance,
rule, regulation or order of any government or judicial entity,
and from and against any damages, liability, cost, and penalties
assessed as a result of Tenant's (or Tenant's employees or
invitees) activity or operation on the Premises during the Lease
Term. Tenant's obligations and liabilities under this Section
shall continue so long as Landlord bears any liability or
responsibility under the Environmental Laws for any action that
occurred on the Premises during the Lease Term and shall survive
the expiration or termination of this Lease. The terms of this
Section shall be enforceable by injunction or, at Landlord's
option, by action for damages. Landlord hereby agrees to
indemnify and hold harmless Tenant, and
14 of 24
<PAGE>
Tenant's officers, directors, agents, employees and mortgagees
from and against any and all loss, damage, and expense
(including, but not limited to, reasonable investigation and
legal fees and expenses), including, but not limited to, any
claim or action for injury, liability, or damage to persons or
property, and any and all claims or actions brought by any
person, firm, governmental body, or other entity, alleging or
resulting from or arising from or in connection with
contamination of or adverse effects on the environment, or
violation of any Environmental Law or other statute, ordinance,
rule, regulation or order of any government or judicial entity,
and from and against any damages, liability, cost, and penalties
assessed as a result of (i) Landlord's activity or operation on
the Premises, (ii) any pre-existing environmental conditions, and
(iii) any activity or operations of any third party on the
Premises. Landlord's obligations and liabilities under this
Section shall continue so long as Tenant bears any liability or
responsibility under the Environmental Laws for any action that
occurred on the Premises during the Lease Term and shall survive
the expiration or termination of this Lease. The terms of this
Section shall be enforceable by injunction or, at Tenant's
option, by action for damages.
18.0 INDEMNIFICATION
a.) Tenant hereby agrees to indemnify and hold harmless Landlord and
Landlord's officers, directors, agents, employees, invitees and
mortgagees, from and against any and all claims, demands, causes
of action, suits, proceedings, liabilities, damages, losses,
costs, and expenses, including reasonable attorneys' fees, caused
by, incurred, or resulting from Tenant's (i) occupancy, use or
operation of the Premises, or (ii) from any default under or
failure to perform any term or provision of this Lease by Tenant
or (iii) negligence or willful acts. This indemnity does not
cover matters arising out of the negligence or willful acts of
Landlord or its employees, agents, contractors, guests, officers,
or directors. It is expressly understood that Tenant's
obligations under this Section shall survive the expiration or
earlier termination of this Lease for any reason. In case any
action or proceeding is brought against Landlord or its officers,
directors, agents or employees, by reason of any such claim,
Tenant, upon notice, will defend such action or proceeding by
responsible counsel selected by Tenant and reasonably acceptable
to Landlord.
b.) Landlord hereby agrees to indemnify and hold harmless Tenant and
Tenant's officers, directors, agents, employees, and invitees
from and against any and all claims, demands, causes of action,
suits, proceedings, liabilities, damages, losses, costs, and
expenses, including reasonable attorneys' fees, caused by,
incurred, or resulting from Landlord's (i) occupancy, use,
ownership or operation of the Premises prior to the Commencement
Date or (ii) from any default under or failure to perform any
provisions of this Lease to be performed by Landlord, or (iii)
negligence or willful acts, or (iv) actions or omissions of
Landlord's other Tenants or other third parties. This indemnity
does not cover matters arising out of the negligence or willful
acts of Tenant or its agents, officers, directors, employees,
guests, agents or invitees. In case any action or proceeding is
brought against Tenant or its officers, directors, agents or
employees, by reason of any such claim, Landlord, upon notice,
will defend such action or proceeding by responsible counsel
selected by Landlord and reasonably acceptable to Tenant. It is
expressly understood that Landlord's obligations under this
Section shall survive the expiration or earlier termination of
this Lease for any reason. In case any action or proceeding is
brought against Tenant or its officers, directors, agents or
employees, by reason of any such claim, Landlord, upon notice,
will defend such action or proceeding by responsible counsel
selected by Landlord and reasonably acceptable to Tenant.
15 of 24
<PAGE>
19.0 DAMAGE OR DESTRUCTION
a.) If the Premises is destroyed or damaged in whole or in part by
fire, or the elements, or as a result directly or indirectly of
war, or by act of God, or occurs by reason of any other cause
whatsoever, Tenant shall give notice thereof to Landlord, and
except as otherwise provided below, Landlord at Landlord's cost
and expense promptly shall repair, replace, and rebuild the
building or improvements to at least as good condition as it or
they were in immediately prior to such occurrence. Such work
shall be commenced within thirty (30) days subject to force
majeur after the settlement has been made with the insurance
companies.
b.) If following such damage or destruction the estimate of the time
to complete such repair or restoration, as reasonably and
promptly determined by the general contractor selected by
Landlord, exceeds 240 days, Tenant at its option shall have the
right to terminate the Lease upon written notice to the Landlord
given within twenty (20) days after receipt of the estimated time
to repair or restore. Also if the repair or restoration is not
finished or cannot reasonably to be expected to be finished
within thirty (30) days after the date that is 240 days from
commencement of the restoration, the Tenant at its option shall
have the right to terminate the Lease upon written notice to the
Landlord at the end of the 240 day period.
c.) The net proceeds of any insurance shall be applied in payment of
the cost of such repairing or rebuilding as the same progresses.
If the insurance proceeds exceed the cost of such repairs or
rebuilding, then the balance remaining after payment of the cost
of such repairs or rebuilding shall be paid over and belong to
Landlord.
d.) Except as specifically provided in subsections (b) or (e) of this
Section 19.0, this Lease shall not terminate or be affected in
any manner by reason of the destruction or damage in whole or in
part of the Premises or any building or improvements now or
hereafter standing or erected thereon or by reason of the
untenantability of the Premises or any such building or
improvements except that rent shall abate during the period of
untenantability.
e.) If the fire or casualty damages or destroys more than twenty-five
percent (25%) of the improvements on the Premises and occurs
within the last twelve months of the Lease Term then Tenant, at
its option, may elect to terminate the Lease by giving written
notice thereof to Landlord within fifteen (15) days after such
fire or casualty. If Tenant timely gives such notice then the
Lease shall terminate as of the date of such fire or casualty;
Tenant shall not be liable for any rent accruing after the date
of such fire or casualty. If Tenant so elects to terminate,
Landlord shall not be required to rebuild or restore the Premises
and all casualty insurance proceeds shall be the sole property of
Landlord.
20.0 CONDEMNATION
a.) If all or substantially all of the Premises are taken by the
exercise of the power of eminent domain or conveyed under the
threat of eminent domain, then this Lease shall terminate as of
the date possession is taken by the condemnor. The entire
compensation award shall belong to Landlord and Tenant shall have
no interest therein; provided that Tenant shall have the right to
make a separate claim for its personal property, Tenant
Improvements paid for by Tenant, or relocation benefits in
accordance with applicable law.
b.) If (i) more than twenty percent (20%) of the area of the
Premises, or (ii) more than twenty percent (20%) of the fair
market value of the Building is taken by the exercise of the
power of eminent domain or sold under the threat of eminent
domain, then Tenant shall have the right to terminate this Lease
if the premises remaining are such that their continued use for
the
16 of 24
<PAGE>
purposes for which the same were being used immediately prior to
such taking is reasonably impractical or economically imprudent.
Termination shall be as of the earlier of (i) the date legal
possession is taken by the condemnor or (ii) the date Tenant is
no longer able to operate in the effected portion of the
Premises. The option to terminate herein granted shall be
exercised in writing by Tenant within thirty (30) days after the
date of the taking of possession by the condemnor. In any event,
the entire compensation award shall belong to Landlord and Tenant
shall have no interest therein; provided that Tenant shall have
the right to make a separate claim for its personal property or
relocation benefits in accordance with applicable law. If this
Lease is not terminated, then Landlord, with reasonable diligence
and at its own expense, shall restore any improvements upon the
Premises affected by the taking, even if the total cost for such
restoration is in excess of the amount awarded or paid by the
condemnor for such purpose. Rent shall abate in the event of any
partial taking hereunder to the extent to which the Premises are
untenantable.
21.0 INSPECTION
Landlord and its authorized representatives shall have the right, upon
giving reasonable prior written notice (except in an emergency, in
which case no notice is required), to enter the Premises or any part
thereof and inspect the same for the purposes of determining Tenant's
compliance with the terms of this Lease or to make repairs required
hereunder.
22.0 QUIET ENJOYMENT
So long as Tenant shall timely pay the Rent and all other sums herein
provided and shall keep and timely perform all of the terms, covenants,
and conditions on its part herein contained, Landlord covenants that
Tenant, subject to Landlord's rights herein, shall have the right to
the peaceful and quiet occupancy of the Premises.
23.0 MORTGAGES AND SUBORDINATION
a.) Landlord's interest in this Lease or the Premises shall not be
subordinate to any encumbrances placed upon the Premises by or
resulting from any act of Tenant, and nothing herein contained
shall be construed to require such subordination by Landlord.
Tenant shall keep the Premises free from any liens for work
performed, materials furnished, or obligations incurred by
Tenant.
b.) Unless Landlord's mortgagee elects to have its mortgage be
subordinate to this Lease, this Lease at all times shall be
subordinate to the lien of any mortgage or mortgages now or
hereafter placed upon the Premises by Landlord, and Tenant
covenants and agrees to execute and deliver, upon demand, such
further instruments subordinating this Lease to the lien(s) of
any such mortgage or mortgages, and attorning to the interest of
such mortgagee or mortgagees, as shall be desired by Landlord or
by any mortgagee or proposed mortgagee; provided that any such
mortgagee shall deliver to Tenant a written non-disturbance
agreement in recordable form providing that Tenant shall have the
right to remain in possession of the Premises under the terms of
this Lease, notwithstanding any default in any such mortgage or
after foreclosure thereof, so long as Tenant is not in Default
under this Lease. Such non-disturbance agreement shall contain
such other provisions which may be reasonable acceptable to
mortgagee and Tenant, including without limitation, an
acknowledgement from mortgagee that casualty proceeds shall be
used for restoration as provided in Section 19.
17 of 24
<PAGE>
24.0 ESTOPPEL CERTIFICATES
At any time, and from time to time, each party agrees, promptly and in
no event later than ten (10) days after a request in writing from the
other party, to execute, acknowledge, and deliver to the requesting
party a statement in writing certifying (i) that this Lease is
unmodified and in full force and effect (or, if there has been
modification, that the same is in full force and effect as modified and
stating the modification), (ii) the amount of Base Rent due hereunder
and the dates to which the Rent and other charges have been paid, (iii)
that, to the best of its knowledge, Landlord or Tenant (as appropriate)
is not in default under any provision of this Lease (or if Landlord is
in default, specifying such default), (iv) that, to the best of its
knowledge, Landlord or Tenant (as appropriate) has no claims or offsets
under this Lease, and (v) that the certificate may be relied upon by
Landlord or Tenant (as appropriate) and its successors, assigns and
mortgagees. Any failure to deliver a statement as required under this
Section 24.0 shall be considered a Default under this Lease without
cure rights.
25.0 ASSIGNMENT AND SUBLETTING
a.) Except as herein set forth, Tenant shall not mortgage, encumber
or assign this Lease or any interest therein, or sublet all or
any portion of the Premises, or allow the use of any portion of
the Premises by any third party, without the prior written
consent of Landlord in each instance, which will not be
unreasonably withheld, conditioned, or delayed. Any assignment,
sublease or occupancy does not relieve Tenant from obtaining the
consent in writing of Landlord to any further assignment,
subletting or occupancy, and does not release Tenant or any
guarantor from liability hereunder. Landlord may accept rental
from any person or entity in possession of the Premises without
the same being deemed consent to an assignment or sublease and
without the same being deemed a release of Tenant or any other
party of its obligations under this Lease. Tenant shall provide a
copy of the proposed sublease or assignment instrument to
Landlord when requesting consent and shall provide a copy of the
executed sublease or assignment instrument to Landlord after
obtaining consent. Tenant shall pay upon demand to Landlord
reasonable costs and expenses incurred by Landlord in reviewing a
proposed sublease or assignment up to $1,000.00 per request.
Notwithstanding the foregoing, Tenant may assign this Lease or
sublet all or any portion of the Premises to an entity which
purchases all or subsequently all of the stock or assets of
Tenant or to into which Tenant merges or with which it
consolidates, or to an Affiliate Entity. An Affiliate Entity as
used herein shall mean an entity controlling, controlled by or
under common control with the subject entity. Control shall mean
the ability to directly or indirectly determine the management
policies of the subject entity. Without limitation, in
considering a request by Tenant for assignment or subletting, it
shall be reasonable for Landlord to consider, among other things:
(i) the financial record and capability of the proposed assignee
or sublessee, (ii) the business and personal reputation of the
proposed assignee or sublessee and its principals, (iii) the type
of business to be carried on by the proposed assignee or
sublessee, (iv) whether Tenant is or has been in Default
hereunder, and (v.) whether or not proposed assignee or
sub-tenant is currently a tenant of Landlord or is negotiating
for space with Landlord. Any permitted assignee or subtenant
hereunder shall be bound by, and shall assume in writing, all of
the terms and conditions of this Lease.
b.) Landlord shall have the right at any time to sell or convey the
Premises subject to this Lease or to assign its rights, title and
interest as Landlord under this Lease in whole or in part. In the
event of any such sale or assignment (other than a collateral
assignment as security for an obligation of Landlord), and
provided the asignee assumes all of the Landlord's obligations
under this Lease from and after the date of transfer Landlord
shall be relieved from and after the date of such transfer or
conveyance of liability for the performance of any obligation of
18 of 24
<PAGE>
Landlord contained herein, except for obligations or liabilities
accrued prior to the date of such assignment or sale, and Tenant
shall attorn to the purchaser or assignee (as the case may be).
26.0 DEFAULT AND REMEDIES
a.) Each of the following shall be deemed a "Default" of this Lease
by Tenant:
(i.) If any Rent or other monetary sum is not paid on the due
date, therefore, and remains unpaid for five (5) days
after written notice is delivered to Tenant;
(ii.) If Tenant hereunder becomes insolvent, or if proceedings
are commenced against Tenant hereunder in any court under
any bankruptcy act or for the appointment of a trustee or
receiver of Tenant's property and are not dismissed
within sixty (60) days, or if Tenant hereunder files any
assignment for the benefit of creditors, is not generally
paying its debts as the same become due, or is taken over
by any government regulatory agency having the
jurisdiction to do so and such agency does not fully
comply with the obligations imposed on Tenant hereunder;
or
(iii.) If Tenant fails to perform or violates any other of the
covenants, conditions, obligations or restrictions of
this Lease, which failure to perform or violation remains
uncured for a period of thirty (30) days or more after
notice thereof from Landlord to Tenant; provided,
however, that if such failure or violation cannot
reasonably be cured within the thirty (30) day period,
and Tenant is diligently pursuing a cure of such failure
or violation, then Tenant shall, after receiving notice
specified herein, have a reasonable period to cure such
failure or violation, not exceeding one hundred eighty
(180) days, provided Tenant continuously exercises due
diligence in the cure of the same.
b.) In the event of any Default, and without any notice, except, if
applicable, the notice prior to Default required under
circumstances set forth in Subsection (a) above, Landlord shall
be entitled to exercise, at its option, concurrently,
successively, or in any combination, any and all remedies
available at law or in equity, including without limitation any
one or more of the following in accordance with applicable law:
(i.) To terminate this Lease;
(ii.) To terminate Tenant's occupancy of the Premises and
to reenter and take possession of the Premises or any
part thereof (which termination of occupancy and
reentry shall not operate to terminate this Lease
unless Landlord expressly so elects) and of any and
all fixtures which are located on the Premises and
owned by Landlord;
(iii.) To relet the Premises or any part thereof for such
term or terms (including a term which extends beyond
the initial Lease Term), at such rentals, and upon
such other terms as Landlord, in its sole discretion,
may determine, with all net proceeds, after expenses,
received from such reletting being applied to the
Rent and other sums due from Tenant in such order as
Landlord may determine, in its discretion, with
Tenant remaining liable for any deficiency; with
regard to any such reletting, Landlord may make
repairs in or to the Premises to the extent
reasonably necessary to relet and Tenant shall be
liable to Landlord for such expenses;
19 of 24
<PAGE>
(iv.) To recover from Tenant all expenses, including
attorneys' fees, reasonably paid or incurred by
Landlord as a result of any such Default;
(v.) To recover from Tenant all Rent not theretofore paid
pursuant to the foregoing subsections and any sums
thereafter accruing as they become due under this
Lease, if the Lease has not been terminated, during
the period from the Default to the anticipated
Termination Date.
(vi.) Landlord's rights to exercise the remedies set forth
in this Section 26.0 shall survive the expiration or
termination of this Lease.
c.) In the event of any Default by Tenant, or in the event of a
failure by Tenant to perform any covenant, condition, obligation
or restriction under this Lease pertaining to the repair or
maintenance of the Premises (prior to the expiration of any
applicable grace or cure period) that Landlord reasonably deems
of an emergency in nature Landlord may, at its option, but shall
not be obligated to, immediately or at any time thereafter, and
after providing notice except as required herein, correct such
Default or failure without, however, curing the same, for the
account and at the expense of the Tenant. Any sum or sums so paid
by Landlord, together with interest at the Applicable Rate, and
all costs and damages, shall be deemed to be additional Rent
hereunder and shall be due from Tenant to Landlord upon demand.
d) It shall be a default and breach of this Lease by Landlord if it
shall fail to perform or observe any term, condition, covenant or
obligation required to be performed or observed by it under this
Lease for a period of thirty (30) days after notice thereof from
Tenant; provided, however, that if the term, condition, covenant
or obligation to be performed by Landlord is of such nature that
the same cannot reasonably be performed within such thirty-day
period, such default shall be deemed to have been cured if
Landlord commences such performance within said thirty-day period
and thereafter diligently undertakes to complete the same. Upon
the occurrence of any such default, Tenant may sue for injunctive
relief or to recover damages for any loss resulting from the
breach, but Tenant shall not be entitled to terminate this Lease
or withhold or abate any rent due hereunder.
27.0 ADDITIONAL RIGHTS RESERVED TO LANDLORD
Without affecting Tenant's obligations hereunder, Landlord reserves the
right during the last six (6) months of the Lease Term, if the Lease
Term has not been extended, to enter the Premises to display
conspicuously thereon the usual "Space for Lease" or "For Sale" sign or
card (provided Landlord on such sign or card indicates "Tenant Moving
to New Location") and at all reasonable times during the Lease Term to
show the same to prospective purchasers, lessees or mortgagees,
provided that the entry does not unreasonably interfere with the
conduct and operation of Tenant's business.
28.0 NOTICES
All notices, demands, requests, consents, approvals, or other
instruments required or permitted to be given by either party pursuant
to this Lease shall be in writing and sent to the other party at the
following addresses:
To Tenant prior to the
Commencement Date: Streamline.com, Inc.
27 Dartmouth Street
Westwood, MA 02090
Attn.: VP of Real Estate
20 of 24
<PAGE>
With a copy to Counsel to Tenant:
Richard A. Toelke
Bingham Dana LLP
150 Federal Street
Boston, MA 02110-1726
To Landlord: WISPARK Corporation
860 Blue Gentian Road, Ste. 175
Eagan, MN 55121
Attn: Gregory S. Miller
From and after the Commencement Date, all notices to Tenant shall be
effective if given to Tenant at the address of the Premises, with a
copy as provided above. All notices shall be deemed received when
delivered, if hand-delivered, or three business days after deposit with
the United States Postal Service, postage prepaid and sent by certified
mail, return receipt requested, or one business day after deposit with
a nationally recognized overnight commercial courier service, airbill
prepaid. Notices by telefax or e-mail alone are not sufficient. The
addresses for notices may be changed by the parties from time to time
by delivery of written notice to the other party as provided herein.
29.0 LIMITATION ON LANDLORD'S LIABILITY
Anything in this Lease to the contrary notwithstanding, the covenants,
undertakings and agreements herein made on the part of Landlord are
made and intended not as personal covenants, undertakings and
agreements or for the purposes of binding Landlord personally or the
assets of Landlord other than the Project (and the proceeds, profits,
and revenues therefrom). No personal liability or personal
responsibility is assumed by, nor shall at any time be asserted or
enforceable against Landlord or its successors and assigns, arising
from this Lease or Landlord's obligations with respect to the Premises,
or arising from any covenant, undertaking or agreement of Landlord
contained in this Lease. If Landlord fails to perform any covenant,
term or condition of this Lease upon Landlord's part to be performed
and, as a consequence of such failure, Tenant shall recover a judgment
against Landlord, such judgment shall be satisfied only out of proceeds
of sale received upon execution of such judgment and levy thereon
against the right, title and interest of Landlord in the Premises and
Landlord shall not be liable for any deficiency.
30.0 CONDITION OF PREMISES
Except as expressly provided herein, and except for Landlord's
obligation to repair and replace, Landlord makes no representations or
warranties, either express or implied, regarding the condition of the
Premises or suitability of the Premises for Tenant's proposed uses.
31.0 HOLDING OVER
If Tenant remains in possession of the Premises after the expiration of
the Lease Term without consent, then Landlord may, at Landlord's
option, deem Tenant to be a tenant on a month-to-month basis and Tenant
shall continue to pay Rent and other sums and shall comply with all the
terms of this Lease; provided that nothing herein nor the acceptance of
Rent by Landlord shall be deemed a consent to such holding over.
Landlord shall be entitled to all remedies available to it at law or in
equity for such holdover, including holdover rent at one hundred fifty
percent (150%) of all Rent payable hereunder and including, but not
limited to, Landlord's direct and actual damages
21 of 24
<PAGE>
suffered as a result of such holding over by Tenant, and in no event
including consequential damages.
32.0 WAIVER AND AMENDMENT
No provision of this Lease shall be deemed waived or amended except by
a written instrument unambiguously setting forth the matter waived or
amended and signed by the party against which enforcement of such
waiver or amendment is sought. Waiver of any matter shall not be deemed
a waiver of the same or any other matter on any future occasion.
33.0 JOINT VENTURE
None of the agreements contained herein is intended, nor shall the same
be deemed or construed, to create a partnership between Landlord and
Tenant, to make them joint venturers, nor to make Landlord in any way
responsible for the debts or losses of Tenant.
34.0 CAPTIONS
Captions are used throughout this Lease for convenience or reference
only and shall not be considered in any manner in the construction or
interpretation of this Lease.
35.0 SEVERABILITY
If any of the terms or provisions contained herein shall be declared to
be invalid or unenforceable by a court of competent jurisdiction, then
the remaining provisions and conditions of this Lease, or the
application of such to persons or circumstances other than those to
which it is declared invalid or unenforceable, shall not be affected
thereby and shall remain in full force and effect and shall be valid
and enforceable to the fullest extent permitted by law.
36.0 CONSTRUCTION
This Lease involves property located within the State of Minnesota and
shall be construed according to the laws of the State of Minnesota.
37.0 ENTIRE AGREEMENT
This Lease constitutes the entire agreement between the parties with
respect to the subject matter hereof, and there are no other
representations, warranties, or agreements except as herein provided.
38.0 COUNTERPARTS
This Lease may be executed in one or more counterparts, each of which
shall be deemed an original.
39.0 BINDING EFFECT
The terms and conditions of this Lease shall be binding upon and
benefit the parties hereto and their respective successors and assigns.
40.0 ATTORNEY'S FEES
In the event of litigation arising out of this Lease, the prevailing
party shall be entitled to court costs, out-of-pocket expenses and
reasonable attorneys' fees from the unsuccessful party.
41.0 TENANT'S REPRESENTATION AS TO AUTHORITY
a.) Tenant is a Massachusetts corporation duly
organized, validly existing and in good standing under the laws of
the State of Massachusetts and has the power and authority to
consummate the transactions contemplated by this Lease.
22 of 24
<PAGE>
b.) All proceedings of Tenant necessary to consummate the transactions
contemplated by this Lease have been duly taken in accordance with
law.
c.) The person or persons executing this Lease on
behalf of Tenant are duly authorized to bind
Tenant.
42.0 LANDLORD'S REPRESENTATION AS TO AUTHORITY
a.) Landlord is a Wisconsin corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin and has the power and authority to
consummate the transactions contemplated by this Lease.
b.) All proceedings of Landlord necessary to consummate the
transactions contemplated by this Lease have been duly taken in
accordance with law.
c.) The person or persons executing this Lease on
behalf of Landlord are duly authorized to bind
Landlord.
43.0 BROKERS
Tenant represents and warrants that it has dealt with no broker or
agent in this transaction except CB Richard Ellis and Landlord shall be
responsible to pay any and all agreed upon commissions due such broker
or agent. Landlord and Tenant agree to indemnify and hold each other
harmless from and against any claims by any other broker or agent
claiming commissions or other compensation as their respective
representative or agent with regard to this transaction. The provisions
of this Section shall survive the termination of this Lease. Tenant
agrees that it will not provide copies of this Lease document to any
outside broker without Landlord's consent.
44.0 SECURITY DEPOSIT
INTENTIONALLY OMITTED
45.0 GUARANTY OF LEASE
INTENTIONALLY OMITTED
46.0 MEMORANDUM OF LEASE
Either party may at its expense record a memorandum of this lease in
form and content mutually agreeable to the parties hereto and executed
by both parties.
47.0 PERFORMANCE OF WORK BY TENANT
All work on the Premises performed by Tenant or Tenant's contractors,
agents or employees during the Lease Term, whether in the form of
maintenance, repair, replacement, alterations or work in compliance
with law, shall be performed in a good and workmanlike manner and in
accordance with law, and shall be free and clear of all mechanics' lien
claims (provided that Tenant shall have the right to contest mechanics'
lien claims).
48.0 FINANCIAL STATEMENTS
Tenant shall furnish to Landlord no less than annually, within fifteen
(15) days after written request therefor from Landlord, a copy of
Tenant's then most recent financial statement and of any other similar
statements, all substantially in a form reasonably acceptable to
Landlord. If Tenant's statements are unaudited or uncertified, then
Tenant shall furnish such unaudited or uncertified statements as it has
available. Landlord may deliver a copy of such statements to any
mortgagee or prospective mortgagee of Landlord, or any prospective
purchaser of the Premises,
23 of 24
<PAGE>
but otherwise Landlord shall treat such statements and information
therein contained as confidential. Further, Landlord shall obligate all
persons to whom it gives Tenant's statements hereunder to treat same as
confidential, and to agree not to disclose same to any third person
without Tenant's prior written consent.
49.0 FORCE MAJEURE
Time periods, deadlines or dates for Landlord's or Tenant's performance
under any provisions of this Lease (except for the payment of money)
shall be extended for the period of time during which the
non-performing party's performance is prevented or delayed due to labor
disputes, casualties, embargoes, governmental restrictions or
regulations, unusual weather and other acts of God, war or other
strife, shortages of fuel labor, or building materials, action or
non-action of public utilities or local, state or federal governments
or agencies, the act or neglect of the other party or those acting for
or under the other party, or any other causes or circumstances beyond
the non-performing party's reasonable control, except that in no event
shall Tenant be required to accept delivery of the Premises after
November 1, 2000. This provision shall have no impact on the rent
credit as provided in Section 4.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the
date first above written.
<TABLE>
<CAPTION>
LANDLORD: TENANT:
<S> <C>
WISPARK CORPORATION, STREAMLINE.COM, Inc.,
a Wisconsin corporation a Massachusetts corporation
By: /s/ GREGORY S. MILLER By: /s/ J. GREGORY AMBRO
-------------------------------- ----------------------------
GREGORY S. MILLER J. GREGORY AMBRO
-------------------------------- ----------------------------
Print Name Print Name
Its: VICE PRESIDENT Its: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Attest: /s/ JOHN B. HELLER Attest: /s/ JAMES THOMPSON
----------------------------- -----------------------
JOHN B. HELLER JAMES THOMPSON
Print Name Print Name
Its: SENIOR VICE PRESIDENT Its: VICE PRESIDENT - DEVELOPMENT
</TABLE>
24 of 24
<PAGE>
EXHIBIT C
MONTHLY RENT PAYMENT SCHEDULES
<TABLE>
<CAPTION>
BASE RENT
LEASE YEAR PER SF ANNUAL MONTHLY
<S> <C> <C> <C> <C>
1 $4.55 $491,186.15 $40,932.18
2 $4.55 $491,186.15 $40,932.18
3 $4.55 $491,186.15 $40,932.18
4 $4.55 $491,186.15 $40,932.18
5 $4.55 $491,186.15 $40,932.18
6 $5.25 $566,753.25 $47,229.44
7 $5.25 $566,753.25 $47,229.44
8 $5.25 $566,753.25 $47,229.44
9 $5.25 $566,753.25 $47,229.44
10 $5.25 $566,753.25 $47,229.44
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ESTIMATED TAXES AND OPERATING EXPENSES*
- -------------------------------------------------------------------------------
YEAR TAXES OPERATING EXPENSES ANNUAL PAYMENT
<S> <C> <C> <C> <C>
2000 $.20 $.50 $75,567.10
2001 $.30 $.55 $91,760.05
2002 $1.50 $.60 $226,701.30
</TABLE>
2-3% increases are estimated per year for years 4-10.
*Tax and operating expense figures are only estimates. Landlord will not be held
responsible for the accuracy of these figures.
<PAGE>
ADDENDUM TO LEASE
DATED: February ____, 2000
BY AND BETWEEN
WISPARK CORPORATION, a Wisconsin corporation (Landlord)
and
STREAMLINE.COM, INC., a Massachusetts corporation (Tenant)
The terms and provisions of this Addendum shall supercede the terms of the
Lease:
OPTION TO RENEW
Tenant shall have the option to renew this lease for one additional period
equal to the original term by providing Landlord with written notice at
least one hundred eighty (180) days prior to the termination of this Lease.
All of the terms and conditions of this Lease will remain in effect except
for the rental rate which will be increased during the renewal term to the
then current market rate.
The monthly rental rate of the Lease for the renewal term shall be
determined as follows:
a. Landlord shall notify Tenant in writing of the proposed rate ("Rent
Notice") within thirty (30) days after Tenant notifies Landlord that
Tenant will renew the Lease. If Landlord fails to give the Rent Notice
within the 30-day period, then Landlord shall be deemed to have given
Tenant, on the thirtieth (30th) day after Tenant's notice, a Rent
Notice proposing that the rental rate for the renewal term be the same
as the rate during the last 12-month period of the primary Lease Term.
b. Tenant shall, within thirty (30) days following receipt of the Rent
Notice, notify Landlord in writing that Tenant:
(i) Accepts the proposed rate:
(ii) Rejects the proposed rate and declines to renew the Lease;
(iii) Rejects the proposed rate, but desires arbitration.
If Tenant does not give any notice within said 30-day period, then
Tenant shall be deemed to have accepted the proposed rate as stated in
the Rent Notice. If Tenant rejects the proposed rate and declines to
renew, then Tenant shall have no further option to renew the Lease. If
Tenant rejects the proposed rate but requests arbitration, the
arbitration shall be conducted in accordance with Subparagraph C of
this section of the Addendum to Lease. If Tenant requests arbitration,
Tenant shall be deemed to have renewed the term regardless of the
results of the arbitration.
c. If Tenant gives notice that it rejects the proposed rate state in the
Rent Notice but desires arbitration, then the parties shall mutually
submit the matter to bonding arbitration in accordance with the rules
of the American Arbitration Association, Minneapolis office. The rental
rate shall be the rate determined by the arbitrator, who shall be
either a qualified MAI appraiser with at least five (5) years of
commercial appraisal experience in the Minneapolis-St. Paul area, or an
attorney or other real estate professional acceptable to both parties.
In no event shall the rate be
<PAGE>
more than the amount stated in the Rent Notice, nor shall the rate be
less than the rate as set forth in Exhibit C as the rate during the
last twelve (12) month period of the primary term of this Lease.
d. The rental rate shall be the current market rate as of the first year
of the renewal term and shall be the amount for which a willing
Landlord would lease the Premises or comparable space to a willing and
credit-worthy tenant on the same terms and conditions as this Lease,
apart from the rental rate, and may include annual increases.
2. OPTION TO EXPAND
Absent any default in the Lease by Tenant, Landlord will provide Tenant
with the "right of first offer" on any space contiguous to Tenant's space
that becomes available during the term of Tenant's Lease subject to the
following terms and conditions:
a. Landlord will notify Tenant in writing of what contiguous space is
becoming available no more than one hundred eighty (180) days and no
less than thirty (30) days prior to the anticipated date that the
contiguous space is becoming available.
b. Tenant will, within fifteen (15) business days of Landlord's notice,
advise Landlord in writing of Tenant's intent to lease and shall
specify exactly how much space Tenant so desires. Any failure to notify
Landlord shall be deemed a waiver by the Tenant of its rights to lease
said space.
c. Tenant must have at least five (5) years remaining on its Base Lease in
order to exercise its right of first offer. If at the time Tenant
desires to exercise its right, and there are less than five (5) years
remaining on its Base Lease, then Tenant may, in conjunction with the
taking of additional space, extend its Base Lease such that it will
then have five (5) years remaining. The Base Lease Rate for the
extended term will be determined in the same manner as it would be if
Tenant had exercised its Option to Renew as set forth in Paragraph 1
above.
d. The additional space will be added to Tenant's existing Lease under the
same terms and conditions as the existing Lease.
e. Tenant agrees to provide Landlord with an acceptable Space Plan for the
expansion space within fifteen (15) days after notifying Landlord of
its intent to lease said space. Landlord shall have a minimum of thirty
(30) days to construct the space to Tenant's specification and the
space shall be added to Premises immediately upon its completion.
f. All costs incurred in improving the expansion space shall be paid
by the Tenant.
3. Landlord will agree that the following companies be excluded from becoming
tenants or subtenants in the building:
- Stop and Shop
- Homeruns
- Peapod
- Shoplink
- Hannaford's
- Life Simple
2
<PAGE>
Any other companies in the online grocery industry that compete with Tenant
as well as companies that may pose an environmental risk to the building
and the operations of the Tenant.
4. Tenant shall be permitted to take occupancy on or about May 1, 2000. The
Tenant, however, will be required to pay all operating expenses and taxes
during the early move-in period. The first monthly rent payment will be due
to Landlord on the Commencement Date.
3
<PAGE>
WISPARK
CORPORATION (651) 405-8050
860 Blue Gentian Road, Suite 175, Eagan, MN 55121 Fax: (651) 406-8170
April 14, 2000
Mr. James Thompson, VP of Development
Streamline.com, Inc.
27 Dartmouth Street
Westwood, MA 02090
RE: LEASE AGREEMENT BETWEEN WISPARK CORPORATION AND STREAMLINE.COM,
INC. WISPARK DISTRIBUTION CENTER AT SHAKOPEE SHAKOPEE, MN
Dear Jim:
Pursuant to our telephone conversation of this date, this letter is to set forth
our agreement for the funding of the improvement costs set forth in Exhibit A
attached hereto.
WISPARK will sign a contract for the improvements with Amcon Construction in the
amount of $1,708,667 pursuant to the schedule attached hereto. This schedule is
based upon the approved plans and specifications dated 3/20/00. WISPARK will
provide $800,000 toward the payment of the costs with the remaining $908,667 to
be paid by Streamline.com as follows:
1) $400,000 will be deposited on or before 4/19/00 into an interest escrow
bearing account with First American Title Insurance Company to be
disbursed pursuant to the attached Disbursement Agreement. All interest
will accrue to the benefit of Streamline.com. The $400,000 will be
disbursed for the final $400,000 of work pursuant to the contract.
2) Streamline and WISPARK will fund to First American Title Insurance
Company their proportionate shares (40% and 60% respectively) of each
payment request on a monthly progress payment basis (payable on a net
30-day basis), until Streamline's additional $508,667 is paid. These
funds will be disbursed through First American Title Insurance Company
pursuant to the Disbursing Agreement attached.
3) As consideration for WISPARK's agreement to increase its allowance from
$689,765 to $800,000, Streamline agrees to increase its Base Rent
pursuant to the Revised Exhibit C attached hereto.
If this agreement is acceptable to you, please so indicate by signing below and
initialing your approval on the three attachments (Cost Schedule, Disbursing
Agreement, and Revised Exhibit C).
Please call me if you have any problems or questions concerning this matter.
Sincerely,
WISPARK CORPORATION
/s/ Gregory S. Miller
Gregory S. Miller, CCIM, CPM
VP/Regional Director
/kjr
cc: Greg Ambro
Richard Toelke
Steve Lysen
Jim DePietro
AGREED & ACCEPTED this 20 day of April, 2000
By: /s/ J. Gregory Ambro
----------------------------------------
J. Gregory Ambro
Print Name
Its: SVP-CFO
----------------------------------------
<PAGE>
- REVISED -
EXHIBIT C
MONTHLY RENT PAYMENT SCHEDULES
BASE RENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
LEASE YEAR PER SF ANNUAL MONTHLY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 $4.72 $509,240.28 $42,436.69
- -----------------------------------------------------------------------------------------------------------------------------
2 $4.72 $509,240.28 $42,436.69
- -----------------------------------------------------------------------------------------------------------------------------
3 $4.72 $509,240.28 $42,436.69
- -----------------------------------------------------------------------------------------------------------------------------
4 $4.72 $509,240.28 $42,436.69
- -----------------------------------------------------------------------------------------------------------------------------
5 $4.72 $509,240.28 $42,436.69
- -----------------------------------------------------------------------------------------------------------------------------
6 $5.42 $584,809.56 $48,734.13
- -----------------------------------------------------------------------------------------------------------------------------
7 $5.42 $584,809.56 $48,734.13
- -----------------------------------------------------------------------------------------------------------------------------
8 $5.42 $584,809.56 $48,734.13
- -----------------------------------------------------------------------------------------------------------------------------
9 $5.42 $584,809.56 $48,734.13
- -----------------------------------------------------------------------------------------------------------------------------
10 $5.42 $584,809.56 $48,734.13
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
ESTIMATED TAXES AND OPERATING EXPENSES*
- ---------------------------------------------------------------------------------------------- ------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
YEAR TAXES OPERATING EXPENSES ANNUAL PAYMENT
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
2000 $ .20 $.50 $ 75,567.10
- -----------------------------------------------------------------------------------------------------------------------------
2001 $ .30 $.55 $ 91,760.05
- -----------------------------------------------------------------------------------------------------------------------------
2002 $1.50 $.60 $226,701.30
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
2-3% increases are estimated per year for years 4-10.
*Tax and operating expense figures are only estimates. Landlord will not be held
responsible for accuracy of these figures.
<PAGE>
EXHIBIT 10.37
LEASE
THIS INDENTURE OF LEASE made as of this 3rd day of March, 2000 by and
between LEONARD J. JACOBS, TRUSTEE OF 825 UNIVERSITY AVENUE NOMINEE TRUST under
Declaration of Trust dated February 1, 1984, as amended ("Landlord"), having a
mailing address of 99 Yarmouth Road, Chestnut Hill, Massachusetts 02467, and
STREAMLINE.COM, INC., a Delaware corporation ("Tenant"), having a mailing
address of 27 Dartmouth Street, Westwood, Massachusetts 02090.
BACKGROUND AND PURPOSE
Landlord is the fee owner of a certain parcel of land (the "Site") in
Norwood, Massachusetts, shown on EXHIBIT A attached hereto, together with a
building (the "Building") thereon having an aggregate of One Hundred Forty-Seven
Thousand (147,000) square feet of rentable area (the "Leased Premises") and
other improvements thereon (the Site and all said improvements being herein
described as the "Premises").
Landlord and Tenant desire to enter into a lease of the Leased
Premises.
W I T N E S S E T H:
ARTICLE 1
PREMISES
SECTION 1.1. PREMISES. Landlord, for and in consideration of the rents
to be paid and the obligations to be performed by Tenant, as hereinafter
provided, does hereby demise and lease unto Tenant, and Tenant does hereby take
and hire from Landlord, upon and subject to the conditions hereinafter
expressed, the Leased Premises. Tenant shall also have (a) the exclusive right
to use the surface of the areas shown on Exhibit A as Existing Tenant Parking
Area and New Tenant Parking Area (together the "Tenant Parking Area") for
parking motor vehicles used
<PAGE>
by it in connection with the operation of its business and motor vehicles of its
employees and invitees; (b) the right to use in common with Landlord and others
authorized by Landlord the entrance driveway providing vehicular access to the
Leased Premises, as it now exists or as it may subsequently be relocated by
Landlord without having a material adverse affect on Tenant's business
operations (the "Entrance Driveway"), for vehicular access to and egress from
the Leased Premises and Tenant Parking Area from and to University Avenue
twenty-four (24) hours per day; and (c) the right to use any portions of the
Site which Landlord may from time to time designate as areas for common use by
tenants of the Premises in common with Landlord and others authorized by
Landlord to use said areas, subject to such regulations governing the use of
said areas which are not inconsistent with the terms of this Lease as Landlord
may from time to time establish.
SECTION 1.2. TENANT PARKING. Landlord warrants that the Existing Tenant
Parking Area is suitable for the parking of two hundred nineteen (219)
automobiles. Landlord shall, on or before September 30, 2000, (a) perform such
work, including paving, as shall be necessary to make the New Tenant Parking
Area suitable for use for the parking of motor vehicles and capable of allowing
one hundred sixty-seven (167) automobiles and thirty-two (32) delivery vans to
be parked therein, and (b) restripe the Existing Tenant Parking Area so as to
designate two hundred nineteen (219) automobile parking spaces therein. After
completion of construction of the New Tenant Parking Area, Tenant shall
reimburse Landlord for that portion of Landlord's cost of constructing the New
Tenant Parking Area as is attributable to the construction of parking capacity
for Tenant's delivery vans as shown on a statement delivered to tenant by
Landlord; provided, however, that Tenant shall in no event be required to pay
more than Seventy-Five Thousand Dollars ($75,000.00) to Landlord. Tenant's
payment hereunder shall be due within ten (10) days after delivery by Landlord
of said statement. In the event that Landlord fails to
-2-
<PAGE>
complete the work necessary to make the New Tenant Parking Area suitable for
parking as aforesaid by September 30, 2000, the Base Rent payable by Tenant
shall be reduced by fifty percent (50%) until such time as said work has been
completed.
Landlord shall have the right to relocate the Tenant Parking Area to
another location on the Site in connection with the further development of the
Site; provided that the relocated Tenant Parking Area shall accommodate the
parking of at least three hundred eighty-six (386) motor vehicles and shall not
be located materially farther from the Leased Premises than the Tenant Parking
Area as shown on Exhibit A.
SECTION 1.3. FURTHER DEVELOPMENT. Tenant hereby acknowledges that
Landlord may further develop the Site and construct additional buildings and
improvements on the Site for use or rental by Landlord. Before committing to
undertake any further development of the Site, Landlord shall notify Tenant of
its intention to do so and describe the nature of the intended development (the
"Development Plan") in as much detail as is available at the time. In no event
shall Landlord be required to identify possible tenants or users. Within five
(5) days after Tenant receives Landlord's notice and description of the intended
development, Tenant may deliver to Landlord, in writing, any comments on or
objections to the Development Plan which it may have. If Tenant objects to the
Development Plan, its notice of objections may also include a request that
Landlord meet with Tenant to discuss its objections. Landlord and Tenant shall
meet within three (3) business days after delivery of Tenant's request and
discuss Tenant's objections and suggestions which Tenant may have to eliminate
them. Landlord shall give full consideration to Tenant's objections and
suggestions, but Landlord shall not be required to modify the Development Plan.
Notwithstanding anything contained herein to the contrary, in no event shall
Landlord undertake any proposed development if the construction of the same or
the completed development would, or would reasonably be expected to, have a
material adverse
-3-
<PAGE>
effect on Tenant's access to the Site, Tenant's parking rights set forth in this
Lease, or the conduct of Tenant's business on the Premises.
ARTICLE 2
TERM
SECTION 2.1. INITIAL TERM. To have and to hold the Premises unto
Tenant, for an original term commencing on February 14, 2000 (the "Commencement
Date") and expiring at midnight on July 31, 2010 (the "Initial Term").
SECTION 2.2. EXTENDED TERM. Provided that this Lease is then in full
force and effect and there then exists no Event of Default (as hereinafter
defined), Tenant may elect to extend the term of this Lease for two (2)
successive periods of five (5) years each as follows:
<TABLE>
<S> <C>
First Extended Term: August 1, 2010 to July 31, 2015
Second Extended Term: August 1, 2015 to July 31, 2020
</TABLE>
The extension may be exercised by Tenant by giving written notice to Landlord at
least twelve (12) months prior to the expiration of the then current term, upon
which exercise this Lease shall be deemed to be extended without the execution
of any further instrument. Each Extended Term shall be upon and subject to all
the terms and conditions of this Lease, provided, however, that the rent payable
with respect to each Extended Term shall be calculated in the manner hereinafter
set forth in Article 4 and Tenant shall have no right to extend the term of this
Lease beyond the Second Extended Term.
ARTICLE 3
USE OF LEASED PREMISES
SECTION 3.1. PERMITTED USE. Tenant may use the Leased Premises only for
the distribution, warehousing and storage of food and grocery products and
related administrative and office uses (the "Permitted Use"), and for no other
purpose or purposes whatsoever. Tenant shall have access to and, subject to
applicable laws, the right to conduct its business at the
-4-
<PAGE>
Leased Premises twenty-four (24) hours per day seven (7) days per week. The
Leased Premises shall be used only in compliance with applicable laws and only
if and to the extent Tenant has obtained and maintained all licenses and permits
which may be necessary for such use. Landlord warrants and represents to Tenant
that the Permitted Use is permitted as of right under the Zoning Bylaws of the
Town of Norwood.
Tenant shall also have the right to erect a satellite antenna for its
exclusive use on the roof of the Building. Tenant shall be responsible for
obtaining all permits, approvals, and licenses necessary for the erection,
maintenance, and operation of said satellite antenna. Notwithstanding anything
to the contrary considered in this Lease, Landlord makes no warranty or
representation as to the nature of such permits, approvals, and licenses
required for said satellite antenna or whether the same are obtainable. Tenant
shall perform any repairs to the roof or other portions of the Building required
as a result of the erection of said satellite antenna.
Tenant shall not use or occupy or permit the Leased Premises to be used
or occupied, nor do or permit anything to be done in or on the Premises or any
part thereof, in a manner that would in any way violate any certificate of
occupancy affecting the Premises or make void or voidable any insurance then in
force with respect thereto, or that may limit the availability of fire or other
insurance thereon required to be furnished hereunder by Tenant, or that will
cause or be likely to cause structural injury to any of the Improvements, or
that will constitute a public or private nuisance or waste.
ARTICLE 4
BASE RENT
SECTION 4.1. INITIAL TERM. Tenant shall pay to Landlord Base Rent for
the Leased Premises from July 1, 2000 (the "Rent Commencement Date") through the
balance of the Initial Term at the following rates:
-5-
<PAGE>
A. For and with respect to the period beginning on the Rent
Commencement Date and ending on January 31, 2001, Eight Hundred
Fourteen Thousand Six Hundred Twenty-Five Dollars ($814,625.00) payable
in equal monthly installments of One Hundred Sixteen Thousand Three
Hundred Seventy-Five Dollars ($116,375.00) commencing on the Rent
Commencement Date.
B. For and with respect to the next four (4) years of the
Initial Term, an annual Base Rent of One Million Three Hundred
Ninety-Six Thousand Five Hundred Dollars ($1,396,500.00) per year
payable in equal monthly installments of One Hundred Sixteen Thousand
Three Hundred Seventy-Five Dollars ($116,375.00).
C. For and with respect to the last six and one-half (6 1/2)
years of the Initial Term, at the rate of One Million Six Hundred
Seventeen Thousand Dollars ($1,617,000.00) per year payable in equal
monthly installments of One Hundred Thirty-Four Thousand Seven Hundred
Fifty Dollars ($134,750.00).
SECTION 4.2. EXTENDED TERMS. Tenant shall pay to Landlord Base Rent for
the Leased Premises during the Extended Terms at the following rates:
A. For and respect to each year of the First Extended Term, an
annual rent equal to the greater of (1) One Million Six Hundred
Seventeen Thousand Dollars ($1,617,000.00), or (2) ninety-five percent
(95%) of an amount equal to One Million Six Hundred Seventeen Thousand
Dollars ($1,617,000.00) multiplied by a fraction the numerator of which
is the Consumer Price Index (as that term is hereinafter defined) for
the month of July, 2010 and the denominator of which is the Consumer
Price Index for the month of January, 2005.
B. For and with respect to each year of the Second Extended
Term, an annual rent equal to the greater of (1) the annual Base Rent
for the First Extended Term, or (2)
-6-
<PAGE>
ninety-five percent (95%) of an amount equal to the annual Base Rent
for the First Extended Term multiplied by a fraction the numerator of
which is the Consumer Price Index for the month of July, 2015 and the
denominator of which is the Consumer Price Index for the month of July,
2010.
For the purposes hereof, the Consumer Price Index shall be Consumer
Price Index for All Urban Consumers: U.S. City Average published by the Bureau
of Labor Statistics of the United States Department of Labor. If publication of
the Consumer Price Index is discontinued, the computation of Base Rent hereunder
shall be based on comparable statistics on the cost of living for the United
States as computed by a federal agency or by a recognized financial publication.
Landlord shall give Tenant written notice of the annual Base Rent
determined as herein provided and the manner of its determination within a
reasonable time after obtaining the data necessary to compute it.
SECTION 4.3. PAYMENT OF BASE RENT. Except as hereinbefore provided,
annual Base Rent shall be payable in equal monthly installments in advance on
the first (1st) day of each calendar month occurring during the term of this
Lease commencing on the Rent Commencement Date. Base Rent shall be prorated for
any partial month occurring at the commencement or termination of this Lease.
Landlord may, at its option, direct Tenant to pay all or any portion of the Base
Rent directly to the holder of any mortgage on the Leased Premises and to pay
the balance of the Base Rent, if any, to Landlord.
In the event there is any delay in calculating the amount of the new
Base Rent payable hereunder, Tenant shall continue to pay Landlord Base Rent at
the then current rate and shall pay any additional amount due as soon as the new
Base Rent is determined.
Said Base Rent shall, except as herein otherwise specifically provided,
be paid without offset, deduction or demand therefor, and said Base Rent shall
be "net" and shall be in addition
-7-
<PAGE>
to the additional rent hereinafter provided to be paid by Tenant, and in no case
shall Landlord be liable for, or be obliged to incur any expense, liability or
charge with respect to the Leased Premises, except as in this Lease expressly
provided.
Rent shall be paid to Landlord at the address set forth on the first
page of this Lease or to such person or entity and sent to such address within
the continental United States as Landlord shall from time to time designate in
writing to Tenant.
ARTICLE 5
ADDITIONAL RENT: REAL ESTATE TAXES
SECTION 5.1. PAYMENT OF IMPOSITIONS. Tenant shall pay to Landlord
during the term of this Lease, as additional rent, Tenant's Share (as
hereinafter defined) of all Impositions (as hereinafter defined) in the manner
hereinafter provided. For the purposes hereof, the term "Impositions" shall
mean:
(i) all taxes, assessments (including assessments for benefits
from public works or improvements, whether or not begun or
completed prior to the commencement of the Term and whether or
not to be completed within said Term, but, in the case of
assessments payable in installments, only the installments
payable with respect to periods included in the term of this
Lease), levies, fees, water and sewer rents and charges and
all other governmental charges, general and special, ordinary
and extraordinary, whether or not the same shall have been
within the express contemplation of the parties hereto,
together with any interest and penalties thereon, which are,
at any time, imposed or levied upon or assessed against (A)
the Premises, including any improvement on personal property
located thereon, (B) any fixed rent, any additional rent
reserved or payable hereunder or any other sums payable by
Tenant hereunder, or (C) this Lease or the leasehold estate
hereby created, or which arise in respect of the operation,
possession, occupancy or use of the Premises;
(ii) any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the fixed rent, additional
rent or such other sums payable by Tenant hereunder; and
-8-
<PAGE>
(iii) all sales and use taxes which may be levied or assessed
against or payable by Landlord or Tenant on account of the
acquisition, leasing or use of the Premises.
SECTION 5.2. OTHER TAXES. Nothing herein contained shall require Tenant
to pay income taxes assessed against Landlord, or any capital levy, corporation
franchise, excess profits, estate, succession, inheritance or transfer taxes of
Landlord, unless such taxes are imposed or levied upon or assessed as a total or
partial substitute for, or in lieu of, any other Imposition required to be paid
by Tenant pursuant to this Article 5, in which event, the same shall be deemed
Impositions and shall be paid by Tenant.
SECTION 5.3. TENANT'S SHARE. The Premises are currently made up of two
separate lots for the purpose of the assessment of real estate taxes by the Town
of Norwood--namely, Lots 1 and 6 of Block 12 as shown on Town of Norwood
Assessor's Map 22. The Leased Premises are located on said Lot 1 (the "Tax
Lot").
For the purposes hereof, "Tenant's Share" shall mean that portion of
the Impositions payable with respect to the Tax Lot equal to the sum of (i) one
hundred percent (100%) of the amount of Impositions attributable to the
assessment by the Town of Norwood of the Building, and (ii) fifty percent (50%)
of the amount of Impositions attributable to the assessment by the Town of
Norwood of the land constituting the Tax Lot. In the event that it is not
possible to determine the amount of said assessments from the tax bill issued by
the Town of Norwood because the tax bill does not show separate assessments for
the Building and said land, the computation to be made hereunder shall be based
on the valuations by the Town of Norwood Assessors as shown on the records of
said Assessors.
SECTION 5.4. PAYMENT OF TENANT'S SHARE. Landlord shall submit to Tenant
a statement showing the amount of additional rent payable by Tenant hereunder
and the calculation thereof, together with a tax bill or other evidence of the
amount of Impositions on account of which such
-9-
<PAGE>
additional rent is payable, and Tenant shall pay such additional rent within ten
(10) days after receipt of Landlord's statement. So long as Impositions are
payable in installments under applicable law, Landlord shall submit its
statements for additional rent payable hereunder at the times that such
installments of Impositions are payable. The failure of Landlord to submit any
statement of additional rent required hereunder shall not constitute a waiver of
Landlord's right to receive such additional rent.
ARTICLE 6
INSURANCE AND INDEMNITY
SECTION 6.1. TENANT'S REQUIRED INSURANCE. Tenant shall maintain, at its
own expense, the following insurance ("Tenant's Required Insurance") for the
benefit of Landlord:
A. General public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
Leased Premises, the Premises, and the adjoining streets, sidewalks and
passageways, such insurance to afford protection to Landlord of not
less than $2,000,000 with respect to bodily injury or death to any one
person, not less than $5,000,000 with respect to any one accident, and
not less than $1,000,000 with respect to property damage.
B. Workmen's Compensation and Employers Liability insurance
covering all persons employed by Tenant in connection with any work
done on or about the Premises with respect to which claims for death or
bodily injury could be asserted against Landlord, Tenant or the
Premises.
C. Boiler and pressure vessel insurance on all equipment,
parts thereof and appurtenances attached or connected to the Leased
Premises which by reason of their use or existence are capable of
bursting, erupting, collapsing or exploding, in the minimum amount of
$1,000,000 for damage to property resulting from such perils.
-10-
<PAGE>
D. At any time which improvements are being constructed on the
Leased Premises, completed value builder's risk insurance (or
equivalent coverage), which insurance shall cover the Leased Premises,
including building materials thereon, against loss or damage from fire,
lightning, extended coverage perils, sprinkler leakage, vandalism, and
malicious mischief, in an amount not less than the final cost, as
estimated by Tenant, of such improvements.
E. Such other insurance on the Premises in such amounts and
against such other hazards which at the time are commonly obtained in
the case of property similar to the Premises.
All Tenant's Required Insurance shall be written in companies
reasonably satisfactory to Landlord and Tenant and in the forms customarily in
use from time to time in the locality of the Premises; and shall name as the
insured parties thereunder Landlord and Tenant, as their interests may appear.
Every policy of Tenant's Required Insurance shall contain an agreement
that the insurer will not cancel such policy except after ten (10) days' written
notice to Landlord and that any loss otherwise payable thereunder shall be
payable notwithstanding any act or negligence of Landlord or Tenant which might,
absent such agreement, result in a forfeiture of all or a part of such insurance
payment and notwithstanding (i) the occupation or use of the Premises for
purposes more hazardous than permitted by the terms of such policy, (ii) any
foreclosure or other action taken by any mortgagee pursuant to any provision of
any of mortgage on the Premises upon the happening of a default or event of
default thereunder, or (iii) any change in ownership of the Premises.
Tenant shall deliver to Landlord promptly after execution of this Lease
the original or duplicate policies or certificates of insurers, evidencing all
the insurance which is required to be
-11-
<PAGE>
maintained hereunder. Tenant shall, at least ten (10) days prior to the
expiration of any such policy, deliver either original or duplicate renewal
policies or certificates evidencing the renewal of such policy. Should Tenant
fail to maintain or renew any Tenant's Required Insurance, or to pay the premium
therefor, or to deliver to Landlord any such policy or certificate within the
time required hereunder, then Landlord, at its option, but without obligation to
do so, may, upon five (5) days' notice to Lessee, procure such insurance and the
cost of such insurance shall be repaid by Tenant as additional rent hereunder
within five (5) days after Landlord has given notice of such expenditure.
SECTION 6.2. LANDLORD'S REQUIRED INSURANCE. Landlord shall maintain
insurance against loss or damage to the Leased Premises, including improvements
thereto made by Tenant, but not Tenant's personal property or fixtures therein,
by fire, lightning and other risks from time to time included under "extended
coverage" policies, in amounts not less than the full insurable value of the
Premises ("Landlord's Required Insurance"). The term "full insurable value," as
used herein, means actual replacement cost without deduction for physical
depreciation as shall from time to time be determined by Landlord or by
appraisal made from time to time (but not more than annually) at the expense of
Tenant by an accredited insurance appraiser selected by Landlord.
Tenant shall pay to Landlord, as additional rent, all premiums or other
costs payable by Landlord in order to maintain Landlord's Required Insurance
within ten (10) days after receipt by Tenant of a statement from Landlord
showing the amount thereof. The failure of Landlord to submit any such statement
shall not constitute a waiver of Landlord's right to receive such additional
rent.
Landlord shall deliver to Tenant promptly after execution of this Lease
duplicate policies or certificates of insurers evidencing Landlord's Required
Insurance. Landlord shall, at least ten (10) days prior to the expiration of any
policy of Landlord's Required Insurance deliver either
-12-
<PAGE>
duplicate renewal policies or certificates evidencing the renewal of Landlord's
Required Insurance. Every policy under which Landlord's Required Insurance is
maintained shall contain an agreement that the insurer will not cancel such
policy except after ten (10) days written notice to Tenant.
SECTION 6.3. WAIVERS. Tenant and Landlord agree that with respect to
any insurance coverage carried by either Tenant or Landlord in connection with
the Premises or the Leased Premises, whether or not such insurance is required
by the terms of the Lease, such insurance shall provide for the waiver by the
insurance carrier of any subrogation rights against the Landlord, its agents,
servants, and employees under the Tenant's insurance policies or against the
Tenant, its agents, servants, and employees under the Landlord's insurance
policies, where such waiver of subrogation rights either does not require the
payment of an additional premium, or, if an additional premium is required to be
paid, the party to be benefited by the waiver offers to pay such premium after
being notified by the other party of such additional premium.
Notwithstanding any other provision of this Lease and without limiting
the effect of any such provision, Landlord shall not be liable to Tenant, and
Tenant hereby waives any right of recovery against Landlord, for any loss or
damage, whether or not such loss or damage is caused by the negligence of
Landlord, its agents, servants, or employees, but only to the extent that such
loss or damage is actually recovered under insurance carried by Tenant.
Likewise, notwithstanding any other provisions of this Lease and without
limiting the effect of any such provision, Tenant shall not be liable to
Landlord and Landlord hereby waives any right of recovery against Tenant for any
loss or damage whether or not such loss or damage is caused by the negligence of
the Lessee or its agents, servants, or employees, but only to the extent that
such loss or damage is actually recovered under insurance carried by Landlord.
-13-
<PAGE>
SECTION 6.4. INDEMNIFICATION BY TENANT. Tenant agrees to indemnify,
defend and save harmless Landlord from and against all claims of whatever nature
arising, from any act, omission or negligence of Tenant, or Tenant's
contractors, licensees, agents, servants, or employees, or arising from any
accident, injury, or damage whatsoever caused to any person, or to the property
of any person occurring from and after the Commencement Date of this Lease and
until the end of the term hereof on the Premises where such accident, damage or
injury results or is claimed to have resulted from an act or omission on the
part of Tenant or its agents or employees. This indemnity and hold harmless
agreement shall include indemnity against all costs, expenses and liabilities
incurred in or in connection with any such claim or proceeding brought thereon,
and the reasonable cost of defense thereof and shall expressly survive the
termination of this Lease.
SECTION 6.5. INDEMNIFICATION BY LANDLORD. Landlord agrees to indemnify,
defend and save harmless Tenant from and against all claims of whatever nature
arising, from any act, omission or negligence of Landlord, or Landlord's
contractors, licensees, agents, servants, or employees, or arising from any
accident, injury, or damage whatsoever caused to any person, or to the property
of any person occurring on the Premises where such accident, damage or injury
results or is claimed to have resulted from an act or omission on the part of
Landlord or its agents, employees, invitees, and tenants other than Tenant. This
indemnity and hold harmless agreement shall include indemnity against all costs,
expenses and liabilities incurred in or in connection with any such claim or
proceeding brought thereon, and the reasonable costs of defense thereof and
shall expressly survive the termination of this Lease.
ARTICLE 7
REPAIRS, MAINTENANCE AND ALTERATIONS
SECTION 7.1. CONDITION OF PREMISES. Tenant hereby acknowledges: (a)
that it has satisfied itself with respect to the condition of the Leased
Premises and the present and future
-14-
<PAGE>
suitability of the Leased Premises for Tenant's intended use; (b) that Tenant
has made such investigation as it deems necessary with reference to such matters
and is satisfied with reference thereto and assumes all responsibility therefore
as the same relate to Tenant's occupancy of the Leased Premises and/or the terms
of this Lease; (c) that neither Landlord, nor any of Landlord's agents, has made
any oral or written representations or warranties with respect to said matters
other than as set forth in this Lease and (d) that Tenant accepts the Leased
Premises in "as is" condition.
Except as hereinafter provided in Section 7.2 and Section 7.3, Tenant
agrees to be solely responsible for maintaining the Leased Premises, the Tenant
Parking Area, the Entrance Driveway, and the landscaped area of the Site located
around the Leased Premises and between the Leased Premises and University Avenue
and each and every part thereof, in good repair and condition and in full
compliance with applicable laws throughout the term of this Lease, reasonable
wear and use only excepted and agrees, without limitation, to: (i) maintain,
repair and replace the systems serving the Leased Premises including but not
limited to the HVAC, gas, electric water, sewer, security alarm system and
sprinkler system, telephone and all other utilities serving the Leased Premises,
and all pipes, conduits and the like, (ii) maintain the grounds, landscaping and
other natural features, (iii) maintain, repair, resurface and promptly remove
snow and ice from all utilized parking areas, driveways and walkways, (iv)
repair or replace any cracked or broken glass, and (v) maintain, repair and
replace the interior portions of the Leased Premises. All work performed by
Tenant shall be done in a good and workmanlike manner consistent with the
quality of the original construction and in compliance with all applicable laws,
ordinances and regulations relating thereto. Tenant further agrees that the
Leased Premises shall be kept and maintained throughout the term of this Lease
in compliance with all laws,
-15-
<PAGE>
ordinances, rules and regulations of any duly constituted governmental authority
having jurisdiction over the Premises. Tenant shall not permit or commit any
waste.
SECTION 7.2. LANDLORD'S OBLIGATIONS. Notwithstanding anything to the
contrary contained herein, Landlord shall (a) on or before July 1, 2000 fill
cracks in the paving of the Entrance Driveway and Existing Tenant Parking Area
as required, and (b) be responsible for maintaining and keeping in good repair
the roofs, foundations, exterior walls, and other structural components of the
Building.
SECTION 7.3. LANDLORD AND TENANT OBLIGATIONS AFTER FURTHER DEVELOPMENT
OF SITE.
A. In the event that Landlord constructs any additional
buildings on the Site for rental to tenants, from and after the earlier
of (i) the completion of construction of the first of such buildings or
(ii) the date on which the obligation of a tenant thereof to pay rent
commences, Landlord shall be responsible for maintaining and keeping in
good repair and condition the Tenant Parking Area, other parking areas
on the Site, including those reserved for the exclusive use of
particular tenants, the Entrance Driveway, all landscaped portions of
the Site, and all improvements on the Site and improved portions of the
Site not exclusively occupied by tenants, including, without
limitation, parking areas, driveways, walkways, drainage facilities,
and lighting. The expenses and costs of every kind and nature paid or
incurred by Landlord in performing such maintenance and repairs are
hereinafter called "Landlord's Maintenance Costs." In no event shall
development costs of Landlord constitute Landlord's Maintenance Costs.
B. After the expiration of each Operating Year (as that term
is hereinafter defined), Landlord shall furnish to Tenant a statement
setting forth Tenant's Pro-Rata Share (as that term is hereinafter
defined) of Landlord's Maintenance Costs. Tenant shall pay to Landlord,
as additional rent, Tenant's Pro-Rata Share of Landlord's Maintenance
-16-
<PAGE>
Costs for each Operating Year within thirty (30) days after receipt of
Landlord's statement.
Said additional rent shall, with respect to the
Operating Year during which the term of this Lease is to expire, be
apportioned such that Tenant shall pay that proportion of Landlord's
Maintenance Costs as shall be equal to the portion of the term of this
Lease falling within the Operating Year bears to the full Operating
Year.
C. For the purposes hereof, "Operating Year" shall main each
calendar year in which any part of the term of this Lease shall fall.
D. For the purposes hereof, "Tenant's Pro-Rata Share" shall
mean the fraction the numerator of which is One Hundred Forty-Seven
Thousand and the denominator of which is the total gross leaseable
floor area contained in buildings located on the Site as of the first
day of the Operating Year with respect to which the computation is to
be made.
E. Commencing with the Operating Year following the first
Operating Year with respect to which Tenant is required to pay
additional rent pursuant to this Section 7.3, Tenant shall pay to
Landlord, as additional rent, on the first day of each month an amount
reasonably estimated by Landlord from time to time to be sufficient to
cover, in the aggregate, Tenant's Pro-Rata Share of
-17-
<PAGE>
Landlord's Maintenance Costs for the Operating Year in question.
Landlord shall notify Tenant in writing of the estimated monthly
payment required to be made with respect to each Operating Year. If
Landlord's notice is delivered after the commencement of the Operating
Year in question, Tenant's first monthly payment shall include payment
of the estimated monthly payment retroactive to the first day of the
Operating Year in question. If the estimated monthly payments made by
Tenant during any Operating Year exceed Tenant's Pro-Rata Share of
Landlord's Maintenance Costs for the Operating Year as shown on the
statement delivered by Landlord pursuant to Paragraph B of this Section
7.3, Landlord shall credit the amount of such overpayment against
subsequent obligations of Tenant to pay additional rent (or refund such
overpayment if the term of this Lease has ended and Tenant has no
further obligations to Landlord). If the estimated monthly payments so
made by Tenant are less than Tenant's Pro-Rata Share of Landlord's
Maintenance Costs for the Operating Year as shown on said statement
delivered by Landlord, Tenant shall pay the additional amount payable
within thirty (30) days after delivery of Landlord's said statement.
F. Any statement furnished by Landlord to Tenant hereunder
shall be final and binding on Tenant unless Tenant disputes the
statement by giving written notice to Landlord within thirty (30) days
after receiving the same. Landlord shall, upon written request by
Tenant, make available to Tenant for its examination all books and
records of Landlord with respect to Landlord's Maintenance Costs. If
Tenant disputes any such statement and the parties are unable to
resolve said dispute within thirty (30) days after Tenant's notice
thereof, Landlord's statement shall become final and binding on Tenant
unless within such thirty (30) day period either party notifies the
other in writing of its election to have the dispute determined by
arbitration.
The party electing arbitration shall designate a certified
public accountant to serve as arbitrator. Within seven (7) days after
such designation, the other party shall designate a second certified
public accountant to serve as arbitrator. Within ten (10) days after
the designation of the second arbitrator, the two arbitrators so
designated shall jointly select a third certified public accountant to
serve as arbitrator. The three arbitrators so selected shall issue a
decision within thirty (30) days after the selection of
-18-
<PAGE>
the third arbitrator. The decision of a majority of the arbitrators
shall be conclusive and binding on Landlord and Tenant. Each party
shall pay one-half the costs and expenses of the arbitrators, unless
the arbitrators decide that Landlord's statement overstated the amount
of additional rent payable by Tenant by more than five percent (5%), in
which case Landlord shall pay all of the costs and expenses of the
arbitrators.
SECTION 7.4. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS. Except for
nonstructural alterations which do not affect the electrical or mechanical
systems of the Building, Tenant shall not make any alterations of, additions, or
improvements to the Leased Premises without first obtaining the express written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned, or delayed. Unless otherwise provided by the terms of Landlord's
consent to the making thereof, all alterations shall be part of the Leased
Premises and shall remain upon the Leased Premises upon termination of this
Lease or any portion thereof. No additional buildings or structures may be built
by Tenant on any portion of the Premises.
Upon any request for approval of alterations or additions, Tenant shall
submit to Landlord complete plans and specifications and such other information
as Landlord may reasonably require to evaluate Tenant's proposed changes;
provided, however, that if Tenant's proposed work is to be performed without the
preparation of plans and specifications, Tenant may submit a written description
of the proposed work adequate to allow Landlord to evaluate Tenant's request for
approval. Landlord agrees to approve or deny Tenant's request within twenty-one
(21) days from the date all required plans and other information are submitted
to Landlord. If Landlord fails to respond within said twenty-one (21) day
period, such failure shall be deemed to be approval of Tenant's request. If
Landlord denies Tenant's request, Landlord agrees to state its reasons for such
denial, to meet and confer with Tenant within five (5) days after its denial for
the purpose of attempting to resolve Landlord's objections which caused it to
-19-
<PAGE>
deny approval, and to grant Tenant the opportunity to resubmit revised plans and
specifications accordingly. In the event of such resubmission, Landlord shall
respond within seven (7) days after the resubmission, and its failure to do so
shall constitute approval.
Any and all improvements constructed on the Leased Premises shall at
all times comply, when constructed, with all laws of any governmental authority
having jurisdiction over the Leased Premises and any condition, restriction or
other matter of record title to which the Leased Premises are subject.
Any and all alterations, additions and/or improvements hereafter to be
erected on the Leased Premises by Tenant shall be constructed in a good and
workmanlike manner, and in compliance with all applicable building laws,
environmental requirements, and the like, and in accordance with zoning as
aforesaid and in full compliance with the terms and conditions of this Lease.
Tenant shall, at its own cost and expense, obtain all permits and
licenses which may be required for its occupancy and use of the Leased Premises
and for any alterations, additions or improvements. In the event that any
building permits or the like shall require joinder therein by Landlord, Landlord
agrees to execute such instruments as may be reasonably required for said
purpose; but any and all proceedings shall be solely at the cost and expense of
Tenant, without Landlord being required to respond thereto in any manner
whatsoever.
SECTION 7.5. TENANT TO KEEP PREMISES FREE OF LIENS. Subject to the
contest rights of Tenant set forth in Section 7.5 hereof, Tenant shall keep all
of the Leased Premises and every part thereof free and clear of and from any and
all mechanic's, materialmen's and other liens for work or labor done, services
performed, materials, appliances, transportation or power contributed, used or
furnished to be used in or about the Leased Premises for or in connection with
any operations of Tenant, any alterations, improvements, repairs or additions,
which Tenant
-20-
<PAGE>
may make or permit or cause to be made, or any work or construction by, for or
permitted by Tenant on or about the Leased Premises, and at all times Tenant
shall promptly and fully pay and discharge any and all claims upon which any
such lien may or could be based; and Tenant shall save and hold Landlord and all
of the Premises free and harmless of and from any and all such liens and claims
of liens and suits or other proceedings pertaining thereto. In lieu of paying
any claims in accordance with the foregoing, Tenant may provide to Landlord a
bond satisfactory to Landlord covering all such claims.
SECTION 7.6. CONTEST. Tenant shall have the right to contest any
mechanic's lien or other lien claim filed against the Premises, provided that
Tenant shall diligently prosecute any such contest, such contest shall at all
times effectually stay or prevent any official or judicial sale of the Premises
or Leased Premises under execution or otherwise, and Tenant shall pay or
otherwise satisfy any final judgment adjudging or enforcing such contested lien
and thereafter procure record satisfaction or release thereon.
SECTION 7.7. TENANT'S PROPERTY.
A. All Tenant's machinery, equipment, computer and other
equipment, including computer and telephone equipment and all cables
and wires, furniture, removable partitions, and all other property of
Tenant installed or located in the Leased Premises from time to time
("Tenant's Property") shall be and remain the property of Tenant. Upon
the termination or any partial termination of this Lease, Tenant shall
remove all Tenant's Property from the Leased Premises or the portion of
the
-21-
<PAGE>
Leased Premises so affected, at Tenant's sole cost and expense, except
alterations and additions made by Tenant to the extent they are
required to remain in the Leased Premises under the terms of Article 7
hereof. If within ten (10) days after the termination of this Lease
Tenant has not removed all Tenant's Property from the Leased Premises
or portion of the Leased Premises, and Landlord desires to dispose of
such remaining Tenant's Property, Landlord may notify Tenant that the
remaining Tenant's Property must be removed whereupon Tenant shall
remove the same forthwith, failing which Landlord may do so at Tenant's
expense.
B. Tenant's Property and all furnishings, fixtures, equipment,
affects and property of those claiming by, through or under Tenant
located in the Leased Premises shall be at the sole risk and hazard of
Tenant, and if the whole or any part hereof shall be damaged or
destroyed by fire, flood, the leakage or bursting of pipes, or by theft
or by any other cause, no part of such damage shall be borne by
Landlord unless the same is caused by the gross negligence or willful
misconduct of Landlord.
SECTION 7.8. EXTERIOR SIGNS. Tenant shall have the exclusive right to
erect, maintain, repair and replace a sign on the Building following the
Commencement Date, provided the same shall comply with applicable zoning codes
and sign ordinances. Tenant shall also have the right, subject to applicable
zoning codes and sign ordinances, to erect an identifying sign at the entrance
to the Site from University Avenue on a pylon or similar structure furnished by
the Landlord for use by all tenants of the Premises. The size, design, and
illumination of said sign shall be subject to the prior approval of Landlord,
which shall not be unreasonably withheld, conditioned, or delayed. Upon the
termination of this Lease, Tenant shall remove any sign it has placed on the
Building or elsewhere on the Premises and repair any damage caused as a result
of such removal all at Tenant's sole cost and expense. Tenant's obligation as
herein stated shall survive the termination of the Lease.
-22-
<PAGE>
ARTICLE 8
HAZARDOUS MATERIALS
SECTION 8.1. USE OF HAZARDOUS MATERIALS. Tenant shall not cause or
permit any Hazardous Materials (as hereinafter defined) to be used, generated,
stored, or disposed of on, under or about the Premises, or to be transported to,
from, or across the Premises. Notwithstanding the foregoing, Tenant may use and
allow in the Leased Premises the Hazardous Materials which are necessary for the
conduct of Tenant's business, provided that the use, storage, and disposal
thereof by Tenant is at all times in compliance with all applicable laws, rules,
regulations, permits, requirements, and restrictions, of all governmental
authorities now or hereafter in effect.
SECTION 8.2. RELEASE OF HAZARDOUS MATERIALS. In the event Tenant, its
employees, agents, contractors, or invitees cause the release of Hazardous
Materials on or from the Premises, Tenant shall promptly notify Landlord and
take such action, at Tenant's sole expense, as may be necessary to assess,
remediate, or remove such Hazardous Materials as and to the extent required by
all applicable laws, rules, regulations, and requirements of governmental
authorities.
SECTION 8.3. INDEMNIFICATION BY TENANT. Tenant shall indemnify, defend,
and hold harmless Landlord, its agents, employees, and lenders, and the Leased
Premises, from and against any and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of any release by Tenant, its employees, agents,
contractors, or invitees of Hazardous Materials on or from the Premises on or
after the Commencement Date or the use, generation, storage, or disposal of
Hazardous Materials by Tenant in violation of the provisions hereof. Tenant's
obligations under this Article 8 shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Tenant, and the cost of investigation (including
-23-
<PAGE>
consultants' and attorneys' fees and testing), removal, remediation, restoration
and/or abatement thereof, or of any contamination therein involved, and shall
survive the expiration or earlier termination of this Lease; provided, however,
that Tenant shall not be required to pay consequential damages. No termination,
cancellation or release agreement entered into by Landlord and Tenant shall
release Tenant from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Landlord in writing at the time of
such agreement.
SECTION 8.4. LANDLORD'S OBLIGATIONS. Landlord warrants and represents
to Tenant that, to the best of Landlord's knowledge, no Hazardous Materials have
been released on or from the Premises prior to the Commencement Date, except for
releases assessed, remediated, and removed as and to the extent required by
applicable laws, rules, regulations, and requirements of governmental
authorities.
SECTION 8.5. INDEMNIFICATION. Landlord shall indemnify, defend, and
hold harmless Tenant from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of any release of Hazardous
Materials on or from the Premises or the use, generation, storage, or disposal
of Hazardous Materials on the Premises by any party other than Tenant, its
agents, employees, contractors, and invitees. Landlord's obligations under this
Article 8 shall include, but not be limited to, the effects of any contamination
or injury to person, property or the environment created or suffered by
Landlord, and the cost of investigation (including consultants' and attorneys'
fees and testing), removal, remediation, restoration and/or abatement thereof,
or of any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease; provided, however, that Landlord shall not be
required to pay consequential damages. No termination, cancellation or release
agreement entered into by Landlord and Tenant shall release
-24-
<PAGE>
Landlord from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Tenant in writing at the time of
such agreement.
SECTION 8.6. DEFINITION OF HAZARDOUS MATERIALS. For the purposes
hereof, the term "Hazardous Materials" shall mean all substances and materials
constituting "hazardous substances," "hazardous materials," or "toxic
substances" or otherwise regulated now or hereafter under any local, state, or
federal law, rule, or regulation governing health, safety, natural resources, or
the environment.
ARTICLE 9
UTILITIES
SECTION 9.1. UTILITIES. Tenant shall provide and pay for all of its
requirements for utilities, including, but not limited to, gas, steam, water,
electricity, telephone and sewer. Electricity is currently supplied to the
Leased Premises by the Town of Norwood. Tenant shall have the right to contract
with other suppliers of electricity, subject to the prior consent of Landlord,
which consent shall not be unreasonably withheld, qualified, or delayed. Any
costs or liabilities incurred or required to be incurred as a result of a change
in the supplier of electricity shall be borne by Tenant, and Tenant shall
indemnify and hold harmless Landlord from and against any and all such costs and
liabilities.
ARTICLE 10
ASSIGNMENT AND SUBLETTING
SECTION 10.1. LANDLORD'S APPROVAL REQUIRED. Tenant shall not assign,
sublet, transfer, or encumber all or any part of this Lease or the Leased
Premises or allow the Leased Premises to be occupied by another party without
Landlord's prior written consent, which consent Landlord shall not unreasonably
withhold or condition. Landlord shall not withhold its consent to a proposed
assignment or subletting if the proposed assignee's or sublessee's financial
standing and responsibility at the time of the proposed assignment or subleasing
is sufficient to give
-25-
<PAGE>
Landlord reasonable assurance of the payment of all rent and other charges
payable under this Lease, and of compliance with all other terms, covenants,
conditions, and provisions of this Lease. Any request for approval of a proposed
assignment or subletting shall be in writing and shall set forth in detail
satisfactory to landlord the identity of the proposed assignee or sublessee, its
financial condition, and the terms on which the proposed assignment or
subletting is to be made, including, without limitation, the rent and any other
consideration to be paid by the proposed assignee or sublessee. Any assignment
of this Lease or subletting of the whole or any part of the Leased Premises
without Landlord's express prior written consent shall be void and of no force
and effect. For the purposes hereof, a merger or reorganization of Tenant shall
be deemed to be an assignment of this Lease, but the sale or transfer of all or
any part of the stock of Tenant shall not be deemed an assignment of this Lease.
SECTION 10.2. ADDITIONAL RENT. Without limitation of the rights of
Landlord hereunder, if there is a permitted subletting of the whole of the
Leased Premises by Tenant at a rent or other consideration which exceeds the
rent payable by Tenant under this Lease, or if there is a permitted subletting
of a portion of the Leased Premises by Tenant at a rent in excess of the
subleased portion's pro rata share of the rent payable by Tenant under this
Lease, then Tenant shall pay to Landlord, as additional rent, forthwith upon
Tenant's receipt of the excess rent or consideration, fifty percent (50%) of the
excess rent or consideration received after recovery by Tenant of its costs
incurred in connection with such subletting, including, without limitation,
brokerage costs, attorney's fees, and the cost of tenant improvements made by
Tenant or at its expense.
SECTION 10.3. RECAPTURE. In the event that Tenant proposes to assign
this Lease or sublet more than fifty percent (50%) of the area of the Leased
Premises, Landlord shall have the option to terminate this Lease as of the
effective date of the proposed assignment or subletting and
-26-
<PAGE>
relieve Tenant of all of its future obligations hereunder. Landlord may exercise
its right to terminate hereunder by giving written notice to Tenant within
thirty (30) days after Tenant's request for approval of the proposed assignment
or subletting. In the event that Landlord elects to terminate this Lease in the
aforesaid circumstances, Landlord shall be free to enter into a new lease with
the proposed assignee or sublessee on whatever terms and conditions it
determines.
SECTION 10.4. CONTINUED LIABILITY. In any case where Landlord shall
consent to an assignment of this Lease or a subletting of the Leased Premises,
the Tenant named herein shall remain fully liable for the performance of the
obligations of Tenant under this Lease.
ARTICLE 11
CASUALTY DAMAGE
SECTION 11.1. DEFINITIONS.
(a) "Partial Damage" shall mean damage which can reasonably be expected
to be substantially repaired in less than six (6) months after the repair work
is commenced.
(b) "Substantial Damage" shall mean damage to the Leased Premises which
cannot be reasonably expected to be substantially repaired in less than six (6)
months after the repair work is commenced.
SECTION 11.2. PARTIAL DAMAGE. If during the term of this Lease the
Leased Premises shall be damaged by fire or other casualty and such damage shall
fall into the classification of Partial Damage, this Lease shall continue in
full force and effect and Landlord shall promptly proceed to repair said damage
and restore the Leased Premises, including alterations and improvements made by
Tenant with the approval of Landlord, but not Tenant's fixtures and equipment,
to substantially their condition at the time of such damage. Landlord shall not
be responsible for any delay in the completion of such repair and restoration
which may result from any cause beyond Landlord's reasonable control.
-27-
<PAGE>
SECTION 11.3. SUBSTANTIAL DAMAGE. If during the term of this Lease the
Leased Premises shall be damaged by fire or other casualty and such damage falls
into the classification of Substantial Damage, this Lease shall, except as
hereinafter provided, continue in full force and effect and Landlord shall
promptly proceed to repair such damage and restore the Leased Premises,
including alterations and improvements made by Tenant with the approval of
Landlord, but not Tenant's fixtures and equipment. Landlord shall not be
responsible for any delay in the completion of such repair and restoration which
may result from any cause beyond Landlord's reasonable control. Notwithstanding
the foregoing, if such damage is caused by a risk which is not covered by the
insurance required to be maintained by Landlord pursuant to Section 6.2 of this
Lease, Landlord may terminate this Lease by giving written notice of termination
to Tenant and shall thereafter have no obligation to repair or restore the
Leased Premises. Any such notice of termination shall be given within sixty (60)
days after the occurrence of the damage.
SECTION 11.4. DAMAGE NEAR END OF TERM. If at the time of damage to the
Leased Premises by fire or other casualty the date on which the term is
scheduled to expire is less than twelve (12) months in the future and Tenant
shall not have exercised any option to extend the term pursuant to this Lease,
either party shall have the right to terminate this Lease by giving written
notice of termination to the other party within thirty (30) days after the
occurrence of the damage. If said right of termination is exercised by either
party, this Lease shall terminate as of the date of the occurrence of such
damage, and Landlord shall have no obligation to repair or restore the Leased
Premises.
SECTION 11.5. TENANT'S RIGHT TO TERMINATE. In the event that Landlord
fails to repair any damage to the Leased Premises which it is required to repair
hereunder within twelve (12) months after the occurrence of such damage, Tenant
shall have the right to terminate this Lease
-28-
<PAGE>
by giving written notice of termination to Landlord within fifteen (15) days
after the expiration of said twelve (12) month period. If Tenant exercises its
right to terminate, this Lease shall terminate as of the date on which Tenant's
notice of termination is given, and Landlord shall have no further obligation to
repair or restore the Leased Premises.
SECTION 11.6. ABATEMENT OF RENT. In the event that the Leased Premises
are damaged as hereinbefore provided, the Base Rent shall be abated or reduced
proportionately during any period in which, by reason of such damage, there is
any interference with the operation of the business of Tenant in the Leased
Premises, having regard to the extent to which Tenant may be required to
discontinue its business in the Leased Premises. Such abatement or reduction
shall continue for the period commencing with the occurrence of such damage and
ending when Landlord completes the repairs and restoration to be performed by it
pursuant to this Article 11.
ARTICLE 12
EMINENT DOMAIN AND PUBLIC DEDICATION
SECTION 12.1. TERMINATION. If at any time during the Term more than
fifty percent (50%) of the total floor area of the Leased Premises shall be
condemned or taken for public or quasi public use and the same would materially
affect Tenant's ability to conduct normal business operations in the Leased
Premises, this Lease shall automatically terminate as of the earlier of the date
of the vesting of title or the date of dispossession of Tenant as a result of
such condemnation or taking.
SECTION 12.2. PARTIAL TAKING. In the event of a partial condemnation or
taking that does not result in a termination of this Lease in accordance with
the provisions of Section 12.1 above, the Base Rent shall abate in proportion to
the portion of the Leased Premises affected by such condemnation or taking.
-29-
<PAGE>
SECTION 12.3. TEMPORARY TAKING. If at any time during the Term a
substantial portion of the Leased Premises are condemned or taken for a public
or quasi-public use for a limited period of taking time, this Lease shall remain
in full force and effect, provided, however, that Base Rent shall abate during
such limited period in proportion to the portion of the Leased Premises that is
rendered untenantable or unusable as a result of such condemnation or taking,
and provided further that if the period of such condemnation or taking shall be
for greater than ninety (90) days, Tenant may by thirty (30) days advance notice
to Landlord elect to terminate this Lease.
SECTION 12.4. AWARD. Landlord shall be entitled to the entire award
resulting from any such condemnation or taking, including, without limitation,
any portion of the award attributable to the value of the leasehold estate
created by this Lease; provided, however, that Tenant shall be entitled to any
portion of any award attributable to Tenant's personal property or fixtures, or
specifically attributable to its relocation expenses or the interruption or
damage to its business.
ARTICLE 13
DEFAULTS; REMEDIES
SECTION 13.1. DEFAULTS BY TENANT. The occurrence of any one or more of
the following events shall constitute a material default and breach of this
Lease by Tenant ("Event of Default"):
A. The failure by Tenant to make any Base Rent payment,
additional rent payment, or any other payment required to be made by
Tenant, as and when due, where such failure shall continue for a period
of five (5) days after written notice of the failure from Landlord to
Tenant.
B. The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by Tenant, other than described in Subparagraph A where such
failure shall continue for a period of fifteen (15)
-30-
<PAGE>
days after written notice from Landlord to Tenant; provided, however,
that if the default is capable of being cured, but is not capable of
being cured within said fifteen (15) day period, Tenant shall not be
deemed to be in default if such cure is commenced within said fifteen
(15) day period and Tenant diligently pursues the cure to completion.
C. The making by Tenant of any general assignment for the
benefit of creditors; the filing by or against Tenant of a petition to
have Tenant adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case
of the petition filed against Tenant, the same is dismissed within
sixty (60) days); the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the
Leased Premises or of Tenant's interest in this Lease, where such
appointment is not discharged within sixty (60) days.
D. Execution by Tenant of an instrument purporting to assign
Tenant's interest under this Lease or to sublet the whole or any
portion of the Leased Premises to a third party except as permitted
under Article 10 of this Lease.
SECTION 13.2. REMEDIES OF LANDLORD.
A. Should any Event of Default occur then, notwithstanding any
license of any former breach of covenant or waiver of the benefit
hereof or consent in a former instance, Landlord lawfully may, in
addition to any remedies otherwise available to Landlord, immediately
or at any time thereafter and without demand or notice, in accordance
with applicable laws, enter into and upon the Leased Premises or any
part thereof in the name of the whole and repossess the same as of
Landlord's former estate, and expel Tenant and those claiming by,
through or under it and remove its or their effects (forcibly if
necessary) without being deemed guilty of any manner of trespass, and
without prejudice to any remedies which might otherwise be used for
arrears of rent or
-31-
<PAGE>
preceding breach of covenant and/or Landlord may send notice to Tenant
terminating the Term of this Lease; and upon the first to occur of: (i)
entry as aforesaid; or (ii) the fifth (5th) day following the mailing
of such notice of termination, the term of this Lease shall terminate,
but Tenant shall remain liable for all damages as provided for herein.
Tenant covenants and agrees, notwithstanding any
termination of this Lease as aforesaid or any entry or re-entry by
Landlord, whether by summary proceedings, termination, or otherwise, to
pay and be liable for on the days originally fixed herein for the
payment thereof, amounts equal to the several installments of Base
Rent, additional rent, and other charges reserved as they would become
due under the terms of this Lease if this Lease had not been terminated
or if Landlord had not entered or re-entered, as aforesaid, and whether
the Leased Premises be re-let or remain vacant, in whole or in part, or
for a period less than the remainder of the term or for the whole
thereof; but in the event the Leased Premises be re-let by Landlord,
Tenant shall be entitled to a credit in the net amount of rent received
by Landlord in re-letting, after deduction of all expenses incurred in
re-letting the Leased Premises (including, without limitation,
remodeling costs, brokerage fees, attorneys' fees, and the like), and
in collecting the rent in connection therewith. It is specifically
understood and agreed that Landlord shall be entitled to take into
account in connection with any re-letting of the Leased Premises all
relevant factors which would be taken into account by a sophisticated
developer in securing a replacement tenant for the Leased Premises. As
an alternative, at the election of Landlord, Tenant will upon such
termination pay to Landlord, as damages, such a sum as at the time of
such termination represents the amount of the excess, if any of the
then value of the total rent and other benefits which would have
accrued to Landlord under this Lease for the remainder of the term if
the
-32-
<PAGE>
Lease terms had been fully complied with by Tenant over and above the
then cash rental value (in advance) of the Leased Premises for the
balance of the Term.
B. If Tenant defaults in the payment of any amount payable by
it under this Lease or in the performance of any of its other
obligations under this Lease and such default continues beyond any
applicable grace period, Landlord may pay or perform Tenant's
obligations in the manner and to the extent Landlord determines. Upon
demand by Landlord, Tenant shall pay to Landlord, as additional rent,
all sums paid by Landlord and all costs and expenses incurred by
Landlord hereunder, together with interest thereon at a rate equal to
the prime rate of interest announced from time to time by Fleet Bank
plus five percent (5%), but not exceeding the maximum rate allowable by
law (the "Default Rate"), from the date the sum is paid or the cost or
expense is incurred by Landlord until Landlord is reimbursed by Tenant.
No action taken by Landlord hereunder to cure Tenant's default shall be
deemed to waive Tenant's default or affect the right of Landlord to
pursue any other remedy it may have on account of the occurrence of an
Event of Default.
C. Landlord shall have the right to pursue any other remedy
now or hereafter available to Landlord under the laws or judicial
decisions of The Commonwealth of Massachusetts.
SECTION 13.3. INTEREST ON LATE PAYMENT. Tenant hereby agrees to pay to
Landlord interest on all delinquent amounts of Base Rent and additional rental
at the Default Rate on the delinquent amount from the date that such delinquent
amount was due until the date it is paid.
SECTION 13.4. FAILURE OF TENANT TO PAY CLAIMS. Should Tenant fail to
pay or discharge or cause to be paid and discharged, at the time or times called
for in this Lease, any claim, or charge required to be paid by Tenant under this
Lease, or any claim for damages arising out of the
-33-
<PAGE>
repair, maintenance or use of the Leased Premises, or to satisfy any final
judgment rendered on any contested lien or claim, then Landlord may, at its
option, but only after ten (10) days written notice to Tenant, pay such claim,
charge, or settle or discharge any action, or satisfy any judgment. All costs,
expenses, penalties and other sums incurred or paid by Landlord in connection
therewith shall be paid to Landlord by Tenant upon demand, together with
interest thereon at the Default Rate from the date incurred or paid by Landlord
until repaid by Tenant. Any default in such repayment shall constitute a
Tenant's Default. If Tenant desires in good faith to contest any such lien or
claim, and it so notifies Landlord of its intention to do so and, if such lien
or claim will result in an encumbrance on Landlord's interest in or title to the
Premises, furnishes to Landlord a surety bond in an amount equal to one and
one-half the amount of such contested lien or claim indemnifying Landlord
against liability for same within ten (10) days after such lien comes into
existence or such claim is first made, as the case may be, Tenant shall not be
in default and Landlord shall not satisfy such lien or claim until five (5) days
after the determination of the validity thereof.
SECTION 13.5. WAIVERS AND ACCORD AND SATISFACTION. If Landlord fails to
take advantage of any of the terms providing for the termination of this Lease,
or if Landlord, having the right to declare this Lease terminated, shall fail so
to do, any such failure of Landlord shall not be construed to be a waiver of any
provision for the termination of this Lease, or as a waiver of any of the
covenants, terms or conditions of this Lease or of the prompt performance
thereof by Tenant.
None of the covenants, terms or conditions of this Lease can be waived
except by the written consent of the party entitled to the benefits thereof.
No waiver by either party of any provision shall be deemed a waiver of
any other provision or of any subsequent breach by the other party of the same
or any other provision.
-34-
<PAGE>
Consent to or approval of any act by either party shall not render unnecessary
the obtaining of subsequent consent to or approval of any subsequent act. The
acceptance of rent by Landlord shall not be a waiver of any preceding breach by
Tenant of any provisions hereof, other than the failure of Tenant to pay the
particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No payment by Tenant or
receipt by Landlord of a lesser amount than any rent payment specified herein
shall be deemed to be other than on account of rent, nor shall any endorsement
or statement on any check or any letter accompanying any check or statement as
rent be deemed an accord and satisfaction. Landlord's right to recover the
balance of rent or pursue any other remedy provided for in this Lease.
SECTION 13.6. DEFAULT BY LANDLORD. Landlord shall be in default of this
Lease if it fails or refuses to perform any provision of this Lease it is
obligated to perform, if such failure or refusal is not cured within thirty (30)
day after written notice thereof is given by Tenant to Landlord ("Landlord's
Default"); provided, however, that if the default cannot reasonably be cured
within thirty (30) days, Landlord shall not be in default of this Lease if
Landlord commences to cure the default within the thirty (30) day period and
diligently continues to cure the default to completion.
If Landlord fails to perform any of its obligations under this Lease
and such failure is not cured after notice to Landlord and the expiration of the
applicable grace period, Tenant may perform Landlord's obligations and Landlord
shall upon demand by Tenant reimburse Tenant for all sums paid and costs and
expenses incurred by Tenant in performing Landlord's obligations. Landlord shall
also pay Tenant interest on said sums paid by Tenant at the Default Rate from
the date the sum is paid by Tenant until Tenant is reimbursed. In no event shall
the Tenant have the right to setoff the amounts payable by Landlord hereunder
against or deduct the same from the Base Rent, additional rent, or other sums
payable by Tenant under this Lease.
-35-
<PAGE>
ARTICLE 14
MISCELLANEOUS PROVISIONS
SECTION 14.1. ADDITIONAL RENT. Without limiting any other provision of
this Lease, it is expressly understood and agreed that all amounts and charges
which Tenant is required to pay under this Lease shall be deemed to be
additional rent, and in the event of nonpayment thereof by Tenant, Landlord
shall have all of the rights and remedies with respect thereto as would accrue
to Landlord for nonpayment of Base Rent.
SECTION 14.2. PROVISIONS BINDING. The term "Landlord" wherever used in
this Lease shall be deemed to mean the corporation, person or other legal entity
holding the rights of Landlord under this Lease at the time in question.
Except as set forth above, all of the covenants, agreements,
stipulations, provisions, conditions, options and obligations herein expressed
and set forth shall be considered as running with the land and shall (unless
herein otherwise specifically provided) extend to, bind and inure to the benefit
of, as the case may require, the successors and assigns of the Landlord and the
Tenant, respectively, as fully as if such words were written whenever reference
to the Landlord and the Tenant occur in this Lease. The reference contained to
successors and assigns of Tenant is not intended to constitute a consent to an
assignment by Tenant, but has reference only to those instances specifically
permitted by the provisions of Article 10 hereof or to those instances in which
Landlord may later give written consent to a particular assignment as required
by the provisions of said Article 10.
SECTION 14.3. NOTICES. Any and all notices, requests, designations,
demands and the like, required or permitted to be given or served by the terms
and provisions of this Lease, either by Landlord to Tenant, or by Tenant to
Landlord, shall be in writing, and shall be sent by recognized overnight carrier
or registered or certified mail, return receipt requested, addressed to
-36-
<PAGE>
the party intended to be notified at the addresses set forth on the first page
of this Lease or to such other address as may be designated by the party
entitled to receive notice by notice given in accordance with the provisions
hereof. Notices shall be deemed to be effective upon delivery or tender of
delivery.
SECTION 14.4. INVALIDITY OF PARTICULAR PROVISIONS. If any term or
provision of this Lease or the application thereof to any person or circumstance
shall to any extent be invalid or unenforceable, the remainder of this Lease, or
the application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Lease shall be valid and shall be
enforceable to the fullest extent permitted by law.
SECTION 14.5. RECORDING. Each party hereto, on the request of the
other, agrees to execute a so-called Notice of Lease in recordable form
complying with applicable law and reasonably satisfactory to Landlord's and
Tenant's attorneys. In no event shall such document set forth the rent or other
charges payable by Tenant hereunder; and any such document shall expressly state
that it is executed and recorded pursuant to the provisions of this Lease and is
not intended to vary the terms and conditions of this Lease.
SECTION 14.6. SUBORDINATION TO MORTGAGES. Tenant agrees that upon the
request of the Landlord it will subordinate this Lease to the lien of any
mortgage or deed of trust affecting the Premises, provided that the mortgagee or
beneficiary named in such mortgages or deeds of trust agree in writing to
recognize the interest and rights of Tenant under this Lease, agree that so long
as Tenant shall perform its obligations under this Lease the rights of Tenant
hereunder shall remain in full force and effect, and agree that they will not
disturb Tenant's occupancy of the Leased Premises under this Lease in the event
of foreclosure or other action taken under the mortgage or deed of trust if
Tenant is not then in default beyond any applicable grace or cure
-37-
<PAGE>
period. Tenant shall execute and deliver to Landlord's all instruments Landlord
reasonably deems necessary to evidence and give effect to any such subordination
within fifteen (15) days of notice of the same from Landlord to Tenant, provided
that no such instrument shall alter any of the terms, covenants or conditions of
this Lease.
SECTION 14.7. PROTECTION OF MORTGAGEE. If in connection with any
mortgage or deed of trust by Landlord of the Premises there shall be executed an
assignment by Landlord of Landlord's interest in this Lease, or the rents
payable hereunder, conditional in nature or otherwise, Tenant agrees:
(a) that the execution thereof by Landlord and the acceptance
thereof by the mortgagee or assignee (herein referred to as the
"Holder"), shall never be deemed an assumption by the Holder of any of
the obligations of the Landlord hereunder, unless the Holder shall, by
written notice sent to Tenant, specifically otherwise elect;
(b) that except as aforesaid, the Holder shall be treated as
having assumed Landlord's obligations hereunder only upon foreclosure
of the Holder's mortgage or assignment and the taking possession of the
demised premises or such portion thereof as may be covered thereby;
(c) that Tenant shall execute such instruments as may be
reasonably required to assure the Holder that without written consent
of the Holder: (i) no rent shall be prepaid hereunder other than for
the current and next ensuing month or as expressly set forth in this
Lease; and (ii) no modification shall be made in the provisions of this
Lease; and
(d) that Tenant shall provide to the Holder copies of all
notices alleging Landlord defaults hereunder, and shall allow the
Holder to cure any such defaults within
-38-
<PAGE>
any cure or grace period provided by this Lease prior to exercising any
rights or remedies available to Tenant.
SECTION 14.8. WAIVER. No failure by Landlord or Tenant to insist upon
the strict performance of any provision, condition or agreement contained in
this Lease to be performed by the other shall ever be deemed to be a waiver of
such provision as to any subsequent event constituting nonperformance or
observance by such party.
SECTION 14.9. EXCULPATION. Tenant shall neither assert nor seek to
enforce any claim for breach of this Lease against any of Landlord's assets
other than Landlord's interest in the Leased Premises and in the rents, issues,
profits, and proceeds thereof, and Tenant agrees to look solely to such interest
for the satisfaction of any liability of Landlord under this Lease, it being
specifically agreed that in no event shall Landlord (which term shall include,
without limitation any of the officers trustees, directors, partners,
beneficiaries, joint venturers, members, stockholders or other principals or
representatives, disclosed of undisclosed, of Landlord or any managing agent)
ever be personally liable for any such liability.
SECTION 14.10. SECURITY. Tenant shall deposit with Landlord upon
execution of this Lease an irrevocable standby letter of credit in a form, on
terms, and issued by a bank acceptable to Landlord and in an amount equal to One
Million Three Hundred Ninety-Six Thousand Five Hundred Dollars ($1,396,500.00).
Landlord agrees that upon refinancing of the Site, Landlord shall request the
refinancing lender to accept a surety bond as security for the Tenant's
obligations under this Lease in substitution for the letter of credit. Such
surety bond shall be in an amount equal to One Million Three Hundred Ninety-Six
Thousand Five Hundred Dollars ($1,396,500.00), shall be in a form satisfactory
to Landlord and such refinancing lender, and shall be issued by a bonding
company acceptable to Landlord and such refinancing lender. In the event that
the refinancing lender agrees to such substitution, Tenant shall provide such
surety
-39-
<PAGE>
bond to Landlord in replacement of the letter of credit, and Landlord shall
return the letter of credit to Tenant. In the event that the refinancing lender
does not approve such substitution, the letter of credit will remain security
for the Tenant's obligations under this Lease, subject to and in accordance with
the provisions of this Section 14.10.
Provided that there is not a substitution of a surety bond for Tenant's
letter of credit in accordance with the foregoing provisions, Tenant's letter of
credit shall remain in effect until March 25, 2010 (the "LC Expiration Date").
In the event that any letter of credit provided by Tenant hereunder has an
expiration date earlier than the LC Expiration Date or if the issuer of any
letter of credit provided by Tenant hereunder which is by its terms renewable
fails to renew the letter of credit takes any action to prevent the renewal of
the letter of credit with the result that the letter of credit will expire
before the LC Expiration Date, Tenant shall deliver a substitute letter of
credit to Landlord not later than thirty (30) days prior to the expiration date
of the expiring letter of credit. Any substitute letter of credit shall be in a
form, on terms, and issued by a bank acceptable to Landlord; shall be in the
amount required by the terms of this Section 14.10; and shall in all respects be
subject to the provisions of this Section 14.10. If Tenant fails to deliver a
substitute letter of credit as hereinbefore provided, Landlord shall have the
right to draw against the expiring letter of credit to the extent of the full
amount available thereunder. Landlord shall hold the amount received as a result
thereof as a security deposit to secure the prompt and full performance by
Tenant of its obligations under this Lease.
Tenant shall have the right to reduce the amount of said letter of
credit, surety bond or security deposit, as the case may be (the "Security"), by
twenty percent (20%) of its original amount annually commencing on the sixth
(6th) anniversary of the Commencement Date. Tenant may also, not more frequently
than annually, submit to Landlord a request that Landlord agree to allow a
reduction of the Security prior to the sixth anniversary of the Commencement
Date. Any
-40-
<PAGE>
such request by Tenant shall be accompanied by a copy of Tenant's most recent
financial statement prepared by its independent accountants and dated not more
than thirty (30) days prior to the making of such request. If Landlord is
willing to grant Tenant's request, it shall seek the approval of the holder of
any mortgage on the Premises and, if such mortgage holder also approves Tenant's
request, Tenant shall have the right to reduce the Security by the amount
requested or such other amount as is acceptable to Landlord and its mortgagee.
In the event that Tenant defaults in the performance of any of its obligations
under this Lease, Landlord may forthwith draw or proceed against or apply the
Security to the extent of the amount recoverable by Landlord as a result of
Tenant's default and apply the amounts received to the payment of any Base Rent
or additional rent not paid when due or to the satisfaction of the obligations
of Tenant resulting from Tenant's default.
SECTION 14.11. BROKERAGE. Each party warrants and represents to the
other that it has dealt with no broker in connection with the negotiation and
execution of this Lease other than The Tarkinow Group and Trammell Crow Company,
to whom Landlord shall pay a commission. Each party hereby agrees to indemnify
and hold the other party harmless from any loss, cost, or damage sustained as a
result of the inaccuracy of the foregoing warranty and representation.
SECTION 14.12. QUIET ENJOYMENT. Landlord covenants that upon paying the
Base Rent and additional rent and observing and keeping all covenants,
agreements and conditions applicable to it under this Lease, Tenant shall
peaceably and quietly have, hold and enjoy the Leased Premises, without
hindrance or molestation from Landlord or anyone claiming by, through or under
Landlord.
SECTION 14.13. YIELD UP. Tenant covenants to peacefully yield up and
surrender the Leased Premises upon the termination of this Lease in as good
condition and repair as they were at the Commencement Date or may have been put
by Landlord during the term, reasonable wear
-41-
<PAGE>
and tear excepted, and to remove all Tenant's Property therefrom and all
alterations and additions required to be removed under the provisions hereof.
SECTION 14.14. HOLDING OVER. Any holding over by Tenant after the
expiration of the term shall be treated as a tenancy at sufferance at one
hundred fifty percent (150%) of the Base Rent plus the Additional Rent herein
provided to be paid during the last twelve (12) months of the term (prorated on
a daily basis) and shall otherwise be on the terms and conditions set forth in
this Lease, as far as applicable. Landlord shall not be entitled to collect
consequential damages as a result of Tenant's holding over.
SECTION 14.15. LANDLORD'S ENTRY. Tenant covenants to permit the
Landlord or its agents to enter the Leased Premises upon reasonable advance
notice or at any time in the event of an emergency, for the purpose of
inspections and exercising any rights in carrying out any obligations Landlord
may have under this Lease, correcting or repairing damage to the Leased
Premises, and to show the Leased Premises to prospective tenants during the
twelve (12) months prior to the expiration of the term and during other periods
of time as Tenant and Landlord may agree.
SECTION 14.16. ESTOPPEL CERTIFICATE.
A. Tenant shall, upon not less than fifteen (15) days prior
written notice from Landlord to Tenant, execute and deliver to Landlord
a statement in writing in recordable form (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification and certifying that this Lease,
as so modified, is in full force and effect) and the date to which the
rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not to Tenant's knowledge, any uncured
defaults, or, if there are, those which are claimed. Any such statement
may be conclusively relied upon by any prospective purchaser or
mortgagee of the Leased
-42-
<PAGE>
Premises. Tenant's failure to deliver such statement within such time
shall be considered an Event of Default.
B. Landlord shall, upon not less than thirty (30) days prior
written notice from Tenant, execute and deliver to Tenant a statement
in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified is in full
force and effect) and the date to which the rent and other charges are
paid in advance, if any, and (ii) acknowledging that there are not to
Landlord's knowledge, any uncured defaults on the part of the Tenant
hereunder, or specifying such defaults, if any are claimed. Any such
statement may be conclusively relied upon by any party to whom it is
delivered by Tenant. Landlord's failure to deliver such statement
within such time shall be considered a default by Landlord.
SECTION 14.17. Intentionally omitted.
SECTION 14.18. ATTORNMENT. Tenant agrees, upon demand by Landlord, to
attorn to any purchaser at any foreclosure sale, or to any grantee or transferee
designated in any deed given in lieu of foreclosure. Tenant also agrees to cause
any sublessee or assignee of Tenant to agree to attorn to Landlord or to any
purchaser at any foreclosure sale, or to any grantee or transferee designated in
any deed given in lieu of foreclosure.
SECTION 14.19. ATTORNEYS' FEES. If either Landlord or Tenant commences
or engages in an action (the "Action") by or against any other party arising out
of or in connection with this Lease or the Leased Premises, including but not
limited to any Action for recovery of rental due and unpaid, to recover
possession or for damages for breach of this Lease, the prevailing party shall
be entitled to have and recover from the losing party reasonable attorneys' fees
and other costs incurred in the Action and in preparation for said Action. If
Landlord becomes a party to
-43-
<PAGE>
any litigation by or against anyone not a party to this Lease, but arising by
reason of or related to any act or omission of Tenant or its representatives,
agents, employees, licensees or invitees, Tenant agrees to pay Landlord's
reasonable attorneys' fees and other costs incurred in the litigation and in
preparation for said litigation. If Tenant becomes a party to any litigation by
or against anyone not a party to this Lease, but arising by reason of or related
to any act or omission of Landlord or its representatives, agents, employees,
licensees or invitees, Landlord agrees to pay Tenant's reasonable attorneys'
fees and other costs incurred in the litigation and in preparation for said
litigation.
SECTION 14.20. AMENDMENTS. This document shall become effective and
binding only upon the execution and delivery hereof by both Landlord and Tenant.
All negotiations, considerations, representations and understandings between
Landlord and Tenant are incorporated herein and in the documents incorporated
herein by reference. This Lease may be modified or altered only by agreement in
writing between Landlord and Tenant.
SECTION 14.21. PARAGRAPH HEADINGS. The paragraph headings throughout
this instrument are for convenience only, and the words contained therein shall
in no way be held to explain, modify, amplify or aid in the interpretation or
construction of meaning of the provisions of this Lease.
SECTION 14.22. GOVERNING LAW. This Lease shall be governed exclusively
by the laws of The Commonwealth of Massachusetts, as the same may from time to
time exist.
SECTION 14.23. CONSENTS. Wherever in this Lease the consent of one
party is required to an act of the other party, such consent may be made subject
to such reasonable conditions as the consenting party deems appropriate.
SECTION 14.24. COMPUTATION OF TIME. The time in which any act provided
by this Lease is to be done is computed by excluding the first day and including
the last, unless the last day is a
-44-
<PAGE>
Saturday, Sunday or holiday, and in such event, the last day in which the act is
to be done shall be the next following business day.
SECTION 14.25. INTERPRETATION. The language in all parts of this Lease
shall be in all cases simply construed according to its fair meaning and not
strictly for or against Landlord or Tenant. Unless otherwise provided in this
Lease, or unless the context otherwise requires, the following rules of
construction shall also apply to this Lease:
A. NUMBER AND GENDER: In this Lease the neuter gender includes
the feminine and masculine, and the singular number includes plural and
the word "person" includes corporation, partnership, firm or
association wherever the context so requires.
B. MANDATORY AND PERMISSIVE: "Shall," "will", and "agree" are
mandatory; "may" is permissive.
SECTION 14.26. CORPORATE ORGANIZATION AND AUTHORITY.
A. On or prior to the execution of this Lease, the parties
hereto shall provide evidence satisfactory in form and substance to the
other party of the authority of the person executing the Agreement and
evidence that the Lease represents the binding obligation of the
parties thereto enforceable in accordance with its terms.
B. Each party represents and warrants to the other as follows:
(i) it is an entity of the form described on the
first page hereof duly organized and existing
in good standing under the laws of the state of
its formation, and is duly qualified and
authorized to do business wherever necessary to
carry on its present business operations and to
own or hold under the Lease its properties and
to perform its obligations under this Lease. It
has the full power and authority to enter into
and perform this Lease, and the execution,
delivery and performance of this Lease have
been duly authorized by all necessary corporate
or other actions, do not require any
stockholder or certificate holder approval or
approval or consent of any
-45-
<PAGE>
trustee or holders of any indebtedness or
obligations, and do not contravene any law,
governmental rule, regulation or order or
contravene the charter or bylaws or any
indenture, mortgage, contract or other
agreement to which it is a party or by which it
is or may be so bound.
(ii) There are no pending or certain actions or
proceedings to which it is a party or of which
it has knowledge, before any court,
governmental body or arbitrator which might
materially adversely affect the condition,
business or operations of it or its ability to
perform its obligations under this Lease.
SECTION 14.27. PROHIBITED TENANTS. Provided that there exists no Event
of Default under this Lease and that the Tenant named herein occupies the Leased
Premises, Landlord shall not lease any portion of the Premises to or allow the
same to be occupied by any of the following: Stop and Shop; Homegrocer;
Homeruns; Peapod; Shaw's; Shoplink; Hannaford's; Life Simple; and WebVan.
SECTION 14.28. NEPONSET VALLEY TRANSPORTATION MANAGEMENT ASSOCIATION.
Prior to commencing its business operations at the Leased Premises, Tenant shall
take such steps, including the payment of the applicable membership fee, as
shall be necessary for it to become a member of the Neponset Valley
Transportation Management Association. Tenant shall maintain its membership in
said Association at its sole cost during the entire term of this Lease.
WITNESS the execution hereof, under seal, in any number of counterpart
copies, each of which counterpart copies shall be deemed an original for all
purposes, as of the day and year first above written.
825 UNIVERSITY AVENUE NOMINEE TRUST
By: /s/ Leonard J. Jacobs
---------------------------------------
Leonard J. Jacobs, Trustee as aforesaid
STREAMLINE.COM, INC.
By: /s/ J. Gregory Ambro
-----------------------------------------
J. Gregory Ambro, Chief Financial Officer
-46-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-START> JAN-02-2000
<PERIOD-END> APR-01-2000
<CASH> 7,867
<SECURITIES> 12,859
<RECEIVABLES> 834
<ALLOWANCES> (65)
<INVENTORY> 1,510
<CURRENT-ASSETS> 24,782
<PP&E> 28,040
<DEPRECIATION> (6,656)
<TOTAL-ASSETS> 48,380
<CURRENT-LIABILITIES> 7,287
<BONDS> 0
0
0
<COMMON> 224
<OTHER-SE> 34,102
<TOTAL-LIABILITY-AND-EQUITY> 48,380
<SALES> 7,906
<TOTAL-REVENUES> 8,461
<CGS> 5,909
<TOTAL-COSTS> 20,221
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 315
<INCOME-PRETAX> (11,722)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,722)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,722)
<EPS-BASIC> (0.53)
<EPS-DILUTED> (0.53)
</TABLE>
