UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 29, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 1-11427
NEW ENGLAND BUSINESS SERVICE, INC.
----------------------------------
(Exact name of the registrant as specified in its charter)
Delaware 04-2942374
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Main Street
Groton, Massachusetts, 01471
----------------------------
(Address of principal executive offices)
(Zip Code)
(508) 448-6111
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of common shares of the Registrant outstanding on May 7, 1997 was
13,482,033
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
NEW ENGLAND BUSINESS SERVICE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
<CAPTION>
(unaudited)
Mar. 29, June 29,
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 8,074 $ 6,508
Short term investments 852 10,868
Accounts receivable - net 29,243 30,636
Inventories 8,734 8,675
Direct mail advertising and prepaid exps 6,336 5,176
Deferred income tax benefit 9,448 9,471
-------- --------
Total current assets 62,687 71,334
Property and equipment - net 30,728 31,012
Property held for sale 631 631
Goodwill 5,775 0
Other Assets - net 652 565
-------- --------
TOTAL ASSETS $100,473 $103,542
======== ========
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities
Accounts payable $ 12,488 $ 8,575
Accrued expenses 21,602 18,698
-------- --------
Total current liabilities 34,090 27,273
Deferred Income Taxes 391 353
STOCKHOLDERS'EQUITY
Common stock 14,102 14,005
Additional paid-in capital 15,218 13,603
Cumulative foreign currency translation adj (1,677) (1,761)
Retained earnings 54,469 50,069
-------- --------
Total 82,112 75,916
Less: Treasury stock 16,120 0
-------- --------
Stockholders' Equity 65,992 75,916
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $100,473 $103,542
======== ========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
<TABLE>
NEW ENGLAND BUSINESS SERVICE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 64,127 $ 63,100 $188,032 $194,046
OPERATING EXPENSES:
Cost of sales 22,686 23,898 65,293 69,008
Selling and advertising 20,982 25,496 65,413 75,807
General and administrative 11,658 8,735 34,686 32,625
Exit costs (500) 0 4,543 3,044
-------- -------- -------- --------
Total operating expenses 54,826 58,129 169,935 180,484
INCOME FROM OPERATIONS 9,301 4,971 18,097 13,562
OTHER INCOME/(EXPENSE):
Investment income 58 333 301 875
Gain on pension curtailment 644 0 2,187 0
Gain on sale of product line 0 435 0 435
-------- -------- -------- --------
INCOME BEFORE TAXES 10,003 5,739 20,585 14,872
PROVISION FOR INCOME TAXES 3,999 2,213 8,203 5,891
-------- -------- -------- --------
NET INCOME BEFORE LOSS ON EQUITY
METHOD INVESTMENT 6,004 3,526 12,382 8,981
Loss on equity method investment 0 182 0 (820)
-------- -------- -------- --------
NET INCOME $ 6,004 $ 3,708 $ 12,382 $ 8,161
======== ======== ======== ========
PER SHARE AMOUNTS:
Net Income .45 .25 .91 .55
======== ======== ======== ========
Dividends .20 .20 .60 .60
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 13,438 15,016 13,570 14,994
======== ======== ======== ========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
<TABLE>
NEW ENGLAND BUSINESS SERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
<CAPTION>
Nine Months Ended
March 29, March 30,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 12,382 $ 8,161
Adjustments to reconcile net income to cash:
Depreciation and amortization 7,336 8,974
Deferred income taxes 51 (2,485)
Gain on pension curtailment (2,187) 0
Other non-cash items 3,144 6,935
Changes in assets and liabilities:
Accounts receivable 624 (5,005)
Inventories and prepaid expenses 407 1,165
Accounts payable 1,974 1,067
Accrued expenses 1,435 (2,395)
--------- ---------
Net cash provided by operation activities 25,166 16,417
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (6,086) (6,091)
Purchase of investments (3,800) (24,803)
Proceeds from sale of investments 13,815 19,029
Proceeds from sale of building 0 3,465
Proceeds from sale of product line 0 4,500
Other assets 0 300
Acquisition of subsidiary (4,300) 0
--------- ---------
Net cash used in investing activities (371) (3,600)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt (10,338) 0
Proceeds from credit line 9,450 0
Proceeds from issuing common stock 1,712 1,884
Purchase of treasury stock (16,120) 0
Dividends paid (7,982) (8,944)
--------- ---------
Net cash used in financing activities (23,278) (7,060)
EFFECT OF EXCHANGE RATE ON CASH 49 167
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,566 5,924
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,508 11,604
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,074 $ 17,528
========= =========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The consolidated financial statements contained in this report are unaudited
but reflect all adjustments, consisting only of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
statement of the results of the interim periods reflected. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to applicable rules and regulations of
the Securities and Exchange Commission. The results of operations for the
interim period reported herein are not necessarily indicative of results to
be expected for the full year.
2. Accounting Policies
-------------------
The consolidated financial statements included herein should be read in
conjunction with the financial statements and notes thereto, and the
Independent Auditors' Report incorporated by reference in the Company's
Annual Report on Form 10-K for the fiscal year ended June 29, 1996 from the
Company's 1996 Annual Report to Shareholders.
Reference is made to the accounting policies of the Company described in
the notes to consolidated financial statements incorporated by reference
in the Company's Annual Report on Form 10-K for the fiscal year ended June
29, 1996 from the Company's 1996 Annual Report to Shareholders. The
Company has consistently followed those policies in preparing this report.
3. Inventories
-----------
Inventories are carried at the lower of first-in, first-out cost or market.
Inventories at March 29, 1997 and June 29, 1996 consisted of:
<TABLE>
<CAPTION>
(unaudited)
Mar. 29, June 29,
1997 1996
---------- ----------
<S> <C> <C>
Raw paper $ 551,000 $ 434,000
Business forms and related office products 8,183,000 8,241,000
---------- ----------
Total $8,734,000 $8,675,000
</TABLE>
<PAGE>
4. Exit Costs
----------
During the first quarter of fiscal year 1997, the Company reached a joint
decision with Kinko's Corporation to pursue a new strategy for its retail
channel initiative. This decision resulted in the closure of the Company's
75 existing NEBS manned print desks in Kinko's stores, its administrative
offices in Phoenix and its stationery plant in Scottsdale, Arizona. The
accompanying consolidated statements of income include a $5,201,000 pretax
charge for exit costs associated with this plan recognized in the first
quarter ended September 28, 1996.
The $5,201,000 pretax charge for exit costs consisted of estimated costs
related to facility closures of $1,160,000, estimated equipment write-offs
of $1,815,000 and estimated termination benefits of $2,226,000.
Approximately 230 employees have been terminated as a result of the
restructuring plan.
During the second quarter of fiscal year 1997, the Company substantially
completed a portion of its exit plan associated with the first quarter
fiscal year 1997 charge. Accordingly, the above mentioned estimates were
revised. These revisions include a $500,000 pretax exit credit to reflect a
successful sub-lease arrangement of the Scottsdale, Arizona facility and an
additional $342,000 pretax exit charge for higher than expected employee
termination benefits recognized in the second quarter of fiscal year 1997.
During the third quarter of fiscal year 1997, the Company revised the exit
plan estimate relating to equipment write-offs, and recognized a pretax exit
credit of $500,000 due to a higher recovery of costs on equipment disposal
and transfer than originally estimated.
The balance of the reserve for exit costs at March 29, 1997 amounted to
$2,257,000 and represents specifically identified employee termination
benefits, equipment write-offs and facility closure costs. Cash payments
related to these costs are expected to be substantially completed during
fiscal year 1997.*
<PAGE>
5. Pension Plan
------------
During the second quarter of fiscal year 1997, the Company amended its
defined benefit pension plan which provides benefits to the majority of its
domestic employees. The amendment specifically freezes plan participation
at December 31, 1996 and eliminates further benefit accruals after June
28,1997. The Company currently expects to terminate the plan during
calendar year 1997.* The Company recorded a plan curtailment gain of
$1,543,000 in the second quarter ended December 28, 1996 associated with
the plan amendment. During the third quarter of fiscal year 1997, the
actuarial estimate of the plan curtailment gain was revised to reflect
updated information and resulted in the recognition of an additional
$644,000 curtailment gain.
6. Impairment of Long-Lived Assets
-------------------------------
As of June 29, 1996, the Company adopted SFAS No. 121, entitled "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." The adoption of this standard did not have a material effect
on the accompanying consolidated financial statements.
7. Earnings Per Share
------------------
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share". This new
standard requires dual presentation of basic and diluted earnings per share
(EPS) on the face of the earnings statement and requires a reconciliation of
the numerators and denominators of basic and diluted EPS calculations. This
statement will be effective in the second quarter of the Company's 1998
fiscal year. The Company's current EPS calculation would not change
significantly to conform to basic EPS.
8. Debt Obligation
---------------
During March 1997, the Company terminated two existing lines of credit in
the total amount of $20,000,000 and entered into a five year, $60,000,000
committed, unsecured, revolving line of credit agreement with two major
commercial banks. Under this credit agreement, the Company has the option to
borrow at the Eurodollar rate plus a spread or the agent bank's base lending
rate prevailing from time to time. At March 29, 1997, no amounts were
outstanding under this line.
9. Acquisition
-----------
On January 8, 1997, the Company acquired Standard Forms Limited ("SFL"), a
U.K. based company, for $4,300,000. SFL markets a line of business forms and
stationery by direct mail and through a direct sales force principally to
automotive accounts in the U.K. and in France. The acquisition was accounted
for under the purchase method of accounting. Accordingly, SFL's results of
operations are included in the accompanying financial statements from the
<PAGE>
date of acquisition. The purchase price was allocated to the net assets
acquired based on the fair value of such assets and liabilities. The total
cost in excess of net assets acquired will be amortized over a period of 25
years.
10.Subsequent Event
----------------
On March 31, 1997, the Company announced the completion of the acquisition
of all the assets and certain liabilities of Chiswick Trading, Inc.
("Chiswick") for consideration of approximately $34,600,000 in cash and
approximately $8,400,000 in shares of NEBS common stock, for an aggregate
purchase price of $43,000,000. Chiswick markets a line of retail and
industrial packaging, shipping and warehouse supplies sold primarily to
small wholesalers, manufacturers and retailers. The acquisition will be
accounted for under the purchase method. The purchase price will be
allocated to the net assets acquired based on their fair values.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
MANAGEMENT DISCUSSION AND ANALYSIS
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities for the nine months ended March 29, 1997
was $25.2 million and represented an increase of $8.8 million from the $16.4
million provided in the comparable period last year. The increase in operating
cash flow was primarily the result of higher net income and a reduction in cash
used to fund changes in the Company's working capital assets and liabilities.
Working capital at March 29, 1997 amounted to $28.6 million, including $8.9
million of cash and short term investments. This balance compares to working
capital of $62.2 million, including cash and short term investment balances of
$34.7 million, at the same time last year. At June 29, 1996, working capital
amounted to $44.1 million, including cash and short term investments of $17.4
million. The $15.4 million reduction in working capital over the course of the
last nine months was due principally to cash outflows of $16.8 million
associated with the repurchase of 1,023,800 shares of the Company's common
stock, offset in part by an increase in accounts payable and accrued expenses
balances.
Capital expenditures for the nine months ended March 29, 1997 and for first
nine months in fiscal 1996 were $6.1 million. The Company had no significant
commitments for capital projects at quarter end. The Company anticipates that
capital outlays will continue at the same pace throughout fiscal year 1997.*
Anticipated capital outlays for fiscal year 1997 are primarily related to a
plan to upgrade the Company's order entry, financial and related systems.
In addition to its present cash and investment balances, the Company has
consistently generated sufficient cash internally to fund its needs for working
capital, dividends and capital expenditures. However, should the Company need
additional funds, it has recently obtained a new unsecured line of credit with
two major banks for $60.0 million. At March 29, 1997, there were no
outstanding balances against this line. On March 31, 1997, subsequent to the
end of the quarter, the Company borrowed $30.0 million against this line to
partially fund the acquisition of the assets and certain liabilities of
Chiswick Trading, Inc.
Results of Operations
- ---------------------
Net sales increased 1.0 million or 1.6% to $64.1 million in the third quarter
of fiscal 1997 from $63.1 million in last year's third quarter. The sales
increase was composed of approximately a $3.8 million or 6.0% decline
attributable to the discontinuation of Kinko's retail activities and the
divestiture of the One-Write Plus product line, a $1.5 million or 2.4% decline
attributable to higher promotional discounting, offset by a $2.5 million or
4.0% effective price increase, a $1.7 million or 2.7% unit volume increase, and
a $2.1 million or 3.3% increase associated with the acquisition of Standard
Forms Limited in January, 1997.
<PAGE>
Net sales for the nine months ended March 29, 1997 decreased 3.1% to $188.0
million from $194.0 million in last year's comparable period. The sales
decrease was composed of a $9.8 million or 5.1% decline attributable to the
discontinuation of Kinko's retail activities and the divestiture of the One-
Write Plus product line, and a $2.8 million or 1.4% decline attributable to
higher promotional discounting, offset in part by a $3.7 million or 1.9%
effective price increase, a $0.8 million or 0.4% unit volume increase and a
$2.1 million or 1.1% increase associated with the acquisition of Standard Forms
Limited in January, 1997.
For the third quarter of fiscal 1997, cost of sales decreased to 35.4% of sales
from 37.9% in last year's comparable period and decreased to 34.7% from 35.6%
of sales on a year to date basis. This decrease was due to improved
manufacturing efficiency, reduced material costs, reduced freight costs and
reduced manufacturing overhead expense during the quarter and the year.
Selling and advertising expense decreased to 32.7% of sales in the third
quarter of fiscal 1997 from 40.4% of sales in last year's comparable quarter.
On a year to date basis, selling and advertising expenses decreased to 34.8%
of sales in fiscal 1997 from 39.1% in fiscal 1996. These decreases were
primarily associated with reduced software technical support and development
costs following the divestiture of One-Write Plus and reduced selling expenses
related to the discontinuation of Kinko's retail activities. These cost savings
were partially offset by an increase in direct mail advertising expense during
the year.
General and administrative expense increased to 18.2% of sales in the third
quarter of fiscal 1997 from 13.8% in last year's comparable quarter and to
18.4% in fiscal 1997 from 16.8% in fiscal 1996 on a year to date basis. The
third quarter increase was primarily due to non-recurring credits recognized
in the third quarter of fiscal 1996 and to increased costs in the third quarter
of 1997 related to the Company's program to re-engineer its financial and
operational information systems. The year to date increase was due primarily to
non-recurring credits recognized in the third quarter of fiscal 1996, and to
increased costs for the information systems re-engineering program offset in
part by a reduction in expense recognized due to the revaluation of certain
software-related assets during the first quarter of 1996.
During the first quarter of fiscal year 1997, the Company recorded a $5.2
million pre-tax charge, or $.21 per share, related to exit costs associated
with a plan to close the Company's 75 NEBS manned print desks in Kinko's
stores, its administrative offices in Phoenix and its stationery plant in
Scottsdale, Arizona. The $5,201,000 pretax charge for exit costs consisted of
facility closure costs of $1,160,000, equipment write-offs of $1,815,000 and
postemployment benefits of $2,226,000 in conjunction with the termination of
approximately 230 employees.
As a result of the successful negotiation of a sub-lease agreement on its
Scottsdale, Arizona manufacturing facility, the Company reduced its estimate of
facility closure costs and recognized a $500,000 exit credit in the second
quarter of fiscal 1997. In addition, the Company revised its estimate of
postemployment benefits due to its terminated employees and recognized an
<PAGE>
additional $342,000 in related exit costs during the second quarter. In the
third quarter of fiscal 1997, the Company revised the exit plan estimate
relating to equipment write-offs and recognized a pretax exit credit of
$500,000 due to a higher recovery of costs on equipment disposal and transfer
than originally estimated.
The Company does not expect to incur any additional operating expense during
the remainder of fiscal year 1997 associated with the plan to restructure
operations.* As of March 29, 1997, approximately $2,257,000 remains in the exit
cost reserve. The restructuring plan is expected to be substantially completed
during fiscal year 1997.*
Investment income decreased from fiscal year 1996 to fiscal 1997 due to lower
investable cash balances.
The provision for income taxes as a percentage of pre-tax income has remained
constant during fiscal 1997 at approximately 40%, and consistent with the
effective rate for the entire fiscal 1996 year.
In 1996 the Company's adoption of Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", was not significant to the financial
statements.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which will
become effective during the second quarter of the Company's 1998 fiscal year.
SFAS No. 128 will require the Company in that quarter ended December 27, 1997
to restate all previously reported earnings per share information to conform
with the new pronouncement's requirements.
* This statement is a forward-looking statement reflecting the Company's
current expectations. There can be no assurance that the Company's actual
results will not differ materially from those projected in such forward-looking
statements due to the important factors described in Exhibit 99 to this
Quarterly Report on Form 10-Q.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
To the Company's knowledge, no material legal proceedings are pending
on the date hereof to which the Company is a party or to which any property of
the Company is subject.
Item 2. CHANGES IN SECURITIES
(c) On March 31, 1997, NEBS acquired the assets and certain
liabilities of Chiswick Trading, Inc. ("Chiswick") for a total consideration of
approximately $43,000,000 pursuant to an Asset Purchase Agreement dated March
31, 1997. As partial consideration for the assets acquired, NEBS issued to
Chiswick 365,217 shares of its common stock, $1.00 par value, valued at
approximately $8,400,000. The issuance of such shares was not registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
the exemption for transactions not involving a public offering contained in
Section 4(2) of the Securities Act. The shares so issued contain restrictive
legends prohibiting transfer of the shares in the absence of an effective
registration statement or an exemption permitting transfer without
registration. No commission was paid to any underwriter in connection with the
issuance of such shares.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
(2) Not applicable.
(3)(a) Certificate of Incorporation of the Registrant
(Incorporated by reference to the Company's Current
Report on Form 8-K dated October 31, 1986.)
(3)(b) Certificate of Merger of New England Business Service,
Inc. (a Massachusetts corporation) and the Company,
<PAGE>
dated October 24, 1986 amending the Certificate of
Incorporation of the Company by adding Articles 14 and
15 thereto. (Incorporated by reference to the
Company's Current Report on Form 8K dated October 31,
1986.)
(3)(c) Certificate of Designations, Preferences and Rights of
Series A Participating Preferred Stock of the Company,
dated October 27, 1989. (Incorporated by reference to
the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1995, filed September 15,
1995.)
(3)(d) By-Laws of the Registrant, as amended. (Incorporated
by reference to Exhibit 10(a) of the Company's
Quarterly Report on Form 10-Q for the Quarter ended
December 31, 1995, filed February 8, 1996.)
(4)(a) Specimen stock certificate for shares of Common Stock,
par value $1.00 per share. (Incorporated by reference
to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1995, filed September 15,
1995.)
(4)(b) Amended and Restated Rights Agreement, dated October
27, 1989 as amended as of October 20, 1994 (the
"Rights Agreement"), between New England Business
Service, Inc. and The First National Bank of Boston,
National Association, as rights agent, including as
Exhibit B the forms of Rights Certificate Election to
Exercise. (Incorporated by reference to Exhibit 4 of
the Company's Current Report on Form 8-K dated October
25, 1994.)
(10)(a) Asset Purchase Agreement by and among New England
Business Service, Inc., Chiswick Trading, Inc. and
Theodore Pasquarello dated as of March 31, 1997.
(Incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K dated April 15,
1997.)
(10)(b) Revolving Credit Agreement dated as of March 26, 1997,
by and among New England Business Service, Inc., The
First National Bank of Boston and Fleet National Bank
(together with certain other financial institutions,
the Banks), The First National Bank of Boston, as
agent for the Banks, and Fleet National Bank, as
documentation agent for the Banks. (Incorporated by
reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated April 15, 1997.)
<PAGE>
(10)(c) Lease between Theodore Pasquarello, as Trustee of the
E.B. Realty Trust (Landlord) and New England Business
Service, Inc. (Tenant) for the land and improvements
located at 33 Union Avenue, Sudbury, MA 01776.
(10)(d) Agreement to Furnish Copies of Omitted Exhibits to
Lease Agreement between Theodore Pasquarello, as
Trustee of the E.B. Realty Trust (Landlord) and New
England Business Service, Inc. (Tenant).
(10)(e) Lease between Theodore Pasquarello and Eileen
Pasquarello, as Trustees of The Paris Trust (Landlord)
and New England Business Service, Inc. (Tenant) for
the land and improvements located at 31 Union Avenue,
Sudbury, MA 01776.
(10)(f) Agreement to Furnish Copies of Omitted Exhibits to
Lease Agreement between Theodore Pasquarello and
Eileen Pasquarello, as Trustee of The Paris Trust
(Landlord) and New England Business Service, Inc.
(Tenant).
(11) Statement re computation of per share earnings.
(15) Not applicable.
(18) Not applicable.
(19) Not applicable.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Article 5 Financial Data Schedule
(99) Safe Harbor for Forward Looking Statements
b. Reports on Form 8-K.
On April 15, 1997, under Item 2 on Form 8-K, the Company reported
the acquisition of all the assets and assumption of certain
liabilities of Chiswick Trading, Inc. Under Item 5 of the same
Form 8-K, the Company reported the execution of a $60,000,000
Revolving Credit Agreement.
<PAGE>
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.
NEW ENGLAND BUSINESS SERVICE, INC.
----------------------------------
(Registrant)
May 13, 1997 /s/John F. Fairbanks
- ------------ --------------------
Date John F. Fairbanks
Principal Financial and
Accounting Officer
<PAGE>
<TABLE>
New England Business Service, Inc.
Statement Re Computation of Per Share Earnings
(In Thousands Except Per Share Data)
<CAPTION>
Exhibit 11
----------
Three Months Ended Nine Months Ended
March 29, 1997 March 29, 1997
------------------ ------------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shares
- ------
Weighted Average Shares
of Common Stock 13,101 13,101 13,345 13,345
Add:
Common Stock Equivalents
in the form of Stock Options 337 424 225 425
------- ------- ------- -------
Weighted Average Common Stock
and Common Stock Equivalents 13,438 13,525 13,570 13,770
======= ======= ======= =======
Earnings
- --------
Earnings per Consolidated
Statement of Income $ 6,004 $ 6,004 $12,382 $12,382
======= ======= ======= =======
Earnings per Share $ .45 $ .43 $ .91 $ .90
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF NEW ENGLAND BUSINESS SERVICE, INC. AND ITS
SUBSIDIARIES AS OF MARCH 29, 1997 AND THE RELATED STATEMENTS OF CONSOLIDATED
INCOME AND CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JUN-28-1997 JUN-28-1997
<PERIOD-END> MAR-29-1997 MAR-29-1997
<CASH> 8,074 8,074
<SECURITIES> 852 852
<RECEIVABLES> 29,243 29,243
<ALLOWANCES> 0 0
<INVENTORY> 8,734 8,734
<CURRENT-ASSETS> 62,687 62,687
<PP&E> 103,127 103,127
<DEPRECIATION> 72,399 72,399
<TOTAL-ASSETS> 100,473 100,473
<CURRENT-LIABILITIES> 34,090 34,090
<BONDS> 0 0
<COMMON> 14,102 14,102
0 0
0 0
<OTHER-SE> 51,890 51,890
<TOTAL-LIABILITY-AND-EQUITY> 100,473 100,473
<SALES> 64,127 188,032
<TOTAL-REVENUES> 64,127 188,032
<CGS> 22,686 65,293
<TOTAL-COSTS> 32,140 104,642
<OTHER-EXPENSES> (702) (2,488)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 10,003 20,585
<INCOME-TAX> 3,999 8,203
<INCOME-CONTINUING> 6,004 12,382
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 6,004 12,382
<EPS-PRIMARY> .45 .91
<EPS-DILUTED> .43 .90
</TABLE>
Exhibit 99. Additional Exhibits - Safe Harbor for Forward
Looking Statements
From time to time, the Company or its representatives have
made or may make forward-looking statements, orally or in
writing, in reports filed under the Securities Act of 1934,
as amended, in press releases or in statements made with the
approval of an authorized executive officer. The words or
phrases "is expected," "will continue," "anticipates,"
"estimates," or similar expressions in any of these
communications are intended to identify "forward-looking
statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933, as enacted by the Private Securities
Litigation Reform Act of 1995.
In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the Company is
hereby filing the following cautionary statements
identifying important factors that could cause the
Company's actual results to differ materially from those
projected in such forward looking statements:
Increasing Competition; Pressure on Price and Margins.
The Company operates in a highly competitive marketplace, in
which it competes with a variety of mail order marketers,
retailers, dealers, distributors and local printers in the
marketing of business forms, stationery and supplies to
small businesses. Over the course of the past decade, mail
order providers of business forms and stationery have
experienced growth in excess manufacturing capacity. In
addition, the Company has faced increasing competition from
low-price, high-volume office supply chain stores.
Improvements in the cost and quality of printing technology
have increasingly allowed dealers, distributors and local
printers to gain access to products of complex design
and functionality at competitive prices. The Company
currently anticipates that these trends will continue. No
assurance may be given that competition will not have an
adverse effect on the Company's business. In addition, if
any of the Company's mail order competitors were to seek to
gain or retain market share by reducing prices or increasing
promotional discounting, the Company would be compelled to
reduce its prices or match the discounts and thereby
reduce its gross margin and profitability.
<PAGE>
Economic Cycles; Variability of Performance.
The Company's standardized forms and check business accounts
for a large majority of its sales and profitability. The
forms and check industry is highly competitive and generally
characterized by mature products designed within well-
established industry standards. The Company relies, in part,
on net small business formations for growth in demand for
its standardized form and check products. As a result, the
Company's growth rate is closely correlated to the strength
of its target small business market. The Company's revenue
trends and operating profitability have been materially
adversely affected by recession-related contractions in the
small business economy in the past. The Company will
continue to experience quarterly and annual variations in
net sales and net income as a result of changes in the
levels of small business formations and failures.
Technological Change; Product Obsolescence and Risks to
Competitive Advantage.
The Company's standardized business forms and related
products are designed to provide small businesses with the
financial and business records required to manage a
business. Steady technological improvements have provided
small businesses in several market segments with alternative
means to enact and record business transactions. PC-based,
point-of-sale, electronic form and electronic transaction
systems have been designed to automate several of the
functions performed by the Company's products. The price and
performance characteristics of personal laser and ink-jet
printing equipment have improved markedly in the recent
past; thereby allowing small businesses a cost competitive
means to print low-quality versions of Company forms on
plain paper. In addition, the Internet has the potential to
eliminate the Company's advantage of scale in direct
marketing by providing all competitors with equal access to
customers who purchase products over the Internet. In
response, the Company has focused resources on development
and procurement of new products less susceptible to
technological obsolescence and has aggressively moved to
develop a comprehensive electronic catalog of products to be
utilized in retail-based kiosks, PC-based software and over
the Internet. It should be noted that the Company's small
business customers have proven to be relatively slow
adapters of new technology which has minimized the adverse
impact of these technological trends. However, the Company
may give no assurance that continued technological change
will not have a material adverse impact on the long-term
prospects for the Company's business.
<PAGE>
Paper Costs and Postal Rates; Risks to Margins.
The cost of paper used to produce the Company's products,
catalogs and advertising materials constitutes, directly or
indirectly, approximately 20% of consolidated revenues. In
addition, the Company is reliant on the U.S. Postal Service
for delivery of most of the Company's promotional materials.
Coated paper costs for promotional materials and postal
rates for third class mail have increased significantly over
the past decade. In addition, certain segments of the paper
market have demonstrated considerable price volatility over
the past five years. The Company has been able to counteract
the impact of postal and paper cost increases with cost
reduction programs and selected product price increases. Due
to increased competition in the small business forms,
stationery and supplies marketplace, no assurance may be
given that the Company will be able to increase product
pricing to compensate for future paper or postal cost
increases. The inability to raise prices in response to
paper or postal cost increases could reduce the Company's
operating profitability and net income.
Customer Preferences; Investment Requirements & Sales Risk.
The Company's core competency is the direct marketing,
manufacturing and distribution of standardized forms and
related products to small businesses. Newly-formed small
business owners are increasingly demanding custom and
color-coordinated products to create an image in addition to
enabling the management of business transactions. The
relative prices charged by local printers, contract printers
and dealers for providing these custom and full-color
printed products have been declining due to technological
advances in composition systems and printing equipment. As a
direct result, the cost advantage inherent to the Company's
standardized forms and related printed products has
declined. The Company is responding with focused investment
in the infrastructure required to sell, compose, print and
distribute custom and full-color products. This effort will
include installation of an integrated and flexible
information system architecture and the re-engineering of
many of the Company's basic business functions. In addition,
the Company will continue to invest in its dealer and
technology-based channels that more readily support the
interactive marketing required to sell custom and full-color
products. However, the Company may give no assurance that
the rate of decline in demand for standardized forms and
related printed products will not accelerate, that the
interactive marketing investments will prove successful, nor
<PAGE>
that the information systems re-engineering effort will not
result in operating inefficiencies or unplanned expense. If
any of such potential risks materialize, the Company's
future net sales and net income could be materially
adversely affected.
Response Rates and Customer Retention; Sales Risk.
Customer and prospect response rates to the Company's
catalogs and promotional materials have remained relatively
stable over time. Continued stability in prospect response
and customer retention is primarily dependent on the
continued relevancy of the range of the Company's products
to the small business marketplace. New product
introductions, to date, have generally offset declines
in response rates and retention attributable to product
obsolescence. However, the Company can make no assurances
that its new product introductions will continue to offset
the rate of obsolescence of its standardized forms products
in the future. An increase in the rate of product
obsolescence or a decline in new product introductions could
negatively impact response rates and customer retention
which, in turn, would have a materially adverse impact on
the Company's long-term financial performance.
Prospect Lists; Sales Risk.
The Company's direct mail business has been characterized by
a consistent level of average annual sales per customer. As
such, net sales growth is dependent, in part, on an increase
in customers served by the Company. Growth in the total
number of direct mail customers served by the Company
depends upon continued access to high-quality lists of
newly-formed small businesses. In the past, the Company's
ability to compile proprietary prospect lists was a distinct
competitive advantage. However, the external list
compilation industry has grown more sophisticated and
currently markets comprehensive lists of newly-formed
businesses to the Company and its competitors. At present,
the Company relies on the speed of its delivery of
promotional materials to prospective customers to gain
advantage over competitors. However, the Company can make no
assurances that its promotional material delivery advantage
will be maintained over time. A deterioration in the
Company's delivery advantage could have a materially
adverse impact on the Company's business and financial
performance.
<PAGE>
Governmental Regulations; Sales Risk.
Future governmental legislation or regulation including, but
not limited to, the following potential regulatory actions
have the potential to have a material adverse impact on the
Company's business prospects: 1) institution of privacy
laws could constrain the Company's ability to mail
promotional materials or to telemarket to small businesses;
2) modification to U.S. Postal Service regulations with the
effect of increasing postal rates or reducing postal
delivery efficiency could have an adverse impact on the
Company's marketing efforts; and 3)institution of a "general
sales tax", "value added tax" or similar national tax could
reduce demand for the Company's products. Although the
Company has no current knowledge or belief that such adverse
regulation, or similar governmental regulation, is pending
or imminent, it may make no assurance that adverse
governmental regulation will not have a material adverse
impact on the Company's business in the future.
Acquisitions; Inherent Risk
From time to time the Company has acquired, or may acquire
in the future, a majority ownership position in a company or
substantially all of the assets related to a specific line
of business. To date in Fiscal Year 1997, the Company has
acquired Standard Forms Limited and Chiswick Trading, Inc.
which, in the aggregate will comprise approximately 18% of
the Company's future consolidated revenues. Such
acquisitions are undertaken to enhance the Company's
competitive position in the marketplace or to gain access
to new markets, products, competencies or technologies. The
Company has performed in the past and will perform in the
future a business, financial and legal due diligence review
in advance of an acquisition to corroborate the assumptions
critical to projected future performance of an acquired
entity and to identify the risks inherent to such
projections. However, the Company can make no assurances
that its due diligence review will identify all potential
risks associated with the purchase, integration or operation
of any acquired enterprise. If any of such potential risks
materialize, the Company's future net sales and net income
could be materially adversely affected.
<PAGE>
Other Risks; Variability of Performance.
The Company has experienced in the past and will experience
in the future quarterly and annual variations in net sales
and net income as a result of many factors, including, but
not limited to, the timing of catalog mailings, catalog
response rates, product mix, the timing and levels of
selling, general and administrative expenses, cost reduction
programs, timing of holidays and inclement weather. The
Company's planned operating expenses are based on sales
forecasts. If net sales performance falls below expectations
in any given quarter or year, the Company's operating
results could be materially adversely affected.
Exhibit 10 (c)
LEASE
-----
LANDLORD: Theodore Pasquarello, as Trustee of the
E. B. Realty Trust
TENANT: New England Business Service, Inc.
PREMISES: The land and improvements located thereon and
consisting of a 117,000 square foot building (the
"Building") located at 33 Union Avenue, Sudbury,
MA 01776 and more particularly described on
Exhibit A
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I REFERENCE DATA
1.1 Subjects Referred to 1
ARTICLE II PREMISES
2.1 Lease of Premises 3
ARTICLE III TERM OF THE LEASE
3.1 Preparation for Occupancy and Possession 3
3.2 Commencement and Expiration of Term 3
ARTICLE IV FIXED RENT
4.1 Fixed Rent 4
ARTICLE V TAX CHARGES
5.1 Definitions 4
5.2 Additional Rent 4
5.3 Refund of Taxes 5
5.4 Permitted Contests 5
ARTICLE VI OPERATING EXPENSES
6.1 Definitions 6
6.2 Additional Rent 6
ARTICLE VII USE OF PREMISES
7.1 Permitted Uses 6
7.2 Installations and Alterations by Tenant 7
ARTICLE VIII ASSIGNMENT AND SUBLETTING
8.1 Prohibition 9
8.2 Other Requirements and Provisions 10
ARTICLE IX RESPONSIBILITY FOR REPAIRS AND
CONDITION OF PREMISES
9.1 Landlord Repairs and Maintenance 11
9.2 Tenant's Agreement 12
9.3 Heavy Machinery 12
9.4 Utilities 12
9.5 Interruption or Curtailment of Services 13
ARTICLE X INDEMNITY AND INSURANCE
10.1 Tenant's Indemnity 13
10.2 Insurance 14
10.3 Tenant's Risk 14
10.4 Injury Caused by Third Parties 15
10.5 Landlord's Insurance 15
ARTICLE XI LANDLORD'S ACCESS TO PREMISES
11.1 Landlord's Rights 15
ARTICLE XII DAMAGE OR DESTRUCTION
12.1 Restoration 16
12.2 Rent 17
ARTICLE XIII CONDEMNATION
13.1 Termination of Lease 17
13.2 Awards 18
ARTICLE XIV DEFAULT
14.1 Tenant's Default 18
ARTICLE XV MISCELLANEOUS PROVISIONS
15.1 Extra Hazardous Use 22
15.2 Waiver 23
15.3 Covenant of Quiet Enjoyment 23
15.4 Force Majeure, etc. 23
15.5 Assignment of Rents and Transfer of Title 24
15.6 Rules and Regulations 24
15.7 Additional Charges 24
15.8 Invalidity of Particular Provisions 24
15.9 Provisions Binding 24
15.10 Notices 25
15.11 When Lease Becomes Binding 25
15.12 Paragraph Headings 25
15.13 Rights of Mortgagee and Ground Lessor 25
15.14 Estoppel Certificates 27
15.15 Remedying Defaults 27
15.16 Holding Over 27
15.17 Surrender of Premises 28
ARTICLE XVI BROKERAGE
16.1 Brokerage 28
ARTICLE XVII ENVIRONMENTAL MATTERS
17.1 Indemnification 29
17.2 Third Party Claims 30
17.3 Response Actions 31
17.4 Successors and Assigns 32
ARTICLE XVIII EXCULPATORY CLAUSE
18.1 Limitation on Liability 32
18.2 Actions Against Landlord 32
ARTICLE XIX SUBMISSION TO JURISDICTION, ETC.
19.1 Governing Law 33
19.2 Recovery of Fees 33
ARTICLE XX LANDLORD'S EQUITY
20.1 Landlord's Equity Requirement 33
<PAGE
LEASE
-----
This Lease is entered into as of this 31st day of
March, 1997, by and between Theodore Pasquarello, not
individually but as Trustee of E. B. Realty Trust under
Declaration of Trust dated January 28, 1988 (hereinafter
referred to as "Landlord") and New England Business
Service, Inc., a Delaware corporation (hereinafter referred
to as "Tenant").
WHEREAS, Landlord is the owner of the Premises, as
defined in Paragraph 1.1 hereof; and
WHEREAS, Tenant desires to lease the Premises from
Landlord and Landlord desires to lease such Premises to
Tenant;
NOW, THEREFORE, in consideration of the mutual
promises, covenants and conditions hereinafter contained,
and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and
Tenant agree as follows:
ARTICLE I
---------
REFERENCE DATA
1.1: SUBJECTS REFERRED TO.
Each reference in this Lease to any of the following
subjects shall be construed to incorporate the data stated
for that subject in this Section 1.1:
LANDLORD'S ADDRESS: 490 Boston Post Road
Sudbury, MA 01776
Attention: Theodore Pasquarello
TENANT'S
ORIGINAL ADDRESS: 500 Main Street
Groton, MA 01471
PREMISES: The land and improvements located
thereon and consisting of a 117,000
square foot building (the
Building")located at 33 Union
Avenue, Sudbury, MA 01776 and more
particularly described on Exhibit A
COMMENCEMENT DATE: April 1, 1997
FIXED RENT:
Period Rent
- ------ ----
4/1/97-3/31/2000 $585,000 annually, payable in equal
monthly installments of $48,750
4/1/2000-3/31/2003 $620,100 annually, payable in equal
monthly installments of $51,675
4/1/2003-3/31/2007 $657,306 annually, payable in equal
monthly installments of $54,775.50
TENANT'S SHARE OF
OPERATING EXPENSES:
Period Tenant's Share of Operating
- ------ Expenses
----------------------------
4/1/97-3/31/2000 $58,500 annually, payable in equal
monthly installments of $4,875
4/1/2000-3/31/2003 $62,010 annually, payable in equal
monthly installments of $5,167.50
4/1/2003-3/31/2007 $65,730.60 annually, payable in
equal monthly installments of
$5,477.55
PERMITTED USE: Warehousing, storage and
distribution of materials in
connection with or relating to
Tenant's current business as
conducted as of the date of this
Lease. Permitted Use includes
general office use in connection with
warehousing, storage and distribution
activities.
PUBLIC LIABILITY
INSURANCE LIMITS: $5,000,000 per occurrence for
bodily injury (including death)
and $1,000,000 per occurrence for
property damage
TERM: Ten (10) years
ARTICLE II
----------
PREMISES
--------
2.1 LEASE OF PREMISES. Landlord hereby demises and
leases to Tenant, and Tenant hereby accepts from Landlord,
the Premises, for the Term of this Lease and subject to any
and all existing encumbrances, conditions, covenants,
easements, restrictions, rights of way and other matters of
record and to such matters as may be disclosed by
inspection or survey and subject to and with the benefit of
the terms, covenants, conditions and provisions of this
Lease. Attached hereto as Exhibit B is a copy of a title
policy dated December 16, 1993 insuring the Premises.
Landlord makes no representation or warranty concerning
title to the Premises.
ARTICLE III
-----------
TERM OF THE LEASE
3.1 AS-IS CONDITION. Tenant agrees that it has
inspected and examined, or caused to be inspected and
examined, the Premises and that it is fully familiar and
satisfied with the physical condition and state of repair
thereof, and Tenant does hereby agree to accept the
Premises in their existing condition and state of repair
"as is". Except as expressly otherwise provided herein,
Landlord shall have no obligation to do any work or make
any installation or alteration of any kind to the Premises.
Nothing in the foregoing sentence shall be construed to
reduce Landlord's obligations under Section 9.1 below.
Except as otherwise expressly set forth in this Lease, any
work performed in the Premises by Tenant shall be done at
Tenant's sole cost and expense, in accordance with the
terms of Section 7.2.
3.2 COMMENCEMENT AND EXPIRATION OF TERM. The term of
this Lease (herein referred to as the "Term") shall
commence on the Commencement Date, as defined in Section 1.1
and shall terminate on March 31, 2007, unless sooner
terminated as herein provided (the "Expiration Date").
ARTICLE IV
----------
FIXED RENT
4.1 FIXED RENT. (A) Tenant agrees to pay to
Landlord, or as directed by Landlord, without offset,
abatement, deduction or demand (except as otherwise
provided in Section 9.5) the Fixed Rent. The Fixed Rent
shall be payable in lawful money of the United States, in
equal monthly installments, in advance, on the first day of
each and every calendar month during the Term of this Lease
at Landlord's Address, or at such other place as Landlord
shall from time to time designate by notice.
(B) Fixed Rent for any partial month shall be prorated
on a
daily basis.
(C) If any installment of Fixed Rent, additional rent
or any other sums due hereunder are not paid when due and
such failure shall continue for ten (10) days after notice
thereof, Tenant shall pay on demand, in addition to any
other additional charges due under this Lease, an
administrative fee equal to 2% of the overdue payment (the
"Late Fee"). Notwithstanding the foregoing, if any
installment of Fixed Rent, additional rent or any other
sums due hereunder are not paid by the due date on two or
more occasions during any 12-month period, Landlord shall
thereafter have the right to charge a Late Fee if any such
sums are not paid within ten (10) days of the due date.
ARTICLE V
---------
TAX CHARGES
5.1 DEFINITIONS.
For purposes of this Article V, "Real Estate Taxes"
shall mean all or any of the real estate taxes and
assessments imposed on the Premises for the then current
Tax Year by any governmental authority having jurisdiction
upon the Premises and Building, or any tax or assessment to
the extent hereafter imposed in substitution for such real
estate taxes and/or assessments. Real Estate Taxes exclude
income taxes and all estate, succession, inheritance and
transfer taxes. The term "Tax Year" shall mean the period
from July 1, 1996 through June 30, 1997 and each subsequent
fiscal year thereafter.
5.2 ADDITIONAL RENT. Tenant shall pay to Landlord
during the Term of this Lease, as additional rent, all Real
Estate Taxes. If any Tax Year is only partially within the
Term, all payments pursuant hereto shall be appropriately
prorated, based on the portion of the Tax Year which is
within the Term. Landlord shall send to Tenant copies of
the tax bills for the Premises promptly upon receipt
thereof and Tenant shall remit the full payment of such tax
bill directly to Landlord within fifteen (15) days of
receipt of such bill. Notwithstanding the foregoing,
Tenant may elect to pay all Real Estate Taxes directly to
the applicable taxing authority provided that (i) Tenant
shall notify Landlord within 15 days of its receipt of the
tax bill that Tenant has elected to pay the tax bill
directly to the taxing authority; (ii) Tenant shall deliver
to Landlord receipted copies of such paid bills no later
than ten (10) days prior to the date when due; and (iii)
any failure by Tenant to pay Real Estate Taxes as required
by this Article V shall be deemed a default under
Section 14.1(A)(1) and Tenant shall be liable for all costs
and expenses incurred by Landlord as a result of any breach
by Tenant of its obligations under this Article V.
5.3 REFUND OF TAXES. If Landlord receives any refund
of Real Estate Taxes for any Tax Year for which Tenant has
made a payment pursuant hereto, Landlord shall (after
deducting from such refund all reasonable expenses,
including reasonable attorneys' fees, incurred in
connection therewith) pay Tenant, if Tenant is not in
default hereunder, the remainder of the refund.
5.4 PERMITTED CONTESTS. Notwithstanding anything to
the contrary herein, Tenant shall have the right, subject
to the conditions stated below, to contest by appropriate
legal proceedings the amount or validity of any Real Estate
Taxes. During the pendency of such legal proceedings,
Tenant shall not be required to pay the contested Real
Estate Taxes, provided that the following conditions are
satisfied:
(a) The proceedings stay the collection, realization
or enforcement of any such contested Real Estate Tax;
(b) The delay in any such payment, does not subject
the Premises, or any portion thereof, to any
liens or possible sale, forfeiture, foreclosure
or loss (including loss of appeal rights related
to such contest);
(c) Tenant shall escrow amount(s) equal to the Real
Estate Taxes that would have been due and payable
but for such proceedings, and any interest
accruing thereon and any additions thereto;
(d) Tenant shall indemnify and hold harmless Landlord
against any losses, damages, costs, and expenses
(including reasonable attorneys' fees and
disbursements) suffered by Landlord as a result
of such contest;
(e) Tenant shall not settle any such proceedings on
terms that would adversely affect Landlord in any
respect without Landlord's prior written consent;
(f) Tenant shall promptly provide Landlord with
copies of all pleadings, agreements and other
written communications resulting from such
proceedings.
ARTICLE VI
----------
OPERATING EXPENSES
6.1 DEFINITIONS.
For purposes of this Article VI, "Operating Expenses"
shall mean all expenses reasonably incurred by Landlord, on
an accrual basis, for the operation and maintenance of the
Premises and all expenses incurred as a result of Landlord's
compliance with any of its obligations hereunder, and shall
include (without limitation), depreciation of any
expenditure for any capital improvement which is intended to
result in a reduction of Operating Expenses and any and all
expenses incurred by Landlord in connection with compliance
with any law, rule, order, ordinance, regulation or
requirement of any governmental authority having or
asserting jurisdiction or any order, rule, requirement or
regulation of any utility company, insurer of Landlord or
the New England Fire Insurance Rating Association (or
successor organization) first applicable after the date
hereof.
6.2 ADDITIONAL RENT. Tenant shall pay to Landlord
during the Term of this Lease, as additional rent, Tenant's
Share of Operating Expenses (as defined in Article I
hereof) in the same manner as described in Section 4.1 for
the payment of Fixed Rent. Except as otherwise set forth in
Section 9.1(B), in no event shall Tenant's Share of
Operating Expenses exceed the amounts set forth in Article I
hereof.
ARTICLE VII
-----------
USE OF PREMISES
7.1 PERMITTED USES. (A) Tenant agrees that the
Premises shall be used and occupied by Tenant solely for
the Permitted Uses or for any uses permitted by applicable
zoning laws, provided that Tenant obtains Landlord's prior
written consent, which consent shall not be unreasonably
withheld.
(B) Tenant agrees to conform to the following
provisions during the Term of this Lease:
(1) Tenant will not place on the exterior of the
Premises (including both interior and exterior surfaces of
doors and interior surfaces of windows) or on any part of
the Building outside the Premises, any sign, symbol,
advertisement or the like which is visible to public view
outside of the Premises without the prior written consent
of Landlord, which consent shall not be unreasonably
withheld or delayed.
(2) Tenant shall not perform any act or carry on
any practice which may injure the Premises or cause any
offensive odors or loud noise or cause a nuisance.
(3) Tenant shall, in its use of the Premises,
subject to Landlord's compliance with Article IX, comply
with all applicable laws and rules, orders, regulations and
requirements of all governmental and quasi-governmental
authorities having or asserting jurisdiction and any
insurer of Landlord or of all or any part of the Building.
7.2 INSTALLATIONS AND ALTERATIONS BY TENANT. (A)
Tenant shall not make or perform, or permit the making or
performance of, any alterations, improvements, additions or
other physical changes in or about the Premises
(collectively, "Alterations") (other than non-structural
Alterations to the interior of the Premises costing less
than $20,000 in the aggregate during any 12 month period
and not affecting Building systems or reducing the value or
utility of the Building) without Landlord's prior written
consent. Landlord agrees not to unreasonably withhold its
consent to any Alterations which are nonstructural, do not
involve the Building's systems and are not visible from
outside the Building, provided that such Alterations do not
reduce the value or utility of the Building. All
Alterations shall be done at Tenant's expense and at such
times and in accordance with any reasonable rules and
regulations established by Landlord. Prior to making any
Alterations, Tenant (i) shall submit to Landlord plans and
specifications for each proposed Alteration, (ii) shall, at
its expense, obtain all permits, approvals and certificates
required by any governmental or quasi-governmental bodies,
and (iii) shall furnish to Landlord duplicate original
policies of worker's compensation insurance (covering all
persons to be employed by Tenant and Tenant's contractors
and subcontractors in connection with such Alteration) and
comprehensive public liability (including property damage
coverage) insurance in such form, with such companies, for
such periods and in such amounts as Landlord may reasonably
require, naming Landlord and its agents as additional
insureds. All materials and equipment to be incorporated
in the Building as a result of all alterations or
improvements shall be of at least comparable quality to the
then existing improvements. No such materials or equipment
shall be subject to any lien, encumbrance, chattel
mortgage, title retention or security agreement. All work
performed by Tenant to the Premises shall be done in
compliance with all applicable laws and regulations.
(B) All Alterations and all fixtures, paneling,
partitions, railings, equipment and like installations
installed in the Building at any time either by Tenant or
by Landlord on Tenant's behalf shall, upon installation,
become the property of Landlord (unless otherwise agreed in
writing by Landlord and Tenant) and remain upon and be
surrendered with the Premises unless Landlord, by notice to
Tenant given on or before the expiration of the Term of
this Lease, elects to relinquish Landlord's right thereto
and to have them removed by Tenant, in which event, they
shall be removed by Tenant at the expiration or earlier
termination of the Term of this Lease and at Tenant's
expense. Tenant shall repair any damage to the Premises or
the Building caused by any removal of such Alterations.
(C) All trade fixtures, articles of personal property
and all business machinery and equipment and furniture
owned or installed by Tenant solely at its expense in the
Premises ("Tenant's Removable Property") shall, remain the
property of Tenant and may be removed by Tenant at any time
prior to the expiration of this Lease, provided that
Tenant, at its expense, shall repair any damage to the
Premises or the Building caused by any installation and/or
removal of Tenant's Removable Property.
(D) Notice is hereby given that Landlord shall not be
liable for any labor or materials furnished or to be
furnished to Tenant. Tenant shall not permit any
mechanic's or other lien for any such labor or materials to
attach to or affect the reversion or other estate or
interest of Landlord in and to the Premises. Whenever and
as often as any mechanic's lien shall have been filed
against the Premises based upon any act of, or for work
claimed to have been done for, or materials furnished to,
Tenant, or of, for or to anyone claiming through Tenant,
Tenant shall forthwith take such action, by bonding,
deposit or payment, as will remove or satisfy the lien.
ARTICLE VIII
------------
ASSIGNMENT AND SUBLETTING
8.1 PROHIBITION. Tenant covenants and agrees that
neither this Lease nor the term and estate hereby granted,
nor any interest herein or therein, will be assigned
(including, without limitation, by operation of law),
mortgaged, pledged, encumbered or otherwise transferred,
and that neither the Premises nor any part thereof will be
encumbered in any manner by reason of any act or omission
on the part of Tenant, or used or occupied or permitted to
be used or occupied by anyone other than Tenant or for any
use or purpose except as may be permitted by Section 7.1, or
be sublet (which term, without limitation, shall include
granting of concessions, licenses and the like) in whole or
in part, without, in each instance, Tenant having first
received the express written consent of Landlord. Landlord
agrees that it will not withhold or delay consent to
subletting by a third party if, in Landlord's reasonable
discretion, Landlord is reasonably satisfied that (i) the
identity of such third party is of a type and character
suitable for a suburban warehouse/office building, and (ii)
the type of business that such third party proposes to
operate in the Premises is permitted under applicable
zoning regulations. If this Lease be assigned, or if the
Premises or any part thereof be sublet or occupied by
anyone other than Tenant, Landlord may collect rent and
other charges from the assignee, subtenant or occupant, and
apply the net amount collected to the Fixed Rent and other
charges herein reserved, but no such assignment,
subletting, occupancy or collection shall be deemed a
waiver of this covenant, the acceptance of the assignee,
subtenant or occupant as a tenant or a release of Tenant
from the further performance by Tenant of its obligations
hereunder. The consent by Landlord to an assignment or
subletting shall in no way be construed to relieve Tenant
or any successor from obtaining the express consent in
writing of Landlord to any further assignment or
subletting. Notwithstanding anything to the contrary in
the foregoing, no consent of Landlord shall be required for
(i) any sublease or occupancy agreement with an entity
controlled by, under common control with or controlling
Tenant; (ii) a pledge or assignment of Tenant's interest in
this Lease pursuant to a leasehold mortgage; or (iii) an
assignment of the Lease to any successor of Tenant by
merger, consolidation or acquisition of all or
substantially all the stock or assets of Tenant; provided
that (A) Tenant shall deliver to Landlord at least 30 days'
advance notice of any such sublease or occupancy agreement
or such leasehold mortgage; (B) Tenant shall provide
Landlord with complete copies of any leasehold mortgage
promptly after the execution of any such mortgage; (C) in
the case of a merger, consolidation or sale, the net worth
of Tenant's successor (determined in accordance with
generally accepted accounting principles) immediately after
such merger, consolidation or sale is equal to or greater
than $60,000,000; and (D) Tenant shall remain liable for
the performance of Tenant's obligations hereunder during
the balance of the Term.
In any case where Landlord shall consent to such
assignment, subletting or use, Tenant shall remain fully
liable for Tenant's obligations under this Lease,
including, without limitation, the obligation to pay the
rent and other amounts provided under this Lease. At
Landlord's election, it shall be a condition of the
validity of any such assignment, that, upon Landlord's
request, the assignee shall agree directly with Landlord,
in form reasonably satisfactory to Landlord, to be bound by
all the obligations of Tenant, including, without
limitation, the obligation to pay rent and other amounts
provided under this Lease and the covenant against further
assignment, subletting and use.
8.2 OTHER REQUIREMENTS AND PROVISIONS.
(A) No assignment of this Lease shall be effective
unless and until Tenant delivers to Landlord duplicate
originals of the instrument of assignment (wherein the
assignee assumes the performance of Tenant's obligations
under this Lease) and any accompanying documents.
(B) No sublease (or other occupancy agreement) of all
or any part of the Premises shall be effective unless and
until Tenant delivers to Landlord duplicate originals of
the instrument of sublease and any accompanying documents
(wherein the sublessee (or other occupier) assumes the
performance of Tenant's obligations as to the subleased
space). Any such sublease (or other occupancy agreement)
shall be subject and subordinate to this Lease.
(C) Any assignment or sublease shall neither release
Tenant from its liability for the performance of Tenant's
obligations hereunder during the balance of the Term of
this Lease nor constitute Landlord's consent to any further
assignment or sublet of this Lease. If a sublease to which
Landlord has consented is assigned or all or any portion of
the Premises is further sublet without in each instance,
the prior consent of Landlord, then Tenant shall
immediately terminate such sublease, or arrange for the
termination thereof, and proceed expeditiously to have the
occupant thereunder dispossessed.
(D) Tenant shall pay to Landlord, promptly upon
demand therefor, all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees
and disbursements) incurred by Landlord in connection with
any assignment of this Lease or sublease of all or any part
of the Premises.
(E) Any profit resulting from any such assignment or
subletting shall be 100% payable to Landlord.
ARTICLE IX
----------
RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES
9.1 LANDLORD REPAIRS AND MAINTENANCE.
(A) Landlord agrees to keep in good working order,
condition and repair the roof (but not the ceiling in the
Building), foundation, exterior walls and structure of the
Building. Landlord shall also be responsible for
landscaping of the Premises and repairs to and maintenance
of the common driveways and parking areas located on the
Premises, including lighting of such areas and removal of
snow and ice.
(B) Landlord shall keep in good working order,
condition and repair the existing septic, heating,
ventilating and air-conditioning systems servicing the
Building in place as of the Commencement Date,
(collectively, the "Building Systems"). Tenant shall pay
Landlord, as additional rent, and in the manner set forth
below, (i) for all costs incurred by Landlord in connection
with any and all maintenance performed on the Building
Systems during the Term of this Lease (but not for
replacements or other items of a capital nature), and
(ii) for all costs incurred by Landlord in connection with
any repairs or replacements (including without limitation
items of a capital nature) made to the Building Systems
during the period commencing on the fifth (5th) anniversary
of the Commencement Date and continuing through the
remainder of the Term of this Lease. Landlord shall submit
to Tenant copies of Landlord's invoices detailing any such
costs and Tenant shall pay to Landlord the entire amount of
such costs, as additional rent, within thirty (30) days of
receipt of Landlord's invoices. Any amounts paid by Tenant
under the terms of this Section 9.1(B) shall not be deemed
to be payment of Tenant's Share of Operating Expenses, and
shall be in addition to Tenant's obligations under Article
VI.
(C) Landlord shall in no event be responsible to
Tenant for the replacement of glass in the Building or for
the doors leading to the Building (except to the extent any
damage thereto is caused by Landlord), or for any condition
in the Premises or the Building caused by any negligence or
misconduct of Tenant, its employees, agents, invitees or
contractors (including any non-permitted use thereof).
Except as otherwise provided in this Lease, Landlord shall
not be responsible for making any other improvements or
repairs to the Building. Landlord shall not be liable for
any failure to make repairs which, under the provisions of
this Section 9.1 or elsewhere in this Lease, Landlord has
undertaken to make, unless Tenant has given notice to
Landlord of the need to make such repairs and Landlord has
failed to commence to make such repairs within a reasonable
time after receipt of such notice, or fails to proceed with
reasonable due diligence to complete such repairs.
9.2 TENANT'S AGREEMENT. (A) Tenant will keep the
Premises in good order, condition and repair, reasonable
wear and tear excepted, excepting only those repairs for
which Landlord is responsible under the terms of this Lease
or which are necessitated by the occurrence of a fire or
other casualty or by the exercise of the power of eminent
domain; and Tenant shall surrender the Premises, at the end
of the Term of this Lease, in such condition. Without
limitation, Tenant shall maintain and use the Premises in
accordance with all reasonable, rules and regulations of
Landlord and all governmental agencies having jurisdiction
and shall, at Tenant's own expense, obtain all permits,
licenses and the like required by applicable law for
Tenant's use of the Premises, other than occupancy permits
of general application. Tenant shall be responsible for
the provision of adequate security to the Premises and to
Tenant's personnel. Tenant shall be responsible for the
cost of repairs which may be made necessary by reason of
damage to the Premises caused by Tenant or its contractors
or invitees.
(B) If repairs are required to be made by Tenant
pursuant to the terms hereof and are not made within the
time periods allowed hereunder, Landlord may demand that
Tenant make the same forthwith, and, if Tenant refuses or
neglects to commence such repairs and complete the same
with reasonable dispatch after such demand, Landlord may
(but shall not be required to) make or cause such repairs
to be made at Tenant's expense and shall not be responsible
to Tenant for any loss or damage that may occur to Tenant's
stock or business by reason thereof unless caused by
Landlord's negligence or willful misconduct.
9.3 HEAVY MACHINERY. Any moving of machinery or
equipment by Tenant shall be at the sole risk and hazard of
Tenant, and Tenant will exonerate, indemnify and save
Landlord harmless against and from any liability, loss,
injury, claim or suit resulting directly or indirectly from
such moving.
9.4 UTILITIES. Tenant shall pay directly to the
proper authorities charged with the collection thereof all
charges for water, septic, gas, electricity, telephone and
other utilities or services used or consumed on the
Premises, all such charges to be paid as the same from time
to time become due.
9.5 INTERRUPTION OR CURTAILMENT OF SERVICES. Upon
reasonable advance notice to Tenant (except in case of
emergency), Landlord reserves the right to temporarily
interrupt, curtail, stop or suspend (a) the heating and air
conditioning services in the Building and (b) the operation
of the plumbing and electric systems in the Building, when
necessary by reason of accident or emergency, or for
repairs, alterations, maintenance, replacements or
improvements in the reasonable judgment of Landlord
desirable or necessary to be made, or by reason of
difficulty or inability in securing supplies or labor, or
strikes, or any other cause beyond the reasonable control
of Landlord, whether such other cause be similar or
dissimilar to those hereinabove specifically mentioned,
until said cause has been removed. This Lease shall not be
affected or any of the Tenant's obligations hereunder
reduced, and the Landlord shall have no responsibility or
liability for any such interruption, curtailment, stoppage,
or suspension of services or systems as in this Section 9.5
above provided, except that (i) Landlord shall exercise
reasonable diligence to eliminate the cause of same as soon
as reasonably practicable; (ii) Landlord shall use diligent
efforts to minimize any interruption of Tenant's use and
enjoyment of the Premises, and (iii) if all of the Premises
are rendered unfit for occupancy by Tenant for thirty (30)
consecutive days, the Fixed Rent shall abate from and after
the thirty (30) days and until the Premises are again
rendered fit for Tenant's occupancy.
ARTICLE X
---------
INDEMNITY AND INSURANCE
10.1 TENANT'S INDEMNITY. To the maximum extent this
agreement may be made effective according to law, Tenant
agrees to indemnify and save harmless Landlord and
Landlord's agents, affiliates, contractors and the
employees of the foregoing from and against all claims of
whatever nature arising from any act, omission or
negligence of Tenant or Tenant's contractors, licensees,
invitees, 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 account of
or based upon the act, omission or negligence or misconduct
of Tenant or Tenant's contractors, licensees, invitees,
agents servants or employees or arising from any breach by
Tenant of the terms and conditions of this Lease. This
indemnity and hold harmless agreement shall include
indemnity against all costs, expenses and liabilities
(including, but not limited to, reasonable attorney's fees
and disbursements) incurred in connection with any such
claim or proceeding brought thereon and the defense
thereof. Tenant's liability hereunder shall survive any
expiration or termination of this Lease. Nothing in the
foregoing shall be construed to include indemnity with
respect to any claim of whatever nature to the extent (and
only to the extent) caused by the gross negligence or
willful misconduct of Landlord, Landlord's agents,
affiliates, contractors and employees or by a failure of
Landlord to perform its obligations hereunder. Nothing in
this Section 10.1 shall be construed to reduce or otherwise
affect Landlord's obligations pursuant to Article XVII
hereof.
10.2 INSURANCE. (A) Tenant agrees to maintain in
full force, from the date upon which Tenant first enters
the Premises for any reason throughout the Term of this
Lease and thereafter so long as Tenant is in occupancy of
any part of the Premises, (i) "all risk" property insurance
covering all present and future Tenant's Removable Property
and Tenant's improvements and betterments to a limit of not
less than the full replacement cost thereof and (ii) a
policy of general liability and property damage insurance
(including broad form contractual liability, independent
contractor's hazard and completed operations coverage) in
respect of the Premises and the conduct or operation of
business therein, with Landlord and any permitted mortgagee
under Section 15.13 hereof of which Tenant has received
written notice, including John Hancock Mutual Life
Insurance Company, (and such other persons as are in
privity of estate with Landlord as may be set out in notice
from time to time) named as an additional insured, and with
limits of not less than the amount of Public Liability
Insurance specified in Section 1.1. Tenant shall deliver
to Landlord certificates of insurance and receipts
evidencing payment of the premiums for such insurance on or
before the Commencement Date and annually thereafter. Each
such policy shall be noncancellable and nonamendable with
respect to Landlord and Landlord's said designees without
twenty (20) days' prior notice to Landlord.
(B) Tenant hereby waives and releases Landlord from
any and all liabilities, claims and losses on account of
damage to Tenant's Removable Property for which Landlord is
or may be held liable to the extent Tenant either is
required to maintain insurance pursuant to Section 10.2(A)
or actually receives insurance proceeds on account thereof.
Landlord hereby waives and releases Tenant from any and all
liabilities, claims and losses on account of damage to the
Building for which Tenant is or may be held liable to the
extent Landlord actually receives insurance proceeds on
account thereof or to the extent Landlord would have
received such proceeds had Landlord maintained the
insurance required by Section 10.5 of this Lease. Each
party hereto shall secure waiver of subrogation
endorsements from their respective insurance carriers.
10.3 TENANT'S RISK. Except as provided herein, to
the maximum extent this agreement may be made effective
according to law, Tenant agrees to use and occupy the
Premises and to use such other portions of the Building as
Tenant is herein given the right to use at Tenant's own
risk; and Landlord shall have no responsibility or
liability for any loss of or damage to Tenant's Removable
Property or for any other property of any kind, nature and
description which may be in or upon the Premises or the
Building. The provisions of this Section shall be
applicable from and after the execution of this Lease and
until the end of the Term of this Lease, and during such
further period as Tenant may use or be in occupancy of any
part of the Premises or of the Building.
10.4 INJURY CAUSED BY THIRD PARTIES. To the maximum
extent this agreement may be made effective according to
law, Tenant agrees that Landlord shall not be responsible
or liable to Tenant, or to those claiming by, through or
under Tenant, for any loss or damage that may be occasioned
by or through the acts or omissions of any third parties,
except to the extent (and only to the extent) caused by the
gross negligence or willful misconduct of Landlord,
Landlord's agents, affiliates, contractors and employees.
10.5 LANDLORD'S INSURANCE. Landlord shall insure the
Building against damage or destruction by fire or other
casualties insurable under a standard "all risk"
endorsement in an amount equal to one hundred percent
(100%) of the replacement cost of the Building (exclusive
of footings and foundations). Landlord agrees to maintain
a policy of commercial general liability and property
damage insurance in commercially reasonable limits. The
costs of all insurance carried by Landlord with respect to
the Premises shall be Operating Expenses.
ARTICLE XI
----------
LANDLORD'S ACCESS TO PREMISES
11.1 LANDLORD'S RIGHTS. Landlord shall have the
right upon reasonable advance notice to enter the Premises
at all reasonable hours for the purpose of inspecting or
making repairs to the Premises, and Landlord shall also
have the right to make access available at all reasonable
hours to prospective or existing mortgagees, purchasers or,
during the last 12 months of the term, prospective tenants
of any part of the Premises. Notwithstanding the
foregoing, Landlord shall have the right to enter the
Premises at any time without notice in the event of an
emergency. Any exercise of Landlord's right of entry under
this Section 11.1 shall be conducted at such times and in
such manner as to minimize interference with Tenant's
operations on the Premises.
ARTICLE XII
-----------
DAMAGE OR DESTRUCTION
12.1 RESTORATION. (A) If the Building is totally or
partially damaged or destroyed, thereby rendering the
Building totally or partially inaccessible or unusable,
then (unless such damage was caused by Tenant, its agents,
employees, invitees, or contractors) Landlord shall
diligently repair and restore the Building, to
substantially the same condition it was in prior to such
damage or destruction and only to the extent of insurance
proceeds received by Landlord; provided, however, that if
in Landlord's reasonable judgment such repair and
restoration cannot be completed within ninety (90) days
after the occurrence of such damage or destruction (taking
into account the time needed for effecting a satisfactory
settlement with any insurance company involved, removal of
debris, preparation of plans and issuance of all required
governmental permits), then Landlord shall have the right,
at its sole option, to terminate this Lease by giving
written notice of termination within forty-five (45) days
after the occurrence of such damage or destruction.
Landlord shall notify Tenant within 45 days whether
Landlord intends to repair and whether Landlord anticipates
that repairs to the Premises will exceed 180 days to bring
to completion. If Landlord's notice states that such
repairs are not expected to be completed within 180 days,
Tenant shall be entitled to terminate this Lease by notice
to Landlord given within fifteen (15) days of receipt of
Landlord's notice, and this Lease shall then terminate as
if such date were the date of the ordinary expiration of
the Term. In addition, in the event that Landlord has not
completed the repairs required of it under this Section
12.1(A) within one-hundred eighty (180) days of the damage
or destruction, such period to be subject to extension
pursuant to Section 15.4 (but in no event extended beyond a
total of 270 days), Tenant shall have the right, at its
option, to terminate this Lease by delivering written notice
of termination to Landlord within thirty (30) days after the
expiration of such one hundred eighty day period, as the
same may be extended as set forth above.
(B) Notwithstanding anything herein to the contrary,
Landlord shall not be obligated to restore the Building and
shall have the right to terminate this Lease if (1) the
holder of any Mortgage (as such term is defined in Section
15.13 hereof) fails or refuses to make insurance proceeds
available for such repair and restoration, or (2) the cost
of repairing and restoring the Building would exceed fifty
percent (50%) of the replacement value of the Building. If
Landlord is released from its obligation to restore the
Building as a result of this subsection (B) but fails to
terminate this Lease, Landlord shall promptly notify Tenant
and Tenant shall have the option to terminate this Lease by
written notice to Landlord.
12.2 RENT. If the Lease is terminated pursuant to
Section 12.1 above, then all Fixed Rent and additional rent
shall be apportioned (based on the portion of the Building
which is usable after such damage or destruction) and paid
to the date of termination. If this Lease is not
terminated as a result of such damage or destruction, then
until such repair and restoration of the Building is
substantially complete, Tenant shall be required to pay the
Fixed Rent, additional rent and other sums due hereunder
only for the portion of the Building that is fit for
Tenant's occupancy while such repair and restoration are
being made. Landlord shall bear the expenses of repairing
and restoring the Building; provided, however, that
Landlord shall not be required to repair or restore any
alteration, improvement or addition previously made by
Tenant at Tenant's expense or any of Tenant's Removable
Property. Notwithstanding anything in this Lease to the
contrary, if any damage or destruction to the Premises was
caused by the act or omission of Tenant or any agent,
employee, contractor or invitee of Tenant, then Tenant
shall pay the amount by which such expenses of repair or
restoration to the Premises exceed the insurance proceeds,
if any, actually received by Landlord on account of such
damage or destruction.
ARTICLE XIII
------------
CONDEMNATION
13.1 TERMINATION OF LEASE. If the Premises or the
Building or the means of access thereto are totally taken
or condemned by any governmental or quasi-governmental
authority for any public or quasi-public use or purpose,
thereby rendering the Premises totally or substantially
inaccessible or unusable, or are sold under threat of such
a taking or condemnation (collectively, "condemned"), then
this Lease shall terminate on the date title thereto vests
in such authority and Fixed Rent and additional rent shall
be apportioned as of such date. In the event that either
(i) Tenant's reasonable means of access to the Premises is
taken or condemned or (ii) only a "substantial part" of the
Premises is taken or condemned, either Landlord or Tenant,
at its option, by delivery of notice to the other party
within 30 days following the date on which Tenant shall
receive notice of vesting of title, may terminate this
Lease as of the date of vesting of title. A "substantial
part" shall be 60 percent or more of the Premises. In the
event either Landlord or Tenant does not elect to exercise
such termination option, this Lease shall remain in effect,
except the Fixed Rent and additional rent shall be abated
as of the date of vesting of title in an amount apportioned
according to the portion (measured in square feet) of the
Premises so condemned or taken, and Landlord and Tenant
shall execute an amendment to this Lease specifying the new
Fixed Rent and additional rent. In the event of any taking
or condemnation and if neither Landlord nor Tenant
exercises its option to terminate, Landlord, at its
expense, will restore the remaining portion of the Premises
with reasonable diligence to at least the condition
existing prior to such condemnation or taking.
13.2 AWARDS. All awards, damages and other
compensation paid by any governmental or quasi-governmental
authority on account of any condemnation shall belong to
Landlord, and Tenant assigns to Landlord all rights to such
awards, damages and compensation. Tenant shall not make
any claim against Landlord or the authority for any portion
of such award, damages or compensation attributable to
damage to the Premises, value of the unexpired portion of
the Term of this Lease, loss of profits or goodwill,
leasehold improvements or severance damages. Nothing
contained herein, however, shall prevent Tenant from
pursuing a separate claim against the authority for the
value of improvements, alterations, additions, furnishings
and trade fixtures installed in the Building at Tenant's
expense and for relocation expenses.
ARTICLE XIV
-----------
DEFAULT
14.1 TENANT'S DEFAULT. (A) If at any time
subsequent to the date of this Lease any one or more of the
following events (herein referred to as a "Default of
Tenant") shall happen:
(1) Tenant shall fail to pay Fixed Rent,
additional rent or any other amounts payable
under this Lease, when due and such failure
shall continue for ten (10) days after
notice thereof, except that if Landlord
gives such notice twice in any period of
twelve successive months, thereafter no such
notice shall be required; or
(2) Tenant shall neglect or fail to perform or
observe any other covenant herein contained
on Tenant's part to be performed or observed
and Tenant shall fail to remedy the same
within thirty (30) days after notice to
Tenant specifying such neglect or failure,
or if such failure is of such a nature that
Tenant cannot reasonably remedy the same
within such thirty (30) day period, Tenant
shall fail to commence promptly to remedy
the same and to prosecute such remedy to
completion with diligence and continuity,
but in no event longer than ninety (90) days
after notice to Tenant; or
(3) Tenant's leasehold interest in the Premises
shall be taken on execution or by other
process of law directed against Tenant; or
(4) Tenant shall make an assignment for the
benefit of creditors or shall file a
voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall
file any petition or answer seeking any
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or
similar relief for itself under any present
or future Federal, State, or other statute,
law or regulation for the relief of debtors,
or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or
liquidator of Tenant or of all or any
substantial part of its properties, or shall
admit in writing its inability to pay its
debts generally as they become due; or
(5) A petition shall be filed against Tenant in
bankruptcy or under any other law seeking
any reorganization, arrangement,
composition, readjustment, liquidation,
dissolution, or similar relief under any
present or future Federal, State or other
statute, law or regulation and shall remain
undismissed or unstayed for an aggregate of
ninety (90) days (whether or not
consecutive), or if any debtor in possession
trustee, receiver or liquidator of Tenant or
of all or any substantial part of its
properties or of the Premises shall be
appointed without the consent or
acquiescence of Tenant, respectively and
such appointment shall remain unvacated or
unstayed for an aggregate of ninety (90)
days (whether or not consecutive);
(6) A Default of Tenant shall occur under either
(i) that certain Lease of even date herewith
between Theodore Pasquarello and Eileen
Pasquarello, as Trustees of The Paris Trust
(the "Paris Trust Landlord"), as landlord
and Tenant, as tenant for premises located
at 31 Union Avenue, Sudbury; or (ii) that
certain Lease between the Paris Trust
Landlord, as landlord and Tenant, as tenant
for the land and improvements located
thereon at 25 Union Avenue, Sudbury;
then in any such case (a) if such Default of Tenant shall
occur prior to the Commencement Date, this Lease shall ipso
facto, and without further act on the part of the Landlord,
terminate, and (b) if such Default of Tenant shall occur
after the Commencement Date, Landlord or Landlord's agent
may immediately, or at any time thereafter, without demand
or notice, enter into and upon the Premises, or any part
thereof in the name of the whole, and repossess the same
and upon such entry this Lease shall terminate or Landlord
may terminate this Lease at any time thereafter by notice
to Tenant, specifying a date not less than five (5) days
after the giving of such notice on which this Lease shall
terminate and this Lease shall come to an end on the date
specified therein as fully and completely as if such date
were the date herein originally fixed for the expiration of
the Term of this Lease (Tenant hereby waiving any rights of
redemption under M.G.L. ch. 186, sec. 11), and Tenant will
then quit and surrender the Premises to Landlord, but
Tenant shall remain liable as hereinafter provided.
(B) If this Lease shall have been terminated as
provided in this Article, or if any execution or attachment
shall be issued against Tenant or any of Tenant's property
whereupon the Premises shall be taken or occupied by
someone other than Tenant, then Landlord may, without
notice, reenter the Premises, either by summary
proceedings, ejectment or otherwise, and remove and
dispossess Tenant and all other persons and any and all
property from the Premises, as if this Lease had not been
made, and Tenant hereby waives the service of notice of
intention to reenter or to institute legal proceedings to
that end.
(C) In the event of any termination of this Lease,
Tenant shall pay the Fixed Rent, additional rent and all
other amounts payable hereunder up to the time of such
termination, and thereafter Tenant, until the end of what
would have been the Term of this Lease in the absence of
such termination, and whether or not the Premises shall
have been relet, shall be liable to Landlord for, and shall
pay to Landlord, as liquidated current damages, the Fixed
Rent, additional rent and all other amounts payable
hereunder had such termination not occurred, less the net
proceeds, if any, of any reletting of the Premises, after
deducting all reasonable expenses in connection with such
reletting, including, without limitation, all reasonable
repossession costs, brokerage commissions, legal expenses,
advertising and marketing costs, expenses of employees,
alteration and tenant improvement costs and expenses of
preparation for such reletting. Tenant shall pay such
damages to Landlord monthly on the days on which the Fixed
Rent and additional rent would have been payable hereunder
had this Lease not been terminated. Landlord shall use
reasonable efforts to relet the Premises.
(D) At any time after the termination of this Lease,
whether or not Landlord shall have collected any damages
pursuant to Section 14.1(C), as liquidated final damages,
and in lieu of all damages payable by Tenant pursuant to
Section 14.1(C) thereafter, at Landlord's election, Tenant
shall pay to Landlord an amount which at the time of such
election represents the then value of the excess, if any,
of (1) the Fixed Rent, additional rent and all other
amounts which would have been payable by Tenant hereunder
(conclusively presuming the annual payments with respect to
real estate taxes and expense escalation obligations to be
the same as were payable for the preceding year) for the
period commencing with the date of Landlord's election and
ending with the date contemplated as the expiration date
hereof if this Lease had not so terminated, over (2) the
aggregate fair rental value of the Premises for the same
period.
(E) In case of any Default of Tenant, reentry or
expiration and dispossession by summary proceedings or
otherwise, Landlord may (1) relet the Premises or any part
or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may in Landlord's good
faith judgment be equal to or less than or exceed the
period which would otherwise have reasonable constituted
the balance of the Term of this Lease and may grant
reasonable concessions of free rent to the extent that
Landlord considers advisable and necessary to relet the
same, and (2) may make such alterations, repairs and
decoration in and to the Premises as Landlord in its
reasonable judgment considers advisable and necessary for
the purpose of reletting the Premises, and the making of
such alterations, repairs and decorations shall not operate
or be construed to release Tenant from liability hereunder.
Landlord shall in no event be liable in any way whatsoever
for failure to relet the Premises, or in the event that the
Premises are relet, for failure to collect the rent under
such reletting provided Landlord uses reasonable efforts to
collect the rent. Tenant hereby expressly waives any and
all rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or
dispossessed, or in the event of Landlord obtaining
possession of the Premises, by reason of the violation by
Tenant of any of the covenants and conditions of this
Lease.
(F) The specified remedies to which Landlord may
resort hereunder are not intended to be exclusive of any
remedies or means of redress to which Landlord may at any
time be entitled lawfully, and Landlord may invoke any
remedy (including the remedy of specific performance)
allowed at law or in equity as if specific remedies were
not herein provided.
(G) All reasonable costs and expenses incurred by or
on behalf of Landlord (including, without limitation,
reasonable attorneys' fees and expenses) in enforcing its
rights hereunder or occasioned by any Default of Tenant
shall be paid by Tenant promptly upon demand.
ARTICLE XV
----------
MISCELLANEOUS PROVISIONS
15.1 EXTRA HAZARDOUS USE. (A) Tenant covenants and
agrees that Tenant will not do or permit anything to be
done in or upon the Premises, or bring in anything or keep
anything therein, which would increase the rate of property
or liability insurance of the Premises or of the Building
above the standard rate applicable to Premises as of the
Commencement Date being occupied for the Permitted Use; and
Tenant further agrees that, in the event that Tenant shall
do or permit any of the foregoing, Tenant will promptly pay
to Landlord, on demand, any such resulting increase.
(B) Tenant shall not (either with or without
negligence) cause or permit the escape, disposal or release
of any hazardous substances, or materials. Tenant shall
not allow the storage or use of hazardous substances or
materials on or in the Premises in any manner, nor allow to
be brought into any portion of the Building any such
materials or substances except for hazardous substances or
materials disclosed in writing to the Landlord for use in
the ordinary course of the conduct of the Permitted Use,
all such substances or materials to be used and stored in
compliance with applicable laws and regulations. Tenant
shall not store any flammable substances in the Premises,
unless such flammable substances are stored in areas with
in-rack sprinkling. Any such hazardous substances or
flammable substances shall be stored, used and disposed of
in accordance with all applicable laws and regulations.
Without limitation, hazardous substances and materials
shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601 et seq., M.G.L.
Chapter 21E and any other applicable federal, state or
local laws and the regulations adopted under these acts.
If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any
release of hazardous materials as a result of a breach by
Tenant of the provisions of this Section 15.1(B), then the
reasonable costs thereof shall be reimbursed by Tenant to
Landlord upon demand as additional charges. In addition,
Tenant shall execute affidavits, representations and the
like from time to time at Landlord's reasonable request
concerning Tenant's best knowledge and belief regarding the
presence of hazardous substances or materials on the
Premises. In all events, Tenant shall indemnify Landlord
from and against any and all Environmental Damages (as
defined in Section 17.1) asserted by any third party or
governmental authority and either occurring during the Term
of this Lease or resulting from any violation by Tenant (or
its employees, agents, invitees, or contractors) of any
environmental laws pertaining to the Premises or caused by
Tenant (or its agents, employees, invitees, or contractors)
or persons acting under the direction of Tenant (except to
the extent caused by Landlord or persons acting under the
direction of Landlord). The within covenants shall survive
the expiration or earlier termination of the Term of this
Lease. Nothing in this Section 15.1 shall be construed to
reduce or otherwise affect Landlord's obligations pursuant
to Article XVII hereof. In the event of any conflict
between this Section and Article XVII, the provisions of
Article XVII shall control.
15.2 WAIVER. The failure of either Landlord or
Tenant to insist in any one or more instances upon the
strict performance of any one or more of the obligations of
this Lease, or to exercise any election herein contained,
shall not be construed as a waiver or relinquishment for
the future of the performance of such one or more
obligations of this Lease or of the right to exercise such
election, and such right to insist upon strict performance
shall continue and remain in full force and effect with
respect to any subsequent breach, act or omission. The
receipt by Landlord of Fixed Rent, additional rent or other
payments due hereunder or partial payments thereof with
knowledge of breach by Tenant of any obligation of this
Lease shall not be deemed a waiver of such breach.
15.3 COVENANT OF QUIET ENJOYMENT. Landlord covenants
tha t, if Tenant shall timely perform all of its obligations
hereunder, then, subject to the provisions of this Lease,
Tenant shall, during the Term of this Lease, peaceably and
quietly occupy and enjoy the full possession of the
Premises without hindrance by Landlord or any party
claiming through or under Landlord.
15.4 FORCE MAJEURE, ETC. (A) If either Tenant or
Landlord is in any way delayed or prevented from performing
any of its obligations under this Lease (excluding any
monetary obligations of Tenant, including without
limitation Tenant's obligation to pay Fixed Rent and
additional rent) due to fire, act of God, governmental act
or failure to act, strike, labor dispute, inability to
procure materials, war or any other cause beyond such
party's reasonable control (whether similar or dissimilar
to the foregoing events), then the time for performance of
such obligation shall be excused for the period equal to
the period of such delay or prevention and extended for a
period equal to the period of such delay or prevention.
(B) In no event shall either party be liable to the
other for any indirect or consequential damages suffered by
either from any cause whatsoever.
15.5 ASSIGNMENT OF RENTS AND TRANSFER OF TITLE. (A)
If Landlord shall assign Landlord's interest in this Lease
or in the rents payable hereunder to the holder of a
mortgage covering the Premises (regardless of whether or
not such assignment is conditional in nature), then such
assignment shall not be construed as an assumption by the
assignee of any of the obligations of Landlord hereunder
unless such assignee (1) by notice sent to Tenant,
specifically otherwise elects, or (2) forecloses on its
mortgage, or (3) takes possession of the Premises.
(B) In the event of any transfer of title to the
Premises by Landlord, Landlord shall thereafter be released
from the performance and observance of all covenants and
obligations hereunder occurring after the date of such
transfer and the transferee shall be deemed the Landlord
under this Lease from and after the date of such transfers,
except for the provisions of Articles XVII and XX (which
shall not be binding upon the transferee), provided that in
no event shall the original Landlord be relieved of any
obligations pursuant to Article XVII, which obligations
shall survive any such transfer in the manner and to the
extent set forth in Section 17.1.
15.6 RULES AND REGULATIONS. Tenant shall abide by
all reasonable rules and regulations reasonably established
by Landlord from time to time for the operation of the
Premises. Landlord agrees to use reasonable efforts to
insure that any such rules and regulations are uniformly
enforced, but Landlord shall not be liable to Tenant for
the violation of any such rules or regulations by any other
tenant or occupant of the Premises or persons conducting
business with such tenant or occupant.
15.7 ADDITIONAL CHARGES. If Tenant shall fail to pay
when due any sums under this Lease, Landlord shall have the
same rights and remedies as Landlord has hereunder for
failure to pay Fixed Rent.
15.8 INVALIDITY OF PARTICULAR PROVISIONS. If any
provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be invalid or
unenforceable, then the remainder of this Lease and the
application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable
shall not be affected thereby.
15.9 PROVISIONS BINDING. Except as herein otherwise
provided, the provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto
and each of their respective successors and assigns,
subject to the provisions herein restricting assignment or
subletting.
15.10 NOTICES. All notices or other permitted or
required communications hereunder shall be in writing and
shall be deemed duly given when delivered in person (with
receipt therefor), or when sent by Express Mail or
overnight courier service (provided a receipt will be
obtained) or by certified or registered mail, return
receipt requested, postage prepaid to the following
addresses:
If to Landlord, addressed to Landlord at Landlord's
Address (or to such other address or addresses as may
from time to time hereafter be designated by Landlord
by notice).
If to Tenant, addressed to Tenant at Tenant's Original
Address.
15.11 WHEN LEASE BECOMES BINDING. The submission of
this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or
option for, the Premises, and this document shall become
effective and binding only upon the execution and delivery
hereof by both Landlord and Tenant. All negotiations,
consideration, representations and understandings between
Landlord and Tenant are incorporated herein and this Lease
expressly supersedes any proposals or other written
documents relating hereto. This Lease may be modified or
altered only by written agreement signed by Landlord and
Tenant, and no act or omission of any employee or agent of
Landlord shall alter, change or modify any of the
provisions hereof. This Lease shall not be recorded, but
Landlord shall, on request from Tenant, execute and
acknowledge, a Notice of Lease pursuant to M.G.L. Chapter
183, Section 4.
15.12 PARAGRAPH HEADINGS. The paragraph headings
throughout this Lease are for convenience and reference
only, and the words contained therein shall in no way be
held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions
of this Lease.
15.13 RIGHTS OF MORTGAGEE AND GROUND LESSOR. (A)
This Lease is subject and subordinate to the lien,
provisions, operation and effect of all mortgages, deeds of
trust, ground leases or other security instruments which
may now encumber the Building or the Premises
(collectively, "Mortgages"; individually, "Mortgage"), to
all funds and indebtedness intended to be secured thereby,
and to all renewals, extensions, modifications, recastings
or refinancings thereof. The holder of any Mortgage to
which this Lease is subordinate shall have the right
(subject to any required approval of the holder of any
superior Mortgage) at any time to declare this Lease to be
superior to the lien, provisions, operation and effect of
such Mortgage and Tenant shall execute, acknowledge and
deliver all documents required by such holder in
confirmation thereof provided such documents are in form
and substance reasonably satisfactory to Tenant. The
holder of any Mortgage placed on the Premises after the
date of this Lease may elect to subordinate this Lease to
such Mortgage, provided that the holder shall deliver to
Tenant a Non-disturbance and Attornment Agreement, on a
commercially reasonable form, whereby such holder agrees
not to disturb Tenant's rights under this Lease provided
that Tenant is not in default beyond applicable cure
periods hereunder. Tenant acknowledges that John Hancock
Mutual Life Insurance Company and The First National Bank
of Boston are permitted mortgagees of the Landlord under
this Lease. The notice address of John Hancock is: John
Hancock Place, Post Office Box 111, Boston, MA 02117 and
the notice address of the Bank is: 100 Federal Street,
Boston, MA 02110, Attention Elise Pricone. Landlord agrees
to use reasonable efforts to obtain from John Hancock, a
Non-disturbance Agreement, on John Hancock's standard form,
within 90 days of the Commencement Date of this Lease.
(B) In confirmation of the foregoing subordination,
Tenant shall at Landlord's request promptly execute any
requisite or appropriate document. If the Premises are
sold at foreclosure or transferred by a deed-in-lieu of
foreclosure, then, at the request of such purchaser, Tenant
shall attorn to such purchaser and shall recognize such
purchaser as the landlord under this Lease provided that
such purchaser agrees not to disturb Tenant's possession of
the Premises and agrees to be bound by and assume
Landlord's obligations hereunder except such purchaser
shall not be (1) bound by any payment of the Fixed Rent or
additional payments due hereunder for more than one (1)
month in advance, (2) bound by any amendment of this Lease
made without the consent of the holder of each Mortgage
existing as of the date of such amendment provided Tenant
had notice of such Mortgage, (3) liable for damages for any
breach, act or omission of any prior landlord, and (4)
subject to any offsets or defenses which Tenant might have
against any prior landlord. Within fifteen (15) days after
the request of such purchaser, Tenant shall execute,
acknowledge and deliver confirmation of such attornment and
non-disturbance agreement in form reasonably acceptable to
Tenant.
(C) After Tenant receives notice from any person,
firm or other entity that it holds a Mortgage on the
Building or the Premises, no notice from Tenant to Landlord
alleging any default by Landlord shall be effective unless
and until a copy of the same is given to such holder,
provided that Tenant shall have been furnished with the
name and address of such holder. Any such holder shall
have thirty (30) days after its receipt of notice from
Tenant of a default by Landlord under this Lease to cure
such default before Tenant may exercise any remedy
hereunder. The curing of any of Landlord's defaults by
such holder shall be treated as performance by Landlord.
(D) This Lease is subject to Landlord obtaining on or
before the Commencement Date, the consent of John Hancock.
15.14 ESTOPPEL CERTIFICATES. At any time and from
time to time upon not less than fifteen (15) days prior
written notice, Tenant and each subtenant or assignee of
Tenant or occupant of the Premises shall execute,
acknowledge and deliver to Landlord and/or any other person
or entity designated by Landlord, an estoppel certificate
(1) certifying that this Lease is unmodified and in full
force and effect (or if there have been modifications, that
this Lease is in full force and effect as modified and
stating the modifications), (2) stating the dates to which
the rent and any other charges have been paid, (3) stating
whether or not, to the best of Tenant's knowledge, Landlord
is in default in the performance of any obligation of
Landlord contained in this Lease, and, if so, specifying
the nature of such default, (4) stating the address to
which notices are to be sent, and (5) certifying to such
other matters as Landlord may reasonably request. Tenant
acknowledges that time is of the essence to the delivery of
such statements. Upon request, Tenant agrees to furnish
Landlord with Tenant's current annual reports and any other
financial information of Tenant as Landlord may reasonably
request from time to time.
15.15 REMEDYING DEFAULTS. Upon five business days'
notice to Tenant, Landlord shall have the right, but shall
not be required, to pay such sums or perform such acts
which may be necessary or appropriate by reason of the
failure or neglect of Tenant to perform any of its
obligations under this Lease beyond any applicable notice
and grace period hereunder. If Landlord, in connection
with the foregoing, makes any reasonable expenditures or
incurs any obligations for the payment of money, Tenant
agrees to pay to Landlord within five (5) days of demand
all such sums. After a Default of Tenant in the payment of
Fixed Rent, additional rent or other amounts payable
hereunder, such amounts shall, at the option of Landlord,
bear interest from the due date thereof at a rate equal to
five percent (5%) over the rate of interest reported from
time to time in the Wall Street Journal as being the "prime
rate" then in effect and shall be payable by Tenant to
Landlord on demand by Landlord. Notwithstanding anything
to the contrary contained herein, the interest to be paid
by Tenant to Landlord hereunder shall be limited to the
then maximum legal rate thereof.
15.16 HOLDING OVER. If Tenant does not immediately
surrender the Premises upon the expiration or earlier
termination of the Term of this Lease, then Tenant shall
become a tenant by the month and the rent shall be
increased to 150% of the monthly installments of Fixed
Rent, additional rent and all other amounts that would have
been payable pursuant to the provisions of this Lease if
the Term of this Lease had continued during such holdover
period. Such rent shall be computed on a monthly basis and
shall be payable on the first day of such holdover period
and the first day of each calendar month thereafter during
such holdover period until the Premises have been vacated.
Landlord's acceptance of such rent shall not in any manner
adversely affect Landlord's other rights and remedies,
including Landlord's right to evict Tenant and to recover
damages.
15.17 SURRENDER OF PREMISES. Upon the expiration or
earlier termination of the Term of this Lease, Tenant shall
peaceably quit and surrender to Landlord the Premises in
good order and condition, together with all alterations,
additions and improvements which may have been made or
installed in, on or to the Premises prior to or during the
Term of this Lease (subject, however, to the provisions of
Section 7.2(B)), excepting only ordinary wear and use,
eminent domain, and damage by fire or other casualty.
Tenant shall remove all of Tenant's Removable Property and
all items specified by Landlord pursuant to Section 7.2(B)
and shall, at its expense, repair and restore the Premises
to the condition existing prior to installation and repair
any damage to the Premises or the Building due to such
removal. Any of Tenant's Removable Property which shall
remain in the Building or on the Premises after the
expiration or termination of the Term of this Lease shall
be deemed conclusively to have been abandoned, and either
may be retained by Landlord as its property or may be
disposed of, at Tenant's sole cost and expense, in such
manner as Landlord may see fit.
15.18 PAYMENTS BY TENANT. All amounts payable by
Tenant under the terms of this Lease, including without
limitation, all payments of Fixed Rent, additional rent
under Articles V and VI and all payments under Section
9.1(B), shall be paid to Landlord without offset, abatement,
deduction or demand.
ARTICLE XVI
-----------
BROKERAGE
16.1 BROKERAGE. Landlord and Tenant each represent
to the other that it has dealt with no broker in connection
with this Lease. Landlord and Tenant each agree to
indemnify and hold the other harmless from any brokerage
commission, and any other loss, damage or expense,
including reasonable attorneys' fees, resulting from any
dealings by such party in breach of the foregoing
representation.
ARTICLE XVII
------------
ENVIRONMENTAL MATTERS
17.1 INDEMNIFICATION. Landlord shall defend (with
counsel selected by Landlord) and indemnify Tenant from and
against any and all Environmental Damages (as defined
below) asserted by any third party (including, without
limitation, any sub-tenant, assignee or other successor to
Tenant's interest hereunder but only to the extent Landlord
would have been liable to Tenant hereunder in the absence
of any such sublease, assignment or other transfer) or
governmental authority. Landlord's obligations under this
Article XVII shall survive and continue in full force and
effect (subject only to any applicable statutes of
limitations) for a period of three (3) years from the
expiration date of this Lease (the "Termination Date"),
except that Landlord's indemnity obligations under this
Article XVII as to matters caused directly by Landlord or
persons acting under the direction of Landlord during the
Term of this Lease shall survive beyond the Termination
Date and that if there are any pending claims under the
terms of this Article XVII existing on the Termination Date
(whether or not asserted in a case of law) or if there is
any response action which Landlord is obligated to perform
under Section 17.3 and of which Landlord has received notice
on or before the Termination Date, Landlord's obligations
under this Article XVII solely as to such pending claims or
such response action, shall be extended until such time as
the pending claims have been resolved or such response
action has been completed, respectively.
"Environmental Damages" means all claims, judgments,
damages, losses, penalties, fines, liabilities (including
as well strict liability), encumbrances, liens, costs, and
expenses of investigation and defense of any claim, whether
or not such claim is ultimately defeated, and of any good
faith settlement, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or
unforseeable, including without limitation reasonable
attorneys' fees and disbursements and consultants' fees and
response costs, any of which are incurred at any time as a
result of the existence of oil or hazardous materials upon,
about or beneath the Premises and/or any properties
downgradient from or cross-gradient to the Premises, or
migrating or threatening to migrate to or from the
Premises, and any violation by Landlord of any applicable
environmental law pertaining to the Premises (except as
specifically provided in the next paragraph), all to the
extent (and only to the extent) resulting from any
existence or migration of oil or hazardous materials,
provided that the violation, existence, migration and/or
threat of migration occurred or arose prior to the Term of
this Lease and is disclosed in certain reports and other
documents identified in Exhibit C attached hereto and
treating each report and document as applying equally to
the Property, the 31 Union Avenue property and the 25 Union
property or occurred or arose during the Lease Term and was
caused directly by Landlord or persons acting under the
direction of Landlord.
The foregoing indemnity shall not apply to any
Environmental Damages resulting from, relating to, or
arising out of the release or threat of release of oil or
hazardous materials occurring during the Term of the Lease
(unless directly caused by Landlord) or resulting from
Tenant's (or its employees', agents' invitees' or
contractors') violation of any environmental laws or caused
by Tenant's use, operation, or occupation of the Premises
or from any breach by Tenant of the provisions of Section
15.1 of this Lease.
17.2 THIRD PARTY CLAIMS.
(A) If any third party shall notify either Landlord
or Tenant with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against Landlord under this Article XVII or a claim for
indemnification against Tenant under Section 15.1, then the
party receiving notice shall promptly notify the other party
in writing; provided, however, that no delay in notifying
the other party shall relieve that party from any obligation
hereunder unless (and then solely to the extent) such party
is prejudiced.
(B) Landlord agrees to defend Third Party Claims
which arise solely out of Landlord's indemnity obligations
under Section 17.1 and so long as Landlord is conducting the
defense of the Third Party Claim in accordance with Section
17.1 above, (i) Tenant may retain separate co-counsel at
its sole cost and expense and participate in the defense of
the Third Party Claim, (ii) Tenant will not consent to the
entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of Landlord, and (iii) Landlord will not consent to
the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of Tenant (not to be withheld unreasonably).
(C) If Landlord does not defend against the Third
Party Claim as required by Section 17.2(B), however, (i)
Tenant may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem
appropriate (provided that Landlord may participate in any
such action, at its own expense, and Landlord shall have
the right to reject any settlement proposal by Tenant),
(ii) Landlord will reimburse Tenant promptly and
periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and
expenses), and (iii) Landlord will remain responsible for
any Environmental Damages Tenant may suffer resulting from,
arising out of, relating to, in the nature of, or caused by
the Third Party Claim to the extent (and only to the
extent) provided in this Article XVII.
(D) Tenant agrees to defend Third Party Claims which
arise out of Tenant's indemnity obligations under Section
15.1 and so long as Tenant is conducting the defense of the
Third Party Claim in accordance with Section 15.1, (i)
Landlord may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party
Claim,(ii) Landlord will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of
Tenant (not to be withheld unreasonably), and (iii) Tenant
will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without
the prior written consent of Landlord (not to be withheld
unreasonably).
(E) If Tenant does not defend against the Third Party
Claim as required by Section 17.2(D), however, (i) Landlord
may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third
Party Claim in any manner it reasonably may deem appropriate
(provided that Tenant may participate in any such action,
at its own expense), (ii) Tenant will reimburse Landlord
promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (iii) Tenant will remain
responsible for any Environmental Damages Landlord may
suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the
fullest extent provided in this Article XVII and in Section
15.1.
17.3 RESPONSE ACTIONS. If Tenant or Landlord is
required by applicable law to remediate oil or hazardous
materials on or under the Premises or migrating or
threatening to migrate through, under or beyond the
Premises, or to take any other response actions related to
the Premises and/or any migration or threat of migration,
then Landlord shall promptly undertake all such response
actions in accordance with all applicable laws. Upon
completion of each response action, Landlord shall
reasonably restore any affected portion of the Premises to
the condition existing prior to the commencement of such
response action. If the response action is the result of
any breach by Tenant of the terms of Section 15.1 or
otherwise results from any environmental condition occurring
during the Term of this Lease, Tenant shall reimburse
promptly and periodically Landlord, as additional rent, for
all costs incurred by Landlord in connection with such
response action.
Tenant agrees, upon reasonable prior written notice
from Landlord, to grant Landlord or its contractors access
to the Premises to carry out such response actions as
Landlord deems appropriate, provided, however, that
Landlord shall use reasonable efforts to prevent any
interruption of Tenant's (or any permitted subtenant's or
assignee's) conduct of business at the Premises. Landlord
agrees to coordinate its activities with Tenant so as to
minimize any inconvenience to or interruption of the normal
use and enjoyment of the Premises by Tenant and by any
permitted subtenant and/or assignee consistent with
Landlord's obligations hereunder and under any applicable
judgment, decree or settlement.
17.4 SUCCESSORS AND ASSIGNS. This Article XVII is
binding upon and inures to the benefit of Landlord and
Tenant only. The parties acknowledge that Tenant has a
right to terminate this Lease in the event of a default by
Landlord or Theodore Pasquarello under the provisions of
Section 2 of that certain Letter of Credit Agreement of even
date herewith between Landlord, Tenant, Theodore Pasquarello
and the Paris Trust Landlord. In the event that this Lease
is assigned or the Premises are sublet by Tenant as
permitted hereunder, then Landlord's obligations under this
Article XVII shall thereafter be owed only to New England
Business Service, Inc. and not to any of Tenant's
subtenants, successors, transferees, or assigns. In the
event the Premises are acquired by a mortgagee of the
Premises at foreclosure sale or by a deed-in-lieu of
foreclosure, the provisions of this Article XVII shall not
apply to such mortgagee.
ARTICLE XVIII
-------------
EXCULPATORY CLAUSE
18.1 LIMITATION ON LIABILITY. Notwithstanding
anything to the contrary herein, Landlord's liability for
its negligence or failure to perform its obligations
hereunder including all of Landlord's obligations under
Section 17 shall be limited to its interest in the Premises.
Tenant shall neither seek to enforce nor enforce any
judgment or other remedy against any other asset of Landlord
or any individual who holds any interest in Landlord.
18.2 ACTIONS AGAINST LANDLORD. In any claim made by
Tenant against Landlord alleging that Landlord has acted
unreasonably where Landlord had an obligation to act
reasonably, Tenant shall have no right to recover damages
(except as permitted under Section 19.2) from Landlord and
Tenant's sole and exclusive recourse against Landlord shall
be an action seeking specific performance of Landlord's
obligation to act reasonably.
ARTICLE XIX
-----------
SUBMISSION TO JURISDICTION, ETC.
19.1 GOVERNING LAW. This Lease shall be construed in
accordance with the laws of the Commonwealth of
Massachusetts. All actions or proceedings relating,
directly or indirectly, to this Lease shall be litigated
only in courts located within the Commonwealth of
Massachusetts. Landlord, Tenant, their partners, trustees,
and their successors and assigns hereby subject themselves
to the jurisdiction of any state or federal court located
within the Commonwealth of Massachusetts.
19.2 RECOVERY OF FEES. If either party commences any
action or proceeding against the other in connection with
this Lease and such action or proceeding is disposed of, by
settlement, judgment or otherwise, the prevailing party
shall be entitled to recover from the other its reasonable
disbursements (including reasonable attorneys' fees) and
the reasonable fees and disbursements of consultants or
experts incurred in connection with such action or
proceedings.
ARTICLE XX
----------
LANDLORD'S EQUITY
20.1 LANDLORD'S EQUITY REQUIREMENT. Landlord agrees
that it shall not enter into any new loan (or refinance any
existing loan) secured by all or any portion of the
Premises such that the aggregate loan-to-value ratio of all
such loans, determined on the basis of the fair market
value of the Premises at the time of entering into the new
loan, exceeds a loan-to-value ratio of 75%. This Article
XX is binding upon and inures to the benefit of original
Landlord and Tenant only, and shall not be binding on
successors, assigns or transferees of Landlord. In the
event that this Lease is assigned or the Premises are
sublet by Tenant as permitted hereunder, then Landlord's
obligations under Article XX shall thereafter be owed only
to New England Business Service, Inc. and not to any of
Tenant's subtenants, successors, transferees, or assigns.
In the event the Premises are acquired by a mortgagee of
the Premises at foreclosure sale or by a deed-in-lieu of
foreclosure, the provisions of this Article XX shall not
apply to such mortgagee.
IN WITNESS WHEREOF, each of Landlord and Tenant has
caused this Lease to be duly executed as of the date first
written above
LANDLORD:
By: /s/ Theodore Pasquarello
_________________________
Theodore Pasquarello, not
individually but as
Trustee of E. B. Realty
Trust
TENANT:
NEW ENGLAND BUSINESS
SERVICE, INC.
By: /s/ John F. Fairbanks
__________________________
Name: John F. Fairbanks
---------------------
Title: V.P. Finance, Chief
Financial Officer
--------------------
LIST OF EXHIBITS
----------------
EXHIBIT A Legal Description of Premises
EXHIBIT B Title Policy
EXHIBIT C List of Environmental Reports and Related
Documents
Exhibit 10 (d)
NEW ENGLAND BUSINESS SERVICE, INC.
500 Main Street
Groton, Massachusetts 01471
Agreement to Furnish Copies of Omitted Exhibits to Lease Agreement between
Theodore Pasquarello, as Trustee of the E. B. Realty Trust (Landlord) and New
England Business Service, Inc.(Tenant).
New England Business Service, Inc. (the "Registrant") is not filing as
exhibits to its Quarterly Report on Form 10-Q dated May 13, 1997, copies
of the exhibits to the Lease Agreement between Theodore Pasquarello, as
Trustee of the E. B. Realty Trust (Landlord) and New England Business
Service, Inc. dated March 31, 1997, which Agreement is filed as Exhibit
10(d) thereto.
Registrant agrees to furnish to the Securities and Exchange Commission,
upon request, copies of such omitted exhibits.
Dated: May 13, 1997
NEW ENGLAND BUSINESS SERVICE, INC.
(Registrant)
By: /s/ John F. Fairbanks
---------------------
John F. Fairbanks
VP, Chief Financial Officer
Exhibit 10 (e)
LEASE
LANDLORD: Theodore Pasquarello and Eileen Pasquarello,
as Trustees of The Paris Trust
TENANT: New England Business Service, Inc.
PREMISES: 49,700 square feet of space in the building
(the "Building") located at 31 Union Avenue,
Sudbury, MA 01776 and substantially as shown
on Exhibit A
TABLE OF CONTENTS
Page
ARTICLE I REFERENCE DATA
1.1 Subjects Referred to 1
ARTICLE II PREMISES
2.1 Lease of Premises 4
2.2 Appurtenant Rights and Reservations 4
ARTICLE III TERM OF THE LEASE
3.1 Preparation for Occupancy and Possession 5
3.2 Commencement and Expiration of Term 5
ARTICLE IV FIXED RENT
4.1 Fixed Rent 6
<PAGE>
ARTICLE V TAX CHARGES
5.1 Definitions 6
5.2 Additional Rent 6
5.3 Refund of Taxes 7
ARTICLE VI OPERATING EXPENSES
6.1 Definitions 7
6.2 Additional Rent 7
ARTICLE VII USE OF PREMISES
7.1 Permitted Uses 8
7.2 Installations and Alterations by Tenant 8
ARTICLE VIII ASSIGNMENT AND SUBLETTING
8.1 Prohibition 10
8.2 Other Requirements and Provisions 10
ARTICLE IX RESPONSIBILITY FOR REPAIRS AND
CONDITION OF PREMISES
9.1 Landlord Repairs and Maintenance 12
9.2 Tenant's Agreement 13
9.3 Heavy Machinery 14
9.4 Utilities 14
9.5 Interruption or Curtailment of Services 14
ARTICLE X INDEMNITY AND INSURANCE
10.1 Tenant's Indemnity 14
10.2 Insurance 15
10.3 Tenant's Risk 16
10.4 Injury Caused by Third Parties 16
10.5 Landlord's Insurance 16
ARTICLE XI LANDLORD'S ACCESS TO PREMISES
11.1 Landlord's Rights 16
ARTICLE XII DAMAGE OR DESTRUCTION
12.1 Restoration 17
12.2 Rent 18
<PAGE>
ARTICLE XIII CONDEMNATION
13.1 Termination of Lease 18
13.2 Awards 19
ARTICLE XIV DEFAULT
14.1 Tenant's Default 19
ARTICLE XV MISCELLANEOUS PROVISIONS
15.1 Extra Hazardous Use 23
15.2 Waiver 24
15.3 Covenant of Quiet Enjoyment 24
15.4 Force Majeure, etc. 25
15.5 Assignment of Rents and Transfer of Title 25
15.6 Rules and Regulations 25
15.7 Additional Charges 26
15.8 Invalidity of Particular Provisions 26
15.9 Provisions Binding 26
15.10 Notices 26
15.11 When Lease Becomes Binding 26
15.12 Paragraph Headings 27
15.13 Rights of Mortgagee and Ground Lessor 27
15.14 Estoppel Certificates 28
15.15 Remedying Defaults 28
15.16 Holding Over 29
15.17 Surrender of Premises 29
15.18 Payments by Tenant 30
ARTICLE XVI BROKERAGE
16.1 Brokerage 30
ARTICLE XVII ENVIRONMENTAL MATTERS
17.1 Indemnification 30
17.2 Third Party Claims 31
17.3 Response Actions 33
17.4 Successors and Assigns 33
ARTICLE XVIII EXCULPATORY CLAUSE
18.1 Limitation on Liability 34
18.2 Actions Against Landlord 34
<PAGE>
ARTICLE XIX SUBMISSION TO JURISDICTION, ETC.
19.1 Governing Law 34
19.2 Recovery of Fees 34
<PAGE
LEASE
-----
This Lease is entered into as of this 31st day of
March, 1997, by and between Theodore Pasquarello and
Eileen Pasquarello, not individually but as Trustees of
The Paris Trust under Declaration of Trust dated October
30, 1981 (hereinafter referred to as "Landlord") and New
England Business Service, Inc., a Delaware corporation
(hereinafter referred to as "Tenant").
WHEREAS, Landlord is the owner of the Property, as
defined in Paragraph 1.1 hereof; and
WHEREAS, Tenant desires to lease the Premises from
Landlord and Landlord desires to lease such Premises to
Tenant;
NOW, THEREFORE, in consideration of the mutual
promises, covenants and conditions hereinafter contained,
and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and
Tenant agree as follows:
ARTICLE I
---------
REFERENCE DATA
1.1: SUBJECTS REFERRED TO.
Each reference in this Lease to any of the following
subjects shall be construed to incorporate the data stated
for that subject in this Section 1.1:
LANDLORD'S ADDRESS: 490 Boston Post Road
Sudbury, MA 01776
Attention: Theodore Pasquarello
TENANT'S
ORIGINAL ADDRESS: 500 Main Street
Groton, MA 01471
PREMISES: The Premises consist of 49,700 square
feet of space in the building (the
"Building") located at 31 Union Avenue,
Sudbury, MA 01776 and substantially as
shown on Exhibit A. The term "Initial
Premises" shall mean the portion of the
Premises which was occupied by Chiswick
Trading, Inc, and as shown on Exhibit A,
consisting of 30,500 square feet of
space. The term "Expansion Premises"
shall mean that portion of the Premises
currently occupied by New England Door
and as shown on Exhibit A, consisting of
19,200 square feet of space.
PROPERTY: The land with the buildings thereon
located at 31 Union Avenue and
490 Boston Post Road, Sudbury, MA.
COMMENCEMENT DATE: April 1, 1997 as to the Initial Premises
(the "Initial Commencement Date") and
the later to occur of July 1, 1997 or
ten (10) days after New England Door
vacates the Expansion Premises (the
"Expansion Commencement Date")
FIXED RENT:
INITIAL PREMISES:
Period Rent
- ------ ----
4/1/97-3/31/2000 $152,500 annually, payable in equal
monthly installments of $12,708.33
4/1/2000-3/31/2003 $161,650 annually, payable in equal
monthly installments of $13,470.83
4/1/2003-3/31/2007 $171,349 annually, payable in equal
monthly installments of $14,279.08
EXPANSION PREMISES:
Period Rent
- ------ ----
Expansion C.D.-
3/31/2000 $96,000 annually, payable in equal
monthly installments of $8,000.00
4/1/2000-3/31/2003 $101,760 annually, payable in equal
monthly installments of $8,480.00
4/1/2003-3/31/2007 $107,865.60 annually, payable in equal
monthly installments of $8,988.80
TENANT'S SHARE OF
OPERATING EXPENSES:
INITIAL PREMISES:
Period Tenant's Share of Operating Expenses
- ------ ------------------------------------
4/1/97-3/31/2000 $15,250 annually, payable in equal
monthly installments of $1,270.83
4/1/2000-3/31/2003 $16,165 annually, payable in equal
monthly installments of $1,347.08
4/1/2003-3/31/2007 $17,134.90 annually, payable in equal
monthly installments of $1,427.91
EXPANSION PREMISES:
Period Tenant's Share of Operating Expenses
- ------ ------------------------------------
Expansion C.D.-
3/31/2000 $9,600 annually, payable in equal
monthly installments of $800.00
4/1/2000-3/31/2003 $10,176 annually, payable in equal
monthly installments of $848.00
4/1/2003-3/31/2007 $10,786.56 annually, payable in equal
monthly installments of $898.88
PERMITTED USE: Warehousing, storage and distribution
of materials in connection with or
relating to Tenant's current business
as conducted as of the date of this
Lease. Permitted Use includes general
office use in connection with
warehousing, storage and distribution
activities.
PUBLIC LIABILITY
INSURANCE LIMITS: $5,000,000 per occurrence for bodily
injury (including death) and $1,000,000
per occurrence for property damage
TERM: Ten (10) years from the Initial
Commencement Date unless sooner
terminated as herein provided
ARTICLE II
----------
PREMISES
2.1 LEASE OF PREMISES. Landlord hereby demises and
leases to Tenant, and Tenant hereby accepts from Landlord,
the Premises, for the Term of this Lease and subject to
any and all existing encumbrances, conditions, covenants,
easements, restrictions, rights of way and other matters
of record and to such matters as may be disclosed by
inspection or survey and subject to and with the benefit
of the terms, covenants, conditions and provisions of this
Lease. Attached hereto as Exhibit B is a copy of a title
policy dated December 31, 1991 insuring the Property.
Landlord makes no representation or warranty concerning
title to the Property.
2.2 APPURTENANT RIGHTS AND RESERVATIONS. (A) Tenant
shall have, as appurtenant to the Premises, the non-
exclusive right to use, and permit its invitees to use in
common with others, public or common lobbies, hallways,
and common walkways, driveways and parking areas located
on the Property, and, if the portion of the Premises on
any floor includes less than the entire floor, the common
toilets and corridors of such floor; but such rights shall
always be subject to rules and regulations from time to
time reasonably established by Landlord and to the right
of Landlord to designate and change from time to time
<PAGE>
areas and facilities to be used provided that such changes
will not materially adversely affect Tenant's use of,
access to, or conduct of business in the Premises.
Landlord agrees to provide parking on the Property to
Tenant in accordance with the requirements of the zoning
by-law in existence as of the date of this Lease and
applicable to Tenant's use of the Premises as of the date
of this Lease.
(B) Excepted and excluded from the Premises are the
ceiling, floor, perimeter walls and exterior windows,
except the inner surfaces of each thereof, but the entry
doors to the Premises are a part thereof; and Tenant
agrees that Landlord shall have the right to place utility
lines, pipes and the like in, over and upon the Premises
and to make such other reasonable modifications to the
systems servicing the Building and the Premises as
Landlord deems desirable from time to time. Landlord
shall use reasonable efforts to reduce and minimize any
interruption of Tenant's use and enjoyment of the Premises
in performing such work. Tenant shall install and
maintain, as Landlord may require, proper access panels in
any hung ceilings or walls as may be installed by Tenant
in the Premises to afford access to any facilities above
the ceiling or within or behind the walls.
ARTICLE III
-----------
TERM OF THE LEASE
3.1 AS-IS CONDITION. Tenant agrees that it has
inspected and examined, or caused to be inspected and
examined, the Premises and that it is fully familiar and
satisfied with the physical condition and state of repair
thereof, and Tenant does hereby agree to accept the
Premises in their existing condition and state of repair
"as is". Except as expressly otherwise provided herein,
Landlord shall have no obligation to do any work or make
any installation or alteration of any kind to the
Premises. Nothing in the foregoing sentence shall be
construed to reduce Landlord's obligations under Section 9.1
below. Except as otherwise expressly set forth in this
Lease, any work performed in the Premises by Tenant shall
be done at Tenant's sole cost and expense, in accordance
with the terms of Section 7.2.
3.2 COMMENCEMENT AND EXPIRATION OF TERM. The term
of this Lease (herein referred to as the "Term") shall
commence on the Initial Commencement Date, as defined in
Section 1.1 as to the Initial Premises and on the Expansion
Commencement Date as to the Expansion Premises and shall
terminate on March 31, 2007, unless sooner terminated as
herein provided (the "Expiration Date").
ARTICLE IV
----------
FIXED RENT
4.1 FIXED RENT. (A) Tenant agrees to pay to
Landlord, or as directed by Landlord, without offset,
abatement, deduction or demand the Fixed Rent. The Fixed
Rent shall be payable in lawful money of the United
States, in equal monthly installments, in advance, on the
first day of each and every calendar month during the Term
of this Lease at Landlord's Address, or at such other
place as Landlord shall from time to time designate by
notice.
(B) Fixed Rent for any partial month shall be
prorated on a daily basis.
(C) If any installment of Fixed Rent, additional
rent or any other sums due hereunder are not paid when due
and such failure shall continue for ten (10) days after
notice thereof, Tenant shall pay on demand, in addition to
any other additional charges due under this Lease, an
administrative fee equal to 2% of the overdue payment (the
"Late Fee"). Notwithstanding the foregoing, if any
installment of Fixed Rent, additional rent or any other
sums due hereunder are not paid by the due date on two or
more occasions during any 12-month period, Landlord shall
thereafter have the right to charge a Late Fee if any such
sums are not paid within ten (10) days of the due date.
ARTICLE V
---------
TAX CHARGES
5.1 DEFINITIONS.
For purposes of this Article V, "Real Estate Taxes"
shall mean all or any of the real estate taxes and
assessments imposed on the Property for the then current
Tax Year by any governmental authority having jurisdiction
upon the Property and Building, or any tax or assessment
to the extent hereafter imposed in substitution for such
real estate taxes and/or assessments. Real Estate Taxes
exclude income taxes and all estate, succession,
inheritance and transfer taxes. The term "Tax Year" shall
mean the period from July 1, 1996 through June 30, 1997
and each subsequent fiscal year thereafter.
5.2 ADDITIONAL RENT. Tenant shall pay to Landlord
during the Term of this Lease, as additional rent,
Tenant's Share of the Real Estate Taxes. Tenant's Share
of the Real Estate Taxes shall mean (i) 15.4% of the Real
Estate Taxes for the period from the Initial Commencement
Date through the Expansion Commencement Date and (ii)
25.23% of the Real Estate Taxes for the period from the
Expansion Commencement Date through the Expiration Date of
this Lease. If any Tax Year is only partially within the
Term, all payments pursuant hereto shall be appropriately
prorated, based on the portion of the Tax Year which is
within the Term. Landlord shall send to Tenant copies of
the tax bills for the Premises promptly upon receipt
thereof and Tenant shall remit Tenant's Share of the Real
Estate Taxes directly to Landlord within fifteen (15) days
of receipt of such bill.
5.3 REFUND OF TAXES. If Landlord receives any
refund of Real Estate Taxes for any Tax Year for which
Tenant has made a payment pursuant hereto, Landlord shall
(after deducting from such refund all reasonable expenses,
including reasonable attorneys' fees, incurred in
connection therewith) pay Tenant, if Tenant is not in
default hereunder, Tenant's Share of the refund.
ARTICLE VI
----------
OPERATING EXPENSES
6.1 DEFINITIONS.
For purposes of this Article VI, "Operating Expenses"
shall mean all expenses reasonably incurred by Landlord,
on an accrual basis, for the operation and maintenance of
the Property and all expenses incurred as a result of
Landlord's compliance with any of its obligations
hereunder, and shall include (without limitation),
depreciation of any expenditure for any capital
improvement which is intended to result in a reduction of
Operating Expenses and any and all expenses incurred by
Landlord in connection with compliance with any law, rule,
order, ordinance, regulation or requirement of any
governmental authority having or asserting jurisdiction or
any order, rule, requirement or regulation of any utility
company, insurer of Landlord or the New England Fire
Insurance Rating Association (or successor organization)
first applicable after the date hereof.
6.2 ADDITIONAL RENT. Tenant shall pay to Landlord
during the Term of this Lease, as additional rent,
Tenant's Share of Operating Expenses (as defined in
Article I hereof) in the same manner as described in Section
4.1 for the payment of Fixed Rent. Except as otherwise set
forth in Section 9.1(B), in no event shall Tenant's Share of
Operating Expenses exceed the amounts set forth in Article
I hereof.
ARTICLE VII
-----------
USE OF PREMISES
7.1 PERMITTED USES. (A) Tenant agrees that the
Premises shall be used and occupied by Tenant solely for
the Permitted Uses or for any uses permitted by applicable
zoning laws, provided that Tenant obtains Landlord's prior
written consent, which consent shall not be unreasonably
withheld.
(B) Tenant agrees to conform to the following
provisions during the Term of this Lease:
(1) Tenant will not place on the exterior of
the Premises (including both interior and exterior
surfaces of doors and interior surfaces of windows) or on
any part of the Building outside the Premises, any sign,
symbol, advertisement or the like which is visible to
public view outside of the Premises without the prior
written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.
(2) Tenant shall not perform any act or carry
on any practice which may injure the Premises or the
Building or cause any offensive odors or loud noise or
cause a nuisance.
(3) Tenant shall, in its use of the Premises,
subject to Landlord's compliance with Article IX, comply
with all applicable laws and rules, orders, regulations
and requirements of all governmental and quasi-
governmental authorities having or asserting jurisdiction
and any insurer of Landlord or of all or any part of the
Building.
7.2 INSTALLATIONS AND ALTERATIONS BY TENANT. (A)
Tenant shall not make or perform, or permit the making or
performance of, any alterations, improvements, additions
or other physical changes in or about the Premises
(collectively, "Alterations") (other than non-structural
Alterations to the interior of the Premises costing less
than $20,000 in the aggregate during any 12 month period
and not affecting Building systems or reducing the value
or utility of the Building) without Landlord's prior
written consent. Landlord agrees not to unreasonably
withhold its consent to any Alterations which are
nonstructural, do not involve the Building's systems and
are not visible from outside the Building, provided that
such Alterations do not reduce the value or utility of the
Building. All Alterations shall be done at Tenant's
expense and at such times and in accordance with any
reasonable rules and regulations established by Landlord.
Prior to making any Alterations, Tenant (i) shall submit
to Landlord plans and specifications for each proposed
Alteration, (ii) shall, at its expense, obtain all
permits, approvals and certificates required by any
governmental or quasi-governmental bodies, and (iii) shall
furnish to Landlord duplicate original policies of
worker's compensation insurance (covering all persons to
be employed by Tenant and Tenant's contractors and
subcontractors in connection with such Alteration) and
comprehensive public liability (including property damage
coverage) insurance in such form, with such companies, for
such periods and in such amounts as Landlord may
reasonably require, naming Landlord and its agents as
additional insureds. All materials and equipment to be
incorporated in the Building as a result of all
alterations or improvements shall be of at least
comparable quality to the then existing improvements. No
such materials or equipment shall be subject to any lien,
encumbrance, chattel mortgage, title retention or security
agreement. All work performed by Tenant to the Premises
shall be done in compliance with all applicable laws and
regulations.
(B) All Alterations and all fixtures, paneling,
partitions, railings, equipment and like installations
installed in the Building at any time either by Tenant or
by Landlord on Tenant's behalf shall, upon installation,
become the property of Landlord (unless otherwise agreed
in writing by Landlord and Tenant) and remain upon and be
surrendered with the Premises unless Landlord, by notice
to Tenant given on or before the expiration of the Term of
this Lease, elects to relinquish Landlord's right thereto
and to have them removed by Tenant, in which event, they
shall be removed by Tenant at the expiration or earlier
termination of the Term of this Lease and at Tenant's
expense. Tenant shall repair any damage to the Premises
or the Building caused by any removal of such Alterations.
(C) All trade fixtures, articles of personal
property and all business machinery and equipment and
furniture owned or installed by Tenant solely at its
expense in the Premises ("Tenant's Removable Property")
shall, remain the property of Tenant and may be removed by
Tenant at any time prior to the expiration of this Lease,
provided that Tenant, at its expense, shall repair any
damage to the Premises or the Building caused by any
installation and/or removal of Tenant's Removable
Property.
(D) Notice is hereby given that Landlord shall not
be liable for any labor or materials furnished or to be
furnished to Tenant. Tenant shall not permit any
mechanic's or other lien for any such labor or materials
to attach to or affect the reversion or other estate or
interest of Landlord in and to the Premises or the
Property. Whenever and as often as any mechanic's lien
shall have been filed against the Premises or the Property
based upon any act of, or for work claimed to have been
done for, or materials furnished to, Tenant, or of, for or
to anyone claiming through Tenant, Tenant shall forthwith
take such action, by bonding, deposit or payment, as will
remove or satisfy the lien.
ARTICLE VIII
------------
ASSIGNMENT AND SUBLETTING
8.1 PROHIBITION. Tenant covenants and agrees that
neither this Lease nor the term and estate hereby granted,
nor any interest herein or therein, will be assigned
(including, without limitation, by operation of law),
mortgaged, pledged, encumbered or otherwise transferred,
and that neither the Premises nor any part thereof will be
encumbered in any manner by reason of any act or omission
on the part of Tenant, or used or occupied or permitted to
be used or occupied by anyone other than Tenant or for any
use or purpose except as may be permitted by Section 7.1, or
be sublet (which term, without limitation, shall include
granting of concessions, licenses and the like) in whole
or in part, without, in each instance, Tenant having first
received the express written consent of Landlord.
Landlord agrees that it will not withhold or delay consent
to subletting by a third party if, in Landlord's
reasonable discretion, Landlord is reasonably satisfied
that (i) the identity of such third party is of a type and
character suitable for a suburban warehouse/office
building, and (ii) the type of business that such third
party proposes to operate in the Premises is permitted
under applicable zoning regulations. If this Lease be
assigned, or if the Premises or any part thereof be sublet
or occupied by anyone other than Tenant, Landlord may
collect rent and other charges from the assignee,
subtenant or occupant, and apply the net amount collected
to the Fixed Rent and other charges herein reserved, but
no such assignment, subletting, occupancy or collection
shall be deemed a waiver of this covenant, the acceptance
of the assignee, subtenant or occupant as a tenant or a
release of Tenant from the further performance by Tenant
of its obligations hereunder. The consent by Landlord to
an assignment or subletting shall in no way be construed
to relieve Tenant or any successor from obtaining the
express consent in writing of Landlord to any further
assignment or subletting. Notwithstanding anything to the
contrary in the foregoing, no consent of Landlord shall be
required for (i) any sublease or occupancy agreement with
an entity controlled by, under common control with or
controlling Tenant; (ii) a pledge or assignment of
Tenant's interest in this Lease pursuant to a leasehold
mortgage; or (iii) an assignment of the Lease to any
successor of Tenant by merger, consolidation or
acquisition of all or substantially all the stock or
assets of Tenant; provided that (A) Tenant shall deliver
to Landlord at least 30 days' advance notice of any such
sublease or occupancy agreement or such leasehold
mortgage; (B) Tenant shall provide Landlord with complete
copies of any leasehold mortgage promptly after the
execution of any such mortgage; (C) in the case of a
merger, consolidation or sale, the net worth of Tenant's
successor (determined in accordance with generally
accepted accounting principles) immediately after such
merger, consolidation or sale is equal to or greater than
$60,000,000; and (D) Tenant shall remain liable for the
performance of Tenant's obligations hereunder during the
balance of the Term.
In any case where Landlord shall consent to such
assignment, subletting or use, Tenant shall remain fully
liable for Tenant's obligations under this Lease,
including, without limitation, the obligation to pay the
rent and other amounts provided under this Lease. At
Landlord's election, it shall be a condition of the
validity of any such assignment, that, upon Landlord's
request, the assignee shall agree directly with Landlord,
in form reasonably satisfactory to Landlord, to be bound
by all the obligations of Tenant, including, without
limitation, the obligation to pay rent and other amounts
provided under this Lease and the covenant against further
assignment, subletting and use.
8.2 OTHER REQUIREMENTS AND PROVISIONS.
(A) No assignment of this Lease shall be effective
unless and until Tenant delivers to Landlord duplicate
originals of the instrument of assignment (wherein the
assignee assumes the performance of Tenant's obligations
under this Lease) and any accompanying documents.
(B) No sublease (or other occupancy agreement) of
all or any part of the Premises shall be effective unless
and until Tenant delivers to Landlord duplicate originals
of the instrument of sublease and any accompanying
documents (wherein the sublessee (or other occupier)
assumes the performance of Tenant's obligations as to the
subleased space). Any such sublease (or other occupancy
agreement) shall be subject and subordinate to this Lease.
(C) Any assignment or sublease shall neither release
Tenant from its liability for the performance of Tenant's
obligations hereunder during the balance of the Term of
this Lease nor constitute Landlord's consent to any
further assignment or sublet of this Lease. If a sublease
to which Landlord has consented is assigned or all or any
portion of the Premises is further sublet without in each
instance, the prior consent of Landlord, then Tenant shall
immediately terminate such sublease, or arrange for the
termination thereof, and proceed expeditiously to have the
occupant thereunder dispossessed.
(D) Tenant shall pay to Landlord, promptly upon
demand therefor, all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees
and disbursements) incurred by Landlord in connection with
any assignment of this Lease or sublease of all or any
part of the Premises.
(E) Any profit resulting from any such assignment or
subletting shall be 100% payable to Landlord.
ARTICLE IX
----------
RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES
9.1 LANDLORD REPAIRS AND MAINTENANCE.
(A) Landlord agrees to keep in good working order,
condition and repair the roof (but not the ceiling in the
Premises), foundation, exterior walls and structure of the
Building and the septic system servicing the Property, all
insofar as they affect the Premises. Landlord shall also
be responsible for landscaping of the Property and repairs
to and maintenance of the common driveways and parking
areas located on the Property, including lighting of such
areas and removal of snow and ice.
(B) Landlord shall keep in good working order,
condition and repair the existing heating, ventilating and
air-conditioning system servicing the Premises in place as
of the Commencement Date, (collectively, the "HVAC
System"). Tenant shall pay Landlord, as additional rent,
and in the manner set forth below, (i) for all costs
incurred by Landlord in connection with any and all
maintenance performed on the HVAC System during the Term
of this Lease (but not for replacements or other items of
a capital nature), and (ii) for all costs incurred by
Landlord in connection with any repairs or replacements
(including items of a capital nature) made to the HVAC
System during the period commencing on the fifth (5th)
anniversary of the Initial Commencement Date and
continuing through the remainder of the Term of this
Lease. Landlord shall submit to Tenant copies of
Landlord's invoices detailing any such costs and Tenant
shall pay to Landlord the entire amount of such costs, as
additional rent, within thirty (30) days of receipt of
Landlord's invoices. Any amounts paid by Tenant under the
terms of this Section 9.1(B) shall not be deemed to be
payment of Tenant's Share of Operating Expenses, and shall
be in addition to Tenant's obligations under Article VI. If
any costs incurred by Landlord in connection with
maintenance, repair or replacements to the HVAC System
benefit other tenants of the Property, such costs shall be
shared proportionally by Tenant and such other tenants.
(C) Landlord shall in no event be responsible to
Tenant for the replacement of glass in the Premises or for
the doors leading to the Premises (except to the extent
any damage thereto is caused by Landlord), or for any
condition in the Premises or the Building or Property
caused by any negligence or misconduct of Tenant, its
employees, agents, invitees or contractors (including any
non-permitted use thereof). Except as otherwise provided
in this Lease, Landlord shall not be responsible for
making any other improvements or repairs to the Building
or Property. Landlord shall not be liable for any failure
to make repairs which, under the provisions of this
Section 9.1 or elsewhere in this Lease, Landlord has
undertaken to make, unless Tenant has given notice to
Landlord of the need to make such repairs and Landlord has
failed to commence to make such repairs within a
reasonable time after receipt of such notice, or fails to
proceed with reasonable due diligence to complete such
repairs.
9.2 TENANT'S AGREEMENT. (A) Tenant will keep the
Premises in good order, condition and repair, reasonable
wear and tear excepted, excepting only those repairs for
which Landlord is responsible under the terms of this
Lease or which are necessitated by the occurrence of a
fire or other casualty or by the exercise of the power of
eminent domain; and Tenant shall surrender the Premises,
at the end of the Term of this Lease, in such condition.
Tenant shall be responsible for cleaning the Premises.
Without limitation, Tenant shall maintain and use the
Premises in accordance with all reasonable, rules and
regulations of Landlord and all governmental agencies
having jurisdiction and shall, at Tenant's own expense,
obtain all permits, licenses and the like required by
applicable law for Tenant's use of the Premises, other
than occupancy permits of general application. Tenant
shall be responsible for the provision of adequate
security to the Premises and to Tenant's personnel.
Tenant shall be responsible for the cost of repairs which
may be made necessary by reason of damage to the Premises
caused by Tenant or its contractors or invitees.
(B) If repairs are required to be made by Tenant
pursuant to the terms hereof and are not made within the
time periods allowed hereunder, Landlord may demand that
Tenant make the same forthwith, and, if Tenant refuses or
neglects to commence such repairs and complete the same
with reasonable dispatch after such demand, Landlord may
(but shall not be required to) make or cause such repairs
to be made at Tenant's expense and shall not be
responsible to Tenant for any loss or damage that may
occur to Tenant's stock or business by reason thereof
unless caused by Landlord's negligence or willful
misconduct.
9.3 HEAVY MACHINERY. Any moving of machinery or
equipment by Tenant shall be at the sole risk and hazard
of Tenant, and Tenant will exonerate, indemnify and save
Landlord harmless against and from any liability, loss,
injury, claim or suit resulting directly or indirectly
from such moving.
9.4 UTILITIES. Tenant shall pay directly to the
proper authorities charged with the collection thereof all
charges for water, gas, electricity, telephone and other
utilities or services used or consumed on the Premises,
all such charges to be paid as the same from time to time
become due.
9.5 INTERRUPTION OR CURTAILMENT OF SERVICES. Upon
reasonable advance notice to Tenant (except in case of
emergency), Landlord reserves the right to temporarily
interrupt, curtail, stop or suspend (a) the heating and
air conditioning services in the Building and (b) the
operation of the plumbing and electric systems in the
Building, when necessary by reason of accident or
emergency, or for repairs, alterations, maintenance,
replacements or improvements in the reasonable judgment of
Landlord desirable or necessary to be made, or by reason
of difficulty or inability in securing supplies or labor,
or strikes, or any other cause beyond the reasonable
control of Landlord, whether such other cause be similar
or dissimilar to those hereinabove specifically mentioned,
until said cause has been removed. This Lease shall not
be affected or any of the Tenant's obligations hereunder
reduced, and the Landlord shall have no responsibility or
liability for any such interruption, curtailment,
stoppage, or suspension of services or systems as in this
Section 9.5 above provided, except that (i) Landlord shall
exercise reasonable diligence to eliminate the cause of
same as soon as reasonably practicable; (ii) Landlord
shall use diligent efforts to minimize any interruption of
Tenant's use and enjoyment of the Premises, and (iii) if
all of the Premises are rendered unfit for occupancy by
Tenant for thirty (30) consecutive days, the Fixed Rent
shall abate from and after the thirty (30) days and until
the Premises are again rendered fit for Tenant's
occupancy.
ARTICLE X
---------
INDEMNITY AND INSURANCE
10.1 TENANT'S INDEMNITY. To the maximum extent this
agreement may be made effective according to law, Tenant
agrees to indemnify and save harmless Landlord and
Landlord's agents, affiliates, contractors and the
employees of the foregoing from and against all claims of
whatever nature arising from any act, omission or
negligence of Tenant or Tenant's contractors, licensees,
invitees, 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
account of or based upon the act, omission or negligence
or misconduct of Tenant or Tenant's contractors,
licensees, invitees, agents servants or employees or
arising from any breach by Tenant of the terms and
conditions of this Lease. This indemnity and hold
harmless agreement shall include indemnity against all
costs, expenses and liabilities (including, but not
limited to, reasonable attorney's fees and disbursements)
incurred in connection with any such claim or proceeding
brought thereon and the defense thereof. Tenant's
liability hereunder shall survive any expiration or
termination of this Lease. Nothing in the foregoing shall
be construed to include indemnity with respect to any
claim of whatever nature to the extent (and only to the
extent) caused by the gross negligence or willful
misconduct of Landlord, Landlord's agents, affiliates,
contractors and employees or by a failure of Landlord to
perform its obligations hereunder. Nothing in this
Section 10.1 shall be construed to reduce or otherwise
affect Landlord's obligations pursuant to Article XVII
hereof.
10.2 INSURANCE. (A) Tenant agrees to maintain in
full force, from the date upon which Tenant first enters
the Premises for any reason throughout the Term of this
Lease and thereafter so long as Tenant is in occupancy of
any part of the Premises, (i) "all risk" property
insurance covering all present and future Tenant's
Removable Property and Tenant's improvements and
betterments to a limit of not less than the full
replacement cost thereof and (ii) a policy of general
liability and property damage insurance (including broad
form contractual liability, independent contractor's
hazard and completed operations coverage) in respect of
the Premises and the conduct or operation of business
therein, with Landlord and any permitted mortgagee under
Section 15.13 hereof of which Tenant has received written
notice, including The First National Bank of Boston, (and
such other persons as are in privity of estate with
Landlord as may be set out in notice from time to time)
named as an additional insured, and with limits of not
less than the amount of Public Liability Insurance
specified in Section 1.1. Tenant shall deliver to
Landlord certificates of insurance and receipts evidencing
payment of the premiums for such insurance on or before
the Commencement Date and annually thereafter. Each such
policy shall be noncancellable and nonamendable with
respect to Landlord and Landlord's said designees without
twenty (20) days' prior notice to Landlord.
(B) Tenant hereby waives and releases Landlord from
any and all liabilities, claims and losses on account of
damage to Tenant's Removable Property for which Landlord
is or may be held liable to the extent Tenant either is
required to maintain insurance pursuant to Section 10.2(A)
or actually receives insurance proceeds on account
thereof. Landlord hereby waives and releases Tenant from
any and all liabilities, claims and losses on account of
damage to the Building for which Tenant is or may be held
liable to the extent Landlord actually receives insurance
proceeds on account thereof or to the extent Landlord
would have received such proceeds had Landlord maintained
the insurance required by Section 10.5 of this Lease.
Each party hereto shall secure waiver of subrogation
endorsements from their respective insurance carriers.
10.3 TENANT'S RISK. Except as provided herein, to
the maximum extent this agreement may be made effective
according to law, Tenant agrees to use and occupy the
Premises and to use such other portions of the Building
and Property as Tenant is herein given the right to use at
Tenant's own risk; and Landlord shall have no
responsibility or liability for any loss of or damage to
Tenant's Removable Property or for any other property of
any kind, nature and description which may be in or upon
the Premises or the Property. The provisions of this
Section shall be applicable from and after the execution
of this Lease and until the end of the Term of this Lease,
and during such further period as Tenant may use or be in
occupancy of any part of the Premises or of the Building.
10.4 INJURY CAUSED BY THIRD PARTIES. To the maximum
extent this agreement may be made effective according to
law, Tenant agrees that Landlord shall not be responsible
or liable to Tenant, or to those claiming by, through or
under Tenant, for any loss or damage that may be
occasioned by or through the acts or omissions of any
third parties, except to the extent (and only to the
extent) caused by the gross negligence or willful
misconduct of Landlord, Landlord's agents, affiliates,
contractors and employees.
10.5 LANDLORD'S INSURANCE. Landlord shall insure
the Building against damage or destruction by fire or
other casualties insurable under a standard "all risk"
endorsement in an amount equal to one hundred percent
(100%) of the replacement cost of the Building (exclusive
of footings and foundations). Landlord agrees to maintain
a policy of commercial general liability and property
damage insurance in commercially reasonable limits. The
costs of all insurance carried by Landlord with respect to
the Premises shall be Operating Expenses.
ARTICLE XI
----------
LANDLORD'S ACCESS TO PREMISES
11.1 LANDLORD'S RIGHTS. Landlord shall have the
right upon reasonable advance notice to enter the Premises
at all reasonable hours for the purpose of inspecting or
making repairs to the Premises, and Landlord shall also
have the right to make access available at all reasonable
hours to prospective or existing mortgagees, purchasers
or, during the last 12 months of the term, prospective
tenants of any part of the Premises. Notwithstanding the
foregoing, Landlord shall have the right to enter the
Premises at any time without notice in the event of an
emergency. Any exercise of Landlord's right of entry
under this Section 11.1 shall be conducted at such times
and in such manner as to minimize interference with
Tenant's operations on the Premises.
ARTICLE XII
-----------
DAMAGE OR DESTRUCTION
12.1 RESTORATION. (A) If the Premises or the
Building are totally or partially damaged or destroyed,
thereby rendering the Premises totally or partially
inaccessible or unusable, then (unless such damage was
caused by Tenant, its agents, employees, invitees, or
contractors) Landlord shall diligently repair and restore
the Premises and the Building, to substantially the same
condition they were in prior to such damage or destruction
and only to the extent of insurance proceeds received by
Landlord; provided, however, that if in Landlord's
reasonable judgment such repair and restoration cannot be
completed within ninety (90) days after the occurrence of
such damage or destruction (taking into account the time
needed for effecting a satisfactory settlement with any
insurance company involved, removal of debris, preparation
of plans and issuance of all required governmental
permits), then Landlord shall have the right, at its sole
option, to terminate this Lease by giving written notice
of termination within forty-five (45) days after the
occurrence of such damage or destruction. Landlord shall
notify Tenant within 45 days whether Landlord intends to
repair and whether Landlord anticipates that repairs to
the Premises will exceed 180 days to bring to completion.
If Landlord's notice states that such repairs are not
expected to be completed within 180 days, Tenant shall be
entitled to terminate this Lease by notice to Landlord
given within fifteen (15) days of receipt of Landlord's
notice, and this Lease shall then terminate as if such
date were the date of the ordinary expiration of the Term.
In addition, in the event that Landlord has not completed
the repairs required of it under this Section 12.1(A)
within one-hundred eighty (180) days of the damage or
destruction, such period to be subject to extension
pursuant to Section 15.4 (but in no event extended beyond a
total of 270 days), Tenant shall have the right, at its
option, to terminate this Lease by delivering written notice
of termination to Landlord within thirty (30) days after the
expiration of such one hundred eighty day period, as the
same may be extended as set forth above.
(B) Notwithstanding anything herein to the contrary,
Landlord shall not be obligated to restore the Premises or
the Building and shall have the right to terminate this
Lease if (1) the holder of any Mortgage (as such term is
defined in Section 15.13 hereof) fails or refuses to make
insurance proceeds available for such repair and
restoration, or (2) the cost of repairing and restoring
the Building would exceed fifty percent (50%) of the
replacement value of the Building, whether or not the
Premises are damaged or destroyed. If Landlord is
released from its obligation to restore the Building or
Premises as a result of this subsection (B) but fails to
terminate this Lease, Landlord shall promptly notify
Tenant and Tenant shall have the option to terminate this
Lease by written notice to Landlord.
12.2 RENT. If the Lease is terminated pursuant to
Section 12.1 above, then all Fixed Rent and additional
rent shall be apportioned (based on the portion of the
Premises which is usable after such damage or destruction)
and paid to the date of termination. If this Lease is not
terminated as a result of such damage or destruction, then
until such repair and restoration of the Premises is
substantially complete, Tenant shall be required to pay
the Fixed Rent, additional rent and other sums due
hereunder only for the portion of the Premises that is fit
for Tenant's occupancy while such repair and restoration
are being made. Landlord shall bear the expenses of
repairing and restoring the Premises; provided, however,
that Landlord shall not be required to repair or restore
any alteration, improvement or addition previously made by
Tenant at Tenant's expense or any of Tenant's Removable
Property. Notwithstanding anything in this Lease to the
contrary, if any damage or destruction to the Premises or
the Building was caused by the act or omission of Tenant
or any agent, employee, contractor or invitee of Tenant,
then Tenant shall pay the amount by which such expenses of
repair or restoration to the Premises and the Building
exceed the insurance proceeds, if any, actually received
by Landlord on account of such damage or destruction.
ARTICLE XIII
------------
CONDEMNATION
13.1 TERMINATION OF LEASE. If the Premises or the
Building or the means of access thereto are totally taken
or condemned by any governmental or quasi-governmental
authority for any public or quasi-public use or purpose,
thereby rendering the Premises totally or substantially
inaccessible or unusable, or are sold under threat of such
a taking or condemnation (collectively, "condemned"), then
this Lease shall terminate on the date title thereto vests
in such authority and Fixed Rent and additional rent shall
be apportioned as of such date. In the event that either
(i) Tenant's reasonable means of access to the Premises is
taken or condemned or (ii) only a "substantial part" of
the Premises is taken or condemned, either Landlord or
Tenant, at its option, by delivery of notice to the other
party within 30 days following the date on which Tenant
shall receive notice of vesting of title, may terminate
this Lease as of the date of vesting of title. A
"substantial part" shall be 60 percent or more of the
Premises. In the event either Landlord or Tenant does not
elect to exercise such termination option, this Lease
shall remain in effect, except the Fixed Rent and
additional rent shall be abated as of the date of vesting
of title in an amount apportioned according to the portion
(measured in square feet) of the Premises so condemned or
taken, and Landlord and Tenant shall execute an amendment
to this Lease specifying the new Fixed Rent and additional
rent. In the event of any taking or condemnation and if
neither Landlord nor Tenant exercises its option to
terminate, Landlord, at its expense, will restore the
remaining portion of the Premises with reasonable
diligence to at least the condition existing prior to such
condemnation or taking.
13.2 AWARDS. All awards, damages and other
compensation paid by any governmental or quasi-
governmental authority on account of any condemnation
shall belong to Landlord, and Tenant assigns to Landlord
all rights to such awards, damages and compensation.
Tenant shall not make any claim against Landlord or the
authority for any portion of such award, damages or
compensation attributable to damage to the Premises, value
of the unexpired portion of the Term of this Lease, loss
of profits or goodwill, leasehold improvements or
severance damages. Nothing contained herein, however,
shall prevent Tenant from pursuing a separate claim
against the authority for the value of improvements,
alterations, additions, furnishings and trade fixtures
installed in the Premises at Tenant's expense and for
relocation expenses.
ARTICLE XIV
-----------
DEFAULT
14.1 TENANT'S DEFAULT. (A) If at any time
subsequent to the date of this Lease any one or more of
the following events (herein referred to as a "Default of
Tenant") shall happen:
(1) Tenant shall fail to pay Fixed Rent,
additional rent or any other amounts
payable under this Lease, when due and such
failure shall continue for ten (10) days
after notice thereof, except that if
Landlord gives such notice twice in any
period of twelve successive months,
thereafter no such notice shall be
required; or
(2) Tenant shall neglect or fail to perform or
observe any other covenant herein contained
on Tenant's part to be performed or
observed and Tenant shall fail to remedy
the same within thirty (30) days after
notice to Tenant specifying such neglect or
failure, or if such failure is of such a
nature that Tenant cannot reasonably remedy
the same within such thirty (30) day
period, Tenant shall fail to commence
promptly to remedy the same and to
prosecute such remedy to completion with
diligence and continuity, but in no event
longer than ninety (90) days after notice
to Tenant; or
(3) Tenant's leasehold interest in the Premises
shall be taken on execution or by other
process of law directed against Tenant; or
(4) Tenant shall make an assignment for the
benefit of creditors or shall file a
voluntary petition in bankruptcy or shall
be adjudicated bankrupt or insolvent, or
shall file any petition or answer seeking
any reorganization, arrangement,
composition, readjustment, liquidation,
dissolution or similar relief for itself
under any present or future Federal, State,
or other statute, law or regulation for the
relief of debtors, or shall seek or consent
to or acquiesce in the appointment of any
trustee, receiver or liquidator of Tenant
or of all or any substantial part of its
properties, or shall admit in writing its
inability to pay its debts generally as
they become due; or
(5) A petition shall be filed against Tenant in
bankruptcy or under any other law seeking
any reorganization, arrangement,
composition, readjustment, liquidation,
dissolution, or similar relief under any
present or future Federal, State or other
statute, law or regulation and shall remain
undismissed or unstayed for an aggregate of
ninety (90) days (whether or not
consecutive), or if any debtor in
possession trustee, receiver or liquidator
of Tenant or of all or any substantial part
of its properties or of the Premises shall
be appointed without the consent or
acquiescence of Tenant, respectively and
such appointment shall remain unvacated or
unstayed for an aggregate of ninety (90)
days (whether or not consecutive);
(6) A Default of Tenant shall occur under
either (i) that certain Lease of even date
herewith between Theodore Pasquarello, as
Trustee of E. B. Realty Trust (the "E. B.
Trust Landlord"), as landlord and Tenant,
as tenant for premises located at 33 Union
Avenue, Sudbury; or (ii) that certain Lease
between Landlord, as landlord and Tenant,
as tenant for the land and improvements
located thereon at 25 Union Avenue,
Sudbury;
then in any such case (a) if such Default of Tenant shall
occur prior to the Commencement Date, this Lease shall
ipso facto, and without further act on the part of the
Landlord, terminate, and (b) if such Default of Tenant
shall occur after the Commencement Date, Landlord or
Landlord's agent may immediately, or at any time
thereafter, without demand or notice, enter into and upon
the Premises, or any part thereof in the name of the
whole, and repossess the same and upon such entry this
Lease shall terminate or Landlord may terminate this Lease
at any time thereafter by notice to Tenant, specifying a
date not less than five (5) days after the giving of such
notice on which this Lease shall terminate and this Lease
shall come to an end on the date specified therein as
fully and completely as if such date were the date herein
originally fixed for the expiration of the Term of this
Lease (Tenant hereby waiving any rights of redemption
under M.G.L. ch. 186, sec. 11), and Tenant will then quit
and surrender the Premises to Landlord, but Tenant shall
remain liable as hereinafter provided.
(B) If this Lease shall have been terminated as
provided in this Article, or if any execution or
attachment shall be issued against Tenant or any of
Tenant's property whereupon the Premises shall be taken or
occupied by someone other than Tenant, then Landlord may,
without notice, reenter the Premises, either by summary
proceedings, ejectment or otherwise, and remove and
dispossess Tenant and all other persons and any and all
property from the Premises, as if this Lease had not been
made, and Tenant hereby waives the service of notice of
intention to reenter or to institute legal proceedings to
that end.
(C) In the event of any termination of this Lease,
Tenant shall pay the Fixed Rent, additional rent and all
other amounts payable hereunder up to the time of such
termination, and thereafter Tenant, until the end of what
would have been the Term of this Lease in the absence of
such termination, and whether or not the Premises shall
have been relet, shall be liable to Landlord for, and
shall pay to Landlord, as liquidated current damages, the
Fixed Rent, additional rent and all other amounts payable
hereunder had such termination not occurred, less the net
proceeds, if any, of any reletting of the Premises, after
deducting all reasonable expenses in connection with such
reletting, including, without limitation, all reasonable
repossession costs, brokerage commissions, legal expenses,
advertising and marketing costs, expenses of employees,
alteration and tenant improvement costs and expenses of
preparation for such reletting. Tenant shall pay such
damages to Landlord monthly on the days on which the Fixed
Rent and additional rent would have been payable hereunder
had this Lease not been terminated. Landlord shall use
reasonable efforts to relet the Premises.
(D) At any time after the termination of this Lease,
whether or not Landlord shall have collected any damages
pursuant to Section 14.1(C), as liquidated final damages,
and in lieu of all damages payable by Tenant pursuant to
Section 14.1(C) thereafter, at Landlord's election, Tenant
shall pay to Landlord an amount which at the time of such
election represents the then value of the excess, if any,
of (1) the Fixed Rent, additional rent and all other
amounts which would have been payable by Tenant hereunder
(conclusively presuming the annual payments with respect
to real estate taxes and expense escalation obligations to
be the same as were payable for the preceding year) for
the period commencing with the date of Landlord's election
and ending with the date contemplated as the expiration
date hereof if this Lease had not so terminated, over (2)
the aggregate fair rental value of the Premises for the
same period.
(E) In case of any Default of Tenant, reentry or
expiration and dispossession by summary proceedings or
otherwise, Landlord may (1) relet the Premises or any part
or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may in Landlord's
good faith judgment be equal to or less than or exceed the
period which would otherwise have reasonable constituted
the balance of the Term of this Lease and may grant
reasonable concessions of free rent to the extent that
Landlord considers advisable and necessary to relet the
same, and (2) may make such alterations, repairs and
decoration in and to the Premises as Landlord in its
reasonable judgment considers advisable and necessary for
the purpose of reletting the Premises, and the making of
such alterations, repairs and decorations shall not
operate or be construed to release Tenant from liability
hereunder. Landlord shall in no event be liable in any
way whatsoever for failure to relet the Premises, or in
the event that the Premises are relet, for failure to
collect the rent under such reletting provided Landlord
uses reasonable efforts to collect the rent. Tenant
hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the
event of Tenant being evicted or dispossessed, or in the
event of Landlord obtaining possession of the Premises, by
reason of the violation by Tenant of any of the covenants
and conditions of this Lease.
(F) The specified remedies to which Landlord may
resort hereunder are not intended to be exclusive of any
remedies or means of redress to which Landlord may at any
time be entitled lawfully, and Landlord may invoke any
remedy (including the remedy of specific performance)
allowed at law or in equity as if specific remedies were
not herein provided.
(G) All reasonable costs and expenses incurred by or
on behalf of Landlord (including, without limitation,
reasonable attorneys' fees and expenses) in enforcing its
rights hereunder or occasioned by any Default of Tenant
shall be paid by Tenant promptly upon demand.
ARTICLE XV
----------
MISCELLANEOUS PROVISIONS
15.1 EXTRA HAZARDOUS USE. (A) Tenant covenants and
agrees that Tenant will not do or permit anything to be
done in or upon the Premises, or bring in anything or keep
anything therein, which would increase the rate of
property or liability insurance of the Premises or of the
Building above the standard rate applicable to Premises as
of the Commencement Date being occupied for the Permitted
Use; and Tenant further agrees that, in the event that
Tenant shall do or permit any of the foregoing, Tenant
will promptly pay to Landlord, on demand, any such
resulting increase.
(B) Tenant shall not (either with or without
negligence) cause or permit the escape, disposal or
release of any hazardous substances, or materials. Tenant
shall not allow the storage or use of hazardous substances
or materials on or in the Premises or the Property in any
manner, nor allow to be brought into any portion of the
Property any such materials or substances except for
hazardous substances or materials disclosed in writing to
the Landlord for use in the ordinary course of the conduct
of the Permitted Use, all such substances or materials to
be used and stored in compliance with applicable laws and
regulations. Tenant shall not store any flammable
substances in the Premises or the Property, unless such
flammable substances are stored in areas with in-rack
sprinkling. Any such hazardous substances or flammable
substances shall be stored, used and disposed of in
accordance with all applicable laws and regulations.
Without limitation, hazardous substances and materials
shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601 et seq., M.G.L.
Chapter 21E and any other applicable federal, state or
local laws and the regulations adopted under these acts.
If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any
release of hazardous materials as a result of a breach by
Tenant of the provisions of this Section 15.1(B), then the
reasonable costs thereof shall be reimbursed by Tenant to
Landlord upon demand as additional charges. In addition,
Tenant shall execute affidavits, representations and the
like from time to time at Landlord's reasonable request
concerning Tenant's best knowledge and belief regarding
the presence of hazardous substances or materials on the
Premises. In all events, Tenant shall indemnify Landlord
from and against any and all Environmental Damages (as
defined in Section 17.1) asserted by any third party or
governmental authority and either occurring during the
Term of this Lease or resulting from any violation by
Tenant (or its employees, agents, invitees, or
contractors) of any environmental laws pertaining to the
Premises or caused by Tenant (or its agents, employees,
invitees, or contractors) or persons acting under the
direction of Tenant (except to the extent caused by
Landlord or persons acting under the direction of
Landlord). The within covenants shall survive the
expiration or earlier termination of the Term of this
Lease. Nothing in this Section 15.1 shall be construed to
reduce or otherwise affect Landlord's obligations pursuant
to Article XVII hereof. In the event of any conflict
between this Section and Article XVII, the provisions of
Article XVII shall control.
15.2 WAIVER. The failure of either Landlord or
Tenant to insist in any one or more instances upon the
strict performance of any one or more of the obligations
of this Lease, or to exercise any election herein
contained, shall not be construed as a waiver or
relinquishment for the future of the performance of such
one or more obligations of this Lease or of the right to
exercise such election, and such right to insist upon
strict performance shall continue and remain in full force
and effect with respect to any subsequent breach, act or
omission. The receipt by Landlord of Fixed Rent,
additional rent or other payments due hereunder or partial
payments thereof with knowledge of breach by Tenant of any
obligation of this Lease shall not be deemed a waiver of
such breach.
15.3 COVENANT OF QUIET ENJOYMENT. Landlord
covenants that, if Tenant shall timely perform all of its
obligations hereunder, then, subject to the provisions of
this Lease, Tenant shall, during the Term of this Lease,
peaceably and quietly occupy and enjoy the full possession
of the Premises without hindrance by Landlord or any party
claiming through or under Landlord.
15.4 FORCE MAJEURE, ETC. (A) If either Tenant or
Landlord is in any way delayed or prevented from
performing any of its obligations under this Lease
(excluding any monetary obligations of Tenant, including
without limitation Tenant's obligation to pay Fixed Rent
and additional rent) due to fire, act of God, governmental
act or failure to act, strike, labor dispute, inability to
procure materials, war or any other cause beyond such
party's reasonable control (whether similar or dissimilar
to the foregoing events), then the time for performance of
such obligation shall be excused for the period equal to
the period of such delay or prevention and extended for a
period equal to the period of such delay or prevention.
(B) In no event shall either party be liable to the
other for any indirect or consequential damages suffered
by either from any cause whatsoever.
15.5 ASSIGNMENT OF RENTS AND TRANSFER OF TITLE. (A)
If Landlord shall assign Landlord's interest in this Lease
or in the rents payable hereunder to the holder of a
mortgage covering the Property (regardless of whether or
not such assignment is conditional in nature), then such
assignment shall not be construed as an assumption by the
assignee of any of the obligations of Landlord hereunder
unless such assignee (1) by notice sent to Tenant,
specifically otherwise elects, or (2) forecloses on its
mortgage, or (3) takes possession of the Property.
(B) In the event of any transfer of title to the
Premises by Landlord, Landlord shall thereafter be
released from the performance and observance of all
covenants and obligations hereunder occurring after the
date of such transfer and the transferee shall be deemed
the Landlord under this Lease from and after the date of
such transfers, except for the provisions of Articles XVII
and XX, provided that in no event shall the Landlord be
relieved of any obligations pursuant to Article XVII,
which obligations shall survive any such transfer in the
manner set forth in Section 17.1.
15.6 RULES AND REGULATIONS. Tenant shall abide by
all reasonable rules and regulations reasonably
established by Landlord from time to time for the
operation of the Premises and the Property. Landlord
agrees to use reasonable efforts to insure that any such
rules and regulations are uniformly enforced, but Landlord
shall not be liable to Tenant for the violation of any
such rules or regulations by any other tenant or occupant
of the Property or persons conducting business with such
tenant or occupant.
15.7 ADDITIONAL CHARGES. If Tenant shall fail to
pay when due any sums under this Lease, Landlord shall
have the same rights and remedies as Landlord has
hereunder for failure to pay Fixed Rent.
15.8 INVALIDITY OF PARTICULAR PROVISIONS. If any
provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be invalid or
unenforceable, then the remainder of this Lease and the
application of such provision to persons or circumstances
other than those as to which it is invalid or
unenforceable shall not be affected thereby.
15.9 PROVISIONS BINDING. Except as herein otherwise
provided, the provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto
and each of their respective successors and assigns,
subject to the provisions herein restricting assignment or
subletting.
15.10 NOTICES. All notices or other permitted or
required communications hereunder shall be in writing and
shall be deemed duly given when delivered in person (with
receipt therefor), or when sent by Express Mail or
overnight courier service (provided a receipt will be
obtained) or by certified or registered mail, return
receipt requested, postage prepaid to the following
addresses:
If to Landlord, addressed to Landlord at Landlord's
Address (or to such other address or addresses as may
from time to time hereafter be designated by Landlord
by notice).
If to Tenant, addressed to Tenant at Tenant's
Original Address.
15.11 WHEN LEASE BECOMES BINDING. The submission of
this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or
option for, the Premises, and this document shall become
effective and binding only upon the execution and delivery
hereof by both Landlord and Tenant. All negotiations,
consideration, representations and understandings between
Landlord and Tenant are incorporated herein and this Lease
expressly supersedes any proposals or other written
documents relating hereto. This Lease may be modified or
altered only by written agreement signed by Landlord and
Tenant, and no act or omission of any employee or agent of
Landlord shall alter, change or modify any of the
provisions hereof. This Lease shall not be recorded, but
Landlord shall, on request from Tenant, execute and
acknowledge, a Notice of Lease pursuant to M.G.L. Chapter
183, Section 4.
15.12 PARAGRAPH HEADINGS. The paragraph headings
throughout this Lease are for convenience and reference
only, and the words contained therein shall in no way be
held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions
of this Lease.
15.13 RIGHTS OF MORTGAGEE AND GROUND LESSOR. (A)
This Lease is subject and subordinate to the lien,
provisions, operation and effect of all mortgages, deeds
of trust, ground leases or other security instruments
which may now encumber the Building or the Property
(collectively, "Mortgages"; individually, "Mortgage"), to
all funds and indebtedness intended to be secured thereby,
and to all renewals, extensions, modifications, recastings
or refinancings thereof. The holder of any Mortgage to
which this Lease is subordinate shall have the right
(subject to any required approval of the holder of any
superior Mortgage) at any time to declare this Lease to be
superior to the lien, provisions, operation and effect of
such Mortgage and Tenant shall execute, acknowledge and
deliver all documents required by such holder in
confirmation thereof provided such documents are in form
and substance reasonably satisfactory to Tenant. The
holder of any Mortgage placed on the Property after the
date of this Lease may elect to subordinate this Lease to
such Mortgage, provided that the holder shall deliver to
Tenant a Non-disturbance and Attornment Agreement, on a
commercially reasonable form, whereby such holder agrees
not to disturb Tenant's rights under this Lease provided
that Tenant is not in default beyond applicable cure
periods hereunder. Tenant acknowledges that The First
National Bank of Boston (the "Bank") is a permitted
mortgagee of the Landlord under this Lease. The notice
address of the Bank is: 100 Federal Street, Boston, MA
02110, Attention: Elise Pricone. Landlord agrees to use
reasonable efforts to obtain from the Bank, a Non-
disturbance Agreement, in form reasonably satisfactory to
the Bank, within 90 days of the date of this Lease.
(B) In confirmation of the foregoing subordination,
Tenant shall at Landlord's request promptly execute any
requisite or appropriate document. If the Property is
sold at foreclosure or transferred by a deed-in-lieu of
foreclosure, then, at the request of such purchaser,
Tenant shall attorn to such purchaser and shall recognize
such purchaser as the landlord under this Lease provided
that such purchaser agrees not to disturb Tenant's
possession of the Premises and agrees to be bound by and
assume Landlord's obligations hereunder except such
purchaser shall not be (1) bound by any payment of the
Fixed Rent or additional payments due hereunder for more
than one (1) month in advance, (2) bound by any amendment
of this Lease made without the consent of the holder of
each Mortgage existing as of the date of such amendment
provided Tenant had notice of such Mortgage, (3) liable
for damages for any breach, act or omission of any prior
landlord, and (4) subject to any offsets or defenses which
Tenant might have against any prior landlord. Within
fifteen (15) days after the request of such purchaser,
Tenant shall execute, acknowledge and deliver confirmation
of such attornment and non-disturbance agreement in form
reasonably acceptable to Tenant.
(C) After Tenant receives notice from any person,
firm or other entity that it holds a Mortgage on the
Building or the Property, no notice from Tenant to
Landlord alleging any default by Landlord shall be
effective unless and until a copy of the same is given to
such holder, provided that Tenant shall have been
furnished with the name and address of such holder. Any
such holder shall have thirty (30) days after its receipt
of notice from Tenant of a default by Landlord under this
Lease to cure such default before Tenant may exercise any
remedy hereunder. The curing of any of Landlord's
defaults by such holder shall be treated as performance by
Landlord.
(D) This Lease is subject to Landlord obtaining on
or before the Commencement Date, the consent of the Bank.
15.14 ESTOPPEL CERTIFICATES. At any time and from
time to time upon not less than fifteen (15) days prior
written notice, Tenant and each subtenant or assignee of
Tenant or occupant of the Premises shall execute,
acknowledge and deliver to Landlord and/or any other
person or entity designated by Landlord, an estoppel
certificate (1) certifying that this Lease is unmodified
and in full force and effect (or if there have been
modifications, that this Lease is in full force and effect
as modified and stating the modifications), (2) stating
the dates to which the rent and any other charges have
been paid, (3) stating whether or not, to the best of
Tenant's knowledge, Landlord is in default in the
performance of any obligation of Landlord contained in
this Lease, and, if so, specifying the nature of such
default, (4) stating the address to which notices are to
be sent, and (5) certifying to such other matters as
Landlord may reasonably request. Tenant acknowledges that
time is of the essence to the delivery of such statements.
Upon request, Tenant agrees to furnish Landlord with
Tenant's current annual reports and any other financial
information of Tenant as Landlord may reasonably request
from time to time.
15.15 REMEDYING DEFAULTS. Upon five business days'
notice to Tenant, Landlord shall have the right, but shall
not be required, to pay such sums or perform such acts
which may be necessary or appropriate by reason of the
failure or neglect of Tenant to perform any of its
obligations under this Lease beyond any applicable notice
and grace period hereunder. If Landlord, in connection
with the foregoing, makes any reasonable expenditures or
incurs any obligations for the payment of money, Tenant
agrees to pay to Landlord within five (5) days of demand
all such sums. After a Default of Tenant in the payment
of Fixed Rent, additional rent or other amounts payable
hereunder, such amounts shall, at the option of Landlord,
bear interest from the due date thereof at a rate equal to
five percent (5%) over the rate of interest reported from
time to time in the Wall Street Journal as being the
"prime rate" then in effect and shall be payable by Tenant
to Landlord on demand by Landlord. Notwithstanding
anything to the contrary contained herein, the interest to
be paid by Tenant to Landlord hereunder shall be limited
to the then maximum legal rate thereof.
15.16 HOLDING OVER. If Tenant does not immediately
surrender the Premises upon the expiration or earlier
termination of the Term of this Lease, then Tenant shall
become a tenant by the month and the rent shall be
increased to 150% of the monthly installments of Fixed
Rent, additional rent and all other amounts that would
have been payable pursuant to the provisions of this Lease
if the Term of this Lease had continued during such
holdover period. Such rent shall be computed on a monthly
basis and shall be payable on the first day of such
holdover period and the first day of each calendar month
thereafter during such holdover period until the Premises
have been vacated. Landlord's acceptance of such rent
shall not in any manner adversely affect Landlord's other
rights and remedies, including Landlord's right to evict
Tenant and to recover damages.
15.17. SURRENDER OF PREMISES. Upon the expiration
or earlier termination of the Term of this Lease, Tenant
shall peaceably quit and surrender to Landlord the
Premises in good order and condition, together with all
alterations, additions and improvements which may have
been made or installed in, on or to the Premises prior to
or during the Term of this Lease (subject, however, to the
provisions of Section 7.2(B)), excepting only ordinary
wear and use, eminent domain, and damage by fire or other
casualty. Tenant shall remove all of Tenant's Removable
Property and all items specified by Landlord pursuant to
Section 7.2(B) and shall, at its expense, repair and
restore the Premises to the condition existing prior to
installation and repair any damage to the Premises or the
Building due to such removal. Any of Tenant's Removable
Property which shall remain in the Building or on the
Premises after the expiration or termination of the Term
of this Lease shall be deemed conclusively to have been
abandoned, and either may be retained by Landlord as its
property or may be disposed of, at Tenant's sole cost and
expense, in such manner as Landlord may see fit.
15.18. PAYMENTS BY TENANT. All amounts payable by
Tenant under the terms of this Lease, including without
limitation, all payments of Fixed Rent, additional rent
under Articles V and VI and all payments under Section
9.1(B), shall be paid to Landlord without offset, abatement,
deduction or demand.
ARTICLE XVI
-----------
BROKERAGE
16.1 BROKERAGE. Landlord and Tenant each represent
to the other that it has dealt with no broker in
connection with this Lease. Landlord and Tenant each
agree to indemnify and hold the other harmless from any
brokerage commission, and any other loss, damage or
expense, including reasonable attorneys' fees, resulting
from any dealings by such party in breach of the foregoing
representation.
ARTICLE XVII
------------
17.1 INDEMNIFICATION. Landlord shall defend (with
counsel selected by Landlord) and indemnify Tenant from
and against any and all Environmental Damages (as defined
below) asserted by any third party (including, without
limitation, any sub-tenant, assignee or other successor to
Tenant's interest hereunder but only to the extent
Landlord would have been liable to Tenant hereunder in the
absence of any such sublease, assignment or other
transfer) or governmental authority. Landlord's
obligations under this Article XVII shall survive and
continue in full force and effect (subject only to any
applicable statutes of limitations) for a period of three
(3) years from the expiration date of this Lease (the
"Termination Date"), except that Landlord's indemnity
obligations under this Article XVII as to matters caused
by Landlord, or persons acting under the direction of
Landlord, during the Term of this Lease shall survive
beyond the Termination Date and that if there are any
pending claims under the terms of this Article XVII
existing on the Termination Date (whether or not asserted
in a court of law) or if there is any response action
which Landlord is obligated to perform under Section 17.3
and of which Landlord has received notice on or before the
Termination Date, Landlord's obligations under this
Article XVII solely as to such pending claims or such
response action, shall be extended until such time as the
pending claims have been resolved or such response action
has been completed, respectively.
"Environmental Damages" means all claims, judgments,
damages, losses, penalties, fines, liabilities (including
as well strict liability), encumbrances, liens, costs, and
expenses of investigation and defense of any claim,
whether or not such claim is ultimately defeated, and of
any good faith settlement, of whatever kind or nature,
contingent or otherwise, matured or unmatured, foreseeable
or unforseeable, including without limitation reasonable
attorneys' fees and disbursements and consultants' fees
and response costs, any of which are incurred at any time
as a result of the existence of oil or hazardous materials
upon, about or beneath the Property and/or any properties
downgradient from or cross-gradient to the Property, or
migrating or threatening to migrate to or from the
Property, and any violation by Landlord of any applicable
environmental law pertaining to the Property (except as
specifically provided in the next paragraph), all to the
extent (and only to the extent) resulting from any
existence or migration of oil or hazardous materials,
provided that the violation, existence, migration and/or
threat of migration occurred or arose prior to the Term of
this Lease or occurred or arose during the Lease Term and
is disclosed in certain reports and other documents
identified in Exhibit C attached hereto and treating each
report and document as applying equally to the Property,
the 33 Union Avenue property and the 25 Union Avenue
property and was caused directly by Landlord or persons
acting under the direction of Landlord or resulted from
the migration onto the Property of hazardous substances
from the adjacent property known as 33 Union Avenue, and
provided that such hazardous substances were present on
the 33 Union Avenue property as of the date of this Lease.
The foregoing indemnity shall not apply to any
Environmental Damages resulting from, relating to, or
arising out of the release or threat of release of oil or
hazardous materials occurring during the Term of the Lease
(unless directly caused by Landlord or caused by migration
of hazardous substances in the manner described above) or
resulting from Tenant's (or its employees', agents'
invitees' or contractors') violation of any environmental
laws or caused by Tenant's use, operation, or occupation
of the Premises or from any breach by Tenant of the
provisions of Section 15.1 of this Lease.
17.2 THIRD PARTY CLAIMS.
(A) If any third party shall notify either Landlord
or Tenant with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against Landlord under this Article XVII or a claim for
indemnification against Tenant under Section 15.1, then the
party receiving notice shall promptly notify the other party
in writing; provided, however, that no delay in notifying
the other party shall relieve that party from any obligation
hereunder unless (and then solely to the extent) such
party is prejudiced.
(B) Landlord agrees to defend Third Party Claims
which arise solely out of Landlord's indemnity obligations
under Section 17.1 and so long as Landlord is conducting the
defense of the Third Party Claim in accordance with
Section 17.1 above, (i) Tenant may retain separate co-
counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (ii) Tenant will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without
the prior written consent of Landlord, and (iii) Landlord
will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim
without the prior written consent of Tenant (not to be
withheld unreasonably).
(C) If Landlord does not defend against the Third
Party Claim as required by Section 17.2(B), however, (i)
Tenant
may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem
appropriate (provided that Landlord may participate in any
such action, at its own expense, and Landlord shall have
the right to reject any settlement proposal by Tenant),
(ii) Landlord will reimburse Tenant promptly and
periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and
expenses), and (iii) Landlord will remain responsible for
any Environmental Damages Tenant may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the extent (and only to
the extent) provided in this Article XVII.
(D) Tenant agrees to defend Third Party Claims which
arise out of Tenant's indemnity obligations under Section
15.1
and so long as Tenant is conducting the defense of the
Third Party Claim in accordance with Section 15.1, (i)
Landlord may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third
Party Claim, (ii) Landlord will not consent to the entry
of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent
of Tenant (not to be withheld unreasonably), and (iii)
Tenant will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party
Claim without the prior written consent of Landlord (not
to be withheld unreasonably).
(E) If Tenant does not defend against the Third
Party Claim as required by Section 17.2(D), however, (i)
Landlord may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem
appropriate (provided that Tenant may participate in any
such action, at its own expense), (ii) Tenant will
reimburse Landlord promptly and periodically for the costs
of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (iii) Tenant
will remain responsible for any Environmental Damages
Landlord may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Article
XVII and in Section 15.1.
17.3 RESPONSE ACTIONS. If Tenant or Landlord is
required by applicable law to remediate oil or hazardous
materials on or under the Property or migrating or
threatening to migrate through, under or beyond the
Property, or to take any other response actions related to
the Premises and/or any migration or threat of migration,
then Landlord shall promptly undertake all such response
actions in accordance with all applicable laws. Upon
completion of each response action, Landlord shall
reasonably restore any affected portion of the Property to
the condition existing prior to the commencement of such
response action. If the response action is the result of
any breach by Tenant of the terms of Section 15.1 or
otherwise results from any environmental condition occurring
during the Term of this Lease, Tenant shall reimburse
promptly and periodically Landlord, as additional rent, for
all costs incurred by Landlord in connection with such
response action.
Tenant agrees, upon reasonable prior written notice
from Landlord, to grant Landlord or its contractors access
to the Premises to carry out such response actions as
Landlord deems appropriate, provided, however, that
Landlord shall use reasonable efforts to prevent any
interruption of Tenant's (or any permitted subtenant's or
assignee's) conduct of business at the Premises. Landlord
agrees to coordinate its activities with Tenant so as to
minimize any inconvenience to or interruption of the
normal use and enjoyment of the Premises by Tenant and by
any permitted subtenant and/or assignee consistent with
Landlord's obligations hereunder and under any applicable
judgment, decree or settlement.
17.4 SUCCESSORS AND ASSIGNS. This Article XVII is
binding upon and inures to the benefit of Landlord and
Tenant only. The parties acknowledge that Tenant has a
right to terminate this Lease in the event of a default by
Landlord or Theodore Pasquarello under the provisions of
Section 2 of that certain Letter of Credit Agreement of
even date herewith between Landlord, Tenant, Theodore
Pasquarello and the E. B. Trust Landlord. In the event
that this Lease is assigned or the Premises are sublet by
Tenant as permitted hereunder, then Landlord's obligations
under this Article XVII shall thereafter be owed only to
New England Business Service, Inc. and not to any of
Tenant's subtenants, successors, transferees, or assigns.
In the event the Property is acquired by a mortgagee of
the Property at foreclosure sale or by a deed-in-lieu of
foreclosure, the provisions of this Article XVII shall not
apply to such mortgagee.
ARTICLE XVIII
-------------
EXCULPATORY CLAUSE
18.1 LIMITATION ON LIABILITY. Notwithstanding
anything to the contrary herein, Landlord's liability for
its negligence or failure to perform its obligations
hereunder including all of Landlord's obligations under
Section 17 shall be limited to its interest in the Premises.
Tenant shall neither seek to enforce nor enforce any
judgment or other remedy against any other asset of
Landlord or any individual who holds any interest in
Landlord.
18.2 ACTIONS AGAINST LANDLORD. In any claim made by
Tenant against Landlord alleging that Landlord has acted
unreasonably where Landlord had an obligation to act
reasonably, Tenant shall have no right to recover damages
(except as permitted under Section 19.2) from Landlord and
Tenant's sole and exclusive recourse against Landlord
shall be an action seeking specific performance of
Landlord's obligation to act reasonably.
ARTICLE XIX
-----------
SUBMISSION TO JURISDICTION, ETC.
19.1 GOVERNING LAW. This Lease shall be construed
in accordance with the laws of the Commonwealth of
Massachusetts. All actions or proceedings relating,
directly or indirectly, to this Lease shall be litigated
only in courts located within the Commonwealth of
Massachusetts. Landlord, Tenant, their partners,
trustees, and their successors and assigns hereby subject
themselves to the jurisdiction of any state or federal
court located within the Commonwealth of Massachusetts.
19.2 RECOVERY OF FEES. If either party commences
any action or proceeding against the other in connection
with this Lease and such action or proceeding is disposed
of, by settlement, judgment or otherwise, the prevailing
party shall be entitled to recover from the other its
reasonable disbursements (including reasonable attorneys'
fees) and the reasonable fees and disbursements of
consultants or experts incurred in connection with such
action or proceedings.
IN WITNESS WHEREOF, each of Landlord and Tenant has
caused this Lease to be duly executed as of the date first
written above
LANDLORD:
By:/s/ Theodore Pasquarello
___________________________
Theodore Pasquarello, not
individually but as Trustee
of The Paris Trust
By:/s/ Eileen Pasquarello
___________________________
Eileen Pasquarello, not
individually but as Trustee
of The Paris Trust
TENANT:
NEW ENGLAND BUSINESS
SERVICE, INC.
By: /s/ John F. Fairbanks
_______________________________
Name:John F. Fairbanks
____________________________
Title:V.P. Finance, Chief Financial
Officer
_____________________________
LIST OF EXHIBITS
----------------
EXHIBIT A Floor Plan
EXHIBIT B Title Policy
EXHIBIT C List of Environmental Reports and Related
Documents
Exhibit 10 (f)
NEW ENGLAND BUSINESS SERVICE, INC.
500 Main Street
Groton, Massachusetts 01471
Agreement to Furnish Copies of Omitted Exhibits to Lease Agreement between
Theodore Pasquarello and Eileen Pasquarello, as Trustee of The Paris Trust
(Landlord) and New England Business Service, Inc.(Tenant).
New England Business Service, Inc. (the "Registrant") is not filing as
exhibits to its Quarterly Report on Form 10-Q dated May 13, 1997, copies
of the exhibits to the Lease Agreement between Theodore Pasquarello and
Eileen Pasquarello, as Trustee of The Paris Trust (Landlord) and New
England Business Service, Inc. dated March 31, 1997, which Agreement is
filed as Exhibit 10(f) thereto.
Registrant agrees to furnish to the Securities and Exchange Commission,
upon request, copies of such omitted exhibits.
Dated: May 13, 1997
NEW ENGLAND BUSINESS SERVICE, INC.
(Registrant)
By: /s/ John F. Fairbanks
---------------------
John F. Fairbanks
VP, Chief Financial Officer
