<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8988
ECC International Corp.
(Exact name of registrant as specified in its charter)
Delaware 23-1714658
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
175 Strafford Avenue, Suite 116, Wayne, PA 19087-3377
(Address of principal executive offices) (Zip Code)
(610) 687-2600
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 at least the past 90 days. [ X ] Yes [ ] No
As of December 31, 1995, there were 7,754,769 shares of the Registrant's
Common Stock, $.10 par value per share, issued and outstanding.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(In Thousands Except Share and Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
12/31/95 12/31/94
---------- ----------
<S> <C> <C>
Net Sales $ 58,671 $ 43,332
Cost of Sales 45,907 32,187
---------- ----------
Gross Profit 12,764 11,145
---------- ----------
Expenses:
Selling, General & Administrative 6,763 6,188
Systems Development 184 681
---------- ----------
Total Expenses 6,947 6,869
---------- ----------
Operating Income 5,817 4,276
---------- ----------
Other Income (Expense):
Interest Income 113 76
Interest Expense (851) (673)
Other - Net (130) (32)
---------- ----------
Total Other Expense (868) (629)
---------- ----------
Income Before Income Taxes 4,949 3,647
Provision for Income Taxes 1,703 1,122
---------- ----------
Net Income $ 3,246 $ 2,525
========== ==========
Earnings Per Common Share and
Common Share Equivalents $ 0.41 $ 0.32
========== ==========
Weighted Average Number of Common and
Common Share Equivalents Outstanding 7,923,003 7,924,471
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 3
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(In Thousands Except Share and Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
12/31/95 12/31/94
------------ ------------
<S> <C> <C>
Net Sales $ 31,691 $ 22,676
Cost of Sales 25,278 17,264
---------- ----------
Gross Profit 6,413 5,412
---------- ----------
Expenses:
Selling, General & Administrative 3,505 3,004
Systems Development 125 473
---------- ----------
Total Expenses 3,630 3,477
---------- ----------
Operating Income 2,783 1,935
---------- ----------
Other Income (Expense):
Interest Income 50 27
Interest Expense (387) (316)
Other - Net (70) 5
---------- ----------
Total Other Expense (407) (284)
---------- ----------
Income Before Income Taxes 2,376 1,651
Provision for Income Taxes 817 462
---------- ----------
Net Income $ 1,559 $ 1,189
========== ==========
Earnings Per Common Share and
Common Share Equivalents $ 0.20 $ 0.15
========== ==========
Weighted Average Number of Common and
Common Share Equivalents Outstanding 7,908,195 7,856,795
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 4
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
12/31/95 6/30/95
----------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 5,165 $ 3,535
Accounts Receivable, Net 15,534 8,778
Costs and Estimated Earnings in Excess
of Billings on Uncompleted Contracts 29,579 39,752
Inventories
Raw Material 8,381 6,897
Work in Process 5,008 1,998
Finished Goods 1,104 1,140
Prepaid Expenses and Other 1,733 1,764
------- -------
Total Current Assets 66,504 63,864
Property, Plant and Equipment - Net 24,572 24,007
Other Assets 1,936 1,868
------- -------
Total Assets $93,012 $89,739
======= =======
Continued...
</TABLE>
<PAGE> 5
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
12/31/95 6/30/95
----------- ---------
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Temporary Credit Facility $ 0 $ 2,534
Current Portion of Long-Term Debt 3,000 3,600
Accounts Payable 10,975 7,197
Accrued Compensation 3,939 4,093
Advances on Long-Term Contracts 1,156 1,395
Accrued Profit Sharing 812 672
Other Accrued Expenses 2,516 3,390
------- -------
Total Current Liabilities 22,398 22,881
------- -------
Deferred Income Taxes 1,569 1,569
------- -------
Long-Term Debt 16,235 16,250
------- -------
Commitments and Contingencies
Stockholders' Equity:
Common stock, $.10 par; authorized
20,000,000 shares at 12/31/95 and
6/30/95; reserved for stock options
and other obligations to issue stock,
1,450,183 shares at 12/31/95 and
2,157,528 shares at 6/30/95; issued
and outstanding, 7,754,769 shares
at 12/31/95 and 7,657,846 at 6/30/95 775 766
Preferred stock, $.10 par; authorized
1,000,000 shares at 12/31/95 and at
6/30/95; issued and none outstanding
at 12/31/95 and 6/30/95 -- --
Capital in Excess of Par 22,401 21,822
Cumulative Translation Adjustment (18) 45
Retained Earnings 29,652 26,406
------- -------
Total Stockholders' Equity 52,810 49,039
------- -------
Total Liabilities & Stockholders' Equity $93,012 $89,739
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 6
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1995 AND 1994
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
12/31/95 12/31/94
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 3,246 $ 2,525
Items Not Requiring Cash:
Depreciation 1,819 1,674
Provision for Doubtful Accounts 65 --
Deferred Income Taxes -- (129)
Changes in Certain Assets and Liabilities:
Accounts Receivable (6,821) (1,569)
Cost and Estimated Earnings in Excess
of Billings on Uncompleted Contracts 10,173 (7,982)
Inventories (4,458) 308
Prepaid Expenses and Other 31 (189)
Accounts Payable 3,778 1,164
Advances on Long-Term Contracts (239) 1,337
Accrued Expenses (888) (254)
------- --------
Net Cash Provided By (Used In) Operating Activities 6,706 (3,115)
------- --------
Cash Flows From Investing Activities:
Additions to Property, Plant and Equipment (2,384) (2,665)
Other (131) (408)
------- --------
Net Cash Used In Investing Activities (2,515) (3,073)
------- --------
Cash Flows From Financing Activities:
Proceeds From Issuance of Common Stock, Options
Exercised and Warrants, Including Related Tax Benefit 588 5,398
New Borrowings under Term Loan -- 9,000
Repayments under Term Loan (1,500) --
New Borrowings under Revolving Credit Facility, Net (1,649) 10,135
Repayment of Long-Term Debt under Revolving Credit
Agreement and Notes Payable -- (17,568)
------- --------
Net Cash (Used In) Provided By Financing Activities (2,561) 6,965
------- --------
Net Increase in Cash 1,630 777
Cash at Beginning of the Period 3,535 2,600
------- --------
Cash at End of the Period 5,165 3,377
======= ========
</TABLE>
Continued...
<PAGE> 7
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1995 AND 1994 (Continued)
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
12/31/95 12/31/94
---------- ----------
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Year For:
Interest $ 870 $ 369
Income Taxes $2,216 $1,839
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying statements are unaudited and have been prepared by ECC
pursuant to the rules and regulations of the Securities and Exchange
Commission. The June 30, 1995 balance sheet was derived from audited
financial statements but does not include all disclosures required by
generally accepted accounting principles. In the opinion of management such
consolidated financial statements contain all adjustments, consisting of
only normal recurring adjustments, necessary to present fairly the
consolidated financial position, results of operations and cash flows for
the interim periods presented. The aforementioned consolidated financial
statements have been prepared substantially in conformity with the
accounting principles reflected in the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995.
2. Earnings per share for the six and three month periods ended December 31,
1995 and 1994 are based on net income divided by the weighted average
number of common share and common share equivalents outstanding.
Common stock equivalents (stock options, warrants and Employee Stock
Purchase Plan) are excluded from the calculation of per share data when
their dilutive effect is not material.
3. During the second quarter of fiscal year 1996, the Company executed an
Amendment to its loan facility increasing the maximum available credit
under the revolving credit portion of the loan facility from $11.0 million
to $15.0 million. The amendment also increased the maximum available credit
to the Company's wholly owned subsidiary, ECC Simulation Limited from $2.0
million to $4.0 million. The original payment terms and covenants of the
loan facility remain in effect.
<PAGE> 9
ECC INTERNATIONAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
a) Material Changes in Financial Condition
During the six month period ended December 31, 1995, the Company's
principal sources of cash were receipts on accounts receivable and proceeds
from the exercise of stock options. The principal uses of these and
existing funds were to make payments on the term loan and revolving credit
facility and to finance the increase in inventories as well as acquisitions
of property, plant and equipment.
Costs and estimated earnings in excess of billings on uncompleted contracts
decreased and accounts receivable increased due to significant billings on
several of the Company's contracts which were completed during the second
quarter of fiscal year 1996 or are substantially near completion. Payments
on these billings were received in January 1996.
Raw material inventory increased primarily due to the continued production
of vending machines for stock in anticipation of future sales orders.
Work in process inventory increased primarily due to unabsorbed overhead.
Overhead is absorbed based on an annualized projected rate. Management
expects that volume during the remaining fiscal 1996 quarters will support
the currently budgeted overhead rate.
Finished goods inventory increased primarily due to the completion of
vending machines in late December which were not shipped until January.
The increase in accounts payable of approximately $3.8 million is primarily
the result of material purchases in the vending operation, as well as, raw
material purchase requirements under one of the Company's major contracts.
During the second quarter of fiscal year 1996, the Company executed an
Amendment to its loan facility increasing the maximum available credit
under the revolving credit portion of the loan facility from $11.0 million
to $15.0 million. The amendment also increased the maximum available credit
to the Company's wholly owned subsidiary, ECC Simulation Limited from $2.0
million to $4.0 million. The original payment terms and covenants of the
loan facility remain in effect. The Company is required to make quarterly
payments of principal on the term loan in the amount of $750,000 during
fiscal year 1996.
During fiscal year 1996, the Company anticipates spending approximately
$4.5 million to purchase new machinery and equipment, continue
refurbishment of the older areas of the Orlando facility and to make
leasehold improvements to the leased vending and UK facilities.
Due to the continued growth of the UK operation, the Company signed a new
lease in December 1995 for approximately 50,000 square feet near the
existing UK leased facility. Currently, the Company intends to use both
facilities. The move to this new location will be completed by the third
quarter of fiscal year 1996.
<PAGE> 10
Other than as stated above, the Company has no other material commitments
for capital expenditures. Management believes that with proceeds from the
revolving credit facility and its projected cash flow the Company will have
sufficient resources to meet current and future operating commitments.
b) Material Changes in Results of Operations
Sales increased for the six and three month periods ended December 31, 1995
as compared to the same periods ended December 31, 1994. The increase in
sales is the result of increased volume, particularly in the domestic
training operation. The sales volume increase for the training operation is
primarily the result of continued progress on a large cost plus incentive
fee contract and one large fixed price contract as well as several smaller
contracts. The UK and vending operation contributed marginally to the
increase in sales volume over the corresponding six and three month periods
in the prior fiscal year. The increases in domestic training sales volume
were offset by the substantial completion of two fixed price type contracts
during the first two quarters of fiscal year 1996.
Gross margin as a percentage of sales decreased for the six and three month
periods ended December 31, 1995 versus the same periods ended December 31,
1994. The decrease in gross margin is largely the result of the Company's
change in contract mix in the domestic training operation. While the
Company has experienced an increase in volume on its' large cost plus type
contracts, these contracts generally yield lower gross margins than the
fixed price type. In addition, adjustments were taken to the gross margin
of two fixed price domestic contracts, which were substantially completed
during the six month period ended December 31, 1995. These gross margin
adjustments were primarily the result of protracted acceptance schedules
which resulted in higher than previously anticipated costs. Higher costs
than originally anticipated were also incurred on two contracts of the UK
operation resulting from an increase in training requirements and overtime
incurred to meet milestone deadlines. These decreases in gross margin were
slightly offset by an improved margin in the bottle vending operation as
efficiencies continued to be achieved and production costs declined.
Sales volume was less than the first quarter in the vending division due to
a seasonal slowdown in the vending industry. This slowdown is expected to
continue through the third quarter of fiscal year 1996. As a result of the
seasonal slowdown and refinements made to the beverage vending machine to
permit dispensing of 20 ounce bottles, contract labor was reduced during
the second quarter. Management expects to increase personnel levels to
accommodate anticipated sales orders of the new bottle vendor during the
fourth quarter of fiscal year 1996.
Selling, general and administrative expenses increased for the six and
three month periods ended December 31, 1995 compared to the six and three
month periods ended December 31, 1994. The increase is primarily the result
of higher salaries and advertising costs in the vending division as
marketing efforts are expanded.
Systems development expense decreased for the quarter and six month period
ended December 31, 1995 versus the quarter and six month period ended
December 31, 1994. The decrease is the result of the reduction of
development costs associated with the new model frozen/refrigerated vending
machine which is now in production.
Interest expense increased for the quarter and six month period ended
December 31, 1995 versus the corresponding quarter and six month period in
the previous fiscal year. The increase in interest expense is the result of
higher borrowings under the Company's revolving credit agreement during the
quarter and six month period ended December 31, 1995.
<PAGE> 11
PART II. OTHER INFORMATION
ECC INTERNATIONAL CORP.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on December 6, 1995,
the following proposals were adopted by the vote specified below:
<TABLE>
<CAPTION>
Broker
Proposal For Against Abstain NonVotes
<S> <C> <C> <C> <C>
1) To elect the Board
of Directors
Julian Demora 5,659,747 710,085 -- --
Ajit W. Hirani 6,340,299 29,533 -- --
Martin S. Kaplan 6,310,447 59,385 -- --
Herbert Krasnow 5,686,095 683,737 -- --
Jesse Krasnow 6,336,895 32,937 -- --
Thomas E. McGrath 6,340,495 29,337 -- --
Merrill A. McPeak 6,335,575 34,257 -- --
George W. Murphy 6,341,694 28,138 -- --
2) To Approve the Company's
1996 Employee Stock
Purchase Plan 6,206,638 92,719 70,475 --
3) Ratification of
Coopers & Lybrand
as auditors 6,310,477 16,643 30,212 12,500
</TABLE>
<PAGE> 12
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
Exhibit 10.18 - Second Amendment dated as of October 13, 1995 to
the Term and Revolving Credit Agreement dated as of September 20,
1994 by and among First Fidelity Bank, National Association and
ECC International Corp.
Exhibit 10.19 - Lease between ECC International Corp. and State of
Wisconsin Investment Board for the premises 2900 Titan Row,
Orlando, Florida.
Exhibit 10.20 - Lease between ECC Simulation Limited, ECC
International Corp. and G.J. King & Son Limited for the premises
Unit 1 Home Farm Business Centre, Brighton, England.
Exhibit 10.21 - Lease between ECC Simulation Limited, ECC
International Corp. and G.J. King & Son Limited for the premises
Unit 2 Home Farm Business Centre, Brighton, England.
Exhibit 10.22 - Lease between ECC Simulation Limited, ECC
International Corp. and G.J. King & Son Limited for the premises
Unit 3A Home Farm Business Centre, Brighton, England.
Exhibit 10.23 - ECC International Corp. Executive Savings Plan.
Exhibit 11 - Schedule of Computation of Earnings Per Share
b. Reports on Form 8-K
None.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ECC INTERNATIONAL CORP.
Date February 12, 1996 /s/ George W. Murphy
----------------- ---------------------------
George W. Murphy, President
Date February 12, 1996 /s/ Relland Winand
----------------- ---------------------------
Relland Winand
Vice President, Finance
<PAGE> 1
EXHIBIT 10.18
AMENDMENT TO CREDIT AGREEMENTS
THIS AMENDMENT ("Amendment") made as of October 13, 1995, between ECC
INTERNATIONAL CORP. ("ECC"), ECC SIMULATION LIMITED ("Simulation") and FIRST
FIDELITY BANK, NATIONAL ASSOCIATION ("Bank").
Background
Bank and ECC entered into a certain Term Loan and Revolving Credit
Agreement dated as of September 20, 1994 (as amended to date, the "ECC Credit
Agreement") relative to, inter alia, a Revolver (the "ECC Revolver"), as more
fully set forth therein, the terms of which are incorporated herein by
reference. Bank and Simulation entered into a certain Revolving Credit
Agreement dated as of September 20, 1994 (as amended to date, the "Simulation
Credit Agreement") relative to a Revolver (the "Simulation Revolver"), as more
fully set forth therein, the terms of which are incorporated herein by
reference. The parties desire to amend the ECC Credit Agreement and the
Simulation Credit Agreement in the manner hereinafter provided.
NOW, THEREFORE, the parties, INTENDING TO BE LEGALLY BOUND, agree as
follows:
1. Maximum Principal Amount of ECC Revolver. Effective October 13,
1995 and notwithstanding Section A.2.b. of the ECC Credit Agreement to the
contrary, the maximum aggregate principal amount of advances, including the
face amount of Letters of Credit (as defined in the ECC Credit Agreement), to
be outstanding at any time under the ECC Revolver (the "Maximum Principal
Amount") shall be an amount which, when taken together with the principal
amount of cash advances and the face amount of letters of credit outstanding
under the Simulation Revolver, is not greater than $15,000,000.
2. Maximum Principal Amount of Simulation Revolver. Effective October
13, 1995 and notwithstanding Section A.1.b. of the Simulation Credit Agreement
to the contrary, the Maximum Principal Amount (as defined in the Simulation
Credit Agreement) of advances, including the face amount of letters of credit,
to be outstanding at any time under the Simulation Revolver shall be an amount
which is equal to the lesser of (i) $4,000,000 or (ii) an amount which, when
taken together with the principal amount of cash advances and the face amount
of letters of credit outstanding under the ECC Revolver, is not greater than
$15,000,000.
3. Currency Fluctuations. Notwithstanding Section A.1.i. of the
Simulation Credit Agreement to the contrary, if due solely to fluctuations in
the exchange rate for Dollars and Pounds
<PAGE> 2
Sterling, the Equivalent Dollar Amount (as defined in the Simulation Credit
Agreement) of outstanding cash advances and the face amount of outstanding
letters of credit made in Pounds Sterling, when taken together with outstanding
cash advances and the face amount of outstanding letters of credit made in
Dollars under the Simulation Credit Agreement, exceeds $4,000,000 but does not
exceed $4,400,000, Simulation need not repay such excess until the Expiration
Date, provided, that if the same exceeds $4,400,000 or if the Equivalent Dollar
Amount of outstanding cash advances and the face amount of outstanding letters
of credit made in Pounds Sterling, when taken together with the sum of
outstanding cash advances and the face amount of outstanding letters of credit
made in Dollars and the principal amount of cash advances and the face amount of
credit outstanding under the ECC Revolver, exceeds $15,000,000, Simulation will
repay the principal of the Simulation Revolver in the amount of such excess
within one (1) Business Day after notice thereof from Bank.
4. Simulation Letters of Credit. Bank agrees that advances under the
Simulation Revolver may, if requested by Simulation, be in the form of one or
more letters of credit (each a "Letter of Credit" and, collectively, the
"Letters of Credit"), subject to the following terms:
a. Upon the request of Simulation made to Bank not later than
ten (10) Business Days prior to the date on which Simulation requests that a
Letter of Credit be issued hereunder, Bank shall under and subject to the terms
and conditions hereof issue standby letters of credit under the Revolver for
the account of Simulation from time to time through but not including the
Expiration Date, up to an aggregate face amount (the "LC Sublimit") at any time
outstanding equal to $500,000. letters of Credit issued hereunder shall be
under such terms, including provisions for draw and expiration date, as shall
be acceptable to Bank in its discretion, and shall be available only for the
purpose of securing rental obligations of Simulation for leased locations.
Letters of Credit shall be denominated in Dollars or Pounds Sterling.
b. Bank shall have the right, in its absolute discretion and
whether or not an Event of Default has occurred or is continuing under the
Simulation Credit Agreement, to provide the beneficiary of any of the Letters
of Credit with notice of non-renewal in accordance with the provisions, if any,
of the Letters of Credit relating thereto.
c. Simulation agrees to provide Bank with Cash Collateral
(meaning for all purposes hereof cash in Dollars) in the following amounts upon
the following events:
2
<PAGE> 3
(1) On the Expiration Date, Simulation will provide
Bank with Cash Collateral in an amount equal to
the face amount of all Letters of Credit then
outstanding;
(2) If at any time the face amount of Letters of
Credit then outstanding exceeds the LC Sublimit,
Simulation will at such time provide Bank with
Cash Collateral in an amount equal to the
aggregate of such excess;
(3) Upon the occurrence of an event of Default,
Simulation will provide Bank with Cash Collateral
in an amount equal to the aggregate face amount of
all outstanding Letters of Credit.
d. Cash Collateral provided to Bank pursuant to subparagraph
c. above shall be held by Bank as security for the prompt satisfaction of all
of the Liabilities (as defined in the Simulation Credit Agreement), and shall
be deemed to be "Collateral" for all purposes of the Simulation Credit
Agreement.
e. Reimbursement of Letters of Credit Disbursements.
Simulation agrees to reimburse Bank for the amount of each payment by Bank
under any Letter of Credit (a "Letter of Credit Disbursement") made by Bank on
the date (the "Letter of Credit Disbursement Date") on which the Letter of
Credit Disbursement was made. Such obligation of Simulation to reimburse Bank
for any such Letter of Credit Disbursement is herein referred to as a
"Reimbursement Obligation." If any Reimbursement Obligation is not paid in full
by Simulation to Bank on the corresponding Letter of Credit Disbursement Date
(for this purpose payments received by Bank after 1:30 p.m., Philadelphia,
Pennsylvania time on any Business Day shall be deemed to have been made on the
next succeeding Business Day), the unpaid amount of such Reimbursement
Obligation shall bear interest for each day from the corresponding Letter of
Credit Disbursement Date until payment in full thereof (after, as well as
before, judgment), payable on demand, at the Default Rate (as defined in the
Revolving Credit Note to be executed pursuant to Section 6.b. hereof).
f. Letter of Credit Charges and Fees. Simulation agrees to
pay on demand to Bank, with respect to the amendment or transfer of any Letter
of Credit and each drawing made under any Letter of Credit, documentary and
processing fees and charges in accordance with Bank's fees and charges in
effect at the time of such amendment, transfer or drawing, as the case may be.
Also, a letter of credit fee will be payable by Simulation in the amount of 1%
of the face amount of each Letter of Credit, payable upon issuance thereof and
on each anniversary thereof.
3
<PAGE> 4
g. Obligations Absolute. All Reimbursement Obligations of
Simulation arising from Letter of Credit Disbursements shall be unconditional
and absolute and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances whatsoever including, without limitation, the
following circumstances: (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, set-off, defense or other
right which Simulation may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any person for whom any such beneficiary
or transferee may be acting), or any other person, whether in connection with
the Simulation Credit Agreement, the transactions contemplated therein or any
unrelated transaction (including any underlying transaction between Simulation
or any of its subsidiaries or affiliates and the beneficiary for which any
Letter of Credit was procured); (iii) any draft, demand, certificate or any
other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect, except to the extent Simulation
proves that such payment constituted negligence or willful misconduct on the
part of Bank; or (iv) payment by Bank under any Letter of Credit against
presentation of a demand, draft, certificate or other document which does not
comply with the terms of the Letter of Credit, except to the extent that
Simulation proves that such payment constituted negligence or willful
misconduct on the part of Bank; (v) the failure or delay on the part of Bank in
giving any notice hereunder; (vi) any draw thereunder being a consequence of
Bank's non-renewal of any Letter of Credit; or (vii) any other circumstance or
happening whatsoever, whether similar or dissimilar to any of the foregoing.
h. Indemnification; Nature of Duties.
(1) In addition to amounts payable as elsewhere
provided in the Simulation Credit Agreement and/or
in this Amendment, Simulation hereby indemnifies
and holds harmless Bank from and against any and
all claims, damages, losses, liabilities, costs or
expenses whatsoever which Bank may incur (or which
may be claimed against Bank by any person) by
reason of or in connection with the issuance or
transfer of, or payment or failure to pay under,
any Letter of Credit, or the involvement by Bank in
any suit, proceeding or action as a consequence,
direct or indirect, of Bank's issuance of any
Letter of Credit, except for any such claims,
damages, losses, liabilities, costs or expenses to
the extent, but only to the extent, which
Simulation proves were caused by the gross
negligence or
4
<PAGE> 5
willful misconduct of Bank in determining whether
a certificate, draft, statement or document
presented under any Letter of Credit complied with
the terms of the Letter of Credit.
(2) As between Simulation and Bank, Simulation assumes
all risks of the act or omissions of the
beneficiary or any transferee of any Letter of
Credit with respect to such beneficiary's or
transferee's use of the Letter of Credit. Bank
shall not be liable or responsible for: (A) the use
which may be made of any Letter of Credit or the
proceeds of any drawing thereunder or for any
acts or omissions of the beneficiary or any
transferee in connection therewith; (B) the
validity, sufficiency or genuineness of
certificates, drafts or documents presented under
any Letter of Credit that appear on their face to
be in order, or of any endorsement thereon, even if
any of the same should in fact prove to be in any
or all respects invalid, insufficient, fraudulent
or forged; (C) payment by Bank under any Letter of
Credit against presentation of drafts, certificates
or documents which do not comply with the terms of
the Letter of Credit, including failure of any such
drafts, certificates or documents to bear any
reference or adequate reference to the Letter of
Credit, or for any failure of the beneficiary of
any Letter of Credit otherwise to comply fully with
the conditions required in order to draw under the
Letter of Credit; (D) the validity or sufficiency
of any instrument transferring or assigning or
purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or the
proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason;
or (E) any other circumstances whatsoever in making
or failing to make payment under any Letter of
Credit, except only that Bank shall be liable to
Simulation to the extent, but only to the extent,
of any direct, as opposed to consequential, damages
suffered by Simulation which Simulation proves were
caused by Bank's gross negligence or willful
misconduct in connection with the matters referred
to in clauses (B) through (E) above. In
5
<PAGE> 6
furtherance and not in limitation of the foregoing,
Bank may accept drafts, certificates or documents
presented to it under any Letter of Credit that
appear on their face to be in order, without
responsibility for further investigation,
regardless of any notice or information to the
contrary, and any action taken or omitted by Bank
under or in connection with any Letter of Credit,
if taken or omitted in good faith and without
willful misconduct or gross negligence, shall not
put Bank to any resulting liability to Simulation.
i. Payments to Bank. All payments to be made by Simulation to
Bank in respect of Reimbursement Obligations due from Simulation shall be
payable in Dollars on the day when due without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and an action
therefor shall immediately accrue.
j. Application. Simulation shall, as a condition to the
issuance by Bank of any Letter of Credit, execute and deliver to Bank Bank's
then standard Letter of Credit Application as Bank may require in connection
with the issuance of a Letter of Credit, provided, that in the event of any
express inconsistency between the terms of any such Application and the terms
hereof, the latter shall control.
5. Commitment Fee. Effective October 1, 1995, and in lieu of the
Commitment Fee payable by ECC under Section F.2. of the ECC Credit Agreement,
ECC shall pay to Bank an unused commitment fee in the amount of 1/4 of 1% of
the average unused portion of Bank's aggregate commitment under the ECC
Revolver and the Simulation Revolver, determined quarterly and payable in
arrears at the end of each such quarterly period.
6. Conditions. The obligation of Bank to increase the Maximum
Principal Amount of the Revolvers as set forth in Sections 1 and 2 hereof is
subject to the following conditions precedent:
a. ECC shall, concurrently herewith, execute and deliver to
Bank an amended and restated Revolving Credit Note in the face amount of
$15,000,000, which amended and restated Revolving Credit Note, together with
any attachments thereto and amendments, modifications or restatements thereof
or thereto, shall constitute the "Revolving Credit Note" for all purposes of
the ECC Credit Agreement and other Loan Documents referred to therein;
6
<PAGE> 7
b. Simulation shall, concurrently herewith, execute and deliver
to Bank an amended and restated Revolving Credit Note in the face amount of
$4,000,000, which amended and restated Revolving Credit Note, together with any
attachments thereto and amendments, modifications or restatements thereof or
thereto, shall constitute the "Revolving Credit Note" for all purposes of the
Simulation Credit Agreement and other Loan Documents referred to therein;
c. Each of ECC and Simulation shall, concurrently herewith,
deliver to Bank certified resolutions of its Board of Directors authorizing ECC
and Simulation, as applicable, to execute, deliver and perform this Amendment
and any documents required to be executed by it in connection herewith.
7. Reaffirmation. Except as specifically modified by this Amendment,
the ECC Credit Agreement and the Simulation Credit Agreement and all other Loan
Documents referred to in either thereof shall remain unchanged and in full
force and effect, and this Amendment shall be construed as supplemental
thereto, and each of ECC and Simulation hereby reaffirms all of its Liabilities
thereunder and agrees that the same are owing to Bank in accordance with the
terms thereof without off-set, counterclaim or defense of any nature. Each of
ECC and Simulation further reaffirms all guaranties, liens and security
interests heretofore granted by it to Bank pursuant to the Loan Documents,
including without limitation the liens, security interests and guaranties
granted pursuant to the Security Agreement dated September 20, 1994 among Bank,
ECC, ECC International, Inc. and Educational Computer Corporation International
("Security Agreement"), that certain Guarantee and Debenture dated September
20, 1994 executed and delivered by Simulation to Bank ("Guaranty and
Debenture") and that certain Guaranty and Surety Agreement dated September 20,
1994 from ECC, ECC International, Inc. and Educational Computer Corporation to
Bank ("Guaranty"); and agrees that the ECC Revolver and the Simulation
Revolver, as the Maximum Principal Amount of each thereof is amended pursuant
to Sections 1 and 2 hereof, and all Reimbursement Obligations of Simulation,
constitute a "Liability" for all purposes of said Security Agreement, a
"Secured Liability" for all purposes of said Guaranty and Debenture and a
"Liability" for all purposes of said Guaranty.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first above written.
ECC INTERNATIONAL CORP.
By: /s/ G. W. Murphy, CEO
-----------------------------------
Name: George W. Murphy
Title: President/CEO
Attest: /s/ Richard F. Thompson
-----------------------------------
Name: Richard F. Thompson
Title: Secretary/Treasurer
ECC SIMULATION LIMITED
By: /s/ G. W. Murphy, Director
-----------------------------------
Name: George W. Murphy
Title: Director
Attest: /s/ Richard F. Thompson
-----------------------------------
Name: Richard F. Thompson
Title: Secretary/Treasurer
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By: /s/ Jack P. Albaugh
----------------------------------
Name: Jack P. Albaugh
Title: Vice President
8
<PAGE> 9
JOINDER
Each of the undersigned consents to the foregoing Amendment, the terms
of which are incorporated herein by reference, and agrees with Bank that the
Revolver for ECC International Corp. and the Revolver for ECC Simulation
Limited, as the Maximum Principal Amount of each thereof is amended pursuant to
Sections 1 and 2 of the within Amendment, and all Reimbursement Obligations of
Simulation for letters of credit, constitute a "Liability" for all purposes of
(A) that certain Guaranty and Surety Agreement dated September 20, 1994
executed and delivered by Educational Computer Corporation International and
ECC International, Inc. to Bank, (B) that certain Guaranty and Surety Agreement
dated September 20, 1994 executed and delivered by Educational Computer
Corporation International, ECC International, Inc. and ECC International Corp.
to Bank, and (C) that certain General Security Agreement dated September 20,
1994 among Bank, ECC International Corp., Educational Computer Corporation
International and ECC International, Inc.
IN WITNESS WHEREOF, the undersigned have executed this Joinder this
13th day of October, 1995.
ECC INTERNATIONAL, INC.
By: /s/ G. W. Murphy, CEO
-----------------------------------
Name: George W. Murphy
Title: President/CEO
EDUCATIONAL COMPUTER CORPORATION
INTERNATIONAL
By: /s/ G. W. Murphy, Director
-----------------------------------
Name: George W. Murphy
Title: Director
9
<PAGE> 10
REVOLVING CREDIT NOTE
Obligation No.______________
October 13, 1995
Philadelphia, Pennsylvania
$15,000,000
FOR VALUE RECEIVED, and intending to be legally bound hereby, the undersigned
Borrower, ECC International Corp., unconditionally promises to pay to the order
of FIRST FIDELITY BANK, NATIONAL ASSOCIATION (the "Bank"), the principal amount
of all advances that are now or may hereafter be made hereunder and that are
then outstanding, together with accrued, unpaid interest thereon and any unpaid
costs and expenses payable hereunder, on September 19, 1997.
A. Terms of Note.
1. Interest Payments. Interest on the principal balance hereof shall,
except as provided in subpart A.B. below, accrue at such rates and be
payable in accordance with Section A.2. of that certain Term Loan and
Revolving Credit Agreement dated September 20, 1994 between the Bank and
the Borrower, as amended to date, including by Amendment of even date
herewith (together with any exhibits thereto and amendments and
modifications thereto in effect from time to time, the "Loan Agreement").
2. Computation of Interest. Interest hereunder shall be computed daily on
the basis of a year of 360 days for the actual number of days elapsed.
All payments hereunder shall be made in lawful currency of the United
States of America and in immediately available funds at the Bank's
address set forth in the Loan Agreement or at such other address as the
Bank shall notify the Borrower of in writing.
3. Incorporation by Reference. This Note is the Revolving Credit Note
referred to in the Loan Agreement and is subject to the terms and
conditions thereof, which terms and conditions are incorporated herein,
including, without limitation, terms pertaining to definitions,
representations, warranties, covenants, events of default and remedies.
Any capitalized term used herein without definition shall have the
definition contained in the Loan Agreement.
4. Borrowing Requests; Crediting of Account. Any request for borrowing
pursuant to this Note shall be made by the Borrower in writing in the
form of a "Notice of Borrowing Under Revolving Credit" attached hereto as
Exhibit A and in accordance with the terms of the Loan Agreement. Unless
otherwise requested by the Borrower in writing at least one (1) Business
Day prior to the date of a requested advance, each advance hereunder
shall be made by crediting the Account as defined in the Loan Agreement
with the amount of the advance. All advances made by crediting the
Account or any other account of the Borrower at the Bank shall be
conclusively presumed to have been properly authorized by the Borrower.
5. Bank Records of Advance. The Bank may enter in its business records the
date and the amount of each advance, each conversion from one interest
rate basis to another and each payment made pursuant to this Note and the
Loan Agreement. The Bank's records of such advance, conversion or payment
shall, in the absence of manifest error, be conclusively binding upon the
Borrower. In the event the Bank gives notice or renders a statement by
mailing such notice or statement to the Borrower, concerning any such
advance, conversion or payment, or the amount of principal and interest
due on this Note, the Borrower agrees that, unless the Bank receives a
written notification of exceptions to this statement within forty-five
(45) calendar days after such statement or notice is mailed, the
statement or notice shall be an account stated, correct and acceptable
and binding upon the Borrower.
6. Advance Requests Exceeding Maximum Principal Amount. The Borrower shall
not request the Bank to make any advances under this Note or the Loan
Agreement which exceeds the Maximum Principal Amount set forth in Section
A.2.b. of the Loan Agreement. In the event that the principal balance
outstanding under this Note exceeds at any time the Maximum Principal
Amount, the Borrower shall immediately, and without demand from the Bank,
pay to the Bank the amount in excess thereof, and the Borrower agrees
that until such excess is paid to the Bank, this Note shall evidence and
be enforceable with respect to any and all amounts outstanding hereunder
including such excess.
<PAGE> 11
7. Application of Payments. All payments received on this Note shall be
applied first to the Bank's fees, costs and expenses which the Borrower
is obligated to pay pursuant to the terms hereof and under any other
Loan Document, then to accrued and unpaid interest and then to principal
or such payments may be applied in such other order as the Bank in its
sole discretion shall determine.
8. Default Rate. At the Bank's option, interest will be assessed on any
principal which remains unpaid at the maturity of this Note, whether by
acceleration or otherwise, or upon and following any Event of Default, at
a rate which is four percent (4%) higher than the rate otherwise charged
hereunder (the "Default Rate") provided that at no time shall the Default
Rate exceed the highest rate of interest allowed by law. Such Default
Rate of interest shall also be charged on the amounts owed by the
Borrower to the Bank pursuant to any judgments entered in favor of Bank
in respect of this Note or any other Loan Document.
9. Prepayment. Prepayment of principal may be made subject to payment of
all amounts required to be paid in connection with such prepayment as
provided in the Loan Agreement.
B. Remedies.
1. Generally. Upon and following an Event of Default, the Bank, at its
option, may exercise any and all rights and remedies it has under this
Note, the Loan Agreement and/or the other Loan Documents and under
applicable law, including, without limitation, the right to charge and
collect interest on the principal portion of the amounts outstanding
hereunder at the Default Rate. Upon and following an Event of Default,
the Bank may proceed to protect and enforce the Bank's rights under any
Loan Document and/or under applicable law by action at law, in equity,
or other appropriate proceeding, including, without limitation, an
action for specific performance to enforce or aid in the enforcement of
any provision contained herein or in any other Loan Document.
2. Remedies Cumulative; No Waiver. The remedies hereunder and under the
other Loan Documents are cumulative and concurrent, and are not
exclusive of any other remedies available to the Bank. No failure or
delay on the part of the Bank in the exercise of any right, power,
remedy or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, remedy or privilege
preclude any other or further exercise thereof, or the exercise of any
other right, power, remedy or privilege.
C. Miscellaneous.
1. Governing Law. This Note shall be construed in accordance with and
governed by the substantive laws of the Commonwealth of Pennsylvania
without reference to conflict of laws principles.
2. Integration. This Note and the other Loan Documents constitute the sole
agreement of the parties with respect to the subject matter hereof and
thereof and supersede all oral negotiations and prior writings with
respect to the subject matter hereof and thereof.
3. Amendment; Waiver. No amendment of this Note, and no waiver of any one
or more of the provisions hereof shall be effective unless set forth in
writing and signed by the parties hereto.
4. Successors and Assigns. This Note (i) shall be binding upon the Borrower
and the Bank and their respective successors and permitted assigns, and
(ii) shall inure to the benefit of the Borrower and the Bank and their
respective successors and permitted assigns; provided, however, that the
Borrower may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Bank, and any
such assignment or attempted assignment by the Borrower shall be void and
of no effect with respect to the Bank.
5. Severability. The illegality or unenforceability of any provision of
this Note or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Note or any instrument or agreement required
hereunder. In lieu of any illegal or unenforceable provision in this
Note, there shall be added automatically as part of this Note a legal
and enforceable provision as similar in terms to such illegal or
unenforceable provision as may be possible.
6. Inconsistencies. The Loan Documents are intended to be consistent.
However, in the event of any inconsistencies among any of the Loan
Documents, such inconsistency shall not affect the validity or
enforceability of each Loan Document. The Borrower agrees that in the
event of any inconsistency or
-2-
<PAGE> 12
ambiguity in any of the Loan Documents, the Loan Documents shall not be
construed against any one party but shall be interpreted consistent with
the Bank's policies and procedures.
7. Headings. The headings of sections and paragraphs have been included
herein for convenience only and shall not be considered in interpreting
this Note.
8. Schedules. If a Schedule and/or an Exhibit is attached hereto, the
provisions thereof are incorporated herein.
9. Judicial Proceeding; Waivers.
a. THE BORROWER AGREES THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER
CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE BANK OR THE
BORROWER OR ANY SUCCESSOR OR ASSIGN OF THE BANK OR THE BORROWER, ON
OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE
DEALINGS OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE
TRIED ONLY BY A COURT AND NOT BY A JURY.
b. THE BANK AND THE BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. FURTHER, THE BORROWER WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
c. THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS NOTE AND THAT THE BANK WOULD NOT EXTEND
CREDIT TO THE BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE
NOT A PART OF THIS NOTE.
IN WITNESS WHEREOF, the Borrower has duly executed and delivered to the Bank
this Note as of the date first above written.
ATTEST: ECC INTERNATIONAL CORP.
By: /s/ Richard F. Thompson /s/ G. W. Murphy
---------------------------- -----------------------------------
Name: Richard F. Thompson Name: George W. Murphy
Title: Secretary/Treasurer Title: President/CEO
Address: 175 Stafford Avenue
Wayne, PA 19087
Telecopier No. (610) 254-9268
-3-
<PAGE> 13
REVOLVING CREDIT NOTE
Obligation No.______________
October 13, 1995
Philadelphia, Pennsylvania
$4,000,000
FOR VALUE RECEIVED, and intending to be legally bound hereby, the undersigned
Borrower, ECC SIMULATION LIMITED, unconditionally promises to pay to the order
of FIRST FIDELITY BANK, NATIONAL ASSOCIATION (the "Bank"), the principal amount
of all advances that are now or may hereafter be made hereunder and that are
then outstanding, together with accrued, unpaid interest thereon and any unpaid
costs and expenses payable hereunder, on September 19, 1997.
A. Terms of Note.
1. Interest Payments. Interest on the principal balance hereof shall,
except as provided in subpart A.B. below, accrue at such rates and be
payable in accordance with Section A.1. of that certain Revolving Credit
Agreement dated September 20, 1994 between the Bank and the Borrower, as
amended to date, including by Amendment (the "Amendment") of even date
herewith (together with any exhibits thereto and amendments and
modifications thereto in effect from time to time, the "Loan
Agreement").
2. Computation of Interest. Interest hereunder shall be computed daily in
accordance with the Loan Agreement. All payments hereunder shall be made
in lawful currency of the United States of America or in pounds
sterling, as set forth in the Loan Agreement, and in immediately
available funds at the Bank's address set forth in the Loan Agreement or
at such other address as the Bank shall notify the Borrower of in
writing.
3. Incorporation by Reference. This Note is the Revolving Credit Note
referred to in the Loan Agreement and is subject to the terms and
conditions thereof, which terms and conditions are incorporated herein,
including, without limitation, terms pertaining to definitions,
representations, warranties, covenants, events of default and remedies.
Any capitalized term used herein without definition shall have the
definition contained in the Loan Agreement.
4. Borrowing Requests; Crediting of Account. Any request for borrowing
pursuant to this Note shall be made by the Borrower in writing in the
form of a "Notice of Borrowing Under Revolving Credit" attached hereto
as Exhibit A and in accordance with the terms of the Loan Agreement.
Unless otherwise requested by the Borrower in writing at least five (5)
Business Days prior to the date of a requested advance, each advance
hereunder shall be made by crediting the Account as defined in the Loan
Agreement with the amount of the advance. All advances made by crediting
the Account or any other account of the Borrower at the Bank shall be
conclusively presumed to have been properly authorized by the Borrower.
5. Bank Records of Advance. The Bank may enter in its business records the
date and the amount of each advance, each conversion from one interest
rate basis to another and each payment made pursuant to this Note and
the Loan Agreement. The Bank's records of such advance, conversion or
payment shall, in the absence of manifest error, be conclusively binding
upon the Borrower. In the event the Bank gives notice or renders a
statement by mailing such notice or statement to the Borrower,
concerning any such advance, conversion or payment, or the amount of
principal and interest due on this Note, the Borrower agrees that,
unless the Bank receives a written notification of exceptions to this
statement within forty-five (45) calendar days after such statement or
notice is mailed, the statement or notice shall be an account stated,
correct and acceptable and binding upon the Borrower.
6. Advance Requests Exceeding Maximum Principal Amount. The Borrower shall
not request the Bank to make any advances under this Note or the Loan
Agreement which exceeds the Maximum Principal Amount set forth in
Section A.1.b. of the Loan Agreement. In the event that the principal
balance outstanding under this Note exceeds at any time the Maximum
Principal Amount, the Borrower shall, subject to the terms of the
Amendment, immediately, and without demand from the Bank, pay to the
Bank the amount in excess thereof, and the Borrower agrees that until
such excess is paid to the Bank, this Note shall evidence and be
enforceable with respect to any and all amounts outstanding hereunder
including such excess.
7. Application of Payments. All payments received on this Note shall be
applied first to the Bank's fees, costs and expenses which the Borrower
is obligated to pay pursuant to the terms hereof and under any other
Loan Document, then to accrued and unpaid interest and then to principal
or such payments may be applied in such other order as the Bank in its
sole discretion shall determine.
8. Default Rate. At the Bank's option, interest will be assessed on any
principal which remains unpaid at the maturity of this Note, whether by
acceleration or otherwise, or upon and following any Event of Default,
at a rate which is four percent (4%) higher than the rate otherwise
charged hereunder (the "Default Rate") provided that at no time shall
the Default Rate
<PAGE> 14
exceed the highest rate of interest allowed by law. Such
Default Rate of interest shall also be charged on the amounts
owed by the Borrower to the Bank pursuant to any judgments
entered in favor of Bank in respect of this Note or any other
Loan Document.
9. Prepayment. Prepayment of principal may be made subject to
payment of all amounts required to be paid in connection with
such prepayment as provided in the Loan Agreement.
B. Remedies.
1. Generally. Upon and following an Event of Default, the Bank, at
its option, may exercise any and all rights and remedies it has
under this Note, the Loan Agreement and/or the other Loan
Documents and under applicable law, including, without
limitation, the right to charge and collect interest on the
principal portion of the amounts outstanding hereunder at the
Default Rate. Upon and following an Event of Default, the Bank
may proceed to protect and enforce the Bank's rights under any
Loan Document and/or under applicable law by action at law, in
equity, or other appropriate proceeding, including, without
limitation, an action for specific performance to enforce or
aid in the enforcement of any provision contained herein or in
any other Loan Document.
2. Remedies Cumulative; No Waiver. The remedies hereunder and under
the other Loan Documents are cumulative and concurrent, and are
not exclusive of any other remedies available to the Bank. No
failure or delay on the part of the Bank in the exercise of any
right, power, remedy or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
power, remedy or privilege preclude any other or further
exercise thereof, or the exercise of any other right, power,
remedy or privilege.
C. Miscellaneous.
1. Governing Law. This Note shall be construed in accordance with
and governed by the substantive laws of the Commonwealth of
Pennsylvania without reference to conflict of laws principles.
2. Integration. This Note and the other Loan Documents constitute
the sole agreement of the parties with respect to the subject
matter hereof and thereof and supersede all oral negotiations
and prior writings with respect to the subject matter hereof and
thereof.
3. Amendment; Waiver. No amendment of this Note, and no waiver of
any one or more of the provisions hereof shall be effective
unless set forth in writing and signed by the parties hereto.
4. Successors and Assigns. This Note (i) shall be binding upon the
Borrower and the Bank and their respective successors and
permitted assigns, and (ii) shall inure to the benefit of the
Borrower and the Bank and their respective successors and
permitted assigns; provided, however, that the Borrower may not
assign its rights or obligations hereunder or any interest
herein without the prior written consent of the Bank, and any
such assignment or attempted assignment by the Borrower shall be
void and of no effect with respect to the Bank.
5. Severability. The illegality or unenforceability of any
provision of this Note or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Note or any
instrument or agreement required hereunder. In lieu of any
illegal or unenforceable provision in this Note, there shall be
added automatically as part of this Note a legal and enforceable
provision as similar in terms to such illegal or unenforceable
provision as may be possible.
6. Inconsistencies. The Loan Documents are intended to be
consistent. However, in the event of any inconsistencies among
any of the Loan Documents, such inconsistency shall not affect
the validity or enforceability of each Loan Document. The
Borrower agrees that in the event of any inconsistency or
ambiguity in any of the Loan Documents, the Loan Documents shall
not be construed against any one party but shall be interpreted
consistent with the Bank's policies and procedures.
7. Headings. The headings of sections and paragraphs have been
included herein for convenience only and shall not be considered
in interpreting this Note.
8. Schedules. If a Schedule and/or an Exhibit is attached hereto,
the provisions thereof are incorporated herein.
9. Judicial Proceeding; Waivers.
a. THE BORROWER AGREES THAT ANY SUIT, ACTION OR PROCEEDING,
WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY
THE BANK OR THE BORROWER OR ANY SUCCESSOR OR ASSIGN OF
THE BANK OR THE BORROWER, ON OR WITH RESPECT TO THIS
NOTE OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE
PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE TRIED
ONLY BY A COURT AND NOT BY A JURY.
-2-
<PAGE> 15
b. THE BANK AND THE BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. FURTHER, THE BORROWER WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
c. THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS NOTE AND THAT THE BANK WOULD NOT EXTEND
CREDIT TO THE BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE
NOT A PART OF THIS NOTE.
IN WITNESS WHEREOF, the Borrower has duly executed and delivered to the Bank
this Note as of the date first above written.
ATTEST: ECC SIMULATION LIMITED
/s/ Richard F. Thompson By: /s/ G.W. Murphy, Director
- ---------------------------- -----------------------------------
Name: Richard F. Thompson Name: George W. Murphy
Title: Secretary/Treasurer Title: Director
Address: 175 Strafford Avenue
Wayne, PA 19087
Telecopier No. (215) 254-9268
-3-
<PAGE> 1
EXHIBIT 10.19
Approximately 72,520 Rentable Square Feet
2900 Titan Row, Suite 142
Orlando, Florida 32809
LEASE
THIS LEASE dated as of January 26th, 1993, by and between STATE OF
WISCONSIN INVESTMENT BOARD ("Landlord"), and ECC INTERNATIONAL CORP., a
Delaware Corporation (hereinafter referred to as "Tenant").
WITNESSETH:
1. Premises and Term. In consideration of the obligation of
Tenant to pay rent as herein provided, and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to Tenant,
and Tenant hereby leases from Landlord certain premises (the "Premises") as
shown on Exhibit A hereto, which Premises are part of a building (the
"Building") commonly known as Orlando Central Park VIII, and which Building is
situated within the County of Orange, State of Florida, on the land described
on Exhibit B hereto and incorporated herein by reference (the "Land") (the
Land, Building and all other improvements located on the Land, together with
all easements and appurtenances belonging thereto, are hereinafter collectively
referred to as the "Property").
TO HAVE AND TO HOLD the same for a term (the "Lease Term")
commencing on the Commencement Date, as hereinafter defined, and ending on the
date that is seven (7) years and zero (0) months thereafter (the "Termination
Date"), provided, however, that, in the event the Commencement Date is a date
other than the first day of a calendar month, said term shall extend for said
number of years and months in addition to the remainder of the calendar month
following the Commencement Date and the Termination Date shall be adjusted
accordingly.
The Commencement Date shall be ninety (90) days from the date that the
Lease has been fully executed, regardless of the completion of the Landlord's
Work as defined in Exhibit "C" and whether or not a Certificate of Occupancy
has been issued.
1
<PAGE> 2
(a) Notwithstanding the foregoing, Tenant shall have the one-time
right to terminate this Lease as of the last day of the sixtieth (60th) month
of the Lease Term by providing written notice of termination to Landlord no
later than the last day of the fifty-fourth (54th) month of the Lease Term,
subject to the following conditions precedent:
(i) Tenant shall not then be in default hereunder, and no default
shall occur thereafter.
(ii) Tenant shall not have theretofore assigned its Interest
hereunder nor sublet all or any portion of the Premises.
(iii) Tenant pays to Landlord, on or before the last day of the
fifty-fourth (54th) month of the Lease Term, the total amount
of the remaining unamortized value of the Landlord's
Contribution (as hereinafter defined), all leasing commissions
paid by Landlord in connection with the execution of this
Lease and seven (7) months' rent (i.e., $263,778.00) and all
other amounts due from Tenant until the end of the sixtieth
(60th) month.
(b) Tenant has permission to enter upon the Premises during the
period prior to the Commencement Date, such entry shall be in accordance with
(i) all the terms, covenants and conditions of the Lease, except the covenant
to pay Base Rental, and (ii) such other terms and conditions that Landlord may
require in connection with such entry.
2. Base Rent and Security Deposit.
(a) Tenant shall pay to Landlord throughout the Lease Term a base
annual rental of TWO HUNDRED FORTY-SIX THOUSAND FIVE HUNDRED SIXTY-FOUR AND
NO/100 DOLLARS ($246,564.00) per year plus any and all sales, use, transaction,
or comparable taxes applicable thereto. Said base annual rental (the "Base
Rental") shall be subject to adjustment as hereinafter provided in this Lease.
Any and all Base Rental, together with all taxes thereon, shall be due and
payable in advance on or before the first day of January of each year during
the Lease Term; provided, however, the Base Rental for the calendar year in
which this Lease is executed shall be payable in advance on or before the
Commencement Date of the Lease Term. It is expressly provided, however, that
so long as Tenant shall not be in default of its obligations under this Lease,
such Base Rental and the taxes thereon shall, for the convenience of Tenant, be
payable in equal monthly installments in advance, on or before the first day of
each calendar month during the Lease Term. The initial monthly installment
shall be due and payable on the date of Tenant's execution hereof. However,
upon a default by Tenant of any of its obligations hereunder, the Base Rental
for the balance of the then current calendar year of the Lease Term, together
with the aggregate of the Base Rental for the remainder of the calender years
of the Lease Term as provided herein below, shall be immediately due and
payable. If this Lease commences on a day other than the
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first day of the calendar month or ends on a day other than the last day of a
calendar month, the monthly rental for the fractional month shall be
appropriately prorated. Any sum payable hereunder other than Base Rental
(sometimes referred to herein as "Additional Rent") shall, unless otherwise
stated, be due on demand. Tenant shall pay Base Rental and Additional Rent
promptly when due without notice or demand therefor and without abatement,
deduction or set-off for any reason whatever.
(b) No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Base Rental or Additional Rent shall be deemed
to be other than a payment on account, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance or pursue any other remedy
provided in this lease or at law.
(c) Tenant recognizes that late payment of any rent or other sum
due hereunder from Tenant to Landlord will result in administrative expense to
Landlord, the extent of which additional expense is extremely difficult and
economically impractical to ascertain. Tenant therefor agrees that if rent or
any other payment due hereunder from Tenant to Landlord remains unpaid five (5)
days after the same is due, the amount of such unpaid rent or other payment
shall be increased by a late charge to be paid Landlord by Tenant in an amount
equal to five percent (5%) per month of the amount of the delinquent rent or
other payment. The amount of the late charge to be paid to Landlord by Tenant
for any particular month shall be computed on the aggregate amount of
delinquent rents and other payments, including all accrued late charges, then
outstanding. Failure to pay such amount within ten (10) days after demand
shall be deemed an event of default. The terms of this paragraph do not in any
way effect or limit Landlord's remedies pursuant to Paragraph 17 of this Lease
in the event said rent or other payment is unpaid after the date due.
(d) Landlord shall have the same right and remedies (including,
without limitation, the right to commence a summary proceeding) for a default
in the payment of Additional Rent as for a default in the payment of Base
Rental notwithstanding the fact that Tenant may not then also be in default in
the payment of Base Rental.
(e) Tenant agrees to deposit with Landlord on the date hereof the
sum of TWENTY-FOUR THOUSAND TWO HUNDRED THIRTY-THREE AND NO/100 DOLLARS
($24,233.00), which sum shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's covenants and obligations
under this Lease, it being expressly understood and agreed that such deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any Event of Default (as defined in
Section 17 hereof) by Tenant, Landlord may, from time to time, without prejudice
to any other remedy provided herein or provided by law, use such funds to the
extent necessary to made good any arrears of rent or other payments due Landlord
hereunder, and to pay or reimburse Landlord for any other damage, expense or
liability caused by or required to cure, such Event of Default; and Tenant shall
pay to Landlord on demand the amount so applied in order to restore the security
deposit to its original amount. After termination of this Lease any remaining
balance of the security deposit shall be returned by Landlord to Tenant provided
all of Tenant's obligations under this Lease have been fulfilled. The security
deposit shall be transferred to any successor in interest to Landlord hereunder
and notice of such transfer given to Tenant within five (5) days after such
transfer. Upon such transfer and notice, the transferror shall no longer be
liable for the security but the transferee shall become liable.
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3. Use.
(a) The demised Premises shall be used only for the purpose of
manufacturing, receiving, storing, shipping and selling (other than retail)
products, materials and merchandise made and/or distributed by Tenant, and for
such other lawful purposes as may be incidental thereto. Outside storage,
including without limitation, trucks and other vehicles and the washing thereof
at any time, is prohibited without Landlord's written consent. Tenant shall at
its own cost and expense obtain any and all licenses, permits and other
governmental approvals necessary for any such use shall promptly deliver to
Landlord copies of such licenses, permits and governmental approvals upon
receipt thereof, and shall comply with the terms and conditions thereof. Tenant
shall comply with all governmental laws, ordinances and regulations applicable
to the use of the Premises, and Tenant's use of the common areas of the
Property, whether now or hereafter in force and shall promptly comply with all
governmental orders and directives for the correction, prevention and abatement
of violations in or upon, or connected with, the use of, the Premises, all at
Tenant's sole expense. Tenant shall promptly deliver to Landlord a copy of any
such notice of violation it receives. Tenant shall not permit any objectionable
or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the
Premises, nor take any other action which would constitute a nuisance or would
disturb or endanger any other tenants of the Building or unreasonably interfere
with their use of their respective Premises or the common areas of the Property
nor use the Premises or the common areas of the Property in a manner which would
impair the proper and economic maintenance, operation and repair of the
Property. Without Landlord's prior written consent, Tenant shall not receive,
store or otherwise handle any product, material or merchandise which is
explosive or highly inflammable. Tenant will not permit the Premises to be used
for any purpose or in any manner (including, without limitation, any method of
storage) which would render the insurance thereon void or cause the State Board
of Insurance authority to disallow any sprinkler credits. If any increase in
fire and extended coverage insurance premium paid by Landlord or other tenants
of the Building is caused by Tenant's use and occupancy of the Premises, or if
Tenant vacating the Premises and causes an increase in such premiums, then
Tenant shall pay as additional rent the amount of such increase to Landlord.
(b) Tenant shall not at any time use the Premises in a manner which
would violate the Notice of Restrictions, dated August 29, 1985 and recorded
on September 3, 1985 in Book 3683, page 2548 of the official records of Orange
County, executed by Orlando Central Park, Inc. (the "Notice of Restrictions").
Tenant acknowledges receipt of a copy of the Notice of Restrictions.
(c) Tenant agrees that the point pressure resulting from Tenant's
racking system, inventory, forklifts and equipment pertaining to Tenant's use
of the Premises shall not exceed allowable design floor loading of 3,000 pounds
per square inch for floor slabs on grade. Tenant shall be responsible to
provide steel plates, angles or channels as required to distribute floor
loading to building design loads. Tenant shall only use forklifts that have
rubber wheels or other wheels that will not damage floor slabs. Tenant shall
hold harmless Landlord from any loss, liability and expenses, both real and
alleged, arising out of such damage or repair caused by Tenant's negligence or
failure to comply with this paragraph and shall, at its sole cost and expense,
promptly repair any damage or injury to the floor slab and other parts of the
Building caused by Tenant and its employees, agents or invitees.
4. Taxes.
(a) As Additional Rent, Tenant agrees to pay monthly in advance
without demand, deduction or set-off, 1/12th of Tenant's Proportionate Share
(as defined in Paragraph 4(b)) of all taxes, assessments, and other
governmental charges of any kind and
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nature whatsoever unforeseen as well as foreseen, (including any tax, excise or
fee measured by or payable with respect to any rent, other than the taxes
described in paragraph (g) below) (collectively, "Taxes") lawfully levied or
assessed against the Building or the Property for the calendar year in which
such month occurs, subject or proration for any partial month during the term
of the Lease. Such payments shall initially be based on an estimate thereof
prepared by Landlord and delivered to Tenant, except if Landlord shall not
have delivered such a statement prior to the commencement of such year, such
payments shall be in an amount equal to the previous year's Taxes until
Landlord shall deliver such a statement. If Landlord's estimate of Taxes for
any calendar year is delivered after commencement thereof or if such estimate
is revised during such year, then the monthly payments described herein shall
be appropriately adjusted and with respect to any payments previously made, if
there be any deficiency, Tenant shall pay Landlord the amount thereof within
twenty (20) days after demand thereof and if there shall be an overpayment,
then (provided Tenant is not in default under this Lease) Tenant shall be
forwarded the difference within twenty (20) days or the difference shall be
credited against Tenant's next rent payment coming due hereunder.
Notwithstanding the foregoing, Tenant's payments shall be calculated and paid
in such a manner so that Landlord shall have received Tenant's Proportionate
Share of any installment of Taxes not less than thirty (30) days prior to the
date such installment of Taxes is due to the applicable governmental
authority. Within one hundred twenty (120) days after the end of each calendar
year or as soon thereafter as practical, Landlord shall deliver to Tenant a
statement of Taxes for the year just ended, accompanied by a computation of
basic tax cost adjustment. If such statement shows that the aggregate monthly
tax payments paid for such year by Tenant is less than Tenant's Proportionate
Share of Taxes as set forth in such statement, then Tenant shall pay the
difference within twenty (20) days after receipt of such statement. If such
statement shows that Tenant's aggregate monthly tax payments for such year
exceed Tenant's Proportionate Share of Taxes as set forth in such statement,
then (provided Tenant is not in default under this Lease) Tenant shall be
forwarded the difference within twenty (20) days or the difference shall be
credited against Tenant's next rent payment coming due hereunder. If this
Lease has been terminated or the term hereof has expired prior to the date of
such statement, then the adjustment for any deficiency or overpayment of Taxes
shall survive the termination and shall be paid by the appropriate party
within twenty (20) days after the date of delivery of the statement. The
benefit of any discount for early payment (i.e., payment before the last day
such Taxes may be paid without being delinquent) of Taxes shall accrue solely
to the benefit of Landlord.
(b) Tenant's Proportionate Share, as used in this Lease, shall mean
a fraction, the numerator of which is the number of square feet contained in
the Premises and the denominator of which is the number of square feet
contained in the Building. The parties agree that the number of square feet
contained in the Premises is initially 72,520, the number of square feet
contained in the Building is 356,583, and Tenant's Proportionate Share is
initially 20.34%. To the best of Landlord's knowledge, Landlord warrants that
the aforementioned square footages are true and correct.
(c) If at any time during the term of this Lease, the present
method of taxation shall be changed so that in lieu of the whole or any part of
any Taxes levied or assessed against the Building or Property there shall be
levied, assessed or imposed on Landlord a tax, including a franchise, transfer,
capital stock or profit tax, assessment, levy or charge then all such taxes,
assessments, levies or charges, or the part thereof so measured or based, shall
be deemed to be included within the term "Taxes" for the purposes hereof.
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(d) The Landlord shall have the right to employ a tax consulting
firm to seek reduced assessments on the Building and the Land within the
applicable taxing jurisdiction and to attempt to assure a fair tax burden on
the Building and the Property within the applicable taxing jurisdiction.
Tenant shall pay to Landlord upon demand from time to time, as Additional Rent,
the amount of Tenant's Proportionate Share (as defined in subparagraph 4(b)
above) of the cost of such services.
(e) Tenant shall pay as Additional Rent all increases in Taxes
which may be attributable to additions or improvements to the Premises made by
Tenant or on Tenant's behalf. Payment shall be made by Tenant to Landlord
on the rent payment day next following the issuance of a bill therefor by
Landlord to Tenant.
(f) Any payment to be made pursuant to this Paragraph 4 with
respect to the real estate tax year in which this Lease commences or terminates
shall be prorated.
(g) The Landlord will receive monthly from Tenant the equivalent of
six percent (6%) of all amounts paid as rent or for any other payment or
reimbursement required herein. Such sum is paid to the State of Florida by the
Landlord under the Florida Sales Tax Statute. The Landlord receives no
monetary benefit from the collection and disbursement of this charge. Should
such tax rate change under the Florida Sales Tax Statute, the Landlord will
receive monthly from Tenant the amount reflective of appropriate changes.
5. Landlord's Repairs. Landlord shall at its expense maintain
only the roof, foundation and the structural soundness of the exterior walls of
the Building, in good repair, reasonable wear and tear excepted.
Notwithstanding the foregoing, Tenant shall repair and pay for any damage to
the roof, foundation and structural soundness of the exterior walls of the
Building and any other part of the Property caused by the negligence or willful
act of Tenant, or Tenant's employees, agents or invitees, or caused by Tenant's
default hereunder. The term "walls" as used herein shall not include windows,
glass or plate glass, doors, special store fronts or office entries. Tenant
shall immediately give Landlord written notice of defect or need for repairs,
after which Landlord shall have a reasonable opportunity to repair same or cure
such defect. Landlord's liability with respect to any defects, repairs or
maintenance for which Landlord is responsible under any of the provisions of
this Lease shall be limited to the cost of such repairs or maintenance or the
curing of such defect.
6. Tenant's Repair and Maintenance and Common Area Charges.
(a) Tenant shall at its own cost and expense keep and maintain all
parts of the Premises (except those for which Landlord is expressly responsible
under the terms of this Lease) in good condition, promptly making all necessary
repairs and replacements, structural or nonstructural, including but not
limited to, windows, glass and plate glass, doors, any special office entry,
interior walls and finish work, floors and floor covering, downspouts,
gutters, heating and air conditioning systems, dock boards, truck doors, dock
bumpers, paving, plumbing work and fixtures. Tenant shall promptly make all
repairs to the Property resulting from the installation, use or operation of
its equipment and other personal property in the Property. Tenant shall not be
obligated to repair any damage to the Building caused by fire, tornado, or
other casualty covered by the insurance to be maintained by Landlord pursuant
to subparagraph 12(a) below, except that Tenant shall be obligated to repair
all wind damage to glass except with respect to tornado or hurricane damage.
(b) Tenant shall not damage any demising wall or disturb the
integrity and support provided by any demising wall and shall, at its sole cost
and expense, promptly repair any damage or injury to any demising wall caused
by Tenant or its employees, agents or invitees.
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(c) Except as otherwise provided herein, Landlord shall perform, with
respect to the exterior of the Building and the common areas of the Property,
the paving and landscape maintenance, exterior painting, common area lighting
maintenance, roof maintenance, general maintenance, and common sewage line
plumbing and shall pay any other similar expenses which are required to maintain
the same. Tenant shall pay as Additional Rent, monthly, in advance, 1/12 of
Tenant's Proportionate Share (as defined in subparagraph 4(b) above) of the cost
and expense of the care of the exterior of the Building and the grounds around
the Building ("Common Area Maintenance Charges"), including but not limited to
the mowing of grass, care of shrubs, general landscaping, paving and other
repairs and maintenance of parking area, driveway, curbs and gutters, lighting
of the grounds around the Building, Building exterior repainting, window
cleaning and common sewage line plumbing, (and of any common security services
or systems), subject to proration for any partial month during the term of the
Lease; provided, however, that if Tenant can be clearly identified as being
responsible for obstructions or stoppage of the common sanitary sewage line,
then Tenant shall pay the entire cost of clearing the same upon demand, as
Additional Rent. Such payments shall initially be based on an estimate
thereof prepared by Landlord and delivered to Tenant except if Landlord shall
not have delivered such a statement prior to the commencement of such year,
such payments shall be in an amount equal to the previous year's Common Area
Maintenance Charges until Landlord shall deliver such a statement. If
Landlord's estimate of Common Area Maintenance Charges for any calendar year is
delivered after commencement thereof or if such estimate is revised during such
year, then the monthly payments described herein shall be appropriately adjusted
and with respect to any payments previously made, if there be any deficiency,
Tenant shall pay Landlord the amount thereof within twenty (20) days after
demand therefor and if there shall be an overpayment, then (provided Tenant is
not in default under this Lease) Tenant shall be forwarded the difference
within twenty (20) days or the difference shall be credited against Tenant's
next rent payment coming due hereunder. Notwithstanding the foregoing, Tenant's
payments shall be calculated and paid in such a manner so that Landlord shall
have received Tenant's Proportionate Share of any installment of Common Area
Maintenance Charges not less than thirty (30) days prior to the date such
installment of Common Area Maintenance Charges is due. Within one hundred
twenty (120) days after the end of each calendar year or as soon thereafter as
practicable, Landlord shall deliver to Tenant a statement of Common Area
Maintenance Charges for the year just ended, accompanied by a computation of
basic common area maintenance cost adjustment. If such statement shows that the
aggregate monthly common area maintenance payments paid for such year by Tenant
is less than Tenant's Proportionate Share of Common Area Maintenance Charges as
set forth in such statement, then Tenant shall pay the difference within twenty
(20) days after receipt of such statement. If such statement shows that
Tenant's aggregate monthly common area maintenance payments for such year
exceed Tenant's Proportionate Share of Common Area Maintenance Charges as set
forth in such statement, then (provided Tenant is not in default under this
Lease) Tenant shall be forwarded the difference within twenty (20) days or the
difference shall be credited against Tenant's next rent payment coming due
hereunder. If this Lease has been terminated or the term hereof has expired
prior to the date of such statement, then the adjustment for any deficiency or
overpayment of Common Area Maintenance Charges shall survive the termination
and shall be paid by the appropriate party within twenty (20) days after the
date of delivery of the statement. In connection with the performance of the
work as described in this Paragraph 6(d), Landlord shall be allowed to charge a
ten percent (10%) administrative fee to be paid monthly.
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(d) Tenant and its employees, customers and licensees shall have the
exclusive right to use such parking areas, if any, as may be designated by
Landlord in writing, subject to reasonable rules and regulations as Landlord
may from time to time prescribe and subject to rights of ingress and egress of
other tenants. Landlord shall not be responsible for enforcing Tenant's
exclusive parking rights against any third parties. There have been no
exclusive parking rights given to Tenant with the signing of this Lease.
Landlord shall have no obligation to provide any guard service or to otherwise
patrol or secure the parking and other common areas. Landlord shall not be
liable for any injury to person or property or for loss or damage to any
vehicle or its contents on or about the parking areas. Tenant shall further
have the non-exclusive right to park automobiles and light trucks (but not heavy
duty trucks or tractors or trailers) on the property owned by Landlord and
described and depicted on Exhibit "E" attached hereto (the "Off-Site Parking
Area"). The Tenant's right to park automobiles and light trucks on the Off-Site
Parking Area shall be revocable by Landlord at any time upon delivery by
Landlord to Tenant of written notice of revocation. The commercial liability
insurance policy required to be maintained by Tenant hereunder shall include
coverage for Tenant's use of the Off-Site Parking Area, and all provisions
contained in this Lease regarding the use of the Premises and Tenant's Indemnity
of Landlord with respect thereto shall apply to Tenant's use of the Off-Site
Parking Area as fully as if the Off-Site Parking Area were a part of the
Property.
(e) In the event the Building is rail served, Landlord shall have the
right to coordinate any repairs and other maintenance of any rail tracks
serving the Building, and if Tenant uses such rail tracks, Tenant shall
reimburse Landlord from time to time upon demand, as additional rent, for a
share of the costs of such repairs and maintenance and any other sums specified
in any agreement to which Landlord is a party respecting such tracks, such a
share to be a fraction, the numerator of which is the number of square feet
contained in the Premises, and the denominator of which is the number of square
feet occupied by rail users in the building. Tenant agrees to sign a joint
maintenance agreement with the railroad company servicing the Premises, if
requested by the railroad company.
(f) Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all hot water, heating and air conditioning systems and equipment
within the Premises. The maintenance contractor and the contract must be
approved by Landlord. The service contract must include all services suggested
by the equipment manufacturer within the operation/maintenance manual and must
become effective (and a copy thereof delivered to Landlord) within thirty (30)
days of the date Tenant takes possession of the Premises. Tenant shall pay for
and have provided for its Premises regular termite and pest extermination
services and regular removal of trash and debris.
(g) Tenant agrees that no washing of any type (other than reasonable
restroom or kitchen washing) will take place on the Premises including the
truck apron, service court and parking areas.
7. Alterations. Tenant shall not make any alterations or improvements
to the Premises (including but not limited to roof and wall penetrations)
without prior written consent of Landlord, which consent may be granted or
denied in Landlord's sole discretion, and then only by contractors and in such
manner and with such materials as may be approved by Landlord in Landlord's
sole discretion. Notwithstanding the foregoing, Tenant may, without the
consent of Landlord, but at its own cost and expense and in a good workmanlike
manner erect such shelves, bins, machinery and trade fixtures as it may deem
advisable, without altering the basic character of the Building and without
overloading or damaging the Building and in each case complying
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with all applicable governmental laws, ordinances, regulations and other
requirements. All alterations, additions, improvements and partitions erected
by Tenant shall be and remain the property of Tenant during the term of this
Lease and Tenant shall, unless Landlord otherwise elects as hereinafter
provided, remove all alterations, additions, improvements and partitions
erected by Tenant and restore the Premises to their original condition by the
Termination Date or upon earlier vacating of the Premises; provided however,
that if Landlord so elects prior to termination of this Lease or upon earlier
vacating of the Premises, such alterations, additions, improvements and
partitions shall become the property of Landlord as of the Termination Date or
upon earlier vacating of the Premises and shall be delivered up to the Landlord
with the Premises. All shelves, bins, machinery and trade fixtures installed by
Tenant may be removed by Tenant prior to the Termination Date if Tenant so
elects, and shall be removed by the Termination Date or upon earlier vacating of
the Premises if required by Landlord; upon any such removal Tenant shall restore
the Premises to their original condition. All such removals and restoration
shall be accomplished in good workmanlike manner so as not to damage the
Building. Any such shelves, bins, machinery and trade fixtures or other property
of Tenant which shall remain in the Premises after the Termination Date, may, at
the option of Landlord, be deemed to have been abandoned, and in such case such
items may be retained by Landlord, without accountability and in such manner as
Landlord shall determine, at Tenant's expense including all costs of selling,
disposing, removing and storing such property.
8. Signs. Building exterior tenant identification signs shall be of
such order, size and location as shall be designated by Landlord. Exterior
frames will be furnished by Landlord at Landlord's expense. The cost of Tenant
identification panels and installing same shall be the responsibility of
Tenant. No other signs shall be installed by Tenant. Tenant shall not install
drapes, curtains, blinds or any window treatment, including signs, letters,
etc., displayed behind windows so as to be visible to the exterior of the
Premises, without Landlord's prior written approval. Tenant shall secure and
maintain, at Tenant's sole cost and expense, all required governmental permits
and approvals and all permits and approvals required pursuant to the Notice of
Restrictions with respect to any signs.
9. Inspection and Access.
(a) Landlord and Landlord's agents and representatives shall have the
right to enter and inspect the Premises at any reasonable time during business
hours for the purpose of ascertaining the condition of the Premises to make
such repairs as may be required or permitted to be made by Landlord under the
terms of this Lease or to show the Premises to prospective or actual purchasers
or mortgagees. In the case of an emergency, Landlord shall be entitled to enter
the Premises at any time. During the period that is six (6) months prior to the
end of the term hereof, Landlord and Landlord's agents and representatives
shall have the right to enter the Premises at any reasonable time during
business hours for the purpose of showing the Premises and shall have the right
to erect on the Premises a suitable sign indicating the Premises are available.
Tenant shall give written notice to Landlord at least thirty (30) days prior to
vacating the Premises and shall arrange such joint inspection of the Premises
prior to vacating. In the event of Tenant's failure to arrange such joint
inspection, Landlord's inspection at or after Tenant's vacating the Premises
shall be deemed correct for purposes of determining Tenant's responsibility for
repairs and restoration.
(b) Landlord reserves the right, and Tenant shall permit Landlord, to
install, erect, use and maintain pipes, ducts and conduits in and throughout
the Premises, provided said pipes, ducts and conduits do not materially
interfere with Tenant's
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operations. Nothing herein contained shall be construed as a grant or demise by
Landlord to Tenant of the roof or exterior walls of the Building, of the Land,
and/or of any parking or other common areas located on the Property.
10. Utilities. Tenant shall, at its own cost and expense, provide its
own heating, ventilation and air conditioning system. Landlord agrees to
provide at its own cost water, electricity and telephone service connections to
the Premises, but Tenant shall pay for all water, gas, heat, light, power,
telephone, sewer, sprinkler charges and other utilities and services used on or
from the Premises, together with any taxes, penalties, surcharges or the like
pertaining thereto and shall furnish all electric light bulbs and tubes.
Landlord shall have no obligation to provide any utility services to Tenant or
to perform any cleaning of the Premises. If any such services are not
separately metered to Tenant, Tenant shall pay its proportionate share of all
charges incurred jointly with other premises. Landlord shall in no event be
liable for any interruption or failure of utility services on the Premises.
Tenant shall not use any such systems in excess of the capacity of the wires,
cables, equipment and other facilities thereof.
11. Assignment and Subletting.
(a) Tenant shall not have the right to assign, mortgage or encumber
this Lease, whether voluntarily, involuntarily or by operation of law, or to
sublet the whole or any part of the Premises or to permit the Premises or any
part thereof to be used or occupied by others, in each case without the prior
written consent of Landlord. Tenant hereby agrees that Landlord shall be
entitled to withhold its consent, in its sole discretion, to any such sublease
or assignment except if the building is one hundred percent (100%) leased and
the proposed subtenant or assignee is not an existing tenant in a building
owned or managed by Landlord or an affiliated entity and is not a prospective
tenant for other space within the Building or for space within any other
buildings owned and/or managed by Landlord or an affiliated entity, then
Landlord's consent shall not be unreasonably withheld, subject to the
provisions set forth below and provided (i) Tenant pays Landlord's reasonable
costs in reviewing the proposed assignment or sublease in connection with the
requested consent, including any attorneys' fees incurred by Landlord, (ii) in
Landlord's reasonable judgment, (x) the proposed sublessee or assignee is a
reputable party whose financial net worth and financial responsibility is,
considering the responsibility included, satisfactory to Landlord and (y) the
nature and character of the proposed sublease or assignee, its business or
activities and the proposed use of the space are in keeping with the standards
of the Property, and (iii) Tenant shall not be in default beyond the applicable
notice and grace period hereunder.
(b) In the event Tenant proposes to assign or sublease the Premises,
Tenant shall submit in writing the name and address of the proposed assignee or
sublessee and a true and complete copy of the proposed sublease or instrument
of assignment together with information regarding such subtenant or assignee
sufficient for Landlord to make its determination described in clause (ii) of
paragraph (a) above. Landlord shall have fifteen (15) days after receipt of
notice to consent to or deny said proposal. Upon review of said proposal,
Landlord shall have the sole option to terminate this Lease with Tenant for all
or, with respect to a proposed partial subletting, part of the Premises, as
though the early termination date was the Termination Date. With respect to any
partial termination, the Base Rent and additional rent shall be reduced
proportionately, and Tenant shall pay for and perform all work required to
physically separate the remaining premises from the terminated premises and to
permit lawful occupancy of both. In the event of any termination, Landlord
shall be free to, and shall have no liability to Tenant if Landlord shall,
lease the Premises or any portion thereof to Tenant's proposed assignee or
subtenant. Tenant shall execute all documents requested by Landlord to evidence
and effectuate any such termination. Tenant shall, at Tenant's own cost and
expense, discharge
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in full any outstanding commission obligation on the part of the Landlord with
respect to this Lease, and any commissions which may be due and owing as a
result of any proposed assignment or subletting, whether or not the Lease is
terminated pursuant hereto and rented by Landlord to the proposed subtenant or
any other tenant.
(c) Notwithstanding any permitted assignment or subletting, Tenant
shall at all times remain directly, primarily and fully responsible and liable
for the payment of the rent herein specified and for compliance with all of its
other obligations under the terms, provisions and covenants of this Lease. Upon
the occurrence of an Event of Default as herein defined, if the Premises or any
part thereof are then assigned or sublet, Landlord, in addition to any other
remedies herein provided, or provided by law, may at its option collect
directly from such assignee or subtenant all rents coming due to Tenant under
such assignment or sublease and apply such rent against any sums due to
Landlord from Tenant hereunder, and no such collection shall be construed to
constitute a novation or a release of Tenant from the further performance of
Tenant's obligations hereunder.
(d) Any assignment must contain an assumption by the assignee of all of
the terms, conditions and covenants of this Lease to be performed by Tenant and
any sublease shall be and shall provide that the subtenant shall be subject to
and bound by all of the terms, conditions and covenants of this Lease. Each
sublease and assignment shall provide that the sublessee or assignee, as the
case may be, shall not have the right to further assign or sublease, without
the consent of landlord in each instance in accordance with this Article 11.
12. Fire and Casualty Damage.
(a) Landlord agrees to maintain standard fire and extended coverage
insurance covering the Building in an amount not less than 80% (or such greater
percentage as may be necessary to comply with the provisions of any
co-insurance clauses of the policy) of the "replacement cost" thereof as such
term is defined in the Replacement Cost Endorsement to be attached thereto,
such coverage and endorsements to be defined, provided and limited in the
standard forms prescribed by the insurance regulatory authority for the State
in which the Premises are situated for use by insurance companies within such
state. Subject to the provisions of subparagraphs 12(c), 12(d) and 12(e) below,
such insurance shall be for the sole benefit of Landlord and under its sole
control. Tenant agrees to pay to Landlord, as Additional Rent, the amount of
Tenant's full Proportionate Share (as defined in subparagraph 4(b) above) of
such insurance costs. Said payments shall be made to Landlord within ten (10)
days after presentation to Tenant of Landlord's statement setting forth the
amount due. Any payment to be made pursuant to this subparagraph (a) with
respect to the year in which this Lease commences or terminates shall bear the
same ratio to the payment which would be required to be made for the full year
as the part of such year covered by the term of this Lease bears to a full year.
(b) In the event that the Building or the Premises is damaged or
destroyed by fire, tornado and other casualty, Tenant shall give immediate
written notice thereof to Landlord.
(c) In the event that the Building or the Premises is (i) totally
destroyed by fire, tornado, or other casualty; or (ii) is so damaged thereby
that rebuilding or repairs cannot in Landlord's estimation be completed within
two hundred (200) days after the date upon which Landlord is notified of such
damage, or if the Building shall be so damaged or destroyed by fire or other
casualty (whether or not the Premises are damaged or destroyed) that its repair
or restoration requires the expenditure (as estimated by a reputable contractor
or architect designated by Landlord) of more than 50 percent of the full
insurable value of the Building
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immediately prior to the casualty; or (iii) if at least 50 percent of the floor
area of the Premises is damaged or destroyed by fire or other casualty during
the last eighteen (18) months of the then current term of this Lease, then, in
any such cases, Landlord may terminate this Lease by giving Tenant notice to
such effect within ninety (90) days after the date of the casualty, and upon
the date specified in such notice (which shall not be less than 10 days after
such notice is given), this Lease and the estate hereby granted shall terminate
as if the date specified in such notice were the Termination Date.
(d) In the event that the Building or the Premises is damaged by any
peril covered by the insurance to be provided by Landlord under subparagraph
12(a) above, and Landlord is not entitled to or does not elect to terminate
this Lease as provided in paragraph (c), then this Lease shall not terminate,
and Landlord shall at its sole cost and expense thereupon proceed with
reasonable diligence to rebuild and repair the Building or the Premises, as the
case may be, to substantially the condition in which they existed prior to such
damage, except that Landlord shall not be required to rebuild, repair or
replace any part of the partitions, fixtures, additions and other improvements
which may have been placed in, on or about the Premises by Tenant. If the
Premises are untenantable in whole or in part following such damage, the Base
Rental payable hereunder and Tenant's Proportionate Share shall be abated or
reduced, as the case may be, in the proportion that the untenantable area of
the Premises bears to the total area of the Premises from the date of the
damage or the total area of the Premises from the date of the damage or
destruction to the date on which any such portion of the Premises shall be made
tenantable. Landlord shall substantially complete such repairs and rebuilding
with one hundred fifty (150) days after the date upon which Landlord is
notified by Tenant of such damage, provided that if construction is delayed
because of strikes, lockouts, casualties, acts of God, war, material or labor
shortages, governmental regulations or control or other causes beyond the
control of Landlord, the period of rebuilding and repairing the Building or the
Premises, as the case may be, shall be extended for the amount of time Landlord
is so delayed, not to exceed ninety (90) days (such two hundred day period, as
it may be so extended, is hereinafter referred to as the "Repair Period"). In
the event that Landlord should fail to substantially complete such repairs and
rebuilding within the Repair Period, Tenant may at its option terminate this
Lease by delivering written notice of termination to Landlord as Tenant's
exclusive remedy whereupon all rights and obligations hereunder shall cease
and terminate.
(e) Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering
written notice of termination to Tenant within fifteen (15) days after such
requirement is made by such holder, whereupon all rights and obligations
hereunder shall cease and terminate.
(f) Provided that Landlord's right of full recovery under its fire or
other property insurance policies are not adversely effected or prejudiced
thereby, Landlord hereby waives any and all right of recovery which it might
otherwise have against Tenant and its employees for loss or damage occurring to
the Property, to the extent the same is covered by Landlord's insurance,
notwithstanding that such loss or damage may result from the negligence or
fault of Tenant or its employees. Provided that Tenant's right of full
recovery under its fire or other property insurance policies are not adversely
effected or prejudiced thereby, Tenant hereby waives any and all right of
recovery which it might otherwise have against Landlord, its agents, and its
and their employees (including, without limitation, Landlord's agent and
Landlord's property manager), for loss or damage occurring to Tenant's property
whether or not insured, notwithstanding that such loss or damage may result
from the negligence or fault of Landlord, but only to the extent the same
would have been covered by insurance if Tenant had obtained an all risk policy
of insurance covering such property for the full replacement value thereof
without deduction. Each of Landlord and Tenant agrees that it will cause its
insurance carriers to include in its policies a clause or endorsement pursuant
to which the insurance carriers
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(i) waive all right of subrogation against the other party, its agents and
employees and (ii) agree that such policies shall not be invalidated should the
insured waive in writing prior to a loss any or all right of recover against
any party for losses covered by such policies. If extra cost shall be charged
therefor, each party shall advise the other thereof and such party shall not be
obligated to obtain the same unless the other party agrees to pay the amount of
the extra cost.
13. Liability.
(a) Landlord, its trustees, beneficiaries, partners, directors,
officers and agents and its and their employees, including Landlord's agent and
Landlord's property manager, shall not be liable for any loss, damage or injury
to Tenant or any other person or to its or their property, unless caused by or
resulting from the gross negligence or willful misconduct of Landlord, its
agents or employees in the operation or maintenance of the Premises or the
Property. Further, neither Landlord, Landlord's agent nor Landlord's property
manager, even if negligent, shall be liable for consequential damages arising
out of any loss of use of the Premises or any equipment or facilities therein
by Tenant or any person claiming through or under Tenant. In no event shall
Landlord, Landlord's agent or Landlord's property manager be liable for any
damages, claims, expenses or liabilities in excess of Landlord's equity in the
Building regardless of any fault or negligence on the part of Landlord,
Landlord's agent or Landlord's property manager. Tenant hereby covenants and
agrees that it will at all times indemnify, pay on behalf of defend, and hold
harmless Landlord, its trustees, beneficiaries, partners, directors, officers
and agents and its and their employees including Landlord's agent and
Landlord's property manager from any loss, liability, claims, costs and
expenses, including without limitation, attorney's fees and expenses, both real
and alleged, arising from or in connection with (i) the conduct or management
of the Premises or of any business therein, or any work or thing whatsoever
done, or any condition created (other than by Landlord, Landlord's agent or
Landlord's property manager) in or about the Premises during the term of this
Lease or during the period of time, if any, prior to the Commencement Date that
Tenant may have been given access to the Premises; (ii) any act, omission or
negligence of Tenant or any of its subtenants, agents, contractors, invitees,
licensees or its or their employees; (iii) any accident, injury or damage
whatever occurring in, at or upon the Premises not due to the gross negligence
or willful misconduct of the Landlord; and (iv) any breach or default by Tenant
in the full and prompt payment and performance of Tenant's obligations under
this Lease. In case any action or proceeding be brought against Landlord and/or
its trustees, beneficiaries, partners, directors, officers, agents or its or
their employees, including Landlord's agent and Landlord's property manager, by
reason of any such claim, Tenant, upon notice from Landlord shall resist and
defend such action or proceeding (by counsel reasonably satisfactory to
Landlord).
(b) Tenant shall procure and maintain throughout the term of this
Lease at its sole cost and expense, (i) naming Landlord, Jones, Lang, Wootton
Realty Advisors and property manager as additional insured parties, a
commercial general liability insurance policy, including, without limitation,
blanket contractual liability coverage (which shall cover Tenant's obligations
under paragraph (a) above except for the payment of rent), independent
contractors coverage, broad form property damage, personal injury coverage,
products/completed operations and premises operations protecting against any
liability whatsoever, occasioned by any occurrence on or about the Premises
with limits not less than $5,000,000.00 per occurrence in respect of injury to
persons (including death), property damage or destruction, including loss of
use thereof, and Worker's compensation and Employee's Liability insurance (ii)
naming Tenant as the insured, a fire and all risk policy, boiler and machinery
and plate glass insurance
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policies insuring the full replacement value of Tenant's furniture, trade
fixtures, inventory and personal property located in the Premises against fire,
theft, business interruption, sprinkler leakage and water damage and such other
risks or hazards as are insurable under present and future forms of "All Risk"
insurance policies, and with a maximum deductible of $1,000,000. All such
policies shall be procured by Tenant from responsible insurance companies
satisfactory to Landlord. Certified copies of such policies, together with
receipt evidencing payment of premiums therefor shall be delivered to Landlord
prior to the Commencement Date of this Lease. Not less than fifteen (15) days
prior to the expiration date of any such policies, Tenant shall deliver or
cause to be delivered to Landlord certified copies of the renewals thereof
(bearing notations evidencing the payment of renewal premiums). Such policies
shall further provide that not less than twenty (20) days written notice shall
be given to Landlord before such policy may be canceled or materially modified.
If Tenant hires a contractor or subcontractor, contractor shall carry general
liability insurance naming Landlord, Jones, Lang, Wootton Realty Advisors and
property manager as additional insurers.
14. Condemnation.
(a) In the event that the whole or any part of the Building, Property
or Premises is taken for any public or quasi-public use under governmental law,
ordinance or regulation, or by right of eminent domain, or by private purchase
in lieu thereof (collectively, a "Taking"), and the Taking would prevent or
materially interfere with the Tenant's use of the Building, Property or
Premises for the purpose for which they are being used, this Lease shall
terminate effective when the physical taking of the Premises occurs.
(b) If a Taking of part of the Premises occurs and this Lease is not
terminated as provided in the subparagraph (a) above, this Lease shall not
terminate but the Base Rental payable hereunder and Tenant's Proportionate
Share during the unexpired portion of the Lease shall be adjusted according to
the rentable area remaining tenantable.
(c) Landlord shall be entitled to receive the entire award or payment
in connection with any Taking without deduction therefrom for any estate vested
in Tenant by this Lease and Tenant hereby assigns to Landlord any right it may
have to receive any award or payment as may be allocated to its interests in
this Lease or the Property in any proceedings related to such a Taking.
15. Surrender and Holding Over. Tenant will, at the expiration or other
termination of this Lease, quit and surrender the Premises to Landlord "broom
clean" and in good order, condition and repair, except for ordinary wear and
tear and except for damage by fire and other casualties which results in
termination of the Lease by Landlord as provided for in paragraph 12. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of this Lease. If Tenant retains possession of the Premises
or any part thereof after such termination, then Landlord may at its option
serve written notice upon Tenant that such holding over constitutes either (i)
creation of a month-to-month tenancy, upon the terms and conditions set forth
in this Lease, or (ii) creation of a tenancy at sufferance, upon the terms and
conditions set forth in this Lease, provided, however, that in either case the
monthly rental or daily rental, as the case may be, shall, in addition to all
others sums which are to be paid by Tenant hereunder be equal to one and
one-half times the rental being paid to Landlord under this Lease immediately
prior to such termination. If no such notice is served, then a tenancy at
sufferance shall be deemed to be created at the rent set forth in the preceding
sentence. Tenant's payment to Landlord of one and one-half times the rental
shall represent liquidated damages and not a penalty, it being agreed that the
damage to Landlord resulting from any failure by Tenant to timely surrender
possession of the Premises will be substantial and will be impossible to
measure accurately. The provisions of this paragraph shall not constitute a
waiver by Landlord of any right of re-entry
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as herein set forth, nor shall receipt of any rent or any other act in apparent
affirmance of the tenancy operate as a waiver of the right to terminate this
Lease for a breach of any of the terms, covenants or obligations herein on
Tenant's part to be performed.
16. Quiet Enjoyment. Landlord represents and warrants that it has full
right and authority to enter into this Lease and that Tenant, upon paying the
rental herein set forth and performing its other covenants and agreements
herein set forth shall peaceably and quietly have, hold and enjoy the Premises
for the Lease Term hereof without hindrance or molestation from Landlord or any
person claiming by, through and under Landlord, subject to the terms and
provisions of this Lease.
17. Events of Default. The following events shall be deemed to be
"Events of Default" by Tenant under this Lease:
(a) Tenant shall fail to pay any installment of the Base Rental when
due, or any payment with respect to Taxes or other Additional Rent hereunder,
when due, and such failure shall continue to a period of ten (10) days from the
date that Landlord has provided written notice that payment is past due,
provided, however, that Landlord shall be obligated to give written notice of
said failure not more than two (2) times during any twelve (12) month period
and thereafter, Tenant shall be deemed to have received written notice on the
date that such payment was due.
(b) Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors.
(c) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of the
United States or any State thereof, or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant.
(e) Tenant shall desert any substantial portion of the Premises.
(f) Tenant shall fail to execute, within twenty (20) days after demand
by Landlord, any document that Tenant is obligated to execute pursuant to
paragraph 20, 21 or 29(d) hereof.
(g) Tenant shall assign, in whole or in part, its interest in this
Lease or sublet, in whole or in part, the Premises in violation of paragraph 11.
(h) Tenant shall fail to comply with any term, provision or covenant of
this Lease (other than the foregoing in this Paragraph 17), and shall not cure
such failure within twenty (20) days after written notice thereof to Tenant,
or, in the case of a failure which cannot be cured with due diligence within
said twenty (20) day period, shall not notify Landlord within said twenty (20)
day period of Tenant's intention to duly institute all steps necessary to
remedy such default, duly institute within said twenty (20) day period all such
steps, and thereafter diligently and continuously prosecute to completion the
cure of such failure.
18. Remedies. Upon the occurrence of any such Event of Default
described in Paragraph 17 hereof, Landlord shall have the option to pursue any
one or more of the following remedies without any notice or demand whatsoever:
(a) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails so to do, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises or any part
thereof and expel or remove Tenant and any other person who may be occupying
such Premises or any part thereof, by any suitable action or proceeding at law,
by force or otherwise without being liable to indictment, prosecution or for
any claim of damages therefor; and Tenant shall thereupon pay to Landlord all
Base Rental and
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Additional Rent payable up to the time of such termination of this lease, or of
such recovery of possession of the Premises by landlord, as the case may be and
agrees to pay to Landlord on demand the amount of all loss and damage which
Landlord may suffer by reason of such termination, whether through inability to
relet the Premises on satisfactory terms or otherwise.
(b) Enter upon and take possession of the Premises or any part thereof
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, by suitable action or proceeding at law, by
force or otherwise without being liable to indictment, prosecution or any
claim for damages therefor, and relet the Premises and receive the rent
therefor; and Tenant shall thereupon pay to Landlord Base Rental and Additional
Rent payable up to the time of such recovery of possession of the Premises by
Landlord and agrees to pay to the Landlord on demand any deficiency that may
arise by reason of such reletting. In the event Landlord is successful in
reletting the Premises at a rental in excess of that agreed to be paid by
Tenant pursuant to the terms of this Lease, Landlord and Tenant each mutually
agree that Tenant shall not be entitled, under any circumstances, to such
excess rental, and Tenant does hereby specifically waive any claim to such
excess rental.
Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies herein provided or any other remedies provided by law,
nor shall pursuit of any remedy herein provided constitute a forfeiture or
waiver of any rent due to Landlord hereunder or of any damages accruing to
Landlord by reason of the violation of any of the terms, provisions and
covenants herein contained. No act or thing done by the Landlord or its agents
during the Lease Term shall be deemed a termination of this Lease or an
acceptance of the surrender of the Premises, and no agreement to terminate this
Lease or accept a surrender of the Premises shall be valid unless in writing
signed by Landlord. No waiver by Landlord of any violation or breach of any of
the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions and covenants herein contained. Landlord's acceptance of the
payment of rental or other payments hereunder after the occurrence of an Event
of Default shall not be construed as a waiver of such default, unless Landlord
so notifies Tenant in writing. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon a default shall not be deemed or construed to
constitute a waiver of such default or of landlord's right to enforce any such
remedies with respect to such default or any subsequent default. If, on account
of any breach or default by Tenant in Tenant's obligations under the terms and
conditions of this Lease, it shall become necessary or appropriate for Landlord
to employ or consult with an attorney concerning or to enforce or defend any of
Landlord's rights or remedies hereunder, Tenant agrees to pay any reasonable
attorney's fees to incurred.
19. Landlord's Right of Self-help. If Tenant shall default in the
performance of any of Tenant's obligations under this Lease, Landlord, without
thereby waiving such default, may (but shall not be obligated to) enter upon
the Premises, without being liable to indictment, prosecution or any claim for
damages therefor, and remedy such default for the account of Tenant,
immediately and without notice in a case of emergency, and in any other case
only if Landlord shall have notified Tenant of such default and the applicable
grace period for curing such default shall have expired. Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations under this Lease plus interest
at the rate of one and one-half percent (1 1/2%) per annum or the maximum rate
permitted by law, whichever is less, and Tenant further agrees that Landlord
shall not be liable for any damages resulting to the Tenant from such action,
whether caused by the negligence of Landlord or otherwise.
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20. Landlord's Lien. In addition to any statutory lien for rent in
Landlord's favor, Landlord shall have and Tenant hereby grants to Landlord a
continuing security interest for all rentals and other sums of money becoming
due hereunder from Tenant, upon all goods, wares, equipment, fixtures,
furniture, inventory, accounts, contract rights, chattel paper and other
personal property of Tenant situated on the Premises, and such property shall
not be removed therefrom without the consent of Landlord until all arrearages in
rent as well as any and all other sums of money then due to Landlord hereunder
shall first have been paid and discharged. In the event of a default under this
Lease, Landlord shall have, in addition to any other remedies provided herein or
by law, all rights and remedies under the Uniform Commercial Code, including
without limitation the right to sell the property described in this Paragraph 20
at public or private sale upon five (5) days' notice to Tenant. Tenant hereby
agrees to execute such financing statements and other instruments necessary or
desirable in Landlord's discretion to perfect the security interest hereby
created. Any statutory lien for rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
Notwithstanding the foregoing, Landlord agrees to subordinate its lien to the
lien of any unrelated third party financing secured by all of such goods, wares,
equipment, fixtures, furniture, inventory, accounts, chattel paper and other
personal property of Tenant situated on the Premises.
21. Mortgages. Tenant acknowledges and agrees that this Lease and all
rights of Tenant hereunder are and shall be subject and subordinate to any
mortgage(s) and/or deed(s) of trust now or at any time hereafter constituting a
lien or charge upon the Premises or the Improvements provided, however, that if
the mortgagee, trustee, or holder of any such mortgage or deed of trust elects
to have Tenant's interest in this Lease superior to any such instrument, then
by notice to Tenant from such mortgagee, trustee, or holder, this Lease shall
be deeded superior to such lien, whether this Lease was executed before or
after said mortgage of deed of trust. This Paragraph 21 shall be self-operative
and no further instruments of subordination shall be required. However, Tenant
shall at any time hereafter on demand execute any instruments, releases or
other documents which may be required by any mortgage for the purpose of
confirming the subjecting and subordinating of this Lease to the lien of any
such mortgage. To the extent that the Property is or becomes subject to any
mortgage or other lien, Landlord shall use commercially reasonable efforts to
provide Tenant with non-disturbance agreements.
22. Landlord's Default. In the event that Landlord should become in
default of any payments due on any such mortgage described in Paragraph 21
hereof or in the payment of taxes or any other items which might become a lien
upon the Premises and which Tenant is not obligated to pay under the terms and
provisions of this Lease, Tenant is authorized an empowered after giving
Landlord five (5) days prior written notice of such default and Landlord's
failure to cure such default, to pay any such items for and on behalf of
Landlord, and the amount of any item so paid by Tenant for or on behalf of
Landlord, together with any interest or penalty required to be paid in
connection therewith, shall be payable on demand by Landlord to Tenant;
provided, however, that Tenant shall not be authorized and empowered to make
any payment under the terms of this Paragraph 22 unless the item paid shall be
superior to Tenant's interest hereunder. In the event that Tenant pays any
mortgage debt in full, in accordance with this paragraph, it shall, at its
election, be entitled to the mortgage security by assignment or subrogation.
23. Mechanic's Liens. Tenant shall have no authority, express or
implied, to create or place any lien or encumbrance of any kind or nature
whatsoever upon, or in any manner to bind, the interest of Landlord in the
Premises or to charge the rentals payable hereunder for any claim in favor of
any person dealing with Tenant, including those who may furnish materials or
perform
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labor for any construction, alterations or repairs. Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises on which any lien is or can be validly and
legally asserted against its leasehold interest in the Premises or the Property
and that it will save and hold Landlord harmless from any and all loss, cost or
expense based on or arising out of asserted claims or liens against the
leasehold estate or against the right, title and interest of the Landlord in
the Premises or under the terms of this Lease. Tenant at its expense shall
procure the satisfaction or discharge of record of all such liens and
encumbrances within thirty (30) days after the filing thereof.
24. Sale by Landlord.
(a) The term "Landlord" as used herein shall mean only the owner at the
time in question of the Building and Property. In the event of a sale or
conveyance of the Building, the transferor shall be and hereby is relieved and
freed of all obligations of Landlord under this Lease accruing after such
transfer, and it shall be deemed, without further agreement, that such
transferee has assumed and agreed to perform and observe all obligations of
Landlord herein during the period it is the holder of Landlord's Interest under
this Lease. Tenant agrees to attorn to the transferee.
(b) Tenant shall look only to Landlord's estate in the Property for the
satisfaction of Tenant's remedies for the collection of a judgment (or other
judicial process) requiring the payment of money by Landlord in the event of
any default by Landlord hereunder, and no other property or assets of Landlord
or its board of directors and officers, or investment manager, disclosed or
undisclosed, as the case may be, or any employees or agents of Landlord or the
investment manager shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to
this Lease, the relationship of Landlord and Tenant hereunder or Tenant's use
or occupancy of the Premises.
25. Notices.
(a) Any notice or demand, consent, approval or disapproval, or
statement (collectively, "Notices") required or permitted to be given by the
terms and provisions of this Lease, either by Landlord to Tenant or by Tenant
to Landlord, shall be in writing and shall be personally delivered with receipt
acknowledged or sent by United States mail postage prepaid as registered or
certified mail, return receipt requested addressed as follows (or to such other
address within the continental United States as such addressee may specify from
time to time by Notice delivered in accordance herewith):
<TABLE>
<CAPTION>
<S> <C>
If to Landlord's Property Manager, to: If to Landlord, to:
State of Wisconsin Investment Board State of Wisconsin Investment Board
c/o Trammell Crow Realty Associates, Inc. c/o Jones Lang Wootton Realty Advisors
5955 T.G. Lee Boulevard 101 East 52nd Street
Suite 340 New York, New York 10022
Orlando, Florida 32822 Attn: S.J. Furnary
Attn: Elwood B. Coley, Jr.
If to Tenant, to: With a copy to:
ECC International Corp. ECC International Corp.
175 Stratford Avenue 2900 Titan Row, Suite 124
Wayne, PA 19087 Orlando, Florida 32809
Attn: George Murphy Attn: Jerry Robbins
</TABLE>
18
<PAGE> 19
(b) All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address hereinabove set
forth or at such other address as Landlord may specify from time to time by
Notice delivered in accordance herewith. Tenant's obligation to pay rent and
any other amounts to Landlord under the terms of this Lease shall not be deemed
satisfied until such rent and other amounts have been actually received by
Landlord.
(c) Any notice or document required or permitted to be delivered
hereunder shall be deemed given, as of the date of delivery or, in the event of
failure to deliver by reason of changed address of which no Notice was given or
refusal to accept delivery, shall be deemed given as of the date of such
failure as indicated by affidavit or on the return receipt or by notice of the
postal service, as the case may be.
(d) If and when included within the term "Landlord", as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a Notice
specifying some individual at some specific address for the receipt of Notices
and payments to Landlord. If and when included within the term "Tenant", as
used in this instrument, there are more than one person, firm or corporation,
all shall jointly arrange among themselves to their joint execution of such a
Notice specifying some individual at some specific address within the
continental United States for the receipt of Notices and payments to Tenant.
All parties included within the terms "Landlord" and "Tenant", respectively,
shall be bound by Notices given in accordance with the provisions of this
paragraph to the same effects as if each had received such Notice.
26. Brokerage. Tenant represents and warrants that it has dealt with no
broker, agent, or other person in connection with this transaction other than
Trammell Crow Realty Services, Inc. and Castle Commercial Realty, and that no
broker, agent, or other person other than Trammell Crow Realty Services, Inc.
and Castle Commercial Realty, brought about this transaction and Tenant agrees
to indemnify and hold Landlord and Landlord's agent and Landlord's property
manager harmless from and against any claims by any other broker, agent, or
other person claiming a commission or other form of compensation by virtue of
having dealt with Tenant with regard to this leasing transaction, and for all
costs, expenses and liabilities in connection therewith, including, without
limitation, attorneys' fees and expenses.
27. Hazardous Material. Landlord and Tenant agree as follows with
respect to the existence or use of hazardous materials and toxic substances on
or about the Premises:
(a) Tenant shall not cause or permit any hazardous materials or toxic
substances to be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees, without the prior written
consent of Landlord, which consent may be granted or withheld in Landlord's
sole and absolute discretion. The items attached hereto as Exhibit "F" are
hereby approved by Landlord for Tenant's use. Tenant's request for Landlord's
consent shall demonstrate to Landlord's satisfaction that such hazardous
materials or toxic substances are necessary to the business of Tenant and will
be transported, used, kept and stored in a manner that complies with all laws
relating to any such hazardous materials or such toxic substances so brought
upon or used or kept in or about the Premises. If Landlord grants its consent,
Tenant shall transport, use, keep and store such hazardous materials or toxic
substances in a manner that complies with all laws relating to such hazardous
materials or toxic substances so brought upon or used or kept in or about the
Premises in accordance with any procedures described in Tenant's request for
consent. Landlord's consent to any such bringing upon or use of hazardous
materials or toxic substances upon the Premises shall not be deemed an
acknowledgement that Tenant's method of transport, use or disposal is safe or in
19
<PAGE> 20
compliance with law and it shall be Tenant's sole obligation (subject to
Landlord's rights hereunder) to ensure that such method of transport, use and
disposal is safe and in compliance with law.
To the best of Landlord's knowledge, Landlord warrants that as of the
execution of this Lease, the Property is clear of hazardous materials or toxic
substances, except as may be present in accordance with applicable laws and in
accordance with the ordinary course of Tenant's business, if presence of
hazardous materials or toxic substances on the Property caused or permitted by
Tenant or any person claiming by, through or under Tenant, including any
employee or agent of Tenant, results in contamination of the Property, or if
contamination of the Property by hazardous materials or toxic substances
otherwise occurs for which Tenant is legally liable to Landlord for damage
resulting therefrom, then Tenant shall indemnify, defend and hold Landlord
harmless from any and all claims, damages, costs, liabilities and losses,
including without limitation, diminution in value of the Property, damages for
the loss or restriction on use of rentable or usable space or any amenity of the
Property, damages arising from any adverse impact on marketing of space in the
Building, and sums paid in settlement of claims, actual attorneys' fees and
expert fees, which arise during or after the term of this Lease as a result of
such contamination. This indemnification of Landlord by Tenant also includes,
without limitation, costs incurred in connection with any investigation of site
conditions, including regular inspections, or any clean-up, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision or which Landlord otherwise deems necessary to remediate
and remove any such hazardous waste and any contaminated materials, soil or
ground water and to protect any persons or property from injury by reason
thereof if and only if contamination was caused or permitted by any person
claiming by, through or under Tenant including, without limitation, any
employee, contractor, invitee or agent of Tenant. The indemnity and hold
harmless obligations of Tenant under this Paragraph shall survive any
termination of this Lease. Without limiting the foregoing, if any contamination
of the Property is caused or permitted by Tenant or any person claiming by,
through or under Tenant, including any employee or agent of Tenant, Tenant shall
promptly take all actions at its sole expense as are necessary to return the
Property to the condition existing prior to the introduction of any such
hazardous materials or toxic substances to the Property; provided that,
Landlord's approval of such actions shall first be obtained, which approval
shall not be unreasonably withheld so long as such actions, in Landlord's sole
and absolute discretion, would not potentially have any material adverse
long-term or short-term effect on the Property or Landlord, its agents and
employees.
(b) Landlord shall have the right, at any time, to cause testing wells
to be installed on or about the Premises, and may at its option cause the
ground water to be tested to detect the presence of hazardous materials or
toxic substances at least once every twelve (12) months during the term of this
Lease by the use of such tests as are then customarily used for such purposes.
If Tenant so requests, Landlord shall supply Tenant with copies of such test
results. The cost of such tests and of the maintenance, repair and replacement
of such wells shall be fully paid for by Landlord unless contamination of the
Premises with hazardous materials or toxic substances has occurred and was
permitted by Tenant or any person claiming by, through or under Tenant
including, without limitation, any employee, contractor, invitee or agent of
Tenant, in which event, the Tenant shall pay for such audit in addition to all
other obligations hereunder, within ten (10) days after receiving a statement
of charges from Landlord. If Landlord tests any area of the Property not leased
to any Tenant, Tenant shall pay its Proportionate Share of such tests,
provided, if any contamination is so detected and it is determined that such
contamination is caused or
20
<PAGE> 21
permitted by Tenant or any person claiming by, through or under Tenant,
including any employee or agent of Tenant, Tenant shall pay the entire cost of
such tests. Tenant shall have the right at any time during the term of this
Lease to conduct its own test of the ground water underlying the Premises by
using such wells so long as each of the following conditions are satisfied: (i)
such tests are conducted by Tenant at its own expense; (ii) it repairs any
damage to such wells caused by such tests; and (iii) it delivers copies of the
results of such tests to Landlord.
(c) Landlord and Landlord's agents shall have the right to inspect the
Premises for purposes of ascertaining Tenant's compliance with this Paragraph
27. The cost of such inspections shall be reimbursed to Landlord by Tenant. In
the event of a spill or mishandling of hazardous materials or toxic substances,
Tenant shall immediately inform Landlord verbally and in writing. Such notice
shall identify the hazardous materials or toxic substances involved and the
emergency procedures taken.
(d) It shall not be unreasonable for Landlord to withhold its consent
to any proposed assignment or sublease if (i) the proposed assignee's or
sublessee's anticipated use of the Premises involves the generation,
treatment or disposal of hazardous materials or toxic substances; (ii) the
proposed assignee or sublessee has been required by any prior landlord, lender
or governmental authority to take remedial action in connection with hazardous
materials, or toxic substances contaminating a property if the contamination
resulted from such assignee's or sublessee's actions or use of the property in
question; or (iii) the proposed assignee is subject to an enforcement order
issued by any governmental authority in connection with the use, disposal or
storage of any hazardous materials or toxic substances.
(e) As used herein, the terms "hazardous materials and/or toxic
substances" mean (i) any hazardous or toxic substance, material or waste which
is or becomes regulated by any local, state or federal governments or special
districts, (ii) any substance or material which is designated as a "hazardous
substance" pursuant to Section 1311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1317), (iii) any substance or material which is defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or
(iv) any substance or material which is defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C.
Section 9601). References herein to specific statutes or laws shall also be
references to any applicable successor statutes or laws.
(f) If Tenant presently uses in its business any materials which may be
hazardous materials or toxic substances as defined in this Paragraph 27, Tenant
shall prior to execution of this Lease deliver to Landlord, (i) a list of all
such hazardous materials and toxic substances (a copy of which list is attached
hereto as Exhibit E), (ii) a plan for use, handling, storage and disposal of
hazardous materials and toxic substances, (iii) the name, address, telephone
number and qualifications of a licensed company that will handle emergency
clean-up for Tenant, and (iv) a written contingency plan for any emergency
involving said hazardous materials and toxic substances. During the term of this
Lease, Lessee shall deliver to Landlord all reports required by all regulatory
agencies governing the use, handling, storage and disposal of hazardous
materials or toxic substances.
(g) Landlord agrees that Tenant may use the hazardous materials and
toxic substances enumerated on Exhibit E, subject to the terms of this Lease.
Tenant shall immediately notify Landlord of any other materials which may be
used by Tenant or stored by Tenant on or about the Premises which may be
hazardous or toxic, and shall obtain Landlord's written consent thereto, which
consent may be granted or withheld in Landlord's sole and absolute discretion,
prior to such use or storage.
(h) Any increase in the premiums for necessary insurance on the
Premises which arises from Tenant's use and/or storage of these materials shall
be solely at Tenant's expense. Tenant shall procure and maintain at its sole
expense such additional
21
<PAGE> 22
insurance as may be necessary to comply with any requirement of any federal,
state or local governmental agency or special district with jurisdiction.
(i) It is the intent of the parties hereto that the provisions of this
Paragraph 27 regarding the use and handling of hazardous materials and toxic
substances shall also apply to Tenant's storage upon the Premises of any
substances, including, but not limited to, gasoline and diesel fuels in above
or below ground storage tanks.
28. No Recordation of Lease. Tenant shall not record this Lease or any
memorandum hereof.
29. Miscellaneous.
(a) Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
(b) The terms, provisions and covenants and conditions contained in
this Lease shall apply to, inure to the benefit of, and be binding upon, the
parties hereto and upon their respective heirs, legal representatives,
successors and permitted assigns, except as otherwise herein expressly
provided. Landlord shall have the right to assign any of its rights and
obligations under this Lease. Each party agrees to furnish to the other,
promptly upon demand, a corporate resolution, proof of due authorization by
partners, or other appropriate documentation evidencing the due authorization
of such party to enter into this Lease.
(c) The captions inserted in this Lease are for convenience only and in
no way define, limit or otherwise describe the scope or intent of this Lease,
or any provision hereof, or in any way effect the interpretation of this Lease.
(d) Tenant agrees from time to time within ten (10) days after request
of Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this Lease is in full force and effect, the date to
which rent has been paid, the unexpired term of this Lease and such other
matters pertaining to this Lease as may be reasonably required by Landlord. It
is understood and agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this Lease, that any such statement delivered pursuant hereto
shall be deemed a representation and warranty to be relied upon by the party
requesting the certificate and by others with whom such party may be dealing,
regardless of independent investigation, and that Tenant shall be liable for
all loss, cost or expense resulting from the failure of any sale or funding of
any loan caused by a material misstatement contained in such estoppel
certificate. In the event Tenant shall fail to return a fully executed copy of
such certificate to Landlord within the foregoing twenty (20) day period, then
Tenant shall be deemed to have approved and confirmed all of the terms,
certifications and representations contained in such certificate and such
certificate as signed by Landlord shall be fully binding on Tenant.
(e) This Lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
(f) All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the Premises. Upon the expiration or
earlier termination of the term hereof, and prior to Tenant vacating the
Premises, Tenant shall pay to Landlord any amount reasonably estimated by
Landlord as necessary to put the Premises, including without limitation all
heating and air conditioning systems and equipment therein, in good condition
and repair. All such amounts shall be used and held by Landlord for payment of
such obligations of Tenant hereunder, with Tenant being liable for any
additional costs therefor upon demand by Landlord, or with any
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<PAGE> 23
excess to be returned to Tenant after all such obligations have been determined
and satisfied, as the case may be. Any security deposit held by Landlord shall
be credited against the amount payable by Tenant under this Paragraph 29(f).
(g) If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be effected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there be added as a
part of this Lease contract a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may be possible and be
legal, valid and enforceable.
(h) Because the Premises are on the open market and are presently being
shown, this Lease shall be treated as an offer by Tenant, and shall not be
valid or binding unless and until accepted by Landlord in writing and a fully
executed copy delivered to both parties hereto.
(i) All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the date first written above.
(j) If either party hereto is successful in enforcing against the other
any legal or equitable remedy for a breach of any of the provisions of this
Lease, the successful party shall be entitled to recover its reasonable
expenses and attorney's fees as a part of the judgment or decree.
(k) The duties and obligations of Tenant herein shall be binding upon
all or any of them. The duties and obligations of Tenant shall run and extend
not only to the benefit of the Landlord, as named herein, but to the following,
at the option of the following or any of them (i) any person by, through or
under which Landlord derives the right to lease the Premises; (ii) the owner of
the Premises; and (iii) holders of mortgage or rent assignment interests in the
Premises, as their respective interests may appear; provided, however, nothing
contained herein shall be construed to obligate Tenant to pay rent to any
person other than the Landlord until such time as Tenant has been given written
notice of either an exercise of a rent assignment or the succession of some
other party to the interest of Landlord.
(l) If Landlord's consent or approval is required pursuant to any
provision hereof and Tenant shall request Landlord's consent or approval and
Landlord shall fail or refuse to give such consent or approval, Tenant shall
not be entitled to any damages for any withholding by Landlord of its consent
or approval, it being intended that Tenant's sole remedy shall be an action for
specific performance or injunction, and that such remedy shall be available
only in those cases where Landlord has expressly agreed in writing not to
unreasonably withhold its consent or approval or where as a matter of law
Landlord may not unreasonably withhold its consent or approval.
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30. Additional Provisions. See Additional Provisions Paragraph(s) 31
through 37, attached hereto and made part hereof as if fully incorporated
herein and when in conflict with the printed portion of this Lease, said
Additional Provisions shall prevail.
EXECUTED BY LANDLORD, this 26th day of January, 1995.
ATTEST/WITNESS STATE OF WISCONSIN INVESTMENT BOARD
By: Jones Lang Wootton Realty Advisors,
Its Agent
1) /s/ [Signature] By: /s/ [Signature]
---------------------------- ------------------------------
2) /s/ [Signature]
----------------------------
EXECUTED BY TENANT, this 30th day of January, 1995.
ATTEST/WITNESS ECC INTERNATIONAL CORP., a Delaware Corporation
1) /s/ [Signature] By: /s/ [Signature]
---------------------------- ---------------------------------
2) /s/ Joe D. Sellers Title: V.P. Vending Products Division
---------------------------- ------------------------------
24
<PAGE> 25
ADDITIONAL PROVISIONS
31. Landlord shall construct within the Premises the improvements
contemplated by the Preliminary Specifications attached hereto as Exhibit "C"
and made a part hereof ("Landlord's Work"). Landlord shall construct Landlord's
Work in a good and workmanlike manner, in accordance with all applicable laws,
regulation, codes and ordinances, and in accordance with the Work Agreement
attached hereto as Exhibit "D" and made a part hereof. Landlord shall
contribute and pay for up to a total of $248,433.00 toward the cost of
Landlord's Work ("Landlord's Contribution"), and Tenant shall pay to Landlord
all costs associated with Landlord's Work in excess of Landlord's Contribution
within ten (10) days after an invoice from Landlord.
32. The parties agree that one-twelfth (1/12) of Tenant's Proportionate
Share of Taxes described in Paragraph 4 hereof, at the Premises described in
Exhibit "A" hereto, is initially estimated to be TWO THOUSAND SIX HUNDRED
FIFTY-NINE AND 07/100 DOLLARS ($2,659.07) payable as Additional Rent on a
monthly basis subject to adjustment for end-of-the-year reconciliations as
provided in Paragraph 4.
33. The parties agree that one-twelfth (1/12) of Tenant's Proportionate
Share of common area maintenance expenses described in Paragraph 6 hereof, at
the Premises described in Exhibit "A" hereto, is initially estimated to be
SEVEN HUNDRED EIGHTY-FIVE AND 63/100 DOLLARS ($785.63) payable as Additional
Rent on a monthly basis subject to adjustment for end-of-the-year
reconciliations as provided in Paragraph 6.
34. If any holder of any mortgage to which this Lease is subject and
subordinate or any purchaser at a foreclosure sale shall succeed to the rights
of Landlord under this Lease, whether through possession or foreclosure action
or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's rights (a "Successor Landlord"), Tenant shall attorn to
and recognize Successor Landlord as Landlord. This Paragraph 34 shall be
self-operative and no further instruments of attornment shall be required.
However, Tenant shall at any time hereafter on demand execute any instrument
that Landlord or Successor Landlord may reasonably request to evidence such
attornment. Upon such attornment this Lease shall continue in full force and
effect as a direct lease between Successor Landlord and Tenant upon all of the
terms, conditions and covenants set forth in this Lease
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<PAGE> 26
except that Successor Landlord shall not (a) be liable for any previous act,
omission or default of Landlord under this Lease; (b) be responsible for any
liability which shall have accrued to Tenant against Landlord; (c) be bound by
any covenant to undertake or complete any improvements to the Premises or the
Building or to pay to Tenant any sum, or grant to Tenant any credit, towards
the cost of preparing, furnishing or moving into the Premises or any portion
thereof; or (d) be bound by any previous modification, amendment, surrender or
cancellation of this Lease or by any previous prepayment of more than one
month's Base Rental or Additional Rent, unless such modification amendment,
surrender, cancellation or prepayment shall have been expressly approved in
writing by Superior Landlord.
35. Radon Gas: Tenant understands and acknowledges that radon is a
naturally occurring radioactive gas that, when it has accumulated in a building
in sufficient quantities, may present health risks to persons who are exposed
to it over time. Levels of radon that exceed federal and state guidelines have
been found in buildings in Florida. Additional information regarding radon and
radon testing may be obtained from your county public health unit.
36. Notwithstanding the provisions of Paragraph 2(a), base monthly
rental shall increase as per the following schedule:
<TABLE>
<S> <C>
Months 1-36 $20,547.00 per month plus Florida state sales tax.
Months 37-84 $23,872.00 per month plus Florida state sales tax.
</TABLE>
26
<PAGE> 27
EXHIBIT "A"
Approximately 72,520 square feet as outlined in red in Exhibit "B"
attached hereto and made part thereof, out of a larger building situated on a
tract of ground, the legal description of which is:
From the SW corner of the SE 1/4 of Section 28, Township 23 South, Range
29 East, Orange County, Florida, run N 89 degrees 48 minutes 17 seconds
East 209.52 feet along the S boundary of said SE 1/4; thence run North
00 degrees 11 minutes 43 seconds West 957.68 feet to the NW corner of
ORLANDO CENTRAL PARK NO. 42, as recorded in Plat Book 9, Page 21, Public
Records of Orange County, Florida; thence run South 89 degrees 48
minutes 17 seconds West 605.89 feet along the South boundary of ORLANDO
CENTRAL PARK NO. 46, as recorded in Plat Book 11, Page 60, Public
Records of Orange County, Florida, to the beginning of a tangent curve
concave Northeasterly and having a radius of 405.00 feet; thence run
Northwesterly 191.13 feet along the arc of said curve and said S
boundary through a central of 27 degrees 02 minutes 21 seconds to the
Southwest corner of said ORLANDO CENTRAL PARK NO. 46; thence run North
00 degrees 11 minutes 43 seconds West 68.97 feet along the West boundary
of said ORLANDO CENTRAL PARK NO. 46 to the most Southerly corner of
ORLANDO CENTRAL PARK NO. 51, as recorded in Plat Book 14, Page 68,
Public Records of Orange County, Florida, said most Southerly corner
being on a non-tangent curve concave Northeasterly and having a radius
of 345.00 feet; thence from a tangent bearing of North 57 degrees 56
minutes 32 seconds West, run Northwesterly 135.05 feet along the arc of
said curve and the Southwesterly boundary of said ORLANDO CENTRAL PARK
NO. 51, through a central angle of 22 degrees 25 minutes 45 seconds to
the end of said curve; thence run North 35 degrees 30 minutes 47 seconds
West 402.36 feet along said Southwesterly boundary to the SW corner of
said ORLANDO CENTRAL PARK NO. 51; thence run South 00 degrees 11 minutes
43 seconds East 103.79 feet; thence run North 35 degrees 30 minutes 47
seconds West 103.79 feet for the POINT OF BEGINNING: thence continue
North 35 degrees 30 minutes 47 seconds West 149.32 feet to the beginning
of a tangent curve concave Southwesterly having a radius of 970.00 feet
and an intersection angle of 10 degrees 00 minutes 00 seconds; thence
run Northwesterly 169.30 feet along the arc of said curve to the end of
said curve; thence run North 45 degrees 30 minutes 47 seconds West
1257.96 feet to the beginning of a tangent curve concave Northeasterly,
having a radius of 230.00 feet and an intersection angle of 86 degrees
54 minutes 59 seconds; thence run Northwesterly and Northerly 348.91
feet on the arc of said curve to the end of said curve; thence run South
41 degrees 24 minutes 12 seconds West 589.05 feet; thence run South 45
degrees 30 minutes 47 seconds East 2155.09 feet; thence run North 12
degrees 01 minutes 43 seconds West 198.98 feet; thence run North 00
degrees 11 minutes 43 seconds West 309.59 feet to the POINT OF
BEGINNING.
Containing 16.5797 acres, more or less.
Subject to easements.
<PAGE> 28
EXHIBIT "B"
Approximately 72,520 Rentable Square Feet
2900 Titan Row, Suite 142
Orlando, Florida 32809
[Schematic of property]
<PAGE> 29
ECC International
12/29/94 EXHIBIT "C"
1) General Contractor
<TABLE>
<S> <C>
Permit: $2,344
Cut and patch allowance: $900
Plumbing-LBR & MTL: $8,779
2 prefab shower units: $3,700
1 eye wash unit: $1,650
HVAC testing area 7,200 sf-22.5 tons: $18,787
HVAC assembly area 36,000 sf-90 tons: $74,250
Fire alarm for duct detector: $6,899
Electrical-1200 amps total $60,000
Brkrm/office/bthroom construction: $22,150
Compactor ramp $1,500
Paint existing office areas: $5,010
Replace flooring in office area: $6,788
Trash: $200
Supervision: $3,800
O&P $21,676
SUB-TOTAL $238,433
</TABLE>
2) Professional Services
<TABLE>
<S> <C>
Architectural $3,000
Engineering $5,000
Roof Engineer $2,000
GRAND TOTAL $248,433
</TABLE>
<PAGE> 30
EXHIBIT "C" CONT.
NOTES:
Electrical scope of work to include:
* Wire 3 7.5 ton split systems in testing area
* Wire 9 10 ton split systems in assembly
* Wire 1 5 ton split system over office break area.
* Wire 20 2 X 4 lay in light fixtures
* 2 exit lights
* Wire/hookup 1 30 gallon water heater
* Bringing in 2-600 amp services with direct feeders and
dedicating 400 amps to HVAC system
* There are no hookups or wiring of desk mounted tools,
equipment or additional lighting included in this proposal
other than noted above.
Plumbing scope of work:
* 5 Fixtures proposed in men's and women's each 10 total
* 3 sinks proposed in men's and women's each 6 total
* 1 floor drain in men's and women's 2-total
* Code will require 3 drinking fountains in the warehouse area
we have not included a cost for this and recommend using
bottled water.
HVAC scope of work to include:
* The lack of barriers in the assembly and testing areas will
cause the HVAC equipment to run more continuously than a
balanced space.
* The areas directly behind the designated conditioned areas
may be 10 degrees warmer than the conditioned areas during
summertime conditions.
* The HVAC equipment is proposed without heat strips, the
equipment will cool only.
* It appears that roof deck insulation will not be required,
however this will have to be confirmed with the county.
Exclusions:
Telephone, Data, or computer cabling.
It appears that impact fees will be assessed. These fees
are not included and will be Tenant's responsibility.
Warehouse floor stripping of sealing.
Air lines - lbr and mtl.
Relocation or staging expenses.
No fire protection upgrades.
<PAGE> 31
EXHIBIT "D"
Work Agreement
1. Drawings, Plans & Specifications
(a) Landlord shall cause Preliminary Space Plans to be prepared
and delivered to Tenant.
(b) After receipt of Tenant's approval of the Preliminary Space
Plans, Landlord shall cause the following to be prepared and delivered to
Tenant:
(i) architectural drawings for Landlord's Work
sufficient to obtain a building permit from the Orange County Building
Department (which architectural drawings shall include a reflected ceiling
plan); and
(ii) materials, colors and designs of wall coverings
and finishes.
(c) The plans, specifications and information described in
paragraphs 1(a) and (b) above are hereinafter collectively referred to as
"Landlord's Drawings." The cost of preparation and delivery of Landlord's
drawings shall be considered part of Landlord's contribution pursuant to
Paragraph 31.
2. Landlord's Work
As contemplated by Paragraph 31 of the Lease, Landlord shall
construct or cause to be constructed all improvements provided for in
Landlord's Drawings (i.e., Landlord's Work). The cost of Landlord's Work, less
Landlord's Contribution, shall be paid by Tenant to Landlord (as Additional
Rent) within ten (10) days after Tenant's receipt of an invoice therefor.
3. Fees
Tenant shall pay to Landlord the cost of Landlord's work (less
Landlord's Contribution) plus, as Additional Rent, an additional (a) eight
percent (8%) for general contractors Overhead and Profit, (b) $27.50 per hour
for each hour (or portion of an hour) of supervision by general contractor, and
(c) six percent (6%) for construction management. All such fees shall be paid
by Tenant to Landlord as and when billed by Landlord to Tenant and within ten
(10) days after Tenant's receipt of each such bill. All payments to be made by
Tenant to Landlord under this Work Agreement shall be payable by Tenant and
collectible by Landlord in the same manner and to the same extent as the
payment of Base Rental under the Lease, regardless of whether the term of the
Lease has then commenced, and any default by Tenant in the payment of any
amounts due under this Work Agreement shall entitle Landlord to the same rights
and remedies to which Landlord is entitled for default by Tenant in the payment
of Base Rental under the lease.
4. Tenant's Delay
(a) If Landlord shall be delayed in substantially completing
any work it is required to perform hereunder as a result of any act, neglect,
failure or omission of Tenant, its agents, employees or contractors, including
without limitation any of the following, such delay shall be deemed a "Tenant
Delay":
(i) Tenant's failure to approve Landlord's Drawings in
the time period provided in paragraph 5 hereof; or
(ii) Tenant's delays in submitting or approving any
other drawings, plans or
<PAGE> 32
specifications, or in supplying information; or
(iii) Tenant's request for materials, finishes or
installations (other than those included in Building Standard Work); or
(iv) Tenant's changes in drawings, plans or
specifications submitted to or prepared by Landlord (including any Revisions);
or
(v) the entering onto the Premises by Tenant, its
agents, employees or contractors to perform any work on the Premises, to
inspect the Premises or otherwise; or
(vi) any delays of contractors or subcontractors
resulting from Tenant's failure to timely approve cost estimates or to make
any payments required hereunder.
(vii) any other Tenant delay caused by failure to
comply with the provisions of this Work Agreement.
(b) Tenant shall pay to Landlord a sum equal to any
additional cost to Landlord in performing and completing Landlord's Work
resulting from any Tenant Delay. Any such sums shall be in addition to any other
sums payable by Tenant hereunder and shall be paid to Landlord within ten (10)
days after Landlord bills Tenant therefor.
5. Submissions
Unless otherwise provided herein, Tenant shall, within five (5)
days after Landlord submits any drawings, plans or other material to Tenant for
Tenant's approval, respond in writing, either (i) approving such drawings, plans
or materials, or (ii) requesting Landlord to make specific changes therein.
All of Tenant's requested changes shall be subject to Landlord's prior written
approval, which shall not be unreasonably withheld, provided, however, that
Landlord shall have no obligation to make any changes requested by Tenant unless
Tenant's request for changes complies with the provisions of Paragraph 6(b)
below. Unless otherwise provided herein, Tenant's failure to respond within the
time period set forth in the preceding sentence shall be deemed approval of
Landlord's submission.
6. Revisions
(a) Tenant shall have the right to make changes from time to
time in Landlord's Drawings by submitting to Landlord revised plans and
specifications (herein called the "Revisions"). All Revisions shall be subject
to Landlord's prior written approval, which shall not be unreasonably withheld.
Without limiting the generality of the foregoing, no Revisions will be approved
unless (i) all changes to and modifications from Landlord's Drawings are circled
or highlighted as per standard industry practices and (ii) said Revisions
conform with the requirements of paragraph 6(b).
(b) Landlord shall not be required to perform, and Tenant
shall not request, work which would (i) require changes to structural components
of the Building or the exterior design of the Building, (ii) require any
material modification to the Building's mechanical installations or other
Building installations outside the Premises, (iii) require installation
(including quality of materials) which are below the quality of building
standard installations, (iv) not comply with all applicable laws, rules,
regulations and requirements of any governmental department having jurisdiction
over the construction of the Building and/or the Premises, (v) be incompatible
with the Building plans filed with the Department of Buildings or any other
department or agency of the City of Orlando or the County of Orange or with the
occupancy of the Building as a first-class warehouse building, or (vi) delay the
completion of any work being performed in the Building or any part thereof
(other than the Premises).
(c) Any changes required by any governmental department before
completion of Landlord's Work affecting the construction of the Building and/or
the Premises shall be performed by Landlord in completing the Premises, shall
not be deemed to be a violation of the
<PAGE> 33
Preliminary Space Plan or the Work Agreement and shall be deemed automatically
accepted and approved by Tenant. Tenant shall reimburse Landlord within five
(5) days after demand by Landlord for any cost arising out of the changes
described in this Paragraph 6(c).
(d) Any changes required by any governmental department after
completion of the Premises affecting the Premises shall be performed by Tenant
at Tenant's sole cost and expense by contractors approved by Landlord, which
approval may be granted or withheld in Landlord's sole discretion.
<PAGE> 34
[Schematic of property]
<PAGE> 1
EXHIBIT 10.20
DATED 1st December 1995
G J KING & SON (HOME FARM) LIMITED
- to -
ECC SIMULATION LIMITED
- and -
ECC INTERNATIONAL CORP
-----------------------------------
AGREEMENT
- relating to -
Unit 1 Home Farm Business Centre
Lewes Road Brighton East Sussex
-----------------------------------
[SPEECHLY BIRCHAM SOLICITORS LOGO]
<PAGE> 2
THIS AGREEMENT dated the 1st December, 1995
BETWEEN:
(1) G J KING & SON (HOME FARM) LIMITED whose registered office is situate at
G J King Business Centre Reeds Lane Sayers Common West Sussex; and
(2) ECC SIMULATION LIMITED whose registered office is situate at Kingston
Wharf Brighton Road Shoreham by Sea West Sussex
(3) ECC INTERNATIONAL CORP a company incorporated in the State of Delaware and
whose principal place of business is at 175 Strafford Avenue Wayne PA
19087-3377 USA
1. DEFINITIONS
1.1 In this agreement the following terms shall have the following meanings
1.1.1 "Completion Date" means not later than five Working Days
from the latest of (1) 25th March 1998
and (2) the date twenty Working Days
after the date the Landlord notifies
the Tenant that the Premises are vacant
and (3) if a Repairs Notice is served
by the Tenant pursuant to clause 4.2
hereof ten Working Days after the date
the Landlord notifies the Tenant of
completion of the works pursuant to
clause 4.4 hereof
1.1.2 "Existing Unit 1 Lease" means a lease of the Premises dated
25th March 1994 made between (1) the
Landlord (2) Systems Support
Corporation International Limited and
(3) Carterhouse Group PLC which lease
-1-
<PAGE> 3
contains inter alia an agreement excluding the
provisions of Sections 24 to 28 (inclusive) of
the Landlord and Tenant Act 1954 as authorised
by a Court Order obtained prior to the grant
thereof and an option for the Landlord to
determine the lease on 24th March 1998 by
giving notice to this effect to the tenant at
any time before 25th March 1997
1.1.3 "Initial Rent" means the sum of ONE HUNDRED THOUSAND POUNDS
(Pound Sterling 100,000) a year exclusive of
Value Added Tax
1.1.4 "Landlord" means G J King & Son (Home Farm) Limited or
such other person as shall from time to time
be or become the headlessee estate owner of
the Premises
1.1.5 "Lease" means the Lease of the Premises to be granted
by the Landlord to the Tenant pursuant to this
agreement if the Option is exercised by the
Tenant such lease to be in the form of the
draft Lease attached hereto
1.1.6 "Option" means the option to take the Lease of the
Premises at the Initial Rent (subject to
upward review) which is exercisable by the
Tenant in the manner described in clause 3
-2-
<PAGE> 4
1.1.7 "Option Period" means the period from the date
of this agreement until 25th
February 1997
1.1.8 "Premises" means the land with the
building erected thereon or on
some part thereof known as
Unit 1 Home Farm Business
Centre Home Farm Road Brighton
East Sussex as the same are
more particularly described in
the Lease
1.1.9 "Rent Commencement Date" means the Completion Date or
(if applicable) Five Working
Days from the date of the
Landlord's notice given to the
Tenant pursuant to clause 5.2
hereof whichever is the later
1.1.10 "Repairs Notice" means a notice served by the
Tenant pursuant to clause 4.2
hereof
1.1.11 "The Surety" means ECC International Corp
1.1.12 "Tenant" means ECC Simulation Limited
1.1.13 "Term Commencement Date" means 25th March 1998
1.1.14 "Working Day" means a day falling on and
between Monday and Friday upon
which clearing banks in the City
of London are open for normal
business
-3-
<PAGE> 5
1.2 References to a clause or other provision of this agreement shall
be to that so numbered or otherwise identified in this agreement unless
a contrary intention is expressed
1.3 Clause headings are to be ignored for the purposes of interpretation
1.4 References to any statute shall include a reference to any modification
or re-enactment thereof
1.5 At any time when the Landlord or the Tenant comprise two or more
persons such expression shall include all and any of such persons and
obligations expressed or implied to be made by or with any of them
shall be deemed to be made by or with such persons jointly and severally
2. AGREEMENT
In consideration of the sum of ONE POUND (Pound Sterling 1) paid by the Tenant
to the Landlord (receipt of which the Landlord acknowledges) the Tenant shall
have the option of taking up the lease of the Premises for a term commencing on
the Term Commencement Date and expiring on 24th June 2016 at the Initial Rent
(subject to upward review as provided for in the Lease)
3. EXERCISE OF THE OPTION
3.1 The Option shall be exercisable by notice in writing from the Tenant to
the Landlord at any time during the Option Period
3.2 If the Option shall be exercised:-
3.2.1 The Landlord shall grant to the Tenant and the Tenant shall
accept the Lease for a term commencing on the Term Commencement
Date and expiring on 24th June 2016 at the Initial Rent
(subject to upward review as provided for in the Lease) and the
First Reserved Rent (as defined in the Lease) shall commence to
be payable on the Rent Commencement Date and
-4-
<PAGE> 6
the Landlord shall duly execute the original and deliver it to
the Tenant and the Tenant and the Surety shall duly execute
the counterpart and deliver it to the Landlord; and
3.2.2 The Landlord shall within 10 Working Days of the exercise of
the Option serve a notice on the tenant under the Existing Unit
1 lease to determine that lease on 24th March 1998 and if the
Tenant under the Existing Unit 1 lease does not vacate the
Premises by 25th March 1998 the Landlord shall use its best
endeavours to obtain possession of the Premises as soon as
reasonably practicable
4. CONDITION OF PREMISES
4.1 The Landlord will give the Tenant notice in writing when the Premises
are vacant and shall for a period of 20 Working Days from the date of
such notice afford the Tenant all necessary facilities and access to the
Premises to enable the Tenant and its surveyor to satisfy themselves
that the Premises (including the Main Structure (as defined in the
Lease) and all fixtures fittings plant machinery and apparatus belonging
thereto and the walls fences drains appurtenances and decorations
thereof) are in good and substantial repair and condition and cleansed
4.2 The Tenant may within 20 Working Days from the date of the Landlord's
notice given pursuant to clause 4.1 hereof (time to be of the essence)
give a notice to the Landlord if the Tenant does not consider on
reasonable and proper grounds that the Premises (including the Main
Structure (as defined in the Lease) and all fixtures fittings plant
machinery and apparatus belonging thereto and the walls fences drains
appurtenances and decorations thereof) are in good and substantial
repair and condition and cleansed and at the same time shall give full
details of its reasons for such conclusion
4.3 Upon service of a Repairs Notice the Landlord and the Tenant will
endeavour to resolve what if any action should be taken but if they
-5-
<PAGE> 7
cannot or do not do so the objections not so resolved are to be
submitted to an independent chartered building surveyor who shall act as
an expert such independent chartered building surveyor to be appointed
by the parties or failing agreement appointed on the request of either
party by the President for the time being of the Royal Institution of
Chartered Surveyors and such independent chartered building surveyor
shall:-
4.3.1 afford to the parties the opportunity to make representations in
writing and in reaching his decision he shall consider any
written representations made by or on behalf of the parties
hereto which are received by him within 10 Working Days after
they have been afforded such opportunity and each party shall be
entitled to receive a copy of any such written representations
made by or on behalf of the other party and within 5 Working
Days of such receipt to make written counter representations;
and
4.3.2 be entitled to call for such independent expert advice on such
matters as he shall think fit; and
4.3.3 otherwise than as mentioned in sub-clause 4.3.1 he shall have
an unfettered discretion to determine the reference to him; and
4.3.4 give written reasons for his decision if required by either
party; and
4.3.5 determine the reference to him within 30 Working Days of being
appointed
4.4 If a Repairs Notice is served on the Landlord by the Tenant which
necessitates the Landlord carrying out works to the Premises such works
shall be carried out within a reasonable time in a proper and
workmanlike manner with good materials and on completion of such works
-6-
<PAGE> 8
the Landlord shall give written notice thereof to the Tenant and afford
the Tenant an opportunity to inspect the same
5. COMPLETION
5.1 The Completion of the grant of the Lease shall take place on the
Completion Date and completion shall take place at the office of the
Landlord's solicitors
5.2 Without prejudice to any right of action or otherwise which the Tenant
may have against the Landlord as result of any failure by the Landlord
to observe and perform the Landlord's obligations under this Agreement
if the Landlord shall default in completing the Lease on the Completion
Date the Landlord shall serve written notice on the Tenant when the
Landlord is ready and willing to complete the Lease
6. POSSESSION
Vacant possession of the Premises shall be given on completion of the grant of
the Lease
7. TITLE
7.1 Title to the grant of the lease shall consist of a copy of the entries
on the register and a copy of the filed plan for title number ESX177917
together with a copy of the lease referred to in the Property Register
of said title
7.2 The Tenant having investigated and accepted the Landlords title
to the grant of the lease prior to the date hereof shall raise no
objection or requisition in respect thereof save for any which may arise
out of a 94B Search at H.M. Land Registry in respect of adverse entries
registered after 26th July 1995 being the date the office copy entries
supplied to the Tenant's solicitors
8. LICENSE FEE
-7-
<PAGE> 9
8.1 The Tenant shall pay to the Landlord from the Rent Commencement Date a
licence fee equal to the Initial Rent in the same manner as the Initial
Rent reserved by the Lease and any insurance premium service charge or
other monies due in respect of the Premises which would be due if the
Lease had been granted on the Rent Commencement Date plus any Value
Added Tax payable on such sums
8.2 On the grant of the Lease any licence fee as aforesaid and/or insurance
premium and service charge paid in advance in respect of any period
beyond the date of the grant of the Lease shall be credited against the
Initial Rent and/or the insurance premium and service charge due under
the Lease
8.3 If any of the monies payable under this clause 8 by the Tenant to the
Landlord shall be due but unpaid for ten Days the Tenant shall pay
interest thereon (if demanded by the Landlord) calculated on the daily
basis from the due date until receipt by the Landlord at the rate of 4
per centum per annum above the base rate from time to time of Royal Bank
of Scotland Plc
9. REPRESENTATIONS
The Tenant acknowledges that it has not entered into this agreement in reliance
on any representation made but not incorporated herein and also acknowledges
that neither the Landlord nor its agents or advisors nor any other person
acting for the Landlord has made any representation (whether written oral or
implied) in relation to any matter contained or referred to in this agreement
or otherwise
10. MERGER ON COMPLETION
The provisions of this agreement shall not merge on the completion of the grant
of the lease of the Premises to the Tenant so far as they remain to be
performed
11. RESTRICTION ON ASSIGNMENT
-8-
<PAGE> 10
This agreement is personal to the Tenant and shall not be capable of assignment
nor shall the Landlord be required to grant the lease of the Premises to anyone
other than the Tenant
12. NOTICES
Any notices or other written communications required to be served or sent under
the terms of this Agreement shall be served or sent by registered post or by
recorded delivery to the address of the Surety stated in this agreement or
to the registered office for the time being of the Landlord or the Tenant
13. COSTS
The parties shall bear their own costs in connection with and incidental to
this agreement and the grant of the Lease
14. TERMINATION
14.1 The Landlord may determine this agreement forthwith by notice in
writing to that effect if:-
14.1.1 The Tenant shall enter into liquidation whether compulsory or
voluntary (otherwise than for the purpose of amalgamation or
reconstruction) notwithstanding the Tenant may have exercised
the Option; or
14.1.2 The Tenant fails to complete the Lease in accordance with the
terms of this agreement
14.2 Any determination under clause 14.1 shall be without prejudice to any
other rights or remedies of the Landlord against the Tenant for the
breach or non-performance of any of the obligations to be performed by
the Tenant under this agreement
14.3 Notwithstanding any such determination the Tenant if and to the extent
required by the Landlord will at its expense remove without delay any
-9-
<PAGE> 11
works carried out by the Tenant to the Premises and reinstate the same
to the reasonable satisfaction of the Landlord
15. REGISTRATION
Notice of this agreement shall be registered against title number ESX177917
within three months of the date hereof
16. NATURE OF THIS AGREEMENT
This agreement is a deed and has been executed by the parties as a deed
17. SURETY
In consideration of the Landlord agreeing to enter into this Agreement with
the Tenant (at the request of the Surety)
17.1 The Surety hereby unconditionally and irrevocably guarantees to the
Landlord the performance by the Tenant of the stipulations and
obligations and duties on the Tenant's part contained in this Agreement
and the payment by the Tenant to the Landlord of all sums of money due
or becoming due to the Landlord thereunder (all of which are hereinafter
referred to as the "Guaranteed Obligations") and the Surety
unconditionally undertakes with the Landlord that if and whenever the
Tenant shall be in default in relation to the Guaranteed Obligations the
Surety will forthwith upon the written demand of the landlord pay to the
Landlord the whole amount in respect of which the Tenant is so in
default and will indemnify and keep indemnified the Landlord in respect
of any non performance non observance or other breach and will by way of
primary obligation perform observe or keep (as the case may be) the
stipulations obligations or duties in respect of which the Tenant is so
in default
17.2 The Surety shall not be exonerated or discharged from its liability
hereunder by any insolvency or the liquidation of the Tenant or the
Surety or by the time being given to the Tenant or the Surety or by any
-10-
<PAGE> 12
other indulgence or concession to the Tenant or the Surety granted or
allowed by the Landlord or by the taking holding varying compromising
non-enforcement or release by the Landlord or any other rights in
respect of all or any of the obligations or liabilities of the Tenant
or the Surety under this Agreement or by any variation to the terms of
this Agreement
17.3 Moneys payable by the Tenant or the Surety shall be paid to the
Landlord to such account in England as the Landlord shall from time to
time require in writing
17.4 The Surety represents and warrants to the Landlord that the Surety has
full power authority and legal right to enter into the obligations
contained in this Clause 17
17.5 The rights and obligations of the parties hereto shall be governed and
construed in accordance with English law
17.6 The Surety hereby irrevocably:-
17.6.1 agrees that the Courts of England and Wales shall have
jurisdiction to hear and determine any suit action or proceeding
arising out of or relating to this Agreement (including this
Clause 17) and
17.6.2 waives to the fullest extent permitted by law any objection
which the Surety may now or hereafter have to the jurisdiction
of the Courts of England and Wales to hear and determine any
suit action or proceeding arising out of or relating to this
Agreement (including this Clause 17) or any claim that any such
Court is not a convenient or appropriate forum
17.6.3 agrees that the process by which any suit action or proceeding
is begun may be served on the Surety by being delivered in
connection with any suit action or proceeding in England to
the Tenant
-11-
<PAGE> 13
17.7 The submission to the jurisdiction of the Courts referred to in Clause
17.7 shall not (and shall not be construed as to) limit the right of the
Landlord to take proceedings against the Surety in any other Court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction whether concurrently or not
IN WITNESS the hands of the parties hereto or their duly authorised
representatives the day and year hereinbefore written
Signed [Signature Illegible]
---------------------------------------
A director for and on behalf of ECC Simulation Limited
[Signature Illegible]
Signed George W. Murphy
----------------------------------------
For an on behalf of ECC International Corp
State of Pennsylvania
County of Delaware
The foregoing instrument was acknowledged before me this 28th day of
November, 1995 by George W. Murphy of ECC International Corp., a
Delaware Corporation, on behalf of the corporation
[SEAL]
NOTARIAL SEAL
Margery R. Green, Notary Public
Radnor Twp., Delaware County
My Commission Expires Jan. 31, 1998
-----------------------------------
Member, Pennsylvania Association of Notaries
-12-
<PAGE> 14
THIS LEASE made the 1995
BETWEEN
(1) G J KING & SON (HOME FARM) LIMITED whose registered office is situate
at G J King Business Centre Reeds Lane Sayers Common West Sussex
(hereinafter called "the Landlord") of the first part and
(2) ECC SIMULATION LIMITED whose registered office is situate at Kingston
Wharf Brighton Road Shoreham by Sea West Sussex (hereinafter called
"the Tenant") of the second part and
(3) ECC INTERNATIONAL CORP a company incorporated in the State of Delaware
and whose principal place of business is at 175 Strafford Avenue Wayne
PA 19087-3377 USA (hereinafter called "the Surety") of the third part
WITNESSETH as follows:-
1. IN this lease where the context so admits the following expressions
shall have the following meanings respectively that is to say:-
"the landlord"
means the Landlord hereinbefore named or such other person for the time
being entitled to the reversion immediately expectant upon the
determination of the Term
"the Tenant"
means the Tenant hereinbefore named or such other person in whom the
Term shall for the time being be vested and wherever it includes more
than one person the covenants on the part of the Tenant hereinafter
contained shall be deemed to be joint and several
"the Plan"
means the plan numbered 1 annexed hereto
-1-
<PAGE> 15
[Schematic of property]
<PAGE> 16
"the Grassed and Planted Areas"
means the grassed and planted areas which adjoin Home Farm Road Brighton
East Sussex
"the Demised Premises"
means the land with the building erected thereon or on some part thereof
known as Unit 1 Home Farm Business Centre Home Farm Road Brighton East
Sussex and the curtilage thereof as the same is shown edged red on the
Plan and shall include any other building from time to time erected
thereon or on some part thereof
"Unit 2"
means the property adjoining the Demised Premises known as Unit 2 Home
Farm Business Centre Home Farm Road Brighton aforesaid
"the Main Structure"
means the roof foundations floor structures load bearing walls or frame
stanchions beams window frames external walls external drains pipes and
other external services of the Demised Premises
"the Soakaways"
means the soakaways situated on Unit 2 and drainage pipes leading
thereto from the Demised Premises
"Insured Risks"
means (subject to such exclusions and limitations as are imposed by the
Insurers and to the extent that insurance cover against any particular
risk is ordinarily available with a reputable insurer for property such
as the Demised Premises) subsidence landslip heave fire explosion storm
tempest lightning aircraft (not being hostile aircraft) and articles
dropped therefrom riot civil commotion and flood and such other
insurable risks against which the Landlord shall reasonably deem it
desirable or expedient to insure
-2-
<PAGE> 17
"Term"
means a term commencing on 25th March 1998 and expiring on 24th
June 2016
"the Rent Commencement Date"
means 1998
"the Initial Rent"
means the sum of ONE HUNDRED THOUSAND POUNDS (Pound Sterling 100,000)
a year exclusive of Value Added Tax
"the First Reserved Rent"
means the yearly rent reserved by Clause 2(A) hereof
"the Secondly Reserved Rents"
means
(1) a sum representing the cost reasonably and properly incurred or
a fair proportion thereof (subject to the provisions of
Clause 4(7)(h) hereof) of complying with the Landlord's
insuring covenant hereinafter contained
(2) all other sums payable by the Tenant under the covenants on
the part of the Tenant contained in this lease
(3) any interest chargeable under the provisions of this lease
(4) any additional insurance premiums payable by the Tenant arising
under the provisions of Clause 4(7) of this lease
(5) all expenses costs fees and other sums incurred under the
provisions Clause 4(24) hereof
"the Review Dates"
means 24th June 2000 24th June 2005 24th June 2010 and 24th June 2015
-3-
<PAGE> 18
"the Review Period"
means the period starting with any Review Date up to and including the
day immediately preceding the next Review Date or starting with the last
Review Date up to the end of the Term
"the Service Charge"
means the sums payable by the Tenant in accordance with Part 2 of the
Second Schedule hereto
"the Service Charge Year"
means the period of twelve months up to the 31st March each year or such
other period as the Landlord shall from time to time choose
"the Service Costs"
means all costs expenses and outgoings whatsoever incurred by the
Landlord in carrying out the works and providing the services set out in
Part 1 of the Second Schedule hereto
"the Landlord's Surveyor"
means any person or firm of surveyors appointed by or acting for the
Landlord including an employee of the Landlord to perform the function
of a Surveyor for any purposes under this lease
"the Superior Lease"
means the lease of the Demised Premises and other land and premises
dated 9th May 1991 and made between Brighton Borough Council of the one
part and the Landlord of the other part
"the Superior Lessor"
means Brighton Borough Council or such other person entitled to the
benefit of the reversion expectant upon the determination of the
Superior Lease
"the Interest Rate"
means the rate of Four per centum per annum above the base rate from
time to time of The Royal Bank of Scotland PLC
-4-
<PAGE> 19
"the Planning Acts"
means the Town and Country Planning Act 1990 the Planning (Consequential
Provisions) Act 1990 the Planning (Hazardous Substances) Act 1990 and
the Planning (Listed Building and Conservation Areas) Act 1990 or any
statutory consolidation modification or re-enactment of all or any of
the above Acts
"the Units"
means all the units lettered "A" and "B" on the Plan together with the
forecourt parking and landscaped areas therewith
"an Individual Unit"
means any one of the Units
"Qualifying Person"
means a company or corporation registered in the United Kingdom which
has annual profits (which term shall have a meaning which is consistent
with the term "profits for the financial year" where used in the Fourth
Schedule to the Companies Act 1985) in the United Kingdom as shown in
such company's or corporation's properly audited financial statements
for the last three 12 month accounting periods immediately preceding the
proposed assignment of this lease to such company or corporation (the
last of such accounting periods) expiring not more than 12 months prior
to the date of such assignment) which are not less than the sum of the
annual rents pursuant to clauses 2(A) and 2(B) of this lease for the
year immediately prior to the date of such assignment multiplied by a
factor of 2.5
2. IN consideration of the rents and tenants covenants hereinafter
reserved and contained the Landlord HEREBY DEMISES unto the Tenant the
Demised Premises TOGETHER WITH the easements and rights specified in
Part 1 of the First Schedule hereto EXCEPT AND RESERVED unto the
Landlord and others the easements and rights specified in Part 2 of the
First Schedule hereto TO HOLD the same unto the Tenant for the Term
YIELDING AND PAYING to the Landlord without deduction during the
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Term and proportionately for any fraction of a year the rents set out
hereunder
(A) The FIRST RESERVED RENT as hereinbefore defined being
(1) from the date hereof until the Rent Commencement Date a
peppercorn (if demanded); and
(2) from and including the Rent Commencement Date until and
including the day immediately preceding the first Review
Date the Initial Rent; and
(3) during each successive Review Period a rent equal to the
yearly rent previously payable hereunder or such increased
rent as shall be ascertained in accordance with Clause 3
hereof whichever shall be the greater BUT during the first
Review Period the rent shall not exceed ONE HUNDRED AND
TWENTY THOUSAND POUNDS (Pound Sterling 120,000) a year
exclusive of Value Added Tax
ALL such rents to be paid by equal quarterly instalments in advance on
the usual quarter days in every year the first payment of the Initial
Rent (apportioned in respect of the period from and including the Rent
Commencement Date up to and including the day immediately preceding the
next following quarter day) to be payable on the Rent Commencement Date
(B) The SECONDLY RESERVED RENTS as hereinbefore defined
Such rents to be payable from and including the date hereof or
(if earlier) the date of occupation (as determined by the
Landlord or the Landlord's Surveyor) and to be paid to the
Landlord within fourteen days of demand (except as otherwise
provided)
3. RENT REVIEW
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<PAGE> 21
(1) The increased rent for any Review Period shall be (having
regard to current open market values) the open market yearly
rent at which the whole of the Demised Premises might
reasonably be expected to be let at the relevant Review Date
(A) On the following assumptions at the relevant Review Date:-
(i) that the Demised Premises are fit for immediate
occupation and use and that no work has been carried
out thereon by the Tenant its undertenants or their
respective predecessors in title during the Term which
has diminished the rental value of the Demised Premises
and that in case the Demised Premises have been
destroyed or damaged they have been fully restored
(ii) that the Demised Premises are available to let in the
open market by a willing landlord to a willing tenant as
a whole without a premium but with vacant possession and
subject to the provisions of this lease (other than the
amount of the rent hereby reserved but including the
provisions for rent review at intervals of every five
years) for a term of ten years from the relevant Review
Date or the residue then unexpired of the term of this
lease (whichever shall be the longer)
(iii) that the covenants herein contained on the part of the
Tenant and the Landlord have been fully performed and
observed
(B) But disregarding:-
(i) any effect on rent of the fact that the Tenant its
undertenants or their respective predecessors in title
have been in occupation of the Demised Premises; and
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(ii) any goodwill attached to the Demised Premises by reason of the
carrying on thereat of the business of the Tenant its
undertenants or their respective predecessors in title in
their respective businesses; and
(iii) any increase in rental value of the Demised Premises
attributable to the existence at the relevant Review Date of
any improvement to the Demised Premises or any part thereof
carried out with consent where required by and at the expense
of the Tenant its undertenants or their respective predecessors
in title during the Term otherwise than in pursuance of an
obligation to the Landlord or its predecessors in title; and
(iv) any effect on rental value of any obligation of the Tenant to
remove alterations or to restore or reinstate the Demised
Premises
(v) any rent free period or reduced rent period allowed to the
Tenant under the terms of this lease
(vi) the provisions of clause 6(4)(b) (c) and (d) hereof
(2) The increased rent for any Review Period may be agreed at any time
between the Landlord and the Tenant or (in the absence of agreement)
determined not earlier than the relevant Review Date by an arbitrator
such arbitrator to be nominated in the absence of agreement by or on
behalf of the President for the time being of the Royal Institution of
Chartered Surveyors on the application of the Landlord or the Tenant
made not earlier than six months before the relevant Review Date
(3) IT IS HEREBY FURTHER PROVIDED in relation to the ascertainment and
payment of the reviewed rent as follows:-
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(A) The arbitrator shall be a Chartered Surveyor having not less
than ten years experience in letting and valuation of similar
property and of similar sized properties to the Demised Premises
throughout England
(B) The arbitration shall be conducted in accordance with the
Arbitration Acts 1950 and 1979 or any statutory modification or
re-enactment thereof for the time being in force with the
further provision that if the arbitrator nominated pursuant to
Clause 3 hereof shall die or decline to act the President for
the time being of the Royal Institution of Chartered Surveyors
or the person acting on his behalf may on the application of
either the Landlord or the Tenant by writing discharge the
arbitrator and appoint another in his place
(C) When the increased rent has been ascertained as hereinbefore
provided the Landlord and the Tenant shall record it forthwith
by each signing and exchanging a separate written memorandum and
the Landlord and the Tenant shall bear their own costs in
respect thereof
(D) (i) if the increased rent payable on and from any Review
Date has not been agreed by that Review Date rent shall
continue to be payable at the rate previously payable
and forthwith upon the increased rent being ascertained
the Tenant shall pay to the Landlord any shortfall
between the rent actually paid and the increased rent
payable from the relevant Review Date up to the quarter
day immediately following the date that the increased
rent is ascertained together with interest on each
instalment thereof from the date upon which the same
would have been payable if the increased rent had been
ascertained on the relevant Review Date to the date of
actual
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<PAGE> 24
payment thereof at the rate of two per cent below the
Interest Rate and the interest so payable shall be
recoverable in the same manner as rent in arrear
(ii) for the purposes of this proviso the increased rent
shall be deemed to have been ascertained on the date
when the same has been agreed between the Landlord and
the Tenant or as the case may be the date of the award
of the arbitrator
(E) Time shall not be of the essence of this Rent Review clause
(F) If either the Landlord or the Tenant shall fail to pay any
costs awarded against it in an arbitration under the provisions
hereof within fourteen days of the same being demanded by the
arbitrator the other shall be entitled to pay the same and the
amounts so paid shall be repaid by the party chargeable on
demand
(4) Without prejudice to the provisions of this Clause if on any Review
Date there shall be in force any enactment which shall relate to the
control of rents and/or which shall restrict the Landlord's right to
review the rent or recover any increased rent under this lease then the
Landlord shall be entitled upon the termination or relaxation of such
restriction to serve notice (hereinafter called "Interim Notice") upon
the Tenant and from and after the date of the termination or relaxation
of such restriction until the next Review Date (or until the end of the
Term) as the case may be the rent shall be increased to whichever is the
higher of the rent agreed or determined in accordance with the
provisions hereinbefore contained but at the date of service of the
Interim Notice (or such lesser sum as may be permitted) or the rent
payable immediately prior thereto and the provisions
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of this Clause shall apply accordingly with the substitution of
the date of the termination or relaxation of such restriction
for the relevant Review Date
4. THE Tenant hereby covenants with the Landlord as follows:-
(1) TO PAY RENT AND INTEREST
(a) To pay the rents hereby reserved unto the Landlord
throughout the Term and during a statutory continuation
thereof at all times and in manner aforesaid without any
deduction whatsoever except as authorised by any
statutory enactment for the time being in force
(b) If any of the rents hereby reserved shall be due but
unpaid for 14 days to pay interest thereon (if demanded
by the Landlord) calculated on a daily basis with three
monthly rests from the due date until receipt by the
Landlord at the Interest Rate (the Interest Rate shall
and apply before as well as after and notwithstanding
any judgement of the Court) Provided that this
sub-clause shall not prejudice any other right or remedy
in respect of such reserved rents
(c) If following the occurrence of any of the events
referred to in clause 6(1)(b) hereof acceptance of any
of the rents hereby reserved shall be reasonably refused
by the Landlord but shall subsequently be accepted
without prejudice to any other right or remedy of the
Landlord to pay interest thereon (if demanded by the
Landlord) calculated on a daily basis with three monthly
rests from the due date until acceptance and receipt by
the Landlord at the Interest Rate (the Interest Rate
shall apply before as well as after and notwithstanding
any judgement of the Court) Provided
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<PAGE> 26
that this sub-clause shall not prejudice any other right or
remedy in respect of such reserved rents
(2) TO PAY SERVICE CHARGE AND INSURANCE
(a) To pay the Service Charge in the manner set out in Part 2 of the
Second Schedule hereto
(b) To pay on demand therefor the sum representing the cost
(subject to the provisions of clause 4(7)(h) hereof) of
complying with the Landlord's insuring covenant hereinafter
contained
(3) TO PAY RATES AND TAXES
To pay and discharge all existing and future rates taxes charges duties
assessments and outgoings whatsoever whether parliamentary local or
otherwise now or hereafter imposed or charged upon the Demised Premises
or any part thereof or upon the owner or any occupier thereof or payable
by either in respect thereof (excluding any payable by the Landlord in
respect of receipt of rent or any other payment made by the Tenant under
this lease (except any VAT payable on rent or any other payment made by
the Tenant under this lease) or on any disposition or dealing with or
the ownership of the reversion of this lease) but including all charges
in respect of water gas electricity and telecommunications used or
consumed at the Demised Premises PROVIDED ALWAYS that the Tenant shall
not agree or by default allow to be fixed the rateable value of the
Demised Premises or any part thereof without the prior written consent
of the Landlord such consent not to be unreasonably withheld
(4) TO REPAIR
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<PAGE> 27
Well and substantially to repair cleanse maintain amend and keep in good
and substantial repair the Demised Premises (including the Main
Structure and all fixtures fittings Plant machinery and apparatus
belonging thereto) and all additions made thereto and the walls fences
drains appurtenances and decorations thereof and to renew and replace
the same from time to time insofar as the same may be or become beyond
repair at any time during or at the expiration of the Term (howsoever
determined) damage in all such cases from any of the Insured Risks
excepted so long as the Policy of insurance effected by the Landlord
shall not have been vitiated or payment of any Policy moneys refused in
whole or in part by reason of any act neglect or default of the Tenant
its undertenants or their respective servants agents or licensees
(5) TO PAINT AND DECORATE
In every third year of the Term and also during the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner the
outside wood iron and other parts heretofore or usually painted of the
buildings on Demised Premises and all additions thereto with two coats
of good quality paint suitable for external use and for the surface and
material to which it is to be applied such painting in the last year of
the Term (howsoever determined) to be in colours previously approved in
writing by the Landlord And in every fifth year of the Term and also in
the last year thereof (howsoever determined) to paint in a proper and
workmanlike manner all the inside wood iron and other parts heretofore
or usually painted of the buildings on the Demised Premises and all
additions thereto with two coats of good quality paint suitable for the
surface and material to which it is to be applied such Painting in the
last year of the Term (howsoever determined) to be in colours Previously
approved in writing by the Landlord And on the occasion of every such
external painting to varnish or colour the
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external parts usually or previously so dealt with and on the occasion
of every internal painting to varnish wash stop whiten and colour all
such parts as have previously been or are usually so dealt with and to
repaper with suitable paper of good quality (in the last year of the
Term (howsoever determined in colours previously approved in writing by
the Landlord) the parts previously or usually papered
(6) TO CLEAN WINDOWS ETC
To clean internally and externally the windows of the Demised Premises
as often as occasion shall require and at least once in every month and
at least once a week to remove all refuse rubbish and scrap which may
have accumulated on the Demised Premises
(7) INSURANCE
(a) Subject to the Landlord having supplied to the Tenant in
writing full particulars of any policy of insurance effected on
the Demised Premises and any modification or variation thereof
not to do or omit or allow to be done or omitted any act matter
or thing whatsoever whereby any policy of insurance effected on
the Demised Premises or anything therein or on any adjoining
or neighbouring premises of the Landlord may become void or
voidable or the premiums payable for such insurance increased
(b) To the extent that any insurance premium payable in respect of
any adjoining or neighbouring premises is increased by any use
act neglect omission or default of the Tenant its undertenants
or their respective servants agents or licensees in relation to
the Demised Premises to pay the Landlord on demand the amount
of such increase
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<PAGE> 29
(c) In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the insured Risks to give
immediate notice thereof in writing to the Landlord
(d) In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks and the
insurance money under any insurance effected against the same
being wholly or partly irrecoverable (by reason of any act
neglect omission or default of the Tenant its undertenants or
their respective servants agents or licensees) then and in
every such case the Tenant will pay to the Landlord forthwith
the whole (as the case may require) a fair proportion of the
cost of completely rebuilding and reinstating the same
(e) Subject to the Landlord having supplied in writing to the
Tenant full particulars thereof to comply with the requirements
and recommendations of the Landlord's insurers
(f) Not to store on the Demised Premises any inflammable or any
explosive combustible or deleterious substance save that the
Tenant may store at the Demised Premises such reasonable
quantities of inflammable substances in proper and safe
containers as are normally used for its business SUBJECT TO the
Tenant obtaining the Landlord's insurers prior written approval
thereto and the Tenant paying any increase in insurance premium
arising therefrom and on the reasonable request of the Landlord
supplying to the Landlord details of the type and amounts of
the substances stored on the Demised Premises
(g) To repay to the Landlord on demand the proper costs and
expenses incurred in obtaining valuations of the Demised
Premises for insurance purposes from time to time but so
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<PAGE> 30
that such valuations shall not be carried out more frequently
than once every three years
(h) The Landlord may retain for the Landlord's own benefit any
commissions or discount received or obtained by the Landlord on
or based on the gross premiums and other expenses which would
otherwise be paid incurred or suffered by the Landlord in
effecting or maintaining such insurance
(i) To insure and keep insured in the joint names of the Landlord
and the Tenant and such other names as the Landlord may
reasonably require all the plate glass or any substitute or
alternative material used in windows (if any) and doors in the
Demised Premises against breakage or damage howsoever caused
with an insurance company of repute to the full reinstatement
value thereof and public liability relevant to such breakage
and pay all premiums necessary for that purpose and whenever
required produce to the Landlord or its agent the policy of
insurance and the receipt for the current year's premium and
whenever a claim arises to use the insurance money forthwith in
reinstating the same with a like material to the reasonable
satisfaction of the Landlord's Surveyor making up any deficiency
out of the Tenant's own moneys
(j) To pay to the Landlord on demand the amount of any excess which
may be applicable in the event of any claim in respect of any
of the Insured Risks
(8) TO EXECUTE WORKS
To execute all works on or in respect of the Demised Premises now or
from time to time throughout the Term lawfully required to be executed
by any local or public authority
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<PAGE> 31
(including works required under the Health & Safety at Work etc. Act
1974 the Offices Shops and Railway Premises Act 1963 or any Act amending
or replacing the same for the time being in force) whether the said
works shall be required to be executed by the Landlord or by the Tenant
and in all respects and at the Tenant's own expense to comply with and
cause to be complied with the provisions of all statutes byelaws and
regulations for the time being in force and the requirements of any
competent authority affecting or relating to the Demised Premises or the
use thereof and at all times to indemnify and to keep indemnified the
Landlord and the Superior Lessor against all claims demands expenses and
liability in respect thereof
(9) NOTICES RECEIVED
Within seven days of receipt of the same to give full particulars to
the Landlord of any notice direction or order or proposal for a notice
direction or order made given or issued to the Tenant by any government
department or local or public authority and if so required by the
Landlord to produce and supply copies of the same to the Landlord AND
without delay to take all necessary steps to comply with the same AND
ALSO at the request of the Landlord to make or join with the Landlord in
making such objections or representations relating to the same as the
Landlord shall deem expedient but with due regard being had to the
Tenant's interest in the Demised Premises
(10) TO PERMIT ENTRY TO VIEW
To permit the Landlord and the Superior Lessor and their respective
Surveyors or other agents during the Term at reasonable hours in the
daytime on prior appointment to enter the Demised Premises to view the
state of repair and
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<PAGE> 32
condition of the same and to take inventories of the fixtures therein
(11) TO PERMIT ENTRY TO REPAIR
To permit the Landlord and the Superior Lessor or their respective
agents or the Landlord's Surveyor with or without workmen at any time
during the Term at reasonable hours in the daytime on prior appointment
except in the case of emergency to enter upon the Demised Premises for
the purpose of executing repairs or alterations to or in connection with
any adjoining premises of the Landlord or the Superior Lessor the
Landlord or the Superior Lessor making good all damage thereby
occasioned to the Demised Premises
(12) TO REPAIR ON NOTICE
To repair and make good to the satisfaction of the Landlord and the
Superior Lessor all breaches of covenant defects and wants of reparation
for which the Tenant may be liable under the covenants herein contained
of which notice shall have been given by the Landlord to the Tenant
within two calendar months after the giving of such notice or sooner if
requisite
(13) TO COMPLY WITH STATUTORY REQUIREMENTS
(a) At all times to observe and comply with the provisions of or
imposed under any statute licence or regulation regulating or
permitting the use of the Demised Premises for the purpose for
which they are for the time being used and the requirements of
any competent authority in that connection and at the expense
of the Tenant to do all that is necessary to obtain maintain
and renew all licences and registrations required by law for
the use of the Demised Premises for that purpose
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(b) At the sole cost of the Tenant to comply with the Planning Acts
for the time being in force and of all byelaws orders and
regulations licences consents permissions and conditions made
thereunder affecting the Demised Premises or any use thereof
and to indemnify and keep harmless and indemnified the Landlord
against any breach or non-performance of any such requirements
and against all costs expenses penalties and levies thereby
arising
(14) PLANNING
In relation to the Planning Acts:
(a) Not without prior written consent of the Landlord such consent
not to be unreasonably withheld or delayed to apply for
permission to carry out on the Demised Premises any development
requiring permission under the Planning Acts
(b) Not to implement any planning permission relating to the
Demised Premises without the prior written consent of the
Landlord such consent not to be unreasonably withheld or
delayed but without prejudice to the generality of the
foregoing such consent shall be given if in the opinion of the
Landlord or the Landlord's Surveyor (whose decision shall be
final) the value of the Landlord's reversionary interest is not
affected thereby
(c) Whenever required to permit the Landlord to enter upon the
Demised Premises to comply with any requirement lawfully made
of it under the Planning Acts by any competent authority
notwithstanding that any action reasonably necessary for
compliance interferes with the Tenant's enjoyment of the
Demised Premises
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<PAGE> 34
(d) To pay and satisfy any charge which may hereafter be imposed
under the Planning Acts in respect of the carrying out of
any operations or the institution or continuance of the use of
the Demised Premises
(e) Unless the Landlord shall otherwise direct in writing to carry
out and complete before the expiration or sooner determination
of the Term any works stipulated to be carried out to the
Demised Premises (notwithstanding that such works are to be
carried out by a later date) as a condition of planning
permission for any development begun before such expiration or
sooner determination
(f) If the Tenant shall receive any compensation relating to the
Tenant's interest hereunder due to any restriction placed upon
the user of the Demised Premises as a result of the Planning
Acts then if and when the Tenant's interest hereunder shall be
determined by assignment or under the power of re-entry herein
contained the Tenant shall forthwith make such provision as is
just and equitable for the Landlord to receive its due benefit
from such compensation
(15) PERMITTED USE
Not to use or permit or suffer to be used the Demised Premises or any
part thereof otherwise than solely and exclusively as and for use within
Classes B1(b) or (c) or B2 of the Town and Country Planning (Use
Classes) Order 1987 (as originally enacted) and uses ancillary thereto
(16) PROHIBITED USES
Not to use the Demised Premises or any part thereof nor allow the same
to be used as the premises of any public or local
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<PAGE> 35
authority to which the public have access or for any public meeting
exhibition or entertainment or for any illegal or immoral purpose or for
the purposes of a club whether or not one where intoxicating liquor is
supplied to members or their guests nor permit or suffer any sale by
auction to be held on the Demised Premises or any part thereof or to
sell serve or supply or permit or suffer to be sold served or supplied
any intoxicating liquor thereon or therefrom (save that intoxicating
liquor may be served to staff in any staff restaurant which is ancillary
to the use permitted by Clause 4(15) hereof) or play or use or allow to
be played or used any sound-producing instrument or apparatus on the
Demised Premises or any part thereof so as to be audible outside the
Demised Premises nor permit the Demised Premises to be used as a
sleeping place for any person and not to use the Demised Premises or any
part thereof or permit or suffer the same to be used for the purpose of
any betting transactions or for gaming with or between persons resorting
to the Demised Premises and not to make or permit or suffer to be made
any application for a Betting Office Licence or a Licence or
registration under the Gaming Acts 1963 to 1968 in respect of any part
of the Demised Premises
(17) NUISANCE
Not to do or commit or permit or suffer to be done or committed upon the
Demised Premises or any part thereof any act or thing which shall be a
nuisance annoyance or disturbance to the Landlord or the Superior Lessor
or to the owners lessees or occupiers for the time being of any
adjoining or neighbouring property or to the neighbourhood
(18) ALTERATIONS
(a) Not at any time during the Term to make any alteration or
addition to the sprinkler system (if any) or to make
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<PAGE> 36
any alterations to the Demised Premises which effect
the operation of the sprinkler system (if any) without first
obtaining the consent in writing of the Landlord such consent
not to be unreasonably withheld or delayed
(b) Not at any time during the Term to make any alteration or
addition to the electrical installation of the Demised Premises
save in accordance with the terms and conditions laid down by
the Institution of Electrical Engineer's and the Regulations of
the Electrical Supply Authority;
(c) Not at any time during the Term to erect set up or maintain or
suffer to be erected set up or maintained on the Demised
Premises or any part thereof any building shed or similar
structure whether of a permanent or temporary character
(d) Not at any time during the Term to make any change to the
external design or appearance of the building constructed on the
Demised Premises
(e) Not to cut maim alter or injure or suffer to be cut maimed
altered or injured the Main Structure nor make any external or
internal alterations in the plan or elevation of the building on
the Demised Premises or in any party or other wall nor alter or
change any of the materials or architectural decorations of the
said building nor make or maintain or suffer to be made or
maintained any addition thereto either in height or projection
save that if any such alterations as aforesaid are necessary
become of a permitted underletting of an Individual Unit then
the provisions of Clause 4(18)(g) hereof shall apply thereto
mutatis mutandis
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<PAGE> 37
(f) Not at any time during the Term to overload the floors or
ceilings or the Main Structure in any way which imposes a weight
or strain in excess of that which the building on the Demised
Premises is constructed to bear with due margin for safety or
which will in any way strain or interfere with the Main
Structure
(g) Not to make any nonstructural erection addition or alteration
whatsoever to the Demised Premises (including to walls timbers
wires pipes drains appurtenances fixtures or fittings thereof)
without the previous consent in writing of the Landlord (which
consent shall not be Unreasonably withheld or delayed) such
consents to be without prejudice nevertheless to the provisions
of this and sub-clauses (13) (14) and (26) hereof nor except in
accordance with plans and specifications (with such additional
copies thereof as the Landlord may reasonably require)
previously submitted to and approved in writing by the Landlord
nor carried out except to the satisfaction of its Surveyor
(h) Nothing herein contained in this sub-clause (18) shall prevent
the Tenant from installing or removing internal nonstructural
demountable partitioning in the Demised Premises without the
Landlord's consent provided such works do not adversely affect
the services in the Demised Premises and the Tenant shall supply
the Landlord with plans detailing the internal layout of the
Demised Premises then current on demand by the Landlord
(i) Any alterations or additions carried out to the Demised
Premises shall at the end or sooner determination of the Term be
reinstated by the Tenant if requested in writing by the Landlord
so to do
(19) SIGNS
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<PAGE> 38
(1) Not without the Previous written consent of the Landlord and
the Superior Lessor (such consents not to be unreasonably
withheld) to carry out or permit the painting or writing of any
notice or advertisement whatsoever whether permanent or
temporary on the glass of the windows or doors of the building
on the Demised Premises or (except with the previous written
consent of the Landlord and the Superior Lessor) the affixing or
display of any bill notice doorplate sign or advertisement which
projects over any street or land over when the public has access
(2) Without prejudice to the provisions of sub-clause (19)(1) of
this Clause not to exhibit put up or permit upon any part of the
exterior of the building on the Demised Premises and the open
areas thereof without the previous consent in writing of the
Landlord and the Superior Lessor (such consents not to be
unreasonably withheld or delayed) any bill notice sign or
advertisement other than such as relate solely to the Tenant its
undertenant or other occupier's business for the time being
carried on at the Demised Premises PROVIDED and it is hereby
declared that if any bill notice sign or advertisement displayed
in or upon any part of the exterior of the building on the
Demised Premises or in or upon any part of the interior of the
building on the Demised Premises which is visible from outside
the building on the Demised Premises shall in the reasonable
opinion of the Landlord or the Superior Lessor be unsightly
undesirable or objectionable then the same shall be removed by
the Tenant within twenty-four hours after the receipt by the
Tenant of notice requiring the Tenant so to do
(20) ALIENATION ETC
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<PAGE> 39
(a) COMPLETE BAR ON CERTAIN DEALINGS
Not to assign underlet or part with possession or part with or share
occupation of the Demised Premises or any part thereof save as
hereinafter provided
(b) SHARING OCCUPATION
The Tenant may share occupation or possession of any part of the
Demised Premises with any member of the group of companies (as defined
in Section 42(1) of the Landlord and Tenant Act 1954) of which the
Tenant is itself a member on the condition that:-
(i) no relationship of landlord and tenant is created between the
Tenant and any such company
(ii) the possession or occupation shall forthwith be determined if
the Tenant and the relevant member shall cease for any reason
whatsoever to be members of the same group of companies
(iii) On written request from the Landlord or its agents the Tenant
shall supply in writing to the Landlord or its agents details
of the identity of any company as aforesaid let into occupation
(c) ASSIGNING THE WHOLE
Not to assign the whole of the Demised Premises
(i) without the Landlord's prior written consent such consent not
to be unreasonably withheld or delayed and
(ii) except to an assignee who shall first have
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<PAGE> 40
(a) entered into a direct covenant with the Landlord to
observe and perform the covenants and conditions on
the part of the Tenant contained in this lease
(b) if reasonably so required by the Landlord procured a
covenant with the Landlord by an acceptable guarantor or
guarantors in the terms (mutatis mutandis) set out in
the Third Schedule hereto or in such other form as the
Landlord may reasonably require
(d) UNDERLETTING THE WHOLE
Not to underlet the whole of the Demised Premises
(i) without the Landlord's prior written consent such consent not
to be unreasonably withheld
(ii) except to an underlessee who shall first have
(a) entered into a covenant with the Landlord to observe
and perform the covenants and conditions on the part
of the Tenant contained in this lease (other than the
covenant to pay rent) and
(b) if reasonably so required by the Landlord (in the case
of an underlease for a term of more than 3 years)
procured a covenant with the Landlord by an acceptable
guarantor or guarantors in the terms (mutatis mutandis)
set out in the Third Schedule hereto or in such other
form as the Landlord may reasonably require
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(iii) in consideration of any fine or premium
(iv) without reserving a yearly rent payable in advance on the usual quarter
days equal to the then open market yearly rental value of the Demised
Premises and where the underlease is for a term of more than 3 years
such rent shall be reviewable on the same dates and on the same terms as
the rent payable under this lease and
(v) except on similar covenants and conditions to those contained in this
lease and in particular:
(a) for the re-entry on breach of any covenant in the underlease
(b) that the underlease will contain similar terms as to the
carrying out of and the paying for repairs and proper service
charges
(vi) without taking from any underlessee unqualified covenants (which the
Tenant shall enforce):
(a) not to assign or underlet the whole of the Demised Premises
without prior written consent of the Landlord (under this
lease) such consent not to be unreasonably withheld or delayed
and
(b) not to deal in any other way whatsoever with the Demised
premises or any part thereof and
(c) to obtain from any assignee of the underlease a covenant with
the Landlord (under this lease) to observe and perform
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the covenants and conditions on the part of the Tenant
contained in this lease (other than the covenant to pay
rent) during the term granted by the underlease
(e) UNDERLETTING AN INDIVIDUAL UNIT
Not to underlet an Individual Unit
(i) without the Landlord's prior written consent such consent not to
be unreasonably withheld or delayed
(ii) without the Tenant erecting or procuring the erection of an
internal division wall between the Individual Unit and the
remaining Unit details of which having been supplied to the
Landlord in accordance with Clause 4(18)(g) hereof (and for the
avoidance of doubt the provisions of Clause 4(18)(g) hereof
shall apply hereto) and without the Tenant complying with all
statutory requirements insurers requirements and fire authority
requirements or recommendations in relation thereto
(iii) except to an underlessee who shall first have
(a) save in the case of an underletting of less than three
years entered into a covenant with the Landlord to
observe and perform the covenants and conditions on the
part of the Tenant contained in this lease (other than
the covenant to pay rent and insofar as they are
applicable to the underletting of an Individual Unit)
and
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(b) if reasonably so required by the Landlord (in the case of an
underlease for a term of more than three years) procured a
covenant with the Landlord by an acceptable guarantor or
guarantors in the terms (mutatis mutandis) set out in the Third
Schedule hereto or in such other form as the Landlord may
reasonably require
(iv) in consideration of any fine or premium
(v) without reserving a yearly rent payable in advance on the usual quarter
days equal to the then open market yearly rental value of the Individual
Unit and where the underlease is for a term of more than three years
such rent shall be reviewable on the same dates and on the same terms as
set out in Clause 3 hereof
(vi) (a) except by way of an underlease providing for the re-entry on
breach of any covenant in the underlease
(b) save in the case of an underletting of less than three years
except on similar covenants and conditions to those in this
lease (insofar as they are applicable to the underletting of an
Individual Unit) and in particular that the underlease will
contain similar terms as to the carrying out or paying for
repairs and proper services charges
(vii) without taking from any underlessee unqualified covenants (which the
Tenant shall enforce):
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(a) not to assign the underlet Individual Unit without the
prior written consent of the Landlord (under this lease)
such consent not to be unreasonably withheld or delayed
and
(b) not to deal in any other way whatsoever with the
Demised Premises or any part thereof
(c) save in the case of an underletting of less than three
years to obtain from any assignee of the underlet
Individual Unit a covenant with the Landlord (under this
lease) to observe and perform the covenants and
conditions on the part of the Tenant contained in this
lease (other than the covenant to pay rent) during the
term granted by the underlease insofar as such covenants
and conditions relate to the underlet Individual Unit
(f) UNDERLEASES FOR LESS THAN 3 YEARS
Any underlease for a term of three years or less shall exclude the
provisions of section 24 to 28 (inclusive) of the Landlord and Tenant
Act 1954 by way of agreement authorised by the Court
(g) RENT REVIEWS UNDER UNDERLEASES
To procure that in any underletting the yearly rent is reviewed under
such under lease in accordance with the terms of the underlease but not
to agree any rent on review under any underlease without the prior
written consent of the Landlord such consent not to be unreasonably
withheld and (if the rent under the underlease is to be awarded by an
arbitrator in
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accordance with the provisions therein contained) to procure
that the Landlord's representations as to the yearly rent
payable thereunder are made to the arbitrator to the
reasonable satisfaction of the Landlord
(h) ENFORCEMENT OF COVENANTS
To enforce the performance and observance by every underlessee
of the provisions of the underlease (whether of the whole of the
Demised Premises or an Individual Unit) and not at any time
either expressly or by implication to waive any breach of the
covenants or conditions on the part of the under lessee or
assignee of any underlease nor without the consent of the
Landlord (such consent not to be unreasonably withheld) to vary
the terms
(i) AGREEMENT
It is hereby expressly agreed and declared that if the Landlord
(acting reasonably) shall not be satisfied that the yearly rent
to be reserved by a proposed underlease is in accordance with
sub-clauses (20(d)(iv) or (20)(e)(v) of this Clause 4 (as the
case may be) then the Landlord may refuse its consent to such
underletting and such refusal shall be deemed to be reasonable
(21) TO REGISTER ANY DISPOSITION
To give notice in writing of every assignment assent transfer under
lease change of name charge or devolution of or other instrument
relating to or affecting the Demised Premises and to produce a certified
copy of the same within twenty one days after the execution or grant
thereof to the solicitors of the Landlord and to pay their reasonable
registration fee
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(and that of the Superior Lessor) in respect of each such instrument
PROVIDED THAT registration of any such document shall not require the
Landlord to consider the terms thereof and shall not be evidence that it
has done so
(22) RE-LETTING
To permit the Landlord and the Superior Lessor or their agents at any
reasonable time in the daytime on prior notice to enter upon the Demised
Premises and to affix upon any appropriate or suitable part thereof a
notice board or boards for re-letting at any time six months prior to
the expiration or sooner determination of the Term or at any time for
selling and to permit all persons authorised by order in writing of the
Landlord or its agents to view the Demised Premises at reasonable hours
in the day time without interruption
(23) EASEMENTS
To take all necessary steps to prevent any encroachment upon the
Demised Premises or the acquisition of any new right to light passage
drainage or other easement over upon or under the Demised Premises and
to give notice in writing to the Landlord of any threatened encroachment
or attempt to acquire any such easement and throughout the Term to
preserve unobstructed and undefeated all rights of light and other
easements appertaining to the Demised Premises and not to permit or
suffer but give notice in writing to the Landlord of any act matter or
thing whereby a new easement or encroachment might come to be made into
against over or upon the Demised Premises or any part thereof and to do
all such things as the Landlord may reasonably require to prevent the
same
(24) LANDLORD'S COSTS
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To pay to the Landlord on an indemnity basis all reasonable and proper
Solicitors' (as between a Solicitor and own client) counsels' surveyors'
and other professional costs expenses and fees incurred by the Landlord
(a) In or in contemplation of any proceedings relating to the
Demised Premises whether or not under Sections 146 or 147 of the
Law of Property Act 1925 or the preparation and service of a
notice thereunder (whether or not any right of re-entry or
forfeiture has been waived by the Landlord or a notice served on
the Tenant has been complied with or the Tenant has enjoyed
relief under the provisions of the said Act or forfeiture is
avoided otherwise than by relief granted by the Court) and to
keep the Landlord fully and effectively indemnified against all
costs expenses claims and demands whatsoever in respect of such
proceedings
(b) In the preparation and service of a schedule of dilapidations
at any time during or after the Term and in the inspection of
the works which are the subject of such schedule whether during
or after the carrying out thereof
(c) In connection with the recovery of any arrears of the rents
hereby reserved
(d) In respect of any application for consent required by this
lease whether or not such consent is granted
(25) TO YIELD UP
At the expiration or sooner determination of the Term quietly to yield
up the Demised premises and any additions thereto so repaired painted
cleansed maintained amended kept renewed and replaced as aforesaid
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(26) THE SUPERIOR LEASE ETC
At all times during the Term to observe and perform the obligations on
the part of the Landlord contained in the Superior Lease (except the
obligation to pay the premium and the obligations in clause 2(4)(i)(ii)
and (iii)) insofar as the same relate to or affect the Demised Premises
and to keep the Landlord fully and effectually indemnified against all
actions proceedings damages costs expenses claims and demands whatsoever
in respect of any breach thereof
(27) VALUE ADDED TAX
Whenever in this lease provision is made for the Tenant to pay any sum
(including but without prejudice to the generality of the foregoing rent
legal costs registration fees surveyors and other professional fees
charges and expenses) on which Value Added Tax is payable or may at the
election of the Landlord be payable (and provided that the Landlord does
so elect) then the Tenant shall pay in addition to such sum Value Added
Tax thereon at the rate appropriate at the time of supply Provided That
where the Value Added Tax supply is to the Tenant the Landlord shall
provide the Tenant with a VAT invoice addressed to and in favour of the
Tenant and where the VAT supply is to the Landlord the Tenant shall pay
to the Landlord only that part of the Value Added Tax which the Landlord
is not entitled to recover
(28) PIPES AND DRAINS
Not to obstruct or permit the obstruction of any pipes including the
drains serving the Demised Premises by oil grease hair or other
deleterious matter but to keep all pipes and drains in or serving the
Demised Premises thoroughly cleaned as often as may be necessary
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5. THE Landlord hereby covenants with the Tenant that:-
(1) QUIET ENJOYMENT
The Tenant paying the rents hereby reserved and performing and
observing the several covenants conditions and agreements herein
contained and on the Tenant's part to be performed and observed
may peaceably and quietly hold and enjoy the Demised Premises
during the Term without any lawful interruption by the Landlord
or any person rightfully claiming under or in trust for the
Landlord
(2) THE SUPERIOR LEASE ETC
To observe and perform the covenants on the part of the
Landlord contained in the Superior Lease but only so far as the
Superior Lessor shall require the same to be observed and
performed and except as they are by this lease expressly assumed
by the Tenant
(3) TO INSURE
To insure or cause to be insured the Demised Premises and all
Landlord's fixtures and fittings therein or thereon of an
insurable nature (other than those which the Tenant or other
tenants may be entitled to remove) including all the glass
herein (save for plate and other glass insured by the Tenant
pursuant to clause 4(7)(i)) against (i) loss or damage by the
Insured Risks in such sum (including any incidental expenses) as
shall be determined from time to time by the Landlord to
represent the reinstatement cost thereof as new together with
all professional and other fees and expenses and the cost of
site clearance and other incidental expenses (ii) public
liability of the Landlord involving or relating to the Demised
Premises or any part thereof and (iii) the loss of four years
rent in some insurance office of repute
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and to supply a summary of such insurance and evidence of payment of the
current premium to the Tenant on request once yearly and in the case of
destruction or damage to the Demised Premises by any Insured Risk to
immediately notify the insurer on receiving notification from the Tenant
of the damage or destruction and to claim all sums due under the
insurance policy and use all reasonable endeavours to procure the
payment by the insurer of all sums properly due under the insurance
policy and apply for and use all reasonable endeavours to obtain all
planning permissions building regulations consents and other consents or
licences necessary to enable the Landlord to reinstate the Demised
Premises and (unless payment of any money payable under any policy of
insurance shall be wholly or partly withheld or refused either in
consequence of any exclusion or qualification imposed by insurers or of
any act neglect or default of the Tenant its undertenants or their
respective servants agents or licensees) to ensure that all insurance
moneys (other than for loss of rent and public liability) received by
the Landlord are with all convenient speed (subject to the necessary
labour and materials being procurable and to all necessary statutory
consents being obtained) laid out and applied in rebuilding repairing or
otherwise reinstating the Demised Premises and to make up any deficiency
out of its own monies
(4) INSURANCE PROCEEDS
Subject to the provisions for reinstatement contained in sub-clause (3)
of this Clause 5 the building Insurance proceeds shall belong to the
Landlord for its own use and benefit absolutely
(5) NOTIFICATION
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The Landlord will notify its insurers of the Tenant's interest
in the Demised Premises and have it noted on the policy or
policies of insurance
6. PROVIDED ALWAYS and it is hereby agreed and declared as follows:-
(1) FORFEITURE AND RE-ENTRY
That this lease is made upon the express condition that if (a)
any of the rents hereby reserved shall be unpaid for twenty one
days after the due dates whether the same shall have been
lawfully demanded or not or (b) any Tenant's covenant shall not
have been observed or performed or (c) if the Tenant being an
individual or firm shall become bankrupt or be the subject of an
interim order under Part VIII of the Insolvency Act 1986 or
being a Company shall go into either compulsory or voluntary
liquidation (except for the purpose of reconstruction or
amalgamation) or shall have an administration order made in
respect of it under the Insolvency Act 1986 or if an
administrative receiver or a receiver shall be appointed or (d)
the Tenant shall enter into composition or arrangement with
creditors or shall suffer any distress or execution to be levied
on the goods of the Tenant then and in any of the said cases and
at any time thenceforth it shall be lawful for the Landlord or
its authorised agent to re-enter into or upon the Demised
Premises and to repossess and enjoy the same as if this lease
had not been made but without prejudice to any right of action
or remedy of either party in respect of any antecedent breach of
any of the covenants by the other herein contained
(2) RENT CESSER
If during the Term the Demised Premises or any part thereof
shall be destroyed or damaged by any Insured Risk so as to be
unfit for occupation or use and the policy of insurance
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effected by the Landlord shall not have been vitiated or payment of the
policy moneys wholly or partly withheld or refused by reason of any act
neglect or default of the Tenant its undertenants or their respective
servants agents or licensees the First Reserved Rent or a fair
proportion thereof according to the nature and extent of the damage
sustained shall be suspended until the Demised Premises shall again be
fit for occupation and use or until the expiration of four years from
the date of the damage or destruction whichever shall be the earlier and
any dispute shall be referred to the award of a single arbitrator to be
appointed in default of agreement upon the application of either party
by the President for the time being of the Royal Institution of
Chartered Surveyors in accordance with the provisions of the Arbitration
Acts 1950 and 1979 or any statutory modification thereof for the time
being in force
(3) DETERMINATION BY EITHER PARTY
If within four years from the date of such damage or destruction as
aforesaid of the Demised Premises reinstatement or rebuilding of the
Demised Premises has not been practically completed then after the
expiration of the said four year period but only before such practical
completion as aforesaid either party may give written notice to the
other terminating this lease three months from the date of such notice
whereupon this lease shall absolutely determine and the rights and
obligations of the parties shall cease but without prejudice to any
right or claim arising hereunder and still subsisting at the date of
determination
(4) DETERMINATION BY TENANT
(a) At any time before 25th November 2002 the Tenant may serve a
notice to terminate the Term on 25th December 2003 and if it
does so and if the Tenant delivers to the
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Landlord vacant possession of the Demised Premises by 12 noon on
25th December 2003 the Term will end at 12 noon on 25th December
2003 (rent being paid for all that day) but the termination will
not affect any claim by either party in respect of antecedent
breaches of the provisions of this lease
(b) The provisions of clause 6(4)(a) hereof shall be null and void
if the Tenant (with the consent of the Landlord under this
lease) grants an underlease of the whole of the Demised Premises
or an Individual Unit at any time before 25th December 2003
which does not comply with the provisions of sub-paragraph (d)
hereof save if the Landlord at its discretion releases the
provisions of this clause 6(4)(b) in the Licence to Underlet
(c) Notwithstanding the provisions of clauses 4.20(d) and (e) of
this lease the Tenant shall not underlet the whole of the
Demised Premises or an Individual Unit after a notice to
terminate has been served by the Tenant pursuant to clause
6(4)(a) hereof
(d) The provisions of sub-paragraphs (b) and (c) above shall not
apply in circumstances where an underlease contains an agreement
authorised by the Court excluding the provisions of Sections
24-28 (inclusive) of the Landlord and Tenant Act 1954 and is for
a term which expires on or before 12 noon on 25th December 2003
(5) NOTICES
The provisions of section 196 of the Law of Property Act 1925 as amended
by the Recorded Delivery Service Act 1962 shall apply to all notices
required to be served under this lease
(6) MORTGAGEES AND SUPERIOR LESSOR
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In this lease the powers rights matters and discretions reserved to or
exercisable by the Landlord including powers to enter inspect repair
maintain or alter the Demised Premises or any part of the Landlord's
adjoining premises shall also be reserved to or exercisable by its
Mortgagees and by the Superior Lessor and their respective servants
agents or workmen
(7) SUPERIOR LESSOR'S CONSENT
In this lease where the consent of the Landlord is required to any
matter the Superior Lessor's consent shall also be obtained by the
Tenant if appropriate
(8) DISPUTES
Any dispute arising as between the Tenant and the lessee or occupier of
any adjacent or neighbouring premises belonging to the Landlord as to
any easement right or privilege enjoyed or used in common shall be
decided by the Landlord or the Landlord's Surveyor whose decision (save
in the case of manifest error) shall be binding upon all parties to the
dispute
(9) RIGHTS OF ENTRY
Notwithstanding anything contained in this Lease all rights of entry
into the Demised Premises (whether by the Landlord its employees or
agents or other owners tenants or occupiers of the Landlord's adjoining
or neighbouring property) shall only be exercised in the company of an
escort provided by the Tenant and the Tenant undertakes to provide such
escort when required
(10) RELEASE OF TENANT
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(a) Subject to compliance with the provisions of clause 4(20)(c)
then upon and with effect from completion of a lawful assignment
of the whole of the Demised Premises by the person at that time
being the Tenant ("the Assignor") to another ("the Assignee")
where either the Assignor is a Qualifying Person or the Assignee
is a Qualifying Person the Assignor shall cease to have any
liability for any future breach or non observance or non
performance of the covenants on the part of the Tenant contained
in this Lease and any surety of the Assignor shall cease to have
any liability for any future breach or non observance or non
performance of the covenants on the part of the Tenant contained
in this Lease pursuant to any covenants given in any guarantee
or agreement between such surety and the Landlord PROVIDED
ALWAYS
(i) that the Assignor and any surety of the Assignor shall
nevertheless remain liable in respect of any subsisting
breach of the said covenants occurring prior to the date
of the lawful assignment; and
(ii) that the Assignor and any surety of the Assignor shall
enter into a Deed of Guarantee whereby the Assignor and
any surety of the Assignor covenants with the Landlord
as surety (in the form reasonably acceptable to it)
incorporating a standard of obligations similar to those
set out in Third Schedule hereto but adapted to suit the
circumstances in which the guarantee is given for the
period during which the Assignee remains liable as
tenant under the terms of this Lease.
(b) If the Assignor and any surety of the Assignor are not released
from their respective liabilities by the
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operation of this clause 6(10) because neither the Assignor or the
Assignee is a Qualifying Person then the Assignor and any surety of the
Assignor shall in any event cease to have any liability for any future
breach or non observance or non performance of the covenants on the part
of the Tenant contained in this Lease with effect from the date of the
first lawful assignment thereafter by a person at that time being the
Tenant to another where either of those persons is a Qualifying Person.
(11) INTERPRETATION
(a) Whenever the Demised Premises are vested in more than one
person for the Term every covenant on the part of the Tenant
herein contained shall be deemed to be made jointly and
severally by those persons
(b) Words importing the masculine gender shall include the feminine
gender and words in the singular shall include the plural
(c) The clause headings hereto shall not affect in any way the
construction of this lease
(12) DELIVERY
The provisions of this lease (other than those contained in this
clause) shall have no effect until this lease has been dated
(13) AGREEMENT FOR LEASE
It is hereby certified that there is an agreement for lease to which
this lease gives effect
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7. SURETY COVENANTS
The Surety hereby covenants with the Landlord as follows:-
(1) That the Tenant will throughout the Term and also during such period as
the Tenant remains in occupation of the Demised Premises pay the rents
hereby reserved on the days and in manner aforesaid and shall duly
perform and observe all the covenants hereinbefore on the Tenant's part
contained and that in the event of the Tenant failing to do so the
Surety will indemnify and keep indemnified the Landlord from and
against all actions claims demands costs losses and expenses which may
be brought or made against or sustained or incurred by the Landlord
howsoever arising directly or indirectly out of or in connection with
such failure PROVIDED ALWAYS and it is hereby agreed that any neglect
or forbearance of the Landlord in endeavouring to obtain payment of the
several rents when the same become payable or to enforce performance or
observance of the Tenant's covenants and any time which may be given by
the Landlord to the Tenant shall not release or exonerate or in any
way affect the liability of the Surety under this covenant
(2) That if for any reason the term hereby granted shall be prematurely
determined by forfeiture or if the same shall be disclaimed in
circumstances releasing the Tenant from liability the Surety will (if
so required by the Landlord within 60 days of the date of such
forfeiture or disclaimer) accept from the Landlord a grant of a new
lease of the Demised Premises from the date of such determination or
disclaimer for the residue of the Term then unexpired at the same
several rents hereinbefore reserved and subject to the like covenants
and provisos as are herein contained and at the expense of the Surety
and on the execution of such further lease the Surety shall execute and
deliver to the Landlord a counterpart thereof or (as the case may be)
the Surety shall accept the vesting in it of this lease
(3) That if the Landlord shall not require the Surety to take a lease of
the Demised Premises pursuant to Clause 7(2) above the Surety shall
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nevertheless upon demand pay to the Landlord a sum equal to the rent and
to all other payments that would have been payable under this lease but
for the disclaimer in respect of the period from the date of the said
disclaimer until the expiration of six months therefrom or until the
Demised Premises shall have been relet by the Landlord whichever shall
first occur
(4) The Surety represents and warrants to the Landlord that the Surety has
full power authority and legal right to enter into the covenants
contained in this Clause 7
(5) The rights and obligations of the parties hereto shall be governed and
construed in accordance with English law
(6) The Surety hereby irrevocably:-
(a) agrees that the Courts of England and Wales shall have
jurisdiction to hear and determine any suit action or
proceeding arising out of or relating to this lease (including
this Clause 7) and
(b) waives to the fullest extent permitted by law any objection
which the Surety may now or hereafter have to the jurisdiction
of the Courts of England and Wales to hear and determine any
suit action or proceeding arising out of or relating to this
lease (including this Clause 7) or any claim that any such
Court is not a convenient or appropriate forum
(7) The submission to the jurisdiction of the Courts referred to in Clause
7(6) shall not (and shall not be construed as to) limit the right of
the Landlord to take proceedings against the Surety in any other Court
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of competent jurisdiction nor shall the taking of proceedings in any one
or more jurisdictions preclude the taking of proceedings in any other
jurisdiction whether concurrently or not
IN WITNESS whereof the parties have executed this lease as a Deed the day and
year first before written
THE FIRST SCHEDULE above referred to
PART 1
TENANTS RIGHTS
1. A right during the Term to uninterrupted passage and running of water
soil drainage gas electricity and telephone lines and other services (in
common with the Landlord and the Superior Lessor and all other persons
having the like right) through the sewers pipes drains cables wires or
other conducting media in the Landlord and the Superior Lessor's
property adjoining or neighbouring the Demised Premises all such rights
to cease and determine as and when and to the extent from time to time
that the said services shall become adopted and maintainable at public
expense and the right to enter upon the said adjoining or neighbouring
property of the Landlord and the Superior Lessor to make any necessary
connections thereto or to cleanse repair renew the same the person
exercising such right causing as little inconvenience as possible and
making good any damage thereby caused to the property so entered
2. With the Landlord's prior written consent (not to be unreasonably
withheld or delayed) and upon reasonable prior written notice given to
the Landlord and all other persons affected thereby the right of access
into and upon the adjacent premises of the Landlord as may be requisite
to enable the Tenant to comply with the Tenant's obligations herein
contained subject to causing as little inconvenience as possible and
making good any damage caused
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3. The right during the Term to exhibit the Tenant's name and business
details in such manner as the Landlord shall reasonably decide on the
name board sign erected by the Landlord at the junction of Home Farm
Road with Lewes Road pursuant to the provisions of the Superior Lease
4. The right at reasonable times and on reasonable notice (except in
emergency) to the Landlord and the tenant or occupier of Unit 2 to enter
Unit 2 for the purposes of repairing and maintaining the Soakaways
subject to making good any damage to Unit 2 caused by such entry
PART 2
LANDLORDS RIGHTS
1. Unto the Landlord and the Superior Lessor and all persons now or
hereafter entitled thereto the right of free and uninterrupted passage
and running of water soil drainage gas electricity telephone lines and
other services from and to any adjoining or neighbouring property by or
through the sewers pipes drains cables wires conduits and ducts and
other conducting media which are or may hereafter during the Term be in
under or upon the Demised Premises and the right to use the Soakaways
for the purposes of drainage of rainwater and surface water from Unit 1
but all such rights hereinbefore reserved shall cease and determine as
and when and to the extent from time to time that the said services
shall become adopted and maintainable at public expense
2. Unto the Landlord and the Superior Lessor and their respective tenants
the right at any time and from time to time hereafter to build upon and
use any of their adjoining or neighbouring land and rebuild or alter any
of the buildings now or hereafter to be erected thereon according to
such plans (whether as to height extent or otherwise) and in such manner
as they deem fit notwithstanding any interference thereby occasioned to
the access of light and air to the Demised Premises or any buildings now
or hereafter to be erected on the site thereof
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3. Unto the Landlord and the Superior Lessor all of the air over a level
of two metres above the ridge level of the building now constructed on
the Demised Premises as shown on the drawing numbered 2 annexed hereto
such level to extend horizontally over the building and elsewhere over
the site thereof and over a level of one metre above the level of the
fence now erected along the rear boundary of the Demised Premises
4. Unto the Landlord with or without workmen and others the right to enter
upon the Demised Premises for the purpose of carrying out the works
referred to in paragraph 5 of Part 1 of the Second Schedule hereto
5. Unto the Landlord and (in addition in the case of the right reserved
in paragraph (iii) below the Landlord's tenant or tenants of Unit 2 or
other the owner or occupier of Unit 2) all persons authorised by the
Landlord the right at reasonable times and on reasonable notice (except
in emergency) to enter the Demised Premises for the purposes of (i)
inspecting the condition and state of repair thereof (ii) carrying out
any works (whether of repair or otherwise) for which the Tenant is
liable and which the Tenant has failed to carry out pursuant to Clause
4(4) and (8) hereof (iii) carrying out any works (whether of repair or
otherwise) to any property adjoining the Demised Premises or to any
party structure sewer drain or other thing used by the Tenant in common
with others (including without prejudice to the generality of the
foregoing the Soakaways) subject to making good any damage to the
Demised Premises caused by such entry
THE SECOND SCHEDULE above referred to
PART 1
SERVICE COSTS
1. The repair maintenance and replacement from time to time of any drains
pipes cables and wires or other conducting media under any property
adjoining or neighbouring the Demised Premises until such time and to
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<PAGE> 62
the extent that the drains pipes cables and wires or other conducting
media shall become adopted and maintainable at public expense
2. Discharging all rates taxes assessments duties and impositions payable
in respect of the common parts of the adjoining or neighbouring property
of the Landlord the use of which is shared by the Tenant with others
3. Constructing repairing rebuilding and cleansing all party walls and
fences and also sewers drains pipes wires and other things the use of
which is common to the Demised Premises and any other premises and the
said name board referred to in paragraph 3 of Part 1 of the First
Schedule hereto
Maintaining and repairing the Grassed and Planted Areas save for any
part of that area which is demised to a tenant
5. Maintaining and keeping the landscaped areas within the Demised
Premises well and properly cultivated and trimmed and cut and free from
weeds and in a tidy condition and to ensure that the said landscaped
areas are fully planted out with appropriate plants and shrubs
6. Providing such other services or carrying out any other work which the
Landlord shall from time to time reasonably consider necessary for the
benefit of the Demised Premises and any other premises on the Landlord's
adjoining or neighbouring property
7. Management of the Demised Premises and the adjoining or neighbouring
property of the Landlord by the Landlord's surveyor the reasonable and
proper management fee of the Landlord's Surveyor not to exceed 12-1/2%
of the total cost incurred by the Landlord for the provision of the
services referred to in this Part 1 of the Second Schedule hereto
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<PAGE> 63
PART 2
SERVICE CHARGE
1. The Service Charge to be paid by the Tenant shall be such fair
proportion (which may if appropriate be the whole amount) of the actual
or anticipated Service Costs for each Service Charge Year which shall be
assessed by the Landlord's Surveyor according to a reasonable and proper
basis for apportionment applicable from time to time to the Demised
Premises and the rights hereby granted
2. The Landlord may make and send to the Tenant notice in writing of the
Landlord's estimate of the anticipated Service Costs and the Service
Charge applicable to the Demised Premises for each Service Charge Year
and the Tenant shall pay such estimate of the Service Charge by equal
quarterly instalments in advance on the usual quarter days
3. The Landlord will (unless prevented by causes beyond its control)
prepare and send to the Tenant a detailed statement of the actual
Service Costs and Service Charge for each Service Charge Year as soon as
practicable after the end of such year and in the event of the Service
Charge for the Demised Premises exceeding the aggregate amount paid by
the Tenant for such year the Tenant will pay the balance due to the
Landlord forthwith and in the event of the aggregate amount being
greater the excess will be credited by the Landlord by way of set-off
against the next instalment of Service Charge due from the Tenant
THE THIRD SCHEDULE above referred to
1. That the Tenant will throughout the Term and also during such period as
the Tenant remains in occupation of the Demised Premises pay the rents
hereby reserved on the days and in manner aforesaid and shall duly
perform and observe all the covenants hereinbefore on the Tenant's part
contained and that in the event of the Tenant failing to
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<PAGE> 64
do so the Surety will indemnify and keep indemnified the Landlord from
and against all actions claims demands costs losses and expenses which
may be brought or made against or sustained or incurred by the Landlord
howsoever arising directly or indirectly out of or in connection with
such failure PROVIDED ALWAYS and it is hereby agreed that any neglect or
forbearance of the Landlord in endeavouring to obtain payment of the
several rents when the same become payable or to enforce performance or
observance of the Tenant's covenants and any time which may be given by
the Landlord to the Tenant shall not release or exonerate or in any way
affect the liability of the Surety under this covenant
2. That if for any reason the term hereby granted shall be prematurely
determined by forfeiture or if the same shall be disclaimed in
circumstances releasing the Tenant from liability the Surety will (if so
required by the Landlord) accept from the Landlord a grant of a new
lease of the Demised Premises from the date of such determination or
disclaimer for the residue of the Term then unexpired at the same
several rents hereinbefore reserved and subject to the like covenants
and provisos as are herein contained and at the expense of the Surety
and on the execution of such further lease the Surety shall execute and
deliver to the Landlord a counterpart thereof or (as the case may be)
the Surety shall accept the vesting in it of this lease
3. That if the Landlord shall not require the Surety to take a lease of
the Demised Premises pursuant to paragraph 2 above the Surety shall
nevertheless upon demand pay to the Landlord a sum equal to the rent and
to all other payments that would have been payable under this lease but
for the disclaimer in respect of the period from the date of the said
disclaimer until the expiration of six months therefrom or until the
Demised Premises shall have been relet by the Landlord whichever shall
first occur
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<PAGE> 1
EXHIBIT 10.21
Dated 1st December 1995
G J KING & SON (HOME FARM) LIMITED
- to -
ECC SIMULATION LIMITED
- and -
ECC INTERNATIONAL CORP.
- --------------------------------------------------------------------------------
LEASE
- relating to -
Unit 2 Home Farm Business Centre Home Farm Road
Brighton East Sussex
- --------------------------------------------------------------------------------
[SPEECHLY BIRCHAM LOGO]
<PAGE> 2
THIS LEASE is made the 1st December 1995
(1) G J KING & SON (HOME FARM) LIMITED whose registered office is situate
at G J King Business Centre Reeds Lane Sayers Common West Sussex BN6
9LS (hereinafter called "the Landlord")
(2) ECC SIMULATION LIMITED (company registration number 1913659) whose
registered office is situate at Kingston Wharf Brighton Road Shoreham
by Sea West Sussex BN43 6RN (hereinafter called "the Tenant")
(3) ECC INTERNATIONAL CORP a company incorporated in the State of Delaware
and whose principal place of business is at 175 Strafford Avenue Wayne
PA 19087-3377 U S A (hereinafter called "the Surety")
WITNESSETH as follows:-
1. IN this lease where the context so admits the following expressions
shall have the following meanings respectively that is to say:-
"the Landlord"
means the Landlord hereinbefore named or such other person for the time
being entitled to the reversion immediately expectant upon the
determination of the Term
"the Tenant"
means the Tenant hereinbefore named or such other person in whom the
Term shall for the time being be vested and wherever it includes more
than one person the covenants on the part of the Tenant hereinafter
contained shall be deemed to be joint and several
"the Surety"
means the Surety hereinbefore named or any person who shall have
covenanted with the Landlord pursuant to Clause 4(20)
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<PAGE> 3
"the Plan"
means the plan numbered 1 annexed hereto
"the Grassed and Planted Areas"
means the grassed and planted areas which adjoin Home Farm Road Brighton East
Sussex
"the Demised Premises"
means the land with the building erected thereon or on some part thereof known
as Unit 2 Home Farm Business Centre Home Farm Road Brighton East Sussex and the
curtilage thereof as the same is shown edged red on the Plan and shall include
any other building from time to time erected thereon or on some part thereof
"Unit 1"
means the property adjoining the Demised Premises known as Unit 1 Home Farm
Business Centre Lewes Road Brighton aforesaid
"the Main Structure"
means the roof foundations floor structures load bearing walls or frame
stanchions beams window frames external walls external drains pipes and other
external services of the Demised Premises
"the Soakaways"
means the soakaways situated on the Demised Premises and drainage pipes leading
thereto from Unit 1
"Insured Risks"
means (subject to such exclusions and limitations as are imposed by the
Insurers and to the extent that insurance cover against any particular risk is
ordinarily available with a reputable insurer for property such as the Demised
Premises) subsidence landslip heave fire explosion storm tempest lightning
aircraft (not being hostile aircraft) and articles dropped therefrom riot civil
commotion and flood and such other insurable risks against which the Landlord
shall reasonably deem it desirable or expedient to insure
-2-
<PAGE> 4
[Schematic of property]
<PAGE> 5
"Term"
means 21 years commencing on 24th June 1995
"The Rent Commencement Date"
means 24th June 1996
"the Initial Market Rent"
means the sum of TWO HUNDRED AND EIGHTY FIVE THOUSAND POUNDS
(Pounds Sterling 285,000) per annum exclusive of Value Added Tax
"the First Reserved Rent"
means the yearly rent reserved by Clause 2(A)
hereof
"the Secondly Reserved Rents"
means
(1) a sum representing the cost reasonably and properly incurred or a fair
proportion thereof (subject to the provisions of Clause 4(7)(h)
hereof) of complying with the Landlord's insuring covenant hereinafter
contained
(2) all other sums payable by the Tenant under the covenants on the part
of the Tenant contained in this lease
(3) any interest chargeable under the provisions of this lease
(4) any additional insurance premiums payable by the Tenant arising under
the provisions of Clause 4(7) of this lease
(5) all expenses costs fees and other sums incurred under the provisions
Clause 4(24) hereof
"the Review Dates"
means 24th June 2001 24th June 2006 and 24th June 2011
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<PAGE> 6
"the Review Period"
means the period starting with any Review Date up to and including the day
immediately preceding the next Review Date or starting with the last Review
Date up to the end of the Term
"the Landlord's Surveyor"
means any person or firm of surveyors appointed by or acting for the
Landlord including an employee of the Landlord to perform the function of a
Surveyor for any purposes under this lease
"the Service Charge"
means the sums payable by the Tenant in accordance with Part 2 of the Third
Schedule hereto
"the Service Charge Year"
means the period of twelve months up to the 31st March each year or such
other period as the Landlord shall from time to time choose
"the Service Costs"
means all costs expenses and outgoings whatsoever incurred by the Landlord
in carrying out the works and providing the services set out in Part 1 of
the Third Schedule hereto
"the Superior Lease"
means the lease of the Demised Premises and other land date 5th May 1991
and made between the Brighton Borough Council of the one part and the
Landlord of the other part
"the Superior Landlord"
means Brighton Borough Council or such other person entitled to the benefit
of the reversion expectant upon the determination of the Head Lease
"the Electricity Sub-Station Lease"
means the electricity sub-station lease dated 20th June 1991 and made
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<PAGE> 7
between the Superior Landlord of the one part and Seeboard PLC of the other
part
"the Interest Rate"
means the rate of four per centum per annum above the base rate from time
to time of The Royal Bank of Scotland PLC
"the Planning Acts"
means the Town and Country Planning Act 1990 the Planning (Consequential
Provisions) Act 1990 the Planning (Hazardous Substances) Act 1990 and the
Planning (Listed Building and Conservation Areas) Act 1990 or any statutory
consolidation modification or re-enactment of all or any of the above Acts
"the Units"
means all the units lettered "A" "B" "C" and "D" on the Plan together with
the forecourt parking and landscaped areas therewith
"an Individual Unit"
means any one of the Units
"Qualifying Person"
means a company or corporation registered in the United Kingdom which has
annual profits (which term shall have a meaning which is consistent with
the term "profits for the financial year" where used in the Fourth Schedule
to the Companies Act 1985) in the United Kingdom as shown in such company's
or corporation's properly audited financial statements for the last three
12 month accounting periods immediately preceding the proposed assignment
of this lease to such company or corporation (the last of such accounting
periods expiring not more than 12 months prior to the date of such
assignment) which are not less than the sum of the annual rents payable
pursuant to Clauses 2(A) and 2(B) of this lease for the year immediately
prior to the date of such assignment multiplied by a factor of 2.5
-5-
<PAGE> 8
2. IN consideration of the rents and tenants covenants hereinafter reserved
and contained the Landlord HEREBY DEMISES unto the Tenant the Demised
Premises TOGETHER WITH the easements and rights specified in Part 1 of
the First Schedule hereto EXCEPT AND RESERVED unto the Landlord and
others the easements and rights specified in Part 2 of the First Schedule
hereto TO HOLD the same unto the Tenant for the Term SUBJECT TO and where
appropriate with the benefit of the provisions of the Electricity
Sub-Station Lease in so far as the same affect or benefit the Demised
Premises YIELDING AND PAYING to the Landlord without deduction during the
Term and proportionately for any fraction of a year the rents set out
hereunder
(A) The FIRST RESERVED RENT as hereinbefore defined being
(1) from the date hereof until the Rent Commencement Date a
peppercorn (if demanded): and
(2) from and including the Rent Commencement Date until and including
the 24th December 2003 the Initial Market Rent: and
(3) from and including the 25th December 2003 until and including the
23rd June 2006 the yearly rent agreed or determined at 24th June
2001 in accordance with Clause 3 hereof or THREE HUNDRED AND
SIXTY EIGHT THOUSAND POUNDS (Pounds Sterling 368,000) per annum
exclusive of Value Added Tax whichever shall be the greater; and
(4) during each successive Review Period commencing with the Review
Period that commences on the second Review Date (that is 24th
June 2006) a rent equal to the yearly rent previously payable
hereunder or such increased rent as shall be ascertained in
accordance with Clause 3 hereof whichever shall be the greater
-6-
<PAGE> 9
ALL such rents to be paid by equal quarterly instalments in advance
on the usual quarter days in every year the first payment of the
Initial Market Rent (apportioned in respect of the period from
and including the Rent Commencement Date up to and including the day
immediately preceding the next following quarter day) to be payable
on the Rent Commencement Date
(B) The SECONDLY RESERVED RENTS are hereinbefore defined
Such rents to be payable from and including the date hereof or (if
earlier) the date of occupation (as determined by the Landlord or the
Landlord's Surveyor) and to be paid to the Landlord within fourteen
days of demand (except as otherwise provided)
3. RENT REVIEW
(1) The increased rent for any Review Period shall be (having regard to
current open market values) the best yearly rent at which the whole of
the Demised Premises might reasonably be expected to be let at the
relevant Review Date
(a) On the following assumptions at the relevant Review Date:-
(i) that the Demised Premises are fit for immediate occupation
and use and that no work has been carried out thereon by
the Tenant its undertenants or their respective
predecessors in title during the Term which has diminished
the rental value of the Demised Premises and that in case
the Demised Premises have been destroyed or damaged they
have been fully restored
(ii) that the Demised Premises are available to let in the open
market by a willing landlord to a willing tenant as a whole
without a premium but
-7-
<PAGE> 10
with vacant possession and subject to the provisions of
this lease (other than the amount of the rent hereby
reserved but including the provisions for rent review)
for a term of fifteen years from the relevant Review
Date or the residue then unexpired of the term of this
lease (whichever shall be the longer)
(iii) that the covenants herein contained on the part of the
Tenant and the Landlord have been fully performed and
observed
(b) But disregarding:-
(i) any effect on rent of the fact that the Tenant its
undertenants or their respective predecessors in title have
been in occupation of the Demised Premises and
(ii) any goodwill attached to the Demised Premises by reason of
the carrying on thereat of the business of the Tenant its
undertenants or their respective predecessors in title in
their respective businesses and
(iii) any increase in rental value of the Demised Premises
attributable to the existence at the relevant Review Date
of any improvement to the Demised Premises or any part
thereof carried out with consent where required by and at
the expense of the Tenant its undertenants or their
respective predecessors in title during the Term otherwise
than in pursuance of an obligation to the Landlord or its
predecessors in title and
-8-
<PAGE> 11
(iv) any effect on rental value of any obligation of the Tenant
to remove alterations or to restore or reinstate the
Demised Premises and
(v) any rent free period or reduced rent period allowed to the
Tenant under the terms of this lease and
(vi) the provisions of Clause 6 (4) (b) (c) and (d) hereof
(2) The increased rent for any Review Period may be agreed at any time
between the Landlord and the Tenant or (in the absence of agreement)
determined not earlier that the relevant Review Date by an arbitrator
such arbitrator to be nominated in the absence of agreement by or on
behalf of the President for the time being of the Royal Institution of
Chartered Surveyors on the application of the Landlord or the Tenant
made not earlier than six months before the relevant Review Date
(3) IT IS HEREBY FURTHER PROVIDED in relation to the ascertainment and
payment of the reviewed rent as follows:-
(a) The arbitrator shall be a Chartered Surveyor having not less than
ten years experience in letting and valuation of similar property
and of similar sized properties to the Demised Premises
throughout England
(b) The arbitration shall be conducted in accordance with the
Arbitration Acts 1950 and 1979 and any statutory modification or
re-enactment thereof for the time being in force with the further
provision that if the arbitrator nominated pursuant to Clause 3
shall die or decline to act the President for the time being of
the Royal Institution of Chartered Surveyors or the person
acting on his behalf may on the application of either the
Landlord or the Tenant by writing discharge the arbitrator and
appoint another in his place
-9-
<PAGE> 12
(c) When the increased rent has been ascertained as hereinbefore
provided the Landlord and the Tenant shall record it forthwith by
each signing and exchanging a separate written memorandum and the
Landlord and the Tenant shall bear their own costs in respect
thereof
(d) (i) if the increased rent payable on and from any Review Date
has not been agreed by that Review Date rent shall continue
to be payable at the rate previously payable and forthwith
upon the increased rent being ascertained the Tenant shall
pay to the Landlord any shortfall between the rent actually
paid and the increased rent payable from the relevant Review
Date (or in the case of the first review payable from 25th
December 2003) up to the quarter day immediately following
the date that the increased rent is ascertained together
with interest on each instalment thereof from the date upon
which the same would have been payable if the increased rent
had been ascertained on the relevant Review Date (or in the
case of the first review had been ascertained on 25th
December 2003) to the date of actual payment thereof at the
rate of two per cent below the Interest Rate and the
interest so payable shall be recoverable in the same manner
as rent in arrear
(ii) for the purposes of this proviso the increased rent shall be
deemed to have been ascertained on the date when the same
has been agreed between the Landlord and the Tenant or as
the case may be the date of the award of the arbitrator
(e) Time shall not be of the essence of this Rent Review clause
(f) If either the Landlord or the Tenant shall fail to pay any costs
awarded against it in an arbitration under the provisions hereof
within fourteen days of the same being
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<PAGE> 13
demanded by the arbitrator the other shall be entitled to pay the
same and the amounts so paid shall be repaid by the party
chargeable on demand
(4) Without prejudice to the provisions of this Clause if on any Review
Date there shall be in force any enactment which shall relate to the
control of rents and/or which shall restrict the Landlord's right to
review the rent or recover any increased rent under this lease then
the Landlord shall be entitled upon the termination or relaxation of
such restriction to serve notice (hereinafter called "Interim Notice")
upon the Tenant and from and after the date of the termination or
relaxation of such restriction until the next Review Date for until
the end of the Term) as the case may be the rent shall be increased to
whichever is the higher of the rent agreed or determined in accordance
with the provisions hereinbefore contained but at the date of service
of the Interim Notice (or such lesser sum as may be permitted) or the
rent payable immediately prior thereto and the provisions of this
Clause shall apply accordingly with the substitution of the date of
the termination or relaxation of such restriction for the relevant
Review Date
4. THE Tenant hereby covenants with the Landlord as follows:-
(1) TO PAY RENT AND INTEREST
(a) To pay the rents hereby reserved unto the Landlord throughout the
Term and during a statutory continuation thereof at all times and
in manner aforesaid without any deduction whatsoever except as
authorised by any statutory enactment for the time being in force
(b) If any of the rents hereby reserved shall be due but unpaid for
14 days to pay interest thereon (if demanded by the Landlord)
calculated on a daily basis with three monthly rests from the due
date until receipt by the Landlord at the Interest Rate (the
Interest Rate shall apply before as well
-11-
<PAGE> 14
as after and notwithstanding any judgement of the Court) Provided
that this Clause 4(1)(c) shall not prejudice any other right or
remedy in respect of such reserved rents
(c) If following the occurrence of any of the events referred to in
Clause 6(1) hereof acceptance of any of the rents hereby reserved
shall be reasonably refused by the Landlord but shall
subsequently be accepted without prejudice to any other right or
remedy of the Landlord to pay interest thereon (if demanded by
the Landlord) calculated on a daily basis with three monthly
rests from the due date until acceptance and receipt by the
Landlord at the Interest Rate (the Interest Rate shall apply
before as well as after and notwithstanding any judgement of the
Court) Provided that this Clause 4(1)(d) shall not prejudice any
other right or remedy in respect of such reserved rents
(2) TO PAY SERVICE CHARGE AND INSURANCE
(a) To pay the Service Charge in the manner set out in Part 2 of the
Third Schedule hereto
(b) To pay on demand therefor the sum representing the cost (subject
to the provisions of clause 4(7)(h) hereof) of complying with the
Landlord's insuring covenant hereinafter contained
(3) TO PAY RATES AND TAXES
To pay and discharge all existing and future rates taxes charges
duties assessments and outgoings whatsoever whether parliamentary
local or otherwise now or hereafter imposed or charged upon the
Demised Premises or any part thereof or upon the owner or any occupier
thereof or payable by either in respect thereof (excluding any payable
by the Landlord in respect of receipt of rent or any other payment
made by the Tenant under this lease (except any VAT payable on
rent or
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<PAGE> 15
any other payment made by the Tenant under this lease) or on any
disposition or dealing with or the ownership of the reversion of this
lease) but including all charges in respect of water gas electricity
and telecommunications used or consumed at the Demised Premises
PROVIDED ALWAYS that the Tenant shall not agree or by default allow to
be fixed the rateable value of the Demised Premises or any part
thereof without the prior written consent of the Landlord such consent
not to be unreasonably withheld
(4) TO REPAIR
Well and substantially to repair cleanse maintain amend and keep in
good and substantial repair the Demised Premises (including the Main
Structure and all fixtures fittings plant machinery and apparatus
belonging thereto) and all additions made thereto and the walls fences
drains appurtenances and decorations thereof and to renew and replace
the same from time to time insofar as the same may be or become beyond
repair at any time during or at the expiration of the Term (howsoever
determined) damage in all such cases from any of the Insured Risks
excepted so long as the policy of insurance effected by the Landlord
shall not have been vitiated or payment of any policy moneys refused
in whole or in part by reason of any act neglect or default of the
Tenant its undertenants or their respective servants agents or
licensees
(5) TO PAINT AND DECORATE
In every third year of the Term and also during the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner the
outside wood iron and other parts heretofore or usually painted of the
buildings on the Demised Premises and all additions thereto with two
coats of good quality paint suitable for external use and for the
surface and material to which it is to be applied such painting in the
last year of the Term (howsoever determined) to be in colours
previously approved in writing by the Landlord and in every fifth year
of the Term and also in the last year thereof (howsoever determined)
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<PAGE> 16
to paint in a proper and workmanlike manner all the inside wood iron
and other parts heretofore or usually painted of the buildings on the
Demised Premises and all additions thereto with two coats of good
quality paint suitable for the surface and material to which it is to
be applied such painting in the last year of the Term (howsoever
determined) to be in colours previously approved in writing by the
Landlord and on the occasion of every such external painting to
varnish or colour the external parts usually or previously so dealt
with and on the occasion of every internal painting to varnish wash
stop whiten and colour all such parts as have previously been or are
usually so dealt with and to repaper with suitable paper of good
quality (in the last year of the Term (howsoever determined) in
colours previously approved in writing by the Landlord the parts
previously or usually papered
(6) TO CLEAN WINDOWS ETC
To clean internally and externally the windows of the Demised Premises
as often as occasion shall require and at least once in every month
and at least once a week to remove all refuse rubbish and scrap which
may have accumulated on the Demised Premises
(7) INSURANCE
(a) Subject to the Landlord having supplied to the Tenant in writing
full particulars of any policy of insurance effected on the
Demised Premises and any modification or variation thereof not to
do or omit or allow to be done or omitted any act matter or thing
whatsoever whereby any policy of insurance effected on the
Demised Premises or anything therein or on any adjoining or
neighbouring premises of the Landlord may become void or voidable
or the premiums payable for such insurance increased
(b) To the extent that any insurance premium payable in respect of
any adjoining or neighbouring premises is increased by any
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<PAGE> 17
use act neglect omission or default of the Tenant its
undertenants or their respective servants agents or licensees in
relation to the Demised Premises to pay the Landlord on demand
the amount of such increase
(c) In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks to give
immediate notice thereof in writing to the Landlord
(d) In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks and the
insurance money under any insurance effected against the same
being wholly or partly irrecoverable (by reason of any act
neglect omission or default of the Tenant its undertenants or
their respective servants agents or licensees) then and in every
such case the Tenant will pay to the Landlord forthwith the whole
or (as the case may require) a fair proportion of the cost of
completely rebuilding and reinstating the same
(e) Subject to the Landlord having supplied in writing to the Tenant
full particulars thereof to comply with the requirements and
recommendations of the Landlord's insurers
(f) Not to store on the Demised Premises any inflammable or any
explosive combustible or deleterious substance save that the
Tenant may store at the Demised Premises such reasonable
quantities of inflammable substances in proper and safe
containers as are normally used for its business SUBJECT TO the
Tenant obtaining the Landlord's insurers prior written approval
thereto and the Tenant paying any increase in insurance premium
arising therefrom and on the reasonable request of the Landlord
supplying to the Landlord details of the type and amounts of the
substances stored on the Demised Premises
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<PAGE> 18
(g) To repay to the Landlord on demand the proper costs and expenses
incurred in obtaining valuations of the Demised Premises for
insurance purposes from time to time but so that such valuations
shall not be carried out more frequently than once every three
years
(h) The Landlord may retain for its own benefit any commissions or
discount received or obtained by the Landlord on or based on the
gross premiums and other expenses which would otherwise by paid
incurred or suffered by the Landlord in effecting or maintaining
such insurance
(i) To insure the keep insured in the joint names of the Landlord and
the Tenant and such other names as the Landlord may reasonably
require all the plate glass or any substitute or alternative
material used in windows (if any) and doors in the Demised
Premises against breakage or damage howsoever caused with an
insurance company of repute to the full reinstatement value
thereof the public liability relevant to such breakage and pay
all premiums necessary for that purpose and whenever required
produce to the Landlord or its agent the policy of insurance and
the receipt for the current year's premium and whenever a claim
arises to use the insurance money forthwith in reinstating the
same with a like material to the reasonable satisfaction of the
Landlord's Surveyor making up any deficiency out of the Tenant's
own moneys
(j) To pay to the Landlord on demand the amount of any excess which
may be applicable in the event of any claim in respect of any of
the Insured Risks
(8) TO EXECUTE WORKS
To execute all works on or in respect of the Demised Premises now or
from time to time throughout the Term lawfully required to be
executed
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<PAGE> 19
by any local or public authority (including works required under the
Health & Safety at Work ect. Act 1974 the Offices Shops and Railway
Premises Act 1963 or any Act amending or replacing the same for the
time being in force whether the said works shall be required to be
executed by the Landlord or by the Tenant and in all respects and at
the Tenant's own expense to comply with and cause to be complied with
the provisions of all statutes byelaws and regulations for the time
being in force and the requirements of any competent authority
affecting or relating to the Demised Premises or the use thereof and
at all times to indemnify and to keep indemnified the Landlord and the
Superior Landlord against all claims demands expenses and liability in
respect thereof
(9) NOTICES RECEIVED
Within seven days of receipt of the same to give full particulars to
the Landlord of any notice direction or order or proposal for a notice
direction or order made given or issued to the Tenant by any
government department or local or public authority and if so required
by the Landlord to produce and supply copies of the same to the
Landlord AND without delay to take all necessary steps to comply with
the same AND ALSO at the request of the Landlord to make or join with
the Landlord in making such objections or representations relating to
the same as the Landlord shall deem expedient but with due regard
being had to the Tenant's interest in the Demised Premises
(10) TO PERMIT ENTRY TO VIEW
To permit the Landlord and the Superior landlord and their respective
surveyors or other agents during the Term at reasonable hours in the
daytime on prior appointment to enter the Demised Premises to view the
state of repair and condition of the same and to take inventories of
the fixtures therein
(11) TO PERMIT ENTRY TO REPAIR
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To permit the Landlord and the Superior Landlord or their respective
agents or the Landlord's Surveyor with or without workmen at any time
during the Term at reasonable hours in the daytime on prior
appointment except in the case of emergency to enter upon the Demised
Premises for the purpose of executing repairs or alterations to or in
connection with any adjoining premises of the Landlord and the
Superior Landlord the Landlord or the Superior Landlord making good
all damage thereby occasioned to the Demised Premises
(12) TO REPAIR ON NOTICE
To repair and make good to the satisfaction of the Landlord and the
Superior Landlord all breaches of covenant defects and wants of
reparation for which the Tenant may be liable under the covenants
herein contained of which notice shall have been given by the landlord
to the Tenant within two calendar months after the giving of such
notice or sooner if requisite
(13) TO COMPLY WITH STATUTORY REQUIREMENTS
(a) At all times to observe and comply with the provisions of or
imposed under any statute licence or regulation regulating or
permitting the use of the Demised Premises for the purpose for
which they are for the time being used and the requirements of
any competent authority in that connection and at the expense of
the Tenant to do all that is necessary to obtain maintain and
renew all licences and registrations required by law for the use
of the Demised Premises for that purpose
(b) At the sole cost of the Tenant to comply with the Planning Acts
for the time being in force and with all byelaws orders and
regulations licences consents permissions and conditions made
thereunder affecting the Demised Premises or any use thereof and
to indemnify and keep harmless and indemnified the Landlord
against any breach or non-performance of any
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such requirements and against all costs expenses penalties and
levies thereby arising
(14) PLANNING
In relation to the Planning Acts:-
(a) Not without the prior written consent of the Landlord such
consent not to be unreasonably withheld or delayed to apply for
permission to carry out on the Demised Premises any development
requiring permission under the Planning Acts
(b) Not to implement any planning permission relating to the Demised
Premises without the prior written consent of the Landlord such
consent not to be unreasonably withheld or delayed but without
prejudice to the generality of the foregoing such consent shall
be given if in the opinion of the Landlord or the Landlord's
Surveyor (whose decision shall be final) the value of the
Landlord's reversionary interest is not affected thereby
(c) Whenever required to permit the Landlord to enter upon the
Demised Premises to comply with any requirement lawfully made of
it under the Planning Acts by any competent authority
notwithstanding that any action reasonably necessary for
compliance interferes with the Tenant's enjoyment of the Demised
Premises
(d) To pay and satisfy any charge which may hereafter be imposed
under the Planning Acts in respect of the carrying out of any
operations or the institution or continuance of the use of the
Demised Premises
(e) Unless the Landlord shall otherwise direct in writing to carry
out and complete before the expiration or sooner determination of
the Term any works stipulated to be carried
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out to the Demised Premises (notwithstanding that such works are
to be carried out by a later date) as a condition of planning
permission for any development begun before such expiration or
sooner determination
(f) If the Tenant shall receive any compensation relating to the
Tenant's interest hereunder due to any restriction placed upon
the user of the Demised Premises as a result of the Planning Acts
then if and when the Tenant's interest hereunder shall be
determined by assignment or under the power of re-entry herein
contained the Tenant shall forthwith make such provision as is
just and equitable for the Landlord to receive its due benefit
from such compensation
(15) PERMITTED USE
Not to use or permit or suffer to be used the Demised Premises or any
part thereof otherwise than solely and exclusively as and for use
within Classes B1(b) or (c) or B2 of the Town and Country Planning
(Use Classes) Order 1987 as originally enacted and uses ancillary
thereto
(16) PROHIBITED USES
Not to use the Demised Premises or any part thereof nor allow the same
to be used as the premises of any public or local authority to which
the public have access or for any public meeting exhibition or
entertainment or for any illegal or immoral purpose or for the
purposes of a club whether or not one where intoxicating liquor is
supplied to members or their guests nor permit or suffer any sale by
auction to be held on the Demised Premises or any part thereof or to
sell serve or supply or permit or suffer to be sold served or supplied
any intoxicating liquor thereon or therefrom (save that intoxicating
liquor may be served to staff in any staff restaurant which is
ancillary to the use permitted by Clause 4(15) hereof or play or use
or allow to be played or used any sound-producing instrument or
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apparatus on the Demised Premises or any part thereof so as to be
audible outside the Demised Premises nor permit the Demised Premises
to be used as a sleeping place for any person and not to use the
Demised Premises or any part thereof or permit or suffer the same to
be used for the purpose of any betting transactions or for gaming with
or between persons resorting to the Demised Premises and not to make
or permit or suffer to be made any application for a Betting Office
Licence or a Licence or registration under the Gaming Acts 1963 to
1968 in respect of any part of the Demised Premises
(17) NUISANCE
Not to do or commit or permit or suffer to be done or committed upon
the Demised Premises or any part thereof any act or thing which shall
be a nuisance annoyance or disturbance to the Landlord or the Superior
Landlord or to the owners lessees or occupiers for the time being of
any adjoining or neighbouring property or to the neighbourhood
(18) ALTERATIONS
(a) Not at any time during the Term to make any alteration or
addition to the sprinkler system (if any) or to make any
alterations to the Demised Premises which affect the operation of
the sprinkler system (if any) without first obtaining the consent
in writing of the Landlord such consent not to unreasonably
withheld or delayed
(b) Not at any time during the Term to make any alteration or
addition to the electrical installation of the Demised Premises
save in accordance with the terms and conditions laid down by the
Institution of Electrical Engineers and the Regulations of the
Electrical Supply Authority
(c) Not at any time during the Term to erect set up or maintain or
suffer to be erected set up or maintained on the Demised
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Premises or any part thereof any building shed or similar
structure whether of a permanent or temporary character
(d) Not at any time during the Term to make any change to the
external design or appearance of the building constructed on the
Demised Premises
(e) Not to cut maim alter or injure or suffer to be cut maimed
altered or injured the Main Structure nor make any external or
internal alterations in the plan or elevation of the building on
the Demised Premises or in any party or other wall nor alter or
change any of the materials or architectural decorations of the
said building nor make or maintain or suffer to be made or
maintained any addition thereto either in height or projection
save that if any such alternations as aforesaid are necessary
because of a permitted underletting of an Individual Unit then
the provisions of Clause 4(18)(g) hereof shall apply thereto
mutatis mutandis
(f) Not at any time during the Term to overload the floors or
ceilings or the Main Structure in any way which imposes a weight
or strain in excess of that which the building on the Demised
Premises is constructed to bear with due margin for safety or
which will in any way strain or interfere with the Main Structure
(g) Not to make any nonstructural erection addition or alteration
whatsoever to the Demised Premises (including to walls timbers
wires pipes drains appurtenances fixtures or fittings thereof)
without the previous consent in writing of the Landlord (which
consent shall not be unreasonably withheld or delayed) such
consents to be without prejudice nevertheless to the provisions
of this Clause 4(18) and Clauses 4(13)(14) and (26) nor except
in accordance with plans and specifications (with such additional
copies thereof as the Landlord may reasonably required previously
submitted to and
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approved in writing by the Landlord nor carried out except to the
satisfaction of its surveyor
(h) Nothing herein contained in this Clause 4(18) shall prevent the
Tenant from installing or removing internal nonstructural
demountable partitioning in the Demised Premises without the
Landlord's consent provided such works do not adversely affect
the services in the Demised Premises and the Tenant shall supply
the Landlord with plans detailing the internal layout of the
Demised Premises then current on demand by the Landlord
(i) Any alterations or additions carried out to the Demised Premises
shall at the end or sooner determination of the Term be
reinstated by the Tenant if requested in writing by the Landlord
so to do
(19) SIGNS
(a) Not without the previous written consent of the Landlord and the
Superior Landlord (such consents not to be unreasonably withheld)
to carry out or permit the painting or writing of any notice or
advertisement whatsoever whether permanent or temporary on the
glass of the windows or doors of the building on the Demised
Premises or (except with the previous written consent of the
Landlord and the Superior Landlord) the affixing or display of
any bill notice doorplate sign or advertisement which projects
over any street or land over which the public has access
(b) Without prejudice to the provisions of Clause 4(19)(a) not to
exhibit put up or permit upon any part of the exterior of the
building on the Demised Premises and the open areas thereof
without the previous consent in writing of the Landlord and the
Superior Landlord (such consents not to be unreasonably withheld
or delayed) any bill notice sign or advertisement
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other than such as relate solely to the Tenant its undertenants
or other occupier's business for the time being carried on at the
Demised Premises PROVIDED and it is hereby declared that if any
bill notice sign or advertisement displayed in or upon any part
of the exterior of the building on the Demised Premises or in or
upon any part of the interior of the building on the Demised
Premises which is visible from outside the building on the
Demised Premises shall in the reasonable opinion of the Landlord
or the Superior Landlord be unsightly undesirable or
objectionable then the same shall be removed by the Tenant within
twenty-four hours after the receipt by the Tenant of notice
requiring the Tenant so to do
(20) ALIENATION ETC
(a) COMPLETE BAR ON CERTAIN DEALINGS
Not to assign underlet or part with possession or part with or
share occupation of the Demised Premises or any part thereof save
as hereinafter provided
(b) SHARING OCCUPATION
The Tenant may share occupation or possession of any part of the
Demised Premises with any member of the group of companies (as
defined in Section 42(1) of the Landlord and Tenant Act 1954) of
which the Tenant is itself a member on the condition that:-
(i) no relationship of landlord and tenant is created between
the Tenant and any such company
(ii) the possession or occupation shall forthwith be determined
if the Tenant and the relevant member
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shall cease for any reason whatsoever to be members of the
same group of companies
(iii) On written request from the Landlord or its agents the
Tenant shall supply in writing to the Landlord or its
agents details of the identity of any company as aforesaid
let into occupation
(c) ASSIGNING THE WHOLE
(i) Not to assign the whole of the Demised Premises:-
(a) without the Landlord's prior written consent such
consent not to be unreasonably withheld or delayed
(b) except to an assignee who shall first have
(aa) entered into a direct covenant with the Landlord
to observe and perform the covenants and
conditions on the part of the Tenant contained in
this lease
(bb) if reasonably so required by the Landlord
procured a covenant with the Landlord by an
acceptable guarantor or guarantors in the terms
(mutatis mutandis) set out in the Second Schedule
hereto or in such other form as the Landlord may
reasonably require
(ii) Subject to compliance with the provisions of clause
4(20)(c)(i) then upon and with effect from completion of a
lawful assignment of the whole of the Demised Premises by
the person at that time being the Tenant ("the Assignor") to
another ("the Assignee") where either the
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Assignor is a Qualifying Person or the Assignee is a
Qualifying Person the Assignor shall cease to have any
liability for any future breach or non-observance or
non-performance of the covenants on the part of the Tenant
contained in this lease and any Surety of the Assignor shall
cease to have any liability for any future breach or
non-observance or non-performance of the covenants on the
part of the Tenant contained in this lease pursuant to any
covenants given in any guarantee or agreement between such
Surety and the Landlord PROVIDED ALWAYS
(a) that the Assignor and any Surety of the Assignor shall
nevertheless remain liable in respect of any subsisting
breach of the said covenants occurring prior to the
date of the lawful assignment; and
(b) that the Assignor and any Surety of the Assignor shall
enter into a Deed of Guarantee whereby the Assignor and
any Surety of the Assignor covenants with the Landlord
as surety (in a form reasonably acceptable to it)
incorporating a standard of obligations similar to
those set out in the Second Schedule hereto but adapted
to suit the circumstances in which the guarantee is
given for the period during which the Assignee remains
liable as Tenant under the terms of this lease
(iii) If the Assignor and any Surety of the Assignor are not
released from their respective liabilities by the operation
of Clause 4(20)(c)(ii) because neither the Assignor or the
Assignee is a Qualifying Person, then the Assignor and any
Surety of the Assignor shall
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in any event cease to have any liability for any future
breach or non-observance or non-performance of the covenants
on the part of the Tenant contained in this lease with
effect from the date of the first lawful assignment
thereafter by a person at that time being the Tenant to
another where either of those persons is a Qualifying Person
(d) UNDERLETTING THE WHOLE
Not to underlet the whole of the Demised Premises:-
(i) without the Landlord's prior written consent such consent
not to be unreasonably withheld or delayed
(ii) except to an underlessee who shall first have
(a) entered into a covenant with the Landlord to observe
and perform the covenants and conditions on the part
of the Tenant contained in this lease (other than the
covenant to pay rent) and
(b) if reasonably so required by the Landlord procured a
covenant with the Landlord by an acceptable guarantor
or guarantors in the terms (mutatis mutandis) set out
in the Second Schedule hereto or in such other form as
the Landlord may reasonably require
(iii) in consideration of any fine or premium
(iv) without reserving a yearly rent payable in advance on the
usual quarter days equal to the greater of
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(a) the then open market yearly rental value of the Demised
Premises and
(b) the higher of the First Reserved Rent and the Initial
Market Rent
reviewable on the same dates and on the same terms (as set
out in Clause 3 hereof) as the First Reserved Rent
(v) except on similar covenants and conditions to those
contained in this lease and in particular:-
(a) for the re-entry on breach of any covenant in the
underlease
(b) that the underlease will contain similar terms as to
the carrying out of and the paying for repairs and
proper service charges
(vi) without taking from any underlessee unqualified covenants
(which the Tenant shall enforce):-
(a) not to assign or underlet the whole of the Demised
Premises without the prior written consent of the
Landlord (under this lease) such consent not to be
unreasonably withheld or delayed and
(b) not to deal in any other way whatsoever with the
Demised Premises or any part thereof and
(c) to obtain from any assignee of the underlease a
covenant with the Landlord
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(under this lease) to observe and perform the covenants
and conditions on the part of the Tenant contained in
this lease (other than the covenant to pay rent) during
the term granted by the underlease
(e) UNDERLETTING AN INDIVIDUAL UNIT
Not to underlet an Individual Unit
(a) without the Landlord's prior written consent such consent
not to be unreasonably withheld or delayed
(b) without the Tenant erecting or procuring the erection of an
internal division wall or walls (as the case may be) between
the Individual Unit and the remaining Units details of which
having been supplied to the Landlord in accordance with
Clause 4(18)(g) hereof (and for the avoidance of doubt the
provisions of Clause 4(18)(g) hereof shall apply hereto) and
without the Tenant complying with all statutory requirements
insurers requirements and fire authority requirements or
recommendations in relation thereto
(c) except to an underlessee who shall first have
(aa) entered into a covenant with the Landlord to observe
and perform the covenants and conditions on the part of
the Tenant contained in this lease (other than the
covenant to pay rent and insofar as they are applicable
to the underletting of an Individual Unit) and
(bb) if reasonably so required by the Landlord procured a
covenant with the Landlord by an acceptable guarantor
or guarantors in the terms
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(mutatis mutandis) set out in the Second Schedule
hereto or in such other form as the Landlord may
reasonably require
(d) in consideration of any fine or premium
(e) without reserving a yearly rent payable in advance on the
usual quarter days equal to the then open market yearly
rental value of the Individual Unit reviewable on the same
dates and on the same terms as set out in Clause 3 hereof
(f) except on similar covenants and conditions to those in this
lease (in so far as they are applicable to the underletting
of an Individual Unit) and in particular:-
(aa) for the re-entry on breach of any covenant in the
underlease
(bb) that the underlease will contain similar terms as to
the carrying out or paying for repairs and proper
services charges
(g) without taking from any underlessee unqualified covenants
(which the Tenant shall enforce):-
(aa) not to assign the underlet Individual Unit without the
prior written consent of the Landlord (under this
lease) such consent not to be unreasonably withheld or
delayed and
(bb) not to deal in any other way whatsoever with the
Demised Premises or any part thereof
(cc) to obtain from any assignee of the underlet Individual
Unit a covenant with the Landlord
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(under this lease) to observe and perform the covenants
and conditions on the part of the Tenant contained in
this lease (other than the covenant to pay rent) during
the term granted by the underlease insofar as such
covenants and conditions relate to the underlet
Individual Unit
(f) RENT REVIEW UNDER UNDERLEASES
To procure that in any underletting the yearly rent is reviewed
under such underlease in accordance with the terms of the
underlease but not to agree any rent on review under any
underlease without the prior written consent of the Landlord such
consent not to be unreasonably withheld and (if the rent under
the underlease is to be awarded by an arbitrator in accordance
with the provisions therein contained) to procure that the
Landlord's representations as to the yearly rent payable
thereunder are made to the arbitrator to the reasonable
satisfaction of the Landlord
(g) ENFORCEMENT OF COVENANTS
To enforce the performance and observance by every underlessee of
the provisions of the underlease (whether of the whole of the
Demised Premises or an Individual Unit) and not at any time
either expressly or by implication to waive any breach of the
covenants or conditions on the part of the underlessee or
assignee of any underlease nor without the consent of the
Landlord (such consent not to be unreasonably withheld) to vary
the terms
(h) AGREEMENT
It is hereby expressly agreed and declared that if the Landlord
(acting reasonably) shall not be satisfied that the yearly rent
to be reserved by a proposed underlease is in accordance with
Clause 4(20)(d)(iv) or 4(20)(i)(e) (as the case may be) then the
Landlord
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may refuse its consent to such underletting and such refusal
shall be deemed to be reasonable
(21) TO REGISTER ANY DISPOSITION
To give notice in writing of every assignment assent transfer
underlease change of name charge or devolution of or other instrument
relating to or affecting the Demised Premises and to produce a
certified copy of the same within twenty one days after the execution
or grant thereof to the solicitors of the Landlord and to pay their
reasonable registration fee (and that of the Superior Landlord) in
respect of each such instrument PROVIDED THAT registration of any such
document shall not require the Landlord to consider the terms thereof
and shall not be evidence that it has done so
(22) RE-LETTING
To permit the Landlord and the Superior Landlord or their agents at
any reasonable time to enter upon the Demised Premises and to affix
upon any appropriate or suitable part thereof a notice board or boards
for re-letting at any time six months prior to the expiration or
sooner determination of the Term or at any time for selling and to
permit all persons authorised by order in writing of the Landlord or
its agents to view the Demised Premises at reasonable hours in the
daytime without interruption
(23) EASEMENTS
To take all necessary steps to prevent any encroachment upon the
Demised Premises or the acquisition of any new right to light passage
drainage or other easement over upon or under the Demised Premises and
to give notice in writing to the Landlord of any threatened
encroachment or attempt to acquire any such easement and throughout
the Term to preserve unobstructed and undefeated all rights of light
and other easements appertaining to the Demised Premises and not to
permit or suffer but give notice in writing to the Landlord of any
act
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matter or thing whereby a new easement or encroachment might come to
be made into against over or upon the Demised Premises or any part
thereof and to do all such things as the Landlord may reasonably
require to prevent the same
(24) LANDLORD'S COSTS
To pay to the Landlord on an indemnity basis all reasonable and proper
Solicitors' (as between a Solicitor and own client) Counsels'
Surveyors' and other professional costs expenses and fees incurred by
the Landlord
(a) In or in contemplation of any proceedings relating to the Demised
Premises whether or not under Sections 146 or 147 of the Law of
Property Act 1925 or the preparation and service of a notice
thereunder (whether or not any right of re-entry or forfeiture
has been waived by the Landlord or a notice served on the Tenant
has been complied with or the Tenant has enjoyed relief under the
provisions of the said Act or forfeiture is avoided otherwise
than by relief granted by the Court) and to keep the Landlord
fully and effectively indemnified against all costs expenses
claims and demands whatsoever in respect of such proceedings
(b) In the preparation and service of a schedule of dilapidations at
any time during or after the Term and in the inspection of the
works which are the subject of such schedule whether during or
after the carrying out thereof
(c) In connection with the recovery of any arrears of the rents
hereby reserved
(d) In respect of any application for consent or approval required by
this Lease whether or not such consent is granted or such
approval given
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(25) TO YIELD UP
At the expiration or sooner determination of the Term quietly to yield
up the Demised Premises and any additions thereto so repaired painted
cleansed maintained amended kept renewed and replaced as aforesaid
(26) THE SUPERIOR LEASE ETC
At all times during the Term to observe and perform the obligations on
the part of the Landlord contained in the Superior Lease (except the
obligation to pay the premium and the obligations referred to in
clause 2(4) thereof) and Clause 4(e) of the Electricity Sub-Station
Lease insofar as the same relate to or affect the Demised Premises and
to keep the Landlord fully and effectually indemnified against all
actions proceedings damages costs expenses claims and demands
whatsoever in respect of any breach thereof
(27) VALUE ADDED TAX
Whenever in this lease provision is made for the Tenant to pay any sum
(including but without prejudice to the generality of the foregoing
rent legal costs registration fees surveyors and other professional
fees charges and expenses) on which Value Added Tax is payable or may
at the election of the Landlord be payable (and provided that the
Landlord does so elect) then the Tenant shall pay in addition to such
sum Value Added Tax thereon at the rate appropriate at the time of
supply Provided That where the Value Added Tax supply is to the Tenant
the Landlord shall provide the Tenant with a VAT invoice addressed to
and in favour of the Tenant and where the VAT supply is to the
Landlord the Tenant shall pay to the Landlord only that part of the
Value Added Tax which the Landlord is not entitled to recover
(28) PIPES AND DRAINS
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<PAGE> 37
Not to observe or permit the obstruction of any pipes including the
drains serving the Demised Premises by oil grease hair or other
deleterious matter but to keep all pipes and drains in or serving the
Demised Premises thoroughly cleaned as often as may be necessary
5. THE Landlord hereby covenants with the Tenant as follows:-
(1) QUIET ENJOYMENT
The Tenant paying the rents hereby reserved and performing and
observing the several covenants conditions and agreements herein
contained and on the Tenant's part to be performed and observed may
peaceably and quietly hold and enjoy the Demised Premises during the
Term without any lawful interruption by the Landlord or any person
rightfully claiming under or in trust for the Landlord
(2) THE SUPERIOR LEASE ETC
To observe and perform the covenants on the part of the Landlord
contained in:-
(a) the Superior Lease but only in so far as the Superior Landlord
shall require the same to be observed and performed and except as
they are by this lease expressly assumed by the Tenant and
(b) Clauses 4(b) to (d) inclusive of the Electricity Sub-Station
Lease
(3) TO INSURE
To insure or cause to be insured the Demised Premises and all
Landlord's fixtures and fittings therein or thereon of an insurable
nature (other than those which the Tenant or other tenants may be
entitled to remove) excluding all the glass therein against (i) loss
or damage by the Insured Risks in such sum (including any incidental
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<PAGE> 38
expenses) as shall be determined from time to time by the Landlord to
represent the reinstatement cost thereof as new together with all
professional and other fees and expenses and the cost of site
clearance and other incidental expenses (ii) public liability of the
Landlord involving or relating to the Demised Premises or any part
thereof and (iii) the loss of four years rent in some insurance office
of repute and to supply a summary of such insurance and evidence of
payment of the current premium to the Tenant on request once yearly
and in the case of destruction or damage to the Demised Premises by
any Insured Risk to immediately notify the insurer on receiving
notification from the Tenant of the damage or destruction and to claim
all sums due under the insurance policy and use all reasonable
endeavours to procure the payment by the insurer of all sums properly
due under the insurance policy and apply for and use all reasonable
endeavours to obtain all planning permissions building regulations
consents and other consents or licences necessary to enable the
Landlord to reinstate the Demised Premises and (unless payment of any
money payable under any policy of insurance shall be wholly or partly
withheld or refused either in consequence of any exclusion or
qualification imposed by insurers or of any act neglect or default of
the Tenant its undertenants or their respective servants agents or
licensees) to ensure that all insurance moneys (other than for loss of
rent and public liability) received by the Landlord are with all
convenient speed (subject to the necessary labour and materials being
procurable and to all necessary statutory consents being obtained)
laid out and applied in rebuilding repairing or otherwise reinstating
the Demised Premises and to make up any deficiency out of its own
monies
(4) INSURANCE PROCEEDS
Subject to the provisions for reinstatement contained in Clause 5(3)
hereof the building insurance proceeds shall belong to Landlord for
its own use and benefit absolutely
(5) NOTIFICATION
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The Landlord will notify its insurers of the Tenant's interest in the
Demised Premises and have it noted on the policy or policies of
insurance
PROVIDED ALWAYS that where any person comprising the Landlord assigns its
interest in the reversion to the Demised Premises such person shall be
released from the covenants set out above in this Clause 5 with effect from
the date of such assignment
6. PROVIDED ALWAYS and it is hereby agreed and declared as follows:-
(1) FORFEITURE AND RE-ENTRY
That this lease is made upon the express condition that if (a) any of
the rents hereby reserved shall be unpaid for twenty one days after
the due dates whether the same shall have been lawfully demanded or
not or (b) any Tenant's covenant shall not have been observed or
performed or (c) if the Tenant being an individual or firm shall
become bankrupt or be the subject of an interim order under Part VIII
of the Insolvency Act 1986 or being a Company shall go into either
compulsory or voluntary liquidation (except for the purpose of
reconstruction or amalgamation) or shall have an administration order
made in respect of it under the Insolvency Act 1986 or if an
administrative receiver or a receiver shall be appointed or (d) the
Tenant shall enter into composition or arrangement with creditors or
shall suffer any distress or execution to be levied on the goods of
the Tenant then and in any of the said cases and at any time
thenceforth it shall be lawful for the Landlord or its authorised
agent to re-enter into or upon the Demised Premises and to repossess
and enjoy the same as if this lease had not been made but without
prejudice to any right of action or remedy of either party in respect
of any antecedent breach of any of the covenants by the other herein
contained
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<PAGE> 40
(2) RENT CESSER
If during the Term the Demised Premises or any part thereof shall be
destroyed or damaged by any Insured Risk so as to be unfit for
occupation or use and the policy of insurance effected by the Landlord
shall not have been vitiated or payment of the policy moneys wholly or
partly withheld or refused by reason of any act neglect or default of
the Tenant its undertenants or their respective servants agents or
licensees the First Reserved Rent or a fair proportion thereof
according to the nature and extent of the damage sustained shall be
suspended until the Demised Premises shall again be fit for occupation
and use or until the expiration of four years from the date of the
damage or destruction whichever shall be the earlier and any dispute
shall be referred to the award of a single arbitrator to be appointed
in default of agreement upon the application of either party by the
President for the time being of the Royal Institution of Chartered
Surveyors in accordance with the provisions of the Arbitration Acts
1950 and 1979 or any statutory modification thereof for the time being
in force
(3) DETERMINATION BY EITHER PARTY
If within four years from the date of such damage or destruction as
aforesaid of the Demised Premises reinstatement or rebuilding of the
Demised Premises has not been practically completed then after the
expiration of the said four year period but only before such practical
completion as aforesaid either party may give written notice to the
other terminating this lease three months from the date of such notice
and upon expiry of such notice this lease shall absolutely determine
and the rights and obligations of the parties shall cease but without
prejudice to any right or claim arising hereunder and still subsisting
at the date of determination
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<PAGE> 41
(4) DETERMINING BY TENANT
(a) At any time before 25th November 2002 ECC Simulation Limited may
serve a notice to terminate the Term on 24th December 2003 and if
it does so and if ECC Simulation Limited delivers to the Landlord
vacant possession of the Demised Premises by 12 noon on 24th
December 2003 the Term will end at 12 noon on 24th December 2003
(rent being paid for all that day) but the termination will not
affect any claim by either party in respect of antecedent
breaches of the provisions of this lease
(b) The provisions of Clause 6(4)(a) hereof shall be null and void if
ECC Simulation Limited (with the consent of the Landlord) grants
an underlease of the whole of the Demised Premises or an
Individual Unit at any time before 24th December 2003 which does
not comply with the provisions of Clause 6(4)(d) hereof save if
the Landlord at its discretion releases the provisions of this
Clause 6(4)(b) in the Licence to Underlet
(c) Notwithstanding the provisions of Clauses 4(20)(d) and (e) of
this lease ECC Simulation Limited shall not underlet the whole of
the Demised Premises nor an Individual Unit after a notice to
terminate has been served by the Tenant pursuant to Clause
6(4)(a) hereof
(d) The provisions of Clauses 6(4)(b) and (c) above shall not apply
in circumstances where an underlease of the whole of the Demised
Premises or an Individual Unit contains an agreement authorised
by the Court excluding the provisions of Sections 24-28
(inclusive) of the Landlord and Tenant Act 1954 and is for a term
which expires on or before 12 noon on 24th December 2003
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<PAGE> 42
(e) For the avoidance of doubt the benefit of the rights referred to
in Clause 6(4)(a) hereof are personal to ECC Simulation Limited
(5) NOTICES
The provisions of Section 196 of the Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 shall apply to all
notices required to be served under this lease
(6) MORTGAGEES AND SUPERIOR LANDLORD
In this lease the powers rights matters and discretions reserved to or
exercisable by the Landlord including powers to enter inspect repair
maintain or alter the Demised Premises or any part of the Landlord's
adjoining premises shall also be reserved to or exercisable by its
mortgagees and by the Superior Landlord and their respective
mortgagees servants agents or workmen
(7) SUPERIOR LANDLORD'S CONSENT
In this lease where the consent or approval of the Landlord is
required under this lease the giving of such consent or approval
(which shall not be unreasonably withheld) shall be conditional upon
the consent or approval of the Superior Landlord being obtained so far
as may be required and the Landlord shall at the request and cost of
the Tenant use all reasonable endeavours to obtain any such consents
or approvals whenever they may be so required
(8) DISPUTES
Any dispute arising as between the Tenant and the lessee or occupier
of any adjacent or neighbouring premises belonging to the Landlord as
to any easement right or privilege enjoyed or used in common shall be
decided by the Landlord or the Landlord's surveyor whose decision
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<PAGE> 43
(save in the case of manifest error) shall be binding upon all parties
to the dispute
(9) COMPENSATION ON VACATING
(a) Any statutory right of the Tenant to claim compensation from the
Landlord on vacating the Demised Premises shall be excluded as
far as law may allow
(b) The Tenant shall indemnify the Landlord against any compensation
payable by the Landlord pursuant to statute to any person
deriving title to the whole or any part of the Demised Premises
through or under the Tenant upon that person quitting where such
compensation would not have been payable by the Landlord if the
person quitting had been the lessee under a lease granted by the
Landlord containing a clause in the form of Clause 6(9)(a)
(10) RIGHTS OF ENTRY
Notwithstanding anything contained in this lease all rights of entry
into the Demised Premises referred to in Part 2 of the First Schedule
to this lease and Clauses 4(10) 4(11) 4(14)(c) and 4(22) of this lease
shall only be exercised in the company of an escort provided by ECC
Simulation Limited (except in the case of emergency) and ECC
Simulation Limited undertakes to provide such escort without delay as
and when required. The provisions of this Clause 6(10) shall only
apply while ECC Simulation Limited remains the tenant of the Demised
Premises
(11) INTERPRETATION
(a) Whenever the Demised Premises are vested in more than one person
for the Term every covenant on the part of the Tenant herein
contained shall be deemed to be made jointly and severally by
those persons
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<PAGE> 44
(b) Words importing the masculine gender shall include the feminine
gender and words in the singular shall include the plural
(c) The clause headings hereto shall not affect in any way the
construction of this lease
(12) DELIVERY
The provisions of this lease (other than those contained in this
clause) shall have no effect until this lease has been dated
(13) LAW AND JURISDICTION
(a) This lease and the rights and obligations of the parties hereto
shall be governed by and construed in accordance with English law
(b) Any suit action or proceeding arising out of or relating to this
lease and any action or proceedings to execute or otherwise
enforce any judgment obtained against the Tenant or the Surety
for breach of this lease may be instituted in the Courts of
England and Wales and by executing this lease the Tenant and the
Surety both unconditionally and irrevocably submit to such
jurisdiction
7. THE Surety hereby covenants with the Landlord as follows:-
(1) That the Tenant will throughout the Term and also during such period
as the Tenant remains in occupation of the Demised Premises pay the
rents hereby reserved on the days and in manner aforesaid and shall
duly perform and observe all the covenants hereinbefore on the
Tenant's part contained and that in the event of the Tenant failing to
do so the Surety will indemnify and keep indemnified the Landlord from
and against all actions claims demands costs losses and expenses
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<PAGE> 45
which may be brought or made against or sustained or incurred by
the Landlord howsoever arising directly or indirectly out of or
in connection with such failure PROVIDED ALWAYS and it is hereby
agreed that any neglect or forbearance of the Landlord in
endeavouring to obtain payment of the several rents when the same
become payable or to enforce performance or observance of the
Tenant's covenants and any time which may be given by the
Landlord to the Tenant shall not release or exonerate or in any
way affect the liability of the Surety under this covenant
(2) That if for any reason the term hereby granted shall be prematurely
determined by forfeiture or if the same shall be disclaimed in
circumstances releasing the Tenant from liability the Surety will (if
so required by the Landlord within 60 days of the date of such
forfeiture or disclaimer) accept from the Landlord a grant of a new
lease of the Demised Premises from the date of such determination or
disclaimer for the residue of the Term then unexpired at the same
several rents hereinbefore reserved and subject to the like covenants
and provisos as are herein contained and at the expense of the Surety
and on the execution of such further lease the Surety shall execute
and deliver to the Landlord a counterpart thereof or (as the case may
be) the Surety shall accept the vesting in it of this lease
(3) That if the Landlord shall not require the Surety to take a lease of
the Demised Premises pursuant to Clause 7(2) above the Surety shall
nevertheless upon demand pay to the Landlord a sum equal to the rent
and to all other payments that would have been payable under this
lease but for the disclaimer in respect of the period from the date of
the said disclaimer until the expiration of six months therefrom or
until the Demised Premises shall have been relet by the Landlord
whichever shall first occur
(4) The Surety represents and warrants to the Landlord that the Surety has
full power authority and legal right to enter into the covenants
contained in this Clause 7
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<PAGE> 46
(5) The rights and obligations of the parties hereto shall be governed and
construed in accordance with English law
(6) The Surety hereby irrevocably:-
(a) agrees that the Courts of England and Wales shall have
jurisdiction to hear and determine any suit action or proceeding
arising out of our relating to this lease (including this Clause
7) and
(b) waives to the fullest extent permitted by law any objection which
the Surety may now or hereafter have to the jurisdiction of the
Courts of England and Wales to hear and determine any suit action
or proceeding arising out of or relating to this lease (including
this Clause 7) or any claim that any such Court is not a
convenient or appropriate forum
(7) The submission to the jurisdiction of the Courts referred to in Clause
7(6) shall not (and shall not be construed as to) limit the right of
the Landlord to take proceedings against the Surety in any other Court
of competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction whether concurrently or not
8. AGREEMENT FOR LEASE
It is hereby certified that there is no agreement for lease to which this
lease gives effect
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<PAGE> 47
IN WITNESS whereof the parties have executed this lease as a Deed the day
and year first before written
THE FIRST SCHEDULE ABOVE REFERRED TO
PART 1
TENANT'S RIGHTS
1. A right during the Term to uninterrupted passage and running of water soil
drainage gas electricity and telephone lines and other services (in common
with the Landlord and the Superior Landlord and all other persons having
the like rights) through the sewers pipes drains cables wires or other
conducting media in the Landlord's and the Superior Landlord's property
adjoining or neighbouring the Demised Premises all such rights to cease and
determine as and when and to the extent from time to time that the said
services shall become adopted and maintainable at public expense and the
right to enter upon the said adjoining or neighbouring property of the
Landlord and the Superior Landlord to make any necessary connections
thereto or to cleanse repair and renew the same the person exercising such
rights causing as little inconvenience as possible and making good any
damage thereby caused to the property so entered
2. With the Landlord's prior written consent and upon reasonable prior written
notice given to the Landlord and all other persons affected thereby the
right of access into an upon the adjacent premises of the Landlord as may
be requisite to enable the Tenant to comply with the Tenant's obligations
herein contained subject to causing as little inconvenience as possible and
making good any damage caused
3. The Right during the Term to exhibit the Tenant's name and business details
in such manner as the Landlord shall reasonably decide on the name board
sign erected by the Landlord at the junction of Home Farm Road with Lewes
Road pursuant to the provisions of the Superior Lease
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<PAGE> 48
PART 2
LANDLORD'S RIGHTS
1. Unto the Landlord and the Superior Landlord and all persons now or
hereafter entitled thereto the right of free and uninterrupted passage and
running of water soil drainage gas electricity telephone lines and other
services from and to any adjoining or neighbouring property by or through
the sewers pipes drains cables wires conduits and ducts and other
conducting media which are or may hereafter during the Term be in under or
upon the Demised Premises and the right to use the Soakaways for the
purposes of drainage of rainwater and surface water from Unit 1 but all
such rights hereinbefore reserved shall cease and determine as and when and
to the extent from time to time that the said services shall become adopted
and maintainable at public expense
2. Unto the Landlord and the Superior Landlord and their respective tenants
the right at any time and from time to time hereafter to build upon and use
any of their adjoining or neighbouring land and rebuild or alter any of the
buildings now or hereafter to be erected thereon according to such plans
(whether as to height extent or otherwise) and in such manner as they deem
fit notwithstanding any interference thereby occasioned to the access of
light and air to the Demised Premises or any buildings now or hereafter to
be erected on the site thereof
3. Unto the Landlord and the Superior Landlord all of the air over a level of
two metres above the ridge level of the building now constructed on the
Demised Premises as shown on the drawing numbered 2 annexed hereto such
level to extend horizontally over the building and elsewhere over the site
thereof and over a level of one metre above the level of the fence now
erected along the rear boundary of the Demised Premises
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<PAGE> 49
4. Unto the Landlord and (in addition in the case of the right reserved in
paragraph (iii) below the Landlord's tenant or tenants of Unit 1 or the
owner or occupier of Unit 1) all persons authorised by the Landlord the
right at reasonable times and on reasonable notice (except in emergency) to
enter the Demised Premises for the purposes of (i) inspecting the condition
and state of repair thereof (ii) carrying out any works (whether of repair
or otherwise) for which the Tenant is liable and which the Tenant has
failed to carry out pursuant to Clause 4(4) and (8) hereof (iii) carrying
out any works (whether of repair or otherwise) to any property adjoining
the Demised Premises or to any party structure sewer drain or other thing
used by the Tenant in common with others (including without prejudice to
the generality of the foregoing the Soakaways) subject to making good any
damage to the Demised Premises caused by such entry
5. Unto the Landlord with or without workmen and others the right to enter
upon the Demised Premises for the purpose of carrying out the works
referred to in paragraph 5 of Part 1 of the Third Schedule hereto
THE SECOND SCHEDULE above referred to
1. That the Tenant will throughout the Term and also during such period as the
Tenant remains in occupation of the Demised Premises pay the rents hereby
reserved on the days and in manner aforesaid and shall duly perform and
observe all the covenants hereinbefore on the Tenant's part contained and
that in the event of the Tenant failing to do so the Surety will indemnify
and keep indemnified the Landlord from and against all actions claims
demands costs losses and expenses which may be brought or made against or
sustained or incurred by the Landlord howsoever arising directly or
indirectly out of or in connection with such failure PROVIDED ALWAYS and it
is hereby agreed that any neglect or forbearance of the Landlord in
endeavouring to obtain payment of the several rents when the same become
payable or to
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<PAGE> 50
enforce performance or observance of the Tenant's covenants and any time
which may be given by the Landlord to the Tenant shall not release or
exonerate or in any way affect the liability of the Surety under this
covenant
2. That if for any reason the term hereby granted shall be prematurely
determined by forfeiture or if the same shall be disclaimed in
circumstances releasing the Tenant from liability the Surety will (if so
required by the Landlord) accept from the Landlord a grant of a new lease
of the Demised Premises from the date of such determination or disclaimer
for the residue of the Term then unexpired at the same several rents
hereinbefore reserved and subject to the like covenants and provisos as are
herein contained and at the expense of the Surety and on the execution of
such further lease the Surety shall execute and deliver to the Landlord a
counterpart thereof or (as the case may be) the Surety shall accept the
vesting in it of this lease
3. That if the Landlord shall not require the Surety to take a lease of the
Demised Premises pursuant to paragraph 2 above the Surety shall
nevertheless upon demand pay to the Landlord a sum equal to the rent and to
all other payments that would have been payable under this lease but for
the disclaimer in respect of the period from the date of the said
disclaimer until the expiration of six months therefrom or until the
Demised Premises shall have been relet by the Landlord whichever shall
first occur
THE THIRD SCHEDULE above referred to
PART 1
Service Costs
1. The repair maintenance and replacement from time to time of any drains
pipes cables and wires or other conducting media under any property
adjoining or neighbouring the Demised Premises until such time and to the
extent that the drains pipes cables and wires or other conducting media
shall become adopted and maintainable at public expense
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<PAGE> 51
2. Discharging all rates taxes assessments duties and impositions payable in
respect of the common parts of the adjoining or neighbouring property of
the Landlord the use of which is shared by the Tenant with others
3. Construction repairing rebuilding and cleansing all party walls and fences
and also sewers drains pipes wires and other things the use of which is
common to the Demised Premises and any other premises and the said name
board referred to in paragraph 3 of Part I of the First Schedule
4. Maintaining and repairing the Grassed and Planted Areas save for any part
of that area which is demised to a tenant
5. Maintaining and keeping the landscaped areas within the Demised Premises
well and properly cultivated and trimmed and cut and free from weeds and in
a tidy condition and to ensure that the said landscaped areas are fully
planted out with appropriate plants and shrubs
6. Providing such other services or carrying out any other work which the
Landlord shall from time to time reasonably consider necessary for the
benefit of the Demised Premises and any other premises on the Landlord's
adjoining or neighbouring property
7. Management of the Demised Premises and the adjoining or neighbouring
property of the Landlord by the Landlord's surveyor the management fee of
the Landlord's Surveyor not to exceed 12 1/2% of the total cost incurred by
the Landlord for the provision of the services referred to in Part 1 of
this Third Schedule hereto
PART 2
SERVICE CHARGES
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<PAGE> 52
1. The Service Charge to be paid by the Tenant shall be such fair proportion
(which may if appropriate be the whole amount) of the actual or
anticipated Service Costs for each Service Charge Year which shall be
assessed by the Landlord's Surveyor according to a reasonable and proper
basis for apportionment applicable from time to time to the Demised
Premises and the rights hereby granted
2. The Landlord may make and send to the Tenant notice in writing of the
Landlord's estimate of the anticipated Service Costs and the Service Charge
applicable to the Demised Premises for each Service Charge Year and the
Tenant shall pay such estimate of the Service Charge by equal quarterly
instalments in advance on the usual quarter days
3. The Landlord will (unless prevented by causes beyond its control) prepare
and send to the Tenant a detailed statement of the actual Service Costs and
Service Charge for each Service Charge Year as soon as practicable after
the end of such year and in the event of the Service Charge for the Demised
Premises exceeding the aggregate amount paid by the Tenant for such year
the Tenant will pay the balance due to the Landlord forthwith and in the
event of the aggregate amount being greater the excess will be credited by
the Landlord by way of set-off against the next instalment of Service
Charge due from the Tenant
THE COMMON SEAL of ECC SIMULATION
LIMITED was hereunto affixed in the
presence of:-
Director:
Signatory:
THE COMMON SEAL of ECC )
INTERNATIONAL CORP. was )
hereunto affixed in the )
presence of:- )
President:
Secretary:
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<PAGE> 1
EXHIBIT 10.22
DATED 1st December 1995
G J KING & SON (HOME FARM) LIMITED
-- to --
ECC SIMULATION LIMITED
-- and --
ECC INERNATIONAL CORP
- -------------------------------------------------------------------------------
L E A S E
-- relating to --
Unit 3A Home Farm Business Centre
Lewes Road Brighton East Sussex
- -------------------------------------------------------------------------------
[LOGO]
<PAGE> 2
THIS LEASE made the 1st December 1995
BETWEEN
(1) G J KING & SON (HOME FARM) LIMITED whose registered office is situate at G
J King Business Centre Reeds Lane Sayers Common West Sussex (hereinafter
called "the Landlord") of the first part and
(2) ECC SIMULATION LIMITED (company number 1913659) whose registered office is
situate at Kingston Wharf Brighton Road Shoreham by Sea West Sussex
(hereinafter called "the Tenant") of the second part and
(3) ECC INTERNATIONAL CORP a company incorporated in the State of Delaware and
whose principal place of business is at 175 Strafford Avenue Wayne PA
19087-3377 USA (hereinafter called "the Surety") of the third part
WITNESSETH as follows:-
1. IN this lease where the context so admits the following expressions shall
have the following meanings respectively that is to say:-
"the Landlord"
means the Landlord hereinbefore named or such other person for the time
being entitled to the reversion immediately expectant upon the
determination of the Term
"the Tenant"
means the Tenant hereinbefore named or such other person in whom the Term
shall for the time being be vested and wherever it includes more than one
person the covenants on the part of the Tenant hereinafter contained shall
be deemed to be joint and several
"the Plan"
means the plan numbered 1 annexed hereto
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<PAGE> 3
"the Grassed and Planted Areas"
means the grassed and planted areas which adjoin Home Farm Road Brighton
East Sussex
"Block 3"
means the property shown for the purpose of identification only on the Plan
and thereon edged green
"the Forecourt"
means the forecourt which is for the purpose of identification only hatched
blue and coloured blue on the Plan
"the Car Parking Spaces"
means the fifteen car parking spaces marked A for the purpose of
identification only on the Plan
"the Demised Premises"
means the land with the building erected thereon or on some part thereof
known as Unit 3A Home Farm Business Centre Home Farm Road Brighton East
Sussex as the same is shown for identification purposes only edged red on
the Plan with the curtilage thereof and shall include any other building
from time to time erected thereon or on some part thereof
"the Fire Escape"
means the fire escape which is for the purpose of identification only
coloured yellow on the Plan
"the Main Structure"
means the roof foundations floor structures load bearing walls or frame
stanchions beams window frames external walls external drains pipes and
other external services of the Demised Premises
"Insured Risks"
means (subject to such exclusions and limitations as are imposed by the
Insurers and to the extent that insurance cover against any
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<PAGE> 4
[Figure]
<PAGE> 5
particular risk is ordinarily available with a reputable insurer for
property such as the Demised Premises) subsidence landslip heave fire
explosion storm tempest lightning aircraft (not being hostile aircraft) and
articles dropped therefrom riot civil commotion and flood and such other
insurable risks against which the Landlord shall reasonably deem it
desirable or expedient to insure
"Term"
means twenty one years commencing on 24th June 1995
"the Rent Commencement Date"
means 1995
"the Initial Rent"
means the sum of FORTY THOUSAND POUNDS (pound sterling 40,000) a year
exclusive of Value Added Tax
"the First Reserved Rent"
means the yearly rent reserved by Clause 2(A) hereof
"the Secondly Reserved Rents"
means
(1) a sum representing the cost reasonably and properly incurred or a
fair proportion thereof (subject to the provisions of Clause 4(7)(h)
hereof) of complying with the Landlords insuring covenant hereinafter
contained
(2) all other sums payable by the Tenant under the covenants on the part
of the Tenant contained in this lease
(3) any interest chargeable under the provisions of this lease
(4) any additional insurance premiums payable by the Tenant arising under
the provisions of Clause 4(7) of this lease
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<PAGE> 6
(5) all expenses costs fees and other sums incurred under the provisions
Clause 4(24) hereof
"the Review Dates"
means 24th June 1998 24th June 2003 24th June 2008 and 24th June 2013
"the Review Period"
means the period starting with any Review Date up to and including the day
immediately preceding the next Review Date or starting with the last Review
Date up to the end of the Term
"the Service Charge"
means the sums payable by the Tenant in accordance with Part 2 of the
Second Schedule hereto
"the Service Charge Year"
means the period of twelve months up to the 31st March each year or such
other period as the Landlord shall from time to time choose
"the Service Costs"
means all costs expenses and outgoings whatsoever incurred by the Landlord
in carrying out the works and providing the services set out in Part 1 of
the Second Schedule hereto
"the Landlord's Surveyor"
means any person or firm of surveyors appointed by or acting for the
Landlord including an employee of the Landlord to perform the function of a
Surveyor for any purposes under this lease
"the Superior Lease"
means the lease of the Demised Premises and other land and premises dated
4th June 1990 and made between Brighton Borough Council of the one part and
the Landlord of the other part as varied by a Deed of Variation dated 5th
July 1991 and made between Brighton Borough Council of the one part and the
Landlord of the other part
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<PAGE> 7
"the Superior Lessor"
means Brighton Borough Council or such other person entitled to the benefit
of the reversion expectant upon the determination of the Superior Lease
"the Interest Rate" means the rate of Four per centum per annum above the
base rate from time to time of The Royal Bank of Scotland PLC
"the Planning Acts"
means the Town and Country Planning Act 1990 the Planning (Consequential
Provisions) Act 1990 the Planning (Hazardous Substances) Act 1990 and the
Planning (Listed Building and Conservation Areas) Act 1990 or any statutory
consolidation modification or re-enactment of all or any of the above Acts
"CIL" means Computer Imprintable Label System Limited (the present
tenants of the leases granted by the Landlord) or their assigns of the
leases of Units 3B 3C and 3D
"Unit 1 Option Agreement" means an agreement of even date with this Lease
made between (1) the Landlord and (2) the Tenant whereby the Tenant has an
option to take up a lease of Unit 1 in accordance with the provisions
therein contained
"Unit 1" means Unit 1 Home Farm Business Centre Home Farm Road Brighton
East Sussex
"Units 3B 3C and 3D" means the units adjoining the Demised Premises known
as Units 3B 3C and 3D Home Farm Business Centre Home Farm Road Brighton
East Sussex
"Qualifying Person" means a company or corporation registered in the
United Kingdom which has annual profits (which term shall have a meaning
which is consistent with the term "profits for the financial year" where
used in the Fourth Schedule to the Companies Act 1985) in
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<PAGE> 8
the United Kingdom as shown in such company's or corporation's properly
audited financial statements for the last three 12 month accounting periods
immediately preceding the proposed assignment of this lease to such company
or corporation (the last of such accounting periods expiring not more than
12 months prior to the date of such assignment) which are not less than the
sum of the annual rents pursuant to clauses 2(A) and 2(B) of this lease for
the year immediately prior to the date of such assignment multiplied by a
factor of 2.5
2. IN consideration of the rents and tenants covenants hereinafter reserved
and contained the Landlord HEREBY DEMISES unto the Tenant the Demised
Premises TOGETHER WITH the easements and rights specified in Part 1 of the
First Schedule hereto EXCEPT AND RESERVED unto the Landlord and others the
easements and rights specified in Part 2 of the First Schedule hereto TO
HOLD the same unto the Tenant for the Term YIELDING AND PAYING to the
Landlord without deduction during the Term and proportionately for any
fraction of a year the rents set out hereunder
(A) The FIRST RESERVED RENT as hereinbefore defined being
(1) from and including the Rent Commencement Date until and including
the day immediately preceding the first Review Date the Initial
Rent; and
(2) during each successive Review Period a rent equal to the yearly
rent previously payable hereunder or such increased rent as shall
be ascertained in accordance with Clause 3 hereof whichever shall
be the greater
ALL such rents to be paid by equal quarterly instalments in advance on the
usual quarter days in every year the first payment of the Initial Rent
(apportioned in respect of the period from and including the Rent
Commencement Date up to and including the day immediately preceding
-6-
<PAGE> 9
the next following quarter day) to be payable on the Rent Commencement Date
(B) The SECONDARY RESERVED RENTS as hereinbefore defined
Such rents to be payable from and including the date hereof or (if
earlier) the date of occupation (as determined by the Landlord or the
Landlord's Surveyor) and to be paid to the Landlord within fourteen
days of demand (except as otherwise provided)
3. RENT REVIEW
(1) The increased rent for any Review Period shall be (having regard to
current open market values) the open market yearly rent at which the
whole of the Demised Premises might reasonably be expected to be let
at the relevant Review Date
(A) On the following assumptions at the relevant Review Date:-
(i) that the Demised Premises are fit for immediate occupation and
use and that no work has been carried out thereon by the Tenant
its undertenants or their respective predecessors in title during
the Term which has diminished the rental value of the Demised
Premises and that in case the Demised Premises have been
destroyed or damaged they have been fully restored
(ii) that the Demised Premises are available to let in the open market
by a willing landlord to a willing tenant as a whole without a
premium but with vacant possession and subject to the provisions
of this lease (other than the amount of the rent hereby reserved
but including the provisions for rent review at intervals of
every five years) for a term of ten years from the relevant
Review
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<PAGE> 10
Date or the residue then unexpired of the term of this lease
(whichever shall be the longer)
(iii) that the convenants herein contained on the part of the Tenant
and the Landlord have been fully performed and observed
(B) But disregarding:-
(i) any effect on rent of the fact that the Tenant its undertenants
or their respective predecessors in title have been in occupation
of the Demised Premises; and
(ii) any goodwill attached to the Demised Premises by reason of the
carrying on thereat of the business of the Tenant its
undertenants or their respective predecessors in title in their
respective businesses; and
(iii) any increase in rental value of the Demised Premises
attributable to the existence at the relevant Review Date of any
improvement to the Demised Premises or any part thereof carried
out with consent where required by and at the expense of the
Tenant its undertenants or their respective predecessors in title
during Term otherwise than in pursuance of an obligation to the
Landlord or its predecessors in title; and
(iv) any effect on rental value of any obligation of the Tenant to
remove alterations or to restore or reinstate the Demised
Premises
(v) any rent free period or reduced rent period allowed to the Tenant
under the terms of this lease
(vi) the provisions of clause 6(3) hereof save for Clauses 6(3) (a)
(c) and (h) hereof
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<PAGE> 11
(2) The increased rent for any Review Period may be agreed at any time
between the Landlord and the Tenant or (in the absence of agreement)
determined not earlier than the relevant Review Date by an arbitrator
such arbitrator to be nominated in the absence of agreement by or on
behalf of the President for the time being of the Royal Institution of
Chartered Surveyors on the application of the Landlord or the Tenant
made not earlier than six months before the relevant Review Date
(3) IT IS HEREBY FURTHER PROVIDED in relation to the ascertainment and
payment of the reviewed rent as follows:-
(A) The arbitrator shall be a Chartered Surveyor having not less than
ten years experience in letting and valuation of similar property
and of similar sized properties to the Demised Premises
throughout England
(B) The arbitration shall be conducted in accordance with the
Arbitration Acts 1950 and 1979 or any statutory modification or
re-enactment thereof for the time being in force with the further
provision that if the arbitrator nominated pursuant to Clause 3
hereof shall die or decline to act the President for the time
being of the Royal Institution of Chartered Surveyors or the
person acting on his behalf may on the application of either the
Landlord or the Tenant by writing discharge the arbitrator and
appoint another in his place
(C) When the increased rent has been ascertained as hereinbefore
provided the Landlord and the Tenant shall record it forthwith by
each signing and exchanging a separate written memorandum and the
Landlord and the Tenant shall bear their own costs in respect
thereof
(D) (i) if the increased rent payable on and from any Review Date
has not been agreed by that Review
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<PAGE> 12
Date rent shall continue to be payable at the rate
previously payable and forthwith upon the increased rent
being ascertained the Tenant shall pay to the Landlord any
shortfall between the rent actually paid and the increased
rent payable from the relevant Review Date up to the quarter
day immediately following the date that the increased rent
is ascertained together with interest on each instalment
thereof from the date upon which the same would have been
payable if the increased rent had been ascertained on the
relevant Review Date to the date of actual payment thereof
at the rate of two per cent below the Interest Rate and the
interest so payable shall be recoverable in the same manner
as rent in arrear
(ii) for the purposes of this proviso the increased rent shall be
deemed to have been ascertained on the date when the same
has been agreed between the Landlord and the Tenant or as
the case may be the date of the award of the arbitrator
(E) Time shall not be of the essence of this Rent Review clause
(F) If either the Landlord or the Tenant shall fail to pay any costs
awarded against it in an arbitration under the provisions hereof
within fourteen days of the same being demanded by the arbitrator
the other shall be entitled to pay the same and the amounts so
paid shall be repaid by the party chargeable on demand
(4) Without prejudice to the provisions of this Clause if on any Review
Date there shall be in force any enactment which shall relate to the
control of rents and/or which shall restrict
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<PAGE> 13
the Landlord's right to review the rent or recover any increased rent
under this lease then the Landlord shall be entitled upon the
termination or relaxation of such restriction to serve notice
(hereinafter called "Interim Notice") upon the Tenant and from and
after the date of the termination or relaxation of such restriction
until the next Review Date (or until the end of the Term) as the case
may be the rent shall be increased to whichever is the higher of the
rent agreed or determined in accordance with the provisions
hereinbefore contained but at the date of service of the Interim
Notice (or such lesser sum as may be permitted) or the rent payable
immediately prior thereto and the provisions of this Clause shall
apply accordingly with the substitution of the date of the termination
or relaxation of such restriction for the relevant Review Date
4. THE Tenant hereby covenants with the Landlord as follows:-
(1) TO PAY RENT AND INTEREST
(a) To pay the rents hereby reserved unto the Landlord throughout the
Term at all times and in manner aforesaid without any deduction
whatsoever except as authorized by any statutory enactment for
the time being in force
(b) If any of the rents hereby reserved shall be due but unpaid for
14 days to pay interest thereon (if demanded by the Landlord)
calculated on a daily basis with three monthly rents from the due
date until receipt by the Landlord at the Interest Rate (the
Interest Rate shall and apply before as well as after and
notwithstanding any judgement of the Court) Provided that this
sub-clause shall not prejudice any other right or remedy in
respect of such reserved rents
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<PAGE> 14
(c) If following the occurrence of any of the events referred to in
clause 6(1)(b) hereof acceptance of any of the rents hereby
reserved shall be reasonably refused by the Landlord but shall
subsequently be accepted without prejudice to any other right or
remedy of the Landlord to pay interest thereon (if demanded by
the Landlord) calculated on a daily basis with three monthly
rents from the due date until acceptance and receipt by the
Landlord at the Interest Rate (the Interest Rate shall apply
before as well as after and notwithstanding any judgement of the
Court) Provided that this sub-clause shall not prejudice any
other right or remedy in respect of such reserved rents
(2) TO PAY SERVICE CHARGE AND INSURANCE
(a) To pay the Service Charge in the manner set out in Part 2 of the
Second Schedule hereto
(b) To pay on demand therefor the sum representing the cost (subject
to the provisions of clause 4(7)(h) hereof) of complying with the
Landlord's insuring covenant hereinafter contained
(3) TO PAY RATES AND TAXES
To pay and discharge all existing and future rates taxes charges
duties assessments and outgoings whatsoever whether parliamentary
local or otherwise now or hereafter imposed or charged upon the
Demised Premises or any part thereof or upon the owner or any occupier
thereof or payable by either in respect thereof (excluding any payable
by the Landlord in respect of receipt of rent or any other payment
made by the Tenant under this lease (except any VAT payable on rent or
any other payment made by the Tenant under this lease) or on any
disposition or dealing with or the ownership of the
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<PAGE> 15
reversion of this lease) but including all charges in respect of water
gas electricity and telecommunications used or consumed at the Demised
Premises PROVIDED ALWAYS that the Tenant shall not agree or by default
allow to be fixed the rateable value of the Demised Premises or any
part thereof without the prior written consent of the Landlord such
consent not to be unreasonably withheld
(4) TO REPAIR
Well and substantially to repair cleanse maintain amend and keep in
good and substantial repair the Demised Premises (including the Main
Structure and all fixtures fittings Plant machinery and apparatus
belonging thereto) and all additions made thereto and the walls fences
drains appurtenances and decorations thereof and to renew and replace
the same from time to time insofar as the same may be or become beyond
repair at any time during or at the expiration of the Term (howsoever
determined) damage in all such cases from any of the Insured Risks
excepted so long as the Policy of insurance effected by the Landlord
shall not have been vitiated or payment of any Policy moneys refused
in whole or in part by reason of any act neglect or default of the
Tenant its undertenants or their respective servants agents or
licensees
(5) TO PAINT AND DECORATE
In every third year of the Term and also during the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner the
outside wood iron and other parts heretofore or usually painted of the
buildings on Demised Premises and all additions thereto with two coats
of good quality paint suitable for external use and for the surface
and material to which it is to be applied such painting in the last
year of the Term (howsoever determined) to be in colours previously
approved in writing by the Landlord and in
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<PAGE> 16
every fifth year of the Term and also in the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner all
the inside wood iron and other parts heretofore or usually painted of
the buildings on the Demised Premises and all additions thereto with
two coats of good quality paint suitable for the surface and material
to which it is to be applied such Painting in the last year of the
Term (howsoever determined) to be in colours Previously approved in
writing by the Landlord And on the occasion of every such external
painting to varnish or colour the external parts usually or previously
so dealt with and on the occasion of very internal painting to varnish
wash stop whiten and colour all such parts as have previously been or
are usually so dealt with and to repaper with suitable paper of good
quality (in the last year of the Term (howsoever determined in colours
previously approved in writing by the Landlord) the parts previously
or usually papered PROVIDED THAT for the avoidance of doubt the Tenant
shall not be required to paint the external profiled sheet cladding in
accordance with the covenant hereinbefore contained but shall keep the
same cleansed and maintained as necessary throughout the Term
(6) TO CLEAN WINDOWS ETC
To clean internally and externally the windows of the Demised Premises
as often as occasion shall require and at least once in every month
and at least once a week to remove all refuse rubbish and scrap which
may have accumulated on the Demised Premises.
(7) INSURANCE
(a) Subject to the Landlord having supplied to the Tenant in writing
full particulars of any policy of insurance effected on the
Demised Premises and of any
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<PAGE> 17
modification or variation thereof not to do or omit or allow to
be done or omitted any act matter or thing whatsoever whereby any
policy of insurance effected on the Demised Premises or anything
therein or on any adjoining or neighbouring premises of the
Landlord may become void or voidable or the premiums payable for
such insurance increased
(b) To the extent that any insurance premium payable in respect of
any adjoining or neighbouring premises is increased by any use
act neglect omission or default of the Tenant its undertenants or
their respective servants agents or licensees in relation to the
Demised Premises to pay the Landlord on demand the amount of such
increase
(c) In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the insured Risks to give
immediate notice thereof in writing to the Landlord
(d) In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks and the
insurance money under any insurance effected against the same
being wholly or partly irrecoverable (by reason of any act
neglect omission or default of the Tenant its undertenants or
their respective servants agents or licensees) then and in every
such case the Tenant will pay to the Landlord forthwith the whole
or (as the case may require) a fair proportion of the cost of
completely rebuilding and reinstating the same
(e) Subject to the Landlord having supplied in writing to the Tenant
full particulars thereof to comply with the requirements and
recommendations of the Landlord's insurers
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<PAGE> 18
(f) Not to store on the Demised Premises any inflammable or any
explosive combustible or deleterious substance save that the
Tenant may store at the Demised Premises such reasonable
quantities of inflammable substances in proper and safe
containers as are normally used for its business SUBJECT TO the
Tenant obtaining the Landlord's insurers prior written approval
thereto and the Tenant paying any increase in insurance premium
arising therefrom and on the reasonable request of the Landlord
supplying to the Landlord details of the type and amounts of the
substances stored on the Demised Premises
(g) To repay to the Landlord on demand the proper costs and expenses
incurred in obtaining valuations of the Demised Premises for
insurance purposes from time to time but so that such valuations
shall not be carried out more frequently than once every three
years
(h) The Landlord may retain for the Landlord's own benefit any
commissions or discount received or obtained by the Landlord on
or based on the gross premiums and other expenses which would
otherwise be paid incurred or suffered by the Landlord in
effecting or maintaining such insurance
(i) To insure and keep insured in the joint names of the Landlord and
the Tenant and such other names as the Landlord may reasonably
require all the plate glass or any substitute or alternative
material used in windows (if any) and doors in the Demised
Premises against breakage or damage howsoever caused with an
insurance company of repute to the full reinstatement value
thereof and public liability relevant to such breakage and pay
all premiums necessary for that purpose and whenever required
produce to the Landlord or its agent the policy of insurance and
the receipt for the current
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<PAGE> 19
year's premium and whenever a claim arises to use the insurance
money forthwith in reinstating the same with a like material to
the reasonable satisfaction of the Landlord's Surveyor making up
any deficiency out of the Tenant's own moneys
(j) To pay to the Landlord on demand the amount of any excess which
may be applicable in the event of any claim in respect of any of
the Insured Risks
(8) TO EXECUTE WORKS
To execute all works on or in respect of the Demised Premises now or
from time to time throughout the Term lawfully required to be executed
by any local or public authority (including works required under the
Health & Safety at Work etc. Act 1974 the Offices Shops and Railway
Premises Act 1963 or any Act amending or replacing the same for the
time being in force) whether the said works shall be required to be
executed by the Landlord or by the Tenant and in all respects and at
the Tenant's own expense to comply with and cause to be complied with
the provisions of all statutes byelaws and regulations for the time
being in force and the requirements of any competent authority
affecting or relating to the Demised Premises or the use thereof and
at all times to indemnify and to keep indemnified the Landlord and the
Superior Lessor against all claims demands expenses and liability in
respect thereof
(9) NOTICES RECEIVED
Within seven days of receipt of the same to give full particulars to
the Landlord of any notice direction or order or proposal for a notice
direction or order made given or issued to the Tenant by any
government department or local or public authority and if so required
by the Landlord to
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<PAGE> 20
produce and supply copies of the same to the Landlord AND without
delay to take all necessary steps to comply with the same AND ALSO at
the request of the Landlord to make or join with the Landlord in
making such objections or representations relating to the same as the
Landlord shall deem expedient but with due regard being had to the
Tenant's interest in the Demised Premises
(10) TO PERMIT ENTRY TO VIEW
To permit the Landlord and the Superior Lessor and their respective
Surveyors or other agents during the Term at reasonable hours in the
daytime on prior appointment to enter the Demised Premises to view the
state of repair and condition of the same and to take inventories of
the fixtures therein
(11) TO PERMIT ENTRY TO REPAIR
To permit the Landlord and the Superior Lessor or their respective
agents or the Landlord's Surveyor with or without workmen at any time
during the Term at reasonable hours in the daytime on prior
appointment except in the case of emergency to enter upon the Demised
Premises for the purpose of executing repairs or alterations to or in
connection with any adjoining premises of the Landlord or the superior
Lessor the Landlord or the Superior Lessor making good all damage
thereby occasioned to the Demised Premises
(12) TO REPAIR ON NOTICE
To repair and make good to the satisfaction of the Landlord and the
Superior Lessor all breaches of covenant defects and wants of
reparation for which the Tenant may be liable under the covenants
herein contained of which notice shall have
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<PAGE> 21
been given by the Landlord to the Tenant within two calendar months
after the giving of such notice or sooner if requisite
(13) TO COMPLY WITH STATUTORY REQUIREMENTS
(a) At all times to observe and comply with the provisions of or
imposed under any statute licence or regulation regulating or
permitting the use of the Demised Premises for the purpose for
which they are for the time being used and the requirements of
any competent authority in that connection and at the expense of
the Tenant to do all that is necessary to obtain maintain and
renew all licences and registrations required by law for the use
of the Demised Premises for that purpose
(b) At the sole cost of the Tenant to comply with the Planning Acts
for the time being in force and of all byelaws orders and
regulations licences consents permissions and conditions made
thereunder affecting the Demised Premises or any use thereof and
to indemnify and keep harmless and indemnified the Landlord
against any breach or non-performance of any such requirements
and against all costs expenses penalties and levies thereby
arising
(14) PLANNING
In relation to the Planning Acts:
(a) Not without the prior written consent of the Landlord such
consent not to be unreasonably withheld or delayed to apply for
permission to carry out on the Demised Premises any development
requiring permission under the Planning Acts
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<PAGE> 22
(b) Not to implement any planning permission relating to the Demised
Premises without the prior written consent of the Landlord such
consent not to be unreasonably withheld or delayed but without
prejudice to the generality of the foregoing such consent shall
be given if in the opinion of the Landlord or the Landlord's
Surveyor (whose decision shall be final) the value of the
Landlord's reversionary interest is not affected thereby
(c) Whenever required to permit the Landlord to enter upon the
Demised Premises to comply with any requirement lawfully made of
it under the Planning Acts by any competent authority
notwithstanding that any action reasonably necessary for
compliance interferes with the Tenant's enjoyment of the Demised
Premises
(d) To pay and satisfy any charge which may hereafter be imposed
under the Planning Acts in respect of the carrying out of any
operations or the institution or continuance of the use of the
Demised Premises
(e) Unless the Landlord shall otherwise direct in writing to carry
out and complete before the expiration or sooner determination of
the Term any works stipulated to be carried out to the Demised
Premises (notwithstanding that such works are to be carried out
by a later date) as a condition of planning permission for any
development begun before such expiration or sooner determination
(f) If the Tenant shall receive any compensation relating to the
Tenant's interest hereunder due to any restriction placed upon
the user of the Demised Premises as a result of the Planning Acts
then if and when the Tenant's interest hereunder shall be
determined by assignment or
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<PAGE> 23
under the power of re-entry herein contained the Tenant shall
forthwith make such provision as is just and equitable for the
Landlord to receive its due benefit from such compensation
(15) PERMITTED USE
Not to use or permit or suffer to be used the Demised Premises or any
part thereof otherwise than solely and exclusively as and for use
within Class B1(b) or (c) of the Town and Country Planning (Use
Classes) Order 1987 (as originally enacted) and uses ancillary thereto
(16) PROHIBITED USES
Not to use the Demised Premises or any part thereof nor allow the same
to be used as the premises of any public or local authority to which
the public have access or for any public meeting exhibition or
entertainment or for any illegal or immoral purpose or for the
purposes of a club whether or not one where intoxicating liquor is
supplied to members or their guests nor permit or suffer any sale by
auction to be held on the Demised Premises or any part thereof or to
sell serve or supply or permit or suffer to be sold served or supplied
any intoxicating liquor thereon or therefrom (save that intoxicating
liquor may be served to staff in any staff restaurant which is
ancillary to the use permitted by Clause 4(15) hereof) or play or use
or allow to be played or used any sound-producing instrument or
apparatus on the Demised Premises or any part thereof so as to be
audible outside the Demised Premises nor permit the Demised Premises
to be used as a sleeping place for any person and not to use the
Demised Premises or any part thereof or permit or suffer the same to
be used for the purpose of any betting transactions or for gaming with
or between persons resorting to the Demised Premises and not to make
or permit or suffer to be made any
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<PAGE> 24
application for a Betting Office Licence or a Licence or registration
under the Gaming Acts 1963 to 1968 in respect of any part of the
Demised Premises
(17) NUISANCE
(a) Not to do or commit or permit or suffer to be done or committed
upon the Demised Premises or any part thereof any act or thing
which shall be a nuisance annoyance or disturbance to the
Landlord or the Superior Lessor or to the owners lessees or
occupiers for the time being of any adjoining or neighbouring
property or to the neighbourhood
(b) Not to place or cause to be placed or suffer to remain any good
parcels refuse or rubbish in or about the Forecourt Car Parking
Spaces pavements or entrances of the Demised Premises or
otherwise obstruct the same and in all respects to conform to
such reasonable rules and regulations as the Landlord may from
time to time make in this respect in the interest of good estate
management
(c) Not to park any vehicles on any part of Block 3 otherwise than in
the Car Parking Spaces
(18) ALTERATIONS
(a) Not at any time during the Term to make any alteration or
addition to the sprinkler system (if any) or to make any
alterations to the Demised Premises which effect the operation of
the sprinkler system (if any) without first obtaining the consent
in writing of the Landlord such consent not to be unreasonably
withheld or delayed
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<PAGE> 25
(b) Not at any time during the Term to make any alteration or
addition to the electrical installation of the Demised Premises
save in accordance with the terms and conditions laid down by the
Institution of Electrical Engineer's and the Regulations of the
Electrical Supply Authority;
(c) Not at any time during the Term to erect set up or maintain or
suffer to be erected set up or maintained on the Demised Premises
or any part thereof any building shed or similar structure
whether of a permanent or temporary character
(d) Not at any time during the Term to make any change to the
external design or appearance of the building constructed on the
Demised Premises
(e) Not to cut maim alter or injure or suffer to be cut maimed
altered or injured the Main Structure nor make any external or
internal alterations in the plan or elevation of the building on
the Demised Premises or in any party or other wall nor alter or
change any of the materials or architectural decorations of the
said building nor make or maintain or suffer to be made or
maintained any addition thereto either in height or projection
(f) Not at any time during the Term to overload the floors or
ceilings or the Main Structure in any way which imposes a weight
or strain in excess of that which the building on the Demised
Premises is constructed to bear with due margin for safety or
which will in any way strain or interfere with the Main Structure
(g) Not to make any non-structural erection addition or alteration
whatsoever to the Demised Premises (including
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<PAGE> 26
to walls timbers wires pipes drains appurtenances fixtures or
fittings thereof) without the previous consent in writing of the
Landlord (which consent shall not be unreasonably withheld or
delayed) such consents to be without prejudice nevertheless to
the provisions of this and sub-clauses (13 (14) and (26) hereof
nor except in accordance with plans and specifications (with such
additional copies thereof as the Landlord may reasonably require)
previously submitted to and approved in writing by the Landlord
nor carried out except to the satisfaction of its Surveyor
(h) Nothing herein contained in this sub-clause (18) shall prevent
the Tenant from installing or removing internal non-structural
demountable partitioning in the Demised Premises or installing
suspended ceilings lighting and heating on the ground floor of
the Demised Premises without the Landlord's consent provided such
works do not adversely affect the services in the Demised
Premises and the Tenant shall supply the Landlord with plans
detailing the internal layout of the Demised Premises then
current on demand by the Landlord and provided further that any
suspended ceilings lighting and heating installed pursuant to
this paragraph and any carpets laid by the Tenants shall be the
property of the Tenant and may be removed by the Tenant on
vacating the Demised Premises but all damage caused to the
Demised Premises in removing such items shall be made good in a
proper and workmanlike manner by the Tenant
(i) Any alterations or additions carried out to the Demised Premises
(including without prejudice to the generality of the foregoing
the suspended ceilings lighting and heating as aforesaid if these
items are not removed by the Tenant) shall at the end or sooner
determination of
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<PAGE> 27
the Term be reinstated by the Tenant if requested in writing by
the Landlord so to do
(19) SIGNS
(1) Not without the Previous written consent of the Landlord and the
Superior Lessor (such consents not to be unreasonably withheld)
to carry out or permit the painting or writing of any notice or
advertisement whatsoever whether permanent or temporary on the
glass of the windows or doors of the building on the Demised
Premises or (except with the previous written consent of the
Landlord and the Superior Lessor) the affixing or display of any
bill notice doorplate sign or advertisement which projects over
any street or land over which the public has access
(2) Without prejudice to the provisions of sub-clause (19)(1) of this
Clause not to exhibit put up or permit upon any part of the
exterior of the building on the Demised Premises and the open
areas thereof without the previous consent in writing of the
Landlord and the Superior Lessor (such consents not to be
unreasonably withheld or delayed) any bill notice sign or
advertisement other than such as relate solely to the Tenant its
undertenants or other occupier's business for the time being
carried on at the Demised Premises PROVIDED and it is hereby
declared that if any bill notice sign or advertisement displayed
in or upon any part of the exterior of the building on the
Demised Premises or in or upon any part of the interior of the
building on the Demised Premises which is visible from outside
the building on the Demised Premises shall in the reasonable
opinion of the Landlord or the Superior Lessor be unsightly
undesirable or objectionable then the same shall be removed by
the Tenant within twenty-four hours
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<PAGE> 28
after the receipt by the Tenant of notice requiring the Tenant so
to do
(20) ALIENATION ETC
(a) COMPLETE BAR ON CERTAIN DEALINGS
Not to assign underlet or part with possession or part with or
share occupation of the Demised Premises or any part thereof save
as hereinafter provided
(b) SHARING OCCUPATION
The Tenant may share occupation or possession of any part of the
Demised Premises with any member of the group of companies (as
defined in Section 42(1) of the Landlord and Tenant Act 1954) of
which the Tenant is itself a member on the condition that:-
(i) no relationship of landlord and tenant is created between
the Tenant and any such company
(ii) the possession or occupation shall forthwith be determined
if the Tenant and the relevant member shall cease for any
reason whatsoever to be members of the same group of
companies
(iii) On written request from the Landlord or its agents the
Tenant shall supply in writing to the Landlord or its agents
details of the identity of any company as aforesaid let into
occupation
(c) ASSIGNING THE WHOLE
Not to assign the whole of the Demised Premises
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<PAGE> 29
(i) without the Landlord's prior written consent such consent
not to be unreasonably withheld or delayed and
(ii) except to an assignee who shall first have
(a) entered into a direct covenant with the Landlord to
observe and perform the covenants and conditions on the
part of the Tenant contained in this lease
(b) if reasonably so required by the Landlord procured a
covenant with the Landlord by an acceptable guarantor
or guarantors in the terms (mutatis mutandis) set out
in the Third Schedule hereto or in such other form as
the Landlord may reasonably require
(d) UNDERLETTING THE WHOLE
Not to underlet the whole of the Demised Premises
(i) without the Landlord's prior written consent such consent
not to be unreasonably withheld
(ii) except to an underlessee who shall first have
(a) entered into a covenant with the Landlord to observe
and perform the covenants and conditions on the part of
the Tenant contained in this lease (other than the
covenant to pay rent) and
(b) if reasonably so required by the Landlord (in the case
of an underlease for a term of more than 3 years)
procured a covenant with
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<PAGE> 30
the Landlord by an acceptable guarantor or guarantors
in the terms (mutatis mutandis) set out in the Third
Schedule hereto or in such other form as the landlord
may reasonably require
(iii) in consideration of any fine or premium
(iv) without reserving a yearly rent payable in advance on the
usual quarter days equal to the then open market yearly
rental value of the Demised Premises and where the
underlease is for a term of more than 3 years such rent
shall be reviewable on the same dates and on the same terms
as the rent payable under this lease
(v) except on similar covenants and conditions to those
contained in this lease and in particular:
(a) for the re-entry on breach of any covenant in the
underlease
(b) that the underlease will contain similar terms as to
the carrying out of and the paying for repairs and
proper service charges
(vi) without obtaining prior to the grant of the underlease an
Order of the Court excluding the provisions of Sections 24
to 28 (inclusive) of the Landlord and Tenant Act 1954 and
providing in the underlease that the landlord and tenant
thereunder have agreed to exclude such provisions
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(vii) without taking from any underlessee unqualified covenants
(which the Tenant shall enforce):
(a) not to assign or underlet the whole of the Demised
Premises without prior written consent of the Landlord
(under this lease) such consent not to be unreasonably
withheld or delayed and
(b) not to deal in any other way whatsoever with the
Demised Premises or any part thereof and
(c) to obtain from any assignee of the underlease a
covenant with the Landlord (under this lease) to
observe and perform the covenants and conditions on the
part of the Tenant contained in this lease (other than
the covenant to pay rent) during the term granted by
the underlease
(e) RENT REVIEWS UNDER UNDERLEASES
To procure that in any underletting the yearly rent is reviewed
under such under lease in accordance with the terms of the under
lease but not to agree any rent on review under any underlease
without the prior written consent of the Landlord such consent
not to be unreasonably withheld and (if the rent under the
underlease is to be awarded by an arbitrator in accordance with
the provisions therein contained) to procure that the Landlord's
representations as to the yearly rent payable thereunder are made
to the arbitrator to the reasonable satisfaction of the Landlord
(f) ENFORCEMENT OF COVENANTS
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To enforce the performance and observance by an underlessee of
the provisions of the underlease and not at any time either
expressly or by implication to waive any breach of the covenants
or conditions on the part of the under lessee or assignee of any
underlease nor without the consent of the Landlord (such consent
not to be unreasonably withheld) to vary the terms
(g) AGREEMENT
It is hereby expressly agreed and declared that if the Landlord
(acting reasonably) shall not be satisfied that the yearly rent
to be reserved by a proposed underlease is in accordance with
sub-clause (20(d)(iv) of this Clause 4 then the Landlord may
refuse its consent to such underletting and such refusal shall be
deemed to be reasonable
(21) TO REGISTER ANY DISPOSITION
To give notice in writing of every assignment assent transfer under
lease change of name charge or devolution of or other instrument
relating to or affecting the Demised Premises and to produce a
certified copy of the same within twenty one days after the execution
or grant thereof to the solicitors of the Landlord and to pay their
reasonable registration fee (and that of the Superior Lessor) in
respect of each such instrument PROVIDED THAT registration of any such
document shall not require the Landlord to consider the terms thereof
and shall not be evidence that it has done so
(22) RE-LETTING
To permit the Landlord and the Superior Lessor or their agents at any
reasonable time in the daytime on prior notice to enter upon the
Demised Premises and to affix upon any
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appropriate or suitable part thereof a notice board or boards for
re-letting at any time six months prior to the expiration or sooner
determination of the Term or at any time for selling and to permit all
persons authorised by order in writing of the Landlord or its agents
to view the Demised Premises at reasonable hours in the day time
without interruption
(23) EASEMENTS
To take all necessary steps to prevent any encroachment upon the
Demised Premises or the acquisition of any new right to light passage
drainage or other easement over upon or under the Demised Premises and
to give notice in writing to the Landlord of any threatened
encroachment or attempt to acquire any such easement and throughout
the Term to preserve unobstructed and undefeated all rights of light
and other easements appertaining to the Demised Premises and not to
permit or suffer but give notice in writing to the Landlord of any act
matter or thing whereby a new easement or encroachment might come to
be made into against over or upon the Demised Premises or any part
thereof and to do all such things as the Landlord may reasonably
require to prevent the same
(24) LANDLORD'S COSTS
To pay to the Landlord on an indemnity basis all reasonable and proper
Solicitors' (as between a Solicitor and own client) counsels'
surveyors' and other professional costs expenses and fees incurred by
the Landlord
(a) In or in contemplation of any proceedings relating to the Demised
Premises whether or not under Sections 146 or 147 of the Law of
Property Act 1925 or the preparation and service of a notice
thereunder (whether
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or not any right of re-entry or forfeiture has been waived by the
Landlord or a notice served on the Tenant has been complied with
or the Tenant has enjoyed relief under the provisions of the said
Act or forfeiture is avoided otherwise than by relief granted by
the Court) and to keep the Landlord fully and effectively
indemnified against all costs expenses claims and demands
whatsoever in respect of such proceedings
(b) In the preparation and service of a schedule of dilapidations at
any time during or after the Term and in the inspection of the
works which are the subject of such schedule whether during or
after the carrying out thereof
(c) In connection with the recovery of any arrears of the rents
hereby reserved
(d) In respect of any application for consent required by this lease
whether or not such consent is granted
(25) TO YIELD UP
At the expiration or sooner determination of the Term quietly to yield
up the Demised Premises and any additions thereto so repaired painted
cleansed maintained amended kept renewed and replaced as aforesaid
(26) THE SUPERIOR LEASE ETC
At all times during the Term to observe and perform the obligations on
the part of the Landlord contained in the Superior Lease (except the
obligation to pay the premium and the covenant contained in clause
2(4)) insofar as the same relate to or affect the Demised Premises and
to keep the Landlord fully and effectually indemnified against all
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actions proceedings damages costs expenses claims and demands
whatsoever in respect of any breach thereof
(27) VALUE ADDED TAX
Whenever in this lease provision is made for the Tenant to pay any sum
(including but without prejudice to the generality of the foregoing
rent legal costs registration fees surveyors and other professional
fees charges and expenses) on which Value Added Tax is payable or may
at the election of the Landlord be payable (and provided that the
Landlord does so elect) then the Tenant shall pay in addition to such
sum Value Added Tax thereon at the rate appropriate at the time of
supply PROVIDED THAT where the Value Added Tax supply is to the Tenant
the Landlord shall provide the Tenant with a VAT invoice addressed to
and in favour of the Tenant and where the VAT supply is to the
Landlord the Tenant shall pay to the Landlord only that part of the
Value Added Tax which the Landlord is not entitled to recover
(28) PIPES AND DRAINS
Not to obstruct or permit the obstruction of any pipes including the
drains serving the Demised Premises by oil grease hair or other
deleterious matter but to keep all pipes and drains in or serving the
Demised Premises thoroughly cleaned as often as may be necessary
5. THE Landlord hereby covenants with the Tenant that:-
(1) QUIET ENJOYMENT
The Tenant paying the rents hereby reserved and performing and
observing the several covenants conditions and agreements herein
contained and on the Tenant's part to be performed and observed may
peaceably and quietly hold and enjoy the Demised
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Premises during the Term without any lawful interruption by the
Landlord or any person rightfully claiming under or in trust for the
Landlord
(2) THE SUPERIOR LEASE
To observe and perform the covenants on the part of the Landlord
contained in the Superior Lease but only so far as the Superior Lessor
shall require the same to be observed and performed and except as they
are by this lease expressly assumed by the Tenant
(3) TO INSURE
To insure or cause to be insured the Demised Premises and all
Landlord's fixtures and fittings therein or thereon of an insurable
nature (other than those which the Tenant or other tenants may be
entitled to remove) including all the glass herein (save for plate and
other glass insured by the Tenant pursuant to clause 4(7)(a)) against
(i) loss or damage by the Insured Risks in such sum (including any
incidental expenses) as shall be determined from time to time by the
Landlord to represent the reinstatement cost thereof as new together
with all professional and other fees and expenses and the cost of site
clearance and other incidental expenses (ii) public liability of the
Landlord involving or relating to the Demised Premises or any part
thereof and (iii) the loss of four years rent in some insurance office
of repute and to supply a summary of such insurance and evidence of
payment of the current premium to the Tenant on request once yearly
and in the case of destruction or damage to the Demised Premises by
any Insured Risk to immediately notify the insurer on receiving
notification from the Tenant of the damage or destruction and to claim
all sums due under the insurance policy and use all reasonable
endeavours to procure the payment by the insurer of all sums properly
due under the
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insurance policy and apply for and use all reasonable endeavours to
obtain all planning permissions building regulations consents and
other consents or licences necessary to enable the Landlord to
reinstate the Demised Premises and (unless payment of any money
payable under any policy of insurance shall be wholly or partly
withheld or refused either in consequence of any exclusion or
qualification imposed by insurers or of any act neglect or default of
the Tenant its undertenants or their respective servants agents or
licensees) to ensure that all insurance moneys (other than for loss of
rent and public liability) received by the Landlord are with all
convenient speed (subject to the necessary labour and materials being
procurable and to all necessary statutory consents being obtained)
laid out and applied in rebuilding repairing or otherwise reinstating
the Demised Premises and to make up any deficiency out of its own
monies
(4) INSURANCE PROCEEDS
Subject to the provisions for reinstatement contained in sub-clause
(3) of this Clause 5 the building Insurance proceeds shall belong to
the Landlord for its own use and benefit absolutely
(5) NOTIFICATION TO INSURERS
The Landlord will notify its insurers of the Tenant's interest in the
Demised Premises and have it noted on the policy or policies of
insurance
6. PROVIDED ALWAYS and it is hereby agreed and declared as follows:-
(1) FORFEITURE AND RE-ENTRY
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That this lease is made upon the express condition that if (a) any of
the rents hereby reserved shall be unpaid for twenty one days after
the due dates whether the same shall have been lawfully demanded or
not or (b) any Tenant's convenant shall not have been observed or
performed or (c) if the Tenant being an individual or firm shall
become bankrupt or be the subject of an interim order under Part VIII
of the Insolvency Act 1986 or being a Company shall go into either
compulsory or voluntary liquidation (except for the purpose of
reconstruction or amalgamation) or shall have an administration order
made in respect of it under the Insolvency Act 1986 or if an
administrative receiver or a receiver shall be appointed or (d) the
Tenant shall enter into composition or arrangement with creditors or
shall suffer any distress or execution to be levied on the goods of
the Tenant then and in any of the said cases and at any time
thenceforth it shall be lawful for the Landlord or its authorised
agent to re-enter into or upon the Demised Premises and to repossess
and enjoy the same as if this lease had not been made but without
prejudice to any right of action or remedy of either party in respect
of any antecedent breach of any of the convenants by the other herein
contained
(2) RENT CESSER
If during the Term the Demised Premises or any part thereof shall be
destroyed or damaged by any Insured Risk so as to be unfit for
occupation or use and the policy of insurance effected by the Landlord
shall not have been vitiated or payment of the policy moneys wholly or
partly withheld or refused by reason of any act neglect or default of
the Tenant its undertenants or their respective servants agents or
licensees the First Reserved Rent or a fair proportion thereof
according to the nature and extent of the damage sustained shall be
suspended until the Demised Premises shall again be fit for occupation
and use or until the expiration
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of four years from the date of the damage or destruction whichever
shall be the earlier and any dispute shall be referred to the award of
a single arbitrator to be appointed in default of agreement upon the
application of either party by the President for the time being of the
Royal Institution of Chartered Surveyors in accordance with the
provisions of the Arbitration Acts 1950 and 1979 or any statutory
modification thereof for the time being in force
(3) DETERMINATION
(a) If within four years from the date of such damage or destruction
as aforesaid of the Demised Premises reinstatement or rebuilding
of the Demised Premises has not been practically completed then
after the expiration of the said four year period but only before
such practical completion as aforesaid either party may give
written notice to the other terminating this lease three months
from the date of such notice whereupon this lease shall
absolutely determine and the rights and obligations of the
parties shall cease but without prejudice to any right or claim
arising hereunder and still subsisting at the date of
determination
(b) At any time before 25th January 1997 and Landlord may serve a
notice on the Tenant to terminate the Term on 23rd June 1998 and
if the Landlord does so the Term will end at 12 noon on the 23rd
June 1998 (rent being paid for all that day) but the termination
will not affect any claim by either party in respect of
antecedent breaches of the provisions of this lease Provided that
no such notice to terminate this Lease shall be given by the
Landlord unless simultaneously therewith he provides reasonably
evidence that CIL require the Demised Premises for their own use
and occupation
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(c) At any time before the 25th March 1997 the Tenant may serve a
notice on the Landlord to terminate the Term on 23rd June 1998
and if the Tenant does so and if the Tenant delivers to the
Landlord vacant possession of the Demised Premises by 12 noon on
the 23rd June 1998 the Term will end at 12 noon on the 23rd June
1998 (rent being paid for all that day) but the termination will
not affect any claim by either party in respect of antecedent
breaches of the provisions of this lease
(d) The provisions of clause 6(3)(c) hereof shall be null and void if
the Tenant (with the consent of the Landlord under this Lease)
grants an underlease of the Demised Premises at any time before
23rd June 1998 which does not comply with the provisions of
sub-paragraph (g) hereof save if the Landlord at its discretion
releases the provisions of this clause 6(3)(d) in the licence to
underlet
(e) Notwithstanding the provisions of clauses 4(20)(d) of this Lease
the Tenant shall not underlet the Demised Premises after a notice
to terminate has been served by the Landlord pursuant to clause
6(3)(b) hereof or served by the Tenant pursuant to clause 6(3)(b)
hereof
(f) Provided that if the Landlord or the Tenant serve notice pursuant
to sub-paragraphs (b) or (c) hereof and the Tenant exercises the
option to take a lease of Unit 1 pursuant to the Unit 1 Option
Agreement the Term will end at 12 noon on the date which is 3
months after the Rent Commencement Date as defined in the Unit 1
Option Agreement
(g) The provisions of sub-paragraphs (d) and (e) above shall not
apply in circumstances where an underlease contains an agreement
authorised by the Court excluding the
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<PAGE> 41
provisions of Sections 24 to 28 (inclusive) of the Landlord and
Tenant Act 1954 and is for a term which expires on or before 23rd
June 1998
(h) At any time before 29th September 2002 the Tenant may serve a
notice to terminate the Term on 25th December 2003 and if it does
so and if the Tenant delivers to the Landlord vacant possession
of the Demised Premises by 12 noon on 25th December 2003 the Term
will end at 12 noon on 25th December 2003 (rent being paid for
all that day) but the termination will not affect any claim by
either party in respect of antecedent breaches of the provisions
of this lease
(i) The provisions of clause 6(3)(h) hereof shall be null and void if
the Tenant (with the consent of the Landlord under this lease)
grants an underlease of the Demised Premises or any part thereof
at any time before 25th December 2003 which does not comply with
the provisions of sub-paragraph (k) hereof save if the Landlord
at its discretion releases the provisions of this clause 6(3)(i)
in the Licence to Underlet
(j) Notwithstanding the provisions of clauses 4.20(d) and (e) of this
lease the Tenant shall not underlet the Demised Premises after a
notice to terminate has been served by the Tenant pursuant to
clause 6(3)(h) hereof
(k) The provisions of sub-paragraphs (i) and (j) above shall not
apply in circumstances where an underlease contains an agreement
authorised by the Court excluding the provisions of Sections
24-28 (inclusive) of the Landlord and Tenant Act 1954 and is for
a term which expires on or before 12 noon on 25th December 2003
(4) NOTICES
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<PAGE> 42
The provisions of section 196 of the Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 shall apply to all
notices required to be served under this lease
(5) MORTGAGEES AND SUPERIOR LESSOR
In this lease the powers rights matters and discretions reserved to or
exercisable by the Landlord including powers to enter inspect repair
maintain or alter the Demised Premises or any part of the Landlord's
adjoining premises shall also be reserved to or exercisable by its
Mortgagees and by the Superior Lessor and their respective servants
agents or workmen
(6) SUPERIOR LESSOR'S CONSENT
In this lease where the consent of the Landlord is required to any
matter the Superior Lessor's consent shall also be obtained by the
Tenant if appropriate
(7) DISPUTES
Any dispute arising as between the Tenant and the lessee or occupier
of any adjacent or neighbouring premises belonging to the Landlord as
to any easement right or privilege enjoyed or used in common shall be
decided by the Landlord or the Landlord's Surveyor whose decision
(save in the case of manifest error) shall be binding upon all parties
to the dispute
(8) COMPENSATION
Subject to section 38(2) of the Landlord and Tenant Act 1954 neither
the Tenant nor any assignee or underlessee of the Term or of the
Demised Premises shall be entitled on quitting the Demised Premises to
any compensation under the said Act
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<PAGE> 43
(9) LANDLORD AND TENANT ACT 1954
Having been authorised so to do by an Order of the Lambeth County
Court dated 28th November 1995 under the provisions of the Landlord
and Tenant Act 1954 Section 38(4) the Landlord and the Tenant agree
that the provisions of the Landlord and Tenant Act 1954 Sections 24 to
28 inclusive shall be excluded in relation to the tenancy created by
this lease
(10) RIGHTS OF ENTRY
Notwithstanding anything contained in this Lease all rights of entry
into the Demised Premises (whether by the Landlord or its employees or
agents or other owners tenants or occupiers of the Landlord's
adjoining or neighbouring property) shall only be exercised in the
company of an escort provided by ECC Simulation Limited (except in the
case of emergency) and ECC Simulation Limited undertakes to provide
such escort without delay when required The provisions of this clause
6(10) shall only apply while ECC Simulation Limited remains the Tenant
of the Demised Premises
(11) RELEASE OF TENANT
(a) Subject to compliance with the provisions of clause 4(20)(c) then
upon and with effect from completion of a lawful assignment of
the whole of the Demised Premises by the person at that time
being the Tenant ("the Assignor") to another ("the Assignee")
where either the Assignor is a Qualifying Person or the Assignee
is a Qualifying Person the Assignor shall cease to have any
liability for any future breach or non observance or non
performance of the covenants on the part of the Tenant contained
in this Lease and any surety of the Assignor shall cease to have
any liability for any future breach
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<PAGE> 44
or non observance or non performance of the covenants on the part
of the Tenant contained in this Lease pursuant to any convenants
given in any guarantee or agreement between such surety and the
Landlord PROVIDED ALWAYS
(i) that the Assignor and any surety of the Assignor shall
nevertheless remain liable in respect of any subsisting
breach of the said covenants occurring prior to the date of
the lawful assignment; and
(ii) that the Assignor and any surety of the Assignor shall
enter into a Deed of Guarantee whereby the Assignor and any
surety of the Assignor covenants with the Landlord as surety
(in the form reasonably acceptable to it) incorporating a
standard of obligations similar to those set out in Third
Schedule hereto but adapted to suit the circumstances in
which the guarantee is given for the period during which the
Assignee remains liable as tenant under the terms of this
Lease.
(b) If the Assignor and any surety of the Assignor are not
released from their respective liabilities by the operation
of this clause 6(11) because neither the Assignor or the
Assignee is a Qualifying Person then the Assignor and any
surety of the Assignor shall in any event cease to have any
liability for any future breach or non observance or non
performance of the covenants on the part of the Tenant
contained in this Lease with effect from the date of the
first lawful assignment thereafter by a person at that time
being the Tenant to another where either of those persons is
a Qualifying Person.
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<PAGE> 45
(12) INTERPRETATION
(a) Whenever the Demised Premises are vested in more than one person
for the Term every covenant on the part of the Tenant herein
contained shall be deemed to be made jointly and severally by
those persons
(b) Words importing the masculine gender shall include the feminine
gender and words in the singular shall include the plural
(c) The clause headings hereto shall not affect in any way the
construction of this lease
(13) DELIVERY
The provisions of this lease (other than those contained in this
clause) shall have no effect until this lease has been dated
(14) NO AGREEMENT FOR LEASE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
7. SURETY OF COVENANTS
The Surety hereby covenants with the Landlord as follows:-
(1) That the Tenant will throughout the Term and also during such period
as the Tenant remains in occupation of the Demised Premises pay the
rents hereby reserved on the days and in manner aforesaid and shall
duly perform and observe all the covenants hereinbefore on the
Tenant's part contained and that in the event of the Tenant failing to
do so the Surety will indemnify and keep indemnified the Landlord from
and against all actions claims demands costs losses and expenses
which
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may be brought or made against or sustained or incurred by the
Landlord howsoever arising directly or indirectly out of or in
connection with such failure PROVIDED ALWAYS and it is hereby agreed
that any neglect or forbearance of the Landlord in endeavouring to
obtain payment of the several rents when the same become payable or to
enforce performance or observance of the Tenant's covenants and any
time which may be given by the Landlord to the Tenant shall not
release or exonerate or in any way affect the liability of the Surety
under this covenant
(2) That if for any reason the term hereby granted shall be prematurely
determined by forfeiture or if the same shall be disclaimed in
circumstances releasing the Tenant from liability the Surety will (if
so required by the Landlord within 60 days of the date of such
forfeiture or disclaimer) accept from the Landlord a grant of a new
lease of the Demised Premises from the date of such determination or
disclaimer for the residue of the Term then unexpired at the same
several rents hereinbefore reserved and subject to the like covenants
and provisos as are herein contained and at the expense of the Surety
and on the execution of such further lease the Surety shall execute
and deliver to the Landlord a counterpart thereof or (as the case may
be) the Surety shall accept the vesting in it of this lease
(3) That if the Landlord shall not require the Surety to take a lease of
the Demised Premises pursuant to Clause 7(2) above the Surety shall
nevertheless upon demand pay to the Landlord a sum equal to the rent
and to all other payments that would have been payable under this
lease but for the disclaimer in respect of the period from the date of
the said disclaimer until the expiration of six months therefrom or
until the Demised Premises shall have been relet by the Landlord
whichever shall first occur
(4) The Surety represents and warrants to the Landlord that the Surety has
full power authority and legal right to enter into the covenants
contained in this Clause 7
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(5) The rights and obligations of the parties hereto shall be governed and
construed in accordance with English law
(6) The Surety hereby irrevocably:-
(a) agrees that the Courts of England and Wales shall have
jurisdiction to hear and determine any suit action or proceeding
arising out of or relating to this lease (including this Clause
7) and
(b) waives to the fullest extent permitted by law any objection which
the Surety may now or hereafter have to the jurisdiction of the
Courts of England and Wales to hear and determine any suit action
or proceeding arising out of or relating to this lease (including
this Clause 7) or any claim that any such Court is not a
convenient or appropriate forum
(7) The submission to the jurisdiction of the Courts referred to in Clause
7(6) shall not (and shall not be construed as to) limit the right of
the Landlord to take proceedings against the Surety in any other Court
of competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction whether concurrently or not
IN WITNESS whereof the parties have executed this lease as a Deed the day
and year first before written
THE FIRST SCHEDULE above referred to
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PART 1
TENANTS RIGHTS
1. A right of way at all times during the Term for the Tenant its underlessees
and their respective agents employees and licensees in common with the
Landlord and all other person having the like right with or without
vehicles over the part of the Forecourt hatched blue at all times and for
all purposes connected with the use and enjoyment of the Demised Premises
2. An exclusive right at all times during the Term to use the Car Parking
Spaces for the parking of private motor cars in connection with the use and
enjoyment of the Demised Premises
3. A right of escape in the case of emergency for the Tenant its underlessees
and their respective agents employees and licensees in common with the
Landlord and all other person having a like right over along across and
down the Fire Escape
4. A right during the Term to uninterrupted passage and running of water soil
drainage gas electricity and telephone lines and other services (in common
with the Landlord and the Superior Lessor and all other persons having the
like right) through the sewers pipes drains cables wires or other
conducting media in the Landlord and the Superior Lessor's property
adjoining or neighbouring the Demised Premises all such rights to cease and
determine as and when and to the extent from time to time that the said
services shall become adopted and maintainable at public expense and the
right to enter upon the said adjoining or neighbouring property of the
Landlord and the Superior Lessor to make any necessary connections thereto
or to cleanse repair renew the same the person exercising such right
causing as little inconvenience as possible and making good any damage
thereby caused to the property so entered
5. With the Landlord's prior written consent not to be unreasonably withheld
or delayed and upon reasonable prior written notice given to
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the Landlord and all other persons affected thereby the right of access
into and upon the adjacent premises of the Landlord as may be requisite to
enable the Tenant to comply with the Tenant's obligations herein contained
subject to causing as little inconvenience as possible and making good any
damage caused
6. The right during the Term to exhibit the Tenant's name and business details
in such manner as the Landlord shall reasonably decide on the name board
sign erected by the Landlord at the junction of Home Farm Road with Lewes
Road pursuant to the provisions of the Superior Lease
PART 2
LANDLORDS RIGHTS
1. Unto the Landlord and the Superior Lessor and all persons now or hereafter
entitled thereto the right of free and uninterrupted passage and running of
water soil drainage gas electricity telephone lines and other services from
and to any adjoining or neighbouring property by or through the sewers
pipes drains cables wires conduits and ducts and other conducting media
which are or may hereafter during the Term be in under or upon the Demised
Premises and the right to use the Soakaways for the purposes of drainage of
rainwater and surface water from Unit 1 but all such rights hereinbefore
reserved shall cease and determine as and when and to the extent from time
to time that the said services shall become adopted and maintainable at
public expense
2. Unto the Landlord and the Superior lessor and their respective tenants the
right at any time and from time to time hereafter to build upon and use any
of their adjoining or neighbouring land and rebuild or alter any of the
buildings now or hereafter to be erected thereon according to such plans
(whether as to height extent or otherwise) and in such manner as they deem
fit notwithstanding any interference thereby occasioned to the access of
light and air to the Demised Premises or any buildings now or hereafter to
be erected on the site thereof
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3. Unto the Landlord and the Superior Lessor all of the air space from a level
two metres above the ridge level of the building now constructed on the
Demised Premises as shown on the drawing numbered 2532/54 annexed hereto
4. Unto the Landlord with or without workmen and others the right to enter
upon the Demised Premises for the purpose of carrying out the works
referred to in paragraph 5 of Part 1 of the Second Schedule hereto
5. Unto the Landlord and all persons authorised by the Landlord the right at
reasonable times and on reasonable notice (except in emergency) to enter
the Demised Premises and/or the Car Parking Spaces for the purposes of (i)
inspecting the condition and state of repair thereof (ii) carrying out any
works (whether of repair or otherwise) for which the Tenant is liable and
which the Tenant has failed to carry out pursuant to Clause 4(4) and (8)
hereof (iii) carrying out any works (whether of repair or otherwise) to any
property adjoining the Demised Premises or to any party structure sewer
drain or other thing used by the Tenant in common with others subject to
making good any damage to the Demised Premises
THE SECOND SCHEDULE above referred to
PART 1
SERVICE COSTS
1. The repair maintenance and replacement from time to time of any drains
pipes cables and wires or other conducting media under any property
adjoining or neighbouring the Demised Premises until such time and to the
extent that the drains pipes cables and wires or other conducting media
shall become adopted and maintainable at public expense
2. The repair and maintenance from time to time of the Forecourt including the
Car Parking Spaces and the Fire Escape
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<PAGE> 51
3. The repair and maintenance of external lighting for Block 3
4. The repair and maintenance of the burglar alarm system for Block 3
5. The maintenance of the landscaped areas within Block 3 so as to keep the
landscaped areas properly cultivated and trimmed and cut and free from
weeds and in a tidy condition and to ensure that the landscaped areas are
fully planted out with appropriate plants and shrubs
6. Any insurance premiums expended by the Landlord in respect of the Grassed
and Planted Area
7. Discharging all rates taxes assessments duties and impositions payable in
respect of the common parts of the adjoining or neighbouring property of
the Landlord the use of which is shared by the Tenant with others
8. Repairing maintaining and renewing the boundary fence at the rear of Block
3
9. Constructing repairing rebuilding and cleansing all party walls and fences
and also sewers drains pipes wires and other things the use of which is
common to the Demised Premises and any other premises and the said name
board referred to in paragraph 3 of Part 1 of the First Schedule hereto
10. Maintaining and repairing the Grassed and Planted Areas
11. Providing such other services or carrying out any other work which the
Landlord shall from time to time reasonably consider necessary for the
benefit of the Demised Premises and any other premises on the Landlord's
adjoining or neighbouring property
12. Management of the Demised Premises and the adjoining or neighbouring
property of the Landlord by the Landlord's surveyor the reasonably and
proper management fee of the Landlord's Surveyor not to exceed 12 1/2% of
-49-
<PAGE> 52
the total cost incurred by the Landlord for the provision of the services
referred to in this Part 1 of the Second Schedule hereto
PART 2
SERVICE CHARGE
1. The Service Charge to be paid by the Tenant shall be such fair proportion
(which may if appropriate be the whole amount) of the actual or anticipated
Service Costs for each Service Charge Year which shall be assessed by the
Landlord's Surveyor according to a reasonable and proper basis for
apportionment applicable from time to time to the Demised Premises and the
rights hereby granted
2. The Landlord may make and send to the Tenant notice in writing of the
Landlord's estimate of the anticipated Service Costs and the Service Charge
applicable to the Demised Premises for each Service Charge Year and the
Tenant shall pay such estimate of the Service Charge by equal quarterly
instalments in advance on the usual quarter days
3. The Landlord will (unless prevented by causes beyond its control) prepare
and send to the Tenant a detailed statement of the actual Service Costs and
Service Charge for each Service Charge Year as soon as practicable after
the end of such year and in the event of the Service Charge for the Demised
Premises exceeding the aggregate amount paid by the Tenant for such year
the Tenant will pay the balance due to the Landlord forthwith and in the
event of the aggregate amount being greater the excess will be credited by
the Landlord by way of set-off against the next instalment of Service
Charge due from the Tenant
THE THIRD SCHEDULE above referred to
1. That the Tenant will throughout the Term and also during such period as the
Tenant remains in occupation of the Demised Premises pay the
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<PAGE> 53
rents hereby reserved on the days and in manner aforesaid and shall duly
perform and observe all the covenants hereinbefore on the Tenant's part
contained and that in the event of the Tenant failing to do so the Surety
will indemnify and keep indemnified the Landlord from and against all
actions claims demands costs losses and expenses which may be brought or
made against or sustained or incurred by the Landlord howsoever arising
directly or indirectly out of or in connection with such failure PROVIDED
ALWAYS and it is hereby agreed that any neglect or forbearance of the
Landlord in endeavouring to obtain payment of the several rents when the
same become payable or to enforce performance or observance of the Tenant's
covenants and any time which may be given by the Landlord to the Tenant
shall not release or exonerate or in any way affect the liability of the
Surety under this covenant
2. That if for any reason the term hereby granted shall be prematurely
determined by forfeiture or if the same shall be disclaimed in
circumstances releasing the Tenant from liability the Surety will (if so
required by the Landlord) accept from the Landlord a grant of a new lease
of the Demised Premises from the date of such determination or disclaimer
for the residue of the Term then unexpired at the same several rents
hereinbefore reserved and subject to the like covenants and provisos as are
herein contained and at the expense of the Surety and on the execution of
such further lease the Surety shall execute and deliver to the Landlord a
counterpart thereof or (as the case may be) the Surety shall accept the
vesting in it of this lease
3. That if the Landlord shall not require the Surety to take a lease of the
Demised Premises pursuant to paragraph 2 above the Surety shall
nevertheless upon demand pay to the Landlord a sum equal to the rent and to
all other payments that would have been payable under this lease but for
the disclaimer in respect of the period from the date of the said
disclaimer until the expiration of six months therefrom or until the
Demised Premises shall have been relet by the Landlord whichever shall
first occur
-51-
<PAGE> 54
THE COMMON SEAL of ECC
(SIMULATION LIMITED was
(hereunto affixed in the
(presence of:-
Director:
Authorised
Signatory
THE COMMON SEAL of ECC )
INTERNATIONAL CORP. was )
hereunto affixed in the )
presence of:- )
President:
Secretary:
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<PAGE> 1
EXHIBIT 10.23
ECC INTERNATIONAL CORP.
EXECUTIVE SAVINGS PLAN
WHEREAS, many senior level employees of ECC International Corp. (the
"Company") are unable to participate fully in the ECC International Corp.
Savings and Investment Plan (the "Savings and Investment Plan") as a result of
limitations imposed by various provisions of the Internal Revenue Code of 1986,
as amended, (the "Code"); and
WHEREAS, the Company wishes to provide a mechanism by which such executives
may be encouraged and aided in saving part of their compensation for retirement;
NOW, THEREFORE, the Company has established an Executive Savings Plan (the
"Plan") upon the following terms:
1. Effective January 1, 1996 (the "Effective Date"), any employee who is an
executive may be designated as a Participant in the Plan by designation of the
Committee on Employee Benefit Plans (the "Committee"), provided that such
individual earns more than a minimum amount set by the Committee, which amount
must be sufficient for such individual to qualify as a Highly Compensated
Employee under the Code during each year of participation. The Plan Year of the
Plan shall end on June 30. The first Plan Year of the Plan shall be the period
beginning on the Effective Date and ending on June 30, 1996.
2. Election to Participate. Any individual designated as a Participant may
elect to participate in the Plan by submitting a
<PAGE> 2
form to the Committee electing a percentage of compensation, from 3% to 6% (in
increments of 1%), that will be deposited in the Plan's Investment Accounts. For
the first Plan Year of the Plan, such election must be made on or before the
Effective Date. For any subsequent Plan Year, such election must be made prior
to the first day of the Plan Year. Any individual who elects to participate must
elect not to participate in the Savings and Investment Plan for each fiscal year
during which the individual is participating in this Plan. An individual shall
not be deemed to have participated in the Savings and Investment Plan by virtue
of his account under such plan being adjusted for investment earnings, or by
virtue of his account under such plan receiving a contribution that relates to
compensation earned in a prior Plan Year or prior to the Effective Date of this
Plan. If the Company determines that the Participant has actively participated
in the Savings and Investment Plan while participating in Executive Savings
Plan, then the amount contributed to the Plan's Investment Account on behalf of
such Participant for that Plan Year will be forfeited and returned to the
Company.
3. Deposit of Funds. The percentage of compensation elected by the
Participant as a Plan contribution will be withheld from all compensation paid
during said Plan Year. Compensation is defined as a Participant's base salary,
plus management incentive and marketing incentive. All amounts withheld will be
deposited in Investment Accounts, as described in Section 5 below, and as
-2-
<PAGE> 3
directed by the Participant. Each Investment Account will be in the name of
the Participant.
4. Company Contribution. The Company will contribute an amount equal to 75%
of the amount contributed by the Participant, taking into account only
Participant contributions that do not exceed 6% of the Participant's
compensation. Company contributions shall be made at the same time and in
proportion to the Participant contributions up to the annual maximum. The
contribution will be deposited in the same Investment Account as the
Participant contribution.
5. Investment Accounts. The Participant contributions and matching Company
contributions will all be deposited in one or more Investment Accounts that are
invested in Vanguard mutual funds, as selected by the Participant from among the
Vanguard mutual funds selected for such purpose by the Committee. The
Participant shall be permitted to change his investment election with respect to
the Vanguard mutual funds once per calendar quarter by providing written notice
to the Committee. Subject to any limitations imposed by Vanguard, the
Participant is free to redirect contributions which are in these Investment
Accounts into any other investment account that the Participant wishes to
establish. However, if there is any forfeiture of Company contributions arising
as a result of the Participant's decision to participate in the Savings and
Investment Plan, then the
-3-
<PAGE> 4
Participant shall return to the Company all amounts deposited during the year
of such participation.
6. General Administration. This Plan shall be administered by the
Committee, which has the authority to interpret all the Plan's provisions and to
implement its terms. It is understood that the Participant contributions are not
entitled to any special income tax treatment and that all contributions are
fully taxable to the individual under the Code, when earned. Withholding with
respect to the Company contributions will be made out of the other amounts paid
to the Participant for the pay period during which the contributions will be
made.
7. Termination of Participation; Changes in Participant Contributions. Any
individual may elect to cease participation in the Plan at any time by providing
written notice to the Committee. A Participant may change the amount of the
Participant's contributions once per calendar quarter by providing written
notice to the Committee. If any individual ceases to be a Participant during a
Plan Year, that individual may not participate in the Plan for the remainder of
the Plan Year.
8. Amendment and Termination of the Plan. The company may at any time amend
the Plan by written instrument, notice of which shall be given to all
Participants. In addition, the Company may at any time terminate the Plan.
9. Not a Contract of Employment. This Plan shall not constitute a contract
of employment between the Company and the
-4-
<PAGE> 5
Participant. Nothing in this Plan shall give a Participant the right to be
retained in the service of the Company or to interfere with the right of the
Company to discipline or discharge a Participant at any time.
10. Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the Commonwealth of Pennsylvania.
11. Validity. In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
12. Notice. Any notice required or permitted under the Plan shall be
sufficient if in writing and hand delivered or sent by registered or certified
mail. Such notice shall be deemed as given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification. Mailed notice to the Committee shall be
directed to the Company's address.
13. Successors. The provisions of this Plan shall bind and inure to the
benefit of the Company and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity that, whether
by merger, consolidation, purchase or otherwise, acquired all or
-5-
<PAGE> 6
substantially all of the business and assets of the Company, and successors of
any such corporation or other business entity.
IN WITNESS WHEREOF, the company has caused this instrument to be executed
by its officer thereunto duly authorized as of the 15 day of December, 1995.
ECC INTERNATIONAL CORP.
By:
Title:
-6-
<PAGE> 1
Exhibit 11
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
December 31 December 31
1995 1994
<S> <C> <C>
Primary
Net Income $ 3,246 $ 2,525
========== ==========
Weighted Average Shares Outstanding 7,724,559 7,609,346
Incremental Shares from Assumed
Exercise of Stock Options 198,444 315,125
---------- ----------
Total Shares 7,923,003 7,924,471
========== ==========
Primary Per Share Amounts
Net Income $ 0.41 $ 0.32
========== ==========
Fully Diluted*
Net Income $ 3,246 $ 2,525
========== ==========
Weighted Average Shares Outstanding 7,724,559 7,609,346
Incremental Shares from Assumed
Exercise of Stock Options 198,444 302,849
--------- ----------
Total Shares 7,923,003 7,912,195
========== ==========
Fully Diluted Per Share Amounts
Net Income $ 0.41 $ 0.32
========== ==========
</TABLE>
* Fully diluted earnings per share calculation is presented in accordance with
Regulation S-K item 601(b)(11) although not required by footnote 2 to
paragraph 14 of Accounting Principles Board Opinion No. 15 because it results
in dilution of less than 3%.
<PAGE> 2
Exhibit 11
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
December 31 December 31
1995 1994
<S> <C> <C>
Primary
Net Income $ 1,559 $ 1,189
========== ==========
Weighted Average Shares Outstanding 7,724,891 7,554,038
Incremental Shares from Assumed
Exercise of Stock Options 146,170 302,757
---------- ----------
Total Shares 7,871,061 7,856,795
========== ==========
Primary Per Share Amounts
Net Income $ 0.20 $ 0.15
========== ==========
Fully Diluted*
Net Income $ 1,559 $ 1,189
========== ==========
Weighted Average Shares Outstanding 7,724,891 7,554,038
Incremental Shares from Assumed
Exercise of Stock Options 183,304 307,057
---------- ----------
Total Shares 7,908,195 7,861,095
========== ==========
Fully Diluted Per Share Amounts
Net Income $ 0.20 $ 0.15
========== ==========
</TABLE>
* Fully diluted earnings per share calculation is presented in accordance
with Regulation S-K item 601(b)(11) although not required by footnote 2
to paragraph 14 of Accounting Principles Board Opinion No. 15 because it
results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,165
<SECURITIES> 0
<RECEIVABLES> 15,627
<ALLOWANCES> 93
<INVENTORY> 14,493
<CURRENT-ASSETS> 66,504
<PP&E> 53,850
<DEPRECIATION> 29,278
<TOTAL-ASSETS> 93,012
<CURRENT-LIABILITIES> 22,398
<BONDS> 16,235
0
0
<COMMON> 775
<OTHER-SE> 52,035
<TOTAL-LIABILITY-AND-EQUITY> 93,012
<SALES> 58,671
<TOTAL-REVENUES> 58,671
<CGS> 45,907
<TOTAL-COSTS> 45,907
<OTHER-EXPENSES> 314
<LOSS-PROVISION> 65
<INTEREST-EXPENSE> 851
<INCOME-PRETAX> 4,959
<INCOME-TAX> 1,703
<INCOME-CONTINUING> 3,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,246
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
