<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 1994
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 1 - 7272
-------------------
KERR GROUP, INC.
- - - ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-0898810
- - - ------------------------------------------ -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 Century Park East, Los Angeles, CA 90067
- - - ------------------------------------------ -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 556-2200
-------------------------
- - - ------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last year.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No ____
The number of shares of Registrant's Common Stock, $.50 par value, outstanding
as of October 31, 1994 was 3,677,095.
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KERR GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993 3 - 4
Condensed Consolidated Statements of Earnings (Loss) -
Three Months and Nine Months Ended September 30, 1994 and 1993 5
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1994 and 1993 6
Notes to Condensed Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 10
Part II. Other Information 11
</TABLE>
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KERR GROUP, INC.
Consolidated Balance Sheets
As of September 30, 1994 and December 31, 1993
(in thousands except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
September 30, December 31,
Assets 1994 1993
- - - ------ ------------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,926 $ 11,329
Receivables-primarily trade accounts,
less allowance for doubtful accounts
of $724 at September 30, 1994 and $578
at December 31, 1993 21,618 13,533
Inventories
Raw materials and work in process 10,453 8,906
Finished goods 18,685 19,126
-------- --------
Total inventories 29,138 28,032
Prepaid expenses and other current assets 1,955 2,527
Deferred income taxes 1,854 0
-------- --------
Total current assets 57,491 55,421
-------- --------
Property, plant and equipment, at cost 98,373 90,652
Accumulated depreciation and amortization (55,328) (50,228)
-------- --------
Net property, plant and equipment 43,045 40,424
-------- --------
Goodwill and other intangibles, net of
amortization of $2,388 at September 30,
1994 and $2,122 at December 31, 1993 6,788 6,645
Deferred income taxes 2,981 6,629
Other assets 4,125 4,201
Non-current assets related to discontinued operations 4,479 4,029
-------- --------
$118,909 $117,349
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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KERR GROUP, INC.
Consolidated Balance Sheets (continued)
As of September 30, 1994 and December 31, 1993
(in thousands except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
September 30, December 31,
Liabilities and Stockholders' Equity 1994 1993
- - - ------------------------------------ ------------- ------------
<S> <C> <C>
Current liabilities
Short-term debt $ 1,000 $ 0
Accounts payable 10,461 9,573
Accrued expenses 7,594 9,089
-------- --------
Total current liabilities 19,055 18,662
-------- --------
Accrued pension liability 16,745 18,321
Other long-term liabilities 1,889 2,302
Senior long-term debt 50,000 50,000
Stockholders' equity
Preferred Stock, 487 shares authorized
and issued, at liquidation value of
$20 per share 9,748 9,748
Common Stock, $ .50 par value per share,
20,000 shares authorized, 4,220
shares issued at September 30, 1994 and
4,210 shares issued at December 31, 1993 2,110 2,105
Additional paid-in capital 27,210 27,145
Retained earnings 11,971 9,420
Treasury Stock, 543 shares at cost (12,803) (12,803)
Excess of additional pension liability
over unrecognized prior service
cost, net of tax benefits (6,835) (6,835)
Notes receivable from ESOP Trusts (181) (716)
-------- --------
Total stockholders' equity 31,220 28,064
-------- --------
$118,909 $117,349
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
KERR GROUP, INC.
Condensed Consolidated Statements of Earnings (Loss)
for the Three Months and Nine Months Ended September 30, 1994 and 1993
(in thousands except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------- --------------------------
1994 1993 1994 1993
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Net sales $40,624 $34,448 $111,008 $99,235
Cost of sales 28,617 24,616 76,749 69,674
------- ------- -------- -------
Gross profit 12,007 9,832 34,259 29,561
Selling, warehouse, general and
administrative expense 8,559 7,594 25,337 22,915
Interest expense 1,263 1,457 3,727 4,473
Interest and other income (66) (199) (297) (671)
------- ------- -------- -------
Earnings before income taxes 2,251 980 5,492 2,844
Provision for income taxes 941 428 2,320 1,189
------- --------- -------- -------
Earnings before extraordinary item 1,310 552 3,172 1,655
Extraordinary loss on retirement of debt 0 (1,300) 0 (1,300)
------- -------- -------- -------
Net earnings (loss) $ 1,310 $ (748) $ 3,172 $ 355
Preferred stock dividends 207 207 621 621
------- -------- -------- -------
Net earnings (loss) applicable to
common stockholders $ 1,103 $ (955) $ 2,551 $ (266)
======= ======== ======== =======
Net earnings (loss) per common share,
primary and fully diluted:
Earnings per common share before
extraordinary item $ 0.30 $ 0.09 $ 0.69 $ 0.28
Extraordinary loss per common share on
retirement of debt 0.00 (0.35) 0.00 (0.35)
------- -------- -------- -------
Net earnings (loss) per common share $ 0.30 $ (0.26) $ 0.69 $ (0.07)
======= ======== ======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 6
KERR GROUP, INC.
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
September 30,
---------------------------
1994 1993
------------ ----------
<S> <C> <C>
Cash flows provided (used) by operations
- - - ----------------------------------------
Earnings before extraordinary item $ 3,172 $ 1,655
Add (deduct) noncash items included in
net earnings
Depreciation and amortization 5,773 5,541
Change in deferred income taxes 1,794 726
Reduction in long-term pension liability (1,576) (1,374)
Other, net 225 (804)
Changes in other operating working capital
Receivables (8,085) (3,912)
Inventories (1,106) (2,246)
Prepaid expenses 594 (909)
Accounts payable and accrued expenses 2,518 (962)
-------- --------
Cash flows provided (used) by operations 3,309 (2,285)
-------- --------
Cash flows provided (used) by investing activities
- - - --------------------------------------------------
Capital expenditures (8,178) (5,542)
Payments associated with relocation of home
canning cap and lid operations (2,440) 0
Collection of accounts receivable, and payment of
accounts payable and accrued and other expenses
related to discontinued operations (1,802) (2,440)
Other, net (276) (1,388)
-------- --------
Cash flows used by investing activities (12,696) (9,370)
-------- --------
Cash flows provided (used) by financing activities
- - - --------------------------------------------------
Net borrowings under lines of credit 1,000 0
Issuance of Senior Notes 0 50,000
Extinguishment of Subordinated Debt 0 (41,131)
Retirement of long-term debt 0 (1,000)
Dividends paid (621) (621)
Other 605 344
-------- --------
Cash flows provided by financing activities 984 7,592
-------- --------
Cash and cash equivalents
- - - -------------------------
Decrease during the period (8,403) (4,063)
Balance at beginning of the period 11,329 19,251
-------- --------
Balance at end of the period $ 2,926 $ 15,188
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE> 7
KERR GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) General
The condensed consolidated financial statements include the accounts of Kerr
Group, Inc. and its wholly owned subsidiary (collectively referred to as
the Company). In the opinion of management, the accompanying condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the financial
position of the Company as of September 30, 1994, the results of operations
for the three months and nine months ended September 30, 1994 and 1993, and
changes in cash flows for the nine months ended September 30, 1994 and
1993.
The results of operations for the first nine months of 1994 are not
necessarily indicative of the results to be expected for the full year.
2) Earnings Per Share
Fully diluted earnings per common share reflect when dilutive, 1) the
incremental common shares issuable upon the assumed exercise of outstanding
stock options, and 2) the assumed conversion of the Preferred Stock and the
elimination of the related Preferred Stock dividends. The calculation of
fully diluted net earnings (loss) per common share for the three and nine
months ended September 30, 1994 and 1993 was not dilutive.
3) Debt
On May 2, 1994, the Company replaced its two existing unsecured $6,000,000
short-term lines of credit with two unsecured $10,000,000 short-term lines
of credit. The lines of credit provide for the seasonal working capital
needs of the Company. The $10,000,000 lines of credit are committed
through April 30, 1995. One of the $10,000,000 lines of credit provides
for borrowings to bear interest at either the prime rate of the lender or,
alternatively, Eurodollar rate plus 1.5% and charges a facility fee of 0.5%
per annum on the commitment. The other $10,000,000 line of credit provides
for borrowings to bear interest at the prime rate of the lender and charges
a facility fee of 0.75% per annum on the commitment. The lines of credit
contain covenants identical to the Senior Notes.
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<PAGE> 8
KERR GROUP, INC.
Computation of Earnings (Loss) Per Common Share
(in thousands except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Primary Net Earnings (Loss) Per Common Share
Net earnings (loss) $1,310 $ (748) $3,172 $ 355
Less Preferred Stock dividends (207) (207) (621) (621)
------ ------ ------ ------
Net earnings (loss) applicable to primary earnings
per common share $1,103 $ (955) $2,551 $ (266)
====== ====== ====== ======
Weighted average number of common
shares outstanding 3,677 3,667 3,673 3,670
====== ====== ====== ======
Primary net earnings (loss) per common share $ 0.30 $(0.26) $ 0.69 $(0.07)
====== ====== ====== ======
Fully Diluted Net Earnings (Loss) Per Common Share
- - - --------------------------------------------------
Net earnings (loss) applicable to primary earnings
per common share $1,103 $ (955) $2,551 $ (266)
Add Preferred Stock dividends 207 207 621 621
------ ------ ------ ------
Net earnings (loss) applicable to fully
diluted earnings per common share $1,310 $ (748) $3,172 $ 355
====== ====== ====== ======
Weighted average number of common
shares outstanding 3,677 3,667 3,673 3,670
Common shares issuable upon assumed
conversion of Preferred Stock 709 709 709 709
Incremental common shares issuable upon
assumed exercise of outstanding stock options 22 8 22 8
------ ------ ------ ------
Adjusted weighted average number of common
shares outstanding 4,408 4,384 4,404 4,387
====== ====== ====== ======
Fully diluted net earnings (loss) per common share:
As computed $ 0.30 $(0.17) $ 0.72 $ 0.08
====== ====== ====== ======
As reported(a) $ 0.30 $(0.26) $ 0.69 $(0.07)
====== ====== ====== ======
</TABLE>
(a) The calculation of fully diluted net earnings (loss) per common share
for the three and nine months ended September 30, 1994 and 1993 was
not dilutive.
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<PAGE> 9
KERR GROUP, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three Months and Nine Months Ended September 30, 1994 and 1993
Results of Operations
Net sales for the three months ended September 30, 1994 were $40,624,000 as
compared to $34,448,000 for the three months ended September 30, 1993, an
increase of $6,176,000 or 17.9%. The increase in net sales for the three
months ended September 30, 1994 over the comparable period in 1993 was due
primarily to higher unit sales in the Consumer Products and Plastic Products
Businesses.
Net sales for the nine months ended September 30, 1994 were $111,008,000 as
compared to $99,235,000 for the nine months ended September 30, 1993, an
increase of $11,773,000 or 11.9%. The increase in net sales for the nine
months ended September 30, 1994 over the comparable period in 1993 was due
primarily to higher unit sales in the Plastic Products and Consumer Products
Businesses.
Cost of sales for the three months ended September 30, 1994 were $28,617,000 as
compared to $24,616,000 for the three months ended September 30, 1993, an
increase of $4,001,000 or 16.3%. Cost of sales for the nine months ended
September 30, 1994 were $76,749,000 as compared to $69,674,000 for the nine
months ended September 30, 1993, an increase of $7,075,000 or 10.2%. The
increase for both periods in 1994 over comparable periods in 1993 was due
primarily to higher unit sales.
Gross profit as a percent of net sales for the three months ended September 30,
1994 increased to 29.6% as compared to 28.5% for the three months ended
September 30, 1993. Gross profit as a percent of net sales for the nine months
ended September 30, 1994 increased to 30.9% as compared to 29.8% for the nine
months ended September 30, 1993.
Selling, warehouse, general and administrative expenses increased $965,000 or
12.7% during the three months ended September 30, 1994, as compared to the same
period in 1993. The increase for the three months was primarily due to salary
and wage increases, higher bad debt expense, additional employees and higher
legal and professional fees.
Selling, warehouse, general and administrative expenses increased $2,422,000 or
10.6% during the nine months ended September 30, 1994, as compared to the same
period in 1993. The increase for the nine months was primarily due to
additional employees, higher bad debt expense, and salary and wage increases.
Net interest expense decreased $61,000 and $372,000 during the three month and
nine month periods ended September 30, 1994, respectively, as compared to the
same periods in 1993, as a result of the refinancing of the Company's long-term
debt on September 21, 1993.
Earnings before income taxes increased $1,271,000 during the three months ended
September 30, 1994, as compared to the same period in 1993 due to higher
earnings in both the Consumer Products and Plastic Products Businesses.
Earnings before income taxes increased $2,648,000 during the nine months ended
September 30, 1994 as compared to the same period in 1993 due to higher
earnings in both the Consumer Products and Plastic Products Businesses and
lower interest expense as a result of the refinancing of the Company's
long-term debt on September 21, 1993. Earnings of the Consumer Products
Business increased significantly in the three month and nine month periods of
1994 as compared to the same periods in 1993 due to higher sales as a result of
favorable weather and growing conditions in many areas of the country where the
Company markets home canning supplies, compared to the adverse weather
conditions experienced during 1993.
The provision for income taxes increased $513,000 and $1,131,000 during the
three month and nine month periods ended September 30, 1994, respectively, as
compared to the same periods in 1993 due primarily to higher pretax earnings.
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<PAGE> 10
The Company successfully completed the relocation of its home canning cap and
lid manufacturing operations to Jackson, Tennessee during August 1994. The new
facility is ultimately expected to result in improved efficiencies and cost
reductions of approximately $3,000,000 pre-tax per year ($1,836,000 after-tax,
or 50 cents per common share per year). In anticipation of the relocation, the
Company produced home canning caps and lids in excess of normal requirements.
As a result, the Company will not realize significant earnings improvement from
the relocation until 1996, when inventories and production volume are at normal
levels.
The Company's sales and earnings are usually higher in the second and third
quarters and lower in the first and fourth quarters because of the seasonal
nature of the sales of home canning supplies.
Extraordinary Loss
During the third quarter of 1993, the Company incurred an after-tax loss of
$1,300,000 or 35 cents per common share (primary and fully diluted) in
connection with the refinancing on September 21, 1993 of its 13% Subordinated
Notes and the termination of its revolving credit facility. The extraordinary
loss included interest expense on the 13% Subordinated Notes from September 21,
1993 through December 15, 1993 (the date on which the Subordinated Notes were
redeemed at par) and the write-off of unamortized debt fees and related costs.
Financial Condition
Cash flow was generated by operations in the nine months ended September 30,
1994 in the amount of $3,309,000 and used by operations in the nine months
ended September 30, 1993 in the amount of $2,285,000. The comparable
improvement in funds provided by operations is due primarily to higher pretax
earnings and lower working capital requirements.
Cash flow was used by investing activities in the nine months ended September
30, 1994 in the amount of $12,696,000 and in the nine months ended September
30, 1993 in the amount of $9,370,000, primarily related to capital expenditures
and cash costs associated with discontinued operations and also in 1994 related
to the Company's relocation of its home canning cap and lid operations.
Cash flow was provided by financing activities in the nine months ended
September 30, 1994 in the amount of $984,000 primarily attributable to
borrowings under the Company's working capital lines of credit. Cash flow was
generated by financing activities in the nine months ended September 30, 1993
in the amount of $7,592,000, primarily attributable to the sale of $50 million
principal amount of unsecured Senior Notes to a group of insurance companies.
A portion of the proceeds from that sale were deposited with a trustee to
provide for the redemption of all of the $40,000,000 principal amount of 13%
Subordinated Notes on December 15, 1993 when they became redeemable at par.
The ratio of current assets to current liabilities at both September 30, 1994
and December 31, 1993 was 3.0. The ratio of total debt to total capitalization
decreased to 62.0% at September 30, 1994 from 64.1% at December 31, 1993 due
primarily to higher retained earnings of the Company.
As of September 30, 1994, the Company had two unsecured $10,000,000 lines of
credit with two banks to provide for the seasonal working capital needs of the
Company. The lines of credit are committed through April 30, 1995. The lines
of credit provide the Company with a source of working capital which the
Company believes will be sufficient to meet its anticipated needs.
At September 30, 1994, the Company had unused sources of liquidity consisting
of cash and cash equivalents of $2,926,000, unused committed credit under bank
lines of credit of $19,000,000, of which $11,068,000 could be borrowed under
the terms of the Company's Senior Note Agreement, tax net operating loss
carryforwards of $2,640,000 and certain tax credit carryforwards of $1,975,000.
- 10 -
<PAGE> 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.3 Lease dated October 5, 1989 between Century 21 Associates, as
lessor, and Santa Fe Plastic Corporation, as lessee.
10.4 Amended and restated lease dated as of May 16, 1994 between
Phoenician Properties, as lessor, and Kerr Group, Inc., as
lessee.
10.5 Amendment dated May 18, 1994 by and between Century 21 Associates
and Kerr Group, Inc. related to lease dated October 5, 1989.
10.6 Lease agreement dated June 30, 1994 between Bowling Green-Warren
County Industrial Authority IV, Inc. and Kerr Group, Inc.
b. Reports on Form 8-K
There were no reports filed on Form 8-K for the three months ended September
30, 1994.
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.
KERR GROUP, INC.
November 10, 1994 By /s/ D. Gordon Strickland
-------------------------------
D. Gordon Strickland
Senior Vice President, Finance,
Chief Financial Officer
November 10, 1994 By /s/ J. Stephen Grassbaugh
-------------------------------
J. Stephen Grassbaugh
Vice President, Controller,
Chief Accounting Officer
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<PAGE> 1
EXHIBIT 10.3
LEASE
BETWEEN
CENTURY 21 ASSOCIATES,
AS LESSOR,
AND SANTA FE PLASTIC CORPORATION,
AS LESSEE
DATED: OCTOBER 5, 1989
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Article No. Title Page
- - - ----------- ----- ----
<S> <C> <C>
1 Rent Payments; Additional Rent............................ 2
2 Repairs .................................................. 3
3 Compliance With Laws...................................... 4
4 Surrender At End Of Term.................................. 6
5 Mechanics' Liens.......................................... 7
6 Inspection by Lessor...................................... 8
7 Mortgaging................................................ 8
8 Indemnification Of Lessor................................. 11
9 Insurance; Restoration.................................... 12
10 Condemnation.............................................. 17
11 Assignment And Subletting................................. 18
12 Taxes..................................................... 20
13 Defaults.................................................. 22
14 No Reinstatement.......................................... 28
15 Subordination............................................. 29
16 Quiet Enjoyment........................................... 31
17 Successors And Assigns.................................... 31
18 Alterations............................................... 31
19 Notices................................................... 33
20 No Waiver................................................. 34
21 Remedies Cumulative....................................... 35
22 Entire Agreement.......................................... 36
23 Representations Of Lessor................................. 36
24 Indemnification Of Lessee................................. 37
25 Estoppel Certificates..................................... 38
26 Certain Definitions....................................... 39
27 Extension of Term......................................... 40
28 Purchase Option........................................... 40
29 Conditions Precedent...................................... 43
30 Hazardous Waste/Substances................................ 46
31 Signage................................................... 48
32 Purposes.................................................. 49
</TABLE>
<PAGE> 3
This Lease made this 5th day of October, 1989, between CENTURY 21
ASSOCIATES, a Tennessee general partnership, having its principal office at
P.O. Box 200, Jackson, Tennessee 38302, attention Larry Becker ("Lessor") and
Santa Fe Plastic Corporation, a California corporation, having its principal
office at 9601 John Street, Santa Fe Springs, Caliornia 90670 ("Lessee").
WITNESSETH:
Lessor leases to the Lessee, and the Lessee leases from the Lessor,
the real property described in Exhibit "A" attached to and made a part of this
Lease, together with all rights, privileges, easements, appurtenances and
amenities belonging or in any way pertaining thereto, and together with a
building containing 104,800 square feet constructed on the real property (the
"Demised Premises").
To have and to hold for a term commencing on the date that the Lessee
has received possession of the Demised Premises in accordance with the
provisions of Article 29 (the "Commencement Date") and ending on the date that
is thirteen (13) years after the Commencement Date (unless sooner terminated as
hereinafter provided) at the net annual rental of Three Hundred Fourteen
Thousand Four Hundred Dollars ($314,400.00) payable commencing upon the
Commencement Date in equal monthly installments of Twenty Six Thousand Two
Hundred Dollars $26,200.00) in advance on the first day of each month during
the term. If the
<PAGE> 4
Commencement Date does not occur on the first day of the month, Lessee
shall pay rent for the fractional month on a per diem basis, calculated on the
basis of a thirty (30) day month.
The Lessor shall receive the net annual rental free from all taxes,
assessments, charges, expenses, damages, repairs, maintenance and deductions of
every description (except those damages or repairs caused by or resulting from
acts of Lessor or its agents, contractors or employees), and Lessee shall pay
all of these which, except for this Lease, would have been chargeable against
the Demised Premises and payable by the Lessor. However, nothing contained in
this Lease shall obligate Lessee to pay any interest or principal on any
mortgage or other financing of Lessor's interest in the Demised Premises.
Notwithstanding anything herein to the contrary, Lessee shall be entitled to an
abatement of the first three (3) full months' rental payments.
ARTICLE 1
RENT PAYMENTS; ADDITIONAL RENT
1.01. The Lessee will pay to the Lessor the rent reserved in this
Lease, and all other sums that may become due or be payable by the Lessee under
this Lease, at the time and in the manner provided in this Lease. All of such
other sums to be paid may, at the Lessor's option, be deemed to be additional
rent to be added to any fixed rent then due or thereafter falling due,
- 2 -
<PAGE> 5
and in the event of non-payment, the Lessor shall have all the rights
and remedies provided by this Lease in the case of non-payment of rent or of a
breach of condition. Rental payments shall be tendered in legal tender and
lawful money of the United States at the office of Lessor or such other place
as Lessor may designate in writing. Rental payments shall be without setoff,
abatement, deduction or other reduction whatsoever.
ARTICLE 2
REPAIRS
2.01. The Demised Premises, together with the sidewalks adjacent
thereto, shall be kept in good order and repair by the Lessee at the Lessee's
sole cost and expense, and the Lessee shall make all repairs and replacements,
ordinary as well as extraordinary, foreseen and unforeseen, of every kind and
nature whatsoever, including necessary interior and exterior roof and wall
maintenance and repair, that may be necessary or required in or about the same
so that at all times those buildings, improvements, and sidewalks shall be in
good order, condition, and repair. The Lessor shall, to the extent possible,
assign to the Lessee, on the Commencement Date all manufacturers' and builders'
or contractors' warranties for the improvements and equipment located on, or
installed in, the Demised Premises.
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<PAGE> 6
ARTICLE 3
COMPLIANCE WITH LAWS
3.01. LESSEE'S OBLIGATION TO COMPLY WITH LAWS - Lessee covenants to
comply with any and all laws, statutes, ordinances and regulations, federal,
state, county or municipal, now or hereinafter in force applicable to the
Demised Premises relating to the use or occupancy thereof or to the making of
repairs thereto, or of changes, alterations or, improvements therein, ordinary
or extraordinary, structural or otherwise, seen or unforeseen, including but
not limited to the performance of any duty imposed upon the Lessor or Lessee by
such laws, statutes, ordinances or regulations in respect to the sidewalks,
curbs, streets or vaults adjacent to the Demised Premises. The Lessee also
covenants to comply with any and all regulations and rules applicable to the
Demised Premises issued by the Board of Fire Underwriters, or by any other body
exercising similar functions, and insurance companies writing policies covering
the Demised Premises which now or hereafter may become applicable to the
Demised Premises. Lessee shall have the right to contest by appropriate legal
proceedings diligently conducted in good faith, in the name of the Lessee, or
Lessor (if legally required) or both (if legally required), without cost or
expense to Lessor, the validity or application of any law, ordinance, order,
rule, regulation or requirement of the nature referred to in this
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<PAGE> 7
Article 3 and, if by the terms of any such law, ordinance, order, rule,
regulation, or requirement, compliance therewith may legally be delayed pending
the prosecution of any such proceeding, Lessee may delay such compliance
therewith until the final determination of such proceeding. Lessee will
indemnify Lessor against all adverse consequences of such contest, including
court costs, interest, penalties or other expense including attorneys' fees.
Lessee shall pay all costs, expenses, claims, fines, penalties and damages that
may in any manner arise out of or be imposed because of the failure of Lessee
to comply with this Article 3, and in any event agrees to indemnify the Lessor
from all liability with reference to the same. The Lessor and Lessee shall each
promptly give notice to the other in writing at the address listed in the Lease
of any notice of violation received by the Lessee or Lessor, respectively.
Without diminishing the obligation of the Lessee, if the Lessee shall at any
time fail or neglect to comply, to the extent reasonably appropriate and as
expeditiously as reasonably feasible, with any of said laws, rules,
requirements, orders, directions, ordinances or regulations concerning or
affecting the Demised Premises or the use and occupation thereof, or of any
building thereof, as hereinbefore provided and, if a stay is necessary, shall
have failed to obtain the stay or continuance thereof, the Lessor in addition
to other remedies shall be at liberty, after ten (10) days prior written notice
to Lessee, to
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comply therewith, and reasonable expenses consequent thereon shall be
borne and paid by the Lessee; upon Lessee's failure so to pay, Lessor may pay
the same and any payments so made by the Lessor, together with interest thereon
to be computed at the rate of fourteen percent (14%) per annum from date of
payment shall be considered as additional rent to be added to the installment
of rent next accruing, and shall entitle the Lessor to enforce any of the
terms, provisions, conditions and covenants herein contained that may be
applicable to such rent.
ARTICLE 4
SURRENDER AT END OF TERM
4.01. The Lessee will surrender and deliver up the Demised Premises,
including, but not limited to, all buildings, improvements, hoists, pipes,
plumbing, engines, electric wires, and fixtures used in connection with the
operation of the Demised Premises (but no movable trade fixtures and equipment
of occupants in possession of the Demised Premises) at the expiration of the
term of this Lease or sooner termination, if the term, in good repair and
condition, reasonable wear and tear thereof excepted. Notwithstanding the
foregoing, the Lessee may, at its option, remove any furnishings, fixtures and
equipment which it has installed (including, without limitation, any plumbing,
pipes, wires, cables, or other apparatus in connection therewith). Upon any
such removal, Lessee shall restore the
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Demised Premises to its original condition, reasonable wear and tear thereof
excepted. All such removals and restoration shall be accomplished in a good
workmanlike manner so as not to damage the primary structure or structural
qualities of the buildings and other improvements which are a part of the
Demised Premises.
ARTICLE 5
MECHANICS' LIENS
5.01. Neither Lessor nor Lessee shall have the power to subject the
Demised Premises or any interest in the Demised Premises to any mechanics' or
other liens. If the mechanics' or other liens or order for the payment of money
shall be filed against the Demised Premises or any building or improvement
which is a part thereof by reason of or arising out of any labor or material
furnished or alleged to have been furnished or to be furnished to or for the
Lessor or the Lessee at the Demised Premises, or for or by reason of any
change. alteration, or addition or the cost or expense thereof or any contract
relating thereto, the party responsible for such lien (the "Responsible Party")
shall cause the same to be cancelled and discharged of record, by bond or
otherwise as allowed by law at the expense of the Responsible Party, within
thirty-five (35) days after written demand therefor, and shall also defend on
behalf of the party which is not responsible for such lien (the
"Non-Responsible Party") at the Responsible Party's sole cost and expense, any
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action, suit or proceeding that may be brought thereon or for the enforcement
of those liens, lien or orders, and the Responsible Party will pay any damages
and satisfy and discharge any judgment entered therein and save harmless the
Non-Responsible Party from any claim or damage resulting therefrom.
ARTICLE 6
INSPECTION BY LESSOR
6.01. Lessee shall permit the Lessor and Lessor's agents to enter the
Demised Premises, at reasonable hours and upon reasonable prior notice, to
examine them. Lessee shall have the right to accompany or designate an agent
to accompany Lessor on any examination of the Demised Premises made pursuant to
this Article 6.
ARTICLE 7
MORTGAGING
7.01. The term "Mortgage", whenever used herein, shall include
whatever security instruments are used in the locale of the Demised Premises,
such as, without limitation, deeds of trust, security deeds and conditional
deeds, as well as financing statements, security agreements and other
documentation required pursuant to the Uniform Commercial Code. Lessee and
every successor and assignee of Lessee (including, but not limited to,
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any sublessee of Lessee, but only with Lessee's prior consent) is hereby given
the right by Lessor in addition to any other rights herein granted, without
Lessor's prior written consent, to mortgage its interests in this Lease and/or
under a purchase money first or second leasehold Mortgage in connection with
any sale of such interest, and assign this Lease, and any sublease(s) as
collateral security for such Mortgage upon the condition that all rights
acquired under such Mortgage shall be subject to all of the terms, covenants
and conditions of this Lease, and to all rights and interests of lessor herein,
none of which terms, covenants or conditions is or shall be waived by Lessor by
reason of the right given so to mortgage such interest in this Lease, except as
expressly provided herein. If Lessee and/or Lessee's successors and assigns
(including, but not limited to, any sublessee of Lessee, but only with Lessee's
prior consent) shall mortgage this leasehold, or any part or parts thereof, and
if the holder of such Mortgage shall, within twenty (20) days of its execution,
send to Lessor a true copy thereof, together with a notice specifying the name
and address of the Mortgagee and the pertinent recording date with respect to
such Mortgage, Lessor agrees that as long as any leasehold Mortgage shall
remain unsatisfied of record or until a notice of satisfaction is given by the
holder to Lessor, the following provisions shall apply:
(a) Lessor shall, upon serving Lessee with any notice of default,
simultaneously serve a copy of such notice upon the
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holder of such leasehold Mortgage. The leasehold Mortgagee shall thereupon have
the same period, after service of such notice upon it, to remedy or cause to be
remedied the defaults complained of, and Lessor shall accept such performance
by or at the instigation of such leasehold Mortgagee as if the same had been
done by Lessee;
(b) Anything herein contained notwithstanding, while such leasehold
Mortgage remains unsatisfied of record, or until written notice of satisfaction
is given by the holder to Lessor, if any default shall occur which, pursuant to
any provision of this Lease, entitles Lessor to terminate this Lease, and if
before the expiration of ten (10) days from the date of the giving of notice of
termination upon such leasehold Mortgagee, such leasehold Mortgagee shall have
notified Lessor of its desire to nullify such notice and shall have paid to
Lessor all basic rent and additional rent and other charges herein provided for
which are then in default, and shall have complied or shall commence complying
with all of the other requirements of this Lease (except as provided in
paragraph (c) of this Article), if any are then in default, and shall prosecute
the same to completion with reasonable diligence, then in such event, Lessor
shall not be entitled to terminate this Lease and any notice of termination
theretofore given shall be void and of no effect;
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(c) The leasehold Mortgagee shall be given notice of any arbitration
proceedings by the parties hereto, and shall have the right to intervene
therein and be made a party to such proceedings, and the parties hereto do
hereby consent to such intervention. In the event that the leasehold Mortgagee
shall not elect to intervene or become a party to such proceedings, the
leasehold Mortgagee shall receive notice of, and a copy of any award or
decision made in said arbitration proceedings; and
(d) Lessor shall, upon request, execute, acknowledge and deliver to
each leasehold Mortgagee, an agreement prepared at the sole cost and expense of
Lessee, in form reasonably satisfactory to such leasehold Mortgagee, between
Lessor, Lessee and leasehold Mortgagee, agreeing to all of the provisions of
this Article 7. The provisions of this Article 7 shall survive any termination
of this Lease.
ARTICLE 8
INDEMNIFICATION OF LESSOR
8.01. The Lessee shall exonerate, keep, save, hold harmless, protect
and indemnify the Lessor from any and all losses, damages, claims, suits,
liability and costs, including attorneys' fees, for anything and everything
whatsoever (i) arising from or out of the occupancy of the Demised Premises by
or under the Lessee, the Lessee's agents or servants, (ii) from
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any loss or damage arising from any fault or negligence by the Lessee,
or (iii) from any failure on the Lessee's part to comply with any of the
covenants, terms and conditions contained in this Lease. Lessee shall have no
duties and responsibilities under this Article 8 for any losses, damages,
claims, suits, liability or costs incurred by Lessor as a result of any acts of
Lessor.
ARTICLE 9
INSURANCE; RESTORATION
9.01. INSURANCE
(a) During the term of this Lease, Lessee, at its sole cost and
expense, shall carry and maintain the following types of insurance in the
amounts specified:
(i) fire and extended coverage insurance covering the
Demised Premises against loss or damage by fire and against
damage by other risks now or hereafter embraced by the
"extended coverage" so called, in amounts equal to the full
cost of replacing the Demised Premises in the event of total
destruction of same by fire or any other casualty with
appropriate riders to compensate for the effect of inflation
on such replacement cost.
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(ii) comprehensive public liability insurance including
property damage, insuring the Lessor and the Lessee against
liability for injury to persons or property occurring in or
about the Demised Premises or arising out of the ownership,
maintenance or use or occupancy thereof. The liability under
such insurance shall not be less than One Million Dollars
($1,000,000.00) for any one accident and not less than Five
Million Dollars ($5,000,000.00) in the aggregate for all
accidents in any one year period.
(iii) business interruption insurance against loss of
rent or rental value due to fire, including extended coverage
endorsement, in an amount equal to the annual rent for the
Demised Premises plus the estimated amount of real estate
taxes and any other expenses connected with the Demised
Premises payable by the Lessee.
(c) All policies of insurance shall provide by endorsement that any
loss shall be payable to the Lessor or Lessee as their respective interests may
appear at the time of the loss or payable to any mortgagee of Lessor under the
standard
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mortgage clause, if such mortgagee requires. All such policies shall
further provide that not less than thirty (30) days written notice shall be
given to Lessor and Lessee before such policy may be cancelled or changed to
reduce insurance provided thereby. Lessee shall provide Lessor with a duplicate
policy of each insurance policy evidencing such endorsement(s) together with
evidence satisfactory to Lessor that payment of all premiums thereon has been
made.
(d) Each of Lessor and Lessee hereby releases the other from any and
all liability or responsibility to the other or any person or entity claiming
through or under them by way of subrogation or otherwise for any loss or damage
to property caused by fire or any other perils insured in policies of insurance
covering such property, even if such loss or damage shall have been caused by
the fault or negligence of the other party, or anyone for whom such party may
be responsible, provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such
times as the releasor's policies shall contain a clause or endorsement to the
effect that any such release shall not adversely affect or impair said policies
or prejudice the right of the releasor to recover thereunder and then only to
the extent of the insurance proceeds payable under such policies. Each of
Lessor and Lessee agrees that it will request its
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insurance carriers to include in its policies such a clause or endorsement.
(e) In the event that Lessee fails to provide or to keep in force the
insurance required by this Article 9, Lessor shall furnish Lessee with written
notice of failure to provide or keep in force such insurance, and if Lessee
fails to furnish satisfactory evidence of such insurance within five (5) days
of receipt of such notice, Lessor may, if it elects, procure such insurance and
all premiums advanced by Lessor shall be repaid by Lessee, on demand, together
with interest at the rate of 14% per annum from date of advance until paid.
9.02. If any buildings at any time on the Demised Premises shall be
damaged or destroyed by any cause whatsoever, during the term of this Lease,
the Lessee shall give immediate notice thereof to Lessor and, with reasonable
promptness, repair and replace the same at its expense, utilizing the insurance
proceeds paid to the Lessee in conjunction with such damage or destruction so
that the buildings upon the Demised Premises after that repair and replacement
shall be at least equal in value to the buildings existing immediately prior to
such occurrence and as nearly similar to such buildings in character as shall
be practicable and reasonable. Before beginning such repair or rebuilding, or
letting any contracts in connection therewith, Lessee shall submit for Lessor's
approval, which approval Lessor
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shall not unreasonably withhold or delay, complete and detailed plans and
specifications thereof.
9.03. The Lessee shall not be entitled to any abatement of rent except
to the extent to which Lessor shall have received a net sum as proceeds of any
loss or business interruption insurance maintained by Lessee, nor shall its
obligations under this Lease be terminated during the term of this Lease,
notwithstanding any destruction or damage to the Demised Premises by any cause
whatsoever, unless resulting from a defect in construction caused by Lessor or
Lessor's agents, employees, contractors or suppliers.
9.04. In the event of damage to or destruction of any building upon
the Demised Premises during the term of this Lease, Lessor agrees that Lessee
shall be entitled to retain the insurance proceeds paid on account thereof.
Such proceeds shall be received by the Lessee in trust to pay the cost of
restoration, and shall not be commingled with any of Lessee's other funds.
ARTICLE 10
CONDEMNATION
10.01. If any person or corporation, municipal, public, private, or
otherwise shall at any time during the term of this Lease lawfully condemn and
by reason thereof acquire title to
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Lessor's interest in the Demised Premises, in or by condemnation
proceedings in pursuance of the law, general, special or otherwise, the Lessor
shall be entitled to and shall, except as hereinafter provided, receive any
award that may be made, including the award, if any, to the Lessee for the
value of the unexpired term of this Lease, and the Lessee shall and does hereby
assign and transfer to Lessor any award that may be so made to Lessee for any
damages to the term of years set forth in this Lease. This assignment shall not
include any award for taking of or damage to the trade fixtures of Lessee, or
its subtenants.
10.02. In the event of a taking by condemnation as described in
Article 10.01, this Lease shall continue, but the annual rental to be paid by
the Lessee shall thereafter be reduced in proportion to the space taken by
condemnation, and in such event the Lessor will apply (or cause to have
applied) any sum awarded for damage to the building which is a part of the
Demised Premises (but no portion of any award made for the taking of land)
toward the cost of restoring that building as nearly as possible to the
condition in which it was before that taking. The Lessor shall make that
restoration and, upon payment of the award, shall apply (or cause to be
applied) toward the cost of that restoration the said award.
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10.03. Should such taking of a portion of the building which is a part
of the Demised Premises result in a loss of thirty-three and one-third percent
(33-1/3%) or more of the ground floor area of the building which is a part of
the Demised Premises, then Lessee, at its option, may cancel and terminate this
Lease by furnishing written notice to Lessor of its intent to terminate and
cancel the Lease must be furnished within sixty (60) days after vesting of
title in the condemnor, and the Lease shall terminate within thirty (30) days
from receipt by Lessor of such written notice.
ARTICLE 11
ASSIGNMENT AND SUBLETTING
11.01. (a) Lessee shall not assign or sublet its interests, or any
portion thereof, under this Lease without first obtaining Lessor's consent in
writing, which consent shall not be unreasonably withheld or delayed. No
consent in one instance shall prevent this provision from applying to each
subsequent instance. Except as otherwise provided in section 11.01(c) of this
Article 11, this provision shall apply to all transfers by operation of law,
including but not limited to mergers or any change of ownership of fifty-one
percent (51%) or more of the stock or beneficial interest of Lessee.
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(b) In the event Lessee should desire to assign this Lease or sublet
the Demised Premises or any part thereof, Lessee shall give Lessor written
notice of such desire (and the name of the proposed assignee or sublessee) at
least sixty (60) days in advance of the date Lessee proposes to make such
assignment or subletting.
(c) If the entity to whom Lessee proposes to sublet or assign this
Lease is a business entity related to Lessee (i.e., an entity controlling,
controlled by or under common control with Lessee, where control is more than
50% of stock ownership or equity, as the case may be), Lessor's approval for
such subletting or assignment shall not be required provided that the net worth
of the related entity is substantially equal to or greater than that of Lessee.
Lessee shall provide Lessor with proof of the related entity's net worth at the
time of giving written notice of the proposed subletting or assignment of this
Lease.
(d) Lessor's approval in accordance with section 11.01(a) of this
Article 11 shall be deemed given unless Lessee receives notice in writing of
Lessor's disapproval within the ten (10) day period following expiration of
said sixty (60) day period.
(e) Subject to any applicable provisions of Article 15 and Article 26,
Lessor may transfer, convey, assign or
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encumber its interest in this Lease at any time without Lessee's consent.
ARTICLE 12
TAXES
12.01. The Lessee shall pay and discharge all duties, taxes, charges
for water, sewer taxes, assessments and payments, extraordinary as well as
ordinary, whether foreseen or unforeseen, as shall, during the term of this
Lease, be laid, levied, assessed, or imposed upon the Demised Premises, or
become due and payable, or liens upon the Demised Premises, or any part
thereof, or any appurtenances thereto, the leasehold estate created by this
Lease, the sidewalks or streets in front of or adjoining the Demised Premises,
by virtue of any present or future law, order or ordinance of the United States
of America, or of the city, county or other local government, or of any
department, office or bureau thereof, or any other governmental authority. The
duties, taxes, charges, assessments and payments described in this Article
12.01 are sometimes referred to herein collectively as "Impositions".
12.02. All Impositions shall be paid by the Lessee when they become
due and payable without interest or penalty to the department, officer or
bureau charged with the collection thereof. But nothing in this Lease shall
require the Lessee to
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pay any inheritance, franchise, income, payroll, excise, gross
receipts, privilege, rent, capital stock, estate or profit tax, or any tax of
similar nature, that is or may be imposed upon the Lessor, unless those taxes
shall be levied upon the rent reserved in this Lease in the place of taxes upon
the Demised Premises.
12.03. All taxes, assessments, and water rents that are mentioned
above to be paid by Lessee shall be prorated and adjusted for the fiscal years
in which the term of this Lease begins and ends.
12.04. In the case of assessments for local improvements or
betterments that are assessed or imposed during the term of this Lease and that
may be payable in installments, Lessee shall only be obligated to pay the
installments that fall due during the term of this lease.
12.05. The Lessee may contest or review by legal proceedings or in any
manner that Lessee in its opinion shall deem advisable (which proceedings or
other steps taken by Lessee, if instituted, shall be conducted diligently at
its own expense and free of expense to the Lessor) any and all Impositions
levied, assessed or imposed upon or against the Demised Premises or taxes in
lieu thereof, required to be paid by Lessee under this Lease. No such contest
or review shall be undertaken in a manner that exposes the Demised Premises or
Lessor's interest therein to jeopardy.
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12.06. On or before the due date, Lessee shall furnish to Lessor
copies of official receipts of the appropriate taxing authority or other
evidence satisfactory to the Lessor evidencing payment of taxes. Lessee upon
request of Lessor will promptly exhibit to Lessor all paid bills for water
rates and assessments, which bills after inspection by the Lessor shall be
returned to the Lessee. In the event the Lessor shall receive any notice,
correspondence, bill, audit or similar documentation from any entity regarding
the Impositions, the Lessor shall deliver same to the Lessee within five (5)
days of the Lessor's receipt thereof.
ARTICLE 13
DEFAULTS
13.01. Each of the following shall be deemed a default by Lessee and a
breach of this Lease:
(a) Lessee's failure to pay any installment of rent, which failure
persists after the expiration of fifteen (15) days from receipt by Lessee of
written notice from Lessor advising of such failure to pay;
(b) Lessee's failure to pay any additional rent, which failure
persists after the expiration of fifteen (15) days from receipt by Lessee of
written notice from Lessor advising of such failure to pay;
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(c) Lessee's failure to observe or perform any of its obligations
under the other terms, covenants or conditions of this Lease, which failure
persists after the expiration of thirty (30) days from the date Lessor gives
written notice to Lessee calling attention to the existence of that failure,
but, if the matter that is the subject of the notice is of such a nature that
it cannot be reasonably corrected within thirty (30) days then no default shall
be deemed to have occurred if Lessee promptly, upon the receipt of notice,
commences the curing of the default and diligently prosecutes the same to
completion. However, if the default is one relating to a matter that exposes
space occupants or the public to a danger to safety or health of which the
public authorities have given due notice to Lessee, then such shorter notice to
Lessee, whether written or otherwise, shall be sufficient as the circumstances
demand with the responsibility of Lessee to take corrective measures forthwith.
The right to cure provided herein does not grant Lessee any license or
privilege to allow the Demised Premises to be without the insurance coverage
provided for in Article 9 and failure promptly to comply with Article 9 shall
entitle the Lessor to place immediately the necessary insurance, and the cost
thereof shall be additional rent and collectible as such.
(d) The adjudication of Lessee in an involuntary bankruptcy proceeding
and such adjudication is not vacated within sixty (60) days; the taking by
Lessee of the benefit of any other
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insolvency act or procedure, which term includes any form of proceeding
for reorganization or arrangement or rearrangement under the Bankruptcy Code as
well as an assignment for the benefit of creditors; or the appointment of a
receiver for Lessee and such receiver remains undischarged for sixty (60) days.
13.02. Should Lessee default as described in this Article 13, Lessor
at any time thereafter may, at its option give Lessee ten (10) days written
notice of intention to end the term of this Lease and thereupon at the
expiration of those ten (10) days the term of this Lease shall expire as
completely as if that date were the date definitely fixed in this Lease for the
expiration of the term and Lessee will then quit and surrender the Demised
Premises to Lessor, but Lessee shall remain liable as provided in this Article
13. Lessee hereby expressly waives any right under the common law to demand for
rent by the Lessor prior to termination of this Lease in accordance with this
Article 13, provided, however, that this waiver does not waive or diminish
Lessee's rights under this Article 13.
13.03. If the notice provided for in Article 13.02 shall have been
given and the term of this Lease shall expire as described in that Article
13.02, or if the Lease shall be taken from the Lessee as a result of any
execution against Lessee in any proceeding in which the Lessee shall have no
appeal or further appeal, then Lessor may without notice re-enter the
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Demised Premises either by force or otherwise and dispossess Lessee by
summary proceedings or otherwise, and Lessee or other occupant or occupants of
the Demised Premises will remove their effects and hold the Demised Premises as
if this Lease had not been made, and Lessee waives the service of notice of
intention to re-enter or to institute legal proceedings to that end.
In case of any default, re-entry, expiration or dispossession by
summary proceedings or otherwise:
(a) Rent shall become due thereupon and be paid up to the time of that
re-entry, dispossession or expiration, together with any reasonable and
customary expenses that Lessor may incur for legal expenses and attorneys'
fees, including those incident to the recovery of possession, brokerage, and
putting the Demised Premises in good order, or for preparing the same for
re-rental;
(b) Lessor may relet the Demised Premises or any part or parts
thereof, either in the name of Lessor or otherwise, for a term or terms that
may at Lessor's option be less than or exceed the period that would otherwise
have constituted the balance of the term of this Lease and may grant reasonable
and customary concessions or free rent without thereby in any way affecting
Lessee's liability for the rental payable under this Lease for the period of
concession or free rent; and
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(c) Lessee shall also pay Lessor as liquidated damages for the failure
of Lessee to observe and perform Lessee's covenants any deficiency between the
rent reserved in this Lease and the net amount, if any, of the rents collected
by reason of the reletting of the Demised Premises for each month of the period
that would otherwise have constituted the balance of the term of this Lease.
(i) In computing liquidated damages there shall be
added to the said deficiency any reasonable and customary
expenses that Lessor may incur in connection with the recovery
of possession of the Demised Premises and reletting, such as,
but not limited to, legal expenses, attorneys' fees,
brokerage, for keeping the Demised Premises in good order and
for preparing the same for reletting.
(ii) Any such liquidated damages shall be paid in
monthly installments by lessee on the rent day specified in
this Lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the
rights of Lessor to collect the
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deficiency for any subsequent month by a similar action
or proceeding.
13.05. Lessor may make any alterations and decorations in the Demised
Premises that Lessor, in its sole judgment, considers reasonably advisable and
reasonably necessary for the purpose of reletting the Demised Premises. The
making of these alterations of decorations shall not operate or be construed to
release Lessee from any liability under this Article 13.
13.06. Lessor shall in no event be liable and Lessee's liability under
this Article 13 shall not be affected or diminished in any way whatsoever for
failure to relet the Demised Premises, or if the Demised Premises are relet,
for failure to collect the rent thereof under such reletting.
13.07. In the event of a breach or threatened breach by Lessee of any
of the covenants or provisions of this Lease, Lessor shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary disposes proceedings, or other remedies were not provided in
this Lease. Mention in this Lease of any particular remedy shall not preclude
Lessor from any other remedy, in law or in equity.
13.08. Any action taken by Lessor under this Article 13 shall not
waive any right that Lessor would otherwise have against Lessee for rent
reserved in this Lease or otherwise, and
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Lessee shall remain responsible to Lessor for any loss and damage
suffered by Lessor by reason of Lessee's default or breach. The words
"re-enter" and "re-entry" as used in this Lease are not restricted to their
technical legal meanings. Lessor shall, at all times, use its best efforts to
mitigate its damages under this Article 13.
ARTICLE 14
NO REINSTATEMENT
14.01. (a) No receipt of monies by the Lessor from the Lessee after
the lawful termination or cancellation of this lease, shall reinstate, continue
or extend the term of this Lease, or affect any notice theretofore given to the
Lessee, or waive the Lessor's right to enforce the payment of fixed or
additional rent or rents then due, or thereafter falling due, or waive the
Lessor's right to recover possession of the Demised Premises by proper suit,
action, proceeding or remedy;
(b) After the service of notice to terminate or
cancel this Lease, or the commencement of suit, action or summary
proceedings, or any other remedy, or after a final order or
judgement for the possession of the Demised Premises, the Lessor
may demand, receive and collect any monies due, or thereafter
falling due, without in any manner affecting the notice,
proceeding, suit, action, order or judgement. All such monies
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collected shall be deemed to be payments on the account of the use and
occupation or the Lessee's liability under this Lease.
14.02. The Lessor's failure to enforce any term of this Lease, that is
breached by the Lessee, after notice had, shall not be deemed to void or affect
the right of the Lessor to enforce that term on the occasion of a subsequent
default or breach.
ARTICLE 15
SUBORDINATION
15.01. This Lease shall be subject and subordinate to any and all
Institutional Mortgages (as defined in Article 25) that may now or hereafter
affect the Lessor's interest in the real property of which the Demised Premises
form a part, and of all renewals, modifications, consolidations, replacements
and extensions thereof. This clause shall be self-operative and no further
instruments of subordination shall be required. In confirmation of this
subordination, Lessee shall execute promptly any certificate, subordination
agreement or other document that Lessor or its lender may reasonably request.
Lessee constitutes and appoints Lessor as Lessee's attorney-in-fact to execute
any such certificate or certificates for and on behalf of the Lessee.
15.02. (a) The subordination described in Article 15.01 as it pertains
to Institutional Mortgages hereafter made (which
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term includes any agreement modifying any Institutional Mortgage now in
existence or hereafter made), is conditioned upon the agreement of the
institutional mortgagee, to be delivered by it to Lessee, in which the
institutional mortgagee agrees in substance that so long as Lessee is not in
default:
(i) The Lessee will not be disturbed in its possession by the
holder of the mortgage;
(ii) Lessee will not be joined in any action or proceeding to
foreclose the mortgage by the holder thereof; and
(iii) Casualty insurance proceeds and condemnation awards to
which the holder of the mortgage is entitled under the
terms of the mortgage will be applied towards restoration
of the Demised Premises consistent with Articles 9 and 10
of this Lease, respectively, and shall be disbursed as
provided for by those Articles.
(b) The giving of any agreement as described in Article 15.02(a) by
the mortgagee may be conditioned by it on the reciprocal agreement by the
Lessee to attorn to the holder of the
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mortgage should it become vested with the Lessor's interest in the Demised
Premises.
ARTICLE 16
QUIET ENJOYMENT
16.01. The Lessee, upon paying the rent and performing its other
obligations under this Lease shall and may, at all times during the term of
this lease, peacably and quietly have, hold and enjoy the Demised Premises free
of molestation by the Lessor.
ARTICLE 17
SUCCESSORS AND ASSIGNS
17.01. The covenants and agreements contained in this Lease inure to
the benefit of and are binding upon the parties to this Lease, their successors
and assigns, but this Article 17 does not modify the provisions governing
assignment, as elsewhere provided for in this Lease.
ARTICLE 18
ALTERATIONS
18.01. Lessee may, without the consent of Lessor, but at its own cost
and expense and in a good workmanlike manner, make nonmechanical or
nonstructural alterations, additions or
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improvements to the Demised Premises subject to all conditions contained in
Section 18.03 of this Article 18. Such nonmechanical or nonstructural
alternations, additions or improvements shall comply with all applicable
governmental laws, ordinances and regulations.
18.02. Lessee may, without the consent of Lessor, but at its own cost
and expense and in a good workmanlike manner, make mechanical or structural
alterations, additions or improvements to the Demised Premises subject to all
conditions contained in Section 18.03 of this Article 18 if the cost of such
mechanical or structural alterations does not exceed $200,000.00 and does not
alter the roofline or exterior walls of the Demised Premises. Such mechanical
or structural alterations, additions or improvements shall comply with all
applicable governmental laws, ordinances and regulations. Lessor's prior
written consent shall be required for all mechanical or structural alterations,
additions or improvements exceeding $200,000.00 in cost, which consent shall
not be unreasonably withheld.
18.03. Alterations, additions, improvements and partitions erected by
Lessee shall be and remain the property of Lessee during the term of this
Lease, and Lessee shall, unless Lessor otherwise elects as hereinafter
provided, remove all such alterations, additions, improvements and partitions
erected by Lessee and restore the Demised Premises to their original
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condition by the date of termination of this Lease; provided, however, that if
Lessor so elects prior to termination of this Lease, such alterations,
additions, improvements and partitions shall become the property of Lessor as
of the date of termination and shall be delivered up to the Lessor with the
Demised Premises. All shelves, bins, machinery and trade fixtures installed by
Lessee shall be removed by Lessee prior to termination of this Lease if Lessee
so elects and shall be removed if required by Lessor; upon any such removal
Lessee shall restore the Demised Premises to the original condition. All such
removals and restorations shall be accomplished in a good workmanlike manner
so as not to damage the primary structure or structural qualities of the
building and other improvements situated on the Demised Premises.
ARTICLE 19
NOTICES
19.01. All notices to the parties shall be addressed to them at the
respective addresses first given for them in this Lease, or to such other
address, of which either of them, as the case may be, shall notify the other
party and its attorney in the manner stated in this Article 19 for giving
notice. Copies of all notices shall be furnished to the attorneys for the
parties at the addresses hereinafter provided, or at such other addresses which
either of such attorneys, as the case may be, shall notify
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the other party and its attorney in the manner stated in this Article 19 for
giving notice. Copies of all notices shall also be then given to Kerr Glass
Manufacturing Corporation, 1840 Century Park East, Los Angeles, California
90067, Attention: Corporate Secretary.
NOTICES TO ATTORNEY'S FOR LESSOR AND LESSEE
Lessor's Attorneys Lessee's Attorney
- - - ------------------ -----------------
Lee J. Chase Joseph L. Broadwin
Glankler, Brown, Gilliland, Wilkie, Farr & Gall
Chase, Robinson & Raines One Citicorp Center
1700 One Commerce Square 153 East 53rd Street
Memphis, Tennessee 38103 New York, New York 10022
The notices to the parties and copies of such notices to the attorneys for the
parties must be given by either registered mail, return receipt requested, or
by certified mail, return receipt requested. In the case of the former service
of the notice shall be deemed completed upon the registration thereof with the
postal authorities, and in the case of the latter upon the due mailing thereof.
ARTICLE 20
NO WAIVER
20.01. The failure of the Lessor to insist in any one or more
instances, upon a strict performance of any of the covenants of this Lease,
shall not be construed as a waiver of or relinquishment for the future
performance of that covenant, or
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the right to exercise that option, but the same shall continue and remain in
full force and effect. The Lessor's receipt of net annual or additional rent,
with knowledge of the breach of any covenant of this Lease, shall not be deemed
a waiver of that breach, and no waiver by the Lessor of any provision of this
Lease shall be deemed to have been made unless expressed in writing and signed
by the Lessor.
20.02. The Lessor's receipt of any installment of the net annual rent
under this Lease or of any additional rent shall not be a waiver of any net
annual or additional rent then due. Lessor may, in its sole discretion, apply
any payments made by Lessee to the satisfaction of any debt or obligation of
Lessee to Lessor, regardless of Lessee's instructions as to the application of
those payments, whether those instructions are endorsed on Lessee's check or
otherwise.
ARTICLE 21
REMEDIES CUMULATIVE
21.01. All of the rights and remedies given to the Lessor in this
Lease for the recovery of the Demised Premises because of the default by the
Lessee in the payment of any sums that may be payable pursuant to the terms of
this Lease, or upon the breach of any of the terms of this Lease, or the right
to re-enter and take possession of the Demised Premises upon the happening of
any
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<PAGE> 38
of the defaults or breaches of any of the covenants of this Lease, or the
right to maintain any action for rent or damages and all other rights and
remedies allowed at law or in equity, are reserved and conferred upon the
Lessor as distinct, separate and cumulative remedies, and no one of them,
whether exercised by the Lessor or not, shall be deemed to be in exclusion of
any of the others.
ARTICLE 22
ENTIRE AGREEMENT
22.01. This Lease contains the entire agreement between the parties,
and any agreement hereafter made shall not operate to change, modify or
discharge this Lease in whole or in part unless that agreement is in writing
and signed by the party sought to be charged with it.
ARTICLE 23
REPRESENTATIONS OF LESSOR
23.01. Lessor represents and warrants that:
(a) The improvements on the Demised Premises have been constructed in
compliance with all applicable laws, ordinances, regulations and restrictions
affecting the Demised Premises.
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<PAGE> 39
(b) All necessary permits and approvals necessary to construct the
Demised Premises including, without limitation, certificates of occupancy, have
been obtained.
(c) All utilities necessary to service the Demised Premises are
adequate for the permitted use thereof and have been connected.
ARTICLE 24
INDEMNIFICATION OF LESSEE
24.01. Lessor shall indemnify Lessee from and hold Lessee harmless
against all costs, legal expenses, liability, and other expenses, claims by any
party or governmental entity, whether grounded in statutory or common law, for
personal injury, wrongful death, property damage, economic loss, abatement,
redemption, damage to natural resources, response costs, civil penalty, or any
other claim, demand or notice arising out of or relating to
(a) the generation, presence, handling, treatment, storage or disposal
of any solid waste, hazardous waste, hazardous substance, toxic
substance, contaminant, or pollutant, or any other environmental
condition, on, at, beneath, or near the property, provided such
generation, presence, handling, treatment, storage or
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<PAGE> 40
disposal occurred prior to the Commencement Date of this Lease and
(i) was due to the acts of Lessor or its agents or employees; or
(ii) was due to the acts of third parties, provided that Lessor had
knowledge of such acts prior to the Commencement Date of this
Lease.
24.02. Lessee shall have the right to terminate this Lease in the event
Lessee determines in its reasonable discretion that the condition for which
Lessee is entitled to indemnification under section 24.01 of this Article 24
materially and adversely affects the operation of Lessee's business or the
health or safety of Lessee's employees.
ARTICLE 25
ESTOPPEL CERTIFICATES
25.01. The Lessee agrees at any time and from time to time upon not
less than twenty (20) days prior written request by the Lessor, to execute,
acknowledge and deliver to Lessor a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications that the same is in full force and effect as modified and stating
the modifications) and the dates to which the rent and other charges have been
paid in advance, if any, it being intended that
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<PAGE> 41
any such statement delivered pursuant to this Article 24 may be relied upon by
prospective purchasers of Lessor's interest or mortgagees of Lessor's interest
or assignees of any mortgage upon Lessor's interest in the Demised Premises.
ARTICLE 26
CERTAIN DEFINITIONS
26.01. The term "Lessor" as used in this Lease means only the owner of
the current interest of the Lessors in the Demised Premises or, as the case
may be, the successor thereto from time to time. In the event of any transfer
at any time of the interest of the Lessor to (i) an entity which is not
controlled by Lessor, or (ii) an entity which is controlled by Lessor and with
respect to (i) and (ii) has a net worth substantially equal to the net worth of
Lessor, the transferor shall be and is entirely relieved of all convenants
and obligations of the Lessor under this Lease, and shall be deemed and
construed without further agreement between the parties or their respective
successors in interest or between the parties and the transferee that the
transferee of the Lessor's interest has assumed and agreed to carry out any and
all convenants and obligations of the Lessor under this Lease, provided,
however, that transferor shall remain liable of rights representations and
warranties contained in this Lease of a period of one year from the date
hereof. In the event of any transfer at any time of the interest of Lessor to
an entity which
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<PAGE> 42
is controlled by Lessor and has a net worth less than the net worth of Lessor,
the transferor shall not be relieved from liability on the covenants and
obligations of Lessor under the Lease.
26.02. An "Institutional Mortgage" is a mortgage held by an
institutional Lender on the interest of the Lessor in the real property
constituting the Demised Premises.
ARTICLE 27
EXTENSION OF TERM
27.01. Provided the Lessee is not then in default, the Lessee shall
have the right to extend the term of this Lease for one twelve (12) year period
as hereinafter provided. The net annual rental during such renewal period shall
be Three Hundred Sixty-One Thousand, Five Hundred Sixty Dollars ($361,560.00).
The Lessee shall have the right to exercise such renewal option by written
notice to the Lessor not later than one year prior to the commencement date of
the proposed renewal term. The Lessee shall exercise the option to renew by
giving notice (the "Renewal Option Notice") to the Lessor in accordance with
Article 19.
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<PAGE> 43
ARTICLE 28
PURCHASE OPTION
28.01. The Lessor grants to Lessee the option to purchase the Demised
Premises in accordance with the provisions of this Lease, so long as the Lessee
is not in default at the time it exercises the option.
28.02. The purchase price for the Demised Premises shall be Two
Million Five Hundred Eighty-Seven Thousand Dollars ($2,587,000.00). The Lessee
shall be entitled to apply ten percent (10%) of the aggregate of all net annual
rent payments made to the Lessor during the term of this Lease and any
extensions thereof at the time the option is exercised as a credit toward the
purchase price. The Lessee shall have the right to exercise such purchase
option by written notice to the Lessor at least thirty (30) days prior to the
date of closing of such purchase; provided, however, that any notice of intent
to purchase given by Lessee during the final year of the initial thirteen year
term of this Lease must be given at least twelve months prior to the expiration
of such initial term, and any notice of intent to purchase given by Lessee
during the final year of the twelve (12) year extension term of this Lease must
be given at least twelve (12) months prior to the expiration of such extension
term. The Lessee shall exercise the option to purchase
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<PAGE> 44
by giving notice (the "Purchase Option Notice") to the Lessor in accordance
with Article 19.
28.03. The purchase price shall be payable in lawful money of the
United States to the Lessor by the Lessee at the close of escrow as provided in
Section 22.05 of this Article 28.
28.04. The Lessor shall deliver to the Lessee an executed Special
Warranty deed in recordable form conveying fee simple title to the Demised
Premises. Title to the Demised Premises shall be conveyed by the Lessee free
and clear of all liens, encumbrances, convenants, conditions, restrictions,
easements and rights of way of record, leases or other tenancy agreements, and
other matters of record except (i) current taxes, a lien not yet delinquent,
(ii) those portions of current assessments not yet due and payable (iii)
anything of record or not of record that in any way affects title to the
premises resulting from the acts or omissions of the Lessee, (iv) any
covenants, conditions, restrictions, easements, rights of way of record, and
leases or other tenancy agreements existing at the commencement of the term,
and (v) subleases covering portions of the Demised Premises executed by the
Lessee during the term.
28.05. The sale shall be consummated through an escrow with title
company selected by the Lessee. Escrow shall be deemed to be closed pursuant to
this Article 28.05 on the date the deed conveying fee simple title to the
Demised Premises to
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<PAGE> 45
the Lessee is recorded. At the close of escrow, the title company must be
prepared to issue an ALTA Owner's Title Insurance Policy in the amount of the
purchase price insuring title to the Demised Premises vested in the Lessee,
subject only to the matters set forth in Article 28.04. Each party shall select
and bear all costs of its attorneys at closing.
ARTICLE 29
CONDITIONS PRECEDENT
29.01. Lessor agrees to complete, and this Lease is subject to and
conditioned upon the Lessor's completing, construction of the improvements to
be located on the Demised Premises in accordance with the requirements of the
work summary attached hereto as Exhibit "B" (the "Lessor's Work").
The Lessee shall perform the work and supply the materials set
forth on the work summary attached hereto as Exhibit "C" (the "Lessee's Work"),
and this Lease shall not be conditioned upon completion of the Lessee's Work.
The Lessee's Work includes certain electrical work on the Demised Premises as
described in Exhibit "B" hereto. Upon (i) satisfactory completion of the
electrical work which is a part of the Lessee's Work, Lessor shall pay Lessee
the sum of $300,000 for completion of such electrical work. Such $300,000
amount is a negotiated sum and shall be payable upon
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<PAGE> 46
completion of such electrical work irrespective of the actual "out of pocket"
costs to Lessee for such electrical work. Lessee shall be responsible for all
costs and expenses of all Lessee's Work other than the electrical work.
The Lessor shall submit all proposed building specifications (the
"Specifications") to Lessee for Lessee's review and written approval. If Lessee
determines that the Specifications are not acceptable, Lessee shall so notify
Lessor, and Lessor shall revise them to so conform and shall resubmit the
Specifications to Lessee for review and approval, provided, however, that in no
event shall Lessor be required to incur cost and expenses in excess of One
Million Nine Hundred Three Thousand Two Hundred Forty-One Dollars
($1,903,241.00) which amount is not intended to include and is in excess of the
$300,000 specified above in this Section 29.01 to complete the Lessor's Work.
The initial review by Lessee of the Specifications shall be carried out within
fourteen (14) days of the date of submission thereof by Lessor and any
subsequent review by Lesse of any revisions thereto shall be carried out within
fourteen (14) days of Lessor's submission of such revision. If Lessee has not
notified Lessor of its determination within the fourteen (14) day period,
Lessee shall be deemed to have disapproved the Specifications or any revisions
thereof, Lessor shall have fourteen (14) days after a disapproval of the
Specifications or any revision thereof to resubmit a modification thereof.
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<PAGE> 47
29.02. Lessor shall make a good faith effort to cause the Demised
Premises to be available for occupancy by the Lessee on or before January 2,
1990. Demised Premises are not available for occupancy by Lessee on or before
January 2, 1990, Lessor shall pay a penalty of $1,250.00 per day, which may be
offset against Leessee's first rent payment due under this lease, for each day
after January 2, 1990 that Leesee is unable to occupy the Demised Premises. If
the Demised Premises are not available for occupancy by the Lessee on or before
February 1, 1990, then the Lessee shall have the right to cancel this Lease by
written notice to the Lessor. The penalties and the right to cancel this Lease
which are provided for in this Article 28 shall
- 45 -
<PAGE> 48
not apply if the delay or delays in construction are a result of the acts of
Lessee's agents, employees, contractors, subcontractors or suppliers.
ARTICLE 30
HAZARDOUS WASTES/SUBSTANCES
30.01. The term "Hazardous Substances," as used in this Lease, shall
mean pollutants, contaminants, toxic or hazardous wastes, or any other
substances, (including, without limitation, asbestos and raw materials which
include hazardous constituents), the removal of which or the use of which is
restricted, prohibited or penalized by any "environmental law," which term
shall mean any Federal, State or local law, regulation, or ordinance relating
to pollution or protection of the environment. Lessee hereby agrees that (i) no
activity will be conducted on the Demised Premises by Lessee, its agents,
employees, sublessees, invitees or any other party entering the Demised
Premises with the consent or knowledge of Lessee during the term hereof that
will produce any Hazardous Substance, except for such activities that are part
of the ordinary course of Lessee's business activities (the "Permitted
Activities") provided said Permitted Activities are conducted in accordance
with all environmental laws; (ii) the Demised Premises will not be used by
Lessee, its agents, employees, sublessees, invitees or any other party entering
the Demised Premises with the consent or knowledge
- 46 -
<PAGE> 49
of Lessee during the term hereof in any manner for the storage of any Hazardous
Substances except for the temporary storage of such materials that are used in
the ordinary course of Lessee's business (the "Permitted Materials") provided
such Permitted Materials are properly stored in a manner and location meeting
all Environmental Laws; (iii) no portion of the Demised Premises will be used
by Lessee, its agents, employees, sublessees, invitees or any other party
entering the Demised Premises with the consent or knowledge of Lessee during
the term hereof as a landfill or dump; (iv) Lessee will not during the term
hereof install any underground tanks of any type without the prior written
consent of Lessor, which shall not be unreasonably withheld provided that
Lessee complies with all applicable laws regarding such underground tanks.
Lessee shall remove any such underground tanks at the expiration of the term of
this Lease unless Lessee obtains Lessor's written consent to allow the
underground tank or tanks to remain on the Demised Premises after that date;
(v) Lessee will not during the term hereof cause any surface or subsurface
conditions to exist or to come into existence that constitute, or with the
passage of time may constitute, a public or private nuisance; (vi) Lessee will
not during the term hereof permit any Hazardous Substances to be brought onto,
stored, processed, disposed of on, released, discharged from (including ground
water contamination) or otherwise handled on the Demised Premises, except for
the
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<PAGE> 50
Permitted Materials described below, and if so brought or found located
thereon, the same shall be immediately removed, with proper disposal, and all
required cleanup procedures shall be diligently undertaken pursuant to all
Environmental Laws. Lessee shall immediately notify Lessor should Lessee become
aware of any Hazardous Substance or other environmental problem or liability
with respect to the Demised Premises. If, at any time during or after the term
of the Lease, the Demised Premises is found to be so contaminated or subject to
said conditions, Lessee agrees to indemnify and hold Lessor (and any mortgagee
and trustee under any deed of trust or mortgage on the Demised Premises)
harmless from all claims, demands, actions, liabilities, costs, (including
reasonable attorney's fees), expenses, damages and obligations of any nature
arising from or as a result of the actions or omissions of the Lessee, its
agents, employees, sublessees, invitees or any other party entering the Demised
Premises with the consent or knowledge of Lessee during the term hereof, but
not further or otherwise. The foregoing indemnifications shall survive the
termination or expiration of this Lease.
ARTICLE 31
SIGNAGE
31.01. Lessee shall have the right, subject to Lessor's prior written
approval, which approval shall not be unreasonably withheld, to place on or in
the Demised Premises such signs
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<PAGE> 51
conforming to all laws and municipal regulations as it deems necessary and
proper in the conduct of its business.
ARTICLE 32
PURPOSE
32.01. Lessee agrees that it shall not use or suffer the Demised Premises
to be used for any unlawful purposes or any purposes which violate any public or
private zoning, land use or other applicable covenants, restrictions,
regulations or ordinances. The Demised Premises leased hereunder are to be used
by Lessee for office, warehouse, light manufacturing of plastics and such other
purposes that are usual and normal in connection with Lessee's current business
operations, and no other purpose.
LESSOR:
CENTURY 21 ASSOCIATES
a Tennessee general partnership
BY: /s/ L.P. BECKER
-----------------------------
LESSEE:
SANTA FE PLASTIC CORPORATION
a California corporation
BY: /s/ D.G. STRICKLAND
-----------------------------
ATTEST: /s/ L.R. KNIPPLE
-------------------------
CORPORATE SECETARY
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<PAGE> 52
GUARANTY
The undersigned, KERR GLASS MANUFACTURING CORPORATION, a Delaware
corporation, hereby irrevocably guarantees to Lessor, its successors and
assigns, the full and due performance by the Lessee, and its successors
and assigns, all of the terms, obligations, covenants and agreements under
the foregoing Lease on the part of Lessee to be observed or performed
including the full and punctual payment by Lessee of all rent, and other
sums of money, as and when they become due and payable by Lessee as
provided in the Lease, during the full term of the Lease, including any
extensions or renewals thereof.
GUARANTOR:
KERR GLASS MANUFACTURING
CORPORATION
By: /s/ D.G. STRICKLAND
------------------------------------
Attest: /s/ L.R. KNIPPLE
--------------------------------
Corporate Secretary
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
Personally appeared before me, Carla E. Andrews, a Notary Public, D. G.
Strickland, with whom I am personally acquainted and who acknowledged
that he executed the within instrument for the purposes therein contained,
and who further acknowledged that he is the Sr. VP, Finance of the
Guarantor and is authorized by the Guarantor to execute this instrument on
behalf of the Guarantor.
Witness my hand, at office, this 29th day of Sept. 1989.
/s/ CARLA E. ANDREWS
-------------------------------
Notary Public
My Commission Expires:
Jan. 7th 1992
- - - ---------------------
[SEAL]
- 50 -
<PAGE> 53
STATE OF TENNESSEE
COUNTY OF MADISON
Personally appeared before me, Teresa A. Dunn, a Notary Public, Larry P.
Becker, with whom I am personally acquainted and who acknowledged that
he executed the within instrument for the purposes therein contained, and
who further acknowledged that he is the Partner of the Lessor and is
authorized by the Lessor to execute this instrument on behalf of the
Lessor.
Witness my hand, at office, the 5th day of October, 1989.
/s/ TERESA A. DUNN
------------------------------
Notary Public
My Commission Expires:
3/21/93
- - - ---------------------
STATE OF CALIFORNIA
COUNTY OF LAS ANGELES
Personally appeared before me, Carla E. Andrews, a Notary Public, D. G.
Strickland, with whom I am personally acquainted and who acknowledged
that he executed the within instrument for the purposes therein contained,
and who further acknowledged that he is the Sr. VP Finance CEO of the
Lessee and is authorized by the Lessee to execute this instrument on
behalf on the Lessee.
Witness my hand, at office, this 29th day of Sept., 1989.
/s/ CARLA E. ANDREWS
------------------------------
Notary Public
My Commission Expires:
Jan. 7, 1992
- - - ---------------------
[SEAL]
- 51 -
<PAGE> 54
Lying in Madison County, Jackson, Tennessee in Madison West Industrial
Park, and beginning at an iron pin set in the North margin of Lower
Brownsville Road, which point is the Southeast corner of this tract and
the Southwest corner of Metamora Plastics; thence, from the point of
beginning and with the North margin of Lower Brownsville Road, South 87
degrees 58 minutes West 583.69 feet to a point; thence, with a curve
having a radius of 40 feet for a length of 62.12 feet to a point in the East
margin of Industrial Park Road; thence, with the East margin of Industrial
Park Road, North 3 degrees 03 minutes west 892.48 feet to an iron pin set
at the Southwest corner of Tabuchi; thence, with the South line of
Tabuchi, North 87 degrees 58 minutes East 622.99 feet to an iron pin set
at the Northwest corner of Metamora Products; thence, with the West line
of Metamora Products, South 3 degrees 03 minutes East 931.78 feet to the
point of beginning containing 13.32 acres.
Included in the above description, but to be expressly excluded, is the
following described tract to be used for railroad purposes: BEGINNING at
the Northwest corner of above described tract at an iron pin set in the
East margin of Industrial Park Road, which point is the Southwest corner
of Tabuchi; thence, from the point of beginning and with South line of
Tabuchi, North 87 degrees 58 minutes East 90.7 feet to a point in the
East margin of railroad right-of-way; thence, South 3 degrees 03 minutes
East 931.78 feet to a point in the North margin of Lower Brownsville Road;
thence, with same, South 87 degrees 58 minutes west 51.41 feet to a
point; thence, with a curve having a radius of 40 feet in a Northwesterly
direction and along said curve for a distance of 62.12 feet to a point in the
East margin of Industrial Park Road; thence, with same, North 3 degrees
03 minutes West 892.48 feet to the point of beginning, containing 1.94
acres.
Description from survey of Tony M. Reasons, R.L.S., Tenn. Reg. No. 508.
Being a portion of the property conveyed to Madison County, Tennessee by
Deed of Hugh Pearson, et al, dated May 15, 1975, appearing of record in
Deed Book 313, page 321, in the Register's Office of Madison County,
Tennessee.
EXHIBIT "A"
- REAL PROPERTY DESCRIPTION -
<PAGE> 55
OUTLINE SPECIFICATIONS
PROPOSED MANUFACTURING FACILITY
SCP CORPORATION
JACKSON, TENNESSEE
May 10, 1989
SUMMARY OF WORK:
The scope of work included in our proposal consists of the installation of
concrete floors, office finishes, outside improvements, mechanical and
fire protection systems to the existing building located on Lower
Brownsville Road in the Madison West Industrial Park.
The proposed facility shall consist of an existing building with a 100,000
S.F. manufacturing and warehouse area and a 4,800 S.F. office area.
The clear height of the building to the bottom of the steel structure is
24'-0" at the low or eaves side.
This building consists of a free standing steel frame with 8'-0" high block
masonry wainscot and 24 gauge prefinished siding for the perimeter
walls. The prefinished siding is lined with 2" thick vinyl faced insulation.
The block masonry wainscot and the office perimeter walls are finished
with "dryvit" synthetic plaster applied to plastic foam insulation. The
roofing for building is a 45 mil EPDM ballasted roof system. A 48" high
draft curtain will be provided dividing the building into 25,000 S.F. areas.
The draft curtains will be built using 28 gauge corrugated metal attached
to the truss girders.
Included within the manufacturing area is a shipping office with toilet
room and one set of remote toilet rooms, for the plant personnel, sized to
accommodate 115 employees working two shifts.
The plant toilet rooms will be located in the southwest corner of the
building adjacent to the lunchroom. They will have masonry perimeter
walls and a metal roof. The interior finish shall consist of ceramic tile
floor and wainscot, epoxy paint on walls above wainscot and a 2' x 4'
moisture resistant lay-in ceiling. Toilet partitions and toilet accessories
are included.
The interior side of the exterior masonry wainscot shall be painted. The
structural steel in the warehouse and manufacturing is to be painted.
The office finish allowance of $44,400 anticipates carpet floors, drywall
partitions finished with paint and vinyl wall covering, 2' x 4' lay-in
acoustical ceiling, doors and frames. The office rest room walls, finishes,
and accessories are a part of this allowance. The rest room plumbing and
plumbing fixtures are included in the base bid.
EXHIBIT "B"
- LESSOR'S WORK -
<PAGE> 56
We have included nine shipping doors, eight levelers and shelters, and one
drive-in door. The nine shipping doors will be 8'-6" x 9'-0" metal sectional
vertical lift doors. The dock shelters will be Frommelt Model WG402 and
the dock levelers will be Rite Hite Model ST968 of 25,000 lb. capacity. The
one drive-in door will be 12'-0" x 14'-0" metal sectional vertical lift door.
The drives and parking will be asphalt paving. The truck drives will have
8" gravel base and 3 1.2" asphalt topping. The automobile parking will have
6" gravel base and 2" asphalt topping. We have provided for parking cf 80
cars. The eight loading doors will have a concrete apron slab extending 50'
from the building. The ninth loading door will have a 50' long ramp. A 24'
wide paved road will be provided around the building connecting the two
loading areas. A 500 S.F. concrete slab for pallet storage will be provided
adjacent to the north loading area.
The manufacturing area will have a 6" thick floor slab consisting 4,000
psi concrete reinforced with #3 reinforcing steel at 20" o.c. both ways.
The office area floor slab will be 4" thick with 4,000 psi concrete
unreinforced. We have not included any thickened slabs or equipment bases
for any production machines.
The chiller pad will be 6" thick with 4,000 psi concrete reinforced with
#3 reinforcing at 20" o.c. both ways. The chiller pad will have a 6' high
masonry wall on two sides and five 12' wide expanded metal gates.
The silo pad will be 72' long x 20' wide with a 72' long x 12' wide pump
pad along side making a 32' wide pad. The silo pad will be 3'-6" thick with
4,000 psi concrete and reinforced with #5's at 12" o.c. each way top and
#8's at 12" o.c. each way bottom. The pump pad will be 8" thick of 4,000
psi concrete and reinforced with #4 reinforcing at 12" o.c. both ways. The
silo and pump pads will be surrounded with a 6' high security fence with a
12' wide gate. The north concrete apron slab will extend across the 32'
width of the silo pad for truck access.
The 1,000 S.F. outside storage building will be an uninsulated pre-
engineered building with a 6" thick concrete floor slab. The building will
have a 14' clear height at the eaves and will have a 12' wide x 14' high
door.
HVAC:
The office area will be air conditioned utilizing two 10 ton gas pack rooftop
units. This should provide a comfort level of 78 degrees Fahrenheit in the
summer and 72 degrees Fahrenheit in the winter.
Plant air conditioning will be accomplished using 5 - 60 ton rooftop units
placed two over the warehouse and three over the manufacturing. Air will
be distributed utilizing factory concentric duct packages. The assumed
heat gains are based on the 200 f.c. lighting required in the injection
molding area and 500 square feet per ton in the remaining area of the
plant. A thru-the-wall unit will be furnished in the receiving office. The
plant toilet rooms and lunchroom will be air conditioned with a separate
unit.
- 2 -
<PAGE> 57
PLUMBING:
The office will be provided with plumbing fixtures to meet the code
requirements of fifteen people. Copper water piping and PVC sewer piping
will be furnished as required for their connection. A drinking fountain and
mop sink will be furnished in the office rest room complex. Drinking
fountains will also be provided near the plant rest rooms, near the
shipping office, and near the injection molding machines.
Plumbing fixtures of standard quality will be furnished for a unisex rest
room in the receiving area. Finished rest room facilities will be furnished
for 60 people on one shift. We will also provide one floor drain at the rear
of the building for an air compressor to be furnished by others at a later
date. We will provide a two inch water service to the building and
distribute it to rest rooms and drinking fountains. A two inch valved
connection is provided for future use. All sewer piping will be PVC and all
water piping will be copper. We will provide hose bibbs at intervals
around the perimeter of the building and at the loading docks.
FIRE PROTECTION:
We have included a new 8" tap to the 16" city main on either Lower
Brownsville Road or Industrial Road. An above ground backflow preventer
will be provided in a weather resistant enclosure. Three hydrants will be
provided equally spaced along the north and east sides of the building.
Each of the three sprinkler lead-ins will have a post indicator valve
located approximately 40' from the building.
The water supply in the Industrial Park is more than adequate to supply
high density hydraulically calculated sprinkler systems. The pressures and
supply at Madison West Industrial Park are 95 p.s.i. static, 93 p.s.i.
residual flowing at 2,325 gallons per minute. The manufacturing area will
be protected with a density of 0.18 GPM/S.F over the most remote 3,000
S.F. The warehouse will have a primary density of 0.66 GPM/S.F. over the
most remote 1,000 S.F. and a secondary density of 0.40 GPM/S.F. over the
most remote 3,725 S.F.
The offices will be protected with a density of 0.12 GPM/S.F. over the
most remote 3,000 S.F.
ELECTRICAL:
Our proposal does not include any electrical work. All electrical work will
be performed by SCP Corporation.
- 3 -
<PAGE> 58
[LOGO] H and M CONSTRUCTION CO., INC.
INTERNAL CORRESPONDANCE
FROM: DON DANIELS DATE: 5-24-89
TO: DAVID FITE
COPY TO: CURTIS CAIN AND RICHARD FITE
SUBJECT: SCP CORPORATION
JACKSON, TN
The following is a recap of the changes requested by SCP Corporation
during our meeting on April 19, 1989.
1. Move toilet rooms to southwest corner of the building and add a
34' long x 18' wide lunchroom. Included within this change will
be the installation of a 32' long x 5' high window in the
existing south wall of the lunchroom. A separate 3 ton air
conditioning unit will be provided for this lunchroom.
Add $40,327 Accepted
2. Add a 3' x 7' glass door in the west wall of the office building
to match the existing door in the east wall of the office
building. Included within this change is a 4' wide x 80' long
sidewalk between the office building and the employees entrance.
Add $6,789 Accepted
3. Change the block pilasters at the chiller pad from 4' to 2'
making the chiller enclosure 72' x 20'. The chiller pad will
remain 84' x 20'. Included within this change is changing the
gates from wood to expanded metal.
No change Accepted
4. Move the shipping office from its present location near Column
Line 0-11 to a new location near Column Line G-11.
No Change Accepted
- EXHIBITED "B" - CONTINUED -
<PAGE> 59
May 24, 1989
Page 2
5. Extend the truck asphalt paving at the north loading area to the
west edge of the silo pad so that trucks can back up to silos.
Add $5,500 Accepted
6. Extend truck asphalt paving from north drive to the 12' x 14'
door on the north side of the building.
Add $3,496 Accepted
7. Provide ladder to roof. Ladder may be interior or exterior.
a. Exterior Ladder
Add $2,396 Not Accepted
b. Interior ladder, including roof hatch.
Add $3,266 Accepted
Total $59,378
SCP has also asked us to paint the structure for an additional
amount of $55,000, as stated in our Outline Specifications dated
March 8, 1989.
They have also agreed to changing the HVAC system to 5 - 60 ton
units for the additional amount of $25,000.
Therefore, the new budget will be as follows:
<TABLE>
<S> <C>
Budget (my memo to you dated 4-4-89) $1,763,863
Total Requested Changes (Item #1 - 7 above) 59,378
Add Painting Deck 55,000
Add for Changing HVAC to 5 - 60 ton Units 25,000
Revised Budget $1,903,241
</TABLE>
In addition to the above, the following additional clarifications
were offered in response to comments by SCP Corporation.
1. We do not include roof walkway treads to the HVAC units.
2. We do not include any electrical work in our proposal.
3. The office finish allowance does not include HVAC, plumbing or
electrical work. The HVAC and plumbing cost for the office is
in our base price.
DD:ef
<PAGE> 60
3262N
EXHIBIT C - LESSEE'S WORK
1-1200 MLO 277/4BOV PANEL WITH 4-175A/3P BREAKERS, 2-50A/3P BREAKERS, AND
7 13A/3P BREAKERS. THIS PANEL IS LOCATED ALONG COLUMN LINE G NEAR THE
CHILLER PAD.
1-800A MLO 277/4BOV PANELS ONE WEATHER PROOF LOCATED ON ROOF AT
COLUMN 5D FOR AIR CONDITIONING USE.
2-400 A MLO 277/4BOV LOCATED ALONG COLUMN LINE G NEAR COLUMN 6 FOR
PLANT AND WAREHOUSE LIGHTING USE AND A SECOND LOCATED NEAR THE OFFICE
ALONG COLUMN LINE A AND BETWEEN COLUMNS 5 & 6.
1-100 A MLO 277/ABOV LOCATED NEAR OFFICE ALONG COLUMN LINE A FOR USE IN
OFFICE LIGHTING AND SITE LIGHTING.
2-100 A MB 120/208BV PANELS ONE LOCATED NEXT TO EACH LIGHTING PANEL FOR
RECEPTACLES AND POWER.
- - - -FEEDERS FOR THE ABOVE PANELS ARE AS FOLLOWS 3000A - B RUNS OF 3 1/2" PVC
CONDUIT WITH 4-500 MCM THW WIRE FOR EACH. 1200A - 3 RUNS 3" PVC CONDUIT
WITH 3-400 MCM THW WIRE. 400A NEAR OFFICE 1 RUNS OF 3 1/2 PVC WITH 4-500
MCM WIRE. ALUMINUM CONDUIT WITH 3-500 MCM WIRE. ALL UNDERGROUND FEEDERS
SHALL BE IN PVC CONDUIT AND ALL OVERHEAD FEEDERS SHALL IN RIGID ALUMINUM
CONDUIT.
- - - -120 VOLT CONVENIENCE RECEPTACLES ARE INCLUDED AT EACH MAN DOOR IN
WAREHOUSE AND MANUFACTURING. IN ADDITION THE DOCK DOORS HAVE TWO
DUPLEX RECEPTACLES BETWEEN EACH SET OF DOORS. RECEPTACLES SHALL BE
INSTALLED USING USING EMT CONDUIT.
- - - -ELECTRICAL CONNECTION ARE PROVIDED TO THE FOLLOWING EQUIPMENT:
3-UNIT HEATERS
2-EXHAUST FANS
5-60 TON ROOF TOP AIR CONDITIONING UNITS
1-2 TON ROOF TOP AIR CONDITIONING UNIT FOR CAFETERIA
LIGHTING:
- - - -LIGHTING LEVEL THROUGHOUT FACTORY ACHIEVED USING HUGBELL 1000 WATT HI
BAY HIGH METAL HALIDE FIXTURES SPACED AS PER DRAWINGS. A LEVITON SWITCHING
SYSTEM HAS BEEN PROVIDED AT THE EMPLOYEES ENTRANCE. WE DO NOT PROVIDE
THESE FIXTURES.
- - - -DOCK LIGHTS ARE INCLUDED ON ALL DOCK DOORS.
EXHIBIT "C"
LESSEE'S WORK
<PAGE> 61
- - - -EMERGENCY LIGHTING USING 2-HEAD BATTERY PACK FIXTURES IS INCLUDED SPACED
APPROXIMATELY 1 EVERY 12,000 S.F.
- - - -EXIT LIGHTS ARE PROVIDED FOR EVERY EXTERIOR MAN DOOR
- - - -LIGHTING SHALL BE INSTALLED USING EMT CONDUIT.
SITE:
- - - -4 - 30 FOOT PAINTED STEEL POLES WITH 400 WATT METAL HALIDE FIXTURES HAVE
BEEN PROVIDED FOR PARKING LOT LIGHTING.
- - - -SECURITY LIGHTING ON PERIMETER OF BUILDING IS PROVIDED USING 9-250 WATT
METAL HALIDE WALL PACKS.
- - - -CHILLER PAD LIGHTING WAS PROVIDED USING 3-250W METAL HALIDE WALL PACKS
AND 4-175 WATT STANCHION MOUNTED FLOORS.
OFFICE:
- - - -WE PROVIDE A MINIMAL LIGHTING LEVEL (70-300 F.C.) FOR THE OFFICE AND A
MINIMUM NUMBER OF RECEPTACLES.
<PAGE> 62
[LETTERHEAD, KERR]
June 27, 1989
Mr. Ken Baye
Willkie, Farr & Gallagher
One Citicorp Center
153 East 53rd. Street
New York, New York 10022
RE: Jackson, Tennessee Environmental Indemnification
Dear Ken:
Attached for your information and files is a copy of the Environmental
Indemnification signed by the County of Jackson, Tennessee.
Very truly yours,
Larry R. Knipple
Corporate Secretary
LRK/jtg:55
Attachment
<PAGE> 63
[LETTERHEAD, MADISON COUNTY]
June 26, 1989
Madison County Commission
Jackson, Tennessee
SCP Corporation
9601 John Street
Santa Fe Springs, CA 90670
RE: Environmental Indemnification;
Century 21 Associates/SCP Corporation Lease
Gentlemen:
Reference is made to the lease (the "Lease") dated May ___, 1989, between
Century 21 Associates, as landlord (Century 21) and SCP Corporation, as tenant,
("SCP") for the real property described on Exhibit A hereto together with the
improvements thereon (the "Property").
In consideration for SCP's lease of the Property from Century 21 pursuant to
the Lease and other good and valuable consideration, the receipt of which is
hereby acknowledged, the undersigned, being the prior fee owner of the
Property, hereby indemnifies SCP from and holds SCP harmless against all costs,
legal expenses, liability, and other expenses, claims by any party or
governmental entity, whether grounded in statutory or common law, for personal
injury, wrongful death, property damage, economic loss, abatement, remediation,
damage to natural resources, response costs, civil penalty, or any other claim,
demand or notice arising out of or relating to:
(i) the generation, presence, handling, treatment, storage or disposal of
any solid waste, hazardous waste, hazardous substance, toxic
substance, contaminant, or pollutant, or any other environmental
condition, on, at or beneath the property, provided such generation,
presence, handling, treatment, storage or disposal occurred prior to
the commencement of the Lease or due to the acts of the undersigned or
its agents or employees; or
<PAGE> 64
SCP Corporation
June 26, 1989
Page Two
(ii) the generation, handling, transportation, treatment, storage, or
disposal of any solid waste, hazardous waste, hazardous substance,
toxic substance, contaminant, or pollutant, from the property to or
at another facility, site, or property, provided such generation,
handling, transportation, treatment storage, or disposal occurred
prior to the commencement of the Lease or due to the acts of the
undersigned or its agents or employees.
Sincerely,
Madison County Commission
By: /s/ J. ALEX LEECH
--------------------------------
J. ALEX LEECH, County Executive
Madison County, Tennessee
<PAGE> 1
EXHIBIT 10.4
________________________________________
AMENDED AND RESTATED LEASE
BETWEEN
PHOENICIAN PROPERTIES
AS LESSOR,
AND
KERR GROUP, INC.,
AS LESSEE
Dated as of May 16, 1994
________________________________________
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Article No. Title Page
- - - ----------- ----- ----
<S> <C> <C>
1 Term; Rent Payments; Additional Rent.......... 2
2 Repairs....................................... 4
3 Compliance With Laws.......................... 5
4 Surrender At End Of Term...................... 7
5 Mechanics' Liens.............................. 9
6 Inspection By Lessor.......................... 10
7 Taxes and Other Charges....................... 10
8 Indemnification Of Lessor..................... 12
9 Insurance; Restoration........................ 13
10 Condemnation.................................. 20
11 Assignment And Subletting..................... 22
12 Intentionally Deleted......................... 24
13 Defaults...................................... 24
14 No Reinstatement.............................. 30
15 Subordination................................. 31
16 Quiet Enjoyment............................... 33
17 Successors And Assigns........................ 33
18 Alterations................................... 34
19 Notices....................................... 36
20 No Waiver..................................... 37
21 Remedies Cumulative........................... 38
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
22 Entire Agreement.............................. 39
23 Intentionally Deleted......................... 39
24 Indemnification Of Lessee..................... 39
25 Estoppel Certificates......................... 41
26 Certain Definitions........................... 42
27 Extension Of Term............................. 42
28 Purchase Option............................... 43
29 Intentionally Deleted......................... 48
30 Hazardous Wastes/Substances................... 49
31 Signage....................................... 52
32 Purposes...................................... 53
33. Right to Create Encumbrances.................. 53
34. Arbitration................................... 54
35. Memorandum of Lease........................... 56
36. Phase 2 Work.................................. 57
</TABLE>
Exhibit A -- Land
Exhibit B -- Approved Form of Subordination, Non-Disturbance and
Attornment Agreement
Exhibit C -- Approved Title Exceptions
Exhibit D -- Phase 2 Work
(ii)
<PAGE> 4
This Amended and Restated Lease made as of the 16th day of May, 1994,
between PHOENICIAN PROPERTIES, a Tennessee general partnership, having its
principal office at 529 Old Hickory Boulevard, Jackson, Tennessee 38305
("Lessor") and KERR GROUP, INC., a Delaware corporation, having its principal
office at 1840 Century Park East, Los Angeles, California 90067 ("Lessee").
W I T N E S S E T H:
WHEREAS, pursuant to that certain lease (the " Original Lease") dated
as of May 14, 1993, Lessee leased from the Industrial Development Board of the
City of Jackson (the "Board") that certain real property described on Exhibit A
attached hereto and made part hereof, together with all rights, privileges,
easements, appurtenances and amenities belonging or in any way pertaining
thereto (collectively, the "Land"), together with a building containing
approximately 166,400 square feet of area (the Land, together will all existing
improvements are referred to collectively as the "Demised Premises"); and
WHEREAS, as of even date herewith Lessor acquired from the Board fee
simple title to the Demised Premises subject to the Original Lease; and
WHEREAS, on and subject to the terms and conditions hereinafter set
forth, Lessor and Lessee desire to amend and restate the Original Lease in its
entirety.
NOW THEREFORE, in consideration for the premises and other good and
valuable consideration, the receipt and sufficiency whereof is hereby
acknowledged, Lessor and Lessee agree as follows.
<PAGE> 5
ARTICLE 1
TERM, RENT, PAYMENTS; ADDITIONAL RENT
1.01 Term. The term of this Lease (the "Term") shall begin as of the
date hereof (the "Commencement Date") and, subject to the terms
of Article 27 relating to possible extension and renewal of the
Term, shall end on the last day of the month following the
twentieth anniversary of the Commencement Date (the "Expiration
Date") unless sooner terminated as hereinafter provided.
1.02 Rents. Lessee shall pay to Lessor a fixed annual rent (the
"Rent") at the rate of:
(a) Five Hundred Fifty-Six Thousand Eighty Dollars ($556,080)
per year, payable in equal consecutive monthly installments of Forty-Six
Thousand Three Hundred Forty Dollars ($46,340) per month, commencing on the
Commencement Date, and to be paid in advance, and thereafter on the first day
of each calendar month of the Term, and ending on April 30, 1999;
(b) Five Hundred Seventy-Two Thousand Eight Hundred Eighty
Dollars ($572,880) per year, payable in equal consecutive monthly installments
of Forty-Seven Thousand Seven Hundred Forty Dollars ($47,740) per month,
commencing on May 1, 1999 and ending on April 30, 2004;
(c) Five Hundred Eighty-Nine Thousand Six Hundred and Eighty
Dollars ($589,680) per year, payable in equal consecutive monthly installments
of Forty-Nine Thousand One Hundred Forty
-2-
<PAGE> 6
Dollars ($49,140) per month, commencing on May 1, 2004 and ending on April 30,
2009; and
(d) Six Hundred Six Thousand Four Hundred Eighty Dollars
($606,480) per year, payable in equal consecutive monthly installments of Fifty
Thousand Five Hundred Forty Dollars ($50,540) per month, commencing on May 1,
2009 and ending on the Expiration Date.
Rent payable on account of any partial calendar month during the term of this
Lease, shall be prorated.
1.03 Net Rents Payable. Lessor shall receive all Rent free from all
taxes, assessments, charges, expenses, damages, repairs, maintenance and
deductions of every description, and except as expressly provided in this
Lease, with no right of set-off, and Lessee shall pay all of the foregoing and
other charges which, except for this Lease, would have been chargeable against
the Demised Premises and payable by the Lessor. Notwithstanding the
immediately preceding sentence, Lessor shall be solely responsible for any of
the matters described in the preceding sentence caused or necessitated by, or
resulting from, the negligence or acts of Lessor or its agents, contractors,
employees or any other party for whom Lessor is legally responsible. Nothing
contained in this Lease shall obligate Lessee to become directly obligated to
pay any interest or principal on any mortgage or other financing of Lessor's
interest in the Demised Premises (but nothing contained in this sentence shall
abrogate Lessee's responsibility to tender rent
-3-
<PAGE> 7
to any Institutional Lender (as defined in Section 26.03) pursuant to the
provisions of the Subordination, Non-Disclosure and Attornment Agreement
attached hereto as Exhibit B), or any corporate, inheritance, franchise, income
or similar tax assessed to Lessor.
1.04 Additional Rents. Lessee shall pay to Lessor the Rent and all
other sums that may become due or be payable by the Lessee under this Lease,
including, without limitation, taxes and insurance obligations of Lessee
hereunder, at the time and in the manner provided in this Lease, all of which
shall be deemed as Additional Rents, and in the event of nonpayment the Lessor
shall have all the rights and remedies provided by this Lease. Rent shall be
tendered in legal tender and lawful money of the United States at the office of
Lessor or such other place as Lessor may designate in writing. Rental payments
shall be without set-off, abatement, deduction or other reduction whatsoever
except as expressly set forth in this Lease.
ARTICLE 2
REPAIRS
2.01. The Demised Premises, together with the sidewalks adjacent
thereto, if any, shall be kept in good order and repair by Lessee at Lessee's
sole cost and expense, and Lessee shall make all repairs and replacements,
ordinary as well as extraordinary, foreseen and unforeseen, of every kind and
nature whatsoever, including necessary interior and exterior roof and wall
maintenance
-4-
<PAGE> 8
and repair, that may be necessary or required in or about the same so that at
all times those buildings, improvements, sidewalks, parking lots and other
paved surfaces shall be in good order, condition, and repair.
ARTICLE 3
COMPLIANCE WITH LAWS
3.01 Lessee covenants to comply with any and all applicable laws,
statutes, ordinances, orders, rules, regulations and requirements of all
federal, state and municipal governments, and the appropriate agencies,
offices, departments, boards and commissions thereof (including without
limitation all applicable zoning, building codes, and the Americans with
Disabilities Act of 1990), and the board of fire underwriters and/or fire
insurance rating organization or similar organization performing the same or
similar functions (collectively, "Laws") applicable to the Demised Premises
relating to the use or occupancy thereof or to the making of repairs thereto,
or of changes, alterations or, improvements therein, ordinary or extraordinary,
structural or otherwise, seen or unforeseen, including but not limited to the
performance of any duty imposed upon Lessor or Lessee by such Laws in respect
to the sidewalks, curbs, streets or vaults, if any, adjacent to the Demised
Premises. Lessee shall have the right to contest by appropriate legal
proceedings diligently conducted in good faith, in the name of Lessee, or
Lessor (if legally required) or both (if
-5-
<PAGE> 9
legally required), without cost or expense to Lessor, the validity or
application of any Law and, if by the terms of any such Law compliance
therewith may legally be delayed pending the prosecution of any such
proceeding, Lessee may delay such compliance therewith until the final
determination of such proceeding. Lessee will indemnify Lessor against all
adverse consequences of such contest, including court costs, interest,
penalties or other expense including reasonable attorneys' fees. Lessee shall
pay all costs, expenses, claims, fines, penalties and damages that may in any
manner arise out of or be imposed because of the failure of Lessee to comply
with this Article 3, and in any event agrees to indemnify the Lessor from all
liability with reference to the same. Lessor and Lessee shall each promptly
give notice to the other in writing of any (a) written notice of violation of
Law or Environmental Law (as defined in Section 30.01) relating to the Demised
Premises received by the Lessee or Lessor, respectively, or (b) event or
occurrence, the existence of which is known by either Lessor or Lessee, which
would constitute a reportable event or occurrence under any Environmental Law.
Without diminishing the rights or obligation of Lessee, if Lessee shall at any
time fail or neglect to comply, to the extent reasonably appropriate and as
expeditiously as reasonably feasible, with any of said Laws or Environmental
Laws, as hereinbefore provided and, if a stay is necessary, Lessee shall have
failed to obtain the stay or continuance thereof, Lessor in addition to other
remedies shall be
-6-
<PAGE> 10
at liberty, after ten (10) business days' prior written notice to Lessee and
without unreasonable disruption to Lessee's business activities, to comply
therewith, and reasonable expenses consequent thereon shall be borne and paid
by Lessee; upon Lessee's failure so to pay, Lessor may pay the same and any
payments so made by the Lessor, together with interest thereon to be computed
at the prime rate of interest from time to time announced by Chase Manhattan
Bank, N.A. (or its successor) plus 2% per annum from date of payment shall be
considered as additional rent to be added to the installment of Rent next
accruing, and shall entitle Lessor to enforce any of the terms, provisions,
conditions and covenants herein contained that may be applicable to such Rent.
Lessee agrees to defend, indemnify and hold harmless Lessor from and against
all claims, losses, costs or expenses (including reasonable attorneys' fees)
suffered or incurred by Lessee arising out of Lessor's exercise of its rights
to comply set forth in the preceding sentence.
ARTICLE 4
SURRENDER AT END OF TERM
4.01. On the Expiration Date or earlier termination date of this
Lease, Lessee shall surrender the Demised Premises, including, but not limited
to, all buildings, improvements, hoists, pipes, plumbing, engines, electric
wires, and fixtures used in connection with the operation of the Demised
Premises (but no trade fixtures
-7-
<PAGE> 11
and equipment of occupants in possession of the Demised Premises, provided that
any damage to the Demised Premises resulting from such removal shall be
repaired by Lessee) in good repair and condition, damage by fire or other
casualty and reasonable wear and tear thereof excepted. In amplification of
the foregoing, provided Lessee shall not then be in default beyond applicable
notice and cure periods and Lessor has not exercised its right to terminate the
Lease as set forth in Section 13.02, Lessee may, at its option, remove any
furnishings, fixtures, equipment and personal property which have been
installed by Lessee or anyone claiming through or under Lessee (including,
without limitation, any plumbing, pipes, wires, cables, or other apparatus in
connection therewith, however, excluding any such property or improvement
installed as part of the Phase 2 Work (as defined in Article 36), unless and to
the extent Lessee has paid for same in which event Lessee may at its option
remove same). Upon any such permitted removal, Lessee shall restore the
Demised Premises to its original condition, damage by fire or other casualty
and reasonable wear and tear thereof excepted. All such removals and
restoration shall be accomplished in a good and workmanlike manner so as not to
damage the primary structure or structural integrity of the building and other
improvements which are a part of the Demised Premises and shall not decrease
the value of the Demised Premises except as to the value of the property the
Lessee is permitted to remove and after such removal, if any, the primary
structure on the Demised Premises
-8-
<PAGE> 12
still shall be eligible for a certificate of occupancy from the appropriate
governmental authority.
ARTICLE 5
MECHANICS' LIENS
5.01. Neither Lessor nor Lessee shall have the power to subject the
Demised Premises or any interest in the Demised Premises to any mechanics' or
other liens. If any mechanics' or other liens or order for the payment of
money shall be filed against the Demised Premises or any building or
improvement which is a part thereof by reason of or arising out of any labor or
material furnished or alleged to have been furnished or to be furnished to or
for Lessor or Lessee at the Demised Premises, or for or by reason of any
change, alteration, or addition or the cost or expense thereof or any contract
relating thereto, the party responsible for such lien (the "Responsible Party")
shall cause the same to be cancelled and discharged of record, by bond or
otherwise as allowed by law at the expense of the Responsible Party, within
forty-five (45) days after written demand therefor, and shall also defend on
behalf of the party which is not responsible for such lien (the
"Non-Responsible Party") at the Responsible Party's sole cost and expense, any
action, suit or proceeding that may be brought thereon or for the enforcement
of those liens, lien or orders, and the Responsible Party will pay any damages
and satisfy and discharge any judgment entered therein and save harmless the
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Non-Responsible Party from any claim or damage resulting therefrom including
reasonable attorneys' fees and expenses incurred by the Non-Responsible Party
in defending against any such lien or claim. Nothing herein shall be construed
to create an agency on the part of Lessor or Lessee on behalf of the other for
the contracting for labor or materials on the Demised Premises.
ARTICLE 6
INSPECTION BY LESSOR
6.01. Lessee shall permit Lessor and Lessor's agents to enter the
Demised Premises, during Lessee's normal business hours and upon reasonable
prior notice, to examine same. Lessee shall have the right to accompany or
designate an agent to accompany Lessor on any examination of the Demised
Premises made pursuant to this Article 6. Lessor agrees to defend, indemnify
and hold harmless Lessee from and against all claims, losses, costs or expenses
(including reasonable attorneys' fees) suffered or incurred by Lessee arising
out of Lessor's exercise of its entry rights under this Article 6.
ARTICLE 7
TAXES AND OTHER CHARGES
7.01. Lessee agrees to pay and discharge punctually as and when the
same shall become due and payable without penalty, all real estate taxes,
personal property and income taxes, business and
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occupation taxes, occupational licenses, water charges, sewage charges and
utility assessments, and all other governmental taxes, impositions and charges
of every kind and nature, extraordinary or ordinary, general or special,
foreseen or unforeseen, which at any time during the Term shall become due and
payable by Lessor or Lessee and which shall be levied, assessed or imposed:
(a) Upon, or which shall be or become liens upon, the Demised
Premises or any portion thereof, or any interest of Lessor or Lessee therein or
under this Lease or upon the rents payable hereunder; or
(b) Upon or with respect to the construction, possession,
operation, maintenance, alteration, repair, rebuilding, use or occupancy of the
Demised Premises or any portion thereof.
The obligations of Lessee hereunder shall be pursuant to any present
or future laws, statutes, regulation or other requirement of any governmental
authority, however, Lessee shall have no liability for any such tax, charge or
assessment attributable to properties or operations of Lessor not involving the
Demised Premises. It is the intention of the parties hereto that, insofar as
the same may be lawfully done, Lessor shall be free from all costs, expenses
and obligations with respect to any such taxes, charges, assessments or
impositions, and that this Lease shall yield, net to Lessor, not less than the
Rents reserved hereunder throughout the Term. Notwithstanding anything to the
contrary contained in this Article 7, in no event shall Lessee be required
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to pay any corporate, inheritance, franchise, income or similar tax assessed
against Lessor.
Section 7.02. Lessee covenants to furnish to Lessor, promptly upon
request, proof of the payment of any tax, assessment, and other governmental or
similar charge, and any utility charges, which is payable by Lessee as provided
in this Article.
ARTICLE 8
INDEMNIFICATION OF LESSOR
8.01. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all claims, losses, costs and expenses, including
reasonable attorneys' fees, suffered or incurred by Lessor (i) arising from or
out of the occupancy of the Demised Premises by or under Lessee, Lessee's
agents or employees, (ii) from any loss or damage arising in connection with
the Demised Premises from any fault or negligence by Lessee, or (iii) from any
failure on Lessee's part to comply with any of the covenants, terms and
conditions contained in this Lease required to be complied with by Lessee.
Lessee shall have no duties and responsibilities under this Article 8 for any
claims, losses, damages, claims, suits, liability, costs or expenses, including
reasonable attorneys' fees incurred by Lessor as a result of any negligence or
acts of Lessor, its employees, contractors, agents or any other party for whom
Lessor is legally responsible.
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ARTICLE 9
INSURANCE; RESTORATION
9.01. INSURANCE
(a) During the term of this Lease, Lessee, at its sole cost
and expense, shall carry and maintain the following types of insurance in the
amounts specified:
(i) Fire and extended coverage insurance (including
earthquake insurance, to the extent available)
covering the Demised Premises against loss or damage
by fir and against damage by other risks now or
hereafter embraced by the "extend coverage" so called,
in amounts equal to the full cost of replacing the
Demise Premises in the event of total destruction
of same by fire or any other casualty with appropriate
riders to compensate for the effect of inflation on
such replacement cost, with a deductible not to exceed
$250,000.
(ii) Comprehensive public liability insuranc including
propert damage, insuring Lesso and Lessee against
liability for injury to persons or property occurring
in or about the Demised Premises or arising out of the
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ownership, maintenance or use or occupancy thereof.
The liability under such insurance shall not be less
than Two Million Dollars ($2,000,000.00) for any one
accident and not less than Five Million Dollars
($5,000,000.00) in the aggregate for all accidents
in any one year period; and
(iii) Business interruption insurance against loss of rent
or rental value due to fire including extended
coverage endorsement in an amount equal to the
annual rent for the Demised Premises plus the
estimated amount of rea estate taxes and any
other expenses connected with the
Demised Premises payable by the Lessee.
(c) All policies of insurance shall provide by endorsement that
any loss shall be payable to Lessor or Lessee as their
respectiv interes may appear at the time of the loss or
payable to mortgagee of Lessor under the standard mortgage
clause, if such mortgagee requires. All such policies shall
further provide that not less than thirty (30) days written
notice shall be given to Lessor, Lessee and the holder of an
Institutional Mortgage before such policy may be cancelled
changed to reduce insurance provided thereby. Lessee shall
provide Lessor with either certificates evidencing such
insurance, or duplicate
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policies of each insurance policy evidencing such endorsement(s) together with
evidence satisfactory to Lessor that payment of all premiums thereon has been
made.
(d) Each of Lessor and Lessee hereby releases the other from
any and all liability or responsibility to the other or any person or entity
claiming through or under them by way of subrogation or otherwise for any loss
or damage to property caused by fire or any other perils insured in policies of
insurance covering such property, even if such loss or damage shall have been
caused by the fault or negligence of the other party, or anyone for whom such
party may be legally responsible, provided, however, that this release shall be
applicable and in force and effect only with respect to loss or damage
occurring during such times as the releasor's policies shall contain a clause
or endorsement to the effect that any such release shall not adversely affect
or impair said policies or prejudice the right of the releasor to recover
thereunder and then only to the extent of the insurance proceeds payable under
such policies. Each of Lessor and Lessee agrees that it will request its
insurance carriers to include in its policies such a clause or endorsement; if
such clause or endorsement is unavailable the party unable to obtain same shall
give the other party immediate written notice of such fact.
(e) If Lessee fails to provide or to keep in force the
insurance required by this Article 9, Lessor shall furnish Lessee with written
notice of failure to provide or keep in force such
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insurance, and if Lessee fails to furnish satisfactory evidence of such
insurance within five (5) business days of receipt of such notice, Lessor may,
if it elects, procure such insurance and all premiums advanced by Lessor shall
be repaid by Lessee, as additional rent, promptly following written request,
together with annual interest at the lesser of the highest rate of interest
permitted by Law, and the prime rate of interest from time to time charged by
Chase Manhattan Bank, N.A. plus 2%.
9.02. Subject to the provisions of Section 9.04, if any buildings at
any time on the Demised Premises shall be damaged or destroyed by any cause
whatsoever, during the Term, Lessee shall give immediate notice thereof to
Lessor and, with reasonable promptness, repair and replace the same at Lessee's
expense, utilizing the insurance proceeds, if any, paid in conjunction with
such damage or destruction so that the buildings upon the Demised Premises
after that repair and replacement shall be at least equal in value to the
buildings existing immediately prior to such occurrence and as nearly similar
to such buildings in character as shall be practicable and reasonable. Before
beginning such repair or rebuilding, or letting any contracts in connection
therewith, Lessee shall submit complete detailed plans and specifications for
Lessor's approval, which approval Lessor shall not unreasonably withhold,
condition or delay.
9.03. Except as otherwise provided in Article 9, Lessee shall not be
entitled to any abatement of Rent except to the extent to
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which Lessor shall have received a net sum as proceeds of any loss or business
interruption insurance maintained by Lessee, nor shall its obligations to pay
rent under this Lease be abated during the term of this Lease, notwithstanding
any destruction or damage to the Demised Premises by any cause whatsoever.
9.04. In the event of damage to or destruction of any building upon
the Demised Premises during the term of this Lease, Lessor and Lessee agree
that Lessor's mortgagee, if an Institutional Lender shall be entitled to retain
the insurance proceeds paid on account thereof; provided, however, if Lessee
shall not then be in default beyond applicable notice and cure periods and
Lessor has not exercised its right to terminate the Lease as set forth in
Section 13.02, then as a condition thereto such proceeds shall be received by
such mortgagee in trust to pay the cost of restoration, and shall not be
commingled with any other funds of such mortgagee. In such event the mortgagee
shall apply all insurance money received on account of such damage or
destruction to pay the cost of the work and for the protection of the Demised
Premises pending the completion of the work. If the estimated cost of the work
is more than $150,000.00, the plans and specifications shall first be submitted
to and approved in writing by Lessor and the holder of an Institutional
Mortgage, which approvals shall not unreasonably be withheld, conditioned or
delayed. The insurance funds shall be paid out, as provided below,
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from time to time as the work progresses, upon the written request of Lessee,
which shall be accompanied by the following:
(a) A certificate (the "Certificate") of the architect or
engineer in charge of the work dated not more than ten (10) days before such
request, stating that the requested sum either has been paid by Lessee or is
justly due to contractors, subcontractors, materialmen, engineers, architects
or other persons (whose names and addresses shall be stated) who have rendered
services or furnished materials in connection with such work. The Certificate
shall give a brief description of such services and materials, list the several
amounts so paid or due to each such person, state the estimated fair value of
the work at the date of requisition, and state that to the best knowledge of
the certifying party no part of such expenditures has been or is being made the
basis for any other request for payments. The certificate shall state also
that, except for the amounts listed therein, the architect or engineer, after
reasonable inquiry, knows of no outstanding indebtedness that is then due for
labor, wages, materials, supplies, or services relating to such work and which,
if unpaid, could become the basis of a mechanic's, materialmen's, or similar
lien upon such work or the Demised Premises. The certificate shall also
contain such other information regarding the work as shall be reasonably
requested by Lessor's mortgagee; and
(b) An affidavit sworn to by Lessee that all materials and
property constituting the work described in the certificate are
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free and clear of all security interests, liens, charges, or encumbrances,
except encumbrances securing indebtedness due to persons specified in such
certificate which are to be discharged upon payment of such indebtedness; and
(c) An affidavit, sworn to by Lessor, that to the best of
Lessor's knowledge there exists no material default under the Lease.
Upon compliance with the provisions of this Section, such mortgagee
shall, out of the insurance money, pay to the persons named in such
certificates the respective amounts stated to be due to them, or shall pay to
Lessee the amounts stated to have been paid by Lessee. Upon completion of the
work, Lessee shall cause to be filed a "notice of completion" in the Register's
Office for Madison County, Tennessee, and to give such other notices as shall
be required or permitted under TCA Section 66-11-101 et. seq. to determine the
time period for filing of liens or other claims against the work. The final
disbursement from the insurance funds for the work shall be withheld until the
time period has expired for filing of claims against the work, but in no event
longer than sixty (60) days following completion of the work.
Section 9.05. If the insurance proceeds are insufficient to pay the
cost of such restoration work, Lessee shall pay the deficiency. If the
proceeds exceed the cost of such work, Lessee may retain the excess. Prior to
commencement of the work, if the estimated cost of completing such work exceeds
Two Hundred Thousand
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Dollars ($200,000) as reasonably estimated by Lessee's architect or engineer,
and promptly following request of Lessor's mortgagee, Lessee shall require its
contractor or subcontractor to furnish such payment and performance bonds as
may be reasonably requested to insure payment for all aspects of the work and
its proper completion.
ARTICLE 10
CONDEMNATION
10.01. If any person or corporation, municipal, public, private, or
otherwise shall at any time during the Term lawfully condemn and by reason
thereof acquire title to Lessor's interest in the Demised Premises, in or by
condemnation proceedings in pursuance of the law, general, special or
otherwise, Lessor shall be entitled to and shall, except as hereinafter
provided, receive any award that may be made, including the award, if any, to
Lessee for the value of the unexpired term of this Lease, and Lessee shall and
does hereby assign and transfer to Lessor any award that may be so made to
Lessee for any damages to the term of years set forth in this Lease. This
assignment shall not include any award for taking of, or damage to, the trade
fixtures of Lessee or its subtenants, or for any moving expenses incurred by
Lessee or its subtenants.
10.02. Subject to the provisions of Section 10.03, in the event of a
taking by condemnation as described in Section 10.01, this Lease shall
continue, but the Rent to be paid by Lessee shall
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thereafter be reduced in proportion to the space taken by condemnation, and in
such event Lessor shall promptly restore the Building and other improvements
located on the Demised Premises as nearly as possible to the condition in which
same were in before that taking. It is agreed that Lessor's obligations
pursuant to the immediately preceding sentence shall not be limited to the
amount of such condemnation award.
10.03. Should such taking of a portion of the Building which is a
part of the Demised Premises result in a loss of a portion of the total Land
area such that Lessee's use of the remaining portion of the Demised Premises
becomes economically unfeasible (as reasonably determined by Lessee,
recognizing that the manufacturing portion of the Demised Premises is of
critical importance to the Lessee and the distribution portion of the Demised
Premises is not of critical importance), then Lessee, at its option, may cancel
and terminate this Lease by furnishing written notice to Lessor of its intent
to terminate and cancel the Lease, which notice must be furnished within sixty
(60) days after vesting of title in the condemnor, and the Lease shall
terminate within thirty (30) days from receipt by Lessor of such written
notice.
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ARTICLE 11
ASSIGNMENT AND SUBLETTING
11.01. (a) Subject to the provisions of Section 11.01(c), Lessee
shall not assign this Lease or sublet any portion of the Demised Premises
without first obtaining Lessor's written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Irrespective of the foregoing,
no consent in one instance shall prevent this provision from applying to each
subsequent instance. This provision shall not apply to transfers of Lessee's
stock or other beneficial interests, neither of which shall be deemed to be an
assignment of this Lease requiring Lessor's consent.
(b) If Lessee should desire to assign this Lease, or to
sublet all or any portion of the Demised Premises, and in either such case in
an instance where Lessor's consent is required under this Article 11, Lessee
shall give Lessor written notice of such desire, which written notice shall
include (i) the name of the proposed assignee or sublessee, (ii) to the extent
available, a copy of the proposed assignee's or sublessee's profit and loss
statement, balance sheet and, if said proposed assignee or sublessee is a
publicly traded company, annual report, each for the previous three (3) years
and (iii) a statement (including an environmental impact statement) setting
forth the proposed assignee's or sublessee's use of the Demised Premises, at
least twenty (20) business days in advance of the date Lessee proposes to
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make such assignment or subletting. Notwithstanding any such subletting or
assignment, Lessee shall remain liable on all of its obligations under this
Lease.
(c) Notwithstanding the provision of Section 11.01(a),
Lessor's consent shall not be required to any subletting of less than 25,000
square feet of the Demised Premises (either individually or in the aggregate).
In addition, if the entity to whom Lessee proposes to sublet the Demised
Premises or assign this Lease is an Affiliate (as hereinafter defined),
Lessor's approval for such subletting or assignment shall not be required
provided that Lessee remains primarily liable for the full performance of all
of Lessee's obligations under this Lease. As used herein, "Affiliate" shall
mean: (i) any entity that directly or indirectly controls, is controlled by,
is under common control with, or owns a fifty percent (50%) or greater interest
in, Lessee; (ii) any entity in which Lessee owns a fifty percent (50%) or
greater interest, either directly or indirectly, or (iii) any entity which has
acquired all or substantially all of the assets of Lessee by merger,
consolidation, purchase or other transfer.
(d) Lessor's approval in accordance with Section 11.01(a)
shall be deemed given unless Lessee receives notice in writing of Lessor's
disapproval within the twenty (20) business day period described in Section
11.01(b). If Lessor shall deny such approval, Lessor shall specify in detail
its reasons for such denial.
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(e) Subject to any applicable provisions of Article 15,
Article 27 and Article 28, Lessor may transfer, convey, assign or encumber its
interest in this Lease at any time without Lessee's consent. Notwithstanding
the foregoing, Lessor may not transfer, convey or assign its interest in this
Lease to any entity, or any Affiliate of an entity, which is engaged in the
same general business as Tenant.
11.02 Lessee, and any permitted sublessee of the entire Demised
Premises or assignee of all of Lessor's right, title and interest under this
Lease, shall furnish to Lessor, quarterly, copies of financial statements
(including balance, profit and loss statements and such other schedules as may
be reasonably requested by Lessor, as the same are customarily prepared by
Lessee or such sublessee or assignee).
ARTICLE 12
INTENTIONALLY DELETED
ARTICLE 13
DEFAULTS
13.01. Each of the following shall be deemed a default by Lessee and
a breach of this Lease:
(a) Lessee's failure to pay any installment of rent, which
failure persists after the expiration of five (5) days from receipt by Lessee
of written notice from Lessor advising of such
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failure to pay. Notwithstanding the foregoing, no written notice shall be
required if Lessor has, within any consecutive ten (10) month period, twice
given written notice to Lessee under this subparagraph (a). Nevertheless, if
Lessee shall thereafter pay rent on a timely basis for a period of eighteen
(18) consecutive months, the provisions of the first sentence of this
subparagraph shall again apply;
(b) Lessee's failure to pay any additional rent, which
failure persists after the expiration of ten (10) days from receipt by Lessee
of written notice from Lessor advising of such failure to pay;
(c) Lessee's failure to observe or perform any of its
obligations under the other terms, covenants or conditions of this Lease, which
failure persists after the expiration of thirty (30) days from the date Lessor
gives written notice to Lessee calling attention to the existence of that
failure, but, if the matter that is the subject of the notice is of such a
nature that it cannot be reasonably corrected within thirty (30) days then no
default shall be deemed to have occurred if Lessee promptly, upon the receipt
of notice, commences the curing of the default and diligently prosecutes same
to completion within a one hundred eighty (180) day period. However, if the
default is one relating to a matter that exposes space occupants or the public
to an imminent and substantial danger to safety or health of which the public
authorities have given due notice to Lessee, then the cure period
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shall be the period of time permitted to Lessee under law to take corrective
measures for which Lessee is responsible. The right to cure provided herein
does not grant Lessee any license or privilege to allow the Demised Premises to
be without the insurance coverage provided for in Article 9 and failure
promptly to comply with Article 9 shall entitle Lessor to place immediately the
necessary insurance, and the cost thereof shall be additional rent and
collectible as such; or
(d) The adjudication of Lessee in an involuntary bankruptcy
proceeding and such adjudication is not vacated within ninety (90) days; the
taking by Lessee of the benefit of any other insolvency act or procedure, which
term includes any form of proceeding for reorganization or arrangement or
rearrangement under the Bankruptcy Code as well as an assignment for the
benefit of creditors; or the appointment of a receiver for Lessee and such
receiver remains undischarged for ninety (90) days.
13.02. Should Lessee default as described in this Article 13, Lessor
at any time thereafter may, at its option give Lessee five (5) days written
notice of intention to end the term of this Lease and thereupon at the
expiration of those five (5) days the term of this Lease shall expire as
completely as if that date were the Expiration Date and Lessee will then quit
and surrender the Demised Premises to Lessor, but Lessee shall remain liable as
provided in this Article 13.
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13.03. If the notice provided for in Article 13.02 shall have been
given and the term of this Lease shall expire as described in Article 13.02, or
if the Lease shall be taken from Lessee as a result of any execution against
Lessee in any proceeding in which Lessee shall have no appeal or further
appeal, then Lessor may without notice re-enter the Demised Premises and
dispossess Lessee by summary proceedings or otherwise, and Lessee or other
occupant or occupants of the Demised Premises will remove their effects and
hold the Demised Premises as if this Lease had not been made, and Lessee waives
the service of notice of intention to re-enter or to institute legal
proceedings to that end.
13.04. In case of any default, re-entry, expiration or dispossession
by summary proceedings or otherwise:
(a) Rent shall become due thereupon and be paid up to the
time of that re-entry, dispossession or expiration, together with any
reasonable and customary expenses that Lessor may incur for legal expenses and
attorneys' fees, including those incident to the recovery of possession,
brokerage, and putting the Demised Premises in good order, or for preparing the
same for re-rental; and
(b) Lessee shall pay to Lessor as damages sums equal to the
Rent and the additional rent payable hereunder which would have been payable by
Lessee had this Lease not so terminated, or had Lessor not so re-entered the
Demised Premises, payable upon the due dates therefor specified in this Lease
had this Lease been in full
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force and effect unless otherwise specified herein and until the Expiration
Date, without obligation on the part of Lessor to file suit for the collection
of damages on a monthly basis; provided, however, that if Lessor shall relet
the Demised Premises during said period (it being agreed that Lessor shall be
obligated to use its best efforts to relet the Demised Premises), Lessor shall
credit Lessee with the net rents received by Lessor from such reletting, such
net rents to be determined by first deducting from the gross rents as and when
received by Lessor the expenses of reletting, including altering and preparing
the Demised Premises for new tenants, brokers' commissions, and all other
expenses properly chargeable against the Demised Premises and the rental
therefrom; it being understood that any such reletting may be for a period
shorter or longer than the remaining term of this lease. In no event shall
Lessee be entitled to receive any excess of such net rents over the sums
payable by Lessee to Lessor hereunder. Lessee shall not be entitled in any
suit for the collection of damages pursuant to this Subsection to a credit in
respect of any net rents from a reletting, except to the extent that such net
rents are actually received by Lessor. If the Demised Premises or any part
thereof be relet by Lessor for the unexpired portion of the Term, or any part
thereof, before presentation of proof of such damages to any court, commission
or tribunal, except as may be otherwise adjudicated by a court of competent
jurisdiction, the amount of rent reserved upon such reletting shall, prima
facie, be
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the fair and reasonable rental value for the Demised Premises, or part thereof,
so relet during the term of the reletting. Any such damages shall be paid in
monthly installments by Lessee on the rent day specified in this Lease and any
suit brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Lessor to collect the deficiency for any
subsequent month by a similar action or proceeding.
13.05. Lessor may make any alterations and decorations in the Demised
Premises that Lessor in its judgment considers reasonably advisable and
necessary for the purpose of reletting the Demised Premises. The making of
these alterations or decorations shall not operate or be construed to release
Lessee from any liability under this Article 13.
13.06. Lessor shall in no event be liable and Lessee's liability
under this Article 13 shall not be affected or diminished in any way whatsoever
for failure to relet the Demised Premises, or if the Demised Premises are
relet, for failure to collect the rent thereof under such reletting; however,
nothing contained in this Section 13.06 shall abrogate Lessor's obligation to
use its best efforts to mitigate its damages.
13.07. In the event of a breach by Lessee of any of the covenants or
provisions of this Lease, Lessor shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
dispossess proceedings, or other remedies were not provided in this Lease.
Mention in this Lease of
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any particular remedy shall not preclude Lessor from any other remedy, at law
or in equity.
13.08. Any action taken by Lessor under this Article 13 shall not
waive any right that Lessor would otherwise have against Lessee for rent
reserved in this Lease or otherwise, and Lessee shall remain responsible to
Lessor for any loss and damage suffered by Lessor by reason of Lessee's default
or breach. The words "re-enter" and "re-entry" as used in this Lease are not
restricted to their technical legal meanings. Lessor shall, at all times, use
its best efforts to mitigate its damages under this Article 13.
ARTICLE 14
NO REINSTATEMENT
14.01. (a) No receipt of monies by Lessor from Lessee after the
lawful termination or cancellation of this Lease shall reinstate, continue or
extend the term of this Lease, or affect any notice theretofore given to
Lessee, or waive Lessor's right to enforce the payment of Rent or additional
rent then due, or thereafter falling due, or waive Lessor's right to recover
possession of the Demised Premises by proper suit, action, proceeding or
remedy;
(b) After the service of notice to terminate or cancel this
Lease, or the commencement of suit, action or summary proceedings, or any other
remedy, or after a final order or judgment for the possession of the Demised
Premises, Lessor may
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demand, receive and collect any monies due, or thereafter falling due, without
in any manner affecting the notice, proceeding, suit, action, order or
judgment. All such monies collected shall be deemed to be payments on the
account of the use and occupation or Lessee's liability under this Lease.
14.02. Neither Lessor's nor Lessee's failure to enforce any term of
this Lease, that is breached by the other, after notice had, shall not be
deemed to void or affect the right of Lessor or Lessee, as applicable, to
enforce that term on the occasion of a subsequent default or breach.
ARTICLE 15
SUBORDINATION
15.01. Subject to the provisions of Section 15.02 of this Lease, this
Lease shall be subject and subordinate to any present and all future first and
second Institutional Mortgages (as defined in Section 26.02) that may
thereafter affect Lessor's interest in the Demised Premises, and of all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessor represents and warrants that, as of the date of this Lease, there are no
non-Institutional Mortgages encumbering the Demised Premises. This clause
shall be self-operative and no further instruments of subordination shall be
required. In confirmation of this subordination, Lessee shall execute promptly
any certificate,
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subordination agreement or other document that Lessor or its lender may
reasonably request.
15.02. (a) The subordination described in Section 15.01 as it
pertains to Institutional Mortgages now existing or hereafter made (which term
includes any agreement modifying any Institutional Mortgage hereafter made), is
conditioned upon the agreement of each Institutional Lender (as defined in
Section 26.02 hereof), to be delivered by it to Lessee in form reasonably
acceptable to Lessee (Lessee hereby approves the form of agreement attached
hereto as Exhibit B), in which the Institutional Lender agrees in substance
that so long as this lease shall be in full force and effect and Lessee shall
not then be in default beyond applicable notice and cure periods, (i) except as
set forth in this Section, the leasehold estate, possession and use of the
Demised Premises in accordance with the terms of this Lease and all other
rights and benefits of Lessee under this Lease (including, without limitation,
the Purchase Option (as defined in Section 28.01) in accordance with the
provisions of Article 28) shall not be interfered with or disturbed by any
superior mortgagee or by reason of the subordination of this lease to its
mortgage or any foreclosure or other proceedings for the enforcement of its
mortgage or any transfer of Lessor's interest under this Lease pursuant to the
taking of a deed or assignment in lieu of foreclosure (or similar device), (ii)
Lessee shall not be bound to perform any covenant contained in this lease to a
standard greater than that set forth
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in this lease by virtue of the inclusion in the mortgage or other agreements
between Lessor and such Institutional Lender of any such greater standard,
(iii) Lessee shall not be named or joined in any action or proceeding to
foreclose any such mortgage (provided that Lessee may be named or joined if
required by law and if such naming or joining of Lessee will not adversely
affect Lessee's rights under this Lease), (iv) such action or proceeding shall
not result in a cancellation or termination of the Term, and (v) if the holder
of any such Institutional Mortgage becomes the owner of the fee or the assignee
of any superior lease, this Lease shall continue in full force and effect as a
direct lease between Lessee and the then owner of the fee or the then lessee of
such superior lease, or the purchaser of the Land, upon all of the terms and
conditions of this Lease (including, without limitation, the Purchase Option in
accordance with the provisions of Article 28).
ARTICLE 16
QUIET ENJOYMENT
16.01. Lessee, upon paying the rent and performing its other
obligations under this Lease shall and may, at all times during the term of
this Lease, peaceably and quietly have, hold and enjoy the Demised Premises
free of molestation.
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ARTICLE 17
SUCCESSORS AND ASSIGNS
17.01. The covenants and agreements contained in this Lease inure to
the benefit of and are binding upon the parties to this Lease, their successors
and assigns, but this Article 17 does not modify the provisions governing
assignment, as elsewhere provided for in this Lease.
ARTICLE 18
ALTERATIONS
18.01. Lessee may, without Lessor's consent, but at its own cost and
expense and in a good and workmanlike manner, make non-mechanical or
non-structural alterations, additions or improvements to the Demised Premises
subject to all conditions contained in Section 18.03. Such non-mechanical or
non-structural alterations, additions or improvements shall comply with
applicable Laws.
18.02. Lessee may, without the consent of Lessor, but at its own cost
and expense and in a good and workmanlike manner, make mechanical or structural
alterations, additions or improvements to the Demised Premises subject to all
conditions contained in Section 18.03 if the cost of such mechanical or
structural alterations does not exceed Two Hundred Thousand Dollars ($200,000)
in the aggregate and does not (a) alter the roofline or exterior walls or
affect the structural integrity of the Demised Premises and (b) cause a
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decrease in the value of the improvements at the Demised Premises. Such
mechanical or structural alterations, additions or improvements shall comply
with applicable Law. Lessor's prior written consent shall be required for all
mechanical or structural alterations, additions or improvements exceeding Two
Hundred Thousand Dollars ($200,000) in cost, which consent shall not be
unreasonably withheld, conditioned or delayed.
18.03. So long as this lease shall be in full force and effect and
Lessee shall not then be in default beyond applicable notice and cure periods
and Lessor has not given a notice of its intention to terminate the Lease as
set forth in Section 13.02, alterations, additions, improvements and partitions
erected by Lessee shall be and remain the property of Lessee during the term of
this Lease, and Lessee shall, unless Lessor otherwise elects as hereinafter
provided, remove all such alterations, additions, improvements and partitions
erected by Lessee and restore the Demised Premises to their original condition
by the Expiration Date or earlier termination date of this Lease; provided,
however, if Lessor so elects prior to termination of this Lease, such
alterations, additions, improvements and partitions shall become the property
of Lessor as of the date of termination and shall be delivered up to Lessor
with the Demised Premises. Notwithstanding the foregoing, at Lessee's option
all of Lessee's trade fixtures shall continue to be Lessee's property and may
be removed by Lessee at any time. All shelves, bins, machinery and trade
fixtures
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installed by Lessee shall be removed by Lessee prior to termination of this
Lease if Lessee so elects and shall be removed if required by Lessor; upon any
such removal Lessee shall restore the Demised Premises to the original
condition. All such removals and restorations shall be accomplished in a good
and workmanlike manner so as not to damage the primary structure or structural
qualities of the building and other improvements situated on the Demised
Premises.
ARTICLE 19
NOTICES
19.01. All notices to the parties shall be addressed to them at the
respective addresses first given for them in this Lease, or to such other
address, of which either of them, as the case may be, shall notify the other
party and its attorney in the manner stated in this Article 19 for giving
notice. Copies of all notices shall be furnished to the attorneys for the
parties at the addresses hereinafter provided, or at such other addresses which
either of such attorneys, as the case may be, shall notify the other party and
its attorney in the manner stated in this Article 19 for giving notice. Copies
of all notices to Lessee shall also be given to Kerr Group, Inc., 1840 Century
Park East, Los Angeles, California 90067, Attention: Corporate Secretary.
Copies of all notices to Lessor shall also be given to Phonecian Properties,
529 Old Hickory
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Boulevard, Jackson, Tennessee 38305, Attention: Managing Partner.
NOTICES TO ATTORNEYS FOR LESSOR AND LESSEE
Lessor's Attorneys Lessee's Attorney
William C. Bell, Esq. Steven J. Gartner, Esq.
Rainey, Kizer, Butler, Reviere & Bell Willkie Farr & Gallagher
105 South Highland Street One Citicorp Center
Jackson, Tennessee 38301 153 East 53rd Street
New York, New York 10022
The notices to the parties and copies of such notices to the attorneys
for the parties must be given by nationally recognized overnight courier
service, registered mail, return receipt requested, or by certified mail,
return receipt requested. In the case of service by overnight courier, service
of the notice shall be deemed to have been completed upon the next business day
following mailing. In the case of service by registered mail, service of the
notice shall be deemed completed upon the registration thereof with the postal
authorities, and in the case of service by certified mail upon the due mailing
thereof.
ARTICLE 20
NO WAIVER
20.01. The failure of either Lessor of Lessee to insist in any one or
more instances, upon a strict performance of any of the
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covenants of this Lease, shall not be construed as a waiver of or
relinquishment for the future performance of that covenant, or the right to
exercise that option, but the same shall continue and remain in full force and
effect. Lessor's receipt of Rent or additional rent, with knowledge of the
breach of any covenant of this Lease, shall not be deemed a waiver of that
breach, and no waiver by Lessor of any provision of this Lease shall be deemed
to have been made unless expressed in writing and signed by Lessor.
20.02. Lessor's receipt of any installment of the Rent under this
Lease or of any additional rent shall not be a waiver of any Rent or additional
rent then due. Lessor may, in its sole discretion, apply any payments made by
Lessee to the satisfaction of any debt or obligation of Lessee to Lessor,
regardless of Lessee's instructions as to the application of those payments,
whether those instructions are endorsed on Lessee's check or otherwise.
ARTICLE 21
REMEDIES CUMULATIVE
21.01. All of the rights and remedies given to Lessor in this Lease
for the recovery of the Demised Premises because of the default by the Lessee
in the payment of any sums that may be payable pursuant to the terms of this
Lease, or upon the breach of any of the terms of this Lease, or the right to
re-enter and take possession of the Demised Premises upon the happening of any
of the
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defaults or breaches of any of the covenants of this Lease, or the right to
maintain any action for rent or damages and all other rights and remedies
allowed at law or in equity, are reserved and conferred upon the Lessor as
distinct, separate and cumulative remedies, and no one of them, whether
exercised by the Lessor or not, shall be deemed to be in exclusion of any of
the others.
ARTICLE 22
ENTIRE AGREEMENT
22.01. This Lease together with the Exhibits attached hereto contain
the entire agreement between the parties with respect to the Demised Premises,
and any agreement hereafter made shall not operate to change, modify or
discharge this Lease in whole or in part unless that agreement is in writing
and signed by the party sought to be charged with it.
ARTICLE 23
INTENTIONALLY DELETED
ARTICLE 24
INDEMNIFICATION OF LESSEE
24.01 Lessor shall defend, indemnify and hold harmless Lessee, it
employees, agents, contractors and any other party for whom Lessee is legally
responsible from and against all claims, losses, damages, suits, liens,
liability, costs and expenses
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(including without limitation attorneys' fees) suffered or incurred as a result
of any claim brought by any party or governmental entity, whether grounded in
statutory or common law, for personal injury, wrongful death, property damage,
economic loss, abatement, remediation, damage to natural resources, response
costs, civil penalty, or any other claim, demand or notice arising out of or
relating to the generation, presence, handling, treatment, storage or disposal
of any solid waste, hazardous waste, hazardous substance, toxic substance,
contaminant, or pollutant, or any other environmental condition, on, at,
beneath, or near the property, provided such generation, presence, handling,
treatment, storage or disposal was caused by the act or negligence of Lessor,
its employees, agents, contractors or any other party for whom Lessor is
legally responsible.
24.02 Lessee shall have the right to terminate this Lease in the
event Lessee determines in its reasonable discretion that the condition for
which Lessee is entitled to indemnification under Section 24.01 materially and
adversely affects the operation of Lessee's business or the health or safety of
Lessee's employees. If Lessee shall seek to exercise its termination rights
under this Section 24.02 and Lessor disputes such right of Lessee to terminate
this Lease, then, in such event, Lessee or Lessor shall submit the dispute to a
court of competent jurisdiction, and receive a final non-appealable judgment
thereon, prior to Lessee, in any manner, ceasing its obligations hereunder.
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ARTICLE 25
ESTOPPEL CERTIFICATES
25.01. Each party agrees, at any time and from time to time, as
requested by the other party, upon not less than ten (10) days' prior notice,
to execute and deliver to the other a statement certifying (a) that this Lease
is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and
stating the modifications) and whether any options granted to Lessee pursuant
to the provisions of this lease have been exercised, (b) certifying the dates
to which the Rent and additional rent have been paid and the amounts thereof,
and stating whether or not, to the best knowledge of the signer, the other
party is in default in performance of any of its obligations under this lease,
and, if so, specifying each such default of which the signer may have
knowledge, it being intended that any such statement delivered pursuant hereto
may be relied upon by others with whom the party requesting such certificate
may be dealing. Additionally, Lessee's and Lessor's statement shall contain
such other information as shall be required by the holder or proposed holder of
any superior mortgage or the lessor or proposed lessor under any superior
lease.
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ARTICLE 26
CERTAIN DEFINITIONS
26.01. The term "Lessor" as used in this Lease shall mean Phoenician
Properties ("Phoenician") and any future owner of fee title to the Demised
Premises, it being agreed that no sale, transfer or other conveyance of all or
any part of Phoenician's interest in the Demised Premises shall release
Phoenician from the full and complete performance of all of Lessor's
obligations under this Lease.
26.02. An "Institutional Mortgage" is a first or second mortgage or
deed of trust held by an Institutional Lender and shall be in a form
customarily used by such Institutional Lender in similar transactions, securing
the interest of the Lessor in the real property constituting the Demised
Premises.
26.03. An "Institutional Lender" is a commercial bank, savings and
loan association, insurance company, pension or trust company, public
corporation or governmental agency, municipality, county or subdivision
thereof.
ARTICLE 27
EXTENSION OF TERM
27.01. Provided Lessee has not received any notice of default which
has not been waived or if Lessee shall have received a notice of default, the
applicable cure period has not expired, Lessee shall have the right to extend
the term of this Lease for two (2)
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ten (10) year periods as hereinafter provided (each a "Renewal Period").
Lessee shall exercise its option to renew by giving notice ("Renewal Notice")
to Lessor in accordance with Article 19 at any time prior to the expiration of
the then current term; provided, however, if requested by Lessor not less than
eight (8) months nor more than ten (10) months prior to such expiration, Lessee
agrees to exercise or refrain from exercising such option not later than six
(6) months prior to the expiration of the then current term. The Rent during
the first Renewal Period shall be Six Hundred Forty Thousand Eighty Dollars
($640,080) per year payable in equal consecutive monthly installments of Fifty
Three Thousand Three Hundred and Forty Dollars ($53,340) per month and during
the Second Renewal Period shall be Six Hundred Seventy Three Thousand Six
Hundred Eighty Dollars ($673,680) per year, payable in equal consecutive
monthly installments of Fifty Six Thousand One Hundred Forty Dollars ($56,140)
per month. All of the terms, covenants and provisions of this Lease shall
govern the rights and obligations of Lessor and Lessee during each of the
Renewal Periods.
ARTICLE 28
PURCHASE OPTION
28.01. Lessor grants to Lessee the option to purchase the Demised
Premises in accordance with the provisions of this Article 28 (hereinafter, the
"Purchase Option"). The Purchase Option may
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be exercised by Lessee at any time during the Term and prior to the expiration
or termination thereof (or, if applicable, the Renewal Periods), by written
notice to Lessor in accordance with Article 19, as further described in Section
28.02.
28.02. The purchase price for the Demised Premises (the "Purchase
Price") shall be the greater of (a) the fair market value of the Demised
Premises based on its present use, provided, that if by reason of a casualty or
condemnation, Lessee shall then be obligated to repair any part of the Demised
Premises, then the fair market value of the Demised Premises shall be based
upon the condition the Demised Premises would be in if Lessee made such
repairs, plus any diminution of value to the Demised Premises caused by the
Lessee's failure to fulfill its obligations hereunder (other than its
obligation to repair the Demised Premises arising by reason of a casualty or
condemnation) (excluding all improvements to the Demised Premises made at
Lessee's expense valued at the initial cost of said improvements less the
amount of depreciation of said improvements calculated in accordance with
generally accepted accounting principals (and provided, however, that
improvements or repairs otherwise required to be done by Lessee under this
Lease and the Phase 2 Work, shall be taken into account when determining the
fair market value of the Demised Premises)) determined as of the date of
Lessee's exercise of the Purchase Option (as determined by Arbitration pursuant
to the provisions of Article 34) (the "Fair Market Value"), but if the
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Purchase Option is exercised prior to the twentieth (20th) anniversary of the
Commencement Date in no event greater than $5,200,000.00 and (b) the First
Tennessee Mortgage Amount (as hereinafter defined), plus, in either case, all
amounts due under the Lease from the Lessee as Rent or Additional Rent or any
amounts expended in furtherance of Lessee's obligations under this Lease to the
extent such amounts have been paid by Lessor or the holder of the First
Priority Mortgage (as hereinafter defined) on the date such Purchase Price is
to be paid as evidenced by paid receipts. The "First Tennessee Mortgage
Amount" shall mean the then outstanding unamortized principal balance of that
certain mortgage by and between First Tennessee Bank National Association and
Lessor dated on or about May 16, 1994 in the original principal amount of
$3,800,000.00 (the "First Priority Mortgage") (as such mortgage and original
principal amount will exist and expressly excluding any amendment or
modification that shall increase the principal amount thereof or materially
alter the amortization schedule of the loan secured by such mortgage) and any
refinancing of the First Priority Mortgage, so long as the refinanced amount is
not greater than the principal balance of the First Priority Mortgage at the
time of the refinancing (but in no event greater than the original principal
balance) and that the amortization schedule of the loan is not altered to
require less amortization. Upon a foreclosure of the mortgagee's interest
under any mortgage that would otherwise qualify under the definition of "First
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Tennessee Mortgage Amount", should the mortgagee be a successful bidder at the
foreclosure sale, the "First Tennessee Mortgage Amount" shall mean the
outstanding principal amount of such mortgage as of the moment preceding the
extinguishment of the mortgage upon such successful foreclosure bid. In
addition, if the Purchase Option is exercised prior to or on the twentieth
anniversary of the Commencement Date and the Purchase Price is based upon the
Fair Market Value not to exceed $5,200,000.00 and not based upon the First
Tennessee Mortgage Amount, Lessee shall be entitled to apply ten percent (10%)
of the aggregate of all Rent paid to Lessor during the term of this Lease at
the time the Purchase Option is exercised, as a credit towards the Purchase
Price provided, however, that in no event shall the Purchase Price be reduced
to an amount below the First Tennessee Mortgage Amount should the First
Priority Mortgage then exist. Lessee shall exercise the Purchase Option by
giving written notice ("Purchase Option Notice") to Lessor in accordance with
Article 19.
28.03. The Purchase Price shall be payable in lawful money of the
United States to Lessor by Lessee at the close of escrow as provided in Section
28.05.
28.04. At the closing, which the parties agree shall occur on a
mutually acceptable date and in all events within ninety (90) days following
the date of Lessee's notice exercising the Purchase Option, Lessor shall
deliver to Lessee an executed general warranty deed in recordable form
conveying fee simple title to the Demised
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Premises together with all easements, mineral rights, rights to public roads
and other interests appurtenant to the Demised Premises. Title to the Demised
Premises shall be conveyed by Lessor to Lessee (or, at Lessee's option, to
Lessee's designee) free and clear of all liens, encumbrances, covenants,
conditions, restrictions, easements, rights of way, leases or other occupancy
agreements, and other matters of record, except (i) current taxes, a lien not
yet delinquent, (ii) those portions of current assessments not yet due and
payable, (iii) matters (irrespective of whether of record) affecting title to
the Demised Premises and created by Lessee, (iv) covenants, conditions,
restrictions, easements, rights-of-way of record, and leases or other occupancy
agreements existing on the Commencement Date (as conclusively indicated on
Exhibit C attached hereto and made a part hereof), and (v) subleases covering
portions of the Demised Premises entered into by Lessee (the matters described
in (i) - (v) are referred to collectively as "Permitted Exceptions"). If there
are any matters affecting the Demised Premises other than Permitted Exceptions,
Lessor shall use its best efforts to remove same. If such matters are not
removed prior to closing, Lessee may at its election either (i) rescind its
Purchase Option Notice in which case this Lease shall remain in full force and
effect, or (ii) receive a further credit against the Purchase Price in an
amount equal to the resulting decrease in value to the Demised Premises, as
reasonably determined by the parties provided, however, that in no event shall
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the Purchase Price be reduced to an amount below the First Tennessee Mortgage
Amount should the First Priority Mortgage then exist. In the event of any
dispute as to the amount of any such credit, the amount of such credit shall be
determined by arbitration pursuant to Article 34.
28.05. The sale shall be consummated through an escrow with a title
company selected by Lessee. Escrow shall be deemed to be closed pursuant to
this Article 28.05 on the date the deed conveying fee simple title to the
Demised Premises to Lessee is recorded. At the close of escrow, the title
company must be prepared to issue the then most recent ALTA Owner's Title
Insurance Policy in the amount of the purchase price insuring title to the
Demised Premises vested in Lessee, subject only to the Permitted Exceptions.
Each party shall select and bear all costs of its attorneys at closing, but all
other closing costs (including without limitation any transfer taxes and title
insurance premiums) shall be paid by the parties in accordance with the local
commercial custom of Jackson, Tennessee. All items of Rent and additional rent
shall be apportioned as of midnight the day preceding the closing.
ARTICLE 29
INTENTIONALLY DELETED
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ARTICLE 30
HAZARDOUS WASTES/SUBSTANCES
30.01. The term "Hazardous Substances," as used in this Lease, shall
mean pollutants, contaminants, toxic or hazardous wastes, or any other
substances, (including, without limitation, asbestos and raw materials which
include hazardous constituents), the removal, storage, transport or disposal of
which or the use of which is restricted, prohibited or penalized by any
"Environmental Law," which term shall mean any Law relating to pollution or
protection of the environment. Lessee hereby agrees that during the Term (i)
no activity will be conducted on the Demised Premises by Lessee, its agents,
employees, sublessees, invitees or any other party entering the Demised
Premises with the consent or knowledge of Lessee that will produce any
Hazardous Substance, except for such activities that are part of the ordinary
course of Lessee's (or its sublessees') business activities provided such
activities are conducted in accordance with all Environmental Laws; (ii) the
Demised Premises will not be used by Lessee, its agents, employees, sublessees,
invitees or any other party entering the Demised Premises with the consent or
knowledge of Lessee during the term hereof in any manner for the storage of any
Hazardous Substances except for the storage of such materials that are used in
the ordinary course of Lessee's (or its sublessees') business activities,
provided all such Hazardous Substances are properly stored in a manner and
location meeting all Environmental Laws;
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(iii) no portion of the Demised Premises will be used by Lessee, its agents,
employees, sublessees, invitees or any other party entering the Demised
Premises with the consent or knowledge of Lessee during the Term hereof as a
landfill or dump; (iv) Lessee will not install any underground storage tanks of
any type without the prior written consent of Lessor, which consent shall not
be unreasonably withheld, conditioned or delayed, provided Lessee complies with
all applicable Laws regarding such underground tanks (it being further agreed
Lessee shall remove any such underground tanks at the expiration of the Term
unless Lessee obtains Lessor's written consent to allow such underground
tank(s) to remain on the Demised Premises after that date; (v) Lessee shall use
commercially reasonable efforts to prevent any surface or subsurface conditions
from coming into existence that constitute, or with the passage of time may
constitute, a public or private nuisance; (vi) Lessee will use commercially
reasonable effort to prevent any Hazardous Substances from being brought onto,
stored, processed, disposed of on, released, discharged from (including ground
water contamination) or otherwise handled on the Demised Premises, except in
connection with Lessee's (or its sublessees') business activities, and if
disposed of on, released or discharged from or on the Demised Premises, the
same shall be immediately removed, with proper disposal, and all required
cleanup procedures shall be diligently undertaken pursuant to all Environmental
Laws. Lessee and Lessor shall each promptly notify the other in writing should
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Lessor or Lessee become aware of the presence, release or suspected release of
any Hazardous Substance not otherwise permitted under this Lease or any other
environmental problem or liability with respect to the Demised Premises. If,
at any time during the Term or the five (5) year period following the
expiration or earlier termination of the Term the Demised Premises are found to
require remedial action under Environmental Laws as a result of (in whole or
part) Lessee's activities at the Demised Premises or the act or activities of
Lessee's agents, employees, contractors, subcontractors, suppliers, invitees,
or licensees, Lessee agrees to indemnify and hold Lessor (and any mortgagee and
trustee under any deed of trust or mortgage on the Demised Premises) harmless
from all claims, demands, actions, liabilities, costs, (including reasonable
attorney's fees), expenses, damages and obligations of any nature arising from
or as a result of the actions or omissions of Lessee, its agents, employees,
sublessees, invitees or any other party entering the Demised Premises with the
consent or knowledge of Lessee during the Term hereof, but not further or
otherwise. Within thirty (30) days prior to the expiration or termination of
this Lease, Lessee shall commence, at its expense, a Phase 2 environmental
assessment of the Demised Premises (the "Assessment") and to use its best
efforts to cause same to be delivered to Lessor within sixty (60) days
following the expiration or termination of this Lease. The Assessment shall be
performed by a qualified environmental firm reasonably approved by Lessor. The
Assessment
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will address specifically the presence or absence of reportable or actionable
amounts of any Hazardous Substances on or within the Demised Premises. The
Assessment shall run to the benefit of Lessor and any then Institutional
Lender, and each of their successors and assigns.
ARTICLE 31
SIGNAGE
31.01. Lessee shall have the right, subject to Lessor's prior written
approval, which approval shall not be unreasonably withheld, conditioned or
delayed, to place on or about the Demised Premises such signage that Lessee
deems necessary or desirable in the conduct of its business conforming to Laws.
ARTICLE 32
PURPOSES
32.01. Lessee agrees that it shall not use or suffer the Demised
Premises to be used for any unlawful purposes or any purposes which violate any
public or private zoning, land use or other applicable covenants, restrictions,
regulations or ordinances. The Demised Premises leased hereunder may be used
by Lessee for general office use, warehouse use, distribution use,
manufacturing use (including without limitation injection molding of plastic
closures or manufacture of home canning metal caps and lids with platisol
liners and related products), such other
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purposes that are usual and normal in connection with Lessee's current business
operations, and for uses incidental to the foregoing and no other purpose.
Even if Lessee is unable to use the Demised Premises for each of the uses
described above due to no fault of Lessor, this Lease will continue in full
force and effect in accordance with its terms. The preceding sentence is not
intended to limit Lessee's rights in accordance with Section 10.03 in the event
of a taking by condemnation.
ARTICLE 33
RIGHT TO CREATE ENCUMBRANCES
33.01. Lessor agrees not to unreasonably withhold, condition or delay
its consent to Lessee granting such utility, access and other reasonable
customary easements encumbering the Demised Premises for the benefit of third
parties as Lessee may reasonably deem necessary or desirable in connection with
Lessee's activities and operations at the Demised Premises and the holder of an
Institutional Mortgage shall also have such right to consent to such grant so
long as such holder of an Institutional Mortgage does not unreasonably
withhold, condition or delay its consent so long as such grant shall not
diminish the value of the Demised Premises or impair the utility of the Demised
Premises except, as to any of the foregoing, on a deminimis basis. Lessor
agrees to promptly use commercially reasonable efforts to cause any lender
(including without limitation any Institutional Lender) having a security
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interest in the Demised Premises to subordinate the lien of such lender's
security interest to such easements, if so requested by Lessee.
ARTICLE 34
ARBITRATION
34.01. Lessor and Lessee agree that any dispute under this Lease
expressly stated to be settled by arbitration (including without limitation the
determination of fair market value under Article 28) shall be settled pursuant
to the procedures contained in this Article 34 ("Arbitration").
34.02. In any circumstance for which Arbitration is specifically
provided for hereunder, the party desiring Arbitration shall give notice to
that effect to the other party and shall in such notice appoint a person as
arbitrator on its behalf. Within ten (10) days after such notice, the other
party by notice to the original party shall appoint a second person as
arbitrator on its behalf. The arbitrators thus appointed shall appoint a third
person, and such three arbitrators shall as promptly as possible determine such
matter, provided, however, that:
(a) if the second arbitrator shall not have been appointed
within the ten (10) day period as aforesaid, the first arbitrator shall proceed
to determine such matter and shall render his decision and award in writing
within thirty (30) days after the expiration of said ten (10) day period; and
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(b) if the two arbitrators are appointed by the parties and
shall be unable to agree, within ten (10) days after the appointment of the
second arbitrator, upon the appointment of a third arbitrator, they shall give
written notice to the parties of such failure to agree, and, if the parties
fail to agree upon the selection of such third arbitrator within ten (10) days
after the arbitrators appointed by the parties give notice as aforesaid, then
within five (5) days thereafter either of the parties upon notice to the other
party may request such appointment by the American Arbitration Association (or
any successor organization), or in its absence, refusal, failure or inability
to act, may apply to a local state court of competent jurisdiction for a court
appointment of such arbitrator.
34.03. Each arbitrator shall be a qualified and impartial person who
shall have had at least ten (10) years' experience in the calling connected
with the matter of the dispute.
34.04. The Arbitration shall be conducted, to the extent consistent
with this Article, in accordance with the then prevailing rules of the American
Arbitration Association (or any successor organization). The arbitrators, if
more than one, shall render their decision and award in writing, upon the
concurrence of at least two of their number, within sixty (60) days after the
appointment of the third arbitrator. Such decision and award or the decision
and award of the single arbitrator as provided in Section 34.02(a) hereof,
shall be final and conclusive on the
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<PAGE> 59
parties, and counterpart copies thereof shall be delivered to each of the
parties. In rendering such decision and award, the arbitrators shall not add
to, subtract from or otherwise modify the provisions of this lease. Judgment
may be had on the decision and award of the arbitrators so rendered in any
court of competent jurisdiction.
34.05. Each party shall pay the fees and expenses of the one of the
two original arbitrators appointed by or for such party, and the fees and
expenses of the third arbitrator and all other expenses of the arbitration
(other than the fees and disbursements of attorneys or witnesses for each
party) shall be borne by the parties equally.
ARTICLE 35
MEMORANDUM OF LEASE
35.01 At the request of either party, Lessor and Lessee shall
promptly execute, acknowledge, deliver a memorandum with respect to this Lease
sufficient for recording (the "Memorandum"), which shall contain in addition to
the minimum applicable statutory requirements, reference to the Purchase
Option. Such memorandum shall not in any circumstances be deemed to change or
otherwise affect any of the obligations or provisions of this lease. Each
party hereby authorizes the other to record the Memorandum against the Land.
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<PAGE> 60
ARTICLE 36
PHASE 2 WORK
36.01 Lessee and Lessor hereby acknowledge that Lessee is in the
process of performing improvement work to the Demised Premises (collectively,
"Phase 2 Work") described generally on Exhibit D attached hereto and made a
part hereof, in accordance with building plans and specifications which have
been approved by Lessor.
36.02. Upon the completion of Phase 2 Work, Lessee shall be deemed to
represent and warrant to Lessor that:
(a) all Phase 2 Work has been constructed in compliance with
all applicable Laws and Environmental Laws and all title encumbrances and other
matters affecting the Land.
(b) All permits and approvals necessary to construct the
Phase 2 Work and to permit legal occupancy of the Phase 2 Work including,
without limitation, certificates of occupancy, have been obtained.
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<PAGE> 61
(c) All utilities necessary to service Phase 2 Work are
adequate for the permitted use thereof, are being provided by public utility
companies, and have been connected.
IN WITNESS WHEREOF, Lessor and Lessee have set their
respective hands as of the date first above written.
LESSOR:
PHOENICIAN PROPERTIES
a Tennessee general partnership,
By: /s/ LARRY A. BECKER
-------------------
Name: Larry A. Becker
Title: Managing Partner
LESSEE:
KERR GROUP, INC.
a Delaware corporation
By: /s/ LARRY R. KNIPPLE
--------------------
Name: Larry R. Knipple
Title: Vice President - Secretary
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<PAGE> 62
STATE OF TENNESSEE
COUNTY OF MADISON
Personally appeared before me, Cynthia C. Friddle, a Notary Public,
Larry R. Knipple, with whom I am personally acquainted and who acknowledged
that he executed the within instrument for the purposes therein contained, and
who further acknowledged that he is the Vice President-Secretary of the Lessee
and is authorized by the Lessee to execute this instrument on behalf of the
Lessee as the free act and deed of the Lessee.
Witness my hand, at office, this 16th day of May, 1994.
/s/ CYNTHIA C. FRIDDLE
----------------------
Notary Public
My Commission Expires:
October 23, 1995
<PAGE> 63
STATE OF TENNESSEE
COUNTY OF MADISON
Personally appeared before me, Cynthia C. Friddle, a Notary Public,
Larry P. Becker, with whom I am personally acquainted and who acknowledged that
he executed the within instrument for the purposes therein contained, and who
further acknowledged that he is the Managing Partner of the Lessor and is
authorized by the Lessor to execute this instrument on behalf of the Lessor as
the free act and deed of the Lessor.
Witness my hand, at office, this 16th day of May, 1994.
/s/ CYNTHIA C. FRIDDLE
----------------------
Notary Public
My Commission Expires:
October 23, 1995
<PAGE> 64
EXHIBIT "A"
Property Description
LOCATED IN JACKSON, MADISON COUNTY, TENNESSEE:
Beginning at the intersection of the North margin of Highway 70 with the
East margin of Bobrick Drive, which point is the Southwest corner of the
herein described tract:
Thence, with the East margin of Bobrick Drive the following calls:
North 08 degrees 04 minutes 49 seconds East 300.00 feet; North 82 degrees
04 minutes 48 seconds West 69.87 feet; North 08 degrees 04 minutes 49
seconds East 892.36 feet to the Southwest corner of the property of
Madison County, Tennessee;
Thence, with the South line of the property of Madison County, Tennessee,
South 81 degrees 55 minutes 11 seconds East 1000.00 feet to the Northwest
corner of the property of Allsteel Inc.;
Thence, with the West line of the property of Allsteel Inc., South 08
degrees 04 minutes 49 seconds West 956.62 feet to a point in the North
margin of Highway 70;
Thence, with the North margin of Highway 70, South 83 degrees 52 minutes
11 seconds West 959.49 feet to the point of beginning, containing 24.37
acres.
A-1
<PAGE> 65
EXHIBIT "A"
1. Description of Property Subject to Lease:
LOCATED IN JACKSON, MADISON COUNTY, TENNESSEE:
Beginning at the intersection of the North margin of Highway 70 with
the East margin of Bobrick Drive, which point is the Southwest
corner of the herein described tract:
Thence, with the East margin of Bobrick Drive the following calls:
North 08 degrees 04 minutes 49 seconds East 300.00 feet; North 82
degrees 04 minutes 48 seconds West 69.87 feet; North 08 degrees
04 minutes 49 seconds East 892.36 feet to the Southwest corner of
the property of Madison County, Tennessee;
Thence, with the South line of the property of Madison County,
Tennessee, South 81 degrees 55 minutes 11 seconds East 1000.00 feet
to the Northwest corner of the property of Allsteel Inc.;
Thence, with the West line of the property of Allsteel Inc., South
08 degrees 04 minutes 49 seconds West 956.62 feet to a point in the
North margin of Highway 70;
Thence, with the North margin of Highway 70, South 83 degrees 52
minutes 11 seconds West 959.49 feet to the point of beginning,
containing 24.37 acres.
Being the same property conveyed to Phoenician Properties by warranty
deed from Industrial Development Board of the City of Jackson, recorded
in the Register's Office of Madison County, Tennessee in Book ____, at
Page ____.
2. Description of Lease Agreement:
That certain Amended and Restated Lease bearing date of the ____ day of
May, 1994, between Phoenician Properties, a Tennessee General
Partnership, having its principal office at 529 Old Hickory Boulevard,
Jackson, Tennessee 38305, as Lessor, and Kerr Group, Inc., a Delaware
corporation having its principal office at 1840 Century Park East,
Los Angeles, California 90067, as Lessee.
A-1
<PAGE> 66
Exhibit "B" to Amended and Restated Lease
THIS INSTRUMENT PREPARED BY:
David G. Williams
Attorney at Law
2000 First Tennessee Building
Memphis, Tennessee 38103
TENANT ESTOPPEL, SUBORDINATION, NON-DISTURBANCE,
AND ATTORNMENT AGREEMENT
THIS AGREEMENT Made and entered into as of the 16th day of May, 1994,
by and between KERR GROUP, INC., a Delaware corporation, party of the first
part, hereinafter "Tenant," and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a
national banking association, party of the second part, hereinafter "Bank."
RECITALS OF FACT
Tenant has leased certain property (the "Property") located in Madison
County, Tennessee, more particularly described in Exhibit "A," attached hereto
and incorporated herein by reference under and pursuant to an Amended and
Restated Lease (the "Lease") more particularly described in EXHIBIT "A."
Phoenician Properties, a Tennessee General Partnership (the "Landlord"), is
lessor under the Lease. The Bank has agreed to make a loan to Landlord in the
principal sum of Three Million Eight Hundred Thousand Dollars ($3,800,000.00),
evidenced by a note (the "Note") in such amount, and secured by a Tennessee
Construction Deed of Trust With Security Agreement and Assignment of Rents and
Leases (the "Mortgage") upon the Property. (The holder from time to time of
said loan indebtedness is hereinafter sometimes referred to as "Lender".)
One of the conditions of such loan by the Bank is the execution of this
Agreement by the Tenant; and the Tenant is willing to execute this Agreement to
enable such loan to be made.
NOW, THEREFORE, in consideration of the premises, as set forth in the
Recitals of Fact, the sum of Ten Dollars ($10.00) cash in hand paid to the
Tenant, and other good and valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, it is agreed by the parties as follows:
AGREEMENTS
1. Tenant hereby certifies, represents, and warrants to the Bank, as
of the date hereof, that:
<PAGE> 67
(a) The Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way;
(b) The Lease represents the entire agreement between the parties as
to the leasing of the Property;
(c) There are no defaults by either Landlord or Tenant under the
Lease;
(d) No rent which is not yet due under the terms and provisions of the
Lease has been paid;
(e) There are no existing setoffs, counterclaims or credits against
rentals due or to become due under the Lease, nor are there existing defenses
against the enforcement of the Lease by the Landlord;
(f) Tenant has no notice or knowledge of any prior assignment,
hypothecation or pledge of the rents due under the Lease;
(g) The original term of the Lease begins on May___, 1994, and ends on
May 31, 2014;
(h) The Tenant is currently in possession of the Property; and
(i) All conditions of the Lease to be performed by Landlord which are
necessary to the enforceability of the Lease have been satisfied, including,
but not limited to, completion in accordance with approved plans and
specifications of any improvements agreed to be made by the Landlord upon the
Property.
(j) The Mortgage qualifies as an "Institutional Mortgage" under the
provisions of Section 26.02 of the Lease.
2. Tenant and Bank mutually covenant and agree that:
(a) The Lease is and shall be in all respects subject and subordinate
to the lien of the Mortgage and to all renewals, modifications, consolidations
and extensions thereof, in whole or in part;
(b) Provided that Tenant is not in default under the terms of the
Lease (beyond the period, if any, given in the Lease for cure of such default),
Tenant's rights and privileges under the Lease (including, but not limited to,
Tenant's purchase option pursuant to Article 28 of the Lease), and Tenant's
quiet possession and enjoyment of the Property, shall not be affected or
disturbed by the exercise by Lender of any of its rights
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<PAGE> 68
under the Mortgage, nor by any sale or foreclosure of the Property or
deed-in-lieu thereof, or any similar proceedings or devices;
(c) So long as the Tenant is permitted quiet enjoyment of the Property
(and notwithstanding any foreclosure of the lien of the Mortgage), Tenant
agrees, at the option and request of Lender, to attorn to the following persons
upon the terms and conditions of the Lease for the remainder of the term
thereof (whether original or renewal), with the same force and effect as if
such persons were named as Landlord under the Lease:
(i) the Lender when such Lender is in possession of the
Property, whether by foreclosure of the Mortgage, deed-in-lieu of
foreclosure or pursuant to any assignment of rents executed as
additional security for the indebtedness evidenced by the Note;
(ii) any receiver appointed to take possession of the Property;
(iii) any party acquiring title to the Property by foreclosure,
pursuant to the power of sale contained in the Mortgage or by
deed-in-lieu of foreclosure, and his or its heirs, successors, and
assigns;
(d) Tenant will execute and deliver, upon request of Lender, an
appropriate agreement of attornment in confirmation of its obligations
hereunder; and
(e) Lender shall have no obligation to perform as landlord under the
Lease until such time as Lender enters into possession of the Property and
requests attornment by Tenant; such obligation shall continue only with respect
to those obligations accruing during the period in which Lender remains in
possession of the Property; and Tenant's recourse against Lender for any
non-performance of its obligations as landlord under the Lease for such period
of time shall be limited to Lender's interest in the Property. Tenant shall
not, however, be bound to perform any covenant contained in the Lease to a
standard greater than that set forth in the Lease by virtue of the inclusion in
the Mortgage or other agreements between the Landlord and the Bank of any such
greater standard.
3. Tenant acknowledges that as additional security for the
indebtedness evidenced by the Note, Landlord has assigned, or will assign, to
Bank, all rents, issues and profits arising from the Property, including the
rents under the Lease. So long as any part of said indebtedness remains unpaid
Tenant agrees with Bank that:
(a) Tenant will not prepay any rent due under the Lease more than one
(1) month in advance;
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<PAGE> 69
(b) Upon written notice from Lender to Tenant, Tenant will pay to
Lender all rent and other sums thereafter due under the Lease;
(c) Tenant will not consent to any reduction of the rent set forth in
the lease, to any other amendment or modification of the terms and provisions
thereof, or to any cancellation or surrender of the Lease, without the prior
written consent of Lender;
(d) Tenant will, concurrently with serving same upon Landlord, send to
Lender a copy of any notice of default or demand that Landlord cure any
default, which notice or demand is given or made to Landlord pursuant to or
concerning the provisions of the Lease;
(e) In the event of any default by Landlord under the Lease, Lender
shall have the same period of time and opportunity as given to Landlord to cure
said default, plus an additional twenty (20) days, and, in any event, no less
than forty-five (45) days after Tenant's notice to Lender of such default,
before Tenant shall be entitled to declare a termination or cancellation of the
Lease. In the event of a default by Landlord under the Lease which is not
susceptible of cure by Lender, Tenant will not terminate the Lease by reason of
such default if Lender shall, as promptly as practicable, (if applicable) seek
to lift any automatic stay resulting from a bankruptcy proceeding, shall
proceed with foreclosure of the Mortgage or the obtaining of a deed in lieu of
foreclosure, and shall thereafter diligently attempt to effect such cure at the
earliest possible time.
4. All notices or demands hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when
presented personally or sent by registered or certified mail to any party
hereto at the address set forth below or at such other address as any party
shall subsequently designate in writing:
TENANT: Kerr Group, Inc.
1840 Century Park East
Los Angeles, California 90067
BANK: First Tennessee Bank National Association
165 Madison Avenue
Memphis, Tennessee 38103
Attention: Commercial Real Estate Division
COPY TO: Heiskell, Donelson, Bearman, Adams, Williams & Caldwell
2000 First Tennessee Building
Memphis, Tennessee 38103
Attention: David G. Williams
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<PAGE> 70
5. Landlord joins herein for the purpose of consenting and agreeing to
all of the terms and provisions hereof, insofar as its rights are or may be
affected hereby.
6. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto, and their respective heirs, successors and
assigns. This Agreement may be executed in multiple counterparts, all of which,
taken together, shall constitute but one document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement (or
have caused this Agreement to be executed by their respective officers, duly
authorized to do so), on the day and year first above written.
ATTEST: KERR GROUP, INC.
_______________________ By:_______________________________
Corporate Secretary Title:____________________________
TENANT
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:_______________________________
Title:____________________________
LENDER
PHOENICIAN PROPERTIES,
a Tennessee General Partnership
By:_______________________________
Larry P. Becker,
Managing Partner
LANDLORD
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<PAGE> 71
STATE OF TENNESSEE
COUNTY OF MADISON
Before me, ________________________, a Notary Public in and for the
State and County aforesaid, personally appeared ___________________________,
with whom I am personally acquainted (or proved to me on the basis of
satisfactory evidence), and who, upon oath, acknowledge himself (or herself) to
be the _______________________ of KERR GROUP, INC., the within-named bargainor
a corporation, and that _ he as such _______________________, being
duly authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by _____ self as
such ________________________.
WITNESS my hand and seal at office, on this the ____ day of May,
1994.
_______________________________
Notary Public
My Commission Expires:
______________________
STATE OF TENNESSEE
COUNTY OF _______________________
Before me, __________________________, a Notary Public in and for the
State and County aforesaid, personally appeared _________________________, with
whom I am personally acquainted (or proved to me on the basis of satisfactory
evidence), and who, upon oath, acknowledged _____ self to be the
_________________________ of FIRST TENNESSEE BANK NATIONAL ASSOCIATION, the
within-named bargainor, a national banking association, and that _ he as such
____________________ executed the foregoing instrument for the purposes therein
contained, by signing the name of the association by ____self as such
____________________.
WITNESS my hand and seal at office, on this ____ day of May, 1994.
____________________________
Notary Public
My Commission Expires:
______________________
-6-
<PAGE> 1
EXHIBIT 10.5
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (the "Amendment") made and entered into this
18th day of May, 1994, by and between Century 21 Associates, a Tennessee general
partnership having its principal office at P.O. Box 200, Jackson, Tennessee
38305 ("Lessor"), and Kerr Group, Inc., a Delaware corporation having its
principal office at 1840 Century Park East, Los Angeles, California 90067
("Lessee").
W I T N E S S E T H:
WHEREAS, pursuant to that certain lease (the "Lease") dated October 5,
1989 between Lessor, as lessor, and Santa Fe Plastic Corporation, as tenant
("Santa Fe"), Santa Fe leased certain property and improvements located at 1005
Lower Brownsville Road, Jackson, Tennessee and more particularly described in
the Lease;
WHEREAS, pursuant to that certain Assignment and Assumption of Lease
dated as of July 6, 1990, Santa Fe assigned to Lessee all its right, title and
interest as lessee under the Lease to Lessee;
WHEREAS, Lessor and Lessee amended the Lease pursuant to that certain
Amendment to Lease (the "February 4th Amendment") dated February 4, 1994 and
that certain Amendment to Lease (the "February 9th Amendment") dated
February 9, 1994;
WHEREAS, pursuant to that certain Amendment to Lease (the "March 31st
Amendment") dated March 31, 1994, Lessor and Lessee agreed to amend the Lease
in certain respects and declared both the February 4th Amendment and February
9th Amendment to be null and void;
WHEREAS, Lessor and Lessee desire to restate the March 31st Amendment
in its entirety; and
WHEREAS, capitalized terms used herein that are not defined herein
shall have the respective meanings given such terms in the Lease.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Lessor has contracted for the construction of an approximately
93,000 square foot expansion to the leased premises
<PAGE> 2
(the "Expansion"), such work to be performed by Lessor at its sole cost and
expense. On the date of substantial completion of the Expansion (the "Extended
Commencement Date"); that is, the state in the progress of the construction
when the construction of the Expansion is sufficiently complete (including
without limitation complying with the standards of Section 1(f) of this
Amendment) so that Lessee can occupy or utilize the Expansion for its intended
use without material interference from Lessor or any party performing the
construction of the Expansion (should the parties fail to agree upon when said
construction is substantially complete, the matter shall be determined by
Arbitration (as defined in Section 1(j) of this Amendment)), then the following
modifications to the Lease will thereafter go into effect:
(a) The description of the Demised Premises is modified
to reflect the additional square footage of 93,000 to the area of the
building, bringing the total area of the building to 197,800 square
feet. A scope of work and list of drawings delineating the additional
square footage is attached to this Amendment as Exhibit "A".
(b) The term of the Lease is extended beginning on the
Extended Commencement Date and ending on the date that is thirteen
(13) years after such date, it being agreed that all references in the
Lease to the "term" or "initial term" shall mean the period commencing
on the Extended Commencement Date and ending on the 13th anniversary
of the Extended Commencement Date. The net annual rental payable from
the Extended Commencement Date through the balance of the term is
changed to Six Hundred Twenty-One Thousand Ninety Two and No/100
Dollars ($621,092.00), payable in equal monthly installments of
Fifty-One Thousand Seven Hundred Fifty-Eight and no/100 Dollars
($51,758.00) each in advance on the first day of each month during the
term. If the Extended Commencement Date does not occur on the first
day of the month, Lessee shall pay rent for the fractional month on a
per diem basis, calculated on the basis of a thirty (30) day month.
(c) Section 11.01(e) is modified by adding the following
sentence at the end thereof:
"Notwithstanding the foregoing, Lessor may not transfer,
convey or assign its interest in this Lease to any entity, or any
affiliate of any entity which is engaged in the same general business
as Lessee."
-2-
<PAGE> 3
(d) Article 27 EXTENSION OF TERM is modified to reflect
the new annual rental for the 12 year renewal period of Seven Hundred
Ten Thousand One Hundred Two and No/100 Dollars ($710,102.00).
(e) Section 28.02 is modified by deleting the first and
second sentences thereof and inserting the following sentences in
their place:
"If the purchase option is exercised during the initial
thirteen (13) year term of this Lease, the purchase price for
the Demised Premises (the "Purchase Price") shall be Five
Million Two Hundred Thousand Dollars ($5,200,000) and if the
purchase option is exercised during the twelve (12) year
renewal period, the Purchase Price shall be the fair market
value of the Demised Premises based on its present use
(excluding all improvements to the Demised Premises made at
Lessee's expense valued at the initial cost of said
improvements less the amount of depreciation of said
improvements calculated in accordance with generally accepted
accounting principals (and provided, however, that
improvements or repairs otherwise required to be done by
Lessee under this Lease, shall be taken into account when
determining the fair market value of the Demised Premises))
determined as of the date of Lessee's exercise of the Purchase
Option (as determined by Arbitration pursuant to the
provisions of Article 33). In addition, if the Purchase
Option is exercised during the initial thirteen (13) year term
of this Lease, Lessee shall be entitled to apply ten percent
(10%) of the aggregate of all net annual rent payments paid to
Lessor during the term of this Lease at the time the Purchase
Option is exercised, as a credit towards the Purchase Price."
(f) Lessor represents, warrants and covenants that all
work in connection with the Expansion (collectively, "Expansion Work")
shall be completed promptly, in a good and workmanlike manner, free of
all liens, using first-class new materials, in at least the same
quality as the construction of the existing building, and otherwise
reasonably acceptable to Lessee. Lessor shall on the Extended
Commencement Date assign to Lessee all manufacturers' and builders' or
contractors' warranties for all improvements and equipment located on,
or installed in, the Expansion. Lessor represents, warrants and
covenants that all Expansion Work shall be performed and completed in
accordance with plans and specifications reasonably approved in
writing by
-3-
<PAGE> 4
Lessee, and in all events in full compliance with all applicable laws,
ordinances, orders, rules, regulations and requirements of any nature.
Notwithstanding the provisions of Section 9.01 and 9.02 of the Lease,
prior to the date of delivery of the Expansion to Lessee, all risk of
loss concerning the Expansion Work shall be borne by Lessor, and
Lessor shall be fully and solely responsible for carrying "all-risk"
casualty insurance, builder's risk and worker's compensation insurance
with respect to the Expansion Work, and shall at all times maintain
such insurance prior to the date of final completion of the Expansion
Work.
(g) Lessee shall have the right to prepare and deliver to
Lessor a "punch-list" not later than 90 days following final
completion of the Expansion noting any deficiencies with the Expansion
Work. Lessor agrees to promptly correct any items noted on Lessee's
punch-list within 60 days of receipt thereof. If all such punch-list
items are not corrected within such 60-day period, Lessee may at its
election perform same and deduct from the net annual rent thereafter
coming due Lessee's out-of-pocket costs and expenses incurred in
connection with the performance of such work.
(h) Upon the date of substantial completion of the
Expansion, Lessor shall be deemed to have made with respect to the
Expansion and the Expansion Work each of the representations and
warranties contained in Section 23.01(a), (b) and (c) of the Lease.
(i) Lessor agrees to fully defend, indemnify and hold
harmless Lessee from and against all claims, losses, costs and
expenses (including without limitation, reasonable attorneys' fees)
suffered or incurred by Lessee, or any party Lessee is legally
responsible for, arising as a result of the intentional act or
negligence of Lessor, or its agents or contractors, in connection with
the performance of the Expansion Work. In connection with the
performance of the Expansion Work, Lessor agrees to use, and to cause
its agents and contractors to use, all commercially reasonable efforts
to minimize interruption of Lessee's business activities within the
Demised Premises.
-4-
<PAGE> 5
(j) The following Article 33 is hereby inserted after
Article 32 of the Lease:
"ARTICLE 33
ARBITRATION
33.01. Lessor and Lessee agree that any dispute under this Lease
expressly stated to be settled by arbitration (including without limitation the
determination of fair market value under Article 28) shall be settled pursuant
to the procedures contained in this Article 33 ("Arbitration").
33.02. In any circumstance for which Arbitration is specifically
provided for hereunder, the party desiring Arbitration shall give notice to
that effect to the other party and shall in such notice appoint a person as
arbitrator on its behalf. Within ten (10) days after such notice, the other
party by notice to the original party shall appoint a second person as
arbitrator on its behalf. The arbitrators thus appointed shall appoint a third
person, and such three arbitrators shall as promptly as possible determine such
matter, provided, however, that:
(a) if the second arbitrator shall not have been
appointed within the ten (10) day period as aforesaid, the first
arbitrator shall proceed to determine such matter and shall render his
decision and award in writing within thirty (30) days after the
expiration of said ten (10) day period; and
(b) if the two arbitrators are appointed by the parties
and shall be unable to agree, within ten (10) days after the
appointment of the second arbitrator, upon the appointment of a third
arbitrator, they shall give written notice to the parties of such
failure to agree, and, if the parties fail to agree upon the selection
of such third arbitrator within ten (10) days after the arbitrators
appointed by the parties give notice as aforesaid, then within five
(5) days thereafter either of the parties upon notice to the other
party may request such appointment by the American Arbitration
Association (or any successor organization), or in its absence,
refusal, failure or inability to act, may apply to a local state court
of competent jurisdiction for a court appointment of such arbitrator.
33.03. Each arbitrator shall be a qualified and impartial person who
shall have had at least ten (10) years' current
-5-
<PAGE> 6
experience in the City of Jackson, State of Tennessee in the calling connected
with the matter of the dispute.
33.04. The Arbitration shall be conducted, to the extent consistent
with this Article, in accordance with the then prevailing rules of the American
Arbitration Association (or any successor organization). The arbitrators, if
more than one, shall render their decision and award in writing, upon the
concurrence of at least two of their number, within sixty (60) days after the
appointment of the third arbitrator. Such decision and award or the decision
and award of the single arbitrator as provided in Section 33.02(a) hereof,
shall be final and conclusive on the parties, and counterpart copies thereof
shall be delivered to each of the parties. In rendering such decision and
award, the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Lease. Judgment may be had on the decision and award of the
arbitrators so rendered in any court of competent jurisdiction.
33.05. Each party shall pay the fees and expenses of the one of the
two original arbitrators appointed by or for such party and the fees and
disbursements of attorneys or witnesses for such party, and the fees and
expenses of the third arbitrator and all other expenses of the arbitration
shall be borne by the parties equally."
2. This Amendment supersedes the February 4th Amendment, the
February 9th Amendment and the March 31st Amendment. Upon the execution of
this Amendment, the February 4th Amendment, the February 9th Amendment and the
March 31st Amendment shall be and are null and void and of no further force and
effect.
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<PAGE> 7
3. Except as expressly amended hereby, the Lease and all of the
terms, covenants and conditions thereof shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment the day
and date first shown above.
CENTURY 21 ASSOCIATES
By: /s/ LARRY P. BECKER
_________________________________
Larry P. Becker, Managing Partner
KERR GROUP, INC.
By: /s/ LARRY R. KNIPPLE
___________________________________________
Larry R. Knipple, Vice President, Secretary
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Exhibit A
Scope of Work
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EXHIBIT "A"
SUMMARY OF WORK
KERR GROUP, INC.
PLASTIC PRODUCTS DIVISION
PROPOSED 93,000 SF WAREHOUSE ADDITION,
PLANT OFFICES, AND BREAKROOM ADDITION
JACKSON, TENNESSEE
JANUARY 10, 1994
REVISED APRIL 28, 1994
OVERVIEW:
The scope of work included in our proposal consists of the construction of a
93,000 SF warehouse addition to the existing building located at 1005 Lower
Brownsville Road, Jackson, Tennessee. Note: Alternate #9 changed the building
size from 98,000 SF to 93,000 SF. We also propose to construct approximately
1,900 SF of new rooms in the existing plant with concrete storage mezzanines
above.
WAREHOUSE: The warehouse addition will be built on the north side of the
existing building as shown on facility floor plan, A-1.1. The roof will slope
northward from the existing building to the new north wall. The existing
12' x 14' overhead door will be relocated to the new warehouse. One new dock
door, dock leveler, and dock shelter will be provided.
The perimeter walls will consist of an 8'-0" high, block masonry wainscot with
24 gauge, prefinished siding and vinyl backed insulation above. The outside of
the wainscot at the two side walls will be finished with dryvit to match the
existing building. The interior face of the wainscots will be painted as will
the exterior of the rear wainscot. All structural steel, girts, and the bottom
of the roof deck will be field painted.
The warehouse will be provided with heating and ventilation systems.
The existing compressor building will be left intact and enclosed within the
new structure.
NEW BREAKROOM AND PLANT OFFICES: The proposed rooms in the existing plant
consist of a meeting room/breakroom, four offices, and one toilet room. These
areas will be constructed of concrete block walls with bar joist framing and
concrete mezzanines above for storage. The mezzanines will not be provided
with stairs or railing. These new rooms will be provided with heating and air
conditioning systems.
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A more detailed description of the scope of the proposed work follows.
DIV.I - GENERAL REQUIREMENTS:
A. GENERAL CONDITIONS: The general conditions include jobsite
supervision, temporary office trailers, tools and equipment, all as
necessary to construct the project.
DIV.II - SITE DEVELOPMENT:
A. SITE GRADING: The site grading work shall consist of clearing the
site of vegetation and topsoil in the vicinity of the building
addition, excavation and filling as necessary to achieve finish
grades. Any excess soil will be bermed at the northwest corner of the
site at the contractor's option. Disturbed areas will be seeded.
B. ASPHALT PAVING: Heavy duty asphalt will consist of 8" crushed stone
base, 1 1/2" asphaltic binder and 1 1/2" asphalt surface. This will
be used for paved truck traffic areas. Light duty paving will be used
for the parking lot expansion and consists of 6" stone base and 2"
asphalt surface. The gravel fire truck lane will consist of 8" thick,
crushed stone. The proposed paving locations are indicated on the
horizontal layout.
C. CONCRETE PAVING: A 50' x 14' concrete apron shall be provided at the
new loading docks. The concrete apron shall be built using 4,000 psi
concrete and reinforced with #3 reinforcing steel spaced at 18" on
center each way.
DIV.III -CONCRETE:
A. BUILDING FLOOR SLABS AND FOUNDATIONS: Foundations shall consist of
reinforced spread footings under building columns and continuous
footings under exterior walls. All concrete used in foundation work
is 3,000 psi at 28-days compressive strength. The warehouse will have
a 6" thick concrete floor slab with #3 reinforcement at 18" on center
each direction. Construction joints shall be doweled type. All
concrete used on floor slab work is 4,000 psi at 28-days compressive
strength. All floor slabs will be sealed with acrylic sealer.
B. MISCELLANEOUS CONCRETE ITEMS: Miscellaneous concrete items
included are:
* Dock leveler pit (1 each)
* Lightpole bases (3 each)
* 6"0 concrete filled pipe bollards (10 each)
* 4 - concrete stoops at exterior man doors
* 1 set of concrete steps with handrails at the truck dock
* 1 concrete pad for relocation of the transformer
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DIV. IV - MASONRY:
The masonry work includes an 8" thick block masonry wainscot (8'-0" high)
around the perimeter of the addition except at the new loading dock. The
masonry wainscot at the new loading dock shall be 15'-4" high. The masonry
walls at the new rooms in the existing building will extend to 11'-4" A.F.F.
DIV. V - METALS:
Roof framing is joist and joist girders supported by wide flange columns. The
bay spacings will be 40' x 41'-8", except for the bays along the west wall
which will be approximately 20'x 41'-8". The roof deck will be 22 gauge, Type
"B". Draft curtains will be provided at two locations running east-west,
totalling 522 LF. Miscellaneous steel will be provided for handrails at the
dock stairs, dock pit edge angle, pipe bollards, and overhead channel door
frames.
DIV. VI - CARPENTRY:
The carpentry work consists of the necessary pressure treated wood blocking
required to properly tie-in the roofing system to the building.
DIV. VII - MOISTURE PROTECTION:
A. ROOFING: Roof membrane shall be Firestone Tire & Rubber Company's
loose laid, ballasted system. Thickness of membrane to be 0.045".
The ballast shall be double thickness at the perimeter of the
building. The gutters, downspouts, and gravel guard shall be
prefinished to match the wall panels. Perimeter rock is per
F.M. 1-29.
B. WALL PANELS: The metal wall panels shall be 24 gauge, inverted "R"
type exterior wall panels. Color to match existing building. The
metal wall panels shall be lined on the inside with 2" thick, vinyl
backed, fiberglass insulation.
DIV. VIII - DOORS, WINDOWS AND GLASS:
A. HOLLOW METAL: All man doors shall be hollow metal with 16 gauge
frames and 1 3/4" thick, 18 gauge doors. Five view windows with
hollow metal frames will be provided at the breakroom and new plant
offices as shown on the plans.
B. FINISH HARDWARE: The hardware for the doors includes hinges, exit
devices for exterior doors, closers where required, kick plates,
threshold, weather stripping and other items for a complete
installation.
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C. SPECIAL DOORS: One existing 12' x 14' door will be relocated to the
new east wall. One new 8'-6" x 9', vertical lift, manual, overhead
door to match the existing dock doors will be provided at the new
loading dock.
DIV. IX - FINISHES:
A. PAINTING: The interior surface of the masonry wainscot, the new
shipping office walls, the new toilet room walls, and the new
breakroom walls shall be painted. The structural steel, roof framing,
bottom of roof deck and columns shall also be painted. All painting
work shall match existing.
B. DRYVIT: The exterior of the block wainscot of the new east and west
walls will be covered with dryvit. Color is to match the existing
building. The exterior of the north (rear) wall wainscot will be
painted.
C. ACOUSTIC CEILING: Acoustic ceilings shall be provided for the new
offices, new toilet room, and new breakroom. The ceiling tile shall
be a general purpose, 24" x 48" tile in a lay-in grid.
D. FLOOR COVERINGS: The floors of the new offices and new breakroom
shall be covered with vinyl composition tile. Vinyl base will be
provided at these rooms also.
DIV. X - SPECIALTIES:
A. TOILET ACCESSORIES: Chrome plated toilet accessories will be provided
for the one new toilet room.
DIV. XI - EQUIPMENT:
A. DOCK LEVELERS AND DOCK SHELTERS: One new dock leveler to match the
existing ones will be provided as follows.
Rite-Hite, Model ST968 mechanical dock levelers complete as follows:
* 6'x 8'
* 25,000 lbs. capacity
* Perimeter PT-2 weatherseals
* Two bumpers each
B. DOCK SEALS: One new dock shelter to match the existing ones will be
provided as follows.
Frommelt, Model WG-402-V, truck dock shelters with 40 oz. vinyl
material. Units project 24" from building wall.
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DIV. XII - FURNISHINGS: None provided.
DIV. XIII - SPECIAL CONSTRUCTION: None provided.
DIV. XIV - CONVEYING SYSTEMS: None provided.
DIV. XV - MECHANICAL:
Our scope of work includes but is not necessarily limited to the
following:
1. Furnish and install a warehouse area ventilation system to provide (6)
air changes per hour. This system shall consist of roof mounted
exhaust fans with makeup air coming through the dock doors and wall
louvers.
2. Revise the existing compressor room ventilation system to provide (20)
air changes per hour. This system shall consist of a roof mounted
exhaust fan with makeup air coming through a supply fan. The existing
compressor heat recovery duct shall be vented to outside.
3. Furnish and install a warehouse area heating system to maintain
60 degrees F at 0 degrees F outside. The system shall consist of
suspended gas fired and gravity vented unit heaters with thermostats
and a spark ignited pilot.
4. Revise the existing rest room ventilation system at the
shipping/receiving office as required. System shall consist of fan,
ductwork and air distribution devices as required to conform to SBC
requirements.
5. Furnish and install a shipping and receiving office HVAC system.
System shall consist of (2) 1 ton through wall units.
6. Furnish and install meeting/breakroom HVAC system. The area shall be
served by a 6 ton packaged, electrical cooling/gas heating rooftop
unit complete with thermostat, economizer and barometric relief. Air
distribution shall be as required.
7. Revise existing air distribution at the Q.A. office to allow for the
lab partition.
8. Furnish and install natural gas piping to provide natural gas to all
contractor furnished gas appliances. The 5 psi main will be taken
over at the existing gas entrance. It is assumed that the existing
utilities are adequate for the expansion.
9. Furnish and install a plumbing system as required. System shall
include domestic cold and hot water and sanitary drainage to (1)
water closet, (1) lavatory, and (1) floor drain at the shipping area.
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FIRE PROTECTION
1. INTERIOR: Three wet systems designed to provide an initial density of
.66 gpm/sq. ft. over the most remote 1,000 sq. ft. with a 750 gpm
hose allowance and a secondary density of .40 gpm/sq. ft. over the
most remote 3,725 sq. ft. with a 750 gpm hose allowance. We have
included the following at each riser: 1 - alarm valve with trim;
1 - water motor alarm; 1 - retard chamber; 1 - electric flow switch;
1 - spare head cabinet and head wrench.
The existing system riser #1 will be relocated to the east wall of the
proposed addition. A 6" bulk main will be run overhead to supply
existing system #1.
2. HOSE STATIONS: Included are ten 1 1/2" hose stations with 100' of
1 1/2" hose and adjustable nozzle. Note: Additional hose stations may
be required due to final aisle layout.
3. IN-PLANT OFFICES, BREAKROOM: .12 gpm/sq. ft. over the most remote
3,000 sq. ft. with a 250 gpm hose allowance.
4. UNDERGROUND: 8" C-900 PVC pipe.
DIV. XVI - ELECTRICAL:
1. RELOCATION OF EXISTING SERVICE. We shall provide for the relocation
of the existing switchboard feeders and associated transformers. This
shall require routing the primary to a new location and re-feeding the
existing switchgear. This shall be accomplished with a minimum of
shutdown time for the plant.
2. WAREHOUSE:
A. SERVICE: We shall provide for the extension of the existing
service or provide for a new service to this building. The
building shall have a 1,000 amp service provided for building
services, including lighting, receptacles, and HVAC equipment.
We do not provide for the connection of any owner's equipment
in this proposal.
We shall provide a 1,000 amp main switchboard with breakers
for all branch circuits, including (2) lighting panels, (2)
receptacles low voltage panels, and (1) power panel for fans
and other HVAC equipment.
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3. LIGHTING: Lighting for the facility shall be provided, utilizing 400
watt metal halide high bay fixtures spaced so as to obtain 30
footcandles of light. We shall provide swing arm type dock lights at
each dock door.
Exterior lighting shall consist of wall mounted, 400 watt fixtures
spaced approximately 90' apart. We shall relocate the bug lighting
around the perimeter of the owner's property. We do not include the
cost of providing additional bug lights that may be required. We
include three additional pole mounted, 400 watt H.P.S. fixtures in the
parking lot area.
Exit and emergency lighting shall be provided as required to meet
local code. In addition, we shall provide 10% of the high bay
fixtures with a quartz re-strike feature.
4. DEVICES: We shall provide a receptacle at every other column
throughout the facility. In office areas we shall provide receptacles
as previously stated.
5. SYSTEMS: We include an allowance of $5,000 for extending the existing
A.D.T. fire alarm system to cover the new addition.
6. BREAKROOM AND OFFICES: The new breakroom and office areas shall be
provided with fluorescent lighting, using 2' x 4' lay-in fixtures,
arranged so as to provide 80 footcandles of light. Receptacles shall
be provided at the rate of one per each interior wall in private
offices and per code requirements elsewhere. Each private office
shall be provided with a telephone outlet and a data outlet.
Switching for lighting shall be provided as required. It is assumed
that power is available for the new construction and that we shall not
be required to provide a new panel at these locations.
Note: See the attached Schedule of Alternates for information on revisions to
the above described Summary of Work.
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ACCEPTED ALTERNATES
KERR GROUP, INC.
PLASTIC PRODUCTS DIVISION
JACKSON, TN
(THROUGH) March 31, 1994
BASE BID:
All sitework and construction of a 93,000 SF warehouse addition.
$ 1,713,000
ALTERNATE #1:
Construction of new meeting room/breakroom, 4 plant offices, and 1 bathroom
with storage mezzanines above, all within the existing building.
Add +$ 116,000
ALTERNATE #6:
Provide (1) additional door, (1) view window and (1) sliding pass window at the
shipping office.
Add +$ 2,100
ALTERNATE #7a:
Provide (6) new bug attractor lights to match the existing fixtures and
complete the design around the new addition. These pole mounted fixtures shall
be spaced in a similar manner to the existing fixtures and routed with the
existing fixtures that are to be re-located.
Add +$ 12,000
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ALTERNATE #7c:
Provide totally enclosed fixtures in the warehouse in lieu of open high bay
fixtures. This would replace the fixtures in the warehouse with a fixture that
is fully gasketed and should greatly reduce the requirements for bug removal.
Add +$ 5,500
ALTERNATE #8:
Provide cigarette smoke venting at the breakroom and two air curtains at the
doorways between the existing plant and new warehouse.
Add +$ 10,600
ALTERNATE #9:
Provide one water fountain at Column 4.5-N in the new warehouse. The waste
water from this will be pumped to the gravity line.
Add +$ 5,300
ALTERNATE #10:
Pave fire road with 2,440 S.Y. of heavy duty paving in lieu of crushed stone
driveway.
Add +$ 12,500
ALTERNATE #11a:
Add one entrance with 164 S.Y. of light duty paving and a 24" culvert with end
sections at the proposed parking lot. Widen existing entrance at the east side
of the existing entrance.
Add +$ 9,000
ALTERNATE #12:
Demolish 110'plus/minus of existing asphalt driveway between the existing
driveway and parking lot, regrade and reseed the area.
Add +$ 3,700
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ALTERNATE #13:
Shorten bay size between Column Lines R & S from 40'-7" to 20'-7". This
reduces the building size by approximately 5,000 S.F.
Deduct <$ 34,387>
ALTERNATE #14:
Extending existing 8' high block wall to the roof deck for 261 LF in order to
create a 2-hour fire partition between the existing building and the proposed
warehouse. Includes two rolling steel fire doors and two 5' x 4' fire shutters
at view windows.
Add +$ 62,000
ALTERNATE #15:
Provide fire protection coverage as follows in lieu of system previously
quoted.
INTERIOR - Three wet systems utilizing early suppression fast response
sprinklers (ESFR) are designed to provide 50 psi minimum operating pressure at
the most remote twelve sprinklers, flowing four sprinklers on three lines.
HOSE STATIONS - Included are ten 1-1/2" hose stations with 100' of 1-1/2" hose
and adjustable nozzle. Note: Additional hose stations may be required due to
final aisle layout.
UNDERGROUND - 8" C-900 PVC pipe will be extended on the north side of proposed
addition and connected to the 12" city main.
Add +$ 44,102
TOTAL OF BASE BID AND ALTERNATES NOS. 1, 6, 7a, 7c, 8, 9, 10, 11a, 12, 13, 14,
15.
+$1,961,415
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DRAWING LIST
KERR GROUP, INC.
PLASTIC PRODUCTS DIVISION
JACKSON, TN
APRIL 28, 1994
<TABLE>
<CAPTION>
CIVIL CE-1.0 SITE PLAN
<S> <C> <C>
ARCHITECTURAL A1.1 FACILITY FLOOR PLAN
A1.2 WAREHOUSE ADDITION ENLARGED AREA FLOOR
A1.3 ENLARGED AREA FLOOR PLAN
A2.1 DOOR & FINISH SCHEDULES
A3.1 BUILDING ELEVATIONS
A4.1 WALL SECTIONS
A4.2 WALL SECTIONS
A7.1 FACILITY ROOF PLAN
A7.2 FLASHING DETAILS
STRUCTURAL C1.1 FOUNDATION PLAN
C1.2 MEZZANINE FOUNDATION PLANS
C2.1 FOUNDATION DETAILS
C2.2 SECTIONS & DETAILS
S1.1 ROOF FRAMING PLAN
S1.2 MEZZANINE FRAMING PLANS
S1.3 ELEVATIONS
S2.1 SECTIONS & DETAILS
S3.1 WAREHOUSE ADDITION ROOF OPENING PLAN
MECHANICAL SU-1.1 SITE UTILITIES PLAN
M3.1 WAREHOUSE ADDITION PLUMBING PLAN
M3.2 ENLARGED AREAS PLUMBING PLAN
M4.1 FACILITY HVAC PLAN
M4.2 WAREHOUSE ADDITION ENLARGED AREA HVAC
M4.3 ENLARGED AREAS HVAC PLAN
M4.4 HVAC NOTES, DETAILS & SCHEDULES
M4.5 COMPRESSOR ROOM HV PLAN
M5.1 FACILITY FIRE PROTECTION/SPRINKLER
REQUIREMENT PLAN
ELECTRICAL E2.1 WAREHOUSE ADDITION LIGHTING PLAN
E2.2 ENLARGED AREAS LIGHTING PLANS
E3.1 WAREHOUSE ADDITION POWER PLAN
E3.2 ENLARGED AREAS POWER PLAN
E4.1 PANELBOARD SCHEDULES
</TABLE>
<PAGE> 1
LEASE AGREEMENT
BOWLING GREEN - WARREN COUNTY INDUSTRIAL AUTHORITY IV, INC.
and
KERR GROUP, INC.
<PAGE> 2
BOWLING GREEN-WARREN COUNTY INDUSTRIAL AUTHORITY IV, INC.
KERR GROUP, INC.
LEASE AGREEMENT
TABLE OF CONTENTS
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ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Acquisition and Construction Costs. . . . . . . . . . . 1
(b) Additional Consideration. . . . . . . . . . . . . . . . 2
(c) Business Days . . . . . . . . . . . . . . . . . . . . . 2
(d) Design/Builder. . . . . . . . . . . . . . . . . . . . . 2
(e) Design/Builder Contract . . . . . . . . . . . . . . . . 2
(f) Expiration Date . . . . . . . . . . . . . . . . . . . . 3
(g) Hazardous Material. . . . . . . . . . . . . . . . . . . 3
(h) Improvements. . . . . . . . . . . . . . . . . . . . . . 3
(i) Extension Terms. . . . . . . . . . . . . . . . . . . . 3
(j) Initial Term . . . . . . . . . . . . . . . . . . . . . 3
(k) Land. . . . . . . . . . . . . . . . . . . . . . . . . . 3
(l) Landlord . . . . . . . . . . . . . . . . . . . . . . . 3
(m) Lenders . . . . . . . . . . . . . . . . . . . . . . . . 3
(n) Lease Year. . . . . . . . . . . . . . . . . . . . . . . 3
(o) Loan Documents. . . . . . . . . . . . . . . . . . . . . 3
(p) Loans . . . . . . . . . . . . . . . . . . . . . . . . . 4
(q) Plans and Specifications. . . . . . . . . . . . . . . . 4
(r) Premises. . . . . . . . . . . . . . . . . . . . . . . . 4
(s) Rent Commencement Date. . . . . . . . . . . . . . . . . 4
(t) Term. . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DEMISE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTRUCTION OF IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . 5
(a) Construction. . . . . . . . . . . . . . . . . . . . . . 5
(b) Construction Supervision. . . . . . . . . . . . . . . . 5
(c) Excess Costs. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USE OF PREMISES; HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . 6
(a) Use . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Hazardous Material. . . . . . . . . . . . . . . . . . . 6
</TABLE>
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<TABLE>
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ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INITIAL LEASE TERM; POSSESSION;. . . . . . . . . . . . . . . . . . . . . 9
OPTION FOR EXTENSION TERM(S) . . . . . . . . . . . . . . . . . . . . . . 9
(a) Term; Effective Date. . . . . . . . . . . . . . . . . . . . 9
(b) Possesion . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
RENT; OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Absolute Triple Net Lease . . . . . . . . . . . . . . . . . 9
(b) Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Option to Purchase. . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
RESTRICTION ON TRANSFER; TERMINATION BY TENANT . . . . . . . . . . . . . 12
(a) Transfer of Landlord's Interest . . . . . . . . . . . . . . 12
(b) Termination by Tenant; Landlord's Cure Period . . . . . . . 13
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
MAINTENANCE OF LEASE PREMISES. . . . . . . . . . . . . . . . . . . . . . 13
(a) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Public Liability Insurance. . . . . . . . . . . . . . . . . 14
(b) Property Damage, Physical Damage
and Fire Insurance. . . . . . . . . . . . . . . . . . . . . 14
(c) Builders Risk Insurance . . . . . . . . . . . . . . . . . . 15
(d) Limitations . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Certificates of Insurance . . . . . . . . . . . . . . . . . 15
(f) Mortgagee Policy. . . . . . . . . . . . . . . . . . . . . . 15
(g) Insurer's Waiver of Subrogation . . . . . . . . . . . . . . 16
ARTICLE 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ALTERATIONS; IMPROVEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ASSIGNMENT; SUBLETTING; ALIENATION . . . . . . . . . . . . . . . . . . . 17
ARTICLE 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) By Tenant . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) By Landlord . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<TABLE>
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ARTICLE 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DEFAULT; TERMINATION OF LEASE BY LANDLORD; REMEDIES. . . . . . . . . . . 19
(a) Termination at End of Term. . . . . . . . . . . . . . . . . 19
(b) Default By Tenant . . . . . . . . . . . . . . . . . . . . . 19
(c) Re-Entry. . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Acceleration of Rent. . . . . . . . . . . . . . . . . . . . 20
(e) Effect of Termination . . . . . . . . . . . . . . . . . . . 21
ARTICLE 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
HOLDOVER; SURRENDER OF PREMISES. . . . . . . . . . . . . . . . . . . . . 21
(a) Holdover . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Surrender. . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Landlord's Inspection. . . . . . . . . . . . . . . . . . . 22
ARTICLE 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
UTILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
TAXES AND ASSESSMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DESTRUCTION BY FIRE OR CASUALTY. . . . . . . . . . . . . . . . . . . . . 25
(a) Partial Damage. . . . . . . . . . . . . . . . . . . . . . . 25
(b) Substantial Damage. . . . . . . . . . . . . . . . . . . . . 25
(c) Personalty Proceeds . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Taking. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Compensation Award. . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SUBORDINATION, ATTORNMENT AND NONDISTURBANCE . . . . . . . . . . . . . . 27
(a) Tenant's Instruments. . . . . . . . . . . . . . . . . . . . 27
(b) Landlord's Instruments. . . . . . . . . . . . . . . . . . . 28
ARTICLE 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ACCESS TO LEASED PREMISES. . . . . . . . . . . . . . . . . . . . . . . . 28
(a) By Landlord . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) By Prospective Tenants. . . . . . . . . . . . . . . . . . . 28
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PARTIES' REMEDIES CUMULATIVE;
NO WAIVER OR FORBEARANCE; SEVERABILITY . . . . . . . . . . . . . . . . . 29
ARTICLE 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
LANDLORD'S COVENANT OF QUIET ENJOYMENT . . . . . . . . . . . . . . . . . 30
ARTICLE 24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
TENANT'S COVENANTS AND DISCLOSURES . . . . . . . . . . . . . . . . . . . 30
(a) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Compliance Review Disclosures . . . . . . . . . . . . . . . 31
(c) Financial Disclosure. . . . . . . . . . . . . . . . . . . . 31
(d) Improvements Constructed by Tenant. . . . . . . . . . . . . 31
(e) Jobs Incentive Program. . . . . . . . . . . . . . . . . . . 32
ARTICLE 25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
INTEREST ON PAST DUE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
TITLES OF ARTICLES . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
RECORDING OF MEMORANDUM OF LEASE . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 35
EXHIBIT 1(k). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
<PAGE> 6
INDUSTRIAL IV - KERR GROUP
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into on this the
30th day of June, 1994 at Bowling Green, Warren County, Kentucky, by BOWLING
GREEN-WARREN COUNTY INDUSTRIAL AUTHORITY IV, INC., a Kentucky corporation, 812
State Street, Bowling Green, Kentucky 42101, hereinafter referred to as
"Landlord"; and KERR GROUP INC., a Delaware corporation, 1840 Century Park
East, Los Angeles, California 90067 hereinafter referred to as "Tenant".
WHEREAS, Landlord desires to lease to Tenant and Tenant desires to
lease from Landlord, certain real property, Improvements and facilities
described herein; and
WHEREAS, Landlord has engaged the services of a contractor to design
and build Improvements upon the premises to be leased; and
WHEREAS, the parties desire to set forth and be bound by their
agreements herein;
NOW THEREFORE, for and in consideration of the mutual promises of the
parties to this Agreement the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings in this Lease:
(a) Construction Costs: Shall mean all costs of constructing
the Improvements including without limitation, title insurance premiums,
permitting, platting, appraisal, recording, surveying, engineering, drainage
plan fees, inspection fees, accounting, attorney and other
1
<PAGE> 7
professional fees and costs in connection therewith. Attorney and professional
fees together with construction interest and other costs are herein described
as "soft costs" as follows:
<TABLE>
<S> <C>
Construction interest. . . . . . . . . . . . . $175,000.00
Attorneys fees . . . . . . . . . . . . . . . . 19,000.00
Title insurance. . . . . . . . . . . . . . . . 8,000.00
Environmental Audit. . . . . . . . . . . . . . 2,000.00
Appraisal. . . . . . . . . . . . . . . . . . . 10,000.00
Survey . . . . . . . . . . . . . . . . . . . . 1,000.00
Miscellaneous. . . . . . . . . . . . . . . . . 10,000.00
</TABLE>
To the extent such soft costs shall exceed the aggregate of the
foregoing, Tenant shall reimburse Landlord for such soft costs.
(b) Additional Consideration:
(i) The County of Warren will provide an amount not
to exceed Fifty Thousand Dollars ($50,000.00) to the Landlord for the
construction of a rail spur in a form reasonably acceptable to Tenant.
(ii) Warren County will pay for the construction of
an industrial access road up to Fifteen Hundred (1,500) feet in length.
(iii) Tenant will receive a five year moratorium on
Tenant's requirement to pay city ad valorem property taxes.
(c) Business Days: All days other than Saturdays, Sundays
and legal holidays.
(d) Design/Builder: Owens Engineering and H & M Construction
Company, Inc.
(e) Design/Builder Contract: The contract between Landlord
and Tenant and the Design/Builder for designing and building the Improvements,
which contract shall be in form and substance acceptable to Landlord and
Tenant. A copy of this Contract shall be delivered to the Landlord within ten
(10) days following execution of this Lease.
2
<PAGE> 8
(f) Expiration Date: As defined in Article 5(a) hereof.
(g) Hazardous Material: As defined in Article 4(b) hereof.
(h) Improvements: The manufacturing plant and related
buildings located on the Land.
(i) Extension Terms: As defined in Article 5(a) hereof.
(j) Initial Term: As defined in Article 5(a) hereof.
(k) Land: Lot 9, Section 4 of the South Central Kentucky
Industrial Park in Bowling Green, Kentucky, comprised of 25.115 acres, as more
particularly described in Exhibit 1(k) attached hereto and made a part hereof
for all purposes.
(l) Landlord: Bowling Green-Warren County Industrial
Authority IV, Inc.
(m) Lenders: Collectively the entities providing the Loans
to the Landlord, being
i) Kentucky Development Finance Authority
("KDFA") by virtue of its loan in the principal amount of $700,000.00 (the
"Loan");
ii) Trans Financial Bank, N.A. by virtue of
its loan in the principal amount of $4,335,000.00, (the "TFB Loan"); and
(n) Lease Year: Shall mean the twelve (12) month period
commencing on the first day of the month following the Rent Commencement Date
and ending on the last day of the twelfth (12th) full calendar month
thereafter, and each such successive 12- month period.
(o) Loan Documents: The written documents evidencing and
relating to the Loans, including without limitation loan agreements, promissory
notes, mortgages and/or other agreements securing the Loans and occupational
tax credits.
3
<PAGE> 9
(p) Loans: Collectively the loans obtained by Landlord from
the Lenders to finance the construction costs in the maximum principal amount
of $5,035,000.00.
(q) Plans and Specifications: The proposal, drawings,
specifications, cost estimates and documents prepared by the Design/Builder for
the design and building of the Improvements approved by Landlord and Tenant
pursuant to Article 3(a) hereof.
(i) Permitted Exceptions: As defined in Article 6(d).
(r) Premises: Collectively, the Land and the Improvements.
(i) Purchase Option: As defined in Article 6(d), if
so exercised in accordance with the terms of its Lease.
(s) Rent Commencement Date: The earlier of June 1, 1995, or
the date when Tenant commences business in the ordinary course following the
completion of all Improvements or the issuance of a certificate of occupancy.
If the Rent Commencement Date is other than the first day of the month, the
first rental payment due under this Lease shall be pro-rated to the first day
of the following month. Landlord and Tenant each covenant to execute a
written agreement stipulating the Rent Commencement Date when it has been
determined. The Rent Commencement Date is conditioned upon the delivery to
Tenant and/or completion of all Additional Consideration in a form satisfactory
to Tenant.
(t) Term: The Initial Term and both Extension Terms.
ARTICLE 2
DEMISE OF PREMISES
Landlord leases to Tenant and Tenant leases from Landlord the
Premises, together with rights of use, where applicable, to common areas, and
any additions or Improvements made
4
<PAGE> 10
during the term or any renewal term of this Lease, and Landlord, in
consideration of rents, covenants and agreements hereafter set forth to be
observed and/or performed on the part of the Tenant, agrees to lease the
Premises to the Tenant.
ARTICLE 3
CONSTRUCTION OF IMPROVEMENTS
(a) Construction. Landlord and Tenant shall within thirty
(30) days of execution of this Lease agree upon the Plans and Specifications.
The Plans and Specifications may be altered, amended or modified by Tenant with
the consent of Landlord, and such alteration, amendment or modification shall
not increase the cost of the construction of the Improvements and that notice
of such alteration, amendment or modification shall promptly be provided to
Landlord and its Lenders. Tenant will only be responsible for those costs
attributable solely to change orders requested by Tenant. Landlord shall
within 30 days of execution of this Lease enter into the Design/Builder
Contract with the Design/Builder for the design and building of the
Improvements in accordance with the Plans and Specifications of this Lease.
The Design/Builder Contract shall be in the form of the Standard Form of
Agreement between Owner and Design/Builder (AIA Document A191-1985, part 2 and
addendum "A") or such form as is mutually agreed upon by Landlord, Tenant and
Tenant's Lenders. It is anticipated that the Construction Costs will not
exceed $4,803,500.00.
(b) Construction Supervision. Landlord shall designate a
representative of Tenant to act on Landlord's behalf with respect to designing
and building of the Improvements pursuant to the terms of the Design/Builder
Contract. Said representative shall be available to Design/Builder on an
ongoing basis during construction of the Improvements, and shall promptly
5
<PAGE> 11
render decisions to Design/Builder pertaining to the design and building
process and any modifications thereof, subject to Article 3(a) hereof.
(c) Excess Costs. Tenant shall be responsible for and
shall pay all Construction Costs which shall exceed the Contract amount of
$4,803,500.00 between Landlord and H&M Construction.
ARTICLE 4
USE OF PREMISES; HAZARDOUS MATERIALS
(a) Use. The Tenant shall use and occupy the Premises for
the purpose of manufacturing and distribution of manufactured products, office
use, storage, warehousing and related activities. In connection with the use
and occupancy of the Premises, Tenant shall comply in all material respects
with all applicable rules, regulations and requirements of any federal, state
or local governmental authority and the rules, regulations and requirements of
fire rating organizations or will obtain insurance insuring over such
requirements.
(b) Hazardous Material:
(i) As used herein, the term "Hazardous
Material" means (a) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (42 USC Section 6901 et seq.), as
amended from time to time, and regulations promulgated thereunder; or (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act (42 USC Section 9601 et seq.) and regulations
promulgated thereunder, (c) any "hazardous chemical substance or mixture"
described in the Toxic Substances Control Act (15 USC 2601, et seq.); or (d)
any substance that is or becomes regulated by any federal, state or local
governmental authority as a hazardous waste or hazardous substance; any of
which is
6
<PAGE> 12
brought upon, kept or stored upon the Premises by Tenant.
(ii) Tenant shall not cause or permit any
Hazardous Material to be brought upon, kept or used in or about the Premises by
its agents, employees, contractors or invitees, except for such Hazardous
Material as is used or consumed in Tenant's or its sublessees' business and/or
is necessary for the manufacture of its or their products.
(iii) Any Hazardous Materials permitted on
the Premises by Tenant as provided herein and all containers therefor, shall be
used, kept, stored and disposed of in material compliance with all federal,
state and local laws and regulations applicable to such Hazardous Material.
(iv) Tenant shall be fully liable for all
costs and expenses related to the use, generation, transport, handling,
storage, disposal and cleanup or detoxification of Hazardous Material on the
Premises by Tenant or its employees or agents, including without limitation all
damages to Landlord directly or indirectly arising from these activities. The
Tenant shall promptly give notice to Landlord of any violation of the
provisions of this Article or of any citation or written notice received by
Tenant from any federal, state or local governmental authority. After the date
of this Lease except to the extent caused by Landlord or its employees, agents
or contractors, Tenant shall defend, indemnify and hold harmless Landlord and
its agents, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses (including, without
limitation, reasonable attorneys' fees, court costs and litigation expenses) of
whatever kind or nature, arising out of or in any way related to (a) the
presence, use, disposal, transport, release, or threatened release of any such
Hazardous Material that is on, from or affecting the soil, water, vegetation,
buildings, personal property, persons, animals or otherwise
7
<PAGE> 13
which Hazardous Material was not present on the Premises prior to the date of
this Lease; (b) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to the presence, use,
disposal, transport, release or threatened release of Hazardous Material not
present on the Premises prior to the Rent Commencement Date; (c) any lawsuit
brought or threatened, or government order relating to that Hazardous Material
not present on the Premises prior to the date of this Lease, or (d) any
violation of any laws applicable thereto.
(v) Landlord and Tenant shall each
promptly notify the other in writing should Landlord or Tenant become aware of
or receives any written notice of any complaint, order, citation or notice with
regard to air emissions, water discharges, noise emissions, or any other
environmental, health, or safety matter affecting the Premises from any person
or entity including without limitation the Kentucky Cabinet for Natural
Resources and Environmental Protection or the United States Environmental
Protection Agency. Landlord and Tenant shall provide the other with a copy of
any written environmental disclosure voluntarily made or required to be made by
such party to any local, state or federal governmental authority during the
Term of this Lease.
(vi) In consideration of Tenant's
agreements relating to Hazardous Material as set forth above, Landlord warrants
and agrees that upon the date of this Lease, the Premises shall be free of any
and all Hazardous Material. Landlord agrees to defend, indemnify and hold
harmless Tenant from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses, of whatever kind or
nature, arising out of or in any way related to any Hazardous Material in, on,
or under the Premises prior to the date of this Lease).
8
<PAGE> 14
(vii) Tenant's and Landlord's agreements
relating to Hazardous Materials shall survive the termination of this Lease.
ARTICLE 5
INITIAL LEASE TERM; POSSESSION;
OPTION FOR EXTENSION TERM(S)
(a) Term; Effective Date. This Lease shall be effective upon
its execution by Landlord and Tenant. The initial rental term shall be for a
period of fifteen (15) years (the "Initial Term") beginning with the Rent
Commencement Date and ending on the last day of the 180th full calendar month
thereafter (as same may be extended, the "Expiration Date"). In addition,
provided Tenant is not in default beyond notice and grace periods in any
material respect hereunder, Tenant shall have the option to extend the term for
two (2) consecutive five (5) year periods (the "Extension Terms"). To exercise
this Option, Tenant shall give Landlord written notice no later than ninety
(90) days prior to the end of the Initial Term and the first Extension Term.
(b) Possession. Tenant may enter into possession of the
Premises on or before the Rent Commencement Date for the purpose of installing
Tenant's fixtures and equipment; provided, however, that any such entry shall
not unreasonably interfere with the construction of the Improvements. Such
entry shall be under all of the terms and conditions of this Lease.
ARTICLE 6
RENT; OPTION TO PURCHASE
(a) Absolute Triple Net Lease. Landlord and Tenant
acknowledge that this Lease is a "TRIPLE NET" Lease. Therefore, all costs,
expenses and charges relating to the Premises for
9
<PAGE> 15
periods after the Rent Commencement Date, except as expressly provided herein,
shall be paid by Tenant. Notwithstanding the foregoing, nothing contained in
this Lease shall obligate Tenant to become directly obligated to pay any
interest or principal on any mortgage or other financing of Landlord's interest
in the Premises.
(b) Base Rent. The initial monthly base rent (the "Base
Rent") to be paid by Tenant is $50,239.00. The Base Rent shall be fixed for
the first five (5) Lease Years and adjusted thereafter every five years in
accordance with the financing provided by Trans Financial Bank, N.A. which
provides an adjustable interest rate equal to the 5 year United State Treasury
Bill interest rate plus 300 basis points; by way of example the following
schedule indicates per square foot rents applicable at various interest rates
beginning with the interest rate of 6.25%.
<TABLE>
<CAPTION>
BANK SQUARE
INTEREST FOOT
RATE(1) RATE(2)
-------- -------
<S> <C>
6.25 3.04
7.25 3.21
8.25 3.39
9.25 3.58
10.25 3.76
11.25 3.95
12.25 4.16
</TABLE>
- - - ------------------
(1) This Rate is U.S. Treasury Bill rate plus 300 basis points.
(2) Includes the KDFA Loan.
10
<PAGE> 16
Landlord may not vary the amortization schedule without the written consent of
Tenant. To the extent that Construction Costs are below the Contract amount of
$4,803,500.00, the Base Rent shall be reduced by an amount equal to the amount
of such reduced costs calculated on a per square foot basis.
(c) Payment. The Base Rent shall be paid in equal monthly
installments in advance upon the first business day of each and every calendar
month during the Term hereof, and shall be payable at the office of the
Landlord, or its designee.
(d) Option to Purchase. Landlord does hereby grant to Tenant
an Option to Purchase the Premises (the "Purchase Option") at any time for a
purchase price equal to the greater of (x) the fair market value of the
Premises based on its present use and subject to the provisions of this Lease
(excluding the value of all improvements to the Premises made at Tenant's
expense) determined as of the date of Tenant's exercise of the Purchase Option
; (y) the then outstanding unamortized principal balance of the Loans (as such
original principal amounts existed on the date of this Lease and expressly
excluding any increases in the principal amounts thereof); and (z) in no event
shall the net purchase price payable to Landlord be less than $300,000.00. At
the end of the fifteenth (15) Lease Year, the Option Price shall be $1.5
million. To exercise this Purchase Option, Tenant shall give at least ninety
(90) days written notice to Landlord, and promptly after giving such notice
Tenant shall obtain an appraisal of the Premises at Tenant's expense. At
closing, Landlord shall provide to Tenant a deed of general warranty in
recordable form conveying fee simple title to the Premises together with all
easements, mineral rights, rights to public roads and other interests
appurtenant to the Premises, free and clear of all liens and encumbrances
granted or permitted by Landlord, except for matters appearing of record
11
<PAGE> 17
as of the date of the Lease, and such other easements for utilities and sewer
lines which Landlord may grant from time to time which will not materially
impair the use or value of the Premises, and subject to any liens or
encumbrances created or caused by Tenant (the "Permitted Exceptions"). At the
closing of title, the title company selected by Tenant must be prepared to
issue the then most recent ALTA Owner's Title Insurance Policy in the amount of
the purchase price insuring title to the Premises vested in Tenant, subject
only to the Permitted Exceptions. In the event Tenant exercises this Option,
Base Rent shall be paid up to the day of closing. Each party shall select and
bear all costs of its attorneys at closing, but all other closing costs
(including without limitation any transfer taxes and title insurance premiums)
shall be paid by the parties in accordance with local custom.
ARTICLE 7
RESTRICTION ON TRANSFER; TERMINATION BY TENANT
(a) Transfer of Landlord's Interest. Landlord shall give
notice to Tenant of any transfer, sale, assignment or conveyance of its
interest in the Premises; but shall not be required to obtain Tenant's consent
thereto. If Landlord shall transfer, sell, assign or convey its interest in
the first five years of the Initial Term, Landlord shall assume all of Tenant's
obligations to pay any city ad valorem property taxes and other taxes and fees
during the five year period which would not otherwise be payable if such
transfer had not taken place. Notwithstanding the foregoing, no such transfer,
sale, assignment or conveyance shall be effective unless and until the
transferee, purchaser or assignee executes and delivers to Tenant a written
agreement assuming Landlord's obligations hereunder.
12
<PAGE> 18
(b) Termination by Tenant; Landlord's Cure Period. Tenant may
terminate this Lease in the event of any material default by Landlord in the
performance of any material term or covenant of this Lease which continues for
thirty (30) days after written notice to Landlord specifying such default and
setting forth Tenant's intention to terminate this Lease is received by
Landlord. Notwithstanding the foregoing, it shall not be an event of default
and a termination shall not occur if said default is not capable of being cured
within the thirty (30) day period and Landlord has commenced to cure the
default during the said period, and diligently pursues such cure to
completion..
ARTICLE
MAINTENANCE OF LEASED PREMISES
(a) Maintenance. After the Rent Commencement Date, Tenant
covenants and agrees to keep and maintain the roof, parking lot and other
exterior portions of the Premises and to make any reasonably necessary
structural repairs to the interior of the Premises except such repairs required
as the result of damage arising by acts or omissions of the Landlord or of the
Design/Builder. Landlord agrees to use its best efforts to effect remedies
against the Design/Builder. Damage arising by acts or omissions of Landlord
shall be repaired upon written notice by Tenant to Landlord and Landlord, in
addition to its other rights and remedies, shall be entitled to the cure period
in Article 7(b) hereof. Tenant further covenants and agrees to keep and
maintain in good order, condition and repair the Premises and every part
thereof including without limitation any exterior and interior portions of all
doors, door checks, windows, plate glass, and all plumbing and sewage
facilities within the Premises including free flow up to the main sewer line up
to the boundary of the Premises, fixtures, heating, air conditioning and
13
<PAGE> 19
electrical equipment, including mechanical or electrical repairs to the
exterior of the building and parking lot, and interior walls, floors and
ceilings, including compliance with applicable building codes relative to fire
extinguishers. Tenant shall perform all snow removal, lawn care and landscaping
necessary to maintain the Premises in a neat and safe condition. If Tenant
refuses or neglects to commence said maintenance or repairs within fifteen (15)
days of the date Tenant receives written notice from Landlord, Landlord may,
but shall not be required to do so, make said repairs or maintenance and Tenant
shall pay the costs thereof to Landlord upon demand.
ARTICLE 9
INSURANCE
(a) Public Liability Insurance. From and after the Rent
Commencement Date Tenant shall procure and keep in effect general liability,
public liability, and worker's compensation liability insurance of not less
than $1,000,000.00 combined single limit per occurrence effective upon the Rent
Commencement Date.
(b) Property Damage, Physical Damage and Fire Insurance.
Tenant at Tenant's sole cost and expense, shall keep the Improvements now or
hereafter located on the Premises insured pursuant to the so-called extended
coverage policy available from time to time with an earthquake endorsement, if
available at commercially reasonably rates in a blanket policy in an amount not
less than $30,000,000.00, or the replacement cost of the Improvements. Such
insurance shall be so issued as to cover the interests of Landlord, Lenders,
and Tenant, as their interests appear, and shall provide that in the case of
loss or damage the proceeds thereof shall be payable jointly to Lenders,
Landlord and Tenant as their respective interests may appear at the time of the
loss. If Tenant exercises the Purchase Option to purchase the Premises
pursuant to Article 6(d), then
14
<PAGE> 20
Landlord shall turn over to Tenant, at closing thereof, the insurance proceeds
not used, if any, to repair or replace any damage to the Premises which may
have occurred during the Term hereof. In addition, Tenant shall obtain such
insurance at its own option and cost as Tenant deems necessary to insure
Tenant's leasehold improvements, equipment and other personal property located
at the Premises, and all losses for such insurance shall be payable solely to
Tenant.
(c) Builders Risk Insurance. Tenant will provide at Tenant's
sole cost and expense Builders Risk Insurance Coverage between the commencement
of construction of the Improvements and the Rent Commencement Date.
(d) Limitations. Each insurance policy required by this
Article 9 must be by an insurance company having an A.M. Best rating of not
less than "A". Each policy shall name Lenders as additional insureds, and
provide that all provisions shall operate as if there were a separate policy
insuring Lenders. Each policy shall provide thirty (30) days written notice to
Landlord and the Lenders prior to its cancellation. Notwithstanding the
foregoing, Tenant shall have the right to self-insure the workers compensation
coverage required in Article 9(a) hereof.
(e) Certificates of Insurance. Tenant shall deliver to
Landlord certificates of insurance upon execution of this Lease. Tenant shall
deliver certificates of renewal to Landlord for each policy prior to their
respective expiration dates. In the event that Tenant fails to provide any of
the insurance herein, Landlord may procure or renew such insurance, and any
amounts paid by Landlord for such insurance shall be immediately due and
payable as additional rent by Tenant.
(f) Mortgagee Policy. Upon written request of Landlord,
Tenant shall cause its insurer to issue a mortgagee policy of insurance in the
names of Lenders which requires that all notices furnished to Tenant shall
likewise be furnished to Landlord's Lenders.
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(g) Insurer's Waiver of Subrogation. Each policy of insurance
referred to herein shall provide a waiver and release by the insurer of any and
all claims, demands, suits, actions and rights, (including, without limitation,
any and all rights of subrogation) which said insurer might otherwise have
against Landlord and/or Tenant as a result of any acts or omissions of Landlord
and/or Tenant.
ARTICLE 10
ALTERATION; IMPROVEMENTS
Tenant may, without the consent of Landlord, make mechanical or
structural alterations, improvements and/or additions to the Premises or any
part thereof provided such alterations, improvements and/or additions are in
accordance with all applicable laws, are made at the expense of Tenant, and
each repair item does not cost more than Two Hundred Thousand Dollars
($200,000). Landlord's prior written consent shall be required for all
mechanical or structural alterations, improvements and/or additions exceeding
Two Hundred Thousand Dollars ($200,000.00) in cost per item, which consent
shall not be unreasonably withheld, conditioned or delayed. At termination of
this Lease, or within fifteen (15) days thereafter, Tenant shall, if Tenant so
elects, promptly remove the additions, improvements, fixtures and installations
which were placed in or on the Premises by Tenant, and repair any damage
occasioned by such removal. In the event of making such alterations,
improvements and/or additions as herein provided, Tenant further agrees to
indemnify and save harmless the Landlord from all expense, liens, claims or
damages to either persons or property arising out of, or resulting from the
undertaking or making of said alterations, additions and improvements. Any
additions, improvements, fixtures and installations which Tenant elects not to
remove from the Premises shall become property of the Landlord.
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ARTICLE 11
ASSIGNMENT; SUBLETTING; ALIENATION
Tenant may at any time during the Term of this Lease assign, sublet,
transfer, convey or otherwise alien any or all of its rights under this Lease
to its parent corporation, any company owned or controlled by Tenant or its
parent company, any company into which Tenant shall merge or consolidate, any
company purchasing substantially all of the assets of Tenant located in Bowling
Green, Kentucky, any partnership in which Tenant its parent company or any
company owned or controlled by Tenant or its parent company is or may become a
partner; provided, however, that any such assignment of rights, sublease, or
other alienation shall not relieve Tenant from liability for payment of rent or
from compliance with the terms, conditions and covenants of this Lease unless
agreed to in writing by Landlord. Tenant shall have the right, upon notice to
and with consent of Landlord, to pledge, encumber or otherwise assign its
leasehold interest herein as security for the payment of any indebtedness of
Tenant. Any assignment by Tenant of any or all of its rights under this Lease
or subletting by Tenant to any party other than those parties described in this
Article will require the written consent of the Landlord which shall not be
unreasonably withheld, conditioned or delayed. The acceptance of rent from any
other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or to be a consent to the assignment of this Lease,
subletting of the Premises, or other alienation by Tenant.
ARTICLE 12
INDEMNITY
(a) By Tenant. Tenant covenants and agrees that it will
protect, save and keep the Landlord harmless and indemnified against and from
any penalty, damage or charges imposed for
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any violation of any law or ordinance occurring on or after the Rent
Commencement Date, whether occasioned by the act or omission of Tenant or those
holding under Tenant, and that Tenant will at all times protect, indemnify,
save and keep harmless the Landlord against and from all claims, loss, cost,
damage or expense including reasonable attorney's fees arising out of or from
any accident or other occurrence on or about the Premises occurring on or after
the Rent Commencement Date causing injury to any person or property whomsoever
excepting those claims, losses, costs, damages or expenses caused or created by
Landlord or Landlord's employees or agents; and will protect, indemnify, save
and keep harmless the Landlord against and from any and all claims and against
and from any and all loss, cost, damage or expense, including reasonable
attorney fees, arising out of any material failure of Tenant in any respect to
comply with and perform all the requirements and provisions of this Lease from
and after the Rent Commencement Date.
(b) By Landlord. Landlord covenants and agrees that it will
protect, save and keep the Tenant harmless and indemnified against and from any
penalty, damage or charges imposed for any violation of any law or ordinance,
whether occasioned by the act or omission of Landlord or those holding under
Landlord and that Landlord will protect, indemnify, save and keep harmless the
Tenant against and from any and all claims, loss, cost, damage or expense,
including reasonable attorney fees, arising out of Landlord's act or omissions
or out of any material failure of Landlord to comply with and perform all the
requirements and provisions of this Lease.
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ARTICLE 13
DEFAULT; TERMINATION OF LEASE BY LANDLORD; REMEDIES
(a) Termination at End of Term. Unless otherwise sooner
terminated as elsewhere herein provided, this Lease shall terminate upon the
expiration of the Initial Term or any Extension Term thereof.
(b) Default by Tenant. The following shall constitute a
default by Tenant which, if not cured within the applicable time permitted
below, shall give rise to Landlord's remedies set forth hereinbelow, which
shall be in addition to all other remedies available to Landlord in law or in
equity:
(i) Failure to make when due any payment of rent,
unless such failure is cured within five (5) days after notice of default.
(ii) Failure to observe or perform any of the other
terms of this Lease within 30 days after written notice to Tenant; provided,
however, if such failure cannot be cured within said 30 day period, Tenant
commences such cure and thereafter diligently pursues said cure to completion;
including without limitation failure to keep and maintain the Premises in good
repair;
(iii) Abandonment of Premises, or vacation of all or a
substantial portion of the premises for more than fifteen (15) consecutive
days; casualty or condemnation shall not constitute abandonment for purposes of
this Lease
(iv) Making a general assignment for the benefit of
Tenant's creditors;
(v) Filing by or against Tenant of a petition in
bankruptcy or a petition for reorganization or under any law relating to
bankruptcy which is not discharged within ninety (90) days of the filing
thereof;
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(vi) Appointment of a trustee or receiver to take
possession of substantially all Tenant's assets located on the Premises where
possession is not restored within ninety (90) days;
(vii) Attachment, execution or other judicial seizure
of substantially all of Tenant's assets located on the Premises;
(viii) Tenant's insolvency or admission of inability
to pay its debts as they mature; or
(ix) If any representation, warranty or other
statement of fact contained herein shall be materially false or misleading when
made.
(c) Re-Entry. In the event of any uncured default by Tenant
whether or not Landlord terminates this Lease, Landlord may without notice
enter upon the Premises and the Improvements thereon, either with or without
process of law, and at its election remove all persons therefrom and hold the
Premises as if this Lease had not been made; however, before such entry,
Landlord must give Tenant notice of Landlord's intention and an opportunity to
exercise Tenant's Purchase Option.
(d) Acceleration of Rent. In the event of default by Tenant
unless cured as described above, then the rent for the balance of the Initial
Term or the Extension Term or any remaining part thereof at the option of
Landlord shall be due and payable as if by the terms of this Lease it were
payable in advance, and Landlord may immediately proceed to distrain, collect,
or bring action for the whole rent or any part thereof as if such were in
arrears. In case of termination necessitated by Tenant's uncured default,
Landlord shall be entitled to recover from Tenant all loss of rents and other
reasonable and customary costs and expenses Landlord may incur by reason of
such termination, including but not limited to the costs of repairing and
restoring the Premises to rentable condition, costs of renting the Premises to
another tenant, loss or diminution of rents and other damages; and all
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reasonable attorney fees and expenses incurred in enforcing any of the terms of
this Lease. Landlord shall use its best efforts to relet the Premises and
shall credit Tenant with the net rents received by Landlord from such
reletting.
(e) Effect of Termination. Nothing contained herein shall be
construed as giving Tenant, after the Lease has been terminated, any right,
title or interest whatsoever in or to the Premises or as giving or reserving to
Tenant any right of any kind whatever under this Lease, or in or to the
Premises. Upon termination of the Lease any and all interest of Tenant therein
shall forthwith cease and terminate and no compensation, damage or allowance
therefor shall be made to Tenant nor shall Tenant be entitled thereto.
Provided, however, in the event of such termination Tenant shall be allowed a
reasonable time not exceeding 30 days to remove from the Premises any and all
of Tenant's personal property.
ARTICLE 14
HOLDOVER; SURRENDER OF PREMISES
(a) Holdover. In the event Tenant remains in possession of
the Premises after the Initial Term or any Extension Term of this Lease, Tenant
shall be deemed a tenant from month to month only, at 120% of the monthly
rental on the date of expiration of the Initial Term or Extension Term; and
governed in all respects, except as to duration of the term, by the provisions
of this Lease.
(b) Surrender. Tenant covenants and agrees to deliver up and
surrender to the Landlord possession of the Premises upon expiration of this
Lease, or its earlier termination as herein provided, in as good condition and
repair as the same shall be on the Rent Commencement Date of this Lease,
ordinary wear and tear excepted. Tenant shall at Tenant's expense repair all
damage to the Premises caused by Tenant's removal so as to restore the Premises
to the condition in which they were prior to
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the installation of the articles so removed, ordinary wear and tear excepted.
Notwithstanding the foregoing, Tenant will not remove any structural item, but
Tenant may, at Tenants option, remove trade fixtures.
(c) Landlord's Inspection. Landlord shall have ten (10)
Business Days from the expiration or termination of this Lease to conduct an
inspection to determine if the Premises are in a condition of compliance with
the terms of this Lease. To the extent Landlord's requirements for restoration
require Tenant to remain longer in the Premises than the Expiration Date,
Tenant is not obligated to pay Base Rent. Failure to notify Tenant in writing
within said 10 Business Days of any unperformed obligations or covenants of
Tenant in connection with this Lease will be deemed to be an acceptance of the
surrendered Premises by Landlord.
ARTICLE 15
NOTICES
Any notice which Landlord or Tenant may be required to give to the
other party shall be in writing and shall be personally delivered or sent by
certified mail, return receipt requested, or by nationally recognized overnight
courier service and mailed to the other party at the address specified herein,
or to such other address as either party shall have designated in writing to
the other, and the time of the rendition of such notice shall be upon personal
delivery or three days after being deposited in an official United States Post
Office, certified mail, return receipt requested, postage prepaid, or upon the
next Business Day following mailing if sent by overnight courier:
To Landlord: Bowling Green-Warren County Industrial
Authority IV, Inc.
812 State Street
Bowling Green, KY 42101
Attn: Dennis Griffin
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With copies to: Trans Financial Bank, N.A.
500 East Main
P.O. Box 90001
Bowling Green, KY 42102-9001
Attn: Tommy Cole
Stephen B. Catron
Catron, Kilgore & Begley
P. O. Box 280
918 State Street
Bowling Green, KY 42102-0280
To Tenant: Kerr Group, Inc.
1840 Century Park East
Los Angeles, CA 90067
Attn: Larry Knipple
With copy to: Steven J. Gartner, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Refusal to accept a notice delivered by Certified Mail shall be deemed
receipt thereof effective on the date of refusal or the date said notice is
returned unclaimed.
ARTICLE 16
UTILITIES
Tenant covenants and agrees to pay for all public utility services
rendered or furnished to the Premises on and after the date of this Lease,
including heat, water, gas, electricity, sewer rental and the like, together
with all taxes levied or other charges on such utilities. All utilities
servicing the Premises shall be separately metered to Tenant or its successors
in interest. In no event shall Landlord be liable for the quality, quantity,
failure or interruption of such service to the Premises, unless caused by
Landlord or Landlord's employees or agents.
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ARTICLE 17
TAXES AND ASSESSMENTS
After the date of this Lease, Tenant, as part of the consideration for
this Lease and in addition to the rentals hereinabove provided for, will, as
the same become due and payable, pay all taxes and assessments, licenses, fees,
charges and levies, general and special, and other charges and burdens of any
and every kind that are now or hereafter levied or imposed upon the Premises or
upon any part thereof, which are imposed, levied or assessed by a governmental
taxing authority, and which are payable by Landlord after acquisition of title
by Landlord, and Tenant will promptly upon request, supply Landlord with
receipts or other data satisfactory to Landlord showing the payment of the
same. Notwithstanding the foregoing, in no event shall Tenant be required to
pay any corporate, inheritance, franchise, income or similar tax assessed
against Landlord. Tenant shall have the right to contest any taxes or
assessments imposed upon the Premises during the Term hereof and Landlord shall
cooperate in the prosecution of such contest.
The parties acknowledge that at the date of this Lease, pursuant to
KRS 152.910 and KRS 152.920, the Premises is exempt from real estate taxation
of the City of Bowling Green so long as it is owned by Landlord and used as an
industrial development site. Tenant's abatement will continue for the first
five years of the Initial Term. If Landlord shall transfer, sell, assign or
convey its interest in the first five years of the Initial Term, Landlord shall
assume all of Tenant's obligations to pay any city property taxes and other
taxes and fees during the five year period which would not otherwise be payable
if such transfer had not taken place.
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ARTICLE 18
DESTRUCTION BY FIRE OR CASUALTY
(a) Partial Damage. Except as provided in (b) below, if the
Premises shall be partially damaged by fire or other cause without the fault or
neglect of Tenant, the damages shall be repaired by and at the expense of
Tenant, and until such repairs shall be made, the rent shall be abated
according to the part of the Premises which is unusable by Tenant. All
insurance proceeds in respect of such damage shall be paid to Tenant for
restoration of the Premises. If such partial damage is due to the fault or
neglect of Tenant, the damages shall be repaired by and at the expense of
Tenant, but there shall be no apportionment or abatement of rent. No penalty
or default hereunder shall accrue for delay which may arise by reason of
adjustment of fire insurance on the part of Landlord or Tenant. The obligations
of the Tenant under this paragraph shall be limited to such insurance proceeds
as are payable to Tenant by reason of the loss.
(b) Substantial Damage. If the Premises are substantially
damaged or are rendered substantially untenantable by fire or other casualty,
the Landlord shall, within thirty (30) days of such casualty, determine whether
to restore or rebuild the Premises and give Tenant written notice thereof. If
the Landlord decides that the Premises shall not be rebuilt, the Lease shall
thereupon terminate, and Tenant's liability for rent shall cease as of the date
of such casualty. If the Landlord decides that the Premises shall be repaired
or rebuilt, then Landlord shall immediately commence such repair or rebuilding,
and shall use all reasonable efforts to substantially complete all such repairs
within one hundred-eighty (180) days from the date of such casualty, and
Tenant's liability for rent shall abate from the date of the casualty until the
date on which the Premises shall have been rebuilt and are usable by Tenant.
All insurance proceeds in respect of such damage shall be paid to Landlord for
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restoration of the Premises. All obligations of the Landlord shall be limited
to such insurance proceeds as may be payable by reason of the loss.
In the event Landlord determines not to rebuild the Premises, rent
shall abate as of the date of the casualty, and all insurance proceeds shall be
paid as follows: (i) first, to the Lenders, the unpaid principal and accrued
interest on the Loans; (ii) second, to the Landlord, the cost of restoring the
Land to a safe and neat condition; and (iii) the balance, if any, to Tenant.
(c) Personalty Proceeds. Notwithstanding the foregoing,
neither Landlord nor its Lenders shall have any right, claim or interest in the
insurance proceeds paid in respect of Tenant's equipment, inventory or other
personal property; or additions, improvements or alterations installed on the
Premises by Tenant.
ARTICLE 19
CONDEMNATION
(a) Taking. If the whole or a substantial portion of the
Premises shall be condemned or taken either permanently or temporarily for any
public or quasi-public use or purpose under any statute or by right or by
private purchase in lieu thereof, then and in that event, to the extent not
previously terminated, this Lease shall terminate as of the date of possession
of the Premises by such condemning authority, and Tenant shall be released of
any further obligations hereunder including the responsibility to pay rent. In
the event less than a substantial portion of the Premises shall be so taken but
the Premises, in Tenant's sole determination, are not usable by Tenant, Tenant,
at its option, may cancel and terminate this Lease by furnishing written notice
to Landlord of its intent to terminate and cancel the Lease, which notice must
be furnished within sixty (60) days after the date of possession of the
Premises by such condemning authority and the Lease shall terminate within
thirty (30) days from
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receipt by Landlord of such written notice. In the event less than a
substantial a portion of the Premises shall be so taken, but in Tenant's sole
determination, the Premises are usable by the Tenant, the Lease shall continue
in full force and effect, provided that the rent shall be reduced
proportionately based on the useability of the remainder of the Premises.
Provided, in no event shall the Base Rent be reduced below the amount of the
debt service to the Lenders. "Substantial portion" shall be deemed to mean
twenty percent (20%) of the designated manufacturing floor area of the
Premises.
(b) Compensation Award. In the event the Premises or any
part thereof shall be permanently taken or condemned or transferred by
agreement in lieu of condemnation for any public or quasi-public purpose by any
competent authority during any Term of this Lease, the compensation award
therefor shall be paid as follows: (i) First, to the Tenant, if Tenant has not
terminated the Lease as provided herein, the amounts reasonably necessary to
restore the balance of the Premises; (ii) Second, to the Lenders, the unpaid
principal and accrued interest on the Loans; (iii) Third, to Landlord, the
value of Landlord's reversionary interest in the portion of the Premises which
exceeds the sums paid to the Lenders under (ii), above, and (iv) The balance,
if any, to Tenant. Tenant shall be entitled to pursue and collect a
compensation award for the value of its leasehold interest including extension
Terms and purchase option, relocation expenses, and the value of the fixtures,
additions and alterations and other equipment installed by Tenant in the
Premises.
ARTICLE 20
SUBORDINATION, ATTORNMENT AND NONDISTURBANCE
(a) Tenant's Instruments. Tenant covenants and agrees to
execute and deliver upon request of Landlord such instrument(s) subordinating
this Lease to the rights of the Lenders; provided, however, that any such
agreement or subordination shall provide that, so long as Tenant is
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not in default of this Lease, any mortgagee to whose interest this Lease shall
become subordinate shall not disturb the Tenant's peaceful and lawful
possession or other rights under this Lease. In the event of a sale or
assignment of Landlord's interest in the Premises, Tenant shall attorn to and
recognize such purchaser as Landlord under this Lease, provided that such sale
or assignment is made subject to this Lease and the rights of Tenant in the
Premises.
(b) Landlord's Instruments. The Landlord agrees to execute
and deliver, upon the reasonable request of Tenant, an instrument stating that
this Lease is in full force and effect; the date through which the last rent
has been paid; the amount of rent currently then being paid and whether or not
the Tenant is in breach of any other terms and conditions of this Lease.
ARTICLE 21
ACCESS TO LEASED PREMISES
(a) By Landlord. Tenant agrees to permit, in case of due
cause and receipt of notification at least forty-eight (48) hours in advance,
or in case of emergency with as much prior notice as is reasonable under the
circumstances, any of the Landlord's agents to inspect or examine the Premises
and to permit at any reasonable time Landlord to make such repairs, which
Tenant has filed so to do in accordance with Article 8 without the same being
construed as an eviction of Tenant in whole or in part; and the rent shall in
nowise abate while such repairs are being made by reason of loss or
interruption of the business of Tenant because of the prosecution of such work.
Due to the proprietary nature of Tenant's business, Landlord's
officers, employees, agents or contractors will enter into a nondisclosure
agreement acceptable to Tenant prior to entry and/or the performance of such
work hereunder, if requested by the Tenant.
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(b) By Prospective Tenants. For a period of ninety (90) days
prior to expiration of the Term of this Lease, Landlord shall have the right,
upon giving Tenant forty-eight (48) hours notice, to enter upon the Premises
during normal business hours for the purpose of exhibiting the same to
prospective tenants or purchasers. During said period Landlord may place signs
in, or upon the Premises to indicate the same are for rent or sale, which signs
shall not be removed, obliterated or hidden by Tenant but which signs shall be
located as to not interfere with the operations of Tenant on the Premises.
Due to the proprietary nature of Tenant's business, in the event that
Tenant is still in operation at the time when such Premises are exhibited to
prospective tenants or purchasers, Landlord shall obtain a nondisclosure
agreement acceptable to Tenant from such prospective tenant or purchaser prior
to exhibiting the Premises, if requested by the Tenant.
ARTICLE 22
PARTIES' REMEDIES CUMULATIVE;
NO WAIVER OR FORBEARANCE; SEVERABILITY
Except insofar as this is inconsistent with or contrary to any other
provision of this Lease, no right or remedy herein conferred upon or reserved
to either party is intended to be exclusive of any other right or remedy, and
each and every right and remedy given hereunder or now or hereafter existing at
law or in equity or by statute shall be cumulative. Except to the extent that
either party may have otherwise agreed in writing, no waiver by such party of
any violation or nonperformance by the other party of any of its obligations,
agreements or covenants hereunder shall be deemed to be a waiver of any
subsequent violation or nonperformance of the same or any other covenant,
agreement or obligations, nor shall any forbearance by either party to exercise
a remedy for any such violation or
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nonperformance by the other party be deemed a waiver by such party of its
rights or remedies with respect to such violation or nonperformance.
If any provision of this Lease or the application thereof to any
person or circumstance should, for any reason and to any extent, be invalid,
unenforceable or illegal, the remainder of this Lease and the application of
such provision to other persons or circumstances shall not be affected thereby,
but rather shall be enforced to the greatest extent permitted by law and a
rapid remedy or replacement shall be sought for the provision found to be
invalid, unenforceable or illegal.
ARTICLE 23
LANDLORD'S COVENANT OF QUIET ENJOYMENT
Landlord, for itself and for and on behalf of all its mortgagees,
covenants and agrees that Tenant shall, at all times during said Term, have the
peaceable and quiet enjoyment and possession of the Premises without any manner
of hindrance from Landlord or any persons lawfully claiming through Landlord,
except as to such portion of the Premises as shall be taken under the power of
eminent domain. Landlord agrees to use its best efforts after request by Tenant
to obtain written confirmation of such right of quiet enjoyment from all
current mortgagees, if any, and from all future mortgagees of Landlord.
ARTICLE 24
TENANT'S COVENANTS AND DISCLOSURES
Tenant covenants with and warrants to Landlord the following:
(a) Employees. Tenant shall, within 3 years of the Rent
Commencement Date, create jobs for 75 full time equivalent employees; and
during the remaining term and extension terms, maintain an annual average of 75
full time equivalent employees. Tenant acknowledges that any
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downward deviation from said full time equivalent employees will alter the
financing of the Construction Costs and Tenant agrees to be responsible for and
make up any deficit in the financing of the Construction Costs caused by a
decrease in the number of full time equivalent employees as it shall relate to
the KDFA Loan. Landlord has an option to require Tenant to prepay all or any
portion of the KDFA Loan which shall be deemed an acceleration in Rent.
(b) Compliance Review Disclosures. Tenant shall provide to
Landlord copies of written semi-annual compliance reviews of its water and/or
waste treatment procedures by a reputable engineering firm, within 10 days of
receipt thereof by Tenant, to commence within six months of the Rent
Commencement Date. Tenant shall bear the cost of such reviews throughout the
Term of this Lease.
(c) Financial Disclosure. Throughout the Term of this Lease,
Tenant shall at Tenant's cost provide to Landlord the following:
(i) Copies of quarterly and annual financial
statements in the same general format as those distributed to others having a
similar need to know consisting of the balance sheet, statement of income,
statement of cash flows, copies of the operating statements and the management
discussion and analysis letter for the entire Kerr Group, Inc. within 120 days
of the end of any fiscal year or within 60 days of the end of any fiscal
quarter.
(ii) Copies of all Securities and Exchange Commission
filings within ten (10) days of any filing.
(d) Improvements Constructed by Tenant. Tenant shall at its
cost construct improvements to the Premises of not less than $500,000.00, which
shall be specifically identified in a List provided to Landlord by Tenant along
with evidence of costs of each such improvement within
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ninety (90) days of the Rent Commencement Date. All items on this List shall
become the property of Landlord upon termination of this Lease, notwithstanding
any other conditions of this Lease; however, all equipment is to become the
property of Tenant.
(e) Jobs Incentive Program. Tenant will supply the necessary
information as required by the City of Bowling Green in order to assist
Landlord in obtaining a Jobs Incentive Program loan; provided however, that
Tenant shall have no liability, direct or indirect, for such loan.
ARTICLE 25
INTEREST ON PAST DUE OBLIGATIONS
Except as expressly provided herein, any amount due to Landlord or
Tenant not paid within ten (10) days after the date due shall bear interest at
the Trans Financial Bank's (or its successor) prime rate plus 1% from date due
until paid in full. Payment of such interest shall not excuse or cure any
default by Tenant hereunder.
ARTICLE 26
TITLES OF ARTICLES
The titles of the articles and sections throughout this Lease are for
convenience of reference only, and the words contained therein shall in no way
be held to explain, modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Lease.
ARTICLE 27
FORCE MAJEURE
If either Landlord or Tenant is prevented or hindered from timely
satisfying the terms or conditions of this Lease because of a shortage or
inability to obtain materials or equipment, strikes or other labor
difficulties, governmental restrictions, fire, casualty, acts
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of God, or any other cause outside that party's reasonable control, said party
shall be permitted an extension of time of performance by the number of days
during which such performance was prevented or hindered. This provision shall
not affect the Rent Commencement Date or Tenant's obligation to begin paying
Base Rent on that date.
ARTICLE 28
RECORDING OF MEMORANDUM OF LEASE
Neither party shall record this Lease. However, the parties agree to
execute a memorandum of this Lease in recordable form, provided that such
memorandum shall disclose only the description of the Premises, the length of
the Initial Term and Extension Term, the purchase option and the names of the
parties. The cost of such recording shall be borne by the Tenant.
ARTICLE 29
ENTIRE AGREEMENT
This writing contains the entire agreement between the parties hereto
with respect to the leasing of the Premises and shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky; and no
agent, representative, salesman or officer of either Tenant or Landlord has
authority to make or has made any statement, agreement or representations,
either oral or written, in connection herewith, modifying, adding to or
changing the terms and conditions herein set forth. No dealings between the
parties or custom shall be permitted to contradict, vary, add to or modify the
terms hereof. No modification of this Lease shall be binding unless such
modification shall be in writing and signed by the parties hereto.
33
<PAGE> 39
ARTICLE 30
COMPLIANCE WITH LAWS
Landlord represents and warrants to Tenant that the Premises are in
full compliance with all applicable laws, statutes, ordinances, orders, rules,
regulations and requirements of all federal, state and municipal governments,
and the appropriate agencies, offices, departments, boards, and commissions
thereof.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease to
be signed by their duly authorized representatives, in duplicate, this the 30th
day of June, 1994.
TENANT:
KERR GROUP, INC.
By: /s/ D. G. STRICKLAND
--------------------------------------
D. G. STRICKLAND
Senior Vice President, Finance
STATE OF KENTUCKY )
) SS
COUNTY OF WARREN )
The foregoing Lease was subscribed and sworn to before me this 30th day,
of June, 1994, by D. G. Strickland to me personally known, the Senior Vice
President, Finance, Kerr Group, Inc., a corporation, and that said instrument
was signed on behalf of said corporation by proper authority and the instrument
was the act of the corporation for the purposes stated above.
--------------------------------------
NOTARY PUBLIC
Commission Expires: 1-28-97
34
<PAGE> 40
LANDLORD:
BOWLING GREEN-WARREN COUNTY
INDUSTRIAL AUTHORITY IV, INC.
By: /s/ DENNIS GRIFFIN
--------------------------------------
DENNIS GRIFFIN, President
COMMONWEALTH OF KENTUCKY )
) SS
COUNTY OF WARREN )
The foregoing Lease was subscribed and sworn to before me this 30th day,
of June, 1994, by Dennis Griffin to me personally known, the President of
Bowling Green-Warren County Industrial Authority IV, Inc., a corporation, and
that said instrument was signed on behalf of said corporation by proper
authority and the instrument was the act of the corporation for the purposes
stated above.
--------------------------------------
NOTARY PUBLIC
My Commission Expires: 1-28-97
35
<PAGE> 41
Exhibit 1(k)
Diagram of property under lease excerpted from Plat Book 25 page 124 which
shows the property boundaries and the planned location of the railroad
right-of-way for the rail spur.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND CONSOLIDATED BALANCE
SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 2,926
<SECURITIES> 0
<RECEIVABLES> 22,342
<ALLOWANCES> 724
<INVENTORY> 29,138
<CURRENT-ASSETS> 57,491
<PP&E> 98,373
<DEPRECIATION> 55,328
<TOTAL-ASSETS> 118,909
<CURRENT-LIABILITIES> 19,055
<BONDS> 50,000
<COMMON> 2,110
0
9,748
<OTHER-SE> 19,362
<TOTAL-LIABILITY-AND-EQUITY> 118,909
<SALES> 111,008
<TOTAL-REVENUES> 111,305
<CGS> 76,749
<TOTAL-COSTS> 76,749
<OTHER-EXPENSES> 25,337
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,727
<INCOME-PRETAX> 5,492
<INCOME-TAX> 2,320
<INCOME-CONTINUING> 3,172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,172
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
</TABLE>
