UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: APRIL 3, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act
For the transition period from ______________ to ________________
COMMISSION FILE NUMBER 0-1298
ADVANCED TECHNICAL PRODUCTS, INC.
(Exact name of registrant as Specified in Its Charter)
Delaware 11-1581582
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3353 Peachtree Road, Suite 920, Atlanta, Georgia 30326
(Address of Principal Executive Offices)
(404) 231-7272
(Issuer's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) filed all reports required to
be filed by Section 13 of 15(d) of the Securities Exchange Act during the past
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 aggregate number of shares of Common Stock outstanding as of April 30, 1998
was 5,220,416.
Page 1 of 13
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ADVANCED TECHNICAL PRODUCTS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements..........................................3
Item 2. Management's Discussion and Analysis or Plan of Operation
General.......................................................9
Results of Operations.........................................9
Financial Condition and Liquidity.............................9
Recent Accounting Pronouncements.............................10
Year 2000 Issues.............................................10
Forward Looking Statements - Cautionary Factors..............11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................12
Item 2. Changes in Securities and Use of Proceeds....................12
Item 3. Defaults Upon Senior Securities..............................12
Item 4. Submission of Matters to a Vote of Security Holders..........12
Item 5. Other Information............................................12
Item 6. Exhibits and Reports on Form 8-K.............................12
Page 2 of 13
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ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED APRIL 3, 1998 AND APRIL 4, 1997
(UNAUDITED, IN THOUSANDS, EXCEPT EPS)
Quarter Quarter
Ended Ended
April 3, April 4,
1998 1997
------- --------
Revenues ................................................. $30,813 $ 23,822
Cost of sales ............................................ 23,758 18,736
------- --------
Gross profit ................................... 7,055 5,086
General and administrative and other expenses ............ 6,069 4,927
------- --------
Operating income ............................... 986 159
Interest expense ......................................... 806 478
------- --------
Income (loss) before taxes ..................... 180 (319)
Income tax provision (benefit) ........................... 69 (123)
------- --------
Net income (loss) .............................. $ 111 $ (196)
======= ========
Earnings (loss) per share:
Basic .......................................... $ 0.02 $ (0.05)
======= ========
Diluted ........................................ $ 0.02 $ (0.05)
======= ========
Weighted average number of common shares outstanding:
Basic .......................................... 5,220 3,944
======= ========
Diluted ........................................ 5,499 4,134
======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
Page 3 of 13
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ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF APRIL 3, 1998 AND DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
APRIL 3,
1998 DECEMBER 31,
ASSETS (UNAUDITED) 1997
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .................................... $ 386 $ 494
Accounts receivable (net of allowance for doubtful
accounts of $530 and $449 as of April 3, 1998
and December 31, 1997) ................................... 19,791 23,417
Inventories and costs relating to long-term contracts
and programs in process, net of progress payments ........ 41,530 34,633
Prepaid expenses ............................................. 1,093 923
Deferred income taxes ........................................ 759 961
---------- ----------
Total current assets ..................... 63,559 60,428
---------- ----------
Property, plant and equipment ................................. 26,505 25,709
Less-accumulated depreciation ................................. 8,892 8,150
---------- ----------
Net Property, Plant and equipment ........ 17,613 17,559
---------- ----------
Deferred income taxes ......................................... 204 62
Other assets .................................................. 7,742 7,635
========== ==========
Total assets ............................. $ 89,118 $ 85,684
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................. $ 11,267 $ 12,003
Accrued expenses ............................................. 6,378 7,637
Current portion of capital lease obligation .................. 153 150
Short-term debt .............................................. 21,956 19,430
---------- ----------
Total current liabilities ................ 39,754 39,220
LONG-TERM LIABILITIES:
Long-term debt, net of current portion ....................... 19,421 16,678
Capital lease obligation, net of current portion ............. 304 325
Other liabilities ............................................ 2,054 1,967
---------- ----------
Total liabilities ........................ 61,533 58,190
Mandatorily redeemable preferred stock, 8% cumulative,
redeemable, $1.00 par value, 1,000,000 authiorized,
issued and outstanding ....................................... 1,000 1,000
SHAREHOLDERS' EQUITY:
Preferred stock, undesignated, 1,000,000 shares
authorized, no shares issued and outstanding ............ -- --
Common stock, $.01 par value, 30,000,000 shares
authorized, 5,220,052 shares issued and outstanding
as of April 3, 1998 and December 31, 1997 ................ 52 52
Additional paid-in capital ................................... 16,506 16,506
Retained Earnings ............................................ 10,467 10,376
Less-
Notes receivable from officers ........................... (135) (135)
Additional minimum pension liability ..................... (305) (305)
---------- ----------
Total shareholders' equity ............... 26,585 26,494
========== ==========
Total liabilities and shareholders' equity $ 89,118 $ 85,684
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
Page 4 of 13
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ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED APRIL 3, 1998 AND APRIL 4, 1997
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER QUARTER
ENDED ENDED
APRIL 3, APRIL 4,
1998 1997
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................ $ 111 $ (196)
Adjustments to reconcile net income (loss)
to net cash provided by
(used in) operating activities -
Depreciation and amortization ......................... 815 285
Deferred income taxes, net ............................ 60 --
Decrease in accounts receivable ....................... 3,626 4,598
Increase in inventories ............................... (6,897) (3,179)
(Increase) decrease in prepaid expenses................ (170) 270
Increase in other noncurrent assets ................... (94) (197)
Increase (decrease) in accounts payable ............... (736) 4,002
Decrease in accrued expenses .......................... (1,144) (1,147)
-------- -------
Net cash provided by (used in) operating activities (4,429) 4,436
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ..................................... (779) (119)
Cash payments for businesses acquired .................... (115) --
-------- -------
Net cash used in investing activities ............. (894) (119)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings ................................... 13,267 --
Repayment of borrowings .................................. (8,016) (5,234)
Payments under capital lease obligations ................. (36) --
-------- -------
Net cash provided by (used in) financing activities 5,215 (5,234)
-------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS ......................... (108) (917)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................... 494 1,059
======== =======
CASH AND CASH EQUIVALENTS, END OF PERIOD .......................... $ 386 $ 142
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ................................... $ 976 $ 449
======== =======
Cash paid for income taxes ............................... $ 1,426 $ 55
======== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
Page 5 of 13
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ADVANCED TECHNICAL PRODUCTS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements
of Advanced Technical Products, Inc. and Subsidiaries (the "Company" or "ATP")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the quarter ended April
3, 1998 are not necesssarily indicative of the results that may be expected for
the year ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Form 10-K for the fiscal year ended December 31, 1997.
2. FORMATION OF THE COMPANY
On October 31, 1997, TPG Holdings, Inc. ("TPG") merged with Lunn
Industries, Inc. ("Lunn"), forming Advanced Technical Products, Inc. Former
TPG and Lunn common shareholders received 8.3028 and 0.1 shares of ATP stock,
respectively, in exchange for each share of the former companies' stock. The
merger agreement specified that 50% of the common stock to be delivered to each
former TPG common shareholder would be held in escrow subject to cancellation
pending the results of TPG's 1997 operations versus net income targets
designated in the agreement. TPG's 1997 net income exceeded the maximum target,
and all of the escrowed shares were released to the former TPG shareholders in
April, 1998.
The operating results of Lunn have been included in the Company's
consolidated financial statements since the date of the acquisition. The
following table presents unaudited pro forma consolidated operating results for
the Company for the quarter ended April 4, 1997 as if the Lunn acquisition had
occurred on January 1, 1997 (in thousands, except per share amounts):
Net revenues $28,843
Net loss (96)
Loss per share - basic (0.02)
Loss per share - diluted (0.02)
The unaudited pro forma consolidated operating results of the Company
are not necessarily indicative of the operating results that would have been
achieved had the merger been consummated at the beginning of the period
presented, and should not be construed as representative of future operating
results.
Page 6 of 13
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3. INVENTORIES
Inventories at April 3, 1998 and December 31, 1997 consisted of the
following (in thousands):
April 3, Dec. 31,
1998 1997
-------- --------
Finished goods $ 1,333 $ 1,236
Work in process 27,148 18,035
Raw materials 25,045 24,297
Progress payments (11,996) (8,935)
-------- --------
$ 41,530 $ 34,633
======== ========
4. DEBT
Debt is summarized as follows (in thousands):
April 3, Dec. 31,
1998 1997
------- -------
Short-term debt:
Revolving loans .................... $19,245 $17,367
Current maturities of
long-term debt .................... 2,711 2,063
------- -------
$21,956 $19,430
======= =======
Long-term debt:
Term and equipment loans ........... $18,700 $12,500
Deferred obligation ................ -- 3,000
Bond payable ....................... 2,600 2,473
Other long-term debt ............... 832 768
Total long-term debt ........ 22,132 18,741
Less current portion ............... 2,711 2,063
------- -------
Long-term debt, net of
current portion .................. $19,421 $16,678
======= =======
In March, 1998, the Company refinanced its revolving and term loans,
consolidating them with one lending institution. The Company's new credit
facility totals $48.0 million consisting of: (1) $27.0 million of revolving
credit against eligible receivable and inventory balances, (2) $18.0 million
term loan and (3) $3.0 million of capital expenditure facility. In connection
with the refinancing, proceeds from the new loans were used to retire the
deferred obligation of $3.0 million which existed at December 31, 1997.
The loans are secured by collateral consisting of substantially all of
the Company's property including inventory, equipment, receivables, general
intangibles, investment property and real property. The interest rates on the
revolving and term loans are set quarterly based on the Company's performance
against debt-to-earnings ratios specified in the agreement. Interest rates can
range from LIBOR (the London Interbank Offered Rates) plus 2.25% to LIBOR plus
1.0% on the revolving loan and from LIBOR plus 2.75% to LIBOR plus 1.5% on the
term loan. The rates in effect for the initial quarter are LIBOR plus 2.0% on
the revolving loan and LIBOR plus 2.5% on the term loan. Interest is paid
monthly in arrears on all loans. The initial term of the new credit facility
extends to December 31, 2000.
Page 7 of 13
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5. EARNINGS PER SHARE
Earnings per share ("EPS") are calculated as follows (in thousands,
except per share amounts):
QUARTER ENDED
------------------
APRIL 3, APRIL 4,
1998 1997
------- -------
Net income (loss) ........................................ $ 111 $ (196)
Less: preferred stock dividends accrued ................. (20) (20)
------- -------
Income (loss) available for common shares
(same for both basic and diluted
EPS calculation) ............................ $ 91 $ (216)
======= =======
Weighted average number of common shares outstanding:
-- Basic ............................................. 5,220 3,944
Add: assumed stock conversions, net of
assumed treasury stock purchases:
-- stock options .................... 240 190
-- stock warrants ................... 39 --
------- -------
-- Diluted ........................................... 5,499 4,134
======= =======
Basic EPS ................................................ $ 0.02 $ (0.05)
======= =======
Diluted EPS .............................................. $ 0.02 $ (0.05)
======= =======
Page 8 of 13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Condensed Consolidated Financial Statements and Notes thereto included
elsewhere herein.
GENERAL
On October 31, 1997, TPG merged into Lunn under the name "Advanced
Technical Products, Inc." Immediately after the merger, the former stockholders
of Lunn owned approximately 26% of ATP and the former TPG stockholders owned
approximately 74% of ATP. For accounting purposes, the merger was treated as a
purchase of Lunn by TPG and the results of operations of Lunn since November 1,
1997 have been included in the consolidated financial statements of ATP.
RESULTS OF OPERATIONS
QUARTER ENDED APRIL 3, 1998 COMPARED WITH THE QUARTER ENDED APRIL 4, 1997
Revenues increased $7.0 million, or 29.3% from $23.8 million in 1997 to
$30.8 million in 1998. Positive revenue variations in 1998 compared to 1997
include (i) $7.9 million of revenues for Lunn operations which were included in
1998, but not included in the results reported for the first quarter of 1997,
which was prior to the merger, (ii) increased shipments of Natural Gas Vehicle
fuel tanks and related products and (iii) increased shipments on shelter
contracts. These increases were partially offset by reduced ordnance product
sales resulting from the substantial completion of a major ordnance delivery
system contract in early 1998.
Gross profit as a percent of revenues increased from 21.4% in 1997 to
22.9% in 1998. The increase is primarily the result of a change in product sales
mix.
General and administrative expenses increased $1.1 million, or 23.2% in
1998, again reflecting the addition of Lunn operations following the merger. As
a percent of revenues, general and administrative expenses decreased from 20.7%
in 1997 to 19.7% in 1998.
Interest expense increased $0.3 million, from $0.5 million in 1997 to
$0.8 million in 1998, as average loan balances have increased as a result of (i)
debt assumed from Lunn in the merger and (ii) higher working capital needs
driven by increasing revenue volume anticipated during the remainder of 1998.
Income taxes increased $192 thousand in 1998 from a benefit of $123
thousand in 1997 to expense of $69 thousand in 1998. The increase reflects
higher pre-tax earnings as the effective tax rate was 38.5% for both years.
FINANCIAL CONDITION AND LIQUIDITY
Cash flow used in operations was $4.4 million for the first quarter of
1998 compared to $4.4 million provided by operations for the first quarter of
1997. Working capital, excluding short-term debt balances, increased $5.1
million in the first quarter of 1998, as a result of the combination of (i) an
increase of $6.9 million in inventory, reflecting a normal build-up on several
major aerospace composites programs which are in the start-up phase, and an
abnormal build-up caused by delays on a major shelter program, (ii) a decrease
of $3.6 million in accounts receivable, as the major portion of the receivables
build-up at December 31, 1997 was converted to cash during the first quarter of
1998, (iii) a decrease of $1.1 million in accrued liabilities caused primarily
by the $1.3 million first quarter, 1998 payment of federal and state income
taxes
Page 9 of 13
<PAGE>
accrued at December 31, 1997 and (iv) a net increase in other working capital
components of $0.7 million. Cash flow of $0.9 million used in investing
activities in the first quarter of 1998 consisted mostly of $0.8 million of
normal sustaining level capital expenditures.
In March, 1998, the Company refinanced its revolving and term loans,
consolidating them with one lending institution. The previous credit facility
totaling $39 million was replaced with a new $48 million credit facility
consisting of: (i) $27 million of revolving credit against eligible receivable
and inventory balances, (ii) a $18 million term loan and (iii) a $3 million
capital expenditure line of credit. The term loan is payable quarterly based on
a seven year amortization period. Interest rates will vary, depending on the
Company's performance, but should be favorable to the previous rates in effect
by at least one-half percentage point for the remainder of 1998 and by one full
percentage point thereafter. The new credit facility will initially be in place
for a period extending to December 31, 2000.
The Company plans to make substantial capital expenditures during the
balance of 1998 primarily for manufacturing equipment to support long-term
aerospace/defense composites structures contracts for both commercial and
military aircraft programs. It is anticipated that the expenditures will be
financed by a combination of cash flows from operations and the equipment loan
portion of the Company's credit facility. The Company is continuing to look for
opportunistic acquisition candidates that will enhance the current operations.
At April 3, 1998, the Company's backlog of orders and long-term
contracts was approximately $557 million compared to $552 million at December
31, 1997 and $356 million at April 4, 1997. The backlog includes firm released
orders of approximately $199 million, $192 million and $119 million at April 3,
1998, December 31, 1997 and April 4, 1997, respectively. The increase in backlog
reflects (i) a change in management's strategy during the past few years in
placing a greater emphasis on obtaining longer-term contracts, (ii) improved
economic conditions in the aerospace industry, (iii) the military's commitment
to combat chemical warfare and (iv) the inclusion of backlog for Lunn operations
included in periods reported following the merger on October 31, 1997.
Management of ATP believes that cash flows from operations and the new $48
million credit facility are adequate to sustain ATP's current operating level
and future short-term growth. However, should circumstances arise affecting cash
flow or requiring capital expenditures beyond those anticipated by the Company,
there can be no assurance that such funds will be available.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," establishes revised
standards for the manner in which public business enterprises report information
about operating segments. The Company does not believe that this Statement will
significantly alter the segment disclosures it currently provides. This
Statement is effective for fiscal years beginning after December 15, 1997.
YEAR 2000 ISSUES
ATP is conducting a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and is
implementing its plan to resolve the issue. The Year 2000 problem is a result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of ATP's programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a major system failure or miscalculations. ATP presently
believes that, with modifications to existing software and converting to new
software, the Year 2000 problem will not pose significant operational problems
for ATP's computer systems as so modified and converted and that such
modifications and conversions will not have a material adverse effect on ATP's
financial condition or results from operations.
Page 10 of 13
<PAGE>
FORWARD LOOKING STATEMENTS - CAUTIONARY FACTORS
This Report on Form-10Q contains forward-looking statements within the
meaning of the securities laws. The forward-looking statements are those that do
not state historical fact and are inherently subject to risk and uncertainties.
The forward-looking statements contained herein are based on current
expectations and entail various risks and uncertainties which could cause actual
results to differ materially from those projected in such forward-looking
statements. For additional information identifying such risks and uncertainties,
see the Company's 1997 Annual Report on Form 10-K (Item 7, under the heading
"Factors Affecting Future Operating Results").
Page 11 of 13
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries is a party to, nor is
their property the subject of, any material pending legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.29 -- Lease Agreement dated January 21, 1998 by and between FRP Lakeside
L.P., as landlord, and Alcore, Inc., as tenant.
10.30 -- Lease Agreement dated April 14, 1998 by and between Mansell Overlook
200, LLC, and Advanced Technical Products, Inc.
27.1 -- Financial Data Schedule
- -------------------
(b) Reports on Form 8-K.
Current Report on Form 8-K filed March 12, 1998 reporting under Item
5 the Company's earnings for the first quarter of 1998.
Page 12 of 13
<PAGE>
ADVANCED TECHNICAL PRODUCTS, INC.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADVANCED TECHNICAL PRODUCTS, INC.
Dated: May 14, 1998 By: /s/ GARRETT L. DOMINY
Garrett L. Dominy
Executive Vice President, Chief
Financial and Accounting Officer,
Treasurer and Assistant Secretary
Page 13 of 13
<PAGE>
EXHIBIT INDEX
10.29 -- Lease Agreement dated January 21, 1998 by and between FRP Lakeside
L.P., as landlord, and Alcore, Inc., as tenant.
10.30 -- Lease Agreement dated April 14, 1998 by and between Mansell Overlook
200, LLC, and Advanced Technical Products, Inc.
27.1 -- Financial Data Schedule
EXHIBIT 10.29
LEASE AGREEMENT
FRP LAKESIDE L.P., a
Maryland limited partnership
and
ALCORE, INC., a
Delaware corporation
<PAGE>
TABLE OF CONTENTS
PAGE
1. Property............................................................. 1
2. Term................................................................. 2
3. Construction and Alterations......................................... 3
4. Rent................................................................. 4
5. Security Deposit..................................................... 5
6. Use.................................................................. 5
7. Utilities............................................................ 6
8. Use of Roof.......................................................... 6
9. Repairs and Maintenance.............................................. 6
10. Real Estate Taxes.................................................... 8
11. Alterations.......................................................... 9
12. Liens................................................................ 9
13. Compliance with Laws and Regulations/Hazardous Materials............. 9
14. Inspection by Landlord.............................................. 10
15. Indemnification; Liability Insurance................................ 11
16. Casualty Insurance; Damage or Destruction........................... 11
17. Eminent Domain...................................................... 13
18. Default............................................................. 13
19. Quiet Enjoyment; Estoppel; Subordination............................ 16
20. Assignment.......................................................... 17
21. Applicable Law...................................................... 18
22. Notices............................................................. 18
23. Tenant Financial Statements......................................... 19
24. Brokerage........................................................... 19
25. Successors and Assigns.............................................. 19
26. Surrender of the Property........................................... 20
27. Renewal Option...................................................... 20
28. Ownership of The Property/Declarations of Covenants................. 21
29. Force Majeure....................................................... 21
30. Right of First Refusal.............................................. 22
31. Recordation......................................................... 22
32. Guaranty............................................................ 22
33. Exhibits............................................................ 23
<PAGE>
EXHIBITS
Exhibit A Site Plan depicting Access Easement and Loading Dock Easement
Exhibit B Tenant's Space Plan
Exhibit B-1 Plans and Specifications
Exhibit C Commencement Agreement
Exhibit D Guaranty
Exhibit E Lakeside Business Park Declaration of Covenants and Restrictions
Land Use, Architectural Control and Common Area
Exhibit F Lakeside Business Park Declaration of Covenants, Conditions and
Restrictions Storm Water Management
<PAGE>
LEASE AGREEMENT
THIS LEASE is made this 21st day of January, 1998, by and between FRP
LAKESIDE L.P., a Maryland limited partnership (hereinafter called "LANDLORD")
and ALCORE, INC., a Delaware corporation (hereinafter called "TENANT").
WITNESSETH:
That for and in consideration of the rent hereinafter reserved, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord hereby leases to Tenant, and Tenant hereby rents from
Landlord the property described in Section I, upon the following terms:
1. PROPERTY
The property leased hereby (hereinafter called "PROPERTY") is (a)
the 5.23 acres, more or less, referred to as Lot #7 (Harford County property tax
account #A-01-302531) in the Lakeside Business Park inclusive of all the
improvements existing and proposed thereon pursuant to the plans and
specifications attached hereto and referred to as EXHIBITS A, B AND B-1
inclusive of the 110,875 square feet, more or less, of space under construction
as of the date hereof (the "BUILDING"), and (b) the right to use in common with
others those portions of land shown highlighted on EXHIBIT A and not part of Lot
7, all of which shall be the subject of future easements running to the benefit
of Lot 7 as hereafter described.
The Building shall be constructed in accordance with EXHIBITS B AND
B-1. Upon completion, the Property's address will be 1502 Quarry Drive,
Edgewood, Maryland 21040. Tenant, its agents, employees and invitees shall have
the exclusive right to use all of the driveways, walkways, parking areas and
other areas and facilities of the Property, except for the two proposed easement
areas indicated on EXHIBIT A attached hereto.
Landlord confirms it is the owner of the parcels bordering the
property on its north, south, and west boundaries. At such time as Landlord
deems appropriate, but not later than the development and/or subdivision of
proposed Lot 6, Landlord will subdivide the parcel bordering the Property and,
in conjunction with said subdivision, Landlord will record two easements
affecting the Property, which easements shall be in form and content reasonably
satisfactory to Tenant. The first easement (highlighted in yellow on EXHIBIT A
and hereafter, the "ACCESS EASEMENT") shall provide for vehicular and pedestrian
ingress and egress to and from proposed Lots 5 and 6, and to and from Lot 7 via
the road on the west side of the Property. The Access Easement shall burden that
portion of Lot 7 contained therein. The Access Easement shall benefit Lot 7 to
the extent of that portion thereof not now contained in Lot 7. Until Lots 5
and/or 6 are subdivided, Tenant shall be granted a non-exclusive right to use
the Access Easement, and any maintenance required as a result of Tenant's use of
the Access Easement during such period shall be at Tenant's expense. Upon
commencement of the development Lots 5 and/or 6, the owner(s) of Lots 5 and/or 6
shall share in the costs to maintain the Access Easement on a percentage basis
determined by the number of lots utilizing such easement. For example, if Lots 5
and 6 are divided into a total of four lots that utilize the Access Easement,
then the denominator used to determine Tenant's share of costs to maintain said
easement shall be "5," since Lots 5, 6 and 7 would, in this example, include 5
lots in total.
The second easement (highlighted in blue on EXHIBIT A and hereafter,
the "LOADING DOCK EASEMENT") shall be for ingress and egress of trucks and
trailers over the Loading Dock Easement area to the loading docks on the
benefitted parcels. Landlord warrants that the area from the Building to the
building proposed to be built on Lot 6, shall contain not less than one hundred
sixty (160) linear feet from any point on that portion of either Building from
which loading and unloading occurs or may occur. Until such time as Lot 6 is
subdivided, the tenant of Lot 7 shall be granted a non-exclusive right to use
the land to be included in the Loading Dock Easement, and any maintenance
required as a result of Tenant's use of the Loading Dock Easement during such
period shall be at Tenant's expense. After Lot 6 is subdivided, Landlord will
formally record a Loading Dock Easement. The cost to maintain the Loading Dock
Easement after Lot 6 is developed shall be allocated equally (50-50) between
Lots 6 and 7.
2. TERM
The term of this Lease shall begin on the date which is not more
than one hundred forty-five (145) days after the last to occur of: (i) execution
of this Lease and the Guaranty attached hereto and incorporated herein as
EXHIBIT D ("Guaranty"), (ii) Tenant's approval of Tenant's Space Plan (EXHIBIT
B) (such date being hereinafter referred to as the "Anticipated Commencement
Date"). The term shall end ten (10) years after the first day of the first full
calendar month of the term. If, for any reason, Landlord does not deliver
possession of the Building to Tenant with evidence of "substantial completion"
(as hereinafter defined) as required by the terms of the second paragraph of
this Section 2 on or before the Anticipated Commencement Date, then the
commencement of the term shall be delayed until delivery of the Building and in
addition, for each day thereafter that Landlord fails to so deliver the Building
to Tenant, Landlord shall, beginning on the 146th day, pay to Tenant the amount
of Two Hundred Fifty Dollars ($250.00) per day of delay. Notwithstanding the
foregoing, in the event that delivery by Landlord of the Building upon such
terms has not occurred on or before July 3, 1998, Tenant shall, until such time
as the Building is delivered to Tenant in the condition herein required, have
the right to receive, for each day of delay, beginning on July 4, 1998, and in
addition to the $250/day payment hereinabove set forth, an abatement of rent.
If, for any reason, the term has not begun by September 1, 1998,
then this Lease shall be void and of no further force or effect. For purposes
hereof, "substantial completion" of the Property improvements shall be evidenced
by: (i) issuance of an occupancy certificate by Harford County, provided Tenant
has performed and completed all its work within the Property in accordance with
all federal, state, county and local laws, rules and regulations, (ii) issuance
of an architect's certificate of completion certifying that the Building was
completed in accordance with the Plans and Specifications attached hereto as
EXHIBIT B-1, and (iii) issuance of a Structural Engineer's certificate of
compliance. Upon substantial completion, Landlord shall deliver possession of
the Property to Tenant, and Landlord and Tenant shall confirm the commencement
of the term by executing a "COMMENCEMENT AGREEMENT" in the form attached hereto
as EXHIBIT C.
3. CONSTRUCTION AND ALTERATIONS
Landlord's Construction: Landlord shall, at its expense, prepare the
Property for Tenant's use, substantially in accordance with the outlined
specifications and Tenant's Space Plan set forth on EXHIBITS B and B-1,
respectively, each attached hereto and made a part hereof. Upon the execution of
this Lease, Landlord shall prepare working plans and specifications for the work
it shall perform on the Property consistent with EXHIBITS B and B-1, and
thereafter apply for all necessary building and other permits. Upon receipt of
the requisite permits Landlord shall commence the work required of it by this
Lease.
Notwithstanding anything to the contrary set forth in this Lease,
and notwithstanding any limitation of liability by virtue of the transfer of
Landlord's interest in the Property or otherwise, for a period of one (1) year
following the later of substantial completion of the Building and the
commencement of the term, FRP Lakeside, L.P. agrees to warrant all construction
and improvements in the Building performed by Landlord or its agents.
Tenant's Construction: Any work in addition to the work specifically
enumerated in EXHIBITS B AND B-1 required for Tenant's use of the Property shall
be performed by Tenant at its cost and expense after written approval is
obtained from Landlord.
The parties acknowledge that the construction costs for the work
described on EXHIBITS B and B-1 will cost $582,412.00. Landlord shall provide to
Tenant an allowance of $500,000.00 toward the construction costs for the work
detailed in Exhibits B and B-1. Therefore, the construction costs in excess of
Landlord's allowance to Tenant shall be $82,412.00 and shall be paid by Tenant
to Landlord within thirty (30) days after the commencement of the term.
Construction costs in excess of such amount shall be paid in cash by Tenant
within 30 days after presentation by Landlord of invoices therefor, together
with certification by Landlord that such costs have not been included in
previously paid invoices. Tenant shall not be obligated to pay for any change
orders unless approved in writing by Tenant. Landlord agrees that in the event
Tenant requests a change to EXHIBIT B and/or B-1 that results in the removal of
a particular item set forth therein, Tenant may elect to either receive a credit
equal to the cost of the item removed, or Tenant may substitute an item of
comparable cost in place of any such removed item.
4. RENT
Tenant shall pay Landlord an annual rent per the following schedule:
YEAR: PAYABLE PER MONTH: ANNUAL
----- ------------------ ------
1 $37,500.00 per month $450,000.00
2 38,400.00 per month $460,800.00
3 39,400.00 per month $472,800.00
4 40,400.00 per month $484,800.00
5 41,450.00 per month $497,400.00
6 42,500.00 per month $510,000.00
7 43,600.00 per month $523,200.00
8 44,700.00 per month $536,400.00
9 45,900.00 per month $550,800.00
10 47,100.00 per month $565,200.00
All rent shall be paid in advance on the 1st day of each calendar
month during the term. If the term begins on a day other than the 1st day of the
calendar month, the rent for the period from the beginning date of the 1st day
of the first full calendar month of the term shall be prorated at the aforesaid
monthly rate and shall be payable on the date the term begins. Rent shall be
paid to Landlord at FRP Lakeside L.P., 34 Loveton Circle, Suite 100, Sparks,
Maryland 21152, or to such address as Landlord may from time to time notify
Tenant, without prior demand, and without abatement, deduction, recoupment, or
set-off except as set forth in this Lease.
Whenever, under the terms of this Lease, any sum of money is
required to be paid by Tenant in addition to the rent herein reserved, whether
or not such sum is designated as "additional rent", it shall, nevertheless, be
deemed to be additional rent and shall be collectible as rent.
If any installment of rent or an other sum payable hereunder is not
received by Landlord within five (5) days of the due date, and Tenant fails to
correct the delinquency within five days written notice of said delinquency, the
rent and other sum shall be accompanied by a late charge of fifteen percent
(15%) of the total due.
Tenant agrees that if Tenant vacates the Premises at any time, it
shall pay, in addition to other sums due hereunder, and as additional rent
hereunder, together with monthly payments of Base Rent, three percent (3%) of
the monthly Base Rent, such additional rent to be payable until the Premises is
again occupied by Tenant or any assignee or subtenant of Tenant.
5. SECURITY DEPOSIT
A security deposit of thirty-seven thousand five hundred and 00/100
dollars ($37,500.00) will be paid to Landlord at lease execution. This deposit
shall be held, without interest, as security for the payment of rent and other
sums payable by Tenant under this Lease, and the faithful performance of all
other terms, covenants and conditions of this Lease. The deposit shall be repaid
to Tenant at the expiration of the term without any interest, provided Tenant
shall have made all payments and performed all covenants and agreements on
Tenant's part to be performed hereunder. Upon default by Tenant hereunder, all
or part of the deposit may, at Landlord's option, be applied on account of the
default, and thereafter Tenant shall promptly restore the deposit to the amount
stated above. Landlord may commingle the deposit with other funds of Landlord
and Tenant waives the benefit of any provision of law requiring the deposit to
be held in escrow or in trust.
6. USE
The Property shall be used and occupied by Tenant solely: (i) as an
office, warehouse and manufacturing facility for the construction, sales and
distribution of aluminum, non-metallic, thermo-plastic and other types of
honeycomb cores, (ii) for the manufacture of commercial panels using structural
core materials, (iii) for the operation of a quality control lab, (iv) for the
operation of a research and development lab, (v) for special processing of
structural core materials, and (vi) for other uses incidental thereto, and for
no other purpose without Landlord's prior consent.
Tenant acknowledges it is aware the Property's use is governed by
the Lakeside Business Park Declaration of Covenants and Restrictions Land Use,
Architectural Control and Common Area and the Lakeside Business Park Declaration
of Covenants, Conditions and Restrictions Storm Water Management, which are
attached hereto as EXHIBITS E and F, respectively. Landlord represents that
Tenant's use of the Property stipulated herein shall be permitted within the
Lakeside Business Park Declaration of Covenants and Restrictions Land Use,
Architectural Control and Common Area and the Lakeside Business Park Declaration
of Covenants, Conditions and Restrictions Storm Water Management. Landlord
further warrants it will not unreasonably withhold it's approval for Tenant to
modify it's use of the Building's interior, provided, Tenant adheres to the
Lakeside Business Park Declaration of Covenants and Restrictions Land Use,
Architectural Control and Common Area and the Lakeside Business Park Declaration
of Covenants, Conditions and Restrictions Storm Water Management and all Tenant
uses are in compliance with federal, state, county and local laws, ordinances
and guidelines inclusive of zoning regulations applicable to the Property.
Tenant shall, at its expense, obtain all federal, state, county and
local permits with respect to the conduct of its business, the use and occupancy
of the Property and Building and shall pay occupancy fees, license fees and
other charges imposed on the Property and the use and occupancy thereof.
7. UTILITIES
Landlord shall furnish gas, electricity, water and sewer service to
the Property. Tenant shall arrange to have all fees for gas and electric billed
in its name and Tenant shall pay promptly, when due, all charges for such
service. Landlord shall pay all third party-levied water and sewer charges
applicable to the Property and Tenant shall pay Landlord, within thirty (30)
days after Landlord's written request, all third party levied charges for
sprinkler alarms, water and sewer service on the Property. Landlord shall pay
for all utilities and related charges in connection with the construction and
build-out of the Building, including water and sewer impact fees without
reimbursement from Tenant. Tenant shall, at its expense, obtain telephone,
security and other services required in connection with its use of the Property.
8. USE OF ROOF
Tenant may use the roof of the Building to install a satellite
antennae, provided: (i) Tenant notifies Landlord in writing (inclusive of all
plans pursuant thereto) of it's intent to use the roof, (ii) Tenant shall use
Landlord's roofing contractor for any such installation to ensure that the roof
warranty remains in full force and effect, and (iii) Tenant shall maintain such
satellite antennae and repair any damage to the roof resulting from Tenant's use
and/or installation of such satellite antennae, all of which shall be performed
by the roofer issuing the roof warranty. Tenant's use of the roof for any other
reason shall require Landlord's prior consent, which consent shall not be
unreasonably withheld, provided Tenant's use of the roof complies with the
Lakeside Business Park Declaration of Covenants and Restrictions Land Use,
Architectural Control and Common Area and the Lakeside Business Park Declaration
of Covenants, Conditions and Restrictions Storm Water Management, all Tenant's
roof uses are in compliance with federal, state, county and local laws,
ordinances and guidelines inclusive of zoning regulations pursuant to the
Property, and Tenant indemnifies Landlord and holds it harmless from all claims,
damages and encumbrances arising from the use of the roof by Tenant. Should
Tenant cause any work to be performed on the roof which causes the roof warranty
to be terminated, then Tenant shall thereafter, at its sole cost and expense,
maintain the roof.
9. REPAIRS AND MAINTENANCE
Except as provided in Section 8 hereof, Landlord shall, at its
expense, maintain the exterior walls, structural components and roof of the
Building in good condition, all such maintenance to be performed in a
workmanlike manner. Tenant shall promptly notify Landlord of any damage to or
the necessity of any repairs to the roof or exterior walls. Tenant shall, at its
expense, maintain the interior of the Building, and all doors, loading docks and
leveling equipment, if any, the windows and glass, and the systems, machinery
and equipment, including plumbing, electrical, heating and ventilating and air
conditioning, and promptly make all necessary repairs and replacements. In
addition, Tenant shall keep the sidewalks, steps, ramps, walkways and loading
docks which exclusively serve the Building free of snow, ice and debris. At the
beginning of the term, Landlord shall provide all manufacturer's product
warranties to Tenant and, upon expiration of product manufacturer warranties,
Tenant shall, at its expense, obtain and keep in full force and effect
throughout the term, maintenance contracts for the heating and air conditioning
systems and equipment with contractors acceptable to Landlord. Copies of the
contracts shall be given to Landlord at the beginning of the term, and copies of
renewals on replacements shall be given to Landlord prior to expiration of prior
maintenance contract terms. Tenant shall provide its own janitorial services,
including window cleaning and light bulb, tube and starter replacement, and
shall keep all trash in closed containers and arrange for periodic removal
thereof. Tenant's trash containers or dumpster shall be placed at a location
designated by Landlord. Tenant shall also keep the walkways, loading docks and
ramps adjacent to the Property free of litter. In addition, Tenant shall, upon
the reasonable request of the Landlord, at Tenant's expense, throughout the
term, maintain a contract with an extermination service, acceptable to Landlord
to provide monthly service to control rodents and other pests in the Property.
If Tenant fails to maintain the required contracts, Landlord shall provide
written notice to Tenant of said failure to maintain the requisite contracts and
shall arrange for the contracts fifteen days thereafter if Tenant continues to
fail to comply with contract requirements, at Tenant's expense. Landlord shall
provide a one (1) year warranty on all doors, loading docks and leveling
equipment, if any, the windows and glass, and the systems, machinery and
equipment, including plumbing, electrical, heating and ventilating and air
conditioning, along with the floor slab from the date of Tenant occupancy of the
Property. Said warranty shall be provided except in cases where Tenant's use of
facilities demonstrates willful disregard for care and maintenance of it's
Property.
Landlord shall maintain the sprinkler system and the parking,
driveway and other areas and facilities of the Property in good condition and
repair. Except for those areas required to be kept free of ice, snow and litter
by Tenant pursuant to the first paragraph of this Section 9, Landlord shall keep
the parking, driveway and other areas and facilities of the Property reasonably
free of ice, snow and litter. Additionally, Landlord shall provide adequate
lighting and, if necessary, security for these areas. Tenant shall pay to
Landlord the amounts set forth below as reimbursement to Landlord for all
reasonable costs and expenses incurred by Landlord to maintain the Property.
Such costs and expenses shall include, without limitation, gardening and
landscaping, roof maintenance, premiums for public liability and property damage
insurance, repairs, parking lot striping and maintenance, exterior wall
painting/sealing, lighting, sanitary control, sprinkler system monitoring,
maintenance and repair, annual environmental and safety inspections, Lakeside
Owner's Association dues and assessments, the cost of personnel directly related
to the Building's maintenance (which shall be payable only as to the verifiable
portion of the time such employees actually spend at the Property), plus 20% of
all the foregoing for administrative and overhead costs. Tenant shall reimburse
Landlord for actual snow removal costs for Lot 7 only, subject to adjustment
based on the Loading Dock Easement and the Access Easement as described in
Section 1 hereinabove. All contracts for snow removal shall require Tenant's
prior approval. In addition, during the renewal term (if any) all contracts for
snow removal, gardening and landscaping, and sprinkler system monitoring and
maintenance shall require Tenant's prior approval. Any such approvals by Tenant
shall not be unreasonably withheld. All other expenses incurred by Landlord to
maintain the Property shall be initiated by Landlord in good faith with the
intent of maintaining the Property in good, workmanlike condition. Landlord
agrees and confirms no capital improvements shall be included in billable
operating costs unless Tenant specifically agrees to said costs in advance of
incurring same.
Tenant shall pay for maintenance costs (other than snow and ice
removal, which shall be payable at actual cost to Landlord) each month in the
following amounts:
YEAR MONTHLY AMOUNT AMOUNT PER SQUARE FOOT
---- -------------- ----------------------
1 $1,847.92 $ .20
2 $1,940.31 $ .21
3 $2,032.71 $ .22
4 $2,125.10 $ .23
5 $2,217.50 $ .24
6 $2,309.90 $ .25
7 $2,402.29 $ .26
8 $2,494.69 $ .27
9 $2,587.08 $ .28
10 $2,679.48 $ .29
If Landlord shall fail to commence the making of any repairs or
Landlord fails to perform any maintenance it is obligated to do under the terms
of this Lease within thirty days (30) after written notice from Tenant [except,
if an emergency occurs and the immediate curing of such breach is necessary to
protect the Property or persons from imminent injury or damage, the thirty (30)
day grace period shall be reduced to twenty-four (24) hours after written notice
via facsimile], Tenant shall have the right to cause such repairs or maintenance
to performed, and, if the repairs or maintenance are both the Landlord's
responsibility and sole expense pursuant to this Lease, Tenant shall be entitled
to reimbursement from Landlord for the reasonable cost of any such repairs and
maintenance within thirty days after Landlord receipt of Tenant's statement of
costs inclusive of supporting documentation (e.g. paid invoices). If Landlord
fails to pay any such costs to Tenant and Landlord fails to notify Tenant in
writing that it formally disputes the validity of said costs within thirty (30)
days after Tenant's written notice, Tenant shall be entitled to offset such
costs against it's rents thereafter coming due under this Lease.
10. REAL ESTATE TAXES
Tenant shall pay to Landlord, within thirty days after Landlord's
written request, all real estate taxes, assessments and other governmental
charges levied against the Property in excess of real estate taxes, assessments
and other governmental charges levied for the base tax year when all
improvements stipulated in Section 3 and EXHIBITS B AND B-1 are complete and
included in the assessment. Tenant acknowledges the property resides within an
enterprise zone and confirms the base year tax assessment may be significantly
discounted to reflect the benefit of enterprise zone classification. Tenant's
obligation to pay taxes and other charges shall be apportioned with respect to
the tax years in which the term begins and ends proportionately as the number of
days in the term during such tax year bears to 365. Landlord shall furnish a
copy of all real estate tax assessment notices to Tenant within ten days after
their receipt by Landlord. Tenant shall, if permitted by law, have the right to
appeal any real estate tax assessment or charge, provided, Landlord is informed
in writing of Tenant's intent to pursue an appeal within ten days after Tenant's
receipt of real estate tax assessment notices from Landlord and Landlord is
granted the right to participate in said appeal on Tenant's behalf.
11. ALTERATIONS
Tenant shall not make any structural alterations, additions or
modifications to the Property, or place any signs thereon, without the prior
written consent of Landlord. Landlord agrees it will not unreasonably withhold
or condition it's approval, provided, all alterations, additions or
modifications are in compliance with all federal state, county and local laws,
regulations and guidelines. In addition, all alterations, additions or
modifications must conform to the Lakeside Business Park Declaration of
Covenants and Restrictions Land Use, Architectural Control and Common Area and
the Lakeside Business Park Declaration of Covenants, Conditions and Restrictions
Storm Water Management. Prior to making any approved alteration, modification or
addition, Tenant shall, at its expense, obtain all necessary permits from
appropriate governmental authorities and, upon completion, furnish to Landlord
an "as-built" drawing of the alteration, addition or modification. All
additions, alterations and modifications made by Tenant shall be the property of
Landlord. Tenant shall, however, upon the request of Landlord given to Tenant at
least thirty (30) days prior to the expiration or termination of the term,
remove any alterations, additions or modifications made by it and restore the
Property to the condition which existed at the beginning of the term.
12. LIENS
Tenant shall not permit the Property to be subjected to any
mechanic's or other liens; and if any lien attaches, Tenant shall promptly
discharge the same by payment, bond or otherwise; and Tenant shall, at its
expense, defend any proceeding for the enforcement of any lien, discharge any
judgement thereon and save Landlord harmless from all costs and expenses
resulting therefrom, including reasonable counsel fees and other expenses
incurred by Landlord, if it elects to defend or participate in the defense of
such proceedings.
13. COMPLIANCE WITH LAWS AND REGULATIONS/HAZARDOUS MATERIALS
Tenant shall promptly comply with all laws, rules, regulations,
requirements and recommendations of governmental bodies and public authorities,
fire insurance rating organizations and insurers, pertaining to the Property and
the use and occupancy thereof. Tenant shall not do or suffer to be done, or keep
or suffer to be kept anything in or about the Property which will contravene any
insurance which Landlord or Tenant carries with respect to the property. No
hazardous materials or toxic substances shall be stored or kept in or about the
Property, and no such substances shall be discharged from the Property except in
strict accordance and compliance with federal, state and local regulations and
guidelines for the use, handling treatment and discharge of said substances. No
activity may be carried on in the Property which would produce any waste
materials that are considered or classified as hazardous or toxic under any
federal, state or local law, ordinance, rule or regulation beyond the scope of
operations as set forth in Section six above. And, any activities or uses
permitted within section six of this Lease must be performed in strict
accordance with all federal, state and local regulations and guidelines for the
use, handling treatment and discharge of said substances.
Tenant agrees to indemnify, defend, and hold harmless Landlord, it's
assignees and their respective agents, employees, officers, and directors from
and against any and all damages, actions, awards, fines, claims, and actions of
any kind, and all costs associated therewith including clean-up costs, expenses,
reasonable attorneys' and consultants' fees and court costs which may arise as a
result of any claim or finding that Hazardous Materials are present within, upon
or beneath the Property and caused by Tenant, and Tenant will, at it's sole cost
and expense, properly investigate, clean-up, remediate, remove, and abate such
Hazardous Materials, and take all other actions required by any federal, state,
local, or other governmental authority having jurisdiction thereof, at times and
in a manner so as not to disturb other residents in Lakeside Business Park, in
accordance with all applicable federal, state, county and local laws, rules,
regulations, orders, and ordinances. Upon Landlord's request, Tenant shall, at
no expense to Landlord, provide Landlord with such evidence and complete all
certifications required by all such governmental authorities as to the
environmental status of the Property including the existence of Hazardous
Materials. Tenant's and Landlord's obligations and liabilities under this
paragraph shall survive the expiration or earlier termination of this Lease.
Landlord represents that, to the best of its knowledge, no Hazardous
Materials or conditions exist on or under Lot 7. Landlord will defend, indemnify
and hold harmless Tenant, its successors and assigns, from and against any and
all liabilities, actions, demands, penalties, losses, costs or expenses
(including, without limitation, reasonable attorneys' fees, consultants' fees
and remedial costs), suits, costs of any settlement or judgment and claims which
may be paid, incurred or suffered by Tenant as a result of the presence on or
under Lot 7 of Hazardous Substances, provided such presence is not as a result
of Tenant's use or occupancy of Lot 7 or the Building thereon.
The term "Hazardous Materials" as used herein shall mean any
hazardous or toxic substance, material, or waste which, during the term of this
Lease, is determined by or defined by any federal, state, local, or other
government authority to be capable of posing a risk of injury to health, safety,
or property and/or disposal of which is regulated by any such governmental
authority.
14. INSPECTION BY LANDLORD
Upon twenty-four hours advance notice, Landlord, its agents,
authorized representatives and designees, may enter the Property during normal
business hours to view and inspect the same, to show the Property to prospective
purchasers and mortgagees, or to perform any work therein. Further, Landlord
may, at any time after twenty-four hours advance notice during the last six
months of the lease term, enter the Property for the purposes of showing it to
prospective tenants and post "For Rent" signs on the Property. Landlord warrants
it will exercise all reasonable care not to interfere or impede Tenant's ability
to conduct it's business during any visits to the Property. Notwithstanding the
foregoing, Landlord shall be permitted without any advance notice to enter the
Property to perform safety or environmental compliance inspections.
15. INDEMNIFICATION; LIABILITY INSURANCE
Tenant shall defend, indemnify and save Landlord harmless from and
against any and all claims, actions, demands, damages, liability and expenses
(including reasonable counsel fees) for damage to property and injury or death
of persons, which is caused by or arises out of or in connection with the
Property, its appurtenances, and the use or occupancy thereof, or any act or
omission of Tenant, its agents, employees, invitees or contractors, or out of a
breach by Tenant or any term, covenant or condition of this Lease to be
performed or observed by Tenant except for circumstances where the claims,
actions, demands, damages, liability and expenses (including reasonable counsel
fees) for damage to property and injury or death of persons, is caused by the
gross negligence or willful misconduct of Landlord or it's agents,
subcontractors, invitees or employees.
Tenant shall, at its expense, maintain comprehensive general public
liability insurance covering personal injury and property damage occurring on
the Property and its appurtenances, which insurance shall include Landlord and
Tenant as named insureds, and shall include contractual indemnity coverage for
Tenant's liability hereunder. This insurance shall be written with companies
acceptable to Landlord and have liability limits of at least Four Million
Dollars ($4,000,000), combined single limit coverage, on an occurrence basis.
Landlord shall maintain comprehensive general public liability
insurance covering personal injury and property damage occurring on the
Property. This insurance shall have liability limits of at least Four Million
Dollars ($4,000,000), combined single limit coverage, on an occurrence basis.
16. CASUALTY INSURANCE; DAMAGE OR DESTRUCTION
Landlord shall maintain all risks insurance on the Property for the
full replacement cost thereof, including rent interruption insurance on the
Building in an amount equal to at least six months of gross rent revenues.
Tenant shall pay to Landlord, within thirty (30) days after Landlord's written
request, the annual cost of any increase in insurance premiums for this all
risks insurance over the premium for the year in which the term begins for
Landlord to maintain this insurance.
Tenant shall, at its expense, maintain at least standard fire and
extended coverage, vandalism, malicious mischief, and sprinkler damage insurance
on its trade fixtures, equipment and other personal property on the Property,
existing Landlord-provided improvements to the Property, on the leasehold
improvements to the Property, and all other improvements provided by the Tenant
or Landlord to the Property hereafter for their full replacement value,
containing a waiver of subrogation for the benefit of Landlord. Landlord shall
not be liable to Tenant for any damage to any property of Tenant from any cause,
unless it is due to Landlord's willful negligence, misconduct or failure to
comply with terms of the Lease. Certificates evidencing the insurance required
hereby, naming Landlord as an additional insured, shall be delivered to Landlord
at the beginning of the term and at the time of renewal or replacement.
If the Property, or any part of the Building, is damaged or
destroyed by fire or other casualty, to the extent that appropriate governmental
representatives (fire marshals, building inspectors) declare the Property unfit
for Tenant's intended purposes, Tenant shall give notice thereto to Landlord and
Landlord shall, at its option, either (i) repair, restore, rebuild and replace
the damaged or destroyed part, and complete the same as soon as reasonably
possible, subject to delays beyond its reasonable control, to the condition they
were in prior to the damage or destruction, except for changes in design or
materials as may then be required by law or prudent under the circumstances; or
(ii) if the Property or the Building in which it is located is damaged or
destroyed so as to render it wholly or substantially untenable, terminate this
Lease by written notice to Tenant within thirty (30) days of the date of the
casualty.
If Landlord elects to repair and restore, there shall be an
abatement of rent and additional rent. If Landlord terminates this Lease as
above provided, rent and additional rent shall be paid through the date of the
casualty. If Landlord fails to substantially restore the Property within six (6)
months after the date of casualty, Tenant may elect to terminate the remainder
of it's lease term, provided, no early lease termination fees or charges, if
applicable, are levied by Tenant against Landlord. Notwithstanding the
foregoing, Landlord warrants it will diligently pursue repair or restoration
endeavors in a timely manner on behalf of Tenant.
MUTUAL WAIVER OF SUBROGATION. Landlord and Tenant shall each insure
their properties as herein required, and neither shall be responsible to the
other for any damage to its property from any cause, unless the damage is due to
the other's negligence and is caused by an occurrence which is not an insured
hazard under insurance required to be carried hereunder; it being understood
that it is not the intention of the parties that they be relieved from liability
for negligence contrary to any statute or public policy of the State of
Maryland, but rather that each avail itself of insurance coverage without
subjecting the other to liability for losses that could have been insured, and
without subjecting the other to subrogation claims of any insurer.
Notwithstanding anything to the contrary contained herein, Landlord
agrees Tenant may maintain the insurance required in sections 15 and 16 of this
Lease by blanket policies of insurance, provided, the insurance requirements in
this Lease are fulfilled and the insurance coverage is not diminished in any
way. In addition, Tenant shall be permitted to self-insure the risks set forth
in the second paragraph of this Section 16, provided Tenant or its Guarantor
maintains a net worth equal to at least Ten Million Dollars ($10,000,000.00).
17. EMINENT DOMAIN
If the Property, or any part thereof, are condemned under the power
of eminent domain, or sold by Landlord to a condemning authority under threat of
condemnation, this Lease shall terminate as to the part condemned on the date
title or possession vests in the condemning authority, whichever is first.
If any condemning authority notifies Landlord of a proposed
condemnation of any part of the Property, Landlord shall give Tenant written
notice of the proposed condemnation together with whatever plats and data are
furnished to Landlord by the condemnor concerning the extent of the proposed
condemnation. Tenant shall have fifteen (15) days after the date of such notice
in which to elect to cancel this Lease effective upon consummation of the
condemnation. If Tenant gives Landlord written notice of such election within
fifteen (15) days, and if the proposed condemnation is consummated, this Lease
shall terminate entirely on the same date that this Lease terminates as to the
condemned portion of the Property. If the Tenant does not make a timely election
to cancel this Lease, and the condemnation is consummated, Landlord may, at it's
sole discretion, elect to diligently pursue restoration of the remaining
Property as a complete architectural unit; and the rent shall thereafter be
reduced proportionately to the reduction in the area of the Property.
In the event of a condemnation, the entire award shall belong to
Landlord and Tenant shall not be entitled to share in any part of the
condemnation award (including consequential damages). Tenant shall, however, be
entitled to retain any separate award obtained from the condemning authority for
moving and relocation expenses and loss of trade fixtures, equipment and other
personal property, to the extent compensable without diminution of Landlord's
award.
18. DEFAULT
(a) Each of the following shall be deemed a default by Tenant
and a breach of this Lease.
(i) The filing of a petition by or against Tenant for
adjudication as a bankrupt under the Bankruptcy
Code, as now or hereafter amended or supplemented,
or for a reorganization within the meaning of the
Bankruptcy Code, or for an arrangement within the
meaning of the Bankruptcy Code, or the commencement
of any action or proceeding for the dissolution or
liquidation of Tenant, whether instituted by or
against Tenant, or for the appointment of a receiver
or trustee of the property of Tenant.
Notwithstanding the foregoing, Landlord shall grant
Tenant a sixty day period after any involuntary
bankruptcy filing to vacate said filing, provided,
Tenant is not past due in it's rental obligations
and all post filing rents are paid to Landlord in a
prompt manner;
(ii) The making by Tenant of an assignment for the
benefit of creditors.
(iii) The filing of a tax lien against Tenant's estate in
the Property not cured within thirty days after said
filing.
(iv) Failure of Tenant to pay to Landlord all delinquent
rentals within five (5) days after written notice by
Landlord to Tenant informing Tenant it is delinquent
in it's rental payment obligations; and
(v) A default by Tenant in the performance of any other
term, covenant, agreement or condition of this Lease
on the part of Tenant to be performed for a period
of thirty (30) days after notice thereof, unless
such performance shall reasonably require a longer
period in which case Tenant shall not be deemed in
default if Tenant commences the required performance
promptly and thereafter pursues and completes such
action diligently and expeditiously.
(b) In the event of a default of the nature set forth above,
Landlord may, at any time thereafter, at its election,
exercise it's right to take possession of the Property by
pursuing an action in appropriate courts within The State
of Maryland having jurisdiction over the lease and
Property to terminate this Lease and Tenant's right to
possession of the Property, and thereafter, pending court
approval shall take possession of the Property, and
remove Tenant, any occupants and any property therefrom,
without being guilty of or liable for trespass or damages
and without relinquishing any rights of Landlord against
Tenant.
(c) If this Lease is terminated pursuant to the above, Tenant
shall be liable to Landlord for rent and additional rent to
the date of termination, and for liquidated damages to be
calculated and payable as follows:
the monthly rent and additional rent payable by
Tenant hereunder, which shall be payable when due,
less the rent, if any, received by Landlord from
others to whom the Property may be rented on such
terms and conditions and at such rentals as
Landlord, in its sole discretion, shall deem proper.
In no event shall Tenant be entitled to excess rent,
if any, that Landlord may receive from any
substitute tenant; or, an amount equal to the
present value (as of the date of Tenant's default)
of all rent and additional rent which would have
become due during the remainder of the term of this
Lease, which liquidated damages shall be payable to
Landlord in one lump sum on demand. Notwithstanding
the foregoing, Landlord agrees it shall proceed in a
reasonable expeditious manner to pursue relet of the
Property with suitable, credit worthy (in Landlord's
sole judgement) third parties. Said relet efforts
shall be pursued in good faith by Landlord with the
intent of protecting it's interests while making
reasonable efforts to assuage Tenant's damages.
(d) The failure by Landlord to insist upon the performance of
any term, covenant or condition of this Lease or to exercise
any right or remedy consequent upon an unremedied breach
thereof, or the acceptance of full or partial rent during
the continuance of any unremedied breach, shall not
constitute a waiver of the performance of such term,
covenant or condition. No term, covenant or condition of
this Lease to be performed or complied with by Tenant, and
no unremedied breach thereof, shall be deemed waived,
altered or modified except by a written instrument executed
by Landlord. The waiver of any breach shall not affect or
alter this Lease, but each and every term, covenant and
condition shall continue in full force and effect with
respect to any other then existing or subsequent breach
thereof. Upon any default, Tenant waives all legal,
equitable and/or statutory rights to redeem its interest
under this Lease.
(e) In addition to the above, if Tenant defaults in the
performance or observance of any term, covenant or condition
to be performed under this Lease , and Tenant fails to
materially pursue rectification of said default with fifteen
days after written notice to Tenant of said default by
Landlord, Landlord may take any necessary action to rectify
the default on Tenant's behalf. Notwithstanding the
foregoing, if Landlord in it's sole reasonable judgement
deems the default of a nature requiring immediate
resolution, it may proceed immediately to rectify said
default. All money advanced and costs and expenses
reasonably incurred by Landlord in rectifying defaults,
together with interest thereon at the rate of twelve percent
(12%) per annum, shall be repaid by Tenant to Landlord
promptly upon demand.
(f) Each right and remedy of Landlord provided for in this Lease
shall be cumulative and shall be in addition to every other
right or remedy provided for herein or now or hereafter
existing at law, in equity, or by statute or otherwise, and
the exercise or beginning of the exercise by Landlord of any
one or more of the rights or remedies provided for in this
Lease, or now or hereafter existing at law, in equity, or by
statute or otherwise, shall not be construed as an election
of remedies so as to preclude the simultaneous or later
exercise of any other right or remedy for such breach. If
Landlord obtains a judgement against Tenant arising out of
any default by Tenant under this Lease, then Tenant shall
pay Landlord attorney's fees and other reasonable expenses
incurred by Landlord in connection therewith together with
interest thereon at the rate of twelve percent (12%) per
annum, and shall be repaid by Tenant to Landlord promptly
upon demand. If Tenant obtains a judgement against Landlord
arising out of any default by Landlord under this Lease,
then Landlord shall pay in addition to the amount of the
judgment with interest thereon, Tenant's attorney's fees and
other reasonable expenses incurred by Tenant in connection
therewith together with interest thereon at the rate of
twelve percent (12%) per annum promptly upon demand.
(g) The failure of Landlord to perform any obligation hereunder
after the applicable notice and cure period shall constitute
a default hereunder. If Landlord defaults hereunder, then
Tenant may pursue its rights at law and in equity, including
without limitation, exercise of its self-help remedies
provided in Section 9 hereof.
The failure by Tenant to insist upon the performance of any
term, covenant or condition of this Lease or to exercise any
right or remedy consequent upon an unremedied breach
thereof, shall not constitute a waiver of the performance of
such term, covenant or condition. No term, covenant or
condition of this Lease to be performed or complied with by
Landlord, and no unremedied breach thereof, shall be deemed
waived, altered or modified except by a written instrument
executed by Tenant. The waiver of any breach shall not
affect or alter this Lease, but each and every term,
covenant and condition shall continue in full force and
effect with respect to any other then existing or subsequent
breach thereof.
19. QUIET ENJOYMENT; ESTOPPEL; SUBORDINATION
Landlord covenants and agrees that Tenant, upon paying the rent and
all other charges provided for herein, and observing and keeping the terms,
covenants and conditions of this Lease on its part to be kept and performed,
shall lawfully and quietly hold, occupy and enjoy the Property during the term
of this Lease, free from any interference by Landlord or anyone claiming by,
through or under Landlord.
Upon request, Tenant shall promptly deliver to Landlord a signed and
acknowledged statement setting forth:
(i) that to the best of Tenant's knowledge, this Lease remains
unmodified, in full force and effect, free of existing
defaults and free of defenses against enforceability (or if
there have been modifications or defaults or if it claims
defenses against enforcement, then stating the
modifications, defaults and/or defenses);
(ii) the date to which rent and other charges have been paid, and
the amount of any advance rentals paid;
(iii) the beginning and ending dates of the term;
(iv) that to the best of Tenant's knowledge, there are no
outstanding claims (or if there are any claims, then stating
the nature and amount of the claim); and
Provided a non-disturbance agreement in form and substance
acceptable to Tenant as hereafter described is executed by any
applicable lender, this Lease shall be subject and subordinate to
the lien of any mortgage or deed of trust now existing upon the
Property and to any extensions, modifications or amendments thereto,
without the necessity of Tenant executing any instrument other than
this Lease. Landlord shall, within thirty (30) days following the
date of this Lease, obtain a subordination and non-disturbance
agreement from any existing mortgagee of Lakeside Business Park
and/or Lot 7, the form and content of which shall be subject to
Tenant's reasonable approval, and the obtaining of a non-disturbance
agreement, in such event, shall be a condition to the Lease. The
non-disturbance agreement shall provide that in the event of a
foreclosure, said mortgagee will agree to recognize the Lease and
not to disturb Tenant's use and occupancy of Lot 7 and/or the
Building so long as Tenant shall not be in default under the Lease.
Furthermore, Tenant agrees that the Lease shall be
subordinate to any future mortgage or deed of trust placed against
Lot 7 and that it will attorn to the future mortgagee upon
foreclosure of the mortgage or deed of trust, provided that the
mortgagee shall agree to honor and abide by the terms of the Lease
and give Tenant a non-disturbance agreement as hereinabove
described.
20. ASSIGNMENT
Tenant shall not assign this Lease or sublet the Property in whole
or in part, without the prior written consent of Landlord, which consent may not
be unreasonably withheld by Landlord. If Landlord consents to an assignment or
sublease, Tenant shall not be released of any of Tenant's obligations hereunder,
and in addition to any other consideration that may pass between the parties in
connection therewith, Tenant and any assignee or sublessee shall be deemed to
have covenanted not to make any further assignment or sublease without
Landlord's prior written consent. In the event of any assignment or subletting,
Landlord shall be entitled, and Tenant hereby assigns unto Landlord, fifty
percent (50%) of all sums payable by the assignee or sublessee, either as rent,
additional rent or other charge, in excess of the rent and additional rent
payable by Tenant hereunder less any reasonable expenses including leasing
commissions, tenant improvement expenses required pursuant to the assignment or
sublease, advertising expenses and other costs incurred by Tenant directly
attributable to it's efforts to assign or sublet the Property. Notwithstanding
the foregoing, if Tenant elects to assign or sublet the Property or a portion
thereof to any party which controls, is materially in control of the Tenant or
is under common control by Tenant, no excess rents or additional rents arising
from said assignment or sublease shall be payable to Landlord.
21. APPLICABLE LAW
This Lease shall be construed under the laws of the State of
Maryland. The parties acknowledge that this Lease has been drafted, negotiated,
delivered and consummated in the State of Maryland. Tenant consents to suit in
the state and federal courts of the State of Maryland on or with respect to the
Property and this Lease. Tenant hereby waives any objection to the venue of any
action filed in any state or federal court of Maryland, and waives any claim of
forum non conveniens or for transfer of any action to any other court. Service
of Process may be made upon Tenant in any action on or with respect to the
Property, or this Lease, by sending such process to Tenant in the manner and to
the address to which notices are sent under Section 22 hereof. Nothing herein
shall be deemed to preclude Landlord from obtaining Service of Process upon
Tenant in any other manner permitted by the laws and RULES OF COURT of the state
and federal courts of Maryland.
Landlord and Tenant each waive the right to trial by jury in any
action or suit brought pursuant to, under, or in connection with this Lease.
22. NOTICES
All notices, requests, demands or other communications with respect
to this Lease and the Property, shall be in writing, and shall be deemed to have
been duly given when mailed, postage prepaid, United States registered or
certified mail, or hand delivered, or sent by Federal Express, or other
nationally recognized courier service, with signed receipt.
(a) To Landlord, FRP Lakeside L.P., 34 Loveton Circle, Suite
100, Sparks, Maryland 21152, Attn: Mr. David deVilliers, or
at such other address as Landlord may furnish to Tenant for
this purpose.
(b) To Tenant, Alcore Inc., 1324 Brass Mill Road, Belcamp,
Maryland 21017, or at such other address as Tenant may
furnish to Landlord for this purpose.
(c) With a copy to: Ballard, Spahr, Andrews & Ingersoll, 300 E.
Lombard Street, Baltimore, Maryland 21202, Attn: Fran S.
Glushakow-Smith.
23. TENANT FINANCIAL STATEMENTS
Annually, no later than ninety (90) days after the end of Tenant's
fiscal year, Tenant shall furnish to Landlord a copy of Tenant's year-end
financial statements including income statements, balance sheets and statements
of cashflows. Landlord shall maintain Tenant's financial statements in a
confidential manner and shall not share the information contained therein with
any third parties, except for mortgagees, without Tenant's prior consent.
24. BROKERAGE
Tenant represents and warrants that there are no claims for
brokerage commissions or finder's fees in connection with the Lease other than
Arthur B. Steuart (broker) in cooperation with KLNB Inc. pursuant to a separate
agreement between the Landlord and KLNB Inc., and hereby indemnifies and holds
Landlord harmless from all liabilities arising out of any other claimed
brokerage commissions or finder's fees (including, without limitation, the cost
of counsel fees in connection therewith).
25. SUCCESSORS AND ASSIGNS
Except as herein otherwise provided, this Lease and the terms,
covenants and conditions hereof, shall inure to the benefit of, apply to, and be
binding upon the parties and their successors and assigns. If Landlord transfers
its estate in the Property, or if Landlord further leases the Property subject
to this Lease, Landlord shall thereafter be relieved of all obligations of
Landlord arising after the assignment expressed in this Lease or implied by law,
provided the transferee recognizes the Lease and all obligations of the Landlord
contained within this Lease inclusive of terms and conditions contained within
Section 5 (Security deposit).
If Tenant obtains a money judgement against Landlord or Landlord's
successors or assigns under any provisions of, or with respect to this Lease or
on account of any matter, parties under this Lease, Tenant's occupancy of the
Property, or Landlord's ownership of the Property, Tenant shall be entitled to
have execution upon such judgement only upon Landlord's estate inclusive of it's
interest in the Property (or proceeds from the sale thereof) and not out of any
other assets of Landlord, or its successors or assigns, subject, however to the
second paragraph of Section 9 hereinabove; and Landlord shall be entitled to
have any judgement so qualified to constitute a lien only on said estate.
26. SURRENDER OF THE PROPERTY
At the expiration of the tenancy hereby created, or upon any
re-entry by Landlord pursuant to this Lease, Tenant shall, without notice to
quit which Tenant hereby waives, surrender the Property in the same condition as
the Property were upon completion of construction contemplated by Section 3
hereof, reasonable wear and tear excepted, and shall deliver all keys for the
Property to Landlord at the place then fixed for the payment of rent, and shall
inform Landlord of all combinations on locks, safes and vaults, if any, in the
Property. Tenant shall remove all of its trade fixtures and other personal
property, and any alterations, additions or improvements which Landlord requires
to be removed, before surrendering the Property, and shall repair any damage
caused by removal. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this Lease.
If Tenant remains in possession of the Property after the expiration
of the term without the execution of a new lease, or a renewal or extension in
writing, Tenant shall be liable for all damages that Landlord may sustain by
virtue thereof, including but not limited to, any amount for which Landlord may
be liable under, or as the result of, any lease entered into by Landlord for a
term beginning at or after the expiration of the term. If, and while Tenant is
holding over, it shall continue to be subject to and shall perform all of the
conditions, provisions and obligations of this Lease except that Tenant shall
pay Landlord rent at an amount equal to one hundred fifty percent (150%) of the
rent provided to be paid hereunder immediately prior to the expiration of the
term, and Tenant shall continue to be a tenant until its tenancy shall be
terminated by Landlord, or until Tenant shall have given Landlord written notice
of at least one (1) full calendar month of its intention to terminate the
tenancy. Nothing contained in this Lease, however, shall be construed as a
consent by Landlord to the occupancy or possession of the Property by Tenant
after the expiration of the term, and Landlord, upon termination, shall be
entitled to the benefit of all public general or public local laws or ordinances
relating to the recovery of possession of lands and tenements held over by
tenants, that may now be in force or hereafter enacted.
27. RENEWAL OPTION
If the Tenant is not in default under this Lease or any of the
provisions hereof, Tenant may extend the term of this Lease for one (1)
successive period of five (5) years by providing written notice to Landlord of
it's intent to renew lease at least two hundred ten (210) days prior to
completion of the original lease term. Such rental shall be under the same terms
and conditions set forth within this Lease except that the annual rental for the
succeeding lease term shall be ninety five percent (95%) of the prevailing fair
market rent for the Property existing at the end of the initial lease term.
Operating costs payable by Tenant for the renewal term shall be equal to
Landlord's actual costs, plus twenty percent (20%) for administrative and
overhead costs.
Landlord's determination of fair market rent for the renewal term
("LANDLORD'S RATE") shall be submitted by Landlord to Tenant within thirty (30)
days after Landlord's receipt of Tenant's written notice of it's intent to renew
the lease. If Landlord fails to submit Landlord's Rate, then annual rent for the
Renewal Term shall be deemed to be 95% of rent payable in the last year of the
Term. If Tenant elects to contest Landlord's Rate, Tenant, at it's sole expense,
shall contract for and obtain a third party appraisal to determine the fair
market rental rate (inclusive of all improvements provided to the Property) of
the Property within thirty (30) days after Tenant's receipt of Landlord's Rate
("TENANT'S RATE"). Landlord shall, within fifteen (15) days after receipt of
Tenant's Rate, notify Tenant whether Tenant's Rate is acceptable. If Tenant's
Rate is unacceptable to Landlord, Landlord and Tenant shall determine within
five (5) days whether to continue negotiations if they both agree to do so, then
they shall select a mutually agreeable third party appraiser to perform an
additional appraisal (inclusive of all improvements to the Property) to
determine fair market rental rates applicable to the Property. In such event,
said selection must be made by both parties within five (5) business days
thereafter. The cost of such appraisal shall be borne equally by Landlord and
Tenant and said appraisal will be binding to both Tenant and Landlord PROVIDED,
that if such third appraisal exceeds Landlord's Rate or is less than Tenant's
Rate, the average of the three shall be the rental rate for the Renewal Term.
Annual rent over the renewal term shall be payable in advance in equal monthly
installments subject to the same penalties and conditions set forth for rents
due during the original lease period.
During the Renewal Term, actual operating costs and expenses (as
defined in Section 9 of this Lease) shall be determined by Landlord and billed
no less often than quarterly for such fiscal year as Landlord may adopt for such
purpose. Said billings shall include an itemized listing of costs incurred.
Payments shall be due from Tenant to Landlord within thirty (30) days after
receipt of remittance request from Landlord. Tenant may elect to audit
Landlord's books and records relating to operating costs and expenses. If it is
determined from said audit that Landlord has incorrectly billed for operating
costs and overhead, Landlord will be required to reimburse Tenant promptly for
said incorrect charges.
28. OWNERSHIP OF THE PROPERTY/DECLARATIONS OF COVENANTS
Landlord warrants and represents Landlord is fee owner of the
Building and that Landlord has the appropriate authority to enter into this
Lease. Tenant acknowledges that this Lease is subject to the Lakeside Business
Park Declaration of Covenants and Restrictions Land Use, Architectural Control
and Common Area and the Lakeside Business Park Declaration of Covenants,
Conditions and Restrictions Storm Water Management (collectively, the
"DECLARATIONS") which have been recorded prior to the Commencement Date, in the
form attached hereto as EXHIBITS E AND F, respectively.
29. FORCE MAJEURE
In the event that either party hereto shall be delayed, hindered or
prevented from the performance of any act required within this Lease (except for
the payment of rents or additional rents) by reason of any act not within the
reasonable control of the party delayed, hindered or prevented, including
strikes, lockouts, acts of god, enemy acts, civil commotion, labor troubles,
inability to procure materials, failure of power, restrictive government laws or
regulations, riots, insurrections, wars, legal injunctions, or other reasons of
a comparable nature not the fault of or within the reasonable control of the
delayed, hindered or prevented party, in performing the work or doing the acts
required under the terms of this Lease, then performance of said act shall be
excused for the period of the delay, hindrance or prevention and the performance
of any such act shall be extended without penalty for a period equivalent to the
period of such delay, hindrance or prevention.
30. RIGHT OF FIRST REFUSAL
If Landlord elects to sell the Property pursuant to a signed letter
of intent from third parties to purchase the Property inclusive of all material
terms and conditions of such sale, Landlord shall notify Tenant in writing of
the terms and conditions of the sale and shall furnish a copy of the executed
letter of intent to Tenant, and Tenant shall have ten (10) business days after
notice from Landlord to exercise a first right to acquire the Property under the
same terms and conditions indicated within the third party executed letter of
intent. If Tenant fails to respond or elect to purchase the Property pursuant to
the third party letter of intent, Landlord will be entitled to pursue sale of
the Property at it's sole election without further purchase rights available to
the Tenant, provided the sale is substantially in accordance with the terms and
conditions of the letter of intent provided to Tenant. If Landlord elects to
decline to sell the Property after receipt of the letter of intent and Tenant's
election to decline it's first right to purchase the Property, Tenant will
retain it's first right to purchase the Property for any subsequent offers made
by third parties. Nothing herein shall preclude Landlord from selling or
transferring ownership of the Property to it's subsidiaries or affiliates
without the granting of any first right to purchase to Tenant.
31. RECORDATION
Landlord or Tenant may record a memorandum of this Lease in the
public records. Upon the request of the recording party, the non-recording party
shall sign a recordable memorandum of lease containing the terms required by
statute and any other terms that the recording party reasonably elects to
include in the recordation. All costs related to any such recordation shall be
borne solely by the recording party.
This Lease contains the final agreement between the parties.
Landlord shall not have any obligation not expressly set forth herein; and
neither Landlord nor Tenant shall be bound by any problems or representations
prior to the date hereof which are not expressly set forth herein.
32. GUARANTY
This Lease is contingent upon the execution by Advanced Technical
Products, Inc. of the Guaranty attached hereto and incorporated herein as
EXHIBIT D.
33. EXHIBITS
The following Exhibits are attached hereto and incorporated herein:
Exhibit A Site Plan, depicting Access Easement and Loading
Dock Easement
Exhibit B Tenant's Space Plan
Exhibit B-1 Plans and Specifications
Exhibit C Commencement Agreement
Exhibit D Guaranty
Exhibit E Lakeside Business Park Declaration of Covenants
and Restrictions, Land Use Architectural Control
and Common Area
Exhibit F Lakeside Business Park Declaration of Covenants,
Conditions and Restrictions Storm Water Management
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
WITNESS: LANDLORD:
FRP LAKESIDE L.P.
BY: FRP Maryland, Inc.
its General Partner
/s/ STEPHANIE M. HUFF BY: /s/ DAVID H. DEVILLIERS, JR.
David H. deVilliers, Jr., President
WITNESS: TENANT:
ALCORE INC.
BY: /s/ EDWARD A. KILEY
Edward A. Kiley, President
<PAGE>
EXHIBIT A
Site Plan depicting Access Easement
and Loading Dock Easement
<PAGE>
EXHIBIT B
Tenant's Space Plan
<PAGE>
EXHIBIT B-1
Plans and Specifications
<PAGE>
EXHIBIT C
Commencement Agreement
<PAGE>
EXHIBIT D
GUARANTY
<PAGE>
EXHIBIT E
Lakeside Business Park Declaration of Covenants
and Restrictions Land Use, Architectural Control
and Common Area
<PAGE>
EXHIBIT F
Lakeside Business Park Declaration of Covenants,
Conditions and Restrictions Storm Water Management
STATE OF GEORGIA EXHIBIT 10.30
COUNTY OF FULTON
LEASE AGREEMENT
THIS LEASE, made this 14day ofApril, 1998 between MANSELL OVERLOOK 200,
LLC, a Georgia limited liability company having his principal office at 100
Mansell Court East, Suite 225, Roswell, Georgia 30076, telephone no. (770)
993-5056, facsimile no. (770) 998-0515 (herein called "Landlord") and, Advanced
Technical Products, Inc. a Delaware Corporation, having its principal
Pre-Commencement office at 3353 Peachtree Road, Suite 920, Atlanta, GA 30326,
and the Post-Commencement office at 200 Mansell Court East, Suite 505, Roswell,
GA 30076, telephone, __________, facsimile_________(herein called "Tenant").
PREMISES AND TERM
1. Landlord hereby leases to Tenant and Tenant hereby rents and leases from
Landlord the following described space (herein called the "Premises") being
approximately 4,445 square rentable feet (which is 2.73% of the Building) Suite
# 505 on the Fifth Floor in Mansell Overlook Building # 200 (hereinafter
referred to as the "Building") located at 200 Mansell Court East, Roswell,
Georgia 30076 (hereinafter referred to as the "Property") in Land/ Lot(s) 543 of
the 1st District 2nd Section in The City of Alpharetta. The Building and the
Property are shown on the site plan attached hereto as Exhibit A. The Premises
being more particularly shown and outlined on the plan attached hereto as
Exhibit A-1 and made a part hereof; FOR A TERM to commence on the Commencement
Date and to end at the later of 6:00 P.M. on June 30, 2003, or the last day of
the full sixtieth calendar month after the Commencement Date (herein called the
"Term"). No easement for light and air is granted hereunder.
BASE RENTAL
2. (a) Tenant shall pay to Dove Properties, Inc., as Agent for Landlord at
Suite 225, 100 Mansell Court East, Roswell, Georgia 30076 or at such other
places as Landlord designates in writing, without demand, deduction or set-off,
rental in the amount of $73,787.04 per year ($16.60 per rentable square foot per
annum; hereinafter called "Base Rental") payable in equal monthly installments
of $6,148.92 in advance, on the first day of each calendar month during the
Term. A pro rata monthly installment shall be due for the first and last month
of the Term should the Term begin or end on other than the first or last day of
the calendar month. Concurrent with Tenant's execution of this Lease, Tenant
will deposit with Landlord $8,278.82 representing the installment for the first
monthly Base Rental payable hereunder plus the installment for the first monthly
Adjustment payable in Paragraph 9(i). (Security deposit, if applicable, is also
due upon execution-see paragraph 29.)
(b) Landlord and Tenant hereby agree that beginning with the Base Rental
payment due on the first anniversary of the Commencement Date and every
anniversary date thereafter during the Term, the monthly Base Rental shall be
increased by the "Rental Adjustment" being an amount equal to the product of (i)
the monthly Base Rental in effect for the previous month (as such sum may have
been increased by any previous Rental Adjustment hereunder), multiplied by (ii)
three percent (3%).
DELIVERY OF POSSESSION TO TENANT BY LANDLORD
3. (a) The "Commencement Date" shall be the sooner to occur of the date of
Substantial Completion of the Premises or the date on which Tenant commences the
operation of its business in the Premises. For purposes of this Lease,
"Substantial Completion" shall occur on the first date on which all of the
following conditions have been satisfied: (i) the Premises shall be completed in
accordance with the Tenant Improvement Plans (as hereinafter defined) except for
minor punchlist items which do not materially and adversely affect the full use
and occupancy of the Premises by Tenant and do not detract from the aesthetic
appearance of the Premises; (ii) a final certificate of occupancy shall be
issued with respect to the Premises; and (iii) ten (10) days shall have expired
since Tenant shall have been given access to the <PAGE> Premises (with ceilings
and carpet installed) for the purposes of installing its furniture, cabling,
computer and other equipment. All furniture, computer and other equipment and
other personal property moved into the Premises shall be at Tenant's sole risk,
subject, however, to the terms of subparagraph 20(f) establishing liability on
the part of the Landlord for proven acts of negligence or willful misconduct
committed by Landlord, its agents, contractors or employees.
(b) Landlord shall notify Tenant in writing of the anticipated completion
not less than thirty (30) days prior to the Commencement Date. The taking of
possession by Tenant shall conclusively establish that said improvements have
been completed in accordance with the building plans and the plans depicting
improvements to be made to the Premises referred in paragraph 38 below (the
"Tenant Improvement Plans") and that the Premises are in good and satisfactory
condition at the time possession is taken, subject to "punch list items"
submitted to Landlord to be completed within thirty (30) days after occupancy
and latent defects discovered during the first year after the Commencement Date.
(c) Notwithstanding the provisions of paragraph 3 (a)(iii), Tenant's
contractors, consultants, vendors and suppliers shall have access to the
Premises during the thirty (30) day period prior to the Commencement Date for
the purposes of installing Tenant's cabling, telephone system and otherwise
preparing the Premises for occupancy by Tenant, except that Tenant may not move
furniture into the Premises prior to the issuance of a certificate of occupancy
unless the appropriate governmental authorities permit such furniture to be
moved into the Premises. Tenant's contractor shall also have earlier access to
the Premises for the purpose of installing computer and other cabling in the
slab of the Premises provided such installation is coordinated with the Landlord
and its contractor. Tenant agrees not to unreasonably interfere with Landlord's
contractors, subcontractors, employees and agents. Tenant acknowledges that in
the event of a conflict between the work to be performed by its contractors and
work to be performed by Landlord's contractors, Landlord's contractors shall
have priority.
(d) Landlord will use its reasonable, good faith efforts to cause the
Commencement Date to occur on or before JULY 1, 1998. If the Commencement Date
has not occurred on or before AUGUST 1, 1998, unless there were delays caused by
Tenant's failure to comply with the schedule in Exhibit "E", Tenant shall have
the right to terminate this Lease upon thirty (30) days prior written notice to
Landlord, in which event Landlord shall refund to Tenant the $8,278.82
previously paid by Tenant to Landlord pursuant to paragraph 2 (a), above. If the
delays in the completion of construction are due to Tenant's delays, then the
Commencement Date shall be the actual completion date of the Premises advanced
by the number of days Tenant delayed the schedule in "Exhibit E".
Notwithstanding anything herein to the contrary, however, the JULY 1, 1998
deadline for the occurrence of the Commencement Date set forth above shall be
extended (for a maximum period of sixty (60) days) upon the occurrence of any
force majeure. As used herein, "force majeure" shall mean strikes, lockouts,
sitdowns, material or labor restrictions by any governmental authority, unusual
transportation delays, riots, floods, washouts, explosions, earthquakes, fire,
storms, acts of the public enemy, wars, insurrections and any other cause not
reasonably within the control of Landlord and which by the exercise of due
diligence Landlord is unable, wholly or in part, to prevent or overcome.
REPAIRS BY TENANT AND REMOVAL OF IMPROVEMENTS AND ALTERATIONS UPON TERMINATION
4. (a) Subject to Landlord's repair obligations set forth in Paragraph 6(a)
below, Tenant will, at Tenant's expense, take good care of the Premises and the
fixtures and appurtenances therein, and will suffer no active or permissive
waste or injury thereof. Subject to the terms of Paragraph 22 below, Tenant
shall, at Tenant's expense, but under the direction of Landlord, promptly repair
any injury or damage to that portion of the Premises described in the first
sentence of Paragraph 20 below provided, however, that Tenant shall be entitled
to the proceeds of insurance maintained by it under Paragraph 20 below and if
such damage should occur due to Landlord's supervision or direction, Tenant
shall not be liable or responsible
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therefore.
(b) Tenant shall not make any alterations, additions or improvements to the
core of the Building or in or about the Premises, without Landlord's prior
written consent which shall not be unreasonably withheld or delayed. Tenant
shall give Landlord prior written notice describing with reasonable specificity
any proposed alteration, addition or improvement. If the alteration, addition or
improvement in question will materially and adversely affect the marketability
of the Premises upon the expiration or earlier termination of the Term, Landlord
shall, within ten (10) days of the receipt of Tenant's notice, notify Tenant
that Landlord will require that Tenant, no later than ten (10) days following
the expiration or earlier termination of the Term, remove such alteration,
addition or improvement to the Premises and restore the Premises to the
condition that existed prior to such alteration, addition or improvement being
made (reasonable wear and tear and damaged by fire or other casualty excepted).
If Landlord timely notifies Tenant that it will require the alteration, addition
or improvement in question to be removed upon the expiration of the Term and
Tenant moves forward and installs such alteration, addition or improvement,
then, upon the expiration of the Term, Tenant shall be required to remove such
alteration, addition or improvement and restore the Premises to the condition
that existed prior to such alteration, addition or improvement being made
(reasonable wear and tear and damage by fire or other casualty excepted).
(c) All alterations, additions or improvements in or to the Premises
(including, but not limited to carpets, drapes and drape hardware) made or
installed by Tenant which were paid for by Tenant and were not part of the
Tenant Improvement Plans shall become the property of Landlord at the expiration
of the Term. Notwithstanding anything herein to the contrary, Tenant may elect
to have Landlord remove any alterations, additions or improvements to be removed
pursuant to subparagraph 4(b) above, at Tenant's expense, provided Tenant so
notifies Landlord in writing prior to the expiration of the Term and pays to
Landlord on or before the last day of the Term the funds necessary to complete
such removal and restoration, the amount of which funds shall be determined by
Landlord in its reasonable discretion. Notwithstanding the foregoing, Landlord
acknowledges that Tenant shall be allowed to remove at Tenant's expense all
business and trade fixtures, machinery and equipment, communications equipment
installed by Tenant and modular work station cubicles, and any computer
hardware, which is owned or which was purchased or leased by Tenant.
(d) Subject to the terms of subparagraphs 4(b) and (c) above, no later than
the last day of the Term, Tenant will remove all Tenant's personal property and
repair all injury done by or in connection with installation or removal of said
property and surrender the Premises (together with all keys to the Premises) in
as good a condition as they were at the beginning of the Term, reasonable wear
and tear and damage by casualty or condemnation excepted (subject, however, to
the terms of paragraph 20 below). All property of Tenant remaining on the
Premises three (3) business days after notification after Tenant has vacated the
Premises shall be deemed conclusively abandoned and may be removed by Landlord,
and Tenant shall reimburse Landlord for the reasonable cost of removing the
same, subject however, to Landlord's right to require Tenant to remove any
improvements or additions made to the Premises by Tenant and for Tenant to
restore the Premises to its original condition pursuant to the preceding
subparagraph 4(b) above, and further subject to the right of Tenant to leave
certain improvements or additions in the Premises at the end of the Term , as
provided in paragraph 4(b), above.
(e) In doing any work of any nature in, to or about the Premises, Tenant
will use contractors or workmen approved by Landlord, which approval shall not
be unreasonably withheld or delayed. If Tenant incurs any liability for work
done in or to the Building or Premises, Tenant shall promptly pay and discharge
any and all licenses, imposts, liens or other charges arising out of or in
connection with the performance of any act required of or permitted by Tenant
hereunder and shall keep the Premises free and clear from any such liens
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or charges. In furtherance thereof, Tenant agrees to indemnify and hold Landlord
harmless from and against any and all losses, costs, damages or liabilities
resulting from or attributable to any liens or claims of lien for said work and
Tenant shall remove any such lien or claim of lien promptly upon notice from
Landlord or upon any prior notice of such lien or claim of lien.
(f) In the performance of acts required or permitted by Tenant under
Paragraph 7 or any other provisions of this Lease, Tenant shall obey and comply
with all applicable lawful requirements, rules, regulations and ordinances of
all legally constituted authorities existing at any time during the continuance
of such performance which in any way affects the Premises or the use of the
Premises by Tenant. Such compliance shall include compliance by Tenant with
requirements of the Occupational Safety and Health Act and all amendments
thereto, as the same applies to Tenant's use of the Premises. Should any such
requirement, rule, regulation or ordinance which does not apply to the Building
generally, but which instead applies by virtue of Tenant's or any tenant's
specific manner of use of its premises, require any alteration or addition to
its premises, Landlord shall perform same at Tenant's or at such tenant's
expense. Landlord shall, at Landlord's expense but subject to inclusion in
Adjustments pursuant to paragraph 9 below [subject, however, to the limitations
set forth in subparagraphs 9(j) and (l)], perform any alterations or additions
to the Premises required by any law or act which are not required by virtue of
Tenant's specific manner of use of the Premises.
TENANT RISK
5. Landlord shall not be liable to Tenant for any theft of or damage to any
personal property brought into the Building or the Premises by Tenant, its
employees, agents, contractors, licensees and invitees, except where such theft
or damage results from proven acts of negligence or willful misconduct for which
Landlord or its agents, contractors or employees are proven to be responsible.
REPAIRS AND MAINTENANCE
6. (a) Tenant shall be responsible for its pro rata share of the cost of
all maintenance and repair required in connection with the Premises and the
Building to the extent such costs fall within the scope of the Adjustments in
accordance with Paragraphs 8 and 9. Landlord shall not be liable to Tenant,
except as expressly provided in this Lease, for any damage or inconvenience, and
Tenant shall not be entitled to any abatement or reduction of rent, by reason of
any repairs, alterations or additions made by Landlord under this Lease, except
as provided in Paragraphs 8 and 10. Landlord shall not be required to make any
repairs to the Premises except repairs necessary for safety and tenantability,
repairs to the systems (including without limitation the plumbing, electrical,
and heating, ventilating, and air conditioning systems) serving the Premises,
repairs to the roof and structural components of the Premises, and repairs
necessitated by the proven acts of negligence or willful misconduct of Landlord,
its agents, contractors or employees. Landlord shall also be responsible for
repairing and maintaining in good condition the common areas of the Building and
the parking areas, driveways, walkways and landscaped areas serving the
Building. All such costs shall be included in the Adjustments pursuant to the
terms of Paragraph 9 below.
(b) Subject to the terms of Paragraph 21 below, Tenant shall, at its own
cost and expense repair or replace any damage or injury to all or any part of
the Premises caused by Tenant, its agents, employees, invitees, licensees or
visitors; provided, however, if Tenant fails to make the repairs or replacements
within the cure period provided in Paragraph 12, Landlord may, at his option,
make the repairs or replacements and Tenant shall reimburse the reasonable cost
to Landlord within 30 days of Tenant's receipt of Landlord's invoice thereof
with substantiating documentation.
(c) Tenant shall not commit or allow any waste or damage to be committed or
any hazardous materials to be stored or used on any portion of the Premises or
in the Building (except in compliance with applicable laws). The cost and
expense of any repairs and clean-up necessary to restore the condition of the
Premises to its condition existing on the
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Commencement Date, if caused by Tenant or due to Tenant's negligent acts,
ordinary wear and tear excepted, shall be borne by Tenant, and if Landlord
undertakes to restore the Premises, it shall have the right of reimbursement
against Tenant, or as provided in Paragraph 4 above. Tenant's obligation to
remove alterations, additions, or improvements shall be as set forth in
Paragraph 4 above.
USAGE
7. (a) Tenant shall use and occupy the Premises as general executive,
sales, and administrative offices and uses ancillary thereto (including, without
limitation an employee break room) and for no other purpose. Tenant's use of the
Premises shall not violate any ordinance, law or regulations of any governmental
body applicable to the Premises and Tenant's use thereof or the "Rules and
Regulations" of Landlord as made a part hereof. In case of breach of this
covenant, Tenant agrees that Landlord may declare Tenant to be in Default of
this Lease as defined in Paragraph 12 below (if such breach is not cured within
the applicable cure period) and may terminate either this Lease or Tenant's
right to possession in accordance with the provisions of Paragraph 12 . Landlord
represents that Tenant's permitted use of the Premises set forth in first
sentence of this Paragraph 7 shall be in full compliance with all applicable
zoning, land use and development laws and that if Tenant uses the Premises as
permitted herein, its use shall not cause any increase in the existing rates
payable with respect to any fire or other insurance policies relating to the
Building. The Premises shall be used for purposes otherwise in keeping with the
Class A nature of the Building.
(b) In addition to complying with the Rules and Regulations set forth on
EXHIBIT "C" attached hereto and made a part of this Lease and the other terms of
this Lease, Tenant shall not do or permit anything to be done in or about the
Premises nor bring or keep anything herein which is not within the permitted use
of the Premises which will in any way increase the existing rate or affect any
fire or other insurance upon the Building or any of its contents or cause a
cancellation of any insurance policy covering said Building or any part thereof
or any of its contents. In the event that Tenant's actions, omissions or
occupancy of the Premises shall cause the rate of fire or other insurance on the
Building and/or the Premises to be increased, Tenant shall pay, as additional
rent, the amount of any such increase promptly upon demand by Landlord. Landlord
shall give Tenant written notice of and reasonable evidence of the proposed
voiding, suspensions, or increase in the premium of, such insurance, and an
opportunity to cease any conduct causing same, prior to Tenant's incurring the
cost of such increased premium. Tenant shall have the right to pay any such
increased premium cost in lieu of ceasing such conduct, as long as such conduct
is not otherwise prohibited in the Lease. The foregoing to the contrary
notwithstanding, Tenant shall not use or permit the Premises to be used in
violation of the prohibitions of Paragraph 4 of the "Rules and Regulations"
attached hereto.
SERVICES, ELEVATOR, WATER CLEANING & ELECTRICITY
8. (a) Landlord shall furnish, at Tenant's pro rata cost and expense as
provided in Paragraph 9, the following services: (i) elevator service; (ii)
heating and air conditioning in accordance with the standards set forth in
Exhibit B(9) for HVAC; (iii) hot and cold domestic water and common use of
restrooms; (iv) cleaning services; (v) security services consisting of
electronic keyed access to the Building and after-hours on-site guard service;
and (vi) exterior window washing. The services described in clauses (i), (iii)
and (v) shall be provided each day during the Term of this Lease. The services
described in clause (iv) shall be provided on each normal business day except
Holidays. The services described in clause (ii) shall be available from 8:00
a.m. until 6:00 p.m. Monday through Friday inclusive, and 8:30 a.m. until 1:00
p.m. on Saturdays, except Holidays, (herein referred to as "Normal Business
Hours"). As used herein, the term "Holidays" shall mean New Year's Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day and other
holidays generally observed by the owners of comparable buildings in the Georgia
400 at Mansell Road and Haynes Bridge Road Office Market (the "Market").
Heating, air conditioning and electric service shall also be available at
Tenant's expense during hours after normal Business Hours at rates not in excess
of the lowest rate charged to other tenants of the Building for comparable
service (hereinafter referred to as the "After Hours Cost"). The After Hours
Cost shall be equal
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to the sum of: (1) the actual cost of all electricity consumed in the operation
of the Premises (as recorded on electric submeters installed by Landlord at
Tenant's expense); (2) the cost of all water consumed for air conditioning and
restroom facilities; (3) the actual cost of Landlord's maintenance personnel or
contractors needed to serve Tenant's after hours requirements, if any; and (4)
the product of (i) the number of hours the Premises are occupied by Tenant above
the normal Business Hours, multiplied by (ii) the "After Hours Rate" (as
hereinafter defined). The After Hours Rate shall be an hourly rate equal to the
sum of (1) the increased maintenance cost, if any, per hour resulting from
Tenant's after hours use of all building and Premises systems; (2) the
incremental hourly cost of all water and electricity consumed by the Building
systems (e.g., cooling tower, fresh air fans, elevator, lobby, lighting, etc.)
which is attributable to Tenant's occupancy of the Premises during times other
than the Normal Business Hours; and (3) if the heating and air conditioning
system was used, the hourly replacement cost of the Building and Premises
heating and air conditioning systems computed by dividing the installed
replacement costs of such systems by the operating life (in hours) of such
systems. Landlord may charge Tenant for administering the After Hours Cost the
lesser of $35.00 per usage beyond the Normal Business Hours, $200.00 per month
or $2,400.00 per calendar year. The charges for After Hours Cost plus the
administrative charges shall be invoiced to Tenant by the twentieth (20th) of
each month and paid by Tenant to Landlord by the first of the succeeding month.
Paragraph 9(k) of the Lease shall govern the After Hours Cost.
(b) As provided in Paragraph 9, Landlord shall also furnish, at Tenant's
pro rata cost and expense pursuant to Paragraph 9 below, electric current on the
Premises for lighting and for small business machinery only (e.g., desk top
computers, fax machines, printers, kitchen appliances in Tenant's employee
breakroom and other small office equipment) using 110 volt, 20 AMP circuits.
Tenant will not use any electrical equipment which in Landlord's reasonable
opinion will overload the wiring installations or interfere with the reasonable
use thereof by other tenants in the Building. If Tenant shall use any equipment
which would result in subparagraph 8(e) below being applicable, Tenant shall
notify Landlord within ten (10) business days after installing such equipment.
Tenant shall not, without Landlord's prior written consent, in each instance,
make any alteration to the electrical system. All additional circuits or
equipment required shall be provided by Landlord and the reasonable cost of
installation and the power consumption thereof shall be paid by Tenant Within 30
days of Tenant's receipt of Landlord's invoice with substantiating
documentation. Landlord to provide minimum 6 watts per usable square foot demand
load for receptacles, lighting and miscellaneous uses.
(c) If Tenant uses any of the services or electric current enumerated in
this paragraph in an amount or for a period in excess of that provided for
herein, then Landlord reserves the right to charge Tenant as additional rent a
reasonable sum as reimbursement for the direct cost of such added services. In
the event of disagreement as to reasonableness of such charge, the opinion of
the appropriate local utility company or local independent professional engineer
shall prevail.
(d) Subject to the terms of subparagraph 19(f) below, Landlord shall in no
way be liable for cessation of any of the above services caused by strike,
accident or breakdown, nor shall Landlord be liable for damages from the
stopping of elevator nor elevator service, or any of the fixtures or equipment
in the Building being out of repair, or for injury to person or property, caused
by any defects in the electrical equipment, heating, ventilating and air
conditioning system, elevators or water apparatus, or for any damages arising
out of failure to furnish the services enumerated in this paragraph.
Notwithstanding the foregoing, in the event that (i) Landlord fails to provide
services in Paragraph 8(a)and 8 (b) to Tenant or to make any repair as required
by this Lease for a continuous period in excess of five (5) calendar days
following written notice from Tenant of such failure (which notice shall specify
the date on which such failure first occurred) and such failure is not caused by
the failure of any public utility to provide service to the Premises or the
Building, and (ii) such failure results in all or a substantial portion of the
Premises being untenantable for the conduct of Tenant's business,
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Landlord shall provide Tenant an offset against rents next owing, in an amount
equal to the Base Rental and Adjustments due under this Lease (with the amount
of such offset of rent being prorated based on the portion of the Premises which
is rendered untenantable in the event such failure does not render the entire
Premises untenantable) from and after the expiration of such five (5) calendar
day period and until such time as Landlord resumes providing such service or
services to Tenant or makes the repair in question. If such service or services
are not reinstated or if a repair is not completed within twenty days (20) of
the date such services were first interrupted, so that Tenant's Premises resumes
being tenantable, Tenant may cancel this Lease upon ten (10) days prior written
notice t o Landlord. The following are examples of conditions that the parties
agree will result in all or a portion of the Premises being untenantable: the
unavailability of air conditioning during hot summer months; the unavailability
of heating during cold winter months; the absence of janitorial services; and
the absence of electrical service to the Premises (unless such absence is due to
the failure of a public utility to provide service).
(e) In the event that Tenant uses equipment which consumes electricity in
excess of the electricity consumed by equipment typically used in the operation
of a business office (e.g., typewriters, copy machines, personal computers,
printers fax machines, and other customary office equipment) or in the event
Tenant consistently operates its business in all or a substantial portion of the
Premises for hours in excess of hours specified in subparagraph 8(a), Landlord,
at Tenant's expense, may separately meter the electrical consumption of the
Premises or a substantial portion of the Premises. In such event, Tenant agrees
to pay Landlord Tenant's pro rata share of such cost derived from Tenant's floor
area of the Premises as a ratio of the total floor area of the Building or any
smaller component thereof having a separate utility and/or service measuring
device (e.g., meter) to determine such cost. Such payment by Tenant to Landlord
shall be paid in the same manner and time as Base Rental in Paragraph 2, above.
Landlord agrees to include a provision such as this in the leases relating to
other space in the Building and enforce its provisions as to any tenant which
uses any disproportionately large amounts of utilities and/or services. Any
costs paid by Tenant pursuant to the terms of this subparagraph 8(e) shall not
be included in Adjustments pursuant to Paragraph 9 below. In the event that all
or a substantial portion of the Premises are separately metered, then an
appropriate adjustment to the amount of Adjustments shall be made (e.g., in the
event that the entire Premises are separately metered, then the only cost of
electricity included in Adjustments shall be electricity consumed in connection
with the common areas of the Building).
ADJUSTMENTS
9. In addition to the Base Rental provided in Paragraph 2 hereinabove,
Tenant shall pay to Landlord the following expenses of operating the Premises
and Tenant's pro rata share of the following expenses of operating the Building,
such expenses are herein called "Adjustments" (for purposes of this provision,
Tenant's pro rata share shall be computed by dividing the total floor area of
the Premises by the total rentable area of the Building, which pro rata share is
hereby agreed to be 2.73%):
(a) All real estate taxes on the Building and the Premises, including
land, the Building and improvements thereon. Said real estate taxes shall
include all real estate taxes and assessments that are levied upon and/or
assessed against the Premises, including any taxes, excluding income taxes,
which may be levied on rents and/or any reasonable cost incurred by
Landlord in contesting or mitigating same which results in lowering same.
(b) All insurance on the Building and the Premises including all
insurance premiums for fire, extended coverage, liability, and any other
insurance that Landlord deems necessary in its reasonable judgment on the
Building and the Premises.
(c) All costs to maintain, repair and, subject to Paragraph 9(l),
replace common areas, parking lots, sidewalks, driveways and other areas,
facilities and equipment used in common by the tenants of the Building.
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(d) Any parking charges, utility surcharges, or any other costs
levied, assessed or imposed by, or at the direction of, or resulting from
statutes or regulations, or interpretations thereof, promulgated by any
governmental authority in connection with Tenant's use or occupancy of the
Premises or the parking facilities serving the Premises.
(e) The cost of providing the services enumerated in Paragraph 8
above.
(f) The costs of maintaining and repairing the Building, its
mechanical, electrical, plumbing and heating, ventilating and air
conditioning systems, and exterior, including the roof system and glass.
(g) The cost of maintaining and repairing the Premises.
(h) The cost of property management, not to exceed four percent (4%)
of gross rentals and revenues collected from Tenant, and the cost of
Landlord's general and administrative expenses (not to exceed one percent
(1%) of Landlord's gross rentals from the Premises).
(i) Tenant is hereby notified that the estimated monthly installments
of "Adjustments" are payable per month in the amount of $2,129.90 and at
the rate of $5.75 per square foot (rentable) per year beginning on the
Commencement Date, and continuing each month in advance on the first day
thereof. Tenant shall continue to make said monthly payments until notified
by Landlord of a change thereof. By April 1st of each year Landlord shall
give Tenant a statement showing the total Adjustments for the Building for
the prior calendar year and Tenant's allocable share thereof, prorated from
the Commencement Date. Landlord's statement, prepared in accordance with
GAAP, shall show a breakdown of Adjustments into at least the following
categories: real estate taxes, insurance, common area maintenance, building
maintenance, utilities and garbage and property management fee. In the
event the total of the monthly payments which Tenant has made for the prior
calendar year are less than the Tenant's actual pro rata share of such
Adjustments, then Tenant shall pay the difference in a lump sum with the
next installment of Base Rental but no less than thirty (30) business days
after receipt of such statement from Landlord and shall concurrently pay
the difference between the revised monthly payments for the then current
calendar year versus the amount actually paid. In the event the total of
the monthly payments which Tenant has made for the prior calendar year are
greater than Tenant's actual pro rata share of such Adjustments, then the
amount of such overpayment shall be credited towards the monthly Base
Rental or Adjustments next coming due or reimbursed as appropriate. The
projected actual Adjustments for the current year shall be used for the
purposes of calculating the anticipated monthly Adjustments for the then
current year with actual determination of such Adjustments after each
calendar year as above provided. Even though the Term has expired and
Tenant has vacated the Premises, when the fi nal determination is made of
Tenant's share of said Adjustments for the year in which this Lease
terminates, Tenant shall immediately pay any increase due over the
estimated Adjustments previously paid and, conversely, any overpayment made
shall be immediately rebated by Landlord to Tenant.
(j) Notwithstanding anything to the contrary contained in this Lease,
the following items shall be excluded (or, as applicable, deducted) by
Landlord in determining or calculating Adjustments: (i) the cost of repairs
or other work occasioned by fire, windstorm or other casualty or loss, or
by the exercise of eminent domain, to the extent that same are covered or
would have been covered by Landlord's compliance with its covenant to
insure by proceeds of insurance or condemnation awards; (ii) rental
concessions or lease buy-outs; the costs of renovating or otherwise
improving or decorating, painting or redecorating other premises for
tenants of the Building or any other costs related to procuring new leases
or renewals, expansions or extensions of existing leases; or relocating the
premises of any tenants; (iii)
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depreciation; (iv) amounts paid to Landlord, subsidiaries or affiliates of
Landlord, for services to the Building if and to the extent the cost
therefor exceeds competitive costs for such ser vices in comparable
projects or buildings located within the Market were they not so rendered
by Landlord, or a subsidiary or affiliate of Landlord; (v) payments of
principal, interest or other payments or any kind on any deeds to secure
debt, mortgages, ground or underlying lease(s), or other hypothecations for
security of all or any part of the Project or the Building by Landlord;
(vi) any compensation paid to clerks, attendants, or other persons or
entities in any commercial concessions operated by Land lord; (vii) all
items and services and goods for which Tenant or any other tenant,
occupant, person or other party is obligated to reimburse Landlord or to
pay third parties; (viii) wages, salaries and other compensation paid to
employees of the Landlord at the Building who are above the grade of
Building superintendent or manager; (ix) brokerage, legal and professional
fees expended by Landlord in connection with negotiating and entering into
any leases and any related instruments (including w ithout limitation,
guaranties, surrender agreements, leasing amendments and consents to
assignment or subletting) with any tenant or other occupant of any portion
of the Project or the Building and the enforcement of any such instruments;
(x) estate, inheritance, gift, transfer, net worth, intangibles, franchise,
personal property taxes (except such personal property as required to
operate the Building) and income taxes of Landlord (but in no event shall
this subparagraph exclude rent taxes or any net worth, franchise or income
tax assessment in lieu of and in substitution for real estate taxes); (xi)
all other items for which Tenant or any other tenant, occupant or other
party compensates Landlord under this Lease so that no duplication of
payments by Tenant to Landlord shall occur; (xii) any costs, fines or
penalties incurred due to violations by Landlord of any law; (xiii) the
cost of the initial construction of the Building or any subsequent
additions thereto and the cost of correcting any defects in such
construction; (xiv) expenses for the replacement of any item covered under
warranty to the extent of proceeds or payments actually received by
Landlord under such warranty; (xv) Landlord's general corporate overhead
and administrative expenses except as permitted in Paragraph 9 (h); (xvi)
any expenses related to the removal of hazardous substances as defined in
any presently existing applicable environmental law or regulation brought
on the Premises by Landlord, its agents, contractors or employees or other
tenants; (xvii) costs and expenses incurred in connection with financing,
refinancing or syndication of the Building; (xviii) any cost or expense
which is specific to Buildings 10, 20, 30, 70 or any other building which
is hereafter part of the project of which the Building is a part (the
"Adjacent Buildings"); (xix) other items not customarily included as
operating expenses for comparable buildings in the Market; (xx) costs or
expenditures resulting from Landlord's default or from proven acts of
negligence or willful misconduct committed by Landlord, its agents,
contractors or employees; (xxi) late fees due to Landlord's failure to pay
any invoices in a timely manner; and (xxii) consulting fees except those
enhancing the operation of the Building or Premises. Any cost or expense
which benefits one or more of the Adjacent Buildings in addition to the
Building shall be allocated among the benefited buildings in proportion to
the square footage of the benefited buildings.
(k) Within 180 days of Tenant's receipt of a statement from Landlord
showing computation of the Adjustments (or at any time if Landlord fails to
provide such a statement), Tenant may, upon thirty (30) days' written
notice to Landlord and at Tenant's sole cost and expense, conduct an audit
of Landlord's books and records with respect to Adjustments. Officers or
agents of Tenant shall conduct such audit during regular business hours at
Landlord's offices. If such audit shall disclose an error in Landlord's
calculation of Adjustments for such year, proper adjustment shall forthwith
be made between Landlord and Tenant to correct any overpayment or
underpayment of Adjustments by Tenant (with any adjustment by Landlord in
favor of Tenant to be in the form of a credit against future rent) or
reimbursement if appropriate. In the event such audit discloses an
overstatement of Adjustments by Landlord of more than ten (10) percent,
Landlord shall pay the cost of such audit.
(l) Any costs which would be capitalized in accordance with generally
accepted accounting principles ("Capital Costs") shall be amortized on a
straight line basis over the useful
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life expectancy of same. The amortized cost allocable to a particular year
shall be includable in Adjustments for such year in accordance with the
following: (i) any costs incurred in acquiring and installing any device or
equipment reasonably believed by Landlord to improve the operating
efficiency of any system within the Building shall be included in
Adjustments in its entirety; (ii) any costs incurred in making an
improvement to the Building in order to comply with any law enacted or
reinterpreted by court decision subsequent to the Commencement Date shall
likewise be included in Adjustments in its entirety; Landlord will be
solely responsible for the compliance of the Building (including all Common
Areas which includes bathrooms), all exterior facilities of the Building
and the Property with applicable laws, including, without limitation, the
Americans with Disabilities Act. (iii) otherwise, the amount included in
Adjustments on account of such Capital Costs (exclusive of the costs
described in clauses (i) and (ii) which shall be included in their
entireties) in any year shall not exceed the Capital Costs Cap. The term
"Capital Cost Cap" shall mean (i)$.30 per square foot during the first year
of the Term and (ii)during each succeeding year an amount equal to the
product of $.30 per square foot and a fraction, the numerator of which is
the Index most recently published prior to the first day of the year in
question and the denominator of which is the Index most recently published
prior to the Commencement Date. As used herein, the Index shall mean the
Bureau of Labor Statistics Consumer Price Index (All Urban Consumers - U.S.
City Average 1982-84 = 100). In the event the Index ceases being published,
Landlord shall select a replacement index which will result in comparable
adjustments.
DESTRUCTION TO PREMISES
10. If the Building is totally destroyed (or so substantially damaged as to
be unable to be restored or repaired within 270 days of the fire or other
casualty as determined by Landlord's Insurance adjuster) by storm, fire,
earthquake, or other casualty, the Lease, shall at the option of either party,
by giving notice within thirty (30) days of such destruction or damage,
terminate as of the date of such destruction or damage, and rental shall be
accounted for as between Landlord and Tenant as of the date of such destruction
or damage. If the Premises, but not the entire Building, are damaged or are
rendered partially or wholly untenantable by any such casualty, rental shall
abate from the date of such destruction or damage in proportion to the area of
the Premises which cannot be used or occupied by Tenant as a result of such
casualty and Landlord shall restore the Premises within 120 days of the date of
such casualty unless prevented from doing so for reasons beyond Landlord's
control, in which event such restoration period shall be so extended for up to
60 days. If the Premises are not restored within the period of time specified in
the preceding sentence, Tenant shall be entitled to terminate this Lease by
written notice to Landlord.
RULES AND REGULATIONS
11. Tenant will observe and comply with the "Rules and Regulations"
attached hereto as EXHIBIT C and made a part hereof and such further reasonable
rules and regulations as Landlord may prescribe, on written notice to Tenant,
for the safety, care and cleanliness of the Building, and the comfort, quietness
and convenience of other occupants of the Building. Landlord shall have the
exclusive right to regulate and control parking areas and Tenant hereby agrees
to conform to such rules and regulations as Landlord may establish. Tenant shall
have the non-exclusive use of 17 automobile spaces for free parking on the
Property shown in Exhibit A-1 for its employees, vendors, and business invitees.
Twelve (12) of said spaces shall be located in the structured parking deck of
the Building. Tenant shall not allow more than seventeen (17) cars to be parked
on the Property for any employee, visitor, contractor, vendor, or other business
invitee. In no event shall Landlord adopt any rule or regulation which does not
apply to all tenants, including rules and regulations providing for reserved
parking. Landlord shall not enforce any of the rules and regulations in a manner
which is discriminatory against Tenant or inconsistent with the other provisions
of this Lease.
TENANT'S DEFAULT
12. The following constitute a Default: Any failure to pay rent or other
charges due hereunder as and when the same shall be due and payable (provided,
however, that no more than twice during any calendar year, a Default shall not
have occurred unless Tenant has failed to cure any such failure within three (3)
business days following written notice thereof from
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Landlord) or if Tenant defaults in performing any other of Tenant's non-monetary
obligations hereunder and fails to cure such default within thirty (30) days
after written notice from Landlord (or such longer period as may reasonably
necessary to cure such default if such default is not reasonably susceptible of
being cured within thirty (30) days, provided Tenant promptly commences its
efforts to cure such default within thirty (30) days and proceeds with due
diligence and good faith thereafter); or if Tenant files for or is adjudicated a
bankrupt; or if a permanent receiver is appointed for Tenant's property,
including Tenant's interest in the Premises, and such receiver is not removed
within sixty (60) days after written notice from Landlord to Tenant to obtain
such removal; or if whether voluntarily or involuntarily, Tenant takes advantage
of any debtor relief proceedings under any present or future law, whereby the
rent or any part thereof is, or is proposed to be reduced or payment thereof
deferred; or is proposed to be reduced or payment should be levied upon or
attached under process against Tenant, not satisfied or dissolved within thirty
(30) days after written notice from Landlord to Tenant to obtain satisfaction
thereof.
Upon the occurrence of any of the aforesaid events of Default, without further
notice or demand of Tenant in any instance, Landlord shall have the option to
pursue any one or more of the following remedies:
(a) Terminate this Lease by giving Tenant notice of termination, in
which event this Lease shall expire and terminate on the date specified in
such notice of termination, with the same force and effect as though the
date so specified were the date herein originally fixed as the termination
date of the Term of this Lease, and all rights of Tenant under this Lease
and in and to the Premises shall expire and terminate, and Tenant shall
remain liable for all obligations under this Lease arising up to the date
of such termination, and Tenant shall surrender the Premises to Landlord on
the date specified in such notice and if Tenant fails to do so, Landlord
may without prejudice to any other remedy which it may have for possession
or arrearage in rent, enter upon and take possession using lawful means of
the Premises and expel or remove Tenant and any other person who may be
occupying the Premises or any portion thereof.
(b) Terminate this Lease as provided in clause (a) above and recover
from Tenant all losses and damages Landlord may suffer or incur by reason
of Tenant's default, including, without limitation, a sum which, at the
date of such termination, is equal to the then present value (to be
computed as set forth below) of the excess, if any, of (i) the Base Monthly
Rental, Additional Rent and all other sums which would have been payable
hereunder by Tenant for the period commencing with the date following the
date of such termination and ending with the date hereinbefore set forth
for the expiration of the full Term hereby granted, over (ii) the aggregate
reasonable rental value of the Premises for the same period. Tenant hereby
agrees to pay to Landlord on demand the amount of all such losses and
damages which Landlord actually suffer by reason of such Tenant default.
(c) Without terminating this Lease, terminate Tenant's right of
possession and enter into and upon and take possession of the Premises or
any part thereof, and at Landlord's option, expel and remove persons and
property therefrom by entry using lawful means, dispossessing suit or
lawful means , without thereby releasing Tenant form any liability
hereunder, without terminating this Lease, and without being liable to
prosecution or any claim for damages therefor except for damages due to
Landlord's negligent acts or willful misconduct. Such property, if any, may
be removed and stored in a warehouse or elsewhere at the costs of, and for
the account of Tenant, all without being deemed guilty of trespass or
becoming liable for any loss or damage which may be occasioned thereby, to
Landlord's negligent acts or willful misconduct and may, but shall be under
no obligation to do so, relet the Premises in Landlord's name, but for the
account of Tenant, with or without advertisement, and by private
negotiations, and receive the rent therefore, and for any term and upon
such terms and conditions as Landlord may reasonably deem necessary or
desirable. Landlord shall in no way be responsible or liable for any rental
concessions or any failure to
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lease the Premises or any part thereof, or for any failure to lease the
Premises or any part thereof, or for any failure to collect any rent due
upon such reletting. Upon each such reletting, all rentals received by
Landlord from such reletting shall be applied as follows: first, to the
payment of any indebtedness (other than any amounts due hereunder) from
Tenant to Landlord; second, to the payment of any costs and expenses of
such reletting, including, without limitation, reasonable and necessary
brokerage fees and attorneys' fees and costs of alterations and repairs
(Tenant agreeing that Landlord shall have the right to make such
alterations and repairs as, in Landlord's reasonable judgment, may be
necessary to relet the Premises); third, to the paymen t of rental and
other charges then due and unpaid hereunder; and the residue, if any, shall
be held by Landlord to the extent of and for application in payment of
future amounts due hereunder as the same may become due and payable
hereunder. In reletting the Premises as aforesaid, Landlord may grant
market rent concessions and Tenant shall not be credited therefor. If such
rentals received from such reletting shall at any time or from time to time
be less than sufficient to pay to Landlord the entire sums then due from
Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall, at Landlord's option, be calculated and paid monthly. No
such reletting shall be construed as an election by Landlord to terminate
this Lease unless a written notice of such election has been given to
Tenant by Landlord. Notwithstanding any such reletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for any
such previous event of default provided same has not been cured.
Notwithstanding anything contained herein to the contrary, no termination
of Tenant's right of possession of the Premises by dispossessory action or
otherwise shall release Tenant from the performance of Tenant's obligations
under this Lease, including, without limitation, the timely payment of all
rent reserved hereunder for the balance of the Term of this Lease following
such termination of Tenant's right of possession, and Tenant agrees to so
perform said obligations.
(d) Without liability to Tenant or any other party and without
constituting a constructive or actual eviction, suspend, or discontinue
furnishing or rendering to Tenant any property, material, labor, utilities
or other service, wherever Landlord is obligated to furnish or render the
same, so long as Tenant is in default under this Lease.
(e) Allow the Premises to remain unoccupied and collect Base Monthly
rental and other charges due hereunder from Tenant as they come due.
Notwithstanding the forgoing, Landlord shall use commercially reasonable
efforts to mitigate Tenant's damages hereunder.
(f) Landlord may perform, as agent for and at the expense of Tenant,
any obligation of Tenant under this Lease which Tenant has failed to
perform and of which Landlord shall have given Tenant notice and
opportunity to cure as provided herein, the cost of which performance by
Landlord together with interest thereon at the default rate from the date
of such expenditure, shall be deemed additional rental and shall be payable
by Tenant to Landlord upon demand, and Tenant agrees that Landlord shall
not be liable for any damages resulting to Tenant from such action,
provided such action does not constitute gross negligence or willful
misconduct on the part of landlord.
(g) Landlord may exercise any other legal or equitable right or remedy
which it may have, including, but not limited to Landlord's right
judicially to obtain possession pursuant to Georgia statutory law.
Notwithstanding the provisions of clause (g) above and regardless of whether a
"Default" shall have occurred, Landlord may exercise the remedy described in
clause (g) without any prior notice to Tenant if Landlord, in its reasonable
judgment, believes it would be materially injured by failure to take rapid
action and if the unperformed obligation of Tenant constitutes an emergency. The
Tenant shall be notified within ten (10) business days after such
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emergency. Any costs and expenses incurred by Landlord (including, without
limitation, reasonable attorneys' fees) in enforcing any of its rights or
remedies under this Lease shall be deemed additional rent and shall be repaid to
Landlord by Tenant within three days after demand.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any other
remedy herein provided or any other remedy thereby excluding the later election
of an alternate remedy, or a forfeiture or waiver of any Base Rental, Additional
Rent or other charges and assessments payable by Tenant and due to Landlord
hereunder or of any damage accruing to Landlord by reason or violation of any of
the terms, covenants, warranties and provisions herein contained. No course of
dealing between Landlord or Tenant under Paragraph 15, or under any other
provisions of this Lease, shall operate as a waiver of any rights of Landlord or
Tenant hereunder any other provisions of this Lease, nor shall any waiver of an
event of default on one occasion operate as a waiver of any subsequent event of
default or any other event of default. No express waiver shall effect any
condition, covenant, rule, or regulation other than the one specified in such
waiver and that one only for the time and in the manner specifically stated.
If this Lease is terminated by Landlord pursuant to clause (b) above, "present
value" shall be computed by discounting the amount of such excess to present
worth at a discount rate equal to one percent (1%) above the discount rate then
in effect at the Federal Reserve Bank of Atlanta, Georgia. Neither the
commencement of any action or proceeding, any sum or sums then due be a bar to
the maintenance of any subsequent actions or proceedings for the recovery of
such sums or sums so omitted. Landlord's pursuit of any remedy or remedies,
including, without limitation, any one or more of the remedies stated above
shall not (i) constitute an election of remedies or preclude pursuit of any
other remedy or remedies provided in this Lease or separately or concurrently or
in any combination, or (ii) serve as the basis for any claim of constructive
eviction, or allow Tenant to withhold any payments under this Lease.
Landlord hereby waives, releases and relinquishes any and all claims, rights,
interests, liens upon and rights of distraint, levy, attachment or recourse
(whether arising by virtue of statute, common law or otherwise) to equipment or
trade fixtures which Tenant may lease, and to equipment, trade fixtures and
other personal property owned by Tenant (the "Owned Property"). Owned Property
shall include, without limitation, specialized equipment unique to the nature of
Tenant's business, including, with limitation, computer software, computer
tapes, computer program tapes, computer program disks, computer program
documentation and manuals, computer program codes, customer lists or other such
inventory or proprietary information which may belong to Tenant or be in the
possession of Tenant, which is located upon the Premises during the Term, or any
renewal or extension thereof. The foregoing waiver, release and relinquishment
is self-operative and does not require the necessity for any further instrument
or document. Notwithstanding the foregoing, Landlord hereby agrees to furnish,
upon written request, waivers of Landlord's rights and liens as described herein
and shall exempt the same from distraint, levy, attachment, or recourse."
The failure of Landlord to insist upon strict performance of any of the terms,
condition and covenants herein shall not be deemed to be a waiver of any
subsequent breach or default in the terms, conditions, and covenants except as
may be expressly waived in writing.
Notwithstanding the foregoing, Landlord shall not be responsible for any
consequential, indirect, speculative or punitive damages of Tenant.
EARLY TERMINATION
13. No termination of this Lease prior to the normal ending thereof by the
lapse of time or otherwise shall affect Landlord's right to collect rent and
other charges due at the time of such termination.
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ASSIGNMENT SUBLETTING
14. (a) Tenant may assign this Lease and any interest hereunder, or sublet
the Premises or any part thereof, or permit the use of the Premises to or by any
affiliate of Tenant without the approval of Landlord. Tenant may not assign this
Lease and any interest hereunder or sublet the Premises or any part thereof or
permit the use of the Premises by any party other than an affiliate of Tenant
without the prior written consent of Landlord, such consent to be in conformance
with Paragraph 39 hereof. The term "affiliate" shall mean any entity now or
hereafter directly or indirectly in control of, controlled by or under common
control with Tenant or its principals; or into which or with which Tenant
intends to merge or consolidate; or which agrees to acquire all or substantially
all of Tenant's outstanding stock, partnership interests or assets. The terms
"control", "controlled by" and "under common control with" shall mean, with
respect to any entity, the possession of the power to direct or cause the
direction of the management and policy of such entity, whether through the
ownership of voting securities or contracts. Tenant agrees to provide to
Landlord notice of any such assignment or sublease to an affiliate of Tenant.
(b) In the event Tenant subleases or assigns any part of the Premises to a
party other than an affiliate at a rental rate exceeding the Base Rental due
Landlord herein, fifty percent (50%) of the excess rental received by Tenant,
less the cost of subleasing or assigning the Premises, shall be due to Landlord
within ten (10) days after receipt of such excess by Tenant. If Tenant has
vacated or discontinued operation in all or substantially all of the Premises
and subleases or assigns the Premises to another tenant, then, in addition to
other requirements of this paragraph 29, the Lease shall be amended by adding a
Damage Deposit of $8,278.82 in paragraph 29, and Landlord shall receive 50% of
the excess rental received by Tenant, less the cost of subleasing and assigning
the Premises. If Landlord approves Tenant's sublease or assignment, Landlord, as
a condition of its approval, shall (1) be paid $500.00 to reimburse Landlord for
its administrative review of the sublease or assignment; (2) receive a fully
executed copy of the sublease or assignment; (3) hold Tenant liable under this
Lease as if there were no sublease or assignment. Notwithstanding the foregoing,
if Tenant desires to sublease or assign substantially all of the Premises,
Landlord may cancel this Lease and enter into a new lease with Tenant's proposed
sublessee or assignee.
EMINENT DOMAIN
15. If all or any substantial part of the Premises, the land on which the
Building stands, any portion of the common areas necessary for the use and
enjoyment of the Premises or any estate therein is taken by virtue of eminent
domain or is conveyed or leased in lieu of such taking, the Lease shall expire
on the date when title shall vest, or the term of such lease shall commence, and
any rent paid for any period beyond said date shall be repaid to Tenant.
Widening of streets abutting the land on which the Building stands and/or loss
of less than 10% of the total Parking Spaces shall not affect this Lease,
provided no part of the Building is taken and there is no material and adverse
impact on Tenant's ability to park on the Property or any substituted property,
(hereinafter referred to as "Tenant's Parking Impact"). Tenant shall not be
entitled to any part of any condemnation award granted to Landlord or to any
payment in lieu thereof unless condemning authority pays Landlord's and Tenant's
compensation in a lump sum payment, but Tenant shall be entitled to file its own
claim for damages with the condemning authority. If less than substantially all
of the Premises, the land on which the Building stands, or the common areas
necessary for the use and enjoyment of the Premises is so taken and such taking
renders a portion of the Premises untenantable and Tenant could reasonably be
expected to operate within the remaining Premises, Landlord shall conduct such
repair work, if any, as may be necessary to restore the premises to a
self-contained rental unit and provide Tenant an offset against the Base Rental
and Adjustments next owing under this Lease (with the amount of such offset
being determined prorata based on the portion of the Premises rendered
untenantable) from and after the date of such taking until such time as said
portion of the Premises, the land on which the Building stands, or said common
area so taken is restored by Landlord. Any partial taking of the Premises th at
renders the Premises untenantable as defined in Paragraph 8(d) and a loss of
parking causing a Tenant Parking Impact (as herein before defined) shall give
Tenant the option to cancel this Lease upon forty-five (45) days prior written
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notice to Landlord.
ENTRY
16. Landlord may enter the Premises at reasonable hours and upon reasonable
verbal request to show the Premises to mortgagees, or prospective purchasers, or
prospective tenants only during the last twelve (12) months of the term, or to
inspect the Premises, or to make repairs required of Landlord under the terms
hereof or repairs to adjoining space within the Building. Such entry by Landlord
shall not entitle Tenant to any rent abatement, unless such entry by Landlord
deprives Tenant of the use of all or a substantial portion of the Premises for
the conduct of Tenant's business during operating hours of the Building as
specified in Paragraph 8(a). Landlord agrees to exercise its rights pursuant to
this paragraph 16 in a manner so as not to unreasonably interfere with Tenant's
use and enjoyment of the Premises or unreasonably interfere with Tenant's
business operations or occupancy. A representative of Tenant shall accompany
Landlord when in the Premises, unless said entry is for routine janitorial
service or emergency repairs.
TRANSFER OF TENANTS
17. OMITTED
SUBORDINATION
18. (a) This Lease shall be subject and subordinate to all security deeds
which may now or hereafter affect this Lease or the real property of which the
Premises form a part, and also to all renewals, modifications, extensions,
consolidations and replacements of such underlying security deeds. In
confirmation of the subordination set forth in this Paragraph 18, Tenant shall,
within fifteen (15) business days after written request of Landlord or the
holder of any security deed, execute and deliver such further instruments as may
be reasonably requested by any holder of an underlying security deed.
Notwithstanding the provisions of this Paragraph 18, Tenant shall, at the
request of any holder of a security deed, mortgage or other lien affecting this
Lease of the real property of which the Premises form a part, be bound to any
such holder which succeeds to Landlord's interest through foreclosure or
otherwise under all the terms, covenants and conditions of this Lease for the
term remaining, and Tenant shall promptly attorn to such succeeding party as its
Landlord under this Lease, providing that such successor to Landlord shall have
executed a subordination, non-disturbance, and attornment agreement similar to
Exhibit "D". Tenant agrees that should any succeeding party require a separate
attornment agreement regarding matters covered by this Lease, then Tenant shall
enter into any such attornment agreement, provided it does not otherwise modify
this Lease and has no adverse effect upon Tenant's continued occupancy of the
Premises. Landlord hereby advises Tenant that as of the date of execution
hereof, the real property of which the Premises is a part is encumbered by and
subject to a deed to secure debt. Landlord agrees to cause the document similar
to Exhibit "D" to be signed by Landlord's lender within sixty (60) days after
the date of this Lease. Notwithstanding any provisions to the contrary contained
in this paragraph 18, in no event sha ll this Lease be subject and sub ordinate
to any future security deed, mortgage or lien unless the holder thereof provides
an agreement, in form and substance reasonably satisfactory to Tenant, agreeing
to recognize this Lease and Tenant's rights thereunder in the event of a
foreclosure.
(b) If Tenant shall not be in default beyond any applicable notice or grace
period, Tenant shall have the right to peaceably and quietly occupy and enjoy
the full possession and use of the Premises, subject, however, to the terms of
this Lease. Landlord agrees to take reasonable steps to cause any noises, odors
or other similar occurrences originating in portions of the Building other than
the Premises from disturbing Tenant's use and enjoyment of the Premises. Tenant
acknowledges that certain levels of noise and certain odors are unavoidable
consequences of occupying space in a multi-tenant office building. Tenant
acknowledges further that the construction of improvements on floors adjacent to
the Premises will occur from time to time during the Term and that such
construction will result in noise which Tenant may
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find unpleasant. Landlord nevertheless agrees to take such actions as are taken
by the owners of comparable buildings in the Market to cause construction
activities to be conducted in such a way as to minimize the disruption of
Tenant's use and occupancy of the Premises.
INDEMNITY/ HOLD HARMLESS
19. Tenant hereby on behalf of itself and any party holding by, through or
under Tenant agrees to indemnify and hold harmless Landlord, its agents,
contractors and employees in the following manner:
(a) Against any default under this Lease by Tenant or any party
holding by, through or under Tenant for any and all damages, costs, claims
of liabilities of whatsoever nature sustained by Landlord or any party
holding by, through or under Landlord as a result of such default or
failure.
(b) Against any and all claims, damages, losses and liabilities,
whatsoever their nature, cause or origin, attributable in any manner to the
negligence of Tenant, or Tenant's agents, contractors, employees or to the
use and occupancy of the Premises or the Building by Tenant, its agents,
contractors, employees, licensees or invitees.
(c) Against any and all damage or injury to the Premises caused by
Tenant, or Tenant's agents, contractors, employees, licensees or invitees,
to Tenant's own property, to Tenant, its agents, contractors, employees,
invitees or licensees arising from any use or condition of the Premises,
and from any act or failure by Tenant with respect thereto.
(d) Against any and all damages to Tenant of whatever nature resulting
from or caused by the condition of the Premises, or the Building and/or
cessation of operations or malfunction of any equipment or apparatus
serving the Premises or the Building.
(e) Against any and all losses or damages to any person or property of
Tenant, its agents, contractors, employees, invitees or licensees
occasioned by fire, act of God, public enemy, injunction, riot, strike,
insurrection, war, court order, requisition, or order of governmental body
or authority, or other matters beyond the reasonable control of Landlord.
(f) Notwithstanding the terms of subparagraph (a) through (e) above,
the only exceptions to Tenant's full assumption of and liability for any
and all claims whatsoever their nature, cause or origin which relate to the
Premises, the Building and equipment and apparatus located therein and
walks and entryway thereto shall be only (i) those claims resulting from
Landlord's default or from acts of negligence or willful misconduct
committed by Landlord, its agents, contractors or employees, and (ii) those
claims included within the waiver of subrogation contained in Paragraph 21
below. Notwithstanding the terms of subparagraphs (a) through (e) above,
Landlord hereby and on behalf of itself and any party holding by, through
or under Landlord agrees to indemnify and hold harmless Tenant, its agents,
contractors and employees from any and all loss, damage, liability, cost
and expense (including without limitation, reasonable attorney's fees and
court costs) incurred by Tenant, its agents, contractors, employees,
invitees or licensees resulting from Landlord's default under the terms of
this Lease or from acts of negligence or willful misconduct committed by
Landlord, its agents, contractors or employees. Under no circumstances
shall Tenant or Landlord be deemed liable or responsible for and shall not
be required to indemnify the other for the acts, negligent or otherwise, of
other tenants of the Building or the Property.
(g) Tenant's obligation in Paragraph 20 shall be secured by a
$5,000,000 liability insurance policy covering this obligation issued by a
company rated "A" by Best's Rating Service with a certificate thereof
deposited with Landlord upon the execution hereof. Said policy shall name
Landlord as an additional insured and shall not be terminated or canceled
without thirty (30) days prior written notice to Landlord by carrier of
such insurance. Tenant's failure to provide and maintain said insurance
policy within the applicable notice and cure
16
<PAGE>
period shall be a Default in Paragraph 12, above Tenant shall, at its sole
cost and expense obtain and maintain commercial general liability
insurance, including blanket contractual liability coverage, with limits of
not less than $5,000,000.00 combined single limit for personal injury and
property damage; comprehensive automobile liability insurance covering all
owned, non-owned and hired vehicles, with limits or not less than
$1,000,000.00 combined single limit for personal injury and property damage
including Tenant's personal property; and statutory workers compensation
and employers liability coverage, with limits of not less than $250,000.00,
or qualified self-insurance. Landlord will be named as an additional
insured as Landlord's interests may appear. Upon written request, Tenant
shall deliver to Landlord a certificate evidencing such coverages. Such
insurance policies shall provide for no cancellation or material adverse
alteration without 10 day's prior written notice to Landlord.
FIRE AND EXTENDED INSURANCE COVERAGE
20. Tenant shall carry fire and extended coverage insurance insuring its
interest in Tenant's improvements in the Premises and its interest in its office
furniture, equipment and supplies therein. Tenant shall, within thirty (30) days
following notice from Landlord, deposit with Landlord the policy or policies of
such insurance or a certificate or certificates thereof. The instrument or
instruments deposited with Landlord hereunder shall evidence that such insurance
is in full force and effect, that such insurance will not be terminated or
canceled without ten (10) days prior notice to Landlord by the carrier of such
insurance. Landlord covenants and agrees that it will carry a "Special Form" all
risk insurance policy with respect to the Building in an amount not less than
100% of replacement cost of the Building (subject to customary deductibles), and
that it will maintain on a continuous basis, in adequate amounts, liability
insurance on the Property. Landlord shall obtain and maintain all risk property
insurance for the Building upon a full replacement cost basis, subject to
customary deductibles, with no coinsurance requirement; commercial general
liability insurance, including blanket contractual liability coverage, with
limits of not less than $5,000,000.00 combined single limit for personal injury
and property damage; comprehensive automobile liability insurance covering all
owned, non-owned and hired vehicles, with limits of not less than $1,000,000.00
combined single limit for personal injury and property damage and statutory
works compensation and employers liability coverage, with limits of not less
that $250,000.00, or qualified self-insurance. Landlord shall deliver, upon
written request, a certificate evidencing such coverages. Such insurance
policies shall provide for no cancellation or material alteration without 30
days' prior written notice to Tenant. Landlord shall require each of the tenants
of the Building to obtain and main tain commercial general liab ility insurance,
including blanket contractual liability coverage, with limits of not less than
$5,000,000.00 combined single limit for personal injury and property damage.
WAIVER OF SUBROGATION
21. Anything in this Lease to the contrary notwithstanding, Landlord and
Tenant hereby waive and release each other, and their respective partners,
agents and employees, of and from any and all rights of recovery, claim, action
or cause of action against each other, their agents, officers and employees, for
any injury or death or any loss or damage that may occur to the Premises, the
Building or any of the contents thereof, to the extent that such loss or damage
is covered by the insurance carried by Landlord and Tenant hereunder (or if
either Landlord or Tenant defaults in its obligation to carry insurance pursuant
to the terms of paragraphs 19 or 20 above, to the extent that such loss or
damage does not result from negligence or intentional misconduct of the party
being released and such loss would have been covered under the policies required
to be carried pursuant to paragraph 19 or 20 above taking into account any
so-called "deductibles") and regardless of cause or origin, including but not
limited to negligence of Landlord or Tenant or their agents, officers and
employees. Because this paragraph will preclude the assignment of any claim
mentioned in it by way of subrogation or otherwise to an insurance company, each
party to this Lease agrees immediately to give to each insurance company which
has issued to it policies of insurance covering all risk of direct physical loss
written notice of the terms of the mutual waivers contained in this paragraph,
and to use its reasonable good faith efforts to have the insurance policies
properly endorsed, if necessary, to prevent the invalidation of the insurance
coverages by reason of the mutual waiver contained in
17
<PAGE>
this section. If despite using its good faith efforts, either party is unable to
obtain such an endorsement, such party shall promptly provide written notice of
such failure to the other party. In such event, the waiver and release granted
above by the party unable to obtain such endorsement shall not apply unti l such
tim e as such endorsement is provided.
Landlord and Tenant acknowledge that the waivers and releases set forth in this
paragraph are intended to result in any loss or damage which is required to be
covered by insurance pursuant to the terms of this Lease being borne by the
insurance carrier of Landlord or Tenant, as the case may be.
LANDLORD'S AND TENANT'S RIGHTS
22. The rights given to Landlord and Tenant herein are in addition to any
rights that may be given to Landlord by any statute or otherwise.
HOLDING OVER
23. If Tenant remains in possession of the Premises or any part after
expiration of the Term hereof with Landlord's acquiescence and without any
specific agreement between the parties, Tenant shall be a "Tenant at Will" and
such tenancy shall be subject to all the provisions hereof except that the
monthly portion of the Base Rental shall be increased by fifty percent (50%) for
the first month of the hold-over period then shall be doubled for the remaining
hold-over period and there shall be no renewal of this Lease by operation of
law. Nothing in this Paragraph shall be construed as consent by Landlord to the
possession of the Premises by Tenant after the expiration of the term other than
as "Tenant at Will".
NO WAIVER CHANGES
24. (a) The failure of either party to insist in any instance on strict
performance of any covenant or condition or hereof, or to exercise any option
herein contained, shall not be construed as a waiver of such covenant, condition
or option in any other instance. This Lease cannot be changed or terminated
orally.
MARGINAL NOTATIONS
25. The marginal notations in this Lease are included for convenience only
and shall not be taken into consideration in any construction or interpretation
of this Lease or any of its provisions.
NOTICE
26. Any notice by either party to the other shall be valid only if in
writing and delivered personally (including delivery by express courier), sent
by registered or certified mail addressed (1) if to Tenant, at Advanced
Technical Products, Inc. at 200 Mansell Court East, Suite 505, Roswell, GA
30076, and (2) if to Landlord, at Landlord's address set forth above, or at such
other address for either party as that party may designate by notice to the
other. Notice shall be deemed given, if delivered personally, upon the day of
receipt thereof, and if mailed, upon the delivery thereof or refusal to accept
delivery thereof.
SUCCESSORS ASSIGNS
27. The provisions of the Lease shall bind and inure to the benefit of
Landlord and Tenant, and their respective successors, and where permitted
assigns, it being understood that the term "Landlord", as used in this Lease,
means only the owner, or the lessee for the time being of the land and the
Building of which the Premises are a part, so that in the event of any sale or
sales of said property or of any lease thereof, the Landlord named herein shall
be and hereby is entirely freed and relieved of all covenants and obligations of
Landlord hereunder accruing thereafter, and it shall be deemed without further
agreement that the purchaser, or the lessee, as the case may be, has assumed and
agreed to carry out any and all covenants and obligations of Landlord hereunder
during the period such party has possession of the land and the Building. Should
the land and the entire Building be severed as to ownership by sale and or
lease, then the owner of the entire Building or lessee of the entire Building
that has the right to lease space in the Building to tenants shall be deemed the
"Landlord". Tenant shall be bound to any succeeding party Landlord for all the
terms, covenants and conditions hereof and shall
18
<PAGE>
execute any attornment agreement not in conflict herewith at the request of any
succeeding party Landlord.
ENTIRE AGREEMENT AND ENFORCEABILITY
This Lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein shall be of any force or effect. If any term or
provision of this Lease shall be invalid or unenforceable, the remaining terms
and provisions hereof shall not be affected thereby; if the application of any
term or provisions of this Lease to any person or circumstance shall to any
extent be invalid or unenforceable, such term or provision shall remain
applicable as to those persons or circumstances to which it shall be valid and
enforceable; and each term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by Law.
19
<PAGE>
SECURITY DEPOSIT
29. On the execution hereof, if Tenant's rating is not "A" by Moody's or
equivalent, then Tenant shall deposit $8,778.82 as Security Deposit with
Landlord. Such Security Deposit shall be held by Landlord interest-free,
co-mingled with Landlord's funds and returned to Tenant within sixty (60) days
after the expiration of the Lease Term, so long as Tenant complies with the
provisions of this Lease.
ATTORNEY'S FEES AND HOMESTEAD
30. Any amounts payable hereunder by Tenant to Landlord or vice versa which
are not paid within five (5) days of the date due shall (i) incur a late fee of
five percent (5%) of the amount due and (ii) bear interest per annum at the
lesser of the rate published by the WALL STREET JOURNAL as the prime rate per
annum plus four percent (4%) or the highest legal interest rate from said due
date. If amounts owing Landlord by Tenant or Tenant by Landlord are collected by
or through an attorney at law, the party owing such sums agrees to pay the
reasonable attorney's fees actually incurred by the other party.
GENDER
31. The parties "Landlord", "Tenant" and "Agent" and pronouns relating
thereto, as used herein shall include male, female, singular and plural,
corporation, partnership or individual, as may fit the particular parties.
NO ESTATE IN LAND
32. It is understood and agreed that Tenant has only a usufruct under this
Agreement, which is not subject to levy and sale, and that no estate shall pass
out of Landlord to Tenant hereunder with Tenant's rights to the use of the
Premises being solely contractual.
ENVIRONMENTAL MATTERS
33. Subject to including the cost thereof under Paragraph 9 (l) (ii)
Landlord will cause the Building corridors, bathrooms, lobbies, and exterior
common areas to be in compliance with all laws, including without limitation,
the Americans with Disability Act. Landlord represents to Tenant that the real
property on which the Building is to be built and the Building upon construction
shall contain no Hazardous Substances. Landlord agrees to indemnify and hold
Tenant harmless from and against any and all losses, liabilities, costs and
expenses (including without limitation, reasonable attorney's fees, court costs,
inspection fees and remediation costs) suffered by Tenant on account of the
breach of the foregoing representation. Tenant agrees to indemnify and hold
Landlord harmless from and against any and all losses, liabilities, costs and
expenses (including without limitation, reasonable attorney's fees, court costs,
inspection fees and remediation costs) suffered by Landlord arising from any
Hazardous Substances introduced, released by or placed in the Premises, the
Building or the real property on which the Building is located by Tenant, its
agents, contractors or employees. As used in this Lease, the term "Hazardous
Substances" means asbestos, polychlorinated biphenyl, petroleum products and
such materials, waste, contaminates or other substances defined as toxic,
dangerous to health or otherwise hazardous by cumulative reference to the
following sources as amended from time to time: (i) the Resource Conservation
and Recovery Act of 1976, 42 USC ss.6901 et. seq. ("RCRA"); (ii) the Hazardous
Materials Transportation Act, 49 USC ss.1801, et. seq.; (iii) the Comprehensive
Environmental Response Compensation and Liability Act of 1980, 42 USC ss.9601
et. seq. ("CERCLA"); (iv) applicable laws of the jurisdiction where the Property
is located, and (v) any federal, state or local statutes, regulations,
ordinances, rules or orders issued or promulgated under or pursuant to any of
those laws or otherwise by any department, agency or other administrative,
regulatory or judicial body. " Notwithstanding the foregoing, Tenant may handle,
store, use or dispose of products containing small quantities of Hazardous
Materials (such as aerosol cans containing insecticides, toner for copiers, p
ains, paint remover and the like) to the extent customary and necessary for the
use of the Premises for general office purposes; provided that Tenant shall
always handle, store, use and dispose of any such Hazardous Materials in a safe
and lawful manner and never allow such Hazardous Materials to contaminate the
Premises, Building and appurtenant land or the environment."
TIME OF ESSENCE
34. Time is of the essence of this Agreement.
20
<PAGE>
COMMISSION
35. Landlord and Tenant hereby acknowledge that Dove Properties, Inc.
("Dove") acted as agent for Landlord, and Carter & Associates as agent for the
Tenant in this transaction. Dove and Carter & Associates are hereinafter
referred to as "Agents". The Landlord, its successors and assigns shall be
responsible for Agent's commission, as specified in a separate agreement between
Landlord and Agent. Landlord and Tenant hereby respectively acknowledge that no
other party acted as agent for it in this transaction and agree to hold harmless
and indemnify each other against claims to the contrary.
ESTOPPEL CERTIFICATE
36. Tenant shall, from time to time, no more than once a year, upon the
request of Landlord, deliver to Landlord an estoppel certificate or
certificates, jointly or separately addressed to Landlord, or any holder of a
security deed, mortgage, or other lien affecting the Premises, executed by an
appropriate representative of Tenant, and stating to the extent accurate that:
(1) Tenant has accepted the Premises; (2) to the best of Tenant's knowledge,
Landlord is not in default under this Lease, (3) Tenant has not paid any rent in
advance of the date when due under this Lease; and (4) Tenant has no known
offset, charge or deduction against its rent obligations. Tenant will also
certify to any other matter reasonably required by Landlord or any such holder.
Landlord shall provide a comparable certificate to Tenant upon request from time
to time, but no more than once a year.
EXCULPATORY LANGUAGE
37. If Landlord fails to perform its obligations in accordance with any of
the provisions of this Lease, Landlord agrees that it shall, to the extent and
under the conditions provided for in this Lease, be liable to Tenant on account
of any damages caused thereby, but Tenant agrees that any money judgment
resulting from such failure shall be satisfied only out of Landlord's interest
in the Building and the land of which the Premises are a part, and the income
therefrom and no other real, personal or other property of Landlord or of the
partners comprising Landlord, or of the officers, shareholders, director,
partners, or principals of such partners comprising Landlord, shall be subject
to levy, attachment, or execution, or otherwise sued to satisfy any such
judgment. The term, "Landlord", as used in this Paragraph, shall mean only the
owner or owners at the time in question of the fee title or interest in a ground
lease of the Premises, and in the event of any transfer of such title or
interest, Landlord herein named (and in case of any subsequent transfers, the
then grantor) shall be relieved from and after the date of such transfer of all
liability as respects Landlord's obligations thereafter to be performed (but not
from previously accrued liabilities), provided that any funds in the hands of
Landlord or the then grantor at the time of such transfer, in which Tenant has
an interest, shall be delivered to the grantee and provided further that the
successor to Landlord shall assume the obligations of Landlord thereafter
arising. The obligations contained in this Lease to be performed by Landlord
shall, subject as aforesaid, be binding on Landlord's successors and assigns,
only during their respective periods of ownership. For the purposes of this
paragraph 37, "Landlord's interest in the Building" shall include the amount of
any insurance proceeds or condemnation awards received by Landlord, net of any
amounts retained by Landlord's Lender, and any net rents recei ved by Landl ord
after the occurrence of an event of default by Landlord. Nothing contained
herein shall be deemed to limit, restricut, or prohibit Tenant from exercising
any right of offset granted to Tenant pursuant to this Lease.
TENANT IMPROVEMENT ALLOWANCE
38. (a) Landlord shall spend on behalf of Tenant Eighty-Six Thousand Seven
Hundred Two and 00/100 dollars ($22.00) per usable square foot (herein referred
to as the "Tenant Improvement Allowance") for the cost of designing, permitting,
and constructing tenant improvements in the Premises according to the Tenant
Improvement Plans. This expenditure shall be in addition to Landlord's cost to
construct the Base Building Improvements as reflected on EXHIBIT B (Landlord
hereby agreeing to construct the Building so as to include the Base Building
Improvements described on EXHIBIT B), except that demising doors and walls,
excluding core bathroom walls, shall not be Base Building but shall be included
as tenant improvements. Tenant shall not be entitled to propose changes to the
elevator entrance finishes.
21
<PAGE>
(b) Tenant agrees to approve the preliminary architectural plan of the
Tenant Improvement Plans and submit specifications for its electrical,
mechanical, and plumbing no later than SEE EXHIBIT "E". Landlord's architect
shall complete the Tenant Improvement Plans by SEE EXHIBIT "E". Tenant shall
provide Landlord with any comments and suggested revisions to the Tenant
Improvement Plans within five (5) business days of receipt thereof. In the event
Tenant fails to respond to Landlord within such five (5) business day period,
Tenant shall be deemed to have approved the Tenant Improvement Plans. If Tenant
provides Landlord comments and suggested revisions to the Tenant Improvement
Plans within such five (5) business day period, Landlord shall make revisions
within five (5) business days and provide the revised Tenant Improvement Plans
to Tenant. The deadline for approval of the final Tenant Improvement Plans SEE
EXHIBIT "E" . Landlord and Tenant agree use commercially reasonable efforts to
abide by the Schedule attached SEE EXHIBIT "E". Tenant's delay in approving
plans, pricing or other items needed by Landlord shall not delay the
Commencement Date, even though substantial completion of the Premises may be
delayed by Tenant's action.
(c) Tenant agrees to use Lyman, Davidson, Dooley to design the Tenant
Improvement Plans, and Barrett, Woodyard to design Mechanical, Electrical, and
Plumbing Drawings, such cost of $0.68 per square foot (usable) to be paid by
Landlord out of the Tenant Improvement Allowance. Tenant agrees that the Base
Building Architect, Lyman, Davidson, Dooly, Inc. shall be paid from the Tenant
Improvement Allowance ten cents per square foot (usable) to verify that Tenant
Improvement plans coordinate with the Base Building design.
(d) Landlord agrees to obtain bids as to the cost of construction of the
work depicted in the Tenant Improvement Plans from Abel Construction, Structured
Services and Ordnor Construction. Landlord agrees to award the contract for
tenant improvements to the contractor of Tenant's choice, regardless of whether
such contractor is the lowest bidder, provided such contractor executes a
commercially reasonable construction contract consistent with Landlord's
obligations hereunder. Landlord shall not receive any construction management
fees or other compensation relating to the construction of the tenant
improvements, nor shall there be any chargebacks against the Tenant Improvement
Allowance in connection with the Base Building Work, except for demising walls
and doors as stated in paragraph 38(a), above. If the estimated cost of
constructing the work on the Tenant Improvement Plans exceed the Tenant
Improvement Allowance, Tenant shall deposit such excess (hereinafter referred to
as the "Excess Tenant Finish Deposit") with Landlord upon ten (10) days notice
from Landlord prior to start of construction of the tenant improvements.
Likewise, the cost for any changes to the Tenant Improvement Plans shall
similarly be deposited as Excess Tenant Finish Deposit upon ten (10) days notice
form Landlord. Any unused portion of the Tenant Improvement Allowance or Excess
Tenant Finish Deposit provided pursuant hereto shall be paid to Tenant in cash
upon the earlier of the final accounting or within sixty (60) days of the
Commencement Date. If not paid within such sixty (60) day period, Tenant shall
be entitled to offset any such unused portion of Tenant Improvement Allowance
against Base Rental and Adjustments owing under the Lease.
(e) Tenant agrees to reimburse Landlord by Landlord deducting from the
Tenant Improvement Allowance the cost for the following items:
(i) Install submeter for electrical consumption on
the floor. $1,000.
(ii) Purchase of capacity in Landlord's generator for
emergency lighting in lieu of purchasing battery packs-cost
per fixture $105.
(iii) If needed by Tenant, purchase capacity in Landlord's
generator for emergency power back-up to communication and
computer systems cost per KW $1,100.
(iv) If needed by Tenant, purchase extra cooling capacity
in Landlord's cooling tower-cost per ton $1,000.
39. Except in the case of exercise of remedies, Landlord and Tenant each
agree with the
22
<PAGE>
other that at any time during the term of this Lease either Landlord or Tenant
has the right or privilege of giving approval, consent, judgment, determination
or estimate (including without limitation estimates of monetary amounts),
exercising an option or election, determining the other party's conformity with
any standard, or otherwise making a decision after taking action or an action
affecting the rights of any other tenant, all such approvals, consents,
judgments, elections and decisions by Landlord or Tenant, as the case may be,
shall be made both reasonably (and not arbitrarily) and with reasonable
promptness.
RENEWAL OPTION
40. (a ) So long as there is then no continuing Default by Tenant under
this Lease, Tenant shall have the right to lease the Premises for a renewal term
of five (5) years on the same terms and conditions as set forth herein except
that (i) Base Rental shall be at a rate of Mansell 100 & 200, and (ii) the
Rental Adjustment shall be 3% and (iii) Paragraph 38 shall not be operative.
(b) Tenant shall exercise its Renewal Options by providing written notice
to Landlord no later than one (1) year prior to the expiration of the Term.
CODE COMPLIANCE
41. The Building shall be constructed to meet the local and state building
codes and ordinances in effect as of September 1, 1996, the date when the
Building was permitted for construction. The Building shall also comply with the
most prevalent interpretations of the American Disabilities Act (ADA) by the
Building Architect, Lyman Davidson Dooley, Inc as of September 1, 1995. Tenant
and Landlord acknowledge that the ADA is not an explicit building code or
ordinance and is subject to various, and possibly, contradictory
interpretations. Subsequent to the Commencement Date Tenant shall be responsible
for the Premises complying with ADA.
FORCE MAJEURE
42. Neither Landlord nor Tenant shall be deemed to be in default of this
Lease if such default is due to acts of God, acts of the public enemy, acts of
governmental authority, or any other circumstances which are not within the
parties' respective control ("Force Majeure"); provided, that this provision
shall not apply to failures by either party to pay their respective monetary
obligations under this Lease.
PARTIES BOUND
43. The preparation and submission of a draft of this lease by either party
to the other party shall not constitute an offer, nor shall either party be
bound to any terms of this Lease or the entirety of this Lease, until both
parties have fully executed a final document and an original signature document
has been received by both parties. Until such time as described in the previous
sentence, either party is free to terminate negotiations without any obligation
to the other party.
LANDLORD'S DEFAULT
44. Events of Default by Landlord under this Lease shall be deemed to be
the situations where Landlord shall fail to comply with any term, provision or
covenant of this Lease and shall not commence to cure such failure within 30
days after written notice thereof and diligently and in good faith continue to
cure the default until completion. If the default cannot reasonably be cured
within such 30 days period, Landlord shall not be in default if Landlord
commences to cure the default within the 30 days period and diligently and in
good faith continues to cure the default until completion. Pursuit of any of the
remedies available to Tenant after an Event of Default by Landlord shall not
preclude pursuit of any other remedies in this Lease or applicable law, nor
shall pursuit of any remedy constitute a forfeiture or waiver of any payment due
to Tenant. No waiver by Tenant of any violation or breach of any of the terms,
provisions and covenants herein contained shall be deemed or construed to
constitute a waiver of any other violation or breach of any of the terms,
provisions and covenants herein contained. Forbearance by Tenant to enforce one
or more of the remedies herein provided upon an event of Default by Landlord
shall not be deemed or construed to constitute a waiver of any other violation
or default. Notwithstanding the foregoing, Landlord shall not be responsible for
any consequential, indirect, speculative or punitive damages of Tenant.
23
<PAGE>
IN WITNESS WHEREOF, the parties herein have hereunto set their hands and seals,
in triplicate, the day and year first above written.
Signed, sealed and delivered in the presence of:
Witness
Print Name:
TENANT:
ADVANCED TECHNICAL PRODUCTS, INC.
A Delaware Corporation
By:/s/ GARY DOMINY
Print Name: Gary Dominy
Title: Executive Vice President
ATTEST:
By: /s/ JAMES P. HOBT
Print Name:James P. Hobt
Title: Secretary
[CORPORATE SEAL]
Signed, sealed and delivered in the presence of:
/s/ JANELL GRICE
Witness
Print Name: Janell Grice
LANDLORD:
MANSELL OVERLOOK 200, LLC
/s/ WILLIAM M. JOHNSON (SEAL)
WILLIAM M. JOHNSON, MANAGING MEMBER
WHEN EXECUTED, PLEASE RETURN ALL ORIGINAL COPIES OF THE LEASE TO THE LANDLORD
FOR ITS EXECUTION. THE LANDLORD WILL THEN RETURN ONE FULLY-EXECUTED COPY TO THE
TENANT.
- --------------------------------------------------------------------------------
NOTE: IF TENANT IS A CORPORATION, TWO AUTHORIZED OFFICERS OF THE CORPORATION
MUST EXECUTE THIS LEASE IN THEIR APPROPRIATE CAPACITY FOR TENANT AND AFFIX THE
CORPORATE SEAL.
- --------------------------------------------------------------------------------
24
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<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CONDENSED CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> APR-03-1998
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<SECURITIES> 0
<RECEIVABLES> 20,321
<ALLOWANCES> 530
<INVENTORY> 41,530
<CURRENT-ASSETS> 63,559
<PP&E> 26,505
<DEPRECIATION> 8,892
<TOTAL-ASSETS> 89,118
<CURRENT-LIABILITIES> 39,754
<BONDS> 2,600
1,000
0
<COMMON> 52
<OTHER-SE> 26,533
<TOTAL-LIABILITY-AND-EQUITY> 89,118
<SALES> 30,813
<TOTAL-REVENUES> 30,813
<CGS> 23,758
<TOTAL-COSTS> 29,827
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 806
<INCOME-PRETAX> 180
<INCOME-TAX> 69
<INCOME-CONTINUING> 111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111
<EPS-PRIMARY> .02
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