SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1995
Commission File #0-12567
_______________________________________________________________________________
_______________________________________________________________________________
GUEST SUPPLY, INC.
(Exact name of registrant as specified in its charter)
State of New Jersey 22-2320483
(State or other jurisdiction of (Identification number)
incorporation or organization)
720 U.S. Highway One 08902
North Brunswick, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number and area code: 908-246-3011
_______________________________________________________________________________
_______________________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
The number of shares of common stock, without par value, outstanding as of
March 31, 1995 was 4,046,090 shares.<PAGE>
PART 1
GUEST SUPPLY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, September 30,
1995 1994*
----------- -------------
(UNAUDITED)
ASSETS:
Current assets:
Cash and cash equivalents $ 1,560,000 $ 1,782,000
Accounts Receivable 20,029,000 19,250,000
Inventory:
Finished goods 17,253,000 15,976,000
Work in progress 8,367,000 6,156,000
Deferred income taxes 1,947,000 1,999,000
Prepaid expenses and other current assets 1,103,000 733,000
- - - - - - ------------------------------------------------------------------------------
Total current assets 50,259,000 45,896,000
Equipment and leasehold improvements 25,806,000 20,986,000
Other assets 78,000 84,000
Excess of cost over net assets acquired 6,080,000 6,264,000
- - - - - - ------------------------------------------------------------------------------
$82,223,000 $73,230,000
- - - - - - ------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $24,930,000 $21,036,000
Current maturities of long-term debt 2,428,000 1,908,000
Convertible subordinated note 400,000
- - - - - - ------------------------------------------------------------------------------
Total current liabilities 27,758,000 22,944,000
- - - - - - ------------------------------------------------------------------------------
Long-term debt 17,441,000 14,642,000
Convertible subordinated note 400,000
Deferred income taxes 2,192,000 1,999,000
- - - - - - ------------------------------------------------------------------------------
Total long-term liabilities 19,633,000 17,041,000
- - - - - - ------------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity:
Preferred stock - without par value;
authorized 1,000,000 shares, outstanding none
Common stock - without par value;
authorized 10,000,000 shares issued and outstanding
4,046,090 shares at March 31, 1995
and 4,029,767 at September 30, 1994 332,000 330,000
Additional paid-in capital 34,410,000 34,301,000
Retained earnings (deficit) 196,000 (1,312,000)
Cumulative foreign currency translation adjustments(106,000) (74,000)
- - - - - - ------------------------------------------------------------------------------
Total shareholders' equity 34,832,000 33,245,000
- - - - - - ------------------------------------------------------------------------------
$82,223,000 $73,230,000
- - - - - - ------------------------------------------------------------------------------
* From audited financial statements.
The accompanying notes are an integral part
of these consolidated condensed financial statements.
<PAGE>
GUEST SUPPLY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Sales $66,956,000 $49,389,000 $34,193,000 $24,924,000
Cost of sales 51,153,000 35,696,000 26,230,000 18,106,000
- - - - - - -------------------------------------------------------------------------------
Gross profit 15,803,000 13,693,000 7,963,000 6,818,000
SG&A 13,132,000 11,689,000 6,709,000 5,865,000
- - - - - - -------------------------------------------------------------------------------
Operating income 2,671,000 2,004,000 1,254,000 953,000
Interest expense, net 438,000 539,000 209,000 252,000
- - - - - - -------------------------------------------------------------------------------
Income before income taxes 2,233,000 1,465,000 1,045,000 701,000
Income tax expense 725,000 260,000 339,000 133,000
- - - - - - -------------------------------------------------------------------------------
Net income $ 1,508,000 $ 1,205,000 $ 706,000 $ 568,000
- - - - - - -------------------------------------------------------------------------------
Earnings per common share $0.32 $0.26 $0.15 $0.12
- - - - - - -------------------------------------------------------------------------------
Weighted average
shares outstanding 4,765,000 4,639,000 4,783,000 4,712,000
- - - - - - --------------------------------------------------------------------------------
The accompanying notes are an integral part
of these consolidated condensed financial statements.
<PAGE>
GUEST SUPPLY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
------------------------
1995 1994
----------- -----------
Cash flows from operating activities:
Net income $1,508,000 $1,205,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,356,000 1,256,000
Provision for losses on accounts receivable 204,000 99,000
Deferred income taxes 245,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (983,000) 699,000
Increase in inventory (3,488,000) (1,239,000)
Increase in prepaid expenses and other
current assets (370,000) (377,000)
Decrease in other assets 6,000
Increase (decrease) in accounts payable
and accrued expenses 3,894,000 (267,000)
Foreign currency translation adjustments (32,000) (12,000)
- - - - - - -------------------------------------------------------------------------
Net cash provided by operating activities 2,340,000 1,364,000
- - - - - - -------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures 5,992,000 1,329,000
- - - - - - -------------------------------------------------------------------------
Net cash used in investing activities 5,992,000 1,329,000
- - - - - - -------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (payments)on revolving
credit agreement 4,010,000 (5,168,000)
Proceeds from issuance of long-term debt 5,000,000
Repayment of long-term debt (691,000) (746,000)
Proceeds from issuance of common stock 111,000 287,000
- - - - - - -------------------------------------------------------------------------
Net cash provided by (used in)
financing activities 3,430,000 (627,000)
- - - - - - -------------------------------------------------------------------------
Net decrease in cash and cash equivalents (222,000) (592,000)
Cash and cash equivalents at beginning of period 1,782,000 1,107,000
- - - - - - -------------------------------------------------------------------------
Cash and cash equivalents at end of period $1,560,000 $ 515,000
- - - - - - -------------------------------------------------------------------------
The accompanying notes are an integral part of
these consolidated condensed financial statements.
<PAGE>
GUEST SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of Presentation
The unaudited consolidated condensed financial statements have been prepared
from the books and records of Guest Supply, Inc. and subsidiaries (the
Company)in accordance with generally accepted accounting principles for interim
financial information. 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
only of normal and recurring adjustments) considered necessary for a fair
presentation have been included. It is suggested that the consolidated
condensed financial statements be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended
September 30, 1994 included in the Company's annual report on Form 10-K.
Interim results are not necessarily indicative of the results that may be
expected for the full year.
Note 2: Earnings Per Common Share
Earnings per common share is based on the weighted average number of common and
common equivalent shares outstanding during each period. When stock options and
warrants are dilutive, they are included as share equivalents using the treasury
stock method. Where the effect of the assumed exercise on net income would be
anti-dilutive, primary and fully diluted earnings per common share are stated
the same.
Note 3: Revolving Credit Facility
On March 9, 1995, the Company amended its amended and restated credit facility,
with a bank, dated as of January 26, 1994. Under the amended agreement, the
amount available to the Company was increased to $14,500,000 for the period from
February 1, 1995 to and including August 15, 1995. In addition, modifications
were made to certain definitions and a financial covenant.
Note 4: Reclassification
Certain reclassifications have been made to the three month and six month
periods ended March 31, 1994 in order to conform with the current year
presentation.
<PAGE>
GUEST SUPPLY, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Six months ended March 31, 1995 vs. Six months ended March 31, 1994
- - - - - - -------------------------------------------------------------------
Sales for the six months ended March 31, 1995 increased by $17,567,000 or 35.6%
from $49,389,000 for the six months ended March 31, 1994. Revenues generated
from our hotel customers increased $14,448,000 or 35.9% to $54,676,000. This
increase is due to selling additional products to existing customers, the
addition of new customers and the introduction of new items to the Company's
product line.
Sales to consumer product companies and retailers were $12,280,000 for the
six months ended March 31, 1995 compared to $9,161,000 for the six months ended
March 31, 1994. The increase of $3,119,000 or 34.1% was due to increased sales
to existing customers.
Gross profit for the six months ended March 31, 1995 was $15,803,000 or 23.6% of
sales compared to $13,693,000 or 27.7% of sales for the six months ended March
31, 1994. The decrease in gross profit as a percentage of sales was due
primarily to inefficiencies experienced at the Company's manufacturing facility
as a result of the ongoing plant expansion project. The addition of textiles to
the Company's product line also contributed to the decrease as a result of a
lower gross profit associated with these products when compared with the
Company's other products.
Selling, general and administrative expenses were $13,132,000 or 19.6% of sales
for the six months ended March 31, 1995 compared to $11,689,000 or 23.7% of
sales for the six months ended March 31, 1994. The increase of $1,443,000 or
12.3% was due primarily to increased payroll and payroll related costs,
warehousing and delivery costs. The decrease in selling, general and
administrative costs as a percentage of sales was the result of increased sales
volume combined with the effects of the Company's cost containment program.
Interest expense was $438,000 for the six months ended March 31, 1995 compared
to $539,000 for the six months ended March 31, 1994. The decrease in interest
of $101,000 or 18.7% can be attributed to a decrease in borrowings needed to
fund our operations offset by an increase in borrowings for our capital
expansion program. Interest costs incurred on borrowings for our capital
expansion program are capitalized to the cost of the project.
The effective income tax rate increased to 32.5% for the six months ended March
31, 1995 compared with 17.8% for the six months ended March 31, 1994. This
increase is primarily due to a decrease in net operating loss carryforwards
available for the six months ended March 31, 1995.
<PAGE>
Three months ended March 31, 1995 vs. Three months ended March 31, 1994
- - - - - - -----------------------------------------------------------------------
Sales for the three months ended March 31, 1995 increased by $9,269,000 or 37.2%
from $24,924,000 for the three months ended March 31, 1994. Revenues generated
from our hotel customers increased $7,233,000 or 34.6% to $28,146,000. This
increase is due to selling additional products to existing customers, the
addition of new customers and the introduction of new items to the Company's
product line.
Sales to consumer product companies and retailers were $6,047,000 for the
three months ended March 31, 1995 compared to $4,011,000 for the three months
ended March 31, 1994. The increase of $2,036,000 or 50.8% was due to increased
sales to existing customers.
Gross profit for the three months ended March 31, 1995 was $7,963,000 or 23.3%
of sales compared to $6,818,000 or 27.4% of sales for the three months ended
March 31, 1994. The decrease in gross profit as a percentage of sales was due
primarily to inefficiencies experienced at the Company's manufacturing facility
as a result of the ongoing plant expansion project. The addition of textiles to
the Company's product line also contributed to the decrease as a result of a
lower gross profit associated with these products when compared with the
Company's other products.
Selling, general and administrative expenses were $6,709,000 or 19.6% of sales
for the three months ended March 31, 1995 compared to $5,865,000 or 23.5% of
sales for the three months ended March 31, 1994. The increase of $844,000 or
14.4% was due primarily to increased payroll and payroll related costs,
warehousing and delivery costs. The decrease in selling, general and
administrative costs as a percentage of sales was the result of increased sales
volume combined with the effects of the Company's cost containment program.
Interest expense was $209,000 for the three months ended March 31, 1995 compared
to $252,000 for the three months ended March 31, 1994. The decrease in interest
of $43,000 or 17.1% can be attributed to a decrease in borrowings needed to fund
our operations offset by an increase in borrowings for our capital expansion
program. Interest costs incurred on borrowings for our capital expansion
program are capitalized to the cost of the project.
The effective income tax rate increased to 32.4% for the three months ended
March 31, 1995 compared with 19.0% for the three months ended March 31, 1994.
This increase is primarily due to a decrease in net operating loss carryforwards
available for the six months ended March 31, 1995.
<PAGE>
GUEST SUPPLY, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources at March 31, 1995
- - - - - - -------------------------------------------------
At March 31, 1995, the Company had $22,501,000 of working capital compared to
$22,952,000 at September 30, 1994.
At March 31, 1995, equipment and leasehold improvements increased on a net basis
by $4,820,000. This increase is due to the ongoing expansion of the Company's
manufacturing facility. The Company believes that this expansion is necessary
to increase its production capability to accommodate the Company's projected
growth. At March 31, 1995, the Company had approximately $2,032,000 of
commitments related to this expansion.
At March 31, 1995, the Company had a $14,500,000 three year revolving credit
facility with a bank which expires in January, 1997. The amount available under
the revolving credit facility is based upon agreed levels of eligible accounts
receivable. At March 31, 1995, $10,685,000 was outstanding under this facility
and the Company had unused availability of $2,904,000. A portion of this
facility bears interest at a rate equal to LIBOR plus an amount of either 1.25%
or 1.5% and the remaining portion at the bank's prime rate. All of the
Company's loans from its bank are secured by substantially all of the Company's
assets and are subject to certain financial covenants.
On March 9, 1995, the Company amended its amended and restated credit facility
with a bank, dated as of January 26, 1994. Under the amended agreement, the
amount available to the Company was increased to $14,500,000 for the period from
February 1, 1995 to and including August 15, 1995. In addition, modifications
were made to certain definitions and to a financial covenant.
The Company believes that the amount available under its revolving credit
facility together with the cash flow from operations will be sufficient to meet
the Company's short-term working capital requirements and identifiable long-term
capital needs. The Company also believes that, if necessary, additional
financing will be available to it on commercially reasonable terms.
Management believes the impact of inflation on the Company's business has been
minimal.
<PAGE>
GUEST SUPPLY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
- - - - - - -----------------------------------------
a) The exhibits filed as part of this report are listed on the index to the
exhibits.
b) No reports on Form 8-K have been filed during the six month period ended
March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934. The
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUEST SUPPLY, INC.
Dated: May 12, 1995 By: s/Clifford W. Stanley
Clifford W. Stanley
President & Chief Executive Officer
Dated: May 12, 1995 By: s/Clifford W. Stanley
Paul T. Xenis
Vice President, Finance
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
- - - - - - ----------- ----------------------------------------- ----------
10(a) Amendment No. 2 to Amended and Restated 12
Credit Agreement dated as of January 26,
1994 by and among Guest Supply, Inc. and
Guest Packaging, Inc., Breckenridge-Remy
Co. and Chemical Bank New Jersey, National
Association.
10(b) Lease dated March 16, 1995 between the 15
Company and The Morris Company
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1995
<PERIOD-END> MAR-31-1995 MAR-31-1995
<CASH> 1560000 1560000
<SECURITIES> 0 0
<RECEIVABLES> 21301000 21301000
<ALLOWANCES> 1272000 1272000
<INVENTORY> 25620000 25620000
<CURRENT-ASSETS> 3050000 3050000
<PP&E> 40254000 40254000
<DEPRECIATION> 14428000 14428000
<TOTAL-ASSETS> 82223000 82223000
<CURRENT-LIABILITIES> 27758000 27758000
<BONDS> 0 0
<COMMON> 332000 332000
0 0
0 0
<OTHER-SE> 34500000 34500000
<TOTAL-LIABILITY-AND-EQUITY> 82223000 82223000
<SALES> 34193000 66956000
<TOTAL-REVENUES> 34193000 66956000
<CGS> 26230000 51153000
<TOTAL-COSTS> 32939000 64285000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 209000 438000
<INCOME-PRETAX> 1045000 2233000
<INCOME-TAX> 339000 725000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 706000 1508000
<EPS-PRIMARY> .15 .32
<EPS-DILUTED> 0 0
</TABLE>
AMENDMENT NO. 2
AMENDMENT NO. 2 to Amended and Restated Credit Agreement dated as of January
26, 1994 by and among Guest Supply, Inc., Guest Packaging, Inc. and
Breckenridge-Remy Co. (collectively, the "Borrower") and Chemical Bank New
Jersey, National Association (the "Lender") (as amended by Amendment No. 1 dated
September 29, 1994 and this Amendment No. 2, the "Credit Agreement").
Capitalized terms used herein and not defined herein are used herein as defined
in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender amend the Credit
Agreement in order to amend the Commitment level, Available Commitment level and
certain of the financial covenants contained therein; and
WHEREAS, the Lender is willing to amend the Credit Agreement to reflect such
changes and make such other revisions as the Lender deems appropriate and
desirable.
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter contained, the parties hereto agree as follows:
1. All references to this "Agreement" shall refer to the Credit Agreement, as
amended by this Amendment No. 2, and as the same may hereafter be amended,
supplemented or otherwise modified from time to time.
2. As of the effective date hereof, Section 1.1 of the Credit Agreement is
hereby amended as follows:
(a) The definition of "Borrowing Base" is hereby amended by adding the
following language before the period at the end of clause (B): "plus
(z) for the period from February 1, 1995 to and including April 7,
1995, $2,000,000."
(b) Clause (x) of the definition of "Commitment" is hereby amended in its
entirety to read as follows: "(x) $18,000,000 for the Interim
Period, $14,500,000 for the period from February 1, 1995 to and
including August 15, 1995 and $13,000,000 at all other times and."
3. As of the effective date hereof, the words "(the 'Revolving Credit Note')"
in the fourth line of Section 2.2 of the Credit Agreement are amended to
read "(such promissory note or any note issued in substitution thereof,
the 'Revolving Credit Note')."
4. As of the effective date hereof, Section 6.12 of the Credit Agreement is
hereby amended in its entirety to read as follows:
12. Liabilities/Tangible Net Worth. Permit the ratio of liabilities
(other than Subordinated Debt) of GSI and its consolidated
Subsidiaries to Consolidated Tangible Net Worth at the end of any
fiscal quarter of GSI to be greater than 1.49X for any fiscal quarter
ending prior to GSI's 1995 first fiscal quarter or greater than 1.75X
for any fiscal quarter ending prior to GSI's 1996 first fiscal quarter
or greater than 1.50X for any fiscal quarter ending prior to GSI's
1997 first fiscal quarter or greater than 1.25X for any fiscal quarter
ending prior to GSI's 1998 first fiscal quarter or 1.00X from and
including GSI's 1998 first fiscal quarter.
5. In order to induce the Lender to enter into this Amendment No. 2, the
Borrower makes the following representations and warranties which
shall survive the execution and delivery hereof:
(a) All of the representations made by or on behalf of the Borrower
in the Credit Agreement are true on and as of the date hereof;
(b) This Amendment No. 2 has been duly authorized, executed and
delivered by the Borrower;
(c) Neither the execution and delivery of this Amendment No. 2 by the
Borrower, nor consummation by the Borrower of the transactions
herein contemplated, nor compliance by the Borrower with the
terms, conditions and provisions hereof will conflict with or
result in a breach of any of the terms, conditions or provisions
of (i) the Borrower's Certificate of Incorporation or By-Laws,
(ii) any agreement or instrument to which the Borrower is now a
party or by which the Borrower, or to which the property of the
Borrower, is, or may be, bound, or constitute a default
thereunder, or result thereunder in the creation or imposition of
any security interest, mortgage, lien, charge or encumbrance or
any nature whatsoever upon any of the properties or assets of the
Borrower, or (iii) any judgment or order, writ, injunction or
decree of any court; and
(d) No action of, or filing with, any governmental or public body or
authority is required to authorize, or is otherwise required in
connection with, the execution, delivery and performance of this
Amendment No. 2 by the Borrower.
6. This Amendment No. 2 shall become effective upon receipt by Lender of:
(a) a non-refundable amendment fee of $7,500; and
(b) a substitute promissory note (the "Substitute Note") in the form
of Exhibit A annexed hereto.
7. Except as expressly amended by this Amendment No. 2, all terms and
provisions of the Credit Agreement, and all rights of the Lender and all
obligations of the Borrower thereunder shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 as
of the 9th day of March 1995.
GUEST SUPPLY, INC.
By:______________________
Name: Paul Xenis
Title: Vice President, Finance
GUEST PACKAGING, INC.
By:______________________
Name: Paul Xenis
Title: Assistant Secretary
BRECKENRIDGE-REMY CO.
By:______________________
Name: Paul Xenis
Title: Assistant Secretary
CHEMICAL BANK NEW JERSEY,
NATIONAL ASSOCIATION
By:______________________
Name: Nicole Lorber
Title: Vice President
MORRIS COMPANIES, INC.
Landlord
to
GUEST SUPPLY, INC
Tenant
AGREEMENT OF LEASE
Premises:
Kennedy Drive
Township of Sayreville
County of Middlesex
State of New Jersey
<PAGE>
Table of Contents
1. Leased Premises, Term, Extension Rights 1
2. Rents 7
3. Completion and Occupancy of the Leased Premises 14
4. Subordination 26
5. Use of the Leased Premises 28
6. Representations 30
7. Landlord Not Liable for Failure of Water Supply, Etc. 34
8. Repairs, Replacement and Maintenance 34
9. Compliance with Requirements of Public Authorities 37
10. Utilities 39
11. Net Lease, Non-Terminability 41
12. Insurance 42
13. Fire or Casualty 45
14. Self Help 47
15. Bankruptcy, Insolvency, Reorganization, Liquidation, or
Dissolution of Tenant 48
16. Default Clauses 50
17. Remedies 52
18. Indemnity 55
19. Mechanics' Liens 56
20. Condemnation 57
21. Arbitration 59
22. Shoring 60
23. Waiver of Redemption 60
24. Security Deposit 60
25. Covenant of Quiet Enjoyment 62
26. Non-Merger 63
27. Waiver of Counterclaim and Jury Trial 63
28. Assignment and Subletting 64
29. Notices 67
30. Broker 68
31. Waivers and Surrenders to be in Writing 68
32. Landlord's Rights and Remedies Cumulative 69
33. Surrender at the End of Term 69
34. Sale or Conveyance of Leased Premises, Limits of Liability of
Landlord, Consents 70
35. Alterations 71
36. Parties to Furnish Statements 74
37. Access by Landlord 75
38. Sprinkler 76
(i)
39. Covenants Binding on Successors and Assigns 76
40. Entire Agreement, Modifications 77
41. Unavoidable Delays 77
42. Certain Definitions and Rules of Construction 77
43. Short Form of Lease 84
EXHIBITS
Exhibit A - Site Description
Exhibit B - Floor Plan
Exhibit C - Permitted Encumbrances
Exhibit D - Specifications
Exhibit E - Estoppel Certificate
Exhibit F - Construction Schedule
Exhibit G- Tenant Fixturing Work
Exhibit H - Form of Non-Disturbance
Exhibit I - Form of Memorandum of Lease
This Table of Contents is included only as a matter of convenience
of reference and shall not be deemed or construed in any way to
define or limit the scope of the following lease or the intent of
any provision thereof.
(ii)
AGREEMENT OF LEASE
AGREEMENT OF LEASE dated as of the 16th day of March 1995, made by and
between MORRIS COMPANIES, INC. a New Jersey corporation having an office at 535
Secaucus Road, Secaucus, New Jersey 07094 (hereinafter called "Landlord") and
GUEST SUPPLY,INC., a New Jersey corporation, having an office at 730 U.S.
Highway No. 1, North Brunswick, New Jersey (hereinafter called "Tenant").
Witnesseth:
ARTICLE 1
DEMISE, TERM, EXTENSION RIGHTS
1.1 "Leased Premises" shall mean all that certain land (the Land) located
at Kennedy Drive in the Township of Sayreville, County of Middlesex and State of
New Jersey, as more particularly described on Exhibit A annexed hereto together
with all buildings, parking lots, driveways, walkways and other improvements of
any kind now or hereafter situated thereon, including, without limitation a
225,831 square foot warehouse/office building to be constructed on the Land
described on Exhibit "B", annexed hereto (the "Building") together with the
exclusive benefit of all rights, appurtenances, privileges, easements, rights of
ingress or egress, licenses or hereditaments now or hereafter belonging or
appertaining to any of the foregoing.
Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby
hires the Leased Premises from Landlord, upon, and subject to, the terms,
covenants and conditions contained in this lease. The letting of the Leased
Premises to Tenant hereunder is made expressly subject to:
(a) those matters, relating to Landlord's title in and to the Leased
Premises, set forth on Exhibit "C", annexed hereto (the "Permitted
Exceptions")
(b) those conditions, relating to the subordination of this lease and the
delivery of subordination, non-disturbance and attornment agreements, set
forth below in Article 4.
(c) subject to the representations, warranties and covenants of Landlord
herein, all zoning regulations, restrictions, rules and ordinances,
building restrictions and other laws and regulations now in effect or
hereafter adopted by any governmental authority having jurisdiction.
1.2 The initial term of Tenant's leasehold estate in and to the Leased
Premises (herein called the "Initial Term") shall:
<PAGE>
(a) commence on the date (herein called the "Term Commencement Date") of
Substantial Completion (as defined in Section 3.6) as specified in a notice (the
Preliminary Substantial Completion Notice ) given by Landlord to Tenant, which
date shall not be less than sixty (60) days following the date Landlord shall
have delivered to Tenant the Preliminary Substantial Completion Notice; and
(b) expire on the date (herein called the "Expiration Date") that shall
be ten (10) years following the last day of the month in which the day preceding
the Term Commencement Date occurs, unless the Term shall sooner terminate or
expire as herein provided.
Notwithstanding the foregoing, if Substantial Completion is not achieved: (i)
on the date set forth in the Preliminary Substantial Completion Notice, or (ii)
if the Term Commencement Date actually occurs more than eleven (11) months after
the satisfaction of the Requirements (as hereinafter defined), then the Term
Commencement Date shall be adjusted to be the date on which Substantial
Completion is achieved and Tenant shall be given a rent credit of one day for
each day that the Term Commencement Date occurs after (x) the date that was
specified in the Preliminary Substantial Completion Notice or (y) the eleventh
(11th) month as the case may be. for example, if the Term Commencement Date
specified in the Preliminary Substantial Completion Notice was March 1, 1996 and
the actual Term Commencement Date was April 1, 1996 or if Landlord achieved
Substantial in twelve (12)months, Tenant would receive a thirty (30) day rent
credit to be applied to rent due and payable from and after the Rent
Commencement Date (as hereinafter defined).
This clause shall be applied so that Tenant shall receive the benefit of
the maximum credit, i.e., if the date set forth in the Preliminary Substantial
Completion Notice is prior to the final day of the eleventh (11th) month, the
rent credit shall be calculated from that date and vice versa.
1.3 Intentionally Omitted.
1.4. Tenant shall have the right (herein called the "First Extension
Right') to extend the term of this lease for an additional period (herein called
the "First Extension Period') of five (5) years, commencing on the day after the
expiration of the Initial Term and expiring on the date (herein called the
"First Extension Period Expiration Date") that shall be fifteen (15)years
following the last day of the month in which the day preceding the Commencement
Date occurs (unless the Term shall sooner terminate or expire as herein
provided), provided, and on the conditions, that:
(a) Tenant shall give Landlord written notice of its
exercise of the First Extension Right (herein called the "First Extension
Notice") on or before the date that is nine (9) months preceding the last
day of the Initial Term; and
(b) this lease shall be in full force and effect on the
date upon which Tenant shall give the First Extension Notice to Landlord.
In the event that both of the foregoing conditions shall be satisfied, then:
(i) the term of this lease shall be deemed to be extended
for the First Extension Period upon all of the same terms, covenants and
conditions as are applicable during the Initial Term, except:
(x) for any of such terms, covenants and/or conditions
that are expressly, or by their nature, inapplicable to the First Extension
Period; and
(y) the "Fixed Net Rent" (as such term is defined in
Section 2. 1) payable during the First Extension Period shall be as set forth in
subsection (iv) of Section 2. 1(a); and
(ii) the term "Expiration Date", as used in this lease,
shall be deemed to be redefined to refer to the First Extension Period
Expiration Date and not to the date specified as the "Expiration Date" in
Section 1.2.
Conversely, in the event that either of the foregoing conditions shall not be
satisfied, the First Extension Right and the "Second Extension Right", "Third
Extension Right" and "Fourth Extension Right" (as such terms are defined below)
shall each cease and expire, and Tenant shall have no further right to extend
the term of this lease.
1.5 Tenant shall have the right (herein called the "Second Extension
Right') to extend the term of this lease for an additional period (herein called
the "Second Extension Period') of approximately five (5) years, commencing on
the day after the First Extension Period Expiration Date and expiring on the
date (herein called the "Second Extension Period Expiration Date") that shall be
twenty (20) years following the last day of the month in which the day preceding
the Commencement Date occurs (unless the Term shall sooner terminate or expire
as herein provided), provided, and on the conditions, that:
(a) Tenant shall have effectively exercised the First Extension
Right in accordance with the provisions of Section 1.4 above;
(b) Tenant shall give Landlord written notice of its exercise
of the Second Extension Right (herein called the "Second Extension Notice")
on or before the date that is nine (9) months preceding the First Extension
Period Expiration Date; and
(c) this lease shall be in full force and effect on the date
upon which Tenant shall give the Second Extension Notice to Landlord.
In the event that all of the foregoing conditions shall be satisfied, then:
<PAGE>
(i) the term of this lease shall be deemed to be extended
for the Second Extension Period upon all of the same terms, covenants and
conditions as are applicable during the First Extension Period, except:
(x) for any of such terms, covenants and/or conditions that
are expressly, or by their nature, inapplicable to the Second Extension Period;
and
(y) the Fixed Net Rent payable during the Second Extension
Period shall be as set forth in subsection (v) of Section 2.1 (a); and
(ii) the term "Expiration Date", as used in this lease, shall
be deemed to be redefined to refer to the Second Extension Period Expiration
Date and not to the date specified as the "Expiration Date" in Section 1.2 as
modified by subsection (ii) of Section 1.4.
Conversely, in the event that any of the foregoing conditions shall not be
satisfied, the Second Extension Right, Third Extension Right and Fourth
Extension Right shall cease and expire, and Tenant shall have no further right
to extend the term of this lease.
1.6 Tenant shall have the right (herein called the "Third Extension
Right') to extend the term of this lease for an additional period (herein called
the "Third Extension Period') of approximately five (5) years, commencing on the
day after the Second Extension Period Expiration Date and expiring on the date
(herein called the "Third Extension Period Expiration Date") that shall be
twenty-five (25) years following the last day of the month in which the day
preceding the Commencement Date occurs (unless the Term shall sooner terminate
or expire as herein provided), provided, and on the conditions, that:
(a) Tenant shall have effectively exercised the Second Extension
Right in accordance with the provisions of Section 1.5 above;
(b) Tenant shall give Landlord written notice of its exercise
of the Third Extension Right (herein called the "Third Extension Notice") on or
before the date that is nine (9)months preceding the Second Extension Period
Expiration Date; and
(c) this lease shall be in full force and effect on the date
upon which Tenant shall give the Third Extension Notice to Landlord.
In the event that all of the foregoing conditions shall be satisfied, then:
(i) the term of this lease shall be deemed to be extended
for the Third Extension Period upon all of the same terms, covenants and
<PAGE>
conditions as are applicable during the Second Extension Period, except:
(x) for any of such terms, covenants and/or conditions that
are expressly, or by their nature, inapplicable to the Third Extension Period;
and
(y) the Fixed Net Rent payable during the Third Extension
Period shall be as set forth in subsection (v) of Section 2.1 (a); and
(ii) the term "Expiration Date", as used in this lease, shall
be deemed to be redefined to refer to the Third Extension Period Expiration Date
and not to the date specified as the "Expiration Date" in Section 1.2 as
modified by subsection (ii) of Section 1.5.
Conversely, in the event that any of the foregoing conditions shall not be
satisfied, the Third Extension Right shall cease and expire, and Tenant shall
have no further right to extend the term of this lease.
1.7 Tenant shall have the right (herein called the "Fourth Extension
Right') to extend the term of this lease for an additional period (herein called
the "Fourth Extension Period') of approximately five (5) years, commencing on
the day after the Third Extension Period Expiration Date and expiring on the
date (herein called the "Fourth Extension Period Expiration Date") that shall be
thirty (30) years following the last day of the month in which the day preceding
the Commencement Date occurs (unless the Term shall sooner terminate or expire
as herein provided), provided, and on the conditions, that:
(a) Tenant shall have effectively exercised the Third Extension
Right in accordance with the provisions of Section 1.6 above;
(b) Tenant shall give Landlord written notice of its exercise
of the Fourth Extension Right (herein called the "Fourth Extension Notice") on
or before the date that is nine (9) months preceding the Third Extension Period
Expiration Date; and
(c) this lease shall be in full force and effect on the date
upon which Tenant shall give the Fourth Extension Notice to Landlord.
In the event that all of the foregoing conditions shall be satisfied, then:
(i) the term of this lease shall be deemed to be extended
for the Fourth Extension Period upon all of the same terms, covenants and
conditions as are applicable during the First Extension Period, except:
<PAGE>
(x) for any of such terms, covenants and/or conditions
that are expressly, or by their nature, inapplicable to the Fourth Extension
Period;and
(y) the Fixed Net Rent payable during the Fourth Extension
Period shall be as set forth in subsection (v) of Section 2.1 (a); and
(ii) the term "Expiration Date", as used in this lease, shall
be deemed to be redefined to refer to the Fourth Extension Period Expiration
Date and not to the date specified as the "Expiration Date" in Section 1.2 as
modified by subsection (ii) of Section 1.6.
Conversely, in the event that any of the foregoing conditions shall not be
satisfied, the Fourth Extension Right shall cease and expire, and Tenant shall
have no further right to extend the term of this lease.
1.8 Landlord shall proceed in good faith and with due diligence to obtain
final non-appealable site plan approval, as well as all other governmental
approvals (other than building permits), that shall permit the use and operation
of the Leased Premises as an office/warehouse facility in accordance with the
Performance Specifications (as hereinafter defined) and to obtain fee simple
title to the Leased Premises, subject only to the Permitted Exceptions or
designate a party, wholly owned by the sole shareholders of Morris Companies,
Inc., to obtain fee simple title to the Leased Premises, subject only to the
Permitted Exceptions (herein collectively called the Requirements ) by
November 30, 1995 (herein called the Tenant'sOutside Date ). Should Landlord
designate a party, wholly owned by the sole shareholders of Morris Companies,
Inc., to obtain fee simple title to the Leased Premises, such designee shall
assume all of the Landlord's obligations under this Lease. Tenant shall fully
cooperate with Landlord, at Landlord's sole cost and expense, to the extent
reasonably required by Landlord in connection with Landlord's efforts to satisfy
the Requirements. In the event that Landlord shall fail to satisfy all of the
Requirements by Tenant's Outside Date, Tenant shall have the right (herein
called Tenant's Termination Right ), as its sole remedy for such failure and
without payment of any cost or expense to Landlord, to terminate this lease by
giving written notice of such termination (herein called Tenant'sTermination
Notice ) to Landlord at any time within five (5) days following Tenant'sOutside
Date.
In the event that Tenant shall exercise Tenant'sTermination Right within the
time and in the manner hereinabove provided, then, provided that Tenant shall
have fully cooperated with Landlord as aforesaid, this Lease shall terminate and
expire on the date upon which Landlord shall receive or refuse Tenant s
Termination Notice, and neither party shall have any further obligation or
liability to the other except as expressly set forth herein. If however,
either:
(i) Tenant does not exercise Tenant'sTermination Right within the
time and in the manner hereinbefore set forth; or
<PAGE>
(ii) Tenant shall not have fully cooperated with Landlord as
aforesaid,
then Tenant'sTermination Right shall cease and expire, and Tenant shall have no
further right to terminate this lease pursuant to this Section 1.8. Conversely,
in the event that Landlord shall fail to satisfy all of the Requirements by July
1, 1996 (herein called Landlord's Outside Date ), Landlord shall have the right
(herein called Landlord's Termination Right ) to terminate this lease by giving
written notice of such termination (herein called Landlord's Termination Notice
) to Tenant at any time within five (5) days following Landlord's Outside Date ,
but before the date upon which Landlord shall satisfy all of the Requirements.
In the event that Landlord shall exercise Landlord's Termination Right
within The time and in the manner hereinabove provided, then, provided that
Landlord shall have proceeded in good faith and with reasonable diligence to
satisfy all of the Requirements, this lease shall terminate and expire on the
date upon which Tenant shall receive or refuse Landlord's Termination Notice,
and neither party shall have any further obligation or liability to the other
except as exPressly set forth herein. If, however, either:
(x) Landlord does not exercise Landlord's Termination Right within
the time and in the manner hereinbefore set forth; or
(y) Landlord shall not have proceeded in good faith and with
reasonable diligence to satisfy all of the Requirements,
then Landlord's Termination Right shall cease and expire, and Landlord shall
have no further right to terminate this lease pursuant to this Section 1.8.
ARTICLE 2
RENTS
2.1 Rents. The "rents" reserved under this lease shall be payable in
lawful money of the United States that shall be legal tender in payment of all
debts and dues, public and private, at the time of payment, and shall consist of
the aggregate of:
(a) "Fixed Net Rent", as follows (subject, however, to the further
provisions of this Section 2.1):
(i) During Lease Years one through three annual fixed rental in the
amount of $925,907.10 (calculated on the basis of 225,831 square feet at the
annual rate of $4.10 per square foot).
(ii) During Lease Years four through six annual fixed rental in the
amount of $982,364.85 (calculated on the basis of 225,831 square feet at the
annual rate of $4.35 per square foot).
<PAGE>
(iii) During Lease Years seven through ten annual fixed rental in
the amount of $1,061,405.70 (calculated on the basis of 225,831 square feet at
the annual rate of $4.70 per square foot).
(iv) During Lease Years eleven through fifteen annual fixed rental
equal to the Fair Market Value but no less than $1,043,339.22 (calculated on
the basis of 225,831 square feet at the annual rate of $4.62 per square foot);
provided however, that the annual fixed rental shall not exceed $1,199,162.61
(calculated on the basis of 225,831 square feet at the annual rate of $5.31
per square foot
(v) During Lease Years sixteen through twenty annual fixed rental
equal to the Fair Market Value but no less than the fixed rental paid for the
prior period; provided, however, that the annual fixed rental shall not exceed
the annual fixed rental for the prior period by more than 15%.
(vi) During Lease Years twenty-one through twenty-five annual fixed
rental equal to the Fair Market Value but no less than the fixed rental paid for
the prior period; provided, however, that the annual fixed rental shall not
exceed the annual fixed rental for the prior period by more than 20%.
(vii) During Lease Years twenty-six through thirty annual fixed
rental equal to the Fair Market Value but no less than the fixed rental paid for
the prior period; provided, however, that the annual fixed rental shall not
exceed the annual fixed rental for the prior period by more than 20%.
"Fair Market Value" shall mean 95% of the fair market value net, net, net
rent for the Leased Premises per annum. Fair Market Value of the Leased
Premises shall be determined by appraisal for the square footage of the Leased
Premises. The Fair Market Value shall be determined by Landlord and Tenant in
the first instance. If Landlord and Tenant have not agreed on the Fair Market
Value at least eight (8) months prior to the commencement of any extension
period each party shall appoint one M.A.I. appraiser to determine fair market
rental value of the Leased Premises. If either party fails to appoint an
appraiser, the other party's appraisal shall be final. Within thirty (30) days
of their appointment, each appraiser shall submit its appraisal. If the
difference in the two appraisals shall not exceed ten (10%) percent of the fixed
net rent for the prior term, then the parties shall split the difference between
the appraisals; and such amount shall be the Fair Market Value for any extension
period. If the difference between the two appraisals shall exceed ten (10%)
percent of the fixed net rent for the prior term, then the two appraisers shall,
within ten (10) days, appoint a third appraiser with an M.A.I. designation to
perform the third appraisal, to be performed within thirty (30) days thereafter.
The Fair Market Value shall be determined by the third appraiser, selecting the
appraisal of the first appraiser or second appraiser as the Fair Market Value.
Any appraiser that is designated under this Lease shall have a specialty in
commercial appraisals for similar leasehold estates and shall have at least 10
years experience.
<PAGE>
(b) "additional rent", consisting of all such sums, charges, costs,
expenses and other sums of money (other than the Fixed Net Rent) as Tenant shall
assume or agree to pay under, or pursuant to, this lease (regardless of whether
to Landlord or to a third party), for default in the payment of which Landlord
shall have the same remedies as for a default in the payment of Fixed
Net Rent.
Tenant shall pay the Fixed Net Rent reserved herein, as well as the items of
additional rent assumed or payable by Tenant pursuant hereto or hereunder,
promptly, without demand therefor, and without any abatement, suspension,
setoff, or deduction of any kind whatsoever in equal monthly installments
throughout the Term, due in advance on the first day of each month during the
Term, commencing with the Rent Commencement Date (as hereinafter defined), at
the office of Landlord or at such other place as Landlord may designate by
giving written notice thereof to Tenant, except that the installment of Fixed
Net Rent for the month in which the Rent Commencement Date shall occur shall be
due on the Rent Commencement Date, regardless of whether the Rent Commencement
Date is the first day of a month (which installment shall be prorated if the
Rent Commencement Date is other than the first day of a month). For purposes
hereof, the Rent Commencement Date shall be the date which is fifteen (15)
days following the actual Term Commencement Date; provided however that the Rent
Commencement Date shall not under any circumstances be a date prior to March 1,
1996.
2.2 Tenant's Tax Payment. The following terms shall have the following
meanings:
(a) "Taxes" shall mean the real estate taxes, impositions,
assessments, special assessments, charges, water and sewer charges, rents,
levies and sums of every kind or nature whatsoever imposed by governmental
authorities, extraordinary as well as ordinary, whether or not now or within the
contemplation of the parties, and each and every installment thereof, as shall
at any time during the Term be imposed upon, or become a lien with respect to,
the Leased Premises and/or any part thereof and/or upon any sidewalk or street
in front of or adjacent to the same (regardless of whether the same shall
constitute one or more tax lots and regardless of whether the same shall be
payable by Landlord, or otherwise) (the "Tax Premises"). Notwithstanding the
foregoing, however, if, at any time during the Term, the methods of taxation
applicable to the Tax Premises shall be altered (by agreement or otherwise) so
that, in lieu of, as an addition to, or as a substitute for the whole or any
part of the taxes, assessments, special assessments, charges, water and sewer
charges, rents, levies or sums now levied, assessed, or imposed on real estate
and the improvements thereon, there shall be levied, assessed, or imposed:
(i) a tax, assessment, levy, imposition or charge wholly or
partially as a capital levy or otherwise on the rents received therefrom;
(ii) a tax, assessment, levy, imposition or charge measured by,
or based in whole or in part upon, the Tax Premises and imposed upon Landlord;
<PAGE>
(iii) a license fee measured by the rents payable by
Tenant to Landlord; and/or
(iv) a payment obligation on the part of Landlord to any
governmental authority or authorities of the nature of a so called "payment in
lieu of taxes",
then all such taxes, assessments, levies, impositions, charges, fees and/or
payment obligations, or the part thereof so measured or based, shall be deemed
to be included within the term "Taxes" for the purposes hereof. Notwithstanding
the foregoing, however, the term "Taxes", for the purposes hereof, shall
exclude:
(w) any gift, inheritance, estate, franchise, income, profits,
capital, or similar tax imposed upon Landlord, unless such tax shall be imposed
or levied upon, or with respect to, the rents payable to Landlord by the tenants
of the Tax Premises (including, without limitation, Tenant) in lieu of the
Taxes described above, in which event such tax(es) so imposed shall be included
within the term "Taxes" for purposes hereof to the extent of the amount thereof
computed as if the Tax Premises were the only property owned by Landlord; and
(x) any amount directly attributable to the cost or deferred
cost of construction of the improvements on the Land or any off-site
improvements to service the Land;
With respect to any general or special assessments that may be levied
against or upon the Tax Premises, or that, under the laws then in force, may be
evidenced by improvement or other bonds or may be paid in annual installments,
only the amount of such annual installment (with appropriate proration for any
partial year) and any interest due thereon shall be included within the
term "Taxes" for purposes hereof.
(b) "Tax Year" shall mean the fiscal year for which Taxes are levied
by the governmental authority.
Landlord represents and warrants to Tenant that there are currently no local
improvement districts, special assessments, or state or local impact fees that
are assessed against, encumber or affect the Tax Premises, and, to Landlord's
knowledge, none of the foregoing are pending or threatened, and there are no
agreements relating to any such improvement districts, special assessments or
state or local impact fees to which Landlord, or any affiliate or predecessor of
Landlord, is a party.
2.3 Tenant shall pay to Landlord as additional rent hereunder the Taxes
(herein called "Tenant's Tax Payment"). Tenant's Tax Payment shall be paid by
Tenant to Landlord on the same periodic basis (including, without limitation, in
<PAGE>
the same installments, if applicable) upon which the Taxes shall be payable by
Landlord to the applicable governmental authorities. Each such payment or
installment on account of Tenant's Tax Payment shall be paid by Tenant to
Landlord within ten (10) days after receipt of a demand from Landlord therefor,
which demand shall not be made by Landlord more than twenty (20) days prior to
the due date of the corresponding payment or installment on account of Taxes
payable by Landlord. However, if, and for so long as, the Taxes shall be
payable by Landlord to the applicable governmental authorities (or to any
superior mortgagee or to any other superior lessor) on a monthly basis, then,
notwithstanding the foregoing, Tenant's Tax Payment shall be payable by Tenant
to Landlord on a similar monthly basis without demand from Landlord. Tenant's
Tax Payment shall be prorated, if necessary, to correspond with that portion
of a Tax Year occurring within the Term.
2.4 If Landlord elects not to do so, Tenant shall be eligible to
institute tax certiorari or other proceedings to contest the assessed valuation
of the Tax Premises or any portion thereof and/or otherwise to contest the
amount of Taxes payable with respect to any or all of the same on behalf of and
in the name of Landlord.
2.5 Deleted Prior to Execution.
2.6-2.8 Intentionally Omitted.
2.9 Additional Rent. The following terms shall have the following
meanings:
(a) "Building Expenses" shall mean any and all reasonable costs and
expenses (and the taxes thereon, if any) incurred by or on behalf of Landlord
with respect to the ownership, operation, repair, replacement, management and
maintenance of the Building, to the extent that such costs or expenses are in
respect of services requested by Tenant to be performed by Landlord which are
otherwise to be performed at Tenant'scost hereunder or to the extent that such
cost or expense is paid or incurred by Landlord after an Event of Default occurs
in respect of any of Tenant'sobligations for payment of any repair, maintenance
or replacement costs under Article 8 of the Lease, including the following:
(i) the cost of insurance coverage carried by Landlord pursuant
to Section 12.2 with respect to the Building;
(ii) maintenance and repair of the Building and the fixtures and
equipment servicing same (including, without limitation, all charges for service
contracts with respect thereto) only to the extent that such services are
requested to be performed by Landlord or an Event of Default occurs in respect
of Tenant'sobligations under Article 8 of this lease;
<PAGE>
(iii) repairs, replacements and maintenance of the sprinkler
system servicing the Building only to the extent that such services are
requested to be performed by Landlord or an Event of Default occurs in respect
of Tenant'sobligations under Article 8 of this lease;
(iv) personal property taxes (or other similar taxes, however,
denominated) payable by Landlord for any equipment or other facilities excluding
equipment or facilities relating to Landlord's Work or Landlord's obligation
under Article 8 of the Lease;
(v) except as otherwise provided for herein (and excluding
specifically matters relating to Landlord's Work and the matters referred to in
2.2 (a)(x)), such levies, license and permit fees and other charges general and
specific, ordinary and extraordinary, foreseen and unforeseen, of any kind and
nature whatsoever which are, or may during the term of this lease be, assessed,
levied, charged and imposed on the Building, other than as included in Taxes;
and
(vi) normal hourly rates charged by Landlord for its personnel
while performing services at, or in the vicinity of, the Building only to the
extent that such services are requested by Tenant to be performed by Landlord
under Article 8 of this lease.
All wages, salaries, fees and other charges included within Building
Expenses shall not exceed market rates. Nothing contained in this Section 2.6,
however, is intended to increase or expand the scope of any of Landlord's
obligations under this lease. Notwithstanding anything to the contrary in the
lease, in no event shall "Building Expenses" include all or any portion of
the following repairs, maintenance, improvements, replacements, premiums,
claims, losses, fees, charges, costs and expenses (herein collectively called
"Costs"):
(A) any Costs occasioned by the wrongful act, negligence, or
violation of requirements of public authorities by Landlord, by any other
occupant of the Building, or by their respective agents, employees or
contractors;
(B) any Costs occasioned by casualties of a type covered by an
all-risk property insurance policy (excluding earthquake and flood) or by other
insurance carried by Landlord or occasioned by the exercise of the power of
eminent domain;
(C) any interest, charges and fees incurred on debt, any payments on
mortgages or other indebtedness;
(D) any Costs for which Tenant reimburses Landlord directly or that
<PAGE>
Tenant pays directly to a third person on Landlord's behalf, and
(E) any Costs for any act or work that is to be performed by
Landlord at its sole cost and/or sole expense and/or exclusive cost or expense
pursuant to any of the provisions of this lease.
(F) legal, accounting, advertising, administrative and promotional
expenses of any kind.
(G) depreciation.
(H) brokerage commissions, conveyancing and financing costs.
(I) management contracts and salaries, wages or expenses of
Landlord's employees or agents.
(b) "Building Expense Year" shall mean the calendar year.
2.10 Should Tenant request Landlord to maintain and repair the Building as
and to the degree provided in Section 8.3 and elsewhere herein, Tenant shall pay
to Landlord, as additional rent for each Building Expense Year occurring, in
whole or in part, during the Term (including, without limitation, during the
First Extension Period, the Second Extension Period, Third Extension Period and
Fourth Extension Period, if any), from and after the Rent Commencement Date an
amount (herein called "Building Additional Rent") equal to the Building
Expenses.
The Building Additional Rent shall be prorated, if necessary, to correspond with
that portion of a Building Expense Year occurring within the Term. The Building
Additional Rent shall be payable by Tenant to Landlord within thirty (30) days
after sending notice of the same with appropriate supporting documentation
reasonably sufficient to support such Building Expense (the Building Expense
Notice ).
2.11 Except as otherwise provided herein, every Building Expense Notice
given by Landlord shall be conclusive and binding upon Tenant, unless Tenant
shall:
(a) notify Landlord in writing, within ninety (90) days after its
receipt of such notice, that it disputes the correctness of the Building Expense
Notice, which dispute notice shall specify the particular respects in which the
Building Expense Notice in question is claimed to be incorrect; and
(b) submit its dispute to a court of competent jurisdiction, within
sixty (60) days after it gives such dispute notice to Landlord, if such dispute
<PAGE>
shall not theretofore be settled by agreement.
Pending the resolution of such dispute by agreement or adjudication as
aforesaid, Tenant shall pay the amount of Building Additional Rent claimed to be
due in such Building Expense Notice within the thirty (30) day period set forth
in Section 2.12, but such payment shall be without prejudice to Tenant's
position. If the dispute shall be resolved in Tenant's favor, Landlord shall,
on demand, pay Tenant the amount of Tenant's overpayment of Building Additional
Rent, if any, resulting from its compliance with the disputed Building Expense
Notice, plus interest at the Lease Rate.
2.12 Records Relating to Taxes and Building Expenses. Any
determination or redetermination of the Building Additional Rent shall be made
by Landlord acting reasonably, in accordance with this lease and supported by
appropriate documentation, a summary of which shall be provided to Tenant upon
request. Landlord or its agents shall keep records in reasonable detail
showing all expenditures made or items incurred with regard to Taxes and
Building Expenses. Such records shall be available for inspection by Tenant,
for purposes of verifying the amounts of the Taxes and/or the Building Expenses,
during regular business hours at Landlord's office upon reasonable notice.
Tenant shall also have the right to have and to make copies (at Tenant's
reasonable expense) of any and all bills and vouchers relating thereto. Such
records shall be available for one (1) year after the period in question.
2.13 General. Landlord's failure during the lease term to prepare and
deliver any of the statements, notices, or bills set forth in this Article 2, or
Landlord's failure to make a demand, shall not in any way cause Landlord to
forfeit or surrender its rights to collect any of the foregoing items of
additional rent that may have become due during the term of this lease, provided
that Landlord shall forfeit and surrender its rights as to an item of additional
rent if demand therefor shall not be made by Landlord to Tenant within eighteen
(18) months after the expiration of the Tax Year or the Building Expense Year
(as the case may be) in question. Tenant's liability for the amounts due
under this Article 2 shall survive the expiration of the Term.
ARTICLE 3
COMPLETION AND OCCUPANCY OF THE LEASED PREMISES
3.1 Landlord shall, at its sole cost and expense, construct the Leased
Premises in accordance with the provisions of this Article 3 (herein called
"Landlord's Work"). Landlord agrees that Landlord's Work shall be performed and
completed by Landlord at its sole cost and expense:
(a) promptly and with due diligence in accordance with the
construction schedule, annexed hereto as Exhibit F (the Construction Schedule);
(b) in a good and workmanlike manner, using only new, first class
materials;
<PAGE>
(c) in accordance with the Site Plan attached as Exhibit A, the Floor
Plan attached as Exhibit B, the Performance Specifications and Description of
Operations, attached hereto as Exhibit D (collectively, the Performance
Specifications ) and Landlord's Working Drawings prepared by Landlord as set
forth in Section 3.2 below and approved by Tenant as set forth in Section
3.3 below, as the same may be modified and/or revised from time to time by
Tenant as set forth in Section 3.4 below and/or by Landlord as provided in
Section 3.5 below;
(d) in compliance with all requirements of public authorities,
including the requirements of the Americans with Disabilities Act;
(e) in compliance with the provisions of all CC&Rs and other
Permitted Encumbrances affecting the Leased Premises;
(f) by no later than November 30, 1996 ( Tenant Outside Occupancy Date
), otherwise Tenant shall have the right to terminate this lease by giving
notice to Landlord; provided, however, should Tenant not terminate this lease
and Landlord not have achieved Substantial Completion by July 1, 1997, Landlord
shall have a right to terminate this lease by giving notice to Tenant within
fifteen (15) days thereafter;
(g) and shall include the removal of all rubbish, debris and sand
piles from the Leased Premises.
3.2 (A) Landlord shall cause to be prepared at Landlord's sole cost and
expense, andsubmitted to Tenant for its approval as set forth in Section 3.3
below, working drawings and design specifications for Landlord's Work that
satisfy the requirements of Section 3.1 (a), (b), (c), (d), and (e) (herein
collectively called "Landlord's Working Drawings and Specifications").
(B) Without intention to limit the generality of the foregoing in any
respect, Landlord shall have the right, at any time and from time to time, to
give Tenant a written notice requesting that Tenant answer one or more
questions, and/or make one or more choices, concerning one or more aspects of
Landlord's Working Drawings and/or otherwise pertaining to Landlord's Work
(herein called a "Request for Information"). If Landlord shall give a Request
for Information to Tenant, the following procedures shall apply:
(a) Tenant shall respond in writing with its answers to the questions
and/or its preferences as to the choices (as the case may be) posed in such
Request for Information within seven (7) business days after Tenant's receipt or
refusal of delivery of the same.
(b) If:
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(i) Tenant shall respond in writing to a Request for
Information within such seven (7) business day period; and
(ii) Landlord shall determine that some or all of the answers
and/or preferences expressed in such written response are responsive to the
substance of such Request for Information and are reasonable in nature
(including, without limitation, as the same shall affect the cost and/or
construction time necessary to perform and complete Landlord's Work), then
Tenant's answers and/or preferences expressed in such written response, to the
extent that Landlord shall determine that the same are responsive and
reasonable, shall constitute a supplement to the Landlord s Working Drawings and
Specifications or, to the extent that the same shall conflict with the Landlord
Working Drawings and Specifications as theretofore constituted, an
amendment of the same.
(c) If Tenant shall fail to respond in writing to some or all of the
questions and/or requests for choices (as the case may be) contained in a
Request for Information within such seven (7) business day period, Landlord
shall have the right to give Tenant a further written notice (herein called a
"Non-Response Notice"), which Non-Response Notice shall specify:
(i) the questions and/or requests for choices (as the case may
be) contained in the Request for Information as to which Tenant shall have
failed to respond; and
(ii) the answers that Landlord will assume and/or the choices
that Landlord will adopt (as the case may be) if Tenant shall fail to respond to
such Non-Response Notice in a timely fashion.
If Tenant shall fail respond in writing to some or all of the questions
and/or requests for choices (as the case may be) contained in a Non-Response
Notice within three (3) business days after Tenant's receipt or refusal of
delivery of the same, then the answers and/or choices (as the case may be)
stated by Landlord in the Non-Response Notice shall constitute a part of the
Landlord's Working Drawings and Specifications or, to the extent that the same
shall conflict with the Landlord's Working Drawings and Specifications as
theretofore constituted, an amendment of the same.
(d) If Landlord shall determine that the answers given or choices
made (as the case may be) in Tenant's timely response to either a Request for
Information or a Non-Response Notice (as the case may be) are unresponsive
and/or unreasonable in any one or more respects, then:
<PAGE>
(i) except as provided in subsection (e) below, such answers
and/or choices shall not constitute a supplement to the Landlord's Working
Drawings and Specifications and/or an amendment to the same; and
(ii) Landlord shall have the right to give a further written
notice to Tenant, requesting that Tenant again answer such questions and/or
again make such choices (herein called a "Follow-Up Request"), which Follow-Up
Request shall explain in reasonable detail the reasons underlying Landlord's
determination that one or more of Tenant's prior answers and/or prior choices
(as the case may be) were unresponsive and/or unreasonable.
If Landlord shall elect to give a Follow-Up Request to Tenant, then the
procedures established in subsections (a), (b) and (c) above, as well as in this
subsection (d), shall apply to the Follow-Up Request, as if the Follow-Up
Request were the initial Request for Information made hereunder, except that, in
formulating its response to such Follow-Up Request, Tenant shall take into
account, in good faith and in all reasonable respects, the reasons set forth by
Landlord in the Follow-Up Request underlying its determination that the answers
and/or choices previously provided by Tenant were unresponsive or unreasonable.
(e) Any dispute regarding the preparation of Landlord's Working Drawings
and Specifications under this Section 3.2 shall be resolved by expedited
arbitration in the manner provided in Article 21. Provided that Landlord shall
have acted reasonably and in good faith, Tenant's Outside Occupancy Date shall
be extended by one day for each day between the date of submission to
arbitration and the date upon which such dispute shall be finally
resolved by expedited arbitration provided that such arbitration will actually
delay completion of the Building as determined in arbitration and Landlord is
the prevailing party. Landlord and Tenant shall each act in a good faith manner
with respect to the conduct of such arbitration so as to obtain a resolution of
their differences at the earliest possible time and thus minimize the
amount of such delay.
3.3 (A) Provided that Tenant, its agents, employees, representatives and
consultants shall consult with, advise and otherwise cooperate with Landlord as
set forth in Section 3.2, Landlord shall use its reasonable, good faith efforts
to deliver Landlord's Working Drawings and Specifications to Tenant within
forty-five (45) days from the date hereof , (or as soon as reasonably
practicable thereafter). Upon Landlord's delivery of Landlord's Working
Drawings and Specifications to Tenant, the following procedures shall apply:
(a) If Tenant shall determine that Landlord's Working Drawings and
Specifications conform to the requirements set out in Section 3.1 (a), (b), (c),
(d), and (e), (as the same may be supplemented and/or amended pursuant to
Section 3.2), Tenant shall give Landlord written notice of the same (herein
<PAGE>
called the "Drawings Approval Notice") as soon as practicable after Tenant's
receipt or refusal of delivery of the same, but in any event within twenty (20)
days after Tenant's receipt or refusal of delivery of Landlord's Working
Drawings and Specifications and upon receipt of such Drawings Approval Notice,
Landlord's Working Drawings and Specifications shall be deemed to be approved
by, and binding upon, Tenant in all respects (subject, however, to Tenant's
right to request changes in the same as provided in Section 3.4) and to
constitute a part of this lease.
(b) If, and to the extent that, Tenant shall determine that
Landlord's Working Drawings and Specifications do not conform to the
requirements of Section 3.1 (a), (b), (c), (d), and (e) (as the same may be
supplemented and/or amended pursuant to Section 3.2) in any material respect,
Tenant shall give Landlord written notice thereof (herein called the "Drawings
Rejection Notice") within fifteen (15) days after Tenant's receipt or refusal of
delivery of Landlord's Working Drawings and Specifications, which Drawings
Rejection Notice shall set forth, in reasonable detail and in a reasonable
format under the circumstances (including, without limitation, mark-ups of
Landlord's Working Drawings and Specifications), the revisions and/or
corrections to Landlord's Working Drawings that would cause the same to conform
to the requirements of Section 3.1 (a), (b), (c), (d) and (e) (as so
supplemented and/or amended) in all material respects.
(c) If Tenant shall fail to give either a Drawings Approval Notice or
a Drawings Rejection Notice to Landlord within twenty (20) days after Tenant's
receipt or refusal of delivery of Landlord's Working Drawings and
Specifications, then Landlord's Working Drawings and Specifications shall be
deemed to be approved by, and binding upon, Tenant in all respects (subject,
however, to Tenant's right to request changes in the same as provided in
Section 3.4) and to constitute a part of this lease.
(d) If Tenant shall give a Drawings Rejection Notice to Landlord
within twenty (20) days after Tenant's receipt or refusal of delivery of
Landlord's Working Drawings, Landlord shall either:
(i) give Tenant written notice within seven (7) days after
Landlord's receipt or refusal of delivery of the Drawings Rejection Notice that
Landlord disputes the substance of the Drawing Rejection Notice or the
appropriateness of one or more of the revisions and/or corrections requested
therein; or
(ii) make the appropriate revisions or corrections to Landlord's
Working Drawings and Specifications and resubmit the same to Tenant within
thirty (30) days after Landlord's receipt or refusal of delivery of the
Drawings Rejection Notice, whereupon the foregoing procedures shall apply
to the revised Landlord's Working Drawings and Specifications, as well as to any
one or more further revisions of Landlord's Working Drawings thereafter
<PAGE>
submitted by Landlord to Tenant as aforesaid, until such time as a revised
version of Landlord's Working Drawings shall be deemed to be approved by Tenant
as aforesaid (except that Tenant's time to respond to any revised or further
revised Landlord's Working Drawings and Specifications shall be reduced to seven
(7) days).
Any dispute regarding the preparation of Landlord's Working Drawings and
Specifications under this Section 3.3, shall be resolved by expedited
arbitration in the manner provided in Article 21.
Provided that Landlord shall have acted reasonably and in good faith,
Tenant'sOutside Occupancy Date shall be extended by one day for each day
between the date of submission to arbitration and the date upon which such
dispute shall be finally resolved by expedited arbitration provided that such
arbitration will actually delay completion of the Building as determined in the
arbitration and Landlord is the prevailing party. Landlord and Tenant shall
each act in a good faith manner with respect to the conduct of such arbitration
so as to obtain a resolution of their differences at the earliest possible time
and thus minimize the amount of such delay.
Notwithstanding the time frames provided above for the review of Landlord's
Working Drawings and Specifications (or revisions thereto) and for Landlord's
revision of the same, the parties shall endeavor in good faith to respond to the
other's submissions at the earliest practicable time under the circumstances.
(B) Tenant's review and approval of Landlord's Working Drawings shall be
for the sole purpose of determining the suitability for Tenant's use of the
Landlord's Work shown thereon and not for the purpose of determining whether the
same comply with the requirements of public authorities, whether the same are
structurally sound, or whether the same are free from defects in specified
materials or design, all of which shall be Landlord's sole responsibility.
However, Tenant reserves the right (but does not accept any obligation) to
reject Landlord's Working Drawings and Specifications in the event that Tenant
shall reasonably determine that the same shall not so comply or comply
with the Performance Specifications, that the same shall not be structurally
sound, or that the same is defective in specified materials or design, which
rejection shall be in writing and shall describe, in reasonable detail, the
aspects of Landlord's Working Drawings and Specifications that render the same
in non-compliance with the requirements of public authorities, the Performance
Specifications , not structurally sound, or defective.
3.4 (A) Subject to the provisions of Paragraph B of this Section 3.4,
Tenant shall have the right, from time to time after the approval of Landlord's
Working Drawings pursuant to Section 3.3 above, to make changes in and to the
same. Within fifteen (15) days after Tenant shall request a change in
Landlord's Working Drawings, Landlord shall notify Tenant in writing as to
<PAGE>
whether the change requested by Tenant will, in Landlord's reasonable and good
faith judgment, entail Additional Construction Related Costs and/or additional
construction time. If, in Landlord's reasonable and good faith judgment, such
changes will entail Additional Construction Related Costs and/or additional
construction time, such written notice shall contain Landlord's reasonable
estimate of the Additional Construction Related Costs and/or additional
construction time that the same will entail. If Landlord shall not so notify
Tenant within such fifteen (15) day period, then:
(a) Landlord's Working Drawings shall be deemed to be changed as set
forth in Tenant's request;
(b) Tenant shall not be obligated to pay any Additional Construction
Related Costs as a result of such changes; and
(c) Tenant's Outside Occupancy Date shall not be modified as a result
thereof.
Conversely, if Landlord shall so notify Tenant that the changes will entail
Additional Construction Related Costs and/or additional construction time,
Tenant shall notify Landlord in writing within three (3) business days after
such determination as to whether Tenant wishes to make the changes in question.
If Tenant shall not so notify Landlord, it shall be conclusively deemed that
Tenant has elected to withdraw the proposed change in Landlord's Working
Drawings. Conversely, if Tenant shall notify Landlord that Tenant nonetheless
wishes to make the change in question, then:
(i) Landlord's Working Drawings shall be deemed to be changed
as set forth in Tenant's request;
(ii) to the extent that Landlord shall incur additional
Construction Related Cost resulting from such changes, Tenant shall pay to
Landlord, as and when Landlord incurs the same, the actual and direct amount of
such Additional Construction Related Costs, not to exceed the amount of
Landlord's estimate of the same set forth in Landlord's response to the Tenant's
change request; and
(iii) to the extent that such changes shall entail additional
construction time, Tenant'sOutside Occupancy Date shall be postponed by the
number of days of additional construction time actually incurred in connection
with such changes, not to exceed the number of days set forth in Landlord's
response to Tenant's change request.
(B) Notwithstanding the foregoing, Landlord shall not be required to
accept a change proposed by Tenant in Landlord's Working Drawings after the same
shall be approved or deemed to be approved by Tenant if, as a consequence of the
proposed change, either:
<PAGE>
(a) the reasonably anticipated delay in Tenant'sOutside Occupancy
Date, when taken together with all other anticipated delays in such date
occasioned by any other changes theretofore and contemporaneously proposed by
Tenant under this Section 3.4, shall be in excess of thirty (30) days (it being
agreed that Landlord shall use reasonable efforts to minimize any such delay,
the cost of which reasonable efforts shall constitute a part of the Additional
Construction Related Costs); or
(b) due to the fact or nature of the change in question, the
anticipated delay in Landlord's completion of the Building shall reasonably be
expected to jeopardize Landlord's then existing financing or any commitment then
in force to extend, replace and/or refinance the same.
Before Landlord shall reject a change proposed by Tenant in Landlord's Working
Drawings and Specifications on a ground set forth in subsection (b) above,
Landlord shall use its reasonable, good faith efforts to obtain all consents and
other relief (such as, for example, additional time for the completion of the
premises to be demiSed to such other tenant) that shall be necessary to remove
the impediment to the making of the change in question (provided, however, that
Landlord shall in no event be obligated pursuant to this Paragraph B to continue
such efforts for a period in excess of fourteen (14) days). In the event that
such efforts shall be successful, but the removal of such impediments shall
entail additional expense, Landlord shall notify Tenant of the same in writing,
setting forth Landlord's reasonable estimate of the amount of the additional
expense. Tenant shall not be obligated to pay any expense unless approved in
advance by Tenant. If Landlord shall so notify Tenant of any additional
expense, Tenant shall notify Landlord in writing within three (3) business days
thereafter as to whether Tenant continues to desire Landlord to make the change
in question. If Tenant shall not so notify Landlord, it shall be conclusively
deemed that Tenant has elected to withdraw the proposed change in Landlord's
Working Drawings and Specifications. Conversely, if Tenant shall notify
Landlord that Tenant nonetheless wishes to make the change in question, then
Landlord's initial estimate of the cost of making such change shall be deemed to
be increased by the amount of the reasonably estimated additional expense set
forth in Landlord's notice to Tenant.
(C) Any dispute as to the amount of any additional construction cost
and/or additional construction time under Section 3.4(A) or as to whether a
change in Landlord's Working Drawings and Specifications proposed by Tenant may
be rejected by Landlord as provided in Paragraph B above shall be resolved by
expedited arbitration in the manner provided in Article 21. Provided that
Landlord shall have acted reasonably and in good faith, Tenant'sOutside
Occupancy Date shall be extended by one day for each day between the date of
submission to arbitration and the date upon which such dispute shall be finally
resolved by expedited arbitration provided that such arbitration delays will
actually delay completion of the Building and Landlord is the prevailing party.
Landlord and Tenant shall each act in a good faith manner with respect to the
conduct of such arbitration so as to obtain a resolution of their differences at
the earliest possible time and thus minimize the amount of such delay.
3.5 Landlord shall have the right, from time to time after the approval of
Landlord's Working Drawings pursuant to Section 3.3 above, to make reasonable
and non-material changes in and to the same, subject to the prior written
approval of Tenant (not to be unreasonably withheld or delayed) in each
instance, to the extent that the same shall be necessary or desirable:
(a) in connection with Landlord's construction of the Building
and/or
(b) in order to cause Landlord's work to comply with any applicable
requirements of public authorities and/orrequirements of insurance bodies.
Within fifteen (15) days after Landlord shall request a change in Landlord's
Working Drawings, Tenant shall notify Landlord in writing as to whether Tenant
shall consider the changes proposed by Landlord to be reasonable and
non-material. If Tenant shall not so notify Landlord within such fifteen (15)
day period, Landlord's Working Drawings shall be deemed to be changed as set
forth in Landlord's request. Any dispute as to whether a change in Landlord's
Working Drawings proposed by Landlord is reasonable and non-material shall be
resolved by expedited arbitration in the manner provided in Article 21.
Provided that Landlord shall have acted reasonably and in good faith, Tenant s
Outside Occupancy Date shall be extended by one day for each day between the
date of submission to arbitration and the date upon which such dispute shall be
finally resolved by expedited arbitration provided that any such arbitration
delay will actually delay completion of construction as determined in the
arbitration and Landlord is the prevailing party. Landlord and Tenant shall
each act in a good faith manner with respect to the conduct of such arbitration
so as to obtain a resolution of their differences at the earliest
possible time and thus minimize the amount of such delay.
3.6 The Leased Premises shall be deemed to be "Substantially Complete" for
purposes of this lease on the date on which all of the following criteria shall
be satisfied:
(a) Landlord's Work has been substantially completed in compliance
with the provisions of Section 3.1;
(b) all permits, fire underwriter s certificates and certificates of
occupancy (temporary or final) required for the use and occupancy of the Leased
Premises have been issued by the appropriate governmental authority;
(c) all facilities, systems and utilities (exclusive of telephones)
servicing the Leased Premises are in good working order so as to permit the
Leased Premises to be used and ocupied for its intended purposes;
<PAGE>
(d) all common areas, including the lobbies, stairs, restrooms,
walkways, roadways and the parking area have been completed (paved, striped and
lighted) and is available for use;
(e) the warranties and representations of Landlord set forth in this
lease shall be true and correct or, if the same shall not be correct, Landlord
has duly cured such breach;
(f) A certificate of substantial completion shall have been issued
by the Building Architect.
Landlord's Work shall be considered to be substantially completed
notwithstanding the fact that minor or insubstantial details of construction,
mechanical adjustment or decoration remain to be performed, which details
Landlord shall promptly thereafter perform at Landlord's sole cost and expense.
Landlord shall give Tenant a preliminary notice (the Preliminary Substantial
Completion Notice ), estimating when the Leased Premises will be Substantially
Complete, on a date that shall be at least sixty (60) days prior to the date set
forth in such preliminary notice. Prior to the Term Commencement Date, or
within a reasonable period of time after Landlord's receipt of the same (if
after the Term Commencement Date), Landlord shall provide to Tenant at least one
copy of all applicable warranties from manufacturers, all maintenance manuals,
all guarantees and warranties specified in the specifications to Landlord's
Working Drawings and Specifications, keys, project site documents including as
built drawings, change orders, inspection certificates and manufacturers'
certificates and manuals.
3.7 During the construction of the Building, Tenant and its consultants
and engineers shall have the right to attend all regularly scheduled contractor
and project construction meetings, to inspect all relevant construction
documents and records, to meet with construction personnel at reasonable times
and to inspect the construction site from time to time. The purpose of the
foregoing is to allow Tenant to monitor the course of construction, as well as
to resolve any questions or comments regarding whether Landlord's Work is
progressing in a good and workmanlike manner in accordance with Landlord's
Working Drawings and Specifications. Such inspection and monitoring shall not
waive any of Tenant's rights under this lease, including, without limitation,
those set forth in Sections 3.10 and 3.11. Landlord shall permit Tenant access
to the Building Premises, on and after the delivery of the Preliminary
Substantial Completion Notice for purposes of installing its furniture and
fixtures in the same, as described on Exhibit G hereto, which work Landlord does
hereby approve, (herein called "Tenant's Fixturing Work"), and receiving
merchandise provided, and on the conditions, that:
(a) Tenant shall have satisfied all of the conditions precedent to
the commencement of Tenant's Fixturing Work contained in this lease (including,
without limitation, those contained in Article 35) except Section 35.2 (b), (i),
(iv) and (v);
<PAGE>
(b) Tenant shall give Landlord written notice of its intention to
perform Tenant's Fixturing Work in advance of such date, which notice shall
describe, in reasonable detail, the items of Tenant's Fixturing Work to be
performed, to the extent not theretofore provided to Landlord;
(c) Tenant's Fixturing Work shall be performed in such a manner as
shall not unreasonably interfere with, or the delay the performance of,
Landlord's Work; and
(d) this lease shall be in full force and effect.
Landlord shall permit Tenant access to the Building Premises for the performance
of Tenant's Fixturing Work as aforesaid, and such access shall be subject to all
of the terms, covenants and conditions of this lease (other than the obligations
to pay rent and additional rent). Landlord shall render the Building Premises
available for the performance of Tenant's Fixturing Work as aforesaid from and
after the giving of the Preliminary Substantial Completion Notice.
3.8 If a delay shall occur in the Substantial Completion of Landlord's
Work as a result of:
(a) an Event of Default by Tenant in respect of its obligations
under this lease; or
(b) any negligent act or omission of Tenant, or of any of its
employees, agents or contractors (including any delay in the substantial
completion of Landlord's Work occasioned by the performance of Tenant's
Fixturing Work in a manner which unreasonably interferes with Landlord's Work,;
then, if Tenant shall fail to cure the same within five (5) days after Tenant's
receipt or refusal of delivery of written notice thereof from Landlord:
(i) any reasonable Additional Construction Related Costs
incurred by Landlord arising out of or resulting from such delay shall be
promptly paid by Tenant to Landlord as additional rent, as determined by Tenant
s architect; and
(ii) Tenant'sOutside Occupancy Date shall be extended by one
day for each day of such delay.
3.9 During the sixty (60) day period between the date upon which the
Preliminary Substantial Completion Notice shall be sent to Tenant pursuant to
Section 1.2 and the Commencement Date, Landlord shall:
(a) afford Tenant with full access to the Building for the
<PAGE>
performance of Tenant's Fixturing Work in and to the same, provided, and on
the conditions that:
(i) this lease shall be in full force and effect;and
(ii) Tenant shall have satisfied all of the conditions precedent
to the commencement of Tenant's Fixturing Work contained in this lease
(including, without limitation, those contained in Article 35, except Section
35.2 (b), (i), (iv) and (v); and
(b) provide Tenant with a so-called "lay down" area outside of the
Building for the storage and staging of Tenant's fixtures and equipment to be
installed in the Building as part of Tenant's Fixturing Work.
Such access shall be subject to be all of the terms, covenants and conditions of
this lease (other than the obligations to pay rent, including additional rent).
Tenant agrees to permit Landlord access to the Building during such sixty (60)
day period (and, thereafter, during the Term) for the purpose of completing any
unfinished items of Landlord's Work in and to the same, provided, and on the
condition that, such work shall not interfere with, or delay the performance of,
Tenant's Fixturing Work (or, if during the Term, with Tenant's use and occupancy
of the Leased Premises for the purposes permitted by this lease).
3.10 Within twenty (20) days following the Term Commencement Date, Tenant
shall deliver to Landlord a "punchlist" of any defects in the Leased Premises
that are required to be corrected by Landlord pursuant to this lease. Tenant
shall give notice to Landlord whenever any such defect becomes reasonably
apparent, and Landlord shall repair such defect as soon as practicable, subject
to Section 3.11.
3.11 Landlord agrees that it shall, at its sole cost and expense and with
all due diligence, repair or correct, or cause to be repaired or corrected:
(a) any defect(s) in workmanship, materials, or design, with respect
to any portion of Landlord's Work, specified in a written notice or notices
given by Tenant to Landlord within one (1) year after the Term Commencement Date
except for punch list items which shall be warrantied for one (1) year from the
time of final completion of Landlord's Work;
(b) any portion of Landlord's Work that shall not have been
performed in compliance with all of the requirements of public authorities,
Landlord's Working Drawings and Specifications (as amended in accordance with
the terms hereof), the Performance Specifications (except Landlord shall not be
responsible for non-design or non-engineering oriented items in the Performance
Specifications to the extent different than Landlord's Working Drawings and
<PAGE>
Specifications approved by Tenant or the fact that items that Tenant has
specifically selected as specified in Landlord's Working Drawings and
Specifications, approved by Tenant do not conform to the Performance
specifications), all requirements of insurance bodies and all CC&Rs applicable
to the Leased Premises as of the Commencement Date, specified in a written
notice or written notices given by Tenant to Landlord at any time after such
portion of Landlord's Work shall have been performed.
(c) other items referred to in Section 8.3 which shall be performed
at Landlord's cost and expense.
Any such notice(s) shall specify, in reasonable detail, the nature of the
defect(s) noted by Tenant. Provided that non-compliance therewith shall neither
constitute a crime or an offense punishable by fine or imprisonment (as to any
requirement of public authority) nor invalidate any insurance policy maintained
by Landlord or Tenant pursuant to the provisions of this lease (as to any
requirement of insurance bodies), and provided, further, that such
non-compliance shall not affect Tenant's right or ability to lawfully use the
Leased Premises for their permitted purposes or be reasonably anticipated to
adversely affect Tenant's reputation or operation of its business, Landlord may,
at Landlord's sole cost and expense, contest the validity or applicability to
the Leased Premises as of the Term Commencement Date of, or the non-compliance
of the Leased Premises as of the Term Commencement Date with, any requirement of
public authority and/or any CC&R, and such noncompliance by Landlord during such
contest, for so long as such contest shall be diligently prosecuted, shall not
be deemed a breach of this Section 3.11.
3.12 Landlord shall assign to Tenant any and all assignable warranties and
guarantees of workmanship and materials that it may receive in connection with
Landlord's Work, to the extent that the same relate to items that Tenant shall
be responsible to repair, maintain, or replace pursuant to Article 8 hereof. To
the extent that any such warranties and/or guarantees shall not be assignable
to Tenant, Landlord shall use its reasonable efforts to enforce such warranties
and/or guarantees at Tenant's request and on Tenant's behalf.
ARTICLE 4
SUBORDINATION
4.1 Subject to Landlord's compliance with its obligations hereunder, this
lease is subject and subordinate to all ground, overriding, or underlying
leases, as well as to all mortgages, that shall hereafter affect the Leased
Premises, and to all renewals, modifications, consolidations and extensions of
any such leases and/or mortgages. This Section 4.1 shall be self-operative, and
no further instrument of subordination shall be required to effectuate the terms
hereof. In confirmation of such subordination, however, Tenant shall execute
and deliver to Landlord promptly any certificate that Landlord, or any such
lessor or mortgagee, may reasonably request. The leases to which this lease is,
at the time referred to, subject and subordinate pursuant to this Article 4 are
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herein sometimes called "superior leases" and the mortgages to which this lease
is, at the time referred to, subject and subordinate are herein sometimes called
"superior mortgages". The lessor of a superior lease, or its successor in
interest at the time referred to, is sometimes herein called a "superior lessor"
and the mortgagee under a superior mortgage, or its successor in interest at the
times referred to, is sometimes herein called a "superior mortgagee".
4.2 Intentionally Omitted.
4.3 Subject to Tenant'sreceiving a Non Disturbance Agreement
substantially on the same terms provided in the form attached hereto as Exhibit
H, if the lessor of a superior lease, the holder of a superior mortgage, or any
party deriving its interest therefrom shall succeed to the rights of Landlord in
the Leased Premises or under this lease, whether through possession or
foreclosure action or delivery of a new lease or deed, then Tenant shall attorn
to and recognize such party succeeding to Landlord's rights (the party so
succeeding to Landlord's rights herein sometimes called the "successor
landlord") as Tenant's landlord under this lease, and shall promptly execute and
deliver any instrument that such successor landlord may reasonably request to
confirm such attornment. This lease shall continue in full force and effect as,
or as if it were, a direct lease between the successor landlord and Tenant, and
all of the terms, conditions and covenants set forth in this lease shall be
applicable after such attornment, except that the successor landlord shall not:
(a) be liable for any previous act or omission of Landlord under
this lease (the provisions of Sections 3.10 and 3.11 shall not be deemed arising
out of previous acts or omissions);
(b) be subject to any offset that shall have theretofore accrued to
Tenant against Landlord; or
(c) be bound by:
(i) any previous modification of this lease, not expressly
provided for in this lease; or
(ii) any previous prepayment of more than one (1) month's
Fixed Net Rent or any additional rent then due,
unless such modification or prepayment shall have been expressly approved
in writing by the superior lessor or the superior mortgagee through or by
reason of which the successor landlord shall have succeeded to the rights
of Landlord under this lease.
The provisions for attornment set forth in this Article 4 shall be
self-operative and shall not require the execution of any further Instrument.
However, if any superior lessor, any superior mortgagee and/or any other party
<PAGE>
to whom Tenant agrees to attorn as aforesaid reasonably requests a further
instrument confirming such attornment, Tenant agrees to execute and deliver the
same within twenty (20) days after a request is made to do so in accordance with
the provisions of this lease.
4.4-4.5 Intentionally Omitted.
4.5 Landlord shall obtain from the holder of any mortgage, for the benefit
of Tenant, a subordination, non-disturbance and attornment agreement on
substantially the same terms provided in the form attached hereto as Exhibit H,
providing, in substance, that so long as this lease shall then be in full force
and effect, and provided that Tenant attorns to holder of any mortgage under the
terms, covenants and conditions of this lease:
(a) Tenant shall not be joined as a party defendant in any action or
proceeding that may be instituted or taken by the holder of such mortgage;
(b) Tenant'srights as tenant hereunder shall not be affected or
terminated, and the possession of the Lease Premises by Tenant shall not be
disturbed, by the holder of such mortgage or by any proceeding on the debt that
such mortgage secures, or by virtue of a right or power contained in any such
mortgage or the bond or note secured thereby; and
(c) any sale, at foreclosure or otherwise, will be subject to this
lease, and this lease shall continue in full force and effect as a direct lease
between the mortgagee (or successor thereto) and Tenant.
4.7 Landlord shall obtain from the holder of any ground, overriding or
underlying lease, for the benefit of Tenant, a subordination, non-disturbance
and attornment agreement substantially on the same terms provided in the form
attached hereto as Exhibit H:
(a) Tenant shall not be joined as a party defendant in any action
or proceeding that may be instituted or taken by the holder of such lease for
the purpose of terminating such lease by reason of any default thereunder;
(b) Tenant's rights as the tenant hereunder shall not be affected or
terminated;
(c) Tenant's possession of the Leased Premises shall not be
disturbed;
(d) no action or proceeding shall be commenced to remove or evict
Tenant; and
(e) this lease shall continue in full force and effect as a direct
lease between the lessor and Tenant, notwithstanding the termination or
expiration of the ground, overriding, or underlying lease prior to the
expiration or termination of this lease.
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4.8 Landlord hereby represents and warrants that there are no superior
leases or superior mortgages as of the date of this lease.
4.9 Landlord shall provide Tenant with a waiver of lien for any
institutional lender providing financing to Tenant for furniture, fixtures and
equipment in the Building.
ARTICLE 5
USE OF THE LEASED PREMISES
5.1 Tenant shall use and occupy the Leased Premises for a lawful
office/warehouse, distribution, manufacturing or assembly use or uses, at all
times in compliance with:
(a) all requirements of public authorities and all requirements of
insurance bodies now in effect or hereafter adopted; and
(b) such CC&RS, if any, to which the Leased Premises are subject at
the date of this lease (which CC&R's are set forth on Exhibit C), to the extent
that such CC&Rs are not inconsistent with the provisions of this lease.
5.2 Notwithstanding anything to the contrary provided in Section 5. 1,
Tenant shall not use or occupy the Leased Premises or any portion thereof,
permit or suffer the same to be used or occupied and/or do, or permit or suffer
anything to be done, in or on the Leased Premises or any part thereof, that
would, in any manner or respect:
(i) violate any certificate of occupancy in force relating to
the Leased Premises;
(ii) make void or voidable any insurance then in force with
respect to the Leased Premises, or render it impossible to obtain fire or other
insurance thereon required to be furnished by Landlord or Tenant under this
lease;
(iii) cause structural or other injury to the Leased Premises,
or constitute a private or public nuisance or waste; and/or
(iv) render the Leased Premises incapable of being used or
occupied after the expiration or sooner termination of the term of this lease
for the purposes for which the same were permitted to be used and occupied on
the day upon which Tenant shall first open the Leased Premises for business to
the public,except for ordinary wear and tear and damage by fire or other
casualty;
5.3 Tenant hereby covenants and agrees that, notwithstanding any other
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provision of this lease, it shall not open the Leased Premises for business on
or before the Term Commencement Date.
5.4 Tenant shall have the right to install and maintain, at its own cost
and expense, signs in and on the Leased Premises. Landlord's prior written
approval (not to be unreasonbly withheld) shall be required as to the
dimensions, material, content, location and design of any sign(s) installed and
maintained by Tenant outside of the Leased Premises. Landlord shall pass upon
such outside signage as part of Landlord's Working Drawings. In fabricating and
installing Tenant's signs, Tenant shall comply with all of the requirements of
public authorities (including zoning laws and building codes) and all of the
requirements of insurance bodies. Tenant shall obtain and pay for all permits
required therefor. Tenant expressly agrees that no sign shall be installed
until any and all required approvals and permits therefor are first obtained and
copies thereof delivered to Landlord with evidence of payment of any fees
pertaining thereto. Tenant agrees to pay all annual renewal fees pertaining to
Tenant's signs. In the event that the removal of any sign or signs is
necessary, in order to perform any maintenance, repairs, alterations or
improvements in or to the Leased Premises, or any part thereof, Landlord shall
have the right to do so, provided that such sign or signs are replaced whenever
such maintenance, repairs, alterations or improvements shall have been
completed. The cost of replacing such signs shall be borne by Landlord.
5.5 Landlord shall not cause or permit Hazardous Materials to be used,
transported, stored, released, handled, produced, or installed in, on, or from
the Leased Premises (except for such de minimus amounts as may be contained in
industrial strength cleaning solutions and the like). In the event of a breach
of the provisions of this Section 5.5, Landlord or Tenant (as the case may be)
shall have the right, in addition to all of its other rights and remedies under
this lease and pursuant to law, to require Tenant or Landlord (as the case may
be) to remediate such condition in the manner prescribed for such remediation
by the requirements of public authorities and the requirements of insurance
bodies. Tenant shall not bring any Hazardous Materials onto the Leased
Premises or otherwise use, store, release, handle or transport any such
Hazardous Materials there at, except that Tenant may use, store, transport,
handle produce or install Hazardous Materials in connection with the
operation of its business in accordance with the applicable requirements of
public authorities. However, notwithstanding the foregoing, with respect to
any substance or material that is not classified as a Hazardous Material as
of the date of the installation of the same, but that shall become classified
as a Hazardous Material thereafter during the Term, the remediation of the
same, to the extent and in the manner required by all applicable requirements
of public authorities and to the extent, and only to the extent brought onto
the Leased Premises by Tenant, shall be performed by Tenant, at its sole cost
and expense. The provisions of this Section 5.5 shall survive the termination
of this lease. Landlord agrees to indemnify, defend and hold Tenant harmless
from and against any and all losses, costs, expenses, fines, liens,
liabilities and other matters (including reasonable attorney's fees) arising
out of a breach by Landlord of its covenant contained herein.
ARTICLE 6
REPRESENTATIONS
6.1 Landlord agrees to indemnify, defend and hold Tenant harmless from and
against any and all losses, costs, expenses, fines, liens, liabilities and other
matters (including reasonable attorney s fees) arising out of a breach by
Landlord of its covenants contained herein.
Tenant has examined Landlord's title to, as well as, the physical condition of,
the Land constituing a part of the Leased Premises prior to the execution and
delivery of this lease and has found the same to be satisfactory to it for all
purposes hereof, but the foregoing shall be subject to and shall not limit
Landlord's obligations or representations hereunder. Landlord makes no
representations or warranties of any kind or nature whatsoever (other than as
expressly and specifically set forth in this lease), including, but not limited
to the physical condition of the Leased Premises, the use or occupancy that may
be made of the Leased Premises. Except for Landlord's Work and as may be
expressly and specifically provided in this lease (including, without
limitation, Landlord's repair obligations), Tenant assumes the sole
responsibility for the condition, operation, maintenance and management of the
Leased Premises, and Landlord shall not be required to furnish any facilities or
services or make any repairs or alterations thereto (other than those
facilities, services, repairs and alterations that Landlord has specifically and
expressly agreed in this lease to furnish to the Leased Premises, and then only
as and to the extent expressly and specifically provided herein).
6.2 Landlord hereby represents and warrants to Tenant as follows:
(a) Power and Authority. Landlord has the authority and power to
enter into this lease and to consummate the transaction provided for herein.
This lease and all other documents executed and delivered by Landlord in
connection herewith constitute legal, valid, binding and enforceable
obligations of Landlord, and there are no claims or defenses, personal or
otherwise, or offsets whatsoever to the enforceability or validity of this
lease.
(b) No Violations and Actions. The execution, delivery and
performance by Landlord of its obligations under this lease will not conflict
with, or result in a breach of, any requirement of public authority by which
Landlord is bound, or by any of the provisions of any contract to which Landlord
is a party or by which Landlord is bound or, if Landlord is not an individual,
by Landlord's declaration of trust, certificate of incorporation, bylaws, or
partnership agreement, as the case may be. There is no action, suit,
proceeding, or investigation pending, or to Landlord's knowledge threatened,
before any agency, court, or other governmental authority that relates to the
Land or the use thereof.
(c) Condemnation. There is no condemnation proceeding affecting the
Land or any portion thereof currently pending nor, to Landlord's knowledge, is
any such proceeding threatened, which would have a material adverse effect on
the Building.
(d) Default, Breach, Access and Utilities. There is no default or
breach by Landlord under any of the CC&Rs that may affect the Land or any
portion thereof. Gas, electric power, sanitary and storm sewer and water
facilities, and all other utilities necessary for Tenant's intended use and
operation of the Leased Premises, will be available to the Leased Premises in
quantities satisfactory to service the Leased Premises for their intended use.
No condition exists that would result in the termination or impairment of access
to the Land or discontinuation of necessary sewer, water, electric, gas,
telephone, or other utilities.
(e) Leases. There are no leases affecting all or any part of the
Leased Premises.
(f) Environmental Conditions. To the best of Landlord's knowledge:
(i) the Leased Premises have not been affected by the presence
of any Hazardous Material;
(ii) there is not present any Hazardous Material, toxic
substances or other pollutants or materials that could be a detriment to the
Land or in violation of any local, state or federal law or regulation; and
(iii) there are no potentially hazardous environmental
conditions that would affect the Land.
For purposes of this subsection (g), the terms "Hazardous Materials",
"toxic substances", "other pollutants or materials" and "potentially hazardous
environmental conditions" shall be deemed to exclude any of the same that shall
not be so classified, characterized, or recognized as such as of the date of
this lease and/or as of the Commencement Date (as the case may be).
(g) Bankruptcy Matters. Landlord has not made a general assignment
for the benefit of creditors, filed any voluntary petition in bankruptcy, or
suffered the filing of an involuntary petition by its creditors, suffered the
appointment of a receiver to take possession of substantially all of its assets,
suffered the attachment or other judicial seizure of substantially all of its
assets, admitted its inability to pay its debts as they come due, or made an
offer of settlement, extension, or composition to its creditors generally.
(h) Obligations. There are no obligations in connection with the
Land that will be binding upon Tenant, except for those matters specifically set
forth in this lease.
(i) Absence of Moratorium. No moratorium, statute, order,
regulation, ordinance, legislation, judgment, ruling, or decree of any court or
governmental agency has been enacted, adopted, issued, or entered, or is pending
or in effect, that could materially and adversely affect the Land and/or Leased
Premises, Tenant's ability to operate its project, or both.
(j) That Building can be built to the best of Landlord's knowledge
without variance and that Landlord has good title subject to the Permitted
Encumbrance exceptions on Exhibit C and will deliver Premises subject only to
those Permitted Encumbrances and no other liens or encumbrances will be placed
upon the Leased Premises.
All of the representations and warranties of Landlord contained in this lease
shall be true and correct as of the date of this lease and as of the Term
Commencement Date. In the event that Tenant shall claim that any of such
representations or warranties of Landlord shall be untrue, in in any material
respect Tenant shall give written notice to Landlord stating in reasonable
detail the nature and substance of the breach. Landlord shall have the right
to cure such breach within thirty (30) days after the date of Tenant's notice.
In the event that such breach shall be of such a nature that it cannot
reasonably be cured and remedied within such thirty (30) day period, Landlord
shall have sufficient time thereafter within which to cure such breach, provided
that Landlord shall commence the work, or initiate the action, required
to cure and remedy such breach promptly within such thirty (30) day period and
thereafter prosecute such work or action in good faith continuously and
diligently to completion. Should Landlord fail to cure and remedy such breach
within the aforesaid period, Tenant shall have any and all rights affored to it
at law, in equity or otherwise.
6.3 Tenant hereby represents and warrants to Landlord as follows:
(a) Power and Authority. Tenant has the authority and power to
enter into this lease and to consummate the transaction provided for herein.
This lease and all other documents executed and delivered by Tenant in
connection herewith constitute legal, valid, binding and enforceable obligations
of Tenant, and there are no claims or defenses, personal or otherwise, or
offsets whatsoever to the enforceability or validity of this lease.
(b) No Violations and Actions. The execution, delivery and
performance by Tenant of its obligations under this lease will not conflict
with, or result in a breach of, any material requirement of public authority by
which Tenant is bound, or by any of the provisions of any material contract to
which Tenant is a party or by which Tenant is bound or, if Tenant is not
an individual, by Tenant's declaration of trust, certificate of incorporation,
bylaws, or partnership agreement, as the case may be. There is no action, suit,
proceeding, or investigation pending, or to Tenant's knowledge threatened,
before any agency, court, or other governmental authority that may materially
and adversely affect Tenant's right or ability to fulfill any of its
obligations under this lease.
(c) Bankruptcy Matters. Tenant has not made a general assignment
for the benefit of creditors, filed any voluntary petition in bankruptcy, or
suffered the filing of an involuntary petition by its creditors, suffered the
appointment of a receiver to take possession of substantially all of its assets,
suffered the attachment or other judicial seizure of substantially all of its
assets, admitted its inability to pay its debts as they come due, or made an
offer of settlement, extension, or composition to its creditors generally.
All of the representations and warranties of Tenant contained in this lease
shall be true and correct as of the date of this lease and as of the Term
Commencement Date. In the event that Landlord shall claim that any of such
representations or warranties of Tenant shall be untrue, in any material
respect, Landlord shall give written notice to Tenant stating in reasonable
detail the nature and substance of the breach. Landlord shall have the right
to cure such breach within thirty (30) days after the date of Tenant'snotice.
In the event that such breach shall be of such a nature that it cannot
reasonably be cured and remedied within such thirty (30) day period, Tenant
shall have sufficient time thereafter within which to cure such breach, provided
that Tenant shall commence the work, or initiate the action, required to cure
and remedy such breach promptly within such thirty (30) day period and
thereafter prosecute such work or action in good faith continuously and
diligently to completion. Should Tenant fail to cure and remedy such breach
within the aforesaid period, Landlord shall have the right, as its exclusive
remedy therefor, to terminate this lease by giving written notice thereof to
Tenant. If, however, such breach is not reasonably expected to have a
material and adverse affect on Landlord's right, title and interest in and to
the Leased Premises and/or upon Landlord's rights under this lease, then Tenant
shall have no obligation to cure such breach, Landlord shall have
no right to terminate this lease or any other remedy against Tenant with respect
thereto and such breach shall be disregarded for all purposes of this lease.
ARTICLE 7
LANDLORD NOT LIABLE FOR FAILURE OF WATER SUPPLY, ETC.
7.1 Except as otherwise expressly and specifically
provided in this lease, Landlord shall not be liable for:
(a) any failure of any facility or service provided
to the Leased Premises (including the facilities and services
referred to in Article 10), or for any injury to person or damage
to property for any reason whatsoever, including caused by or
resulting from:
(i) hurricane, tornado, flood, wind, or similar
storms or disturbances; or
(ii) the leakage or flow of gasoline, oil, gas,
electricity, steam, water, rain, or snow from the street, sewer,
gas mains, tanks, wires, lines, any subsurface area, any part of
the Building, pipes, appliances, plumbing works, or any other
place; or
(b) any interference with light or other incorporeal
hereditaments by anybody, or caused by operations by or of any
public or quasi-public work,
unless such failure, injury or interference is finally adjudged by
a court of competent jurisdiction to have been caused by the
willful, wrongful acts or negligence of Landlord, its agents,
contractors or employees or as a result of the breach by Landlord
of any of its obligations hereunder. However, nothing contained in
this Section 7.1 shall relieve Landlord of any of its obligations
to repair and maintain the Building as and to the extent otherwise
provided in this lease.
ARTICLE 8
REPAIRS, REPLACEMENT AND MAINTENANCE
8.1 Except as otherwise expressly and specifically
provided in this lease to be Landlord's responsibility, Tenant
shall take good care of the Leased Premises, both inside and
outside, and keep the same and all parts thereof (including the
appurtenances thereof or thereto, together with any and all
alterations, additions and improvements therein or thereto) in
good order and condition, suffering no waste or injury, ordinary
wear and tear excepted. Except as expressly and specifically
provided in this Lease to be Landlord's responsibility, Tenant
shall, at Tenant's sole cost and expense, promptly make all needed
repairs and replacements, internal and external, structural and
non-structural repairs and replacements, internal and external,
ordinary and extraordinary, foreseeable or unforeseeable, in and
to:
(a) the Leased Premises including, without
limitation, the exterior and interior windows and window frames,
doors and door frames, entrances, and signs, thereof (except to
the extent Landlord has expressly and specifically agreed in
Section 8.3 or elsewhere in this lease to repair and replace the
Building and/or the Leased Premises, and then only to such
extent); and
(b) the water, electric, sewer, gas, telephone,
standpipe, sprinkler and other utility connections, lines, pipes,
mains and other installations located within the Building, as well
as all fixtures, machinery and equipment, now or hereafter
servicing, belonging to, or used in connection with the Building
exclusively and/or Tenant's use, occupancy, or operation of the
same (except, with respect to any such installations, to the
extent Landlord has expressly and specifically agreed in Section
8.3 or elsewhere in this lease to maintain, repair and replace the
same, and then only to such extent).
Such maintenance, repair and replacement obligation shall include
all heating and air-conditioning systems, machinery and equipment
exclusively servicing the Building. All of such repairs and
replacements shall be of good quality sufficient for the proper
maintenance and operation of the Building, and shall be
constructed and installed in compliance with all of the
requirements of public authorities and all of the requirements of
insurance bodies having jurisdiction thereof. Tenant shall not
permit the accumulation of waste or refuse matter, nor permit
anything to be done upon the Building that would invalidate or
prevent the procurement of any insurance policies that may at any
time be required pursuant to the provisions of Article 12.
8.2 Tenant shall perform the following services in and to
the Leased Premises exclusive of the Building (the Exterior
Premises ):
(a) subject to Landlord's warranty provided in
Section 3.11, perform all repairs, replacements and maintenance
necessary to maintain the Exterior Premises in a safe and
serviceable condition (including, without limitation, periodic
patching and resurfacing of all driveways, sidewalks, streets and
the Parking Area so as to keep the same free of chuck holes,
fissures and cracks, as well as the restriping of all parking
areas);
(b) to the extent required by public authories, keep
the Exterior Premises properly cleaned and swept (which shall be
performed as often as is reasonably necessary), drained, free of
snow, ice, standing water, rubbish and other obstructions and in a
sightly condition;
(c) keep the Exterior Premises lighted during, and
for appropriate periods before and after, the business hours of
the Leased Premises (including, without limitation, the cost of
electricity to operate the lighting standards and other fixtures
servicing the Exterior Premises, which shall be metered through
Tenant's electric meter, and the cost of relamping the same as
necessary);
(d) maintain signs, markers, painted lines and other
means and methods of pedestrian and vehicular traffic control;
(e) maintain any plantings and landscaped areas;
(f) if required by any governmental authority
having jurisdiction thereof, operate and maintain traffic
signals or lights, as the case may be, that are presently
installed or may be installed hereafter servicing the Exterior
Premises (exclusive of costs associated with the installation of
the same); and
(g) employ an adequate number of persons to perform,
as well as to supervise the performance of, all of the services to
be provided by Tenant to the Leased Premises (including, without
limitation, pay the wages, salaries and fringe benefits of such
employees).
Tenant shall not obstruct, or permit the obstruction of, any
street, road, walk, or sidewalk constituting a part of, or
adjoining, the Exterior Premises, and shall keep any sidewalks
constituting a part of, or adjoining, the Exterior Premises clean
and free of snow and ice.
8.3 Subject to the provisions of Article 13, Landlord
shall, at its sole cost and expense, be responsible for the
following repairs, replacements and maintenance in and to the
Leased Premises (promptly after receipt of written notice from
Tenant setting forth the need for such repairs, which notice shall
be sufficiently detailed to permit Landlord to determine the
nature and extent of the work that shall be necessary in order to
correct the same):
i) any maintenance, repair or replacement occasioned by the
negligent acts or omissions of Landlord or its agents, employees
or contractors;
ii) any maintenance, repair or replacement required to
be made by Landlord pursuant to the provisions of Section 3.10 or
3.11;; and
iii) all repairs, or replacements in respect of
structural steel, wall panels, floors and roof, due to defects in
materials, workmanship, design or structural failure, it being
understood and agreed that with respect to the above, Landlord's
obligation shall exclude ordinary on-going maintenance and repair
items and shall include, by way of example only, roof, floor and
structural steel replacement.
All of such repairs and replacements shall be of good quality
sufficient for the proper maintenance and operation of the Leased
Premises, and shall be constructed and installed in compliance
with all of the requirements of public authorities and all of the
requirements of insurance bodies having jurisdiction thereof at
the time when such work is performed.
ARTICLE 9
COMPLIANCE WITH REQUIREMENTS OF PUBLIC AUTHORITIES
9.1 Except as otherwise expressly and specifically provided
herein, Tenant shall, at Tenant's expense, promptly comply with:
(a) all requirements of public authorities and all
requirements of insurance bodies, with respect to:
(i) the Leased Premises and all appurtenances
thereto; and
(ii) the use or occupancy of the Leased Premises
or any portion thereof, including the making of any alteration or
addition in or to the Building Premises or any structure upon the
Exterior Premises; and
(b) the requirements of all CC&Rs existing of record
as of the date of this lease and set forth on Exhibit C (provided,
however, that Tenant shall be required to comply with the same
only to the extent that the requirements thereof shall not be
inconsistent with the provisions of this lease), as well as the
requirements of all CC&Rs hereafter granted by Landlord with the
prior written consent or joinder of Tenant,
whether or not such compliance involves repairs or changes that
shall be internal or external, ordinary or extraordinary,
structural (except as and to the extent provided for under this
Section 9. 1, in Section 8.3, or in any other provision of this
lease) or non-structural, foreseen or unforeseen, whether or not
such compliance is required on account of any particular use
(including the use permitted hereunder) or manner of use to which
the Leased Premises or any part thereof may be put and regardless
of the cost thereof. Notwithstanding the foregoing, however,
Landlord shall promptly comply with all requirements of public
authorities and all requirements of insurance bodies, as well as
with all of the CC&RS, now or hereafter existing, with respect to
the Leased Premises and Landlord shall be solely responsible for
payment of all charges, assessments, fees and other expenses
payable by a lot owner under such CC&RS with respect to storm
water detention and drainage systems, sewer systems, roadways,
common areas or any other matter, including without limitation,
those under the Deed of Declaration and Protective Covenants dated
May 1, 1987 made by Joseph D. Morris and Robert Morris
Partnership, recorded in Book 3611, Page 516 in the Middlesex
County Clerk s Office, except for item 19 of Exhibit C.
Landlord's right (if any) to reimbursement for the cost of such
compliance shall be governed by the provisions of Section 8.3, as
if such compliance requirement were instead a repair or
replacement provided for in such Section 8.3. Subject to
Landlord's obligations set forth herein, if, and to the extent
that, any license or permit shall be or become necessary or
desirable for the conduct or operation of Tenant's business at the
Leased Premises (or the business of any licensee, subtenant, or
concessionaire of the same), Tenant shall, at its sole cost and
expense obtain and maintain such licenses and permits in full
force and effect throughout the Term.
9.2 Provided that non-compliance therewith shall not
constitute a crime or an offense punishable by fine or
imprisonment (as to any requirement of public authority) or shall
invalidate any insurance policy maintained by Landlord or Tenant
pursuant to the provisions of this lease (as to any requirement of
insurance bodies), and provided, further, that this lease shall be
in full force and effect and that such non-compliance shall not be
reasonably anticipated to adversely affect Landlord's reputation,
Tenant may, at Tenant's expense, contest the validity or
applicability to the Leased Premises of, or the non- compliance of
the Leased Premises with, any requirement of a public authority,
any requirement of an insurance body and/or any CC&R, and such
non-compliance by Tenant during such contest, for so long as that
such contest shall be diligently prosecuted, shall not be deemed a
breach of Tenant's obligations under Section 9.1, provided that,
before the commencement of such contest, Tenant shall furnish to
Landlord, if the estimated cost of compliance exceeds $250,000 and
if Landlord so requires, either:
(a) the bond of a surety company reasonably
satisfactory to Landlord, which bond shall:
(i) be, as to its provisions and form,
satisfactory to Landlord;
(ii) be in an amount at least equal to one
hundred and twenty-five per cent (125%) of the estimated cost of
such compliance; and
(iii) indemnify Landlord against the cost and
expense of such compliance, as well as against all liability for
any damages, interest, penalties and expense (including fees and
disbursements of attorneys or counsel), resulting from or incurred
in connection with such contest or noncompliance; or
(b) other security, in lieu of such bond, that is
reasonably satisfactory to Landlord as to form and amount.
The foregoing requirement to submit a bond or other security shall
not apply if, at the time in question, Tenant meets the net worth
test set forth in Section 12.9 of this lease.
9.3 Provided that non-compliance therewith shall not
constitute a crime or an offense punishable by fine or
imprisonment (as to any requirement of public authority) or shall
invalidate any insurance policy maintained by Landlord or Tenant
pursuant to the provisions of this lease (as to any requirement of
insurance bodies), and provided, further, that such non-compliance
shall not affect Tenant's right or ability to lawfully use the
Leased Premises for their permitted purposes or be reasonably
anticipated to adversely affect Tenant's reputation or the
operation of Tenant'sbusiness, Landlord may, at Landlord's
expense, contest the validity or applicability to the Building, or
the non-compliance of the same with, any requirement of a public
authority, any requirement of an insurance body and/or any CC&R,
and such non-compliance by Landlord during such contest, for so
long as that such contest shall be diligently prosecuted, shall
not be deemed a breach of Landlord's obligations under Section 9.1.
9.4 If, at any time during the Term, any requirement of
public authority shall have the effect of limiting, for any
period of time, the amount of the rents payable by Tenant, or
receivable by Landlord, under this lease, and the maximum rents
so permitted to be paid by Tenant, or received by Landlord,
hereunder shall be less than the rents herein reserved, then:
(a) throughout the period of limitation, Tenant shall
remain liable for the maximum amount of rents that is lawfully
payable; and
(b) if and when the period of limitation ends, the
requirement of public authority imposing such limitation is
repealed, or such limitation is restrained or rendered
unenforceable by any order or ruling of a court of appropriate
jurisdiction:
(i) to the extent that the same is not
prohibited by any requirement of public authority, Tenant shall
pay to Landlord, on demand, all amounts that would have been due
from Tenant to Landlord during the period of limitation, but that
were not paid because of the requirements of public authorities;
and
(ii) thereafter, Tenant shall pay to Landlord
all of the rents reserved under this lease, all of which shall be
calculated as if there had been no intervening period of
limitation.
ARTICLE 10
UTILITIES
10.1 Landlord shall bring all utilities to the Leased
Premises (exclusive of telephone service, except, with respect to
telephone service, for the furnishing of an empty conduit therefor
from the outside into the Building Premises) and install the same
with adequate capacity for Tenant'suse (as required as a part of
Landlord's Work), as well as pay all hook up fees associated with
the utility services required to be brought to and installed in
the Building Premises as a part of Landlord's Work. Tenant agrees
to make its own payment arrangements with such public utility
companies (including posting whatever deposits may be required in
connection therewith) for the furnishing of, and payment of all
charges for, water (including water charges, meter charges, sewer
rents, sewer charges and the like), fire alarm service, gas,
electricity, telephone and all other public utility or similar
service or services that Tenant shall consider necessary or
desirable for the conduct of Tenant's business in the Leased
Premises. In addition, Tenant shall pay the cost of furnishing
heat and air conditioning to the Leased Premises. In no event
shall Landlord be responsible for charges for heat, air
conditioning, water, sewer, fire alarm service, gas, electricity,
steam, telephone, or any other public utility or similar service
or services furnished during the Term to the Leased Premises or to
any part thereof. All meters at the Leased Premises for the
purposes of measuring Tenant's consumption of the respective
utilities shall be installed by Landlord as part of Landlord's
Work and thereafter maintained by Tenant, at Tenant's sole cost
and expense, in good order and condition.
10.2 Except as otherwise specifically and expressly provided
herein, the interruption or curtailment of any utility and/or
other facility or service referred to in this Article 10 shall not
constitute an actual or constructive eviction, nor shall the same
entitle Tenant to any compensation or abatement of rent unless
such interruption or curtailment shall have been caused by the
willful, wrongful act or negligence of Landlord, its agents,
contractors or employees or the breach of this lease by Landlord,
in which event Tenant's right to such compensation shall be
subject to the provisions of Section 34.2.
10.3 Tenant covenants and agrees that, at all times, the
aggregate connected and design loads of the electrical equipment
installed in the Building Premises shall never exceed the design
capacity of the feeders to the Building or the risers or wiring
installation thereof. In connection therewith, Tenant expressly
agrees that all installations, alterations and additions of and to
the electrical fixtures, appliances, or equipment within the
Leased Premises shall be subject to the provisions of Article 35
or, if outside of the Leased Premises, subject to Landlord's prior
written approval, and, if such approval shall be given, rigid
conduit only shall be permitted. If, in connection with any
request for such approval, Landlord shall determine that the
risers of the Building servicing the Leased Premises shall be
insufficient to supply Tenant's electrical requirements with
respect thereto, Landlord shall, at the sole cost and expense of
Tenant, install any additional feeder(s) that Landlord shall deem
necessary with respect thereto, provided, however, that, if
Landlord shall determine that the same will cause permanent damage
or injury to the Building or to the Leased Premises, cause or
create a dangerous or hazardous condition, entail excessive or
unreasonable alterations, repairs, or expense, or interfere with,
or disturb, the other tenants or occupants of the Building, then
Landlord shall not be obligated to make such installation, and
Tenant shall not make the installation, alteration, or addition
with respect to which Tenant requested Landlord's consent. In
addition to the installation of such risers, Landlord will also,
at the sole cost and expense of Tenant, install all other
equipment necessary and proper in connection therewith, subject to
the aforesaid terms and conditions. All of the aforesaid costs
and expenses are chargeable and collectible as additional rent,
and shall be paid by Tenant to Landlord within ten (10) days after
rendition of any bill or statement to Tenant therefor.
ARTICLE 11
NET LEASE, NON-TERMINABILITY
11. 1 Except as otherwise specifically and expressly
provided herein, this lease is a net lease, and the Fixed Net
Rent, additional rent and all other sums payable by Tenant
hereunder to, or on behalf of, Landlord shall be paid by Tenant
without notice or demand and without setoff, counterclaim,
abatement, suspension, deduction, or defense. Landlord and Tenant
each hereby further agree and confirm that, except as otherwise
expressly and specifically provided herein, it is the purpose and
intent of both Landlord and Tenant that the rents payable under
this lease shall be absolutely net to Landlord, so that this lease
shall yield, net to Landlord, the rents specified herein in each
year during the Term.
11.2 Except as otherwise expressly and specifically provided
herein, this lease shall not terminate, nor shall Tenant have any
right to terminate this lease or be entitled to the abatement of
any rent or any reduction thereof, nor shall the obligations
hereunder of Tenant be otherwise affected, any present or future
requirement of any public authority to the contrary
notwithstanding, by reason of:
(a) any damage to, or the destruction of, the Leased
Premises or any portion thereof, from whatever cause, except as
expressly and specifically provided in Article 13;
(b) the taking of the Leased Premises or any portion
thereof by condemnation or otherwise, except as, and to the
extent, expressly and specifically provided to the contrary in
Article 20 below; or
(c) any other cause whatsoever, whether similar or
dissimilar to the foregoing, except that Tenant shall have the
right to terminate this lease if:
(i) Landlord fails to perform, or breaches any of
Landlord's obligations under this lease; and
(ii) such condition shall continue for a period
of thirty (30) days after written notice by Tenant (or, if such
condition cannot reasonably be cured and remedied within such
thirty (30) day period, if Landlord shall fail to commence the
work, or initiate the action, required to cure and remedy such
condition promptly within such thirty (30) day period and
thereafter prosecute such work or action in good faith
continuously and diligently to completion, not to exceed 60 days
in the aggregate), it being the intention of the parties hereto
that the Fixed Net Rent and additional rent reserved hereunder
shall continue to be payable in all events, and the obligations of
Tenant hereunder shall continue unaffected, unless the requirement
to pay or perform the same shall be terminated pursuant to an
express and specific provision of this lease.
11.3 Nothing contained in this Article 11 shall be deemed or
construed to relieve Landlord of any responsibility that it might
otherwise have to respond in damages (subject, however, in all
respects to the provisions of Section 34.2) for any injury or
damage to person or property caused by Landlord's willful,
wrongful acts or negligence, or for any breach of Landlord's
obligations under this lease.
ARTICLE 12
INSURANCE
12.1 Tenant covenants to provide on or before the
Commencement Date and to keep in force during the Term hereof for
the benefit of Landlord and Tenant:
(a) a comprehensive policy of liability insurance
protecting Landlord and Tenant against any liability whatsoever
occasioned by accident on or about the Leased Premises or any
appurtenances thereto (including, without limitation, on or about
the Exterior Premises), and the amount of liability coverage
thereunder shall not be less than the amount of $10,000,000.00 of
coverage on a per occurrence and aggregate basis in respect of
bodily injury and property damage;
(b) fire and extended coverage insurance upon
property of every kind and description owned by Tenant, or for
which Tenant is legally liable, or installed by or on behalf of
Tenant, and which is located within the Leased Premises
(including, without limitation, stock in trade, furniture,
fittings, installations, alterations, additions, partitions,
fixtures and anything in the nature of a leasehold improvement) in
an amount equal to the full replacement value thereof,
(c) broad form boiler and machinery insurance on all
air conditioning equipment, miscellaneous electrical apparatus,
boilers and other pressure vessels or systems, whether fired or
unfired, in or servicing the Building Premises, and if said
equipment, vessels or systems and the damage that may be caused by
or result from them are not covered by Tenant's liability
insurance set forth in subsection (a) of this Section 12. 1, such
boiler and machinery insurance coverage shall not be not less than
the amount of $250,000.00;
(d) business interruption insurance in such amounts
as will reimburse Tenant for direct and indirect loss or earnings
attributable to all perils and casualties and for such duration
commonly insured against by prudent tenants or attributable to
prevention of access to the Leased Premises as a result of such
perils and casualties;
(e) Worker's Compensation Insurance, as required by
law; and
All insurance procured by Tenant shall name Landlord, together
with each superior lessor and superior mortgagee, as additional
insureds, as their respective interests may appear. Such policies
are to be written by insurance companies licensed to do business
in the State of New Jersey, with general policy holder's ratings
of not less than "Best A VIII" or equivalent, and may be carried
under a blanket policy covering the Leased Premises and other
locations of Tenant, if any. Tenant's liability insurance set
forth in subsection (a) above may be issued under an umbrella
policy provided that the retention amount thereunder is reasonably
acceptable to Landlord. In the case of insurance against fire or
other casualty, the policy or policies shall provide that loss
shall be adjusted by, and payable solely to, Tenant. In the event
of any dispute between Landlord and Tenant with respect to the
amount of general liability coverage to be maintained by Tenant
and/or the types and amounts of such other insurance as Landlord
may require Tenant to carry from time to time as above provided,
such dispute shall be arbitrated pursuant to the provisions of
Article 21 of this lease.
12.2 Provided this lease shall be in full force and effect,
Landlord covenants to provide on or before the Term Commencement
Date, and to keep in force during the Term hereof, fire and
extended coverage insurance upon the Building in an amount equal
to the full replacement value thereof (exclusive of footings and
foundations). If Landlord shall be required to maintain any such
insurance pursuant to the terms of any superior mortgage or
superior lease, Tenant agrees that the insurance maintained by
Landlord pursuant thereto shall be conclusively deemed to satisfy
Landlord's obligations to Tenant to maintain insurance hereunder
(provided, however, that such coverages and amounts are no less
favorable than those provided above). Such insurance may be
carried under a blanket policy covering other locations of
Landlord, if any. Tenant acknowledges, however, that Landlord
will not carry insurance on Tenant's furniture, furnishings,
fixtures, equipment, improvements, appurtenances or other
leasehold improvements. Tenant may, at its option, arrange for
such insurance in lieu of Landlording maintaining the same.
12.3 Tenant shall procure policies for the insurance
required to be carried pursuant to Section 12.1 for periods of
from one (1) to five (5) years, as Tenant shall elect, and shall
deliver to Landlord original certificates thereof with evidence,
by stamping or otherwise, of the payment of the premiums thereon.
All such policies shall provide that the insurer will not cancel
or modify such policy except after thirty (30) days' prior written
notice to Landlord. All such policies shall provide, in addition,
that any loss payable thereunder shall be payable notwithstanding
any act or omission of Tenant that might, absent such agreement,
result in the forfeiture of all or part of the payment of such
loss. All premiums and charges for Tenant's insurance policies
(including for the insurance policies required to be carried
pursuant to Section 12. 1) shall be paid by Tenant. If Tenant
shall fail to make any such payment when due, or shall fail to
carry any such policy, the provisions of Articles 14 and 16 shall
apply.
12.4 Tenant shall pay the premiums for Tenant's initial
policies of insurance required hereunder and all renewals thereof
not later than the due date thereof so as to avoid a lapse of
coverage. Not later than thirty (30) days prior to the expiration
of each policy of insurance, Tenant shall deliver to Landlord a
certificate of such renewal policy with evidence, by stamping or
otherwise, of the payment of the premiums thereon. If any such
premiums shall not be paid when due or if such a certificate of
any renewal policy required to be delivered hereunder shall not be
so delivered, the
provisions of Articles 14 and 16 shall apply.
12.5 Tenant shall not violate, or permit to be violated, any
of the conditions or provisions of the insurance policies
maintained by Landlord and Tenant, and Tenant shall so perform and
satisfy the reasonable requirements of the companies writing such
policies.
12.6 Tenant shall not carry separate insurance, concurrent
in coverage and contributing in the event of loss, with any
insurance required to be furnished by Tenant under the provisions
of this Article 12, if the effect of such separate insurance would
be to reduce the protection or the payment to be made under said
insurance required to be furnished by Tenant, unless Landlord, any
superior lessor(s) and any superior mortgagee(s) (where the
insurance required to be carried requires the inclusion of the
superior lessor(s) and/or the superior mortgagee(s)) are included
as additional insureds, with loss payable as hereinabove provided.
Tenant shall promptly notify Landlord of the issuance of any such
separate insurance and shall cause such policies or certificates
of insurance to be delivered to Landlord, any superior lessor(s)
and any superior mortgagee(s) as provided in this Article 12.
12.7 Landlord and Tenant shall each secure an appropriate
clause in, or an endorsement upon, each fire or extended coverage
policy obtained by it and covering the Leased Premises or the
personal property, fixtures and equipment located therein or
thereon, pursuant to which the respective insurance companies
waive subrogation or permit the insured, prior to any loss, to
agree with a third party to waive any claim it might have against
the said third party. The waiver of subrogation or permission to
waive any claim hereinbefore referred to shall extend to the
agents of each party and its employees and, in the case of Tenant,
shall also extend to all other persons and entities occupying all
or using the Leased Premises in accordance with the terms of this
lease. If, and to the extent that, such waiver or permission can
be obtained only upon payment of an additional charge or premium,
the party to benefit from the waiver or permission shall pay such
charge upon demand, or shall be deemed to have agreed that the
party obtaining the insurance coverage in question shall be free
of any further obligations under the provisions hereof relating to
such waiver or permission.
12.8 Each party hereby releases the other with respect to
any claim (including a claim for negligence) that it might
otherwise have against the other party for loss, damage, or
destruction by fire or other casualty (including rental value or
business interruption, as the case may be) occurring during the
term of this lease with respect to all claims for which insurance
is carried or required to be carried hereunder.
12.9 Notwithstanding anything to the contrary contained in
this Article 12, if, and for so long as, Tenant shall have a net
worth, as shown on Tenant's most recent certified financial
statement from time to time (copies of which shall be delivered to
Landlord), in excess of Two Hundred Fifty Million
($250,000,000.00) Dollars, Landlord waives its right to require
Tenant to furnish the insurance coverages set forth in Section
12.1 (other than subsection (e) thereof). However, if, at any
time during the Term, Tenant's net worth shall decrease below Two
Hundred Fifty Million ($250,000,000.00) Dollars, then, and in such
event, the aforesaid waiver of Landlord's right shall cease and
expire, and Tenant shall obtain such insurance coverage(s) and
otherwise forthwith comply with the requirements of this Article
12.
ARTICLE 13
FIRE OR CASUALTY
13.1 Tenant shall give prompt notice to Landlord in case of
any fire or other damage to the Leased Premises or the Building.
If the Leased Premises shall be partially damaged by fire or other
insured casualty, Landlord, except as otherwise provided herein,
shall proceed promptly and with due diligence, and at its sole
cost and expense, with so much of the repair and restoration of
the same as was included in Landlord's Work and in conformity with
all requirements set forth herein, in connection with the
performance thereof.
13.2 If:
(a) the Building shall be damaged to the extent of
seventy-five (75%) percent or more of the cost of replacement
thereof;
(b) the Building shall be destroyed or substantially
damaged as a result of a risk which is not covered by Landlord's
insurance notwithstanding Landlord's compliance with its
obligations in respect of insurance provided herein, or;
(c) the Building shall be damaged to the extent
of thirty (30%) percent or more of the cost of replacement
thereof during the last two (2) years of the Term,
then, or in any such events, Landlord may elect either to repair
the damage as aforesaid, or to cancel this lease by written notice
of cancellation (herein called the "Fire Termination Notice")
given to Tenant within ninety (90) days after the date of an
occurrence specified in this Section 13.2. If Landlord shall give
a Fire Termination Notice to Tenant in the circumstances
hereinbefore set forth, then, subject to the provisions of Section
13.3, this lease shall cease and expire thirty (30) days after the
date upon which Tenant shall receive or refuse delivery of the
same, with such force and effect as though the date of Tenant's
receipt or refusal of the Fire Termination Notice were the
Expiration Date, and Tenant shall vacate and surrender the Leased
Premises to Landlord. Upon the termination of this lease as
aforesaid, Tenant's liability for the rents and other charges and
sums payable hereunder shall cease as of the date of such damage
or destruction, and Landlord shall make an equitable refund of any
rents and other charges paid by Tenant in advance and not earned.
Tenant shall also have the right to terminate this Lease in any of
the events listed above. Unless this lease is terminated by
Landlord or Tenant, as aforesaid, this lease shall remain in full
force and effect (the parties hereby waive the provisions of any
law to the contrary), and Landlord shall repair and restore the
Leased Premises as provided in Section 13.1. If, by reason of
such fire or other casualty the Building is rendered wholly
untenantable, the Fixed Net Rent shall be fully abated, or if only
partially damaged, such Fixed Net Rent shall be abated
proportionately as to that portion of the Building rendered
untenantable, in either event (unless Landlord or Tenant shall
elect to terminate this lease as aforesaid) until thirty (30) days
after notice by Landlord to Tenant that the Building Premises have
been substantially repaired and restored or until Tenant's
business operations are restored in the entire Building Premises,
whichever shall occur sooner. Tenant shall continue the operation
of Tenant's business in the part of the Building Premises not so
damaged during any such period to the extent reasonably
practicable from the standpoint of prudent business management.
13.3 Notwithstanding anything to the contrary provided in
Section 13.2:
(a) if Landlord shall give the Fire Termination
Notice to Tenant in the circumstances set forth in Section 13.2,
Tenant shall have the right to give Landlord written notice within
the thirty (30) day period following Tenant's receipt or refusal
of delivery of the Fire Termination Notice, stating that Tenant
elects to cause this lease to continue in force and effect
notwithstanding the giving of the Fire Termination Notice by
Landlord, in which event:
(i) this lease shall not cease and expire as
provided in Section 13.2;
(ii) Tenant shall proceed promptly and with due
diligence, and at its sole cost and expense, to repair and restore
the Leased Premises in accordance with the terms, conditions and
provisions of this lease (including, without limitation, Article
35 hereof); and
(iii) Landlord shall assign to Tenant all of
Landlord's interest in and to the proceeds of insurance referred
to in Section 12.2.
13.4 Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting
in any way from any damage by fire or other casualty at the Leased
Premises or the Building, or the repair thereof unless caused by
Landlord's negligence, willful acts or omissions or breach of this
Lease. Landlord will not carry insurance of any kind on Tenant's
personal property, and Landlord shall not be obligated to repair
any damage thereto or replace the same.
13.5 Tenant hereby waives the provisions of any current or
future law of similar import, and agrees that the provisions of
this Article 13 shall govern in lieu thereof.
13.6 All repairs, replacement and rebuilding which Tenant is
obligated to perform under this Article 13 shall be performed
subject to the terms, covenants and conditions of this lease
(including, without limitation, Article 35).
13.7 If, at any time and from time to time, as a result of
or in connection with Tenant's failure to comply with all
requirements of insurance bodies, or any act of omission or
commission by Tenant, or as a result of or in connection with any
use to which the Leased Premises is put including, without
limitation, the use permitted under this lease, the fire insurance
rate(s) applicable to the Building Premises or the Building shall
be higher than that which would be otherwise applicable thereto,
then, and in any such event, Tenant agrees that it will pay to
Landlord, on demand, as additional rent, such portion of the
premiums for all fire insurance policies in force as shall be
attributable to such higher rate(s). Any finding or schedule of
an insurance body making fire insurance rates applicable to the
Leased Premises shall be deemed to be conclusive for purposes of
this Section 13.7.
ARTICLE 14
SELF HELP
14.1 If an Event of Default shall occur in:
(a) making any payment required to be made by Tenant
under this lease; or
(b) performing any term, covenant, or condition of
this lease on the part of Tenant to be performed,
Landlord may, at its option (but shall not be obligated to do so)
and after at least fifteen days prior written notice thereof is
given by Landlord to Tenant and for the account of Tenant, make
such payment or expend such sum as may be necessary or desirable
to perform and fulfill such term, covenant, or condition.
Notwithstanding anything to the contrary contained in this Section
14.1, no payment or expenditure made by Landlord pursuant to this
Section 14.1 shall be deemed a waiver of Tenant's default, nor
shall the same affect any other remedy of Landlord by reason of
such default.
14.2 Any and all reasonable sums paid or expended by
Landlord pursuant to Section 14. 1, as well as any other cost or
expense (including attorneys fees, disbursements and court costs)
incurred by Landlord in instituting, prosecuting, or defending any
action or proceeding instituted by reason of, relating to, or
under this lease as to which Landlord shall prevail, shall:
(a) be repaid by Tenant to Landlord, together with
the interest provided for in subsection (b) below, as additional
rent under this lease upon Landlord's written demand therefor; and
(b) bear interest from the date of Landlord's payment
or expenditure thereof to the date of Tenant's repayment of the
same to Landlord, both dates inclusive, at the rate (herein called
the "Lease Rate") of two (2%) percent above the so-called prime,
base, index, or reference interest rate publicly announced by The
Chase Manhattan Bank, N.A., from time to time in effect.
14.3 If:
(a) Landlord shall default in performing any term,
covenant, or condition of this lease on the part of Landlord to be
performed hereunder; and
(b) such default shall continue for a period of
thirty (30) days after written notice by Tenant (or, if such
default cannot reasonably be cured and remedied within such thirty
(30) day period, if Landlord shall fail to commence the work, or
initiate the action, required to cure and remedy such default
promptly within such thirty (30) day period and thereafter
prosecute such work or action in good faith continuously and
diligently to completion),
Tenant may, at its option (but shall not be obligated to do so)
and for the account of Landlord, expend such sum as may be
necessary or desirable to perform and fulfill such term, covenant,
or condition. Notwithstanding anything to the contrary contained
in this Section 14.3, no payment or expenditure made by Tenant
pursuant to this Section 14.3 shall be deemed a waiver of
Landlord's default, nor shall the same affect any other remedy of
Tenant by reason of such default.
ARTICLE 15
BANKRUPTCY, INSOLVENCY, REORGANIZATION, LIQUIDATION, OR DISSOLUTION OF TENANT
15.1 The occurrence of any of the following at any time
during the Term shall constitute and be deemed a material breach
of this lease and a default by Tenant, entitling Landlord, at its
option and to the extent permitted by applicable law and
applicable requirements of public authorities, to cancel and
terminate this lease upon giving Tenant a twenty (20) day notice
in writing of Landlord's intention so to do, whereupon this lease
shall terminate and come to an end at the expiration of said
twenty (20) days as if said expiration date were the time
originally fixed for the termination of this lease, and Tenant
shall quit and surrender the Leased Premises to Landlord:
(a) the filing of a petition by or against Tenant
under this lease under the provisions of the United States
Bankruptcy Code, or under the provisions of any other federal or
state law of similar import now or hereafter in effect, for an
arrangement, reorganization, adjudication of bankruptcy and/or any
other relief thereunder (herein collectively called the
"Bankruptcy Law");
(b) the dissolution or liquidation of Tenant under
this lease, or the commencement of any action or proceeding by or
against Tenant under this lease for its dissolution or
liquidation, that shall be other than a voluntary dissolution,
liquidation, spin-off, split-off, merger or other similar
proceeding pursuant to the United States Internal Revenue Code
whereby the assets of Tenant are distributed to its stockholders
or to a partnership comprised of any such stockholders;
(c) the appointment of a permanent receiver or a
permanent trustee of all or substantially all of the property of
Tenant under this lease or the commencement of any action or
proceeding by or against Tenant for such appointment;
(d) the seizure of the property of Tenant under this
lease by any governmental officer or agency pursuant to statutory
authority for the dissolution, rehabilitation, reorganization or
liquidation of Tenant; or
(e) the assignment by Tenant under this lease of its
property for the benefit of creditors.
However, if any event described in subsection (a), (b), (c), or
(d) occurs and is not voluntarily initiated or commenced by Tenant
or on behalf of Tenant, the event in question shall not constitute
or be deemed a default hereunder provided that the same is
removed, stayed, or remedied by appropriate discharge or dismissal
of the action or proceeding concerned, and the discharge of any
receiver, trustee, or other judicial custodian appointed for the
property of Tenant, within ninety (90) days from the commencement
date of such action, proceeding, or appointment.
15.2 It is stipulated and agreed that, in the event of the
termination of this lease pursuant to Section 15.1 hereof,
Landlord shall forthwith be entitled to recover from Tenant, as
and for liquidated damages in respect of the rent hereunder and in
addition to any other damages sustained by Landlord by reason of
Tenant's breach of any other covenants of this lease, an amount
equal to the difference between:
(a) the aggregate, for the period that would have
constituted the unexpired portion of the Term, but for such
termination, of:
(i) all Fixed Net Rent; plus
(ii) all items of additional rent (conclusively
presuming that Tenant's Tax Payment, the Building Additional Rent
and the other items of additional rent payable under this lease
for each year included in such period would have been the same as
was payable for the year immediately preceding the termination of
this lease); less
(b) the then fair and reasonable rental value of the
Leased Premises for the same period,
such difference being reduced to present value at a rate equal to
the yield to maturity percentage or rate for the U.S. Treasury
Note or Bond closest in maturity to the then Expiration Date, as
reported in The Wall Street Journal (or, if The Wall Street
Journal is no longer published, some other daily financial
publication of national circulation). If the Leased Premises, or
any part thereof, is re-let by Landlord for the unexpired portion
of the Term, or any part thereof, before presentation of proof of
such liquidated damages to any court, commission, or tribunal, the
amount of rent reserved upon such reletting shall be prima facie
evidence that it is the fair and reasonable rental value for such
part or the whole of the Leased Premises so re-let during the term
of the re-letting.
ARTICLE 16
DEFAULT CLAUSES
16.1 Upon the occurrence of any of the following events
(herein called "Events of Default"), Landlord shall have the
right, at Landlord's option, to terminate this lease and the Term,
as well as all of the right, title and interest of Tenant in and
to the Leased Premises hereunder, by giving Tenant seven (7) days'
notice in writing of such termination, whereupon this lease and
the Term, as well as all of the right, title and interest of
Tenant in and to the Leased Premises, shall wholly cease and
expire in the same manner, and with the same force and effect, as
if the date fixed by such notice were the expiration date of the
Term (except that Tenant shall remain liable as provided in
Article 17, which shall survive such terminations
(a) if Tenant shall fail to pay any installment of
Fixed Net Rent, any item of additional rent, or any part thereof
as and when the same shall become due and payable, and such
default shall continue for a period of seven (7) days after
written notice by Landlord;
(b) if Tenant shall violate, fail to comply with, or
fail to perform any other covenant, term, or condition of this
lease, other than that requiring Tenant's payment of a sum of
money, and such default shall continue for a period of thirty (30)
days after written notice by Landlord;
(c) if any execution or attachment shall be issued
against Tenant or any of Tenant's property, whereby the Leased
Premises shall be taken or occupied, or attempted to be taken or
occupied, by someone other than Tenant, and such condition shall
continue for a period of thirty (30) days after written notice by
Landlord; or
(d) if Tenant's right, title and interest in this
lease, or the estate of Tenant hereunder, shall be transferred or
passed to, or devolve upon, any other person, firm, or
corporation, except in the manner provided in this lease, and such
default shall continue for a period of thirty (30) days after
written notice from Landlord.
On or before the expiration of the seven (7) days' termination
notice referred to above, Tenant shall immediately quit and
surrender the Leased Premises and each and every part thereof to
Landlord, and Landlord may enter into or repossess the Leased
Premises by summary or other suitable proceedings; provided, that
on any monetary default, Landlord shall not have the option to
terminate unless the amount of such monetary default exceeds
$5,000.00.
16.2 If any of the events described in subsection (b)
of Section 16.1 occurs and is of such a nature that it cannot
reasonably be cured and remedied within the applicable notice
period, an Event of Default shall not be deemed to exist with
respect thereto if Tenant shall:
(a) commence the work, or initiate the action,
required to cure and remedy such event promptly within the
applicable notice period; and
(b) thereafter prosecute such work or action in good
faith continuously and diligently to completion.
16.3 In the event that Tenant shall fail to make any payment
of Fixed Net Rent or additional rent required to be paid pursuant
to this lease for a period of thirty (30) days after the due date
for the payment thereof, the same shall accrue interest from and
after such due date and until Tenant's payment thereof at the
Lease Rate. In addition to the foregoing interest, as well as in
addition to the other remedies available to Landlord for a default
by Tenant under this lease and otherwise at law and in equity, in
the event that Tenant shall fail to make any payment of Fixed Net
Rent or additional rent required to be paid pursuant to this lease
within five (5) business days after the due date for payment,
Tenant shall pay to Landlord, as additional rent, in addition to
such payment and interest, a charge equal to two (2%) percent of
each such late payment in reimbursement for Landlord's
administrative and other expenses in connection with handling and processing
such Late payment.
16.4 Nothing contained in Section 14.2, 14.4, or 16.3, or in
any other provision of this lease, shall require the payment of
interest in excess of the maximum amount permitted by the
requirements of public authorities. If any excess of interest in
such respect is provided for, or shall be adjudicated to be so
provided for, Tenant or Landlord (as the case may be) shall not be
obligated to pay such interest in excess of the maximum amount
permitted by the requirements of public authorities, the right to
demand the payment of any such excess shall be, and hereby is,
waived and any such excess interest nonetheless paid (as the case
may be):
(a) to Landlord, shall be promptly applied by
Landlord to the rents thereafter becoming due from Tenant under
this lease or, if Landlord shall so elect, repaid to Tenant; or
(b) to Tenant, shall be repaid by Tenant to Landlord.
However, nothing contained in this Section 16.4 shall be deemed or
construed as an agreement or admission that any default charge
paid or payable pursuant to this lease, on whatever basis
calculated, shall constitute, or be the equivalent of, interest
for purposes of any requirement of public authorities. Rather it
is the intention of the parties that all such charges be deemed
and construed, to the fullest extent permitted by the requirements
of public authorities, to constitute default charges and not
interest.
ARTICLE 17
REMEDIES
17.1 In the event that this lease shall be terminated by
reason of Tenant's default, whether as provided in Article 16, by
summary proceedings, or otherwise, or an Event of Default shall
have occurred and be continuing, or the Leased Premises shall be
abandoned by Tenant, then:
(a) Landlord or its agents or representatives may re-enter
and resume possession of the Leased Premises, either by summary
proceedings or by a suitable action or proceeding at law or
otherwise, without being liable for any damages therefor, and no
such re-entry by Landlord shall be deemed an acceptance of a
surrender of this lease;
(b) the rent (the aggregate of all Fixed Net Rent and
additional rent) shall become due thereupon and be paid up to the
time of such re-entry, dispossess and/or termination, together
with such reasonable counsel fees and expenses as Landlord may
incur in connection therewith;
(c) Landlord may, in its own name, but as agent for
Tenant (if this lease is not terminated) or on its own behalf (if
this lease is terminated):
(i) relet the whole or any portion of the Leased
Premises for any period equal to, or greater or less than, the
remainder of the Term, for any sum that it deems reasonable
(including free rent concessions), to any tenant that it may deem
suitable and satisfactory and for any use and purpose that it may
deem appropriate; and
(ii) in connection with any such reletting, make
such changes in the character of the Leased Premises as Landlord
may determine to be appropriate or helpful in effecting such
lease, provided, however, that Landlord shall:
(x) be obligated to use reasonable efforts to
relet the Leased Premises and have a duty to mitigate damages; and
(y) not be required to pay to Tenant any surplus
of any sums received by Landlord on a reletting of the Leased
Premises in excess of the Fixed Net Rent and additional rent
reserved in this lease;
(d) Tenant shall pay to Landlord an amount equal to
any costs and expenses (including reasonable attorneys' fees,
disbursements and court costs) incurred by Landlord in recovering
possession of the Leased Premises, as well as all costs and
expenses incurred by Landlord for the care of the Leased Premises
while vacant, which amounts shall be due and payable by Tenant to
Landlord at such time or times as such costs and expenses shall
have been incurred by Landlord; and
(e) provided that Landlord shall not accelerate the
Rents payable under this lease as provided in Section 17.2, Tenant
shall also pay to Landlord, as damages for the failure of Tenant
to observe and perform Tenant's covenants herein contained, any
deficiency for each month of the balance of the Term (if this
lease is not terminated) or of the period that would have
otherwise constituted the balance of the Term (if this lease is
terminated) between:
(i) the aggregate, with respect to the month in
question, of:
(x) the Fixed Net Rent; plus
(y) all items of additional rent; less
(ii) the net amount, if any, of the rents
collected on account of the lease or leases made upon such
re-letting of the Leased Premises with respect to the month in
question, and, in computing such damages, there shall be added to the
deficiency such expenses as Landlord may incur in connection with
re-letting, including reasonable legal expenses, attorneys' fees,
disbursements and court costs, brokerage and the costs and
expenses of keeping the Leased Premises in good order and
preparing the same for reletting.
The damages described in subsection (e) shall be paid in
installments by Tenant on the rent days specified in this lease,
and any suit brought by Landlord to collect the amount of the
deficiency for any period shall not prejudice in any way the right
of Landlord to collect the deficiency for any subsequent period by
a similar action or proceeding. Nothing contained herein shall be
deemed to require Landlord to postpone suit until the date when
the Term would have expired if it had not been terminated by
reason of Tenant's default.
17.2 In lieu of the damages described in subsection (e) of
Section 17.1, Landlord shall, at its sole discretion, be entitled
to receive, as liquidated damages, an amount equal to the
difference between:
(a) the aggregate, for the period that would have
constituted the unexpired portion of the Term, but for such
termination, of:
(x) all Fixed Net Rent; plus
(y) all items of additional rent (conclusively
presuming that Tenant's Tax Payment, the Building Additional Rent
and the other items of additional rent payable under this lease
for each year included in such period would have been the same as
was payable for the year immediately preceding Landlord's election
to receive such liquidated damages); less
(b) the then fair and reasonable rental value of the
Leased Premises for the same period, such difference being reduced to present
value at a rate equal to the yield to maturity percentage or rate for the U.S.
Treasury Note or Bond closest in maturity to the then Expiration Date, as
reported in The Wall Street Journal (or, if The Wall Street
Journal is no longer published, some other daily financial
publication of national circulation). If the Leased Premises, or
any part thereof, is re-let by Landlord for the unexpired portion
of the Term, or any part thereof, before presentation of proof of
such liquidated damages to any court, commission, or tribunal, the
amount of rent reserved upon such reletting shall be prima facie
evidence that it is the fair and reasonable rental value for such
part or the whole of the Leased Premises so re-let during the term
of the re-letting.
17.3 Landlord, at its option, may make such alterations,
replacements and/or decorations in and to the Leased Premises as
Landlord, in Landlord's sole judgment, considers advisable and
necessary for the purpose of re-letting the Leased Premises, and
the making of such alterations, replacements and/or decorations
shall not operate, or be construed, to release Tenant from
liability hereunder as aforesaid.
17.4 In the event that the Leased Premises and/or any
portion(s) thereof are re-let, Landlord shall not be liable to
Tenant in any respect whatsoever for Landlord's failure, after
reasonable efforts, to collect the rent thereof under such
re-letting. No such failure shall relieve Tenant's liability for,
and obligation to pay, all of the items of damages to which
Landlord shall be entitled under this Article 17 or otherwise at
law or in equity.
17.5 In the event of a breach by Tenant of any of the
covenants or provisions of this lease, Landlord shall have the
right of injunction, as well as to invoke any remedy allowed at
law or in equity, as if re-entry, summary proceedings and other
remedies were not herein provided for, except as otherwise
specifically provided herein.
17.6 Mention in this lease of any particular remedy shall
not preclude Landlord from any other remedy, in law or in equity.
Nothing contained in this Article 17 shall be construed to limit
or preclude recovery by Landlord against Tenant of any sums or
damages to which, in addition to the damages particularly provided
above, Landlord may lawfully be entitled by reason of any default
hereunder on the part of Tenant.
ARTICLE 18
INDEMNITY
18.1 Tenant, at its sole cost and expense, shall defend,
indemnify and hold Landlord harmless against and from any and all
liability, fines, suits, claims, demands, damages, actions, costs
and expenses of each and every kind or nature whatsoever to the
fullest extent permitted by the requirements of public authorities
(including reasonable attorneys' fees, disbursements and court
costs) due to, or arising out of, any:
(a) breach, violation, or non-performance of any
term, covenant, or condition of this lease on the part of Tenant
to be fulfilled, kept, observed, or performed; and/or
(b) injury to any person or persons (including the
death of any person or persons) or damage to any property
occurring in, on, or about the Leased Premises at any time during
the Term, whether or not such injury or damage is occasioned by
the fact of Tenant's use and occupancy of the Leased Premises, by
any specific manner of use or occupancy that Tenant may permit or
suffer to be made thereof, or otherwise (other than to the extent
that the same shall be caused by Landlord's willful wrongful acts,
negligence, or breach of this lease).
18.2 Landlord, at its sole cost and expense, shall defend,
indemnify and hold Tenant harmless against and from any and all
liability, fines, suits, claims, demands, damages, actions, costs
and expenses of each and every kind or nature whatsoever to the
fullest extent permitted by the requirements of public authorities
(including reasonable attorneys' fees, disbursements and court
costs) due to, or arising out of:
(a) the presence of any Hazardous Materials at or on
the Leased Premises, the Tax Premises and/or the Land (excluding,
however, any substance or material that was not classified as a
Hazardous Material as of the Term Commencement Date,
notwithstanding that the same might be classified as a Hazardous
Material thereafter), except to the extent arising out of any use
of Hazardous Materials by Tenant in violation of any applicable
environmental laws;
(b) any breach, violation, or non-performance of any
term, covenant, or condition of this lease on the part of Landlord
to be fulfilled, kept, observed, or performed; and/or
(c) any injury to any person or persons (including
the death of any person or persons) or damage to any property
occurring in, on, or about the Leased Premises (other
than the Leased Premises) at any time during the Term (other
than to the extent that the same shall be caused by Tenant's
willful wrongful acts, negligence, or breach of this lease).
18.3 If Landlord or Tenant (as the case may be, herein
called the "Indemnifying Party") is required to defend any action
or proceeding pursuant to Section 18.1 or 18.2 to which the other
(as the case may be, herein called the "Indemnified Party") is
made a party, the Indemnifying Party shall do so through counsel
reasonably acceptable to the Indemnified Party (provided, however,
that counsel selected by the Indemnifying Party's insurance
carrier shall be deemed to be acceptable to the Indemnified
Party). The Indemnified Party shall cooperate with the
Indemnifying Party's counsel in all reasonable respects in
connection with resolving the action or proceeding, provided,
however, that the Indemnified Party shall not be required to
expend any money with respect thereto. The Indemnified Party
shall be entitled to participate in such defense, at its election,
by counsel of its own choosing and at its own expense, and the
Indemnifying Party and its counsel shall consult and otherwise
cooperate with the Indemnified Party's counsel in all reasonable
respects in connection with such participation, provided that
neither the Indemnifying Party nor its counsel shall be required
to expend any money with respect thereto. The Indemnifying
Party's liability under Section 18.1 or 18.2 shall be reduced by
the net proceeds actually collected of any insurance effected by
the Indemnifying Party on the risks in question for the
Indemnified Party's benefit. However, nothing contained in this
Article 18 shall vary the insurance requirements or other
provisions contained in Article 12 (including, without limitation,
the release provided for in Section 12.8).
ARTICLE 19
MECHANICS' LIENS
19.1 Notice is hereby given that Landlord shall not be
liable for any labor or materials furnished, or to be furnished,
to Tenant upon credit, and that no mechanic's or other lien for
any such labor or materials shall attach to, or otherwise affect,
the reversion or other estate or interest of Landlord and/or any
superior lessor in and to the Leased Premises or any portion
thereof.
19.2 Tenant covenants that, whenever and as often as any
mechanic's lien shall have been filed against the Leased Premises
or portion thereof as a result of (or purporting to be as a result
of) any labor or materials furnished, or to be furnished, to
Tenant upon credit, Tenant shall forthwith take such action, by
bonding, deposit, or payment, as will remove or satisfy the lien.
If Tenant shall fail to do so within thirty (30) days after Tenant
becomes aware of such mechanic's lien, or within such longer time
as shall be permitted pursuant to the terms of any superior lease
or mortgage, the provisions of Articles 14 and 16 shall apply.
ARTICLE 20
CONDEMNATION
20.1 If the whole of the Leased Premises, or such part
thereof as will render the remainder unusable for the permitted
use hereunder, shall be acquired or taken by eminent domain or
similar proceedings for any public or quasi-public use or purpose
or by private purchase in lieu thereof, then this lease and the
Term hereof shall automatically cease and terminate as of the date
of title vesting in such proceedings.
20.2 If fifty (50%) percent or more of the Gross Building
Premises Area and/or fifty (50%) percent or more of the Exterior
Premises shall be so taken, or if vehicular access to the Exterior
Premises shall be taken without provision being made for
reasonable equivalent substitute access, then Landlord and Tenant
shall each have the right to terminate this lease by thirty (30)
days' prior notice given to the other within sixty (60) days after
the date of title vesting in such proceeding, and upon the
expiration of such thirty (30) day period this lease shall cease
and terminate with the same force and effect as though the date
set forth in the said notice were the date herein fixed for the
expiration of the Term. All rents payable hereunder:
(a) with respect to the taken portion of the Leased
Premises, shall be paid by the Tenant up to the earlier of the
date of title vesting in such proceeding or the actual taking of
possession; and
(b) with respect to the untaken portion of the Leased
Premises, shall be paid by Tenant up to the date this lease is
terminated.
If any part of the Leased Premises shall be so taken and this
lease shall not be terminated, as aforesaid, then this lease and
all of the terms and provisions hereof shall continue in full
force and effect, except that the Fixed Net Rent, and all
additional rent shall each be equitably apportioned and Landlord
shall, upon receipt of the award in condemnation make all
necessary repairs and alterations (exclusive of Tenant's trade and
lighting fixtures, furniture, furnishings, personal property,
decorations, signs and contents) to restore the portion of the
Leased Premises remaining to as near its former condition as the
circumstances will permit, and the Building Premises to the extent
necessary to constitute the portion of the Building Premises not
so taken a complete architectural unit, provided, however, that
Landlord, in any event, shall not be required to spend for such
repairs and alterations an amount in excess of the amount received
by Landlord as consequential damages for the portion of the Leased
Premises not so taken, and Tenant, at Tenant's expense, shall, at
its option, make all necessary repairs and alterations to Tenant's
trade and lighting fixtures, furniture, furnishings, personal
property, decorations, signs and contents.
20.3 As used herein, the amount received by Landlord shall
mean that portion of the award in condemnation received by
Landlord as damages from the condemning authority which is free
and clear of all prior claims or collections by any superior
lessor or the superior mortgagee and less reasonable attorneys'
and appraisers' fees and expenses.
20.4 If this lease is terminated as provided in this Article
20, all rents payable hereunder shall be paid by Tenant up to the
date this lease is terminated, and Landlord shall make an
equitable refund of any rents payable hereunder paid by Tenant in
advance and not earned.
20.5 In the event of a condemnation or taking for a
temporary use or occupancy of all or any part of the Leased
Premises for any public or quasi-public use or purpose during the
Term, this lease shall be and remain unaffected by such
condemnation or taking. Tenant shall continue responsible for all
of its obligations hereunder, except to the extent prevented from
so doing by reason of such taking, and except that the Fixed Net
Rent and additional rent payable hereunder, shall be equitably
adjusted. In the event of any such condemnation or taking, Tenant
shall be entitled to appear, claim, prove and receive the entire
award, unless the period of temporary use of occupancy extends
beyond the Expiration Date, in which event Landlord shall be
entitled to appear, claim, prove and receive the entire award as
represents the cost of restoration of the Leased Premises and the
portion of any such award allocable to the period following the
Expiration Date. Tenant will, at its own expense, restore the
Leased Premises to the extent of any award received as nearly as
possible to the condition in which it was prior to the
condemnation or taking, unless such period extends beyond the
Expiration Date.
20.6 All damages or compensation awarded or paid for any
taking other than a taking pursuant to Section 20.5, whether for
the whole or a part of the Leased Premises or any part of the
Building, shall belong to and be the property of Landlord without
any participation by Tenant (except as otherwise set forth in the
Loan Agreement), whether such damages or compensation shall be
awarded or paid for diminution in value of the fee or any interest
of Landlord in any ground or underlying lease covering the
Building or in the leasehold estate created hereby or otherwise,
and Tenant hereby expressly waives and relinquishes all claims to
such award or compensation or any part thereof and relinquishes
the right to participate in any such condemnation proceedings
against the owners of any interest in Building (except as
otherwise set forth in the Loan Agreement) provided, however, that
nothing herein contained shall be construed to preclude Tenant
from prosecuting any claim directly against the condemning
authority, but not against Landlord, for moving expenses or the
value of or damages to, or for the cost of removal of, Tenant's
trade fixtures and other personal property which under the terms
of this lease would in all events remain Tenant's property upon
the expiration of this Term and provided further that no such
claim shall diminish or otherwise affect Landlord's award. Each
party agrees to execute and deliver to the other all instruments
that may be required to effectuate the provisions of this Article
20.
ARTICLE 21
ARBITRATION
21.1 In the event of a dispute between Landlord and Tenant
with respect to any issue of fact (other than one determined by a
condemnation court arising out of a taking referred to in Article
20 specifically mentioned and provided for in this lease as a
matter to be decided by arbitration, such dispute shall be
determined by arbitration as provided in this Article 21.
21.2 Landlord and Tenant shall each appoint as an arbitrator
a fit and impartial person from a panel proposed by the American
Arbitration Association who shall have had at least ten (10)
years' recent experience in the area in which the Leased Premises
is located in a calling connected with the subject matter of the
dispute. Such appointment shall be signified in writing by each
party to the other. If either Landlord or Tenant shall fail to
appoint an arbitrator as set forth in this Section 21.2 for a
period of twenty (20) days after written notice from the other
party to make such an appointment, then the arbitrator appointed
by the party who shall have made such an appointment shall appoint
the second arbitrator.
21.3 The arbitrators, after being duly sworn to perform
their duties with impartiality and fidelity, shall proceed with
all reasonable dispatch to determine the question submitted. The
arbitration shall be conducted in accordance with law and the
award of the arbitrators shall be binding, final and conclusive on
the parties. The decision of the arbitrators shall be rendered
within thirty (30) days after their appointment, and such decision
shall be in writing and in duplicate, one counterpart thereof to
be delivered to each of the parties. If, however, the arbitrators
shall fail to so render their decision within such thirty (30) day
period, such arbitrators shall appoint an umpire, whose
determination shall be conclusive. If the arbitrators fail to
agree upon the identity of the person to act as umpire, such
umpire shall be appointed by the American Arbitration Association
from its qualified panel of arbitrators, and shall be a person
having at least ten (10) years' recent experience in the area in
which the Leased Premises is located in a calling connected with
the subject matter of the dispute.
21.4 If an umpire is appointed as provided in Section 21.3,
the arbitrators and the umpire, after the umpire is duly sworn to
perform his or her duties with impartiality and fidelity, shall
proceed with all reasonable dispatch to determine the question
submitted. The arbitration shall be conducted in accordance with
law and the award of the arbitrators and the umpire, to be
determined by the majority vote of the arbitrators and the umpire,
shall be binding, final and conclusive on the parties. The
decision of the arbitrators and the umpire shall be rendered
within thirty (30) days after the umpire's appointment, and such
decision shall be in writing and in duplicate, one counterpart
thereof to be delivered to each of the parties.
21.5 The fees of the umpire, as well as the expenses
incident to the proceedings, shall be borne by the party whose
position is not upheld in the proceedings (or, if neither party's
position is upheld, such fees and expenses shall be borne by the
parties equally). The fees of respective arbitrators appointed by
the parties and counsel engaged by the parties, and the fees of
expert witnesses and other witnesses called or engaged by the
parties, shall be paid by the respective party engaging such
arbitrators and counsel or calling or engaging such witnesses.
21.6 Notwithstanding anything to the contrary provided in
this Article 21, with respect to any controversy specifically
provided in this lease to be resolved by an expedited arbitration,
the same shall be heard and resolved by a single arbitrator
appointed in accordance with the then Rules of the American
Arbitration Association (or successor thereto) who shall render
his decision within fifteen (15) days.
ARTICLE 22
SHORING
22.1 To the extent mandated by the requirements of public
authorities, Tenant shall allow an adjoining owner desiring to
excavate on its premises, or a governmental authority desiring to
excavate a nearby street, to enter onto the Leased Premises and
shore up a perimeter wall during such excavation. The party
requiring the shoring shall, at its own expense, repair, or cause
to be repaired, any damage caused to any part of the Leased
Premises because of any excavation, construction work, or other
work of a similar nature that may be done on any property
adjoining or adjacent to the Leased Premises, and Landlord hereby
assigns to Tenant any and all rights to sue for and/or recover
against such adjoining owners, or the parties causing such damage,
the amounts expended by Tenant pursuant to the provisions of this
Article 22. Notwithstanding the foregoing, however, in the event
Landlord performs such excavation, Landlord shall be liable to
Tenant for any damages incurred by Tenant as a result thereof, and
Landlord shall restore the Leased Premises to its former condition
at its sole cost and expense and with the least practicable
interruption to Tenant's business.
ARTICLE 23
WAIVER OF REDEMPTION
23.1 Tenant, for itself and for all persons claiming through
or under it, hereby expressly waives any and all rights which are
or may be conferred upon Tenant by any present or future
requirements of public authorities to redeem the Leased Premises,
or to any new trial in any action of ejectment under any provision
of law, after re-entry thereupon, or upon any part thereof, by
Landlord, or after any warrant to dispossess or judgment in
ejectment. If Landlord shall have acquired possession of the
Leased Premises by summary proceedings, or in any other lawful
manner without judicial proceedings, it shall be deemed a re-entry
within the meaning of that word as used in this lease.
ARTICLE 24
SECURITY DEPOSIT
24.1 On the Commencement Date of this Lease by certified or
bank check (drawn on a bank that is a member of a New York
Clearing House Association), by bank wire transfer or by the
issuance of a letter of credit in compliance with the provisions
of subparagraph 24.5 below, Tenant shall deposit with Landlord a
security deposit of $77,152.00 (the "Security Deposit") which is
the equivalent of one (1) month's rent at the annual rate of $4.10
per square foot. The Security Deposit shall be held by Landlord,
with liability for interest thereon, as security for the full and
faithful performance by Tenant of each and every term covenant and
condition of this Lease (including, without limitation, any
damages or deficiency accrued before or after summary proceedings
or other re-entry by Landlord) on the part of Tenant to be
observed and performed. The Security Deposit shall not be
mortgaged, assigned, transferred or encumbered by Tenant without
the prior written consent of Landlord in each instance and any
such act on the part of Tenant shall be without force and effect
and shall not be binding upon Landlord. Notwithstanding anything
contained herein to the contrary, within 45 days after the second
anniversary of the Commencement Date of this lease; provided,
Tenant is not in default hereunder, Landlord shall return the
Security Deposit to Tenant.
24.2 If any of the rents reserved in this Lease or any other
charges or sums payable by Tenant to Landlord shall be overdue and
unpaid or should Landlord make payments on behalf of Tenant, or
should Tenant fail to perform any of the terms of this Lease, then
Landlord may, provided Landlord shall have given Tenant any notice
of default required to be given Tenant under this Lease, and the
period to cure such default, if any, shall have expired without
Tenant having cured such default, at its option, and without
prejudice to any other remedy which Landlord may have on account
thereof, appropriate and apply the Security Deposit or so much
thereof as may be necessary to compensate Landlord toward the
payment of the rents, charges or other sums due from Tenant, or
toward any loss, damage or expense sustained by Landlord resulting
from such default on the part of Tenant; and in such event Tenant
shall forthwith upon demand restore the Security Deposit to the
sum required pursuant to this Article 24. Provided the Tenant is
not in default the Security Deposit shall be returned in full to
Tenant promptly at the end of the lease. At the end of the term of
this Lease, Landlord shall make a reasonable determination of any
damage done to the Leased Premises by Tenant and retain only the
reasonable cost of those repairs and remit the balance to Tenant;
provided, no other amounts are due to Landlord under this lease.
24.3 In the event any bankruptcy, insolvency, reorganization
or other creditor-debtor proceedings shall be instituted by or
against Tenant or its successors or assigns, the Security Deposit
shall be deemed to be applied first to the payment of any rents
and/or other charges due Landlord for all periods prior to the
institution of such proceedings and the balance, if any, of the
Security Deposit may be retained by Landlord in partial
satisfaction of Landlord's damages.
24.4 Landlord shall deliver the Security Deposit to the
transferee of Landlord's interest in the Leased Premises in the
event that such interest be sold or transferred as a condition of
such transfer and thereupon Landlord shall be discharged and
released from all further liability with respect to the Security
Deposit or the return thereof to Tenant, and Tenant agrees to look
solely to the new Landlord for the return of the Security Deposit,
and this provision shall also apply to any subsequent transferees.
24.5 Tenant shall have the right, in lieu of the funds
required to be deposited with Landlord pursuant to subparagraph
24.1 of this Lease, to deposit and maintain with Landlord as the
Security Deposit referred to in subparagraph 24.1 of this Lease,
an irrevocable commercial letter of credit in the aggregate amount
of $77,152.00 in form and substance, and issued by a member bank
of the New York Clearinghouse Association acceptable to Landlord,
payable upon the presentation by Landlord to such bank of a
sight-draft accompanied by Landlord's sworn statement setting
forth a general description of the nature of the default
(provided, however, that such bank shall not be under any
obligation to confirm the existence of such default or any other
fact or circumstance as a condition for Landlord to draw on the
proceeds of the letter of credit) without presentation of any
other documents, statements or authorizations, which letter of
credit shall provide (i) for the continuance of such letter of
credit for a period of at least one (1) year from the date of its
issuance, (ii) for the automatic extension of such letter of
credit for additional periods of one (1) year from the initial and
each future expiration date thereof (the last such extension to
provide for the continuance of such letter of credit until the end
of the term of this lease) unless such bank gives Landlord notice
by certified mail, return receipt requested, of its intention not
to renew such letter of credit (which notice shall be addressed to
Landlord as provided in this lease) not less than thirty (30) days
prior to the initial or any future expiration date of such letter
of credit and (iii) that in the event such notice is given by such
bank, Landlord shall have the right to draw on such bank at sight
for the balance remaining in such letter of credit and hold and
apply the proceeds thereof in accordance with the provisions of
this Article 24. Each letter of credit to be deposited and
maintained with Landlord (or the proceeds thereof) shall be held
by Landlord as security for the faithful performance and
observance by Tenant of the terms, provisions and conditions of
this Lease as provided in this Article 24, and in the event that
(x) any default occurs as provided herein, or (y) Landlord
transfers its right, title and interest under this Lease to a
third party and the bank issuing such letter of credit does not
consent to the transfer of such letter of credit to such third
party and refuses to issue a substitute letter of credit to such
third party at no charge to Landlord or such third party, or (z)
notice is given by the bank issuing such letter of credit that it
does not intend to renew the same, then, in any such event,
Landlord may draw on such letter of credit and the proceeds of
such letter of credit shall then be held and applied as security
(and be replenished, if necessary) as provided in this Article 24.
ARTICLE 25
COVENANT OF QUIET ENJOYMENT
25.1 If, and for so long as, Tenant shall pay the Fixed Net
Rent and the additional rent reserved by or payable pursuant to
this lease, and shall perform and observe all of the other terms,
covenants and conditions herein contained on the part of Tenant to
be performed and observed, Tenant shall quietly enjoy the Leased
Premises, subject, however, to the terms, covenants and conditions
of this lease (including the terms of Article 34), and to the
ground leases, underlying leases, overriding leases and mortgages
referred to in Article 4, subject to Landlord's compliance with
the terms and conditions thereof.
ARTICLE 26
NON-MERGER
26.1 There shall not be a merger of:
(a) Tenant's interest in this lease or the leasehold estate
created hereby;
(b) Tenant's other interest, if any, in the Leased
Premises; and/or
(c) Landlord's right, title and/or interest in or to the
Leased Premises or any
part thereof,
by reason of the fact that the same person may acquire, own, or
hold, directly or indirectly, all or part of the interests or
estates described in subsections (a), (b) and/or (c) above, and no
such merger shall occur unless and until all persons (including
Landlord, Tenant and all mortgagees) having an interest in all of
such interests and estates shall join in a written instrument
expressly and specifically effecting such merger and shall duly
record the same.
ARTICLE 27
WAIVER OF COUNTERCLAIM AND JURY TRIAL
27.1 In the event that:
(a) Landlord shall commence any summary proceeding or
action for nonpayment of rent or of additional rent hereunder; and
(b) Landlord shall not then be subject to any proceeding
under any Bankruptcy Law,
Tenant shall not interpose, and hereby waives its right to
interpose, any counterclaim of any nature or description in such
proceeding or action (except, however, for any compulsory
counterclaims which would be lost to Tenant if not interposed in
such proceeding and except in respect of Tenant's right of offset
provided herein). The parties hereto waive a trial by jury on any
or all issues arising in any action or proceeding between them or
their successors under or connected with this lease or any of its
provisions, any negotiations in connection therewith, or Tenant's
use or occupancy of the Leased Premises. Any claims of Tenant not
brought as a permitted counterclaim under this Section 27.1 may be
brought in a separate action, provided, however, that Tenant shall
not move for, any joinder of such separate action with the action
commenced by Landlord as aforesaid.
ARTICLE 28
ASSIGNMENT AND SUBLETTING
28.1 Tenant, for itself, its heirs, distributees,
executors, administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign, mortgage
(except as provided in Section 4.9) or encumber this lease or any
right, title, or interest of Tenant in, to and under the same, nor
underlet, or suffer or permit the Leased Premises or any part
thereof to be used by others, without the prior written consent of
Landlord in each instance (which prior written consent Landlord
shall not unreasonably withhold or delay).
If this lease be assigned, or if the Leased Premises or any part
thereof be underlet or occupied by anybody other than Tenant,
Landlord may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant, and apply the net amount
collected to the rent herein reserved, but no such assignment,
underletting. Occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or
occupant as tenant, or a release of Tenant from the further
performance by Tenant of all of the covenants on the part of
Tenant herein contained. The consent by Landlord to an assignment
or underletting shall not in any wise be construed to relieve
Tenant from obtaining the express consent in writing of Landlord
to any further assignment or underletting.
28.2 Anything contained in Section 28.1 to the contrary
notwithstanding, provided that this lease shall then be in full
force and effect, Tenant shall have the right without Landlord's
consent, at any time and from time to time, to assign this lease,
or sublet all or part of the Leased Premises, to:
(a) any Tenant's Affiliate; or
(b) an entity that purchases or acquires all or
substantially all of the assets and/or stock of Tenant,
provided, however, that such Tenant's Affiliate shall continue to
use the Leased Premises or the portion thereof that shall be
sublet thereto (as the case may be) for the purposes permitted
under Article 5, and the provisions of Sections 28.3 or 28.4 (as
the case may be) shall apply to any such assignment or subletting.
Additionally, the provisions of Section 28.1 shall not apply to
any merger or consolidation of Tenant with any other corporation
or entity, to any reorganization of Tenant, or to the sale of all
or substantially an of the assets and/or stock of Tenant,
provided, however, that:
(i) the successor to Tenant has a net worth
computed in accordance with generally accepted accounting
principles at least equal to Fifty ($50,000,000) Million;
(ii) notice of such merger, consolidation,
reorganization or sale (as the case may be) shall have been given
to Landlord within ten (10) days after the consummation of the
same (provided, however, that the cure provisions contained in
Section 16.1(b) hereof shall apply in the event that Tenant shall
fail to so notify Landlord within such ten (10) day period); and
(iii) the successor to Tenant shall, at the time
of such merger, consolidation, reorganization or sale (as the case
may be), and at all times thereafter during the Term, operate the
Leased Premises in accordance with the provisions of this lease
(including, without limitation, Article 5 hereof).
28.3 With respect to each and every sublease or subletting,
it is agreed that:
(a) no subletting shall be for a term ending later
than one day prior to the Expiration Date of this lease;
(b) no sublease shall be valid, and no subtenant
shall take possession of the Leased Premises or any part thereof,
until an executed counterpart of such sublease has been delivered
to Landlord;
(c) each sublease shall provide that:
(i) it is subject and subordinate to this lease,
to all of the terms, covenants, conditions, provisions, agreements
and conditions contained herein and to the matters to which this
lease is or shall be subordinate; and
(ii) in the event of termination, re-entry, or
dispossess by Landlord under this lease, Landlord may, at its
option, take over all of the right, title and interest of Tenant,
as sublessor, under such sublease, and such subtenant shall, at
Landlord's option, attorn to Landlord pursuant to the then
executory provisions of such sublease, except that Landlord shall
not be:
(x) liable for any previous act or omission
of Tenant under such sublease;
(y) subject to any offset, not expressly
provided in such sublease, that theretofore accrued to such
subtenant against Tenant; or
(z) bound by any previous modification of
such sublease not approved by Landlord or by any previous
prepayment of more than one (1) month's fixed rent or any
additional rent then due;
(d) each sublease shall contain provisions containing
the same terms, covenants and conditions as those contained in
Sections 5.1 and 5.2 of this lease;
(e) Tenant shall and will remain fully liable for:
(i) the payment of the rents due, and to become
due, hereunder;
(ii) the performance of all of the other terms,
covenants, conditions, provisions, agreements and conditions
contained in this lease on the part of Tenant to be performed; and
(iii) all acts and omissions of any licensee,
subtenant, or any other person claiming under or through any
subtenant that shall be in violation of any of the obligations of
this lease (and any such violation shall be deemed to be a
violation by Tenant); and
(f) in no event shall any subtenant, or any person
claiming through or under Tenant, assign or encumber its sublease,
further sublet all or any portion of its sublet space, or
otherwise suffer or permit the sublet space, or any part thereof,
to be used or occupied by others, except in accordance with the
terms of this Section 28.
The foregoing provisions of this Section 28.3 (other than
subsection (c)(ii) above) shall apply in all respects to any
licenses or concessions granted by Tenant with respect to the
Leased Premises, with such force and effect as if the same were
subleases.
28.4 With respect to each and every assignment or other
transfer of this lease (regardless of whether made with or without
Landlord's prior written consent), it is further agreed that:
(a) no such assignment or transfer shall be made
unless, and shall not be effective until, the assignee or
transferee shall execute, acknowledge and deliver to Landlord an
agreement, in form and substance satisfactory to Landlord,
pursuant to which the assignee or transferee shall
unconditionally:
(i) assume the obligations of this lease on the
part of Tenant to be performed or observed accruing from and after
the date of such assignment; and
(ii) agree that the provisions in this Article 28
shall, notwithstanding such assignment or transfer, continue to be
binding upon it in respect of all future assignments and
transfers;
(b) Landlord's consent to such assignment or
transfer shall not, in any respect, be construed as a waiver of
the provisions of this Article 28 as to any proposed assignment of
this lease, or any subletting of the Leased Premises, by such
assignee or its successors and assigns, and the provisions of this
Article 28 shall survive such consent and continue to be binding
upon Landlord and any direct or remote assignee of Tenant;
(c) notwithstanding any assignment or transfer,
whether or not in violation of the provisions of this lease, and
notwithstanding the acceptance of Fixed Net Rent and/or additional
rent by Landlord from an assignee, transferee, or any other party,
the original named Tenant and each successor thereto by assignment
or other transfer, shall remain fully liable for the payment of
the rents and for the other obligations of this lease on the part
of Tenant to be performed or observed; and
(d) the joint and several liability of Tenant and any
immediate or remote successor in interest of Tenant for the timely
and faithful performance of all of the obligations of this lease
on Tenant's part to be performed or observed, shall not be
discharged, released, or impaired in any respect by any agreement
or stipulation made by Landlord extending the time of, or
modifying any of the obligations of, this lease, or by any waiver
or failure of Landlord to enforce any of the obligations of this
lease (except as so extended or modified), but in no event shall
Tenant's continued liability exceed the liability that would have
existed had this lease continued without any modifications not
consented to by Tenant.
ARTICLE 29
NOTICES
29.1 Any notice, demand, election, or other communication
(herein called a "notice") that, under the terms of this lease or
under any statute, must or may be given by the parties hereto
shall be in writing and shall be given by mailing the same by
registered mail, return receipt requested, in a prepaid wrapper,
addressed:
(a) in the case of notices to Landlord, to Landlord
at its address above, Attention: Mr. Robert Morris; and
(b) in the case of notices to Tenant, to Tenant at
its address above, Attention, Mr. Paul Xenis with a copy of Haythe
& Curley, 237 Park Avenue, New York, NY 10017, Attention: Adam A.
Veltri, Esq.
Either Landlord or Tenant may designate, by notice in writing, a
new or other address to which notices shall thereafter be given.
Any notice given hereunder shall be deemed given, if sent in the
manner hereinabove provided, upon the date upon which it shall be
received or delivery of the same shall be refused.
ARTICLE 30
BROKER
30.1 Landlord and Tenant each covenant, warrant and
represent that it has not dealt with, nor has it had any
conversations or negotiations with, any broker or finder other
than Benchmark Associates, Inc. (herein called the "Broker"),
concerning the leasing of the Leased Premises, and Landlord
covenants to pay a brokerage commission to the Broker pursuant to
a separate agreement. In the event of a breach of the foregoing
covenant, warranty and representation, the breaching party shall
indemnify and save harmless the other party and its agents against
and from:
(a) any and all claims for a brokerage commission or
commissions arising out of any alleged dealings, conversations, or
negotiations had by the breaching party, or by any other person
acting on behalf of the breaching party, with any broker other
than the Broker, or any failure on the part of Landlord to pay
such commission; and
(b) all costs, expenses and liabilities incurred in,
or in connection with, any such claim, action, or proceeding
brought thereon.
If any action or proceeding is brought against the non-breaching
party with respect to any such claim, the breaching party, upon
notice from the other, shall resist and defend such action or
proceeding by counsel chosen by the breaching party and approved
in writing by the other. The breaching party or its counsel shall
keep the other party fully apprised at all times of the status of
such defense.
ARTICLE 31
WAIVERS AND SURRENDERS TO BE IN WRITING
31.1 The receipt of rent by Landlord, with knowledge of any
breach of this lease by Tenant or of any default on the part of
Tenant in the observance or performance of any of the conditions
or covenants of this lease, shall not be deemed to be a waiver of
any provision of this lease. No failure on the part of Landlord
or Tenant to enforce any covenant or provision herein contained,
nor any waiver of any right hereunder by Landlord or Tenant
(unless such waiver is in a writing signed by the party purported
to have made such a waiver), shall discharge or invalidate such
covenant or provision, or affect the right of Landlord or Tenant
to enforce the same in the event of any subsequent breach or
default. The receipt by Landlord of any rent, any other sum of
money, or any other consideration paid by Tenant after the
expiration or termination, in any manner, shall not reinstate,
continue, or extend the Term, unless so agreed to in writing and
signed by Landlord. Neither acceptance of the keys to the Leased
Premises, nor any other act or thing done by Landlord or any agent
or employee during the Term, shall be deemed to be an acceptance
of a surrender of the Leased Premises, excepting only an agreement
in writing signed by Landlord accepting or agreeing to accept such
a surrender which shall be given by Landlord if surrender is made
in accordance with the terms hereof.
ARTICLE 32
LANDLORD'S RIGHTS AND REMEDIES CUMULATIVE
32.1 The rights given to Landlord herein are in addition to
any rights that may be given to Landlord by any statute or
otherwise. All of the rights and remedies of Landlord under this
lease or pursuant to present or future requirements of public
authorities shall be deemed to be separate, distinct and
cumulative, and no one or more of them, whether exercised or not,
nor any mention of, or reference to, any one or more of them in
this lease shall be deemed to be in exclusion of, or a waiver of,
any of the others, or of any of the other rights or remedies that
Landlord may have, whether by present or future requirements of
public authorities or pursuant to this lease. Landlord shall
have, to the fullest extent permitted by requirements of public
authorities, the right to enforce any rights or remedies
separately, and to take any lawful action or proceedings to
exercise or enforce any right or remedy, without thereby waiving,
or being barred or estopped from exercising and enforcing, any
other rights and remedies by appropriate action or proceedings.
Except as otherwise provided herein, the rights and remedies of
Tenant shall be cumulative.
ARTICLE 33
SURRENDER AT THE END OF TERM
33.1 Tenant shall, on or before the Expiration Date, or on
the sooner termination hereof, peaceably and quietly leave,
surrender and yield up unto Landlord all and singular the Leased
Premises, free of all subtenancies, broom-clean (excluding any
debris from a casualty), together with all alterations, additions
and improvements that may have been made upon the Leased Premises
(except movable furniture, movable personal property, or movable
trade and other fixtures put in at the expense of Tenant, or at
the expense of any subtenant, subject, however, to the subsequent
provisions hereof). All furniture, personal property and trade
fixtures property removable pursuant to the provisions of this
Article 33 shall be removed by Tenant on or before the Expiration
Date, or on the sooner termination hereof, and all property not so
removed shall be deemed abandoned by Tenant, to be disposed of by
Landlord, at Tenant's expense, as Landlord considers appropriate.
If the Leased Premises are not so surrendered, Tenant shall make
good to Landlord all damage that Landlord shall suffer by reason
thereof, and shall indemnify Landlord against all claims made by
any succeeding tenant against Landlord founded upon delay by
Tenant in delivering possession of the Leased Premises to such
succeeding tenant, so far as such delay is occasioned by the
failure of Tenant to so surrender the Leased Premises.
33.2 Should Landlord incur any expense in removing any
subtenant, or any other person holding by, through, or under
Tenant, who has failed to so surrender the Leased Premises, or any
part thereof, Tenant shall reimburse Landlord for the reasonable
cost and expense (including reasonable attorneys' fees,
disbursements and court costs) of removing such subtenant or such
person.
33.3 Tenant shall comply with the Industrial Site Recovery
Act, as amended ("ISRA"), and provide Landlord with evidence of
the same. If Tenant is not subject to ISRA, it shall deliver a
Phase I Environmental Study, at the expense of Landlord, prepared
by an environmental consultant acceptable to Landlord three (3)
months prior to the end of the Lease Term.
ARTICLE 34
SALE OR CONVEYANCE OF LEASED PREMISES, LIMITS OF LIABILITY OF LANDLORD
CONSENTS
34.1 Subject to Section 1.8, the term "Landlord", as used in
this lease, means only the owner for the time being of the Leased
Premises or, if the Leased Premises shall be subject to a superior
lease, the tenant for the time in being under such superior lease,
so that, in the event of any sale or other conveyance of the
Leased Premises or an assignment of the tenant's interest under
such superior lease (as the case may be), the seller, grantor, or
assignor (as the case may be) shall be, and hereby is, entirely
freed and relieved of all covenants and obligations of Landlord
hereunder thereafter arising (except for any obligations in
respect of Landlord's Work), and it shall be deemed and construed,
without further agreement between the parties or between the
parties and the purchaser or grantee of the Leased Premises or the
assignee of the tenant's interest under such superior lease (as
the case may be), that such purchaser or assignee has assumed and
agreed to carry out any and all covenants and obligations of
Landlord hereunder.
34.2 If Landlord and/or any successor in interest of
Landlord shall be an individual or individuals who are joint
venturers, tenants in common, members of a firm, a general or
limited partnership, or a corporation, it is specifically
understood and agreed that the monetary liability of such
individual, or of the members or other principals of such firm,
partnership, or joint venture, or of the officers, directors
and/or shareholders of such corporation, whether disclosed or
undisclosed, in relation to any covenants or conditions under this
lease, shall be unconditionally and completely limited to the
equity of Landlord in the Leased Premises in the event of a breach
by Landlord of any of the terms, covenants and conditions of this
lease to be performed by Landlord (except for any breach of any
obligations in respect of Landlord's Work). Notwithstanding
anything to the contrary provided in this lease, there shall be no
personal liability with respect to any of the foregoing persons
and/or entities.
34.3 If either party shall request the other's consent or
approval pursuant to any of the provisions of this lease or
otherwise, such other party shall not unreasonably withhold or
delay such consent, except in those circumstances (if any) in
which this lease shall expressly state that a party may withhold
its consent in its sole discretion. If either party shall fail or
refuse to give, or shall delay in giving, such consent or
approval, such other party shall in no event make, or be entitled
to make, any claim for damages (nor shall such other party assert,
or be entitled to assert, any such claim by way of defense,
set-off, or counterclaim) based upon any claim or assertion by the
other party that such party unreasonably withheld or delayed its
consent or approval, and both parties hereby waive any and all
rights that they may have, from whatever source derived, to make
or assert any such claim. The provisions of the foregoing
sentence shall not apply to any request by Tenant for Landlord's
approval of an assignment of, or subletting under this lease. In
connection therewith, Tenant shall be entitled to claim, seek and
prove whatever damages to which Tenant might be entitled as a
consequence thereof. Except as otherwise expressly set forth in
the preceding sentences relating to consents to proposed
assignments of this lease or sublettings thereunder, a party's
sole remedy for any failure, refusal, or delay of the other party
to give its consent under this lease shall be an action for a
declaratory judgment, specific performance, or injunction in an
expedited arbitration conducted in accordance with the provisions
of Paragraph 21. Additionally, in no event shall Tenant be
entitled to any setoff, abatement, suspension, or deduction of or
against the Fixed Net Rent, additional rent, or any other sums
payable by Tenant to, or on behalf of, Landlord under
this lease, nor shall Tenant have any right to terminate this
lease, nor shall the obligations of Tenant under this lease be
otherwise affected, as remedy for, or otherwise as a result or
consequence of, any such denial of Landlord's consent or approval.
ARTICLE 35
ALTERATIONS
35.1 Tenant shall not, without the prior written consent of
Landlord, make any structural alterations, installations,
additions, improvements or changes to the Building or to the
exterior facade of the same, or any material alterations,
installations, additions, improvements, or changes to the Exterior
Premises. However, Tenant may make non-structural alterations,
installations, additions or improvements in or to the interior of
the Building, provided, however, that this lease shall then be in
full force and effect and such alterations, installations,
additions, or improvements do not affect, in any material respect
the exterior of the Building or the utility or other systems or
equipment of the same.
35.2 Any alterations, additions, installations or
improvements to be made by Tenant in or to the Leased Premises and
the equipment and installations servicing the same (including,
without limitations Tenant's Fixturing Work), except as otherwise
provided, shall be performed upon, and subject to, the following
terms and conditions (in addition to the other terms and
conditions pertaining thereto contained elsewhere in this lease):
(a) Tenant shall comply with all of the requirements
of public authorities and all of the requirements of insurance
bodies, and Tenant shall have procured and paid for, so far as the
same may be required, all certifications, permits, authorizations
and approvals from all public authorities and all insurance
bodies;
(b) prior to commencing any such work, Tenant, shall,
at its own cost and expense:
(i) unless such work shall be of a nature and
degree that shall not require Landlord's prior written consent
thereto pursuant to the provisions of this Article 35, submit to
Landlord, for its prior written approval, all plans and
specifications therefor;
(ii) deliver to Landlord original copies of all
certifications, permits, authorizations and approvals of all
public authorities and all insurance bodies that shall be required
in connection with such work;
(iii) deliver to Landlord an endorsement of
Tenant's policy of comprehensive general liability insurance
referred to in Article 12 of this lease, covering the risk during
the course of performance of such work, together with proof of
payment for such endorsement, which policy, as so endorsed, shall
protect Landlord in the same amounts against any claims or
liability arising out of such work, and Tenant or Tenant's
contractors shall obtain Workmen's Compensation Insurance to cover
all persons engaged in such work;
(iv) if the cost of performing the work shall
exceed $250,000.00 or shall require the filing of a building
alteration notice or other similar filing with any public
authority, post with Landlord a payment and performance bond, in a
form and having content reasonably acceptable to Landlord in an
amount equal to the anticipated cost and expense of performing the
work (but in no event less than $250,000.00) to insure the
diligent completion of the work and the filing of any required
notices or certificates with respect to the work, as well as with
respect to the completion of same, with all public authorities and
insurance bodies (provided, however, that such bond shall not be
required if, at the time in question, Tenant meets the net worth
test set forth in Section 12.9), which bond shall be released by
Landlord to Tenant only after all of the following events have
occurred:
(x) all of the work has been substantially
completed, and the time thereafter within which liens arising out
of the work may be filed lawfully against the Building has expired
without any such liens having been filed;
(y) a general release and waiver of lien
has been obtained from Tenant's general contractor, as well as
from each subcontractor and materialman engaged by Tenant directly
or indirectly in connection with the work or any part thereof, and
original signed counterparts of all such releases and waivers have
been delivered to Landlord; and
(z) any required amended certificate of
occupancy, or other form of acknowledgment of satisfactory
completion of the work, has been issued by all public authorities,
and an original copy of the same has been delivered to Landlord;
and
(v) reimburse Landlord for the actual out of
pocket fees and expenses of Landlord architect and engineer in
connection with their study and review of Tenant's plans and
specifications;
(c) all such work shall be prosecuted:
(i) with reasonable dispatch;
(ii) in substantially conformity with the plans
and specifications submitted to, and approved in writing by,
Landlord pursuant to subdivision (b) hereof, to the extent the
same is required under this lease; and
(iii) only with the use of new first class
materials and supplies, or such materials and supplies comparable
to those replaced;
(d) except as otherwise expressly provided for
herein, the cost of such work shall be paid by Tenant in cash or
its equivalent, so that the Leased Premises and the Building shall
at all times be free of liens for labor and materials supplied in
connection with such work;
(e) notwithstanding anything herein contained to the
contrary, Tenant shall make all repairs to the Leased Premises and
the Building necessitated by such work, shall keep and maintain in
good order and condition all of the installations in connection
with such work, and shall make all necessary replacements thereto;
and
(f) within a reasonable period of time after the
completion of such work, Tenant shall, to the extent applicable,
deliver to Landlord a complete set of "as-built" plans and
specifications for the Leased Premises, showing such alterations,
additions, installations and/or improvements, or such plans as
Tenant may have in its possession.
Landlord's review and approval of Tenant's plans and
specifications shall be solely for the purpose of determining the
acceptability to Landlord (aesthetically and otherwise) of the
work shown thereon, and not for the purpose of determining whether
the same comply with the requirements of public authorities,
whether the same are structurally sound, or whether the same are
free from defects in specified materials or design, all of which
shall be Tenant's sole responsibility. However, Landlord reserves
the right (but does not accept any obligation) to reject Tenant's
plans and specifications in the event that Landlord shall
reasonably determine that the same shall not so comply, that the
same shall not be structurally sound, or that the same is
defective in specified materials or design, which rejection shall
be in writing and shall describe, in reasonable detail, the
aspects of Tenant's plans and specifications that render the same
in non compliance with the requirements of public authorities, not
structurally sound, or defective.
35.3 Tenant agrees that the exercise of its rights pursuant
to the provisions of this Article 35 or any other provision of
this lease shall not be done in a manner which would create any
work stoppage, picketing, labor disruption or dispute, violate
Landlord's union contracts affecting the Leased Premises, and/or
the Building, or interfere with the business of Landlord or any
other tenant or occupant of the Leased Premises or the Building.
In the event of the occurrence of any condition described above
arising from the exercise by Tenant of its rights pursuant to the
provisions of this Article 35 or any other provision of this
lease, Tenant shall, immediately upon notice from Landlord, cease
the manner of exercise of such right giving rise to such
condition. In the event that Tenant fails to cease such manner of
exercise of its rights as aforesaid, Landlord, in addition to any
rights available to it under this lease and pursuant to law, shall
have the right to injunction without additional notice.
35.4 Any and all alterations, additions and improvements
made with respect to, or placed upon, the Leased Premises by
Tenant, as well as all fixtures and articles of personal property
attached to, or used in connection with, the Leased Premises,
shall become, be and remain the property of Tenant for the term of
this lease, but shall become the property of, and surrendered to,
Landlord at the end or other termination of this lease, provided,
however, that the movable furniture, movable personal property and
movable trade or other fixtures put in at the expense of Tenant or
any subtenant that, pursuant to the provisions of Article 33
hereof may be removed by Tenant, or by any subtenant, at or before
the Expiration Date or sooner termination of this lease, shall not
be deemed to be attached to the freehold nor the property of, nor
surrendered to, Landlord.
ARTICLE 36
PARTIES TO FURNISH STATEMENTS
36.1 Either party shall, within twenty (20) days after the
written request of the other party, of any potential purchaser of
the Leased Premises, of any potential assignee of this lease or
subtenant hereunder, of any superior lessor, of any potential
superior lessor, of any superior mortgagee, or of any potential
superior mortgagee, furnish a written statement, duly
acknowledged, substantially in the form of Exhibit "E" annexed
hereto, of the following items:
(a) the amount of Fixed Net Rent and (as to
statements issued by Tenant only) additional rent due, if any;
(b) whether this lease is unmodified and in full
force and effect (or, if there have been modifications, that the
same are in full force and effect as modified and stating the
modifications);
(c) whether, to the best knowledge and belief of the
party giving such statement, the other party is in default;
(d) whether, to the best knowledge and belief of the
party giving such statement, there are any offsets or defenses or
conditions existing that could give rise to any offsets or
defenses;
(e) whether the party giving such statement has given
the other party any notice of default under this lease, and, if
given, whether the default set forth therein remains uncured;
(f) whether, as of the date of such notice, Tenant
shall have effectively exercised the First Extension Right, the
Second Extension Right, the Third Extension Right and /or the
Fourth Extension Right and shall set forth the then date of the
Expiration Date; and
Any such statement shall be for the sole benefit of the party
hereunder to which such statement is given or its assigns, such
potential assignee or subtenant, such superior lessor, such
potential superior lessor, such superior mortgagee, or such
potential superior mortgagee requesting the same or its assigns,
and shall have no effect, as an estoppel or otherwise, with
respect to any third party.
36.2 Upon the failure of either party to furnish any such
statement within the said twenty (20) day period, it shall be
conclusively presumed that this lease is in full force and effect
and that there are no defaults by the other party hereunder.
ARTICLE 37
ACCESS BY LANDLORD
37.1 Landlord, or Landlord's agents or representatives,
shall have the right, upon reasonable prior notice from Landlord
(except in an emergency, in which event no notice shall be
necessary) to enter the Leased Premises or any part thereof at a
specified time during business hours at any time and from time to
time during the Term:
(a) to inspect or exhibit the same to prospective
purchasers and/or mortgagees of any interest in the Leased
Premises, and, during the one (1) year period next preceding the
Expiration Date, to inspect or exhibit the same to prospective
tenants; and
(b) for the purpose of making any repairs,
replacements or improvements as may be provided for under this
lease or as Landlord may otherwise deem necessary.
If, at any time, by reason of an emergency condition an entry
shall be deemed necessary for the protection of the Leased
Premises or any portion thereof, whether for the benefit of Tenant
or not, Landlord, or Landlord's agents or representatives, may
enter the Leased Premises or any portion thereof to accomplish
such purposes and Landlord shall repair all damage caused thereby.
Landlord shall have the right to bring and store materials, tools
and equipment in and upon the Leased Premises that may be required
for such repair, replacement or improvement or for correcting an
emergency condition without liability to Tenant and without the
same constituting an actual or constructive eviction. Subject to
the terms hereof, Landlord shall in no event be liable for any
inconvenience, disturbance, loss of business or other damages to
Tenant by reason of the performance by Landlord of any work in or
about the Leased Premises, for correcting any emergency condition
or for bringing or storing materials, tools and equipment into or
upon the Leased Premises during the course thereof, and subject to
the terms hereof, the obligations of Tenant hereunder shall not be
affected thereby in any manner whatsoever, nor shall the same
constitute any grounds for an abatement, suspension, deferment or
reduction of the Fixed Net Rent, additional rent or other sums
payable under this lease. Notwithstanding the foregoing, Landlord
agrees to use all reasonable efforts not to interfere with the
operation of Tenant's business in the Leased Premises, provided,
however, that Landlord shall not be required to perform any such
work on an overtime or premium time basis unless requested by
Tenant in writing, in which event Tenant shall reimburse Landlord
for the additional cost and expense of the same as additional
rent, from time to time, within ten (10) days after Tenant's
receipt of a demand or demands therefor.
37.2 The provisions contained in this Article 37 are not
intended to create or increase, and are not to be construed as
creating or increasing, any obligations on Landlord's part
hereunder.
ARTICLE 38
SPRINKLER
38.1 Anything elsewhere in this lease to the contrary
notwithstanding, if any public authority or insurance body shall
require or recommend the installation of a sprinkler system beyond
that included in Landlord's Work or that any changes,
modifications, alterations, or additional sprinkler heads or other
equipment be made or supplied in an existing sprinkler system by
reason of Tenant's business, or the location of partitions, trade
fixtures, or other contents of the Leased Premises, or for any
other reason, or if any such sprinkler system installations,
changes, modifications, alterations, additional sprinkler heads or
other such equipment become necessary to prevent the imposition of
a penalty or charge against the full allowance for a sprinkler
system in the fire insurance rate set by any said insurance body
or by any fire insurance company, Tenant shall, at Tenant's
expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional
sprinkler heads or other equipment as required, unless such
installations, changes, modifications, or alterations shall be
required by reason of the failure of the sprinkler system to have
complied, on the Commencement Date, with the requirements of
public authorities then applicable thereto or otherwise with the
requirements for Landlord's Work, in which case, Landlord shall be
responsible for all costs and expenses incurred in connection
therewith.
ARTICLE 39
COVENANTS BINDING ON SUCCESSORS AND ASSIGNS
39.1 The covenants, agreements, terms, provisions and
conditions contained in this lease shall apply to, inure to the
benefit of and be binding upon Landlord, Tenant and their
respective successors and assigns, except as expressly otherwise
hereinbefore provided.
ARTICLE 40
ENTIRE AGREEMENT, MODIFICATIONS
40.1 This lease, contains the entire agreement between the
parties, and shall not be modified in any manner except by an
instrument in writing executed by the parties or their respective
successors in interest.
ARTICLE 41
UNAVOIDABLE DELAYS
41.1 If Landlord shall be delayed in punctually performing
any obligation on its part to be performed under this lease as a
result of any strike, lockout, labor dispute, inability to obtain
labor or materials (or reasonable substitutes therefor), acts of
God, governmental restriction, regulation, or control, enemy or
hostile governmental action, civil commotion, insurrection,
sabotage, fire or other casualty, or any other condition beyond
the reasonable control of Landlord (except for financial condition
or the ability to obtain financing), then the time to perform such
obligation shall be extended by the delay reasonably shown to have
been caused by such condition. The provisions of this Section
41.1 shall not apply to Section 1.2, as to achievement of
Substantial Completion.
41.2 If Tenant shall be delayed in punctually performing any
obligation on its part to be performed under this lease (other
than its obligation to pay the Fixed Net Rent, as the case may be,
reserved hereunder, or any item of additional rent payable by
Tenant pursuant to this lease, as and when the same shall become
due and payable in accordance with the strict terms hereof) as a
result of any strike, lockout, labor dispute, inability to obtain
labor or materials (or reasonable substitutes therefor), acts of
God, governmental restriction, regulation, or control, enemy or
hostile governmental action, civil commotion, insurrection,
sabotage, fire or other casualty, or any other condition beyond
the reasonable control of Tenant (except for financial condition
or the ability to obtain financing), then the time to perform such
obligation shall be extended by the delay reasonably shown to have
been caused by such condition.
ARTICLE 42
CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION
42.1 As the same are used in this lease, the following terms
shall have the following meanings:
"Additional Construction Related Costs" shall mean the
aggregate amount of any and all additional costs and expenses, of
whatever nature (including, without limitation, both so-called
"hard costs" and so-called "soft cost"), that are directly or
indirectly incurred and/or sustained by Landlord in connection
with, or resulting from, any change in the approved Landlord's
Working Drawings made by Landlord at the request of Tenant
pursuant to Section 3.4 and/or any uncured breach by Tenant of the
provisions of Section 3.8. As examples of the breadth of the items
intended by the parties to be included in the foregoing
definition, but without intention to limit the generality of the
same in any respect, such additional costs shall include, if so
incurred and/or sustained by Landlord, any or all of the following
costs and/or expenses:
(a) any and all of the additional costs and expenses
that are directly or indirectly incurred and/or sustained by
Landlord for the preparation of revisions to any plans and
specifications (including, without limitation, Landlord's Working
Drawings) with respect to the construction of any portion of the
Leased Premises;
(b) any and all of the additional costs and expenses
that are directly or indirectly incurred and/or sustained by
Landlord for the amendment of building permits, licenses and the
like, as well as in otherwise complying with the requirements of
public authorities and the requirements of insurance bodies, with
respect to the construction of any portion of the Leased Premises;
(c) any and all of the additional costs and expenses
that are directly or indirectly incurred and/or sustained by
Landlord with respect to the actual construction of any portion of
the Leased Premises, including, without limitation, any additional
general contractor's fee and/or project manager's fee in
connection with the same;
(d) any and all of the additional costs and expenses
that are directly or indirectly incurred or sustained by Landlord
with respect to the financing of the construction of any portion
of the Leased Premises and/or the closing of any permanent
financing in connection with the same, including, without
limitation:
(i) any difference between:
(x) the amount of interest and/or other
charges payable by Landlord to its construction lender during any
period when such construction would have been completed but for,
directly or indirectly, such change in the approved Landlord's
Working Drawings and/or such breach by Tenant; and
(y) the amount of interest that otherwise
would have been payable during such period under Landlord's
permanent financing; and
(ii) any and all other costs and expenses that
are directly or indirectly incurred or sustained by Landlord in
connection with any delay in the closing of Landlord's permanent
financing, including, without limitation, any interest rate
differential with respect to such permanent financing, any
additional commitment or commitment extension fees, any costs
associated with one or more lost or lapsed commitments and the
like provided that Tenant shall not be obligated for the costs in
this subparagraph (d), unless the delay associated with such
AdditionalConstruction Related Costs exceeds five (5) business
days; and
(e) any and all of the additional costs and expenses
that are directly or indirectly incurred or sustained by Landlord
with respect to the leasing of any portion of the Leased Premises,
including, without limitation, if Landlord shall be delayed in
receiving any of the rents otherwise payable under any such
leases, interest on such rents for the period of such delay at the
same interest rate or rates as are then payable under Landlord's
financing of the Leased Premises.
"Hazardous Material" shall mean any flammable,
explosive, or radioactive material, hazardous or toxic substance
or material, asbestos or material containing asbestos, or any
other substance or material defined or generally recognized as
hazardous or toxic by any requirements of public authorities,
including, without limitation:
(a) those materials or substances included within the
definitions of "hazardous substances", "hazardous materials",
"toxic materials", "toxic substances", or "solid waste" in:
(i) the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 USC section 9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act of
1986, Pub. L. 99-499, 100 Stat. 1613);
(ii) the Resource Conservation and Recovery Act
of 1976, 42 USC section 6901 et seq.;
(iii) the Toxic Substances Control Act, 15 USC
section 2601 et seq.,the Hazardous Materials Transportation Act, 49 USC section
1801 et seq.;
(iv) any amendments to, and regulations
promulgated under, said requirements of public authorities, all as
amended; and
(v) any other similar environmental or public
health requirement of public authority;
(b) those materials or substances listed as hazardous
substances in the United States Department of Transportation
Table, 49 CFR 172. 101 (and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) in 40
CFR Part 302 (and any amendments thereto);
(c) any material, waste, or substance that contained
or is derived from:
(i) petroleum or petroleum products;
(ii) asbestos;
(iii) polychlorinated biphenals;
(iv) substances designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 USC
section 1251 et seq. (33 USC section 1321) or listed pursuant to Section 307 of
the Clean Water Act (33 USC section 1317);
(v) flammable explosives; or (vi) radioactive
materials;
(d) any storm water or other waste water discharge
regulated under any requirement of public authority relating to
point or non-point source discharges, including, without
limitation, Section 402(p) of the Clean Water Act (33 USC section 1342)
and the regulations promulgated thereunder, all as amended; and
(e) such other substances, materials and wastes that
are regulated or defined as hazardous or toxic under any
applicable requirement of public authorities.
"Requirements of insurance bodies" and words of similar
import shall mean the rules, regulations, orders, directives,
recommendations and/or other requirements of any insurance
rating organization having jurisdiction over the Leased Premises.
"Requirements of public authorities" and words of similar
import shall mean:
(a) all laws and ordinances of any or all of the
federal, state, city, county and borough governments;
(b) the rules, regulations, orders and/or directives
of any and all departments, subdivisions, bureaus, agencies, or
offices thereof, or of any other governmental, quasi governmental,
public, or quasi-public authorities having jurisdiction over the
Leased Premises; and/or
(c) the direction of any public officer pursuant to
law.
"Tenant's Affiliate" shall mean any corporation, partnership
or other entity:
(a) which, directly or indirectly, controls, is
controlled by, or under common control with, Tenant; or
(b) into or with which Tenant is merged or
consolidated.
"Term" shall mean the Initial Term and, if all of the
conditions set forth in Section 1.4 shall be satisfied and Tenant
shall have exercised the First Extension Right, the First
Extension Period and, if all of the conditions set forth in
Section 1.5 shall be satisfied and Tenant shall have exercised the
Second Extension Right, the Second Extension Period and, if all of
the conditions set forth in Section 1.6 shall be satisfied and
Tenant shall have exercised the Third Extension Right and, if all
of the conditions set forth in Section 1.7 shall be satisfied and
Tenant shall have exercised the Fourth Extension Right.
42.2 In construing or interpreting the provisions of this
lease, the following rules shall apply:
(a) This lease shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New
Jersey, to the extent that the same are not inconsistent with the
rules of construction or interpretation stated herein.
(b) Any reference to this lease being "in full force
and effect", or words of similar import, when used in this lease
as a condition to the existence or exercise of a right or option
on the part of Tenant, shall be construed, in each instance, as
including the further condition that, at the time in question, no
Event of Default has occurred. However, if, prior to the
expiration of such period of time, Tenant shall commence an action
or other proceeding in a court of appropriate jurisdiction to
challenge, in good faith, the happening or continuance of such an
event, or Landlord's characterization of such event as an event as
would entitle Landlord to terminate this lease or dispossess
Tenant, such period of time shall be tolled for so long as Tenant
pursues such action or proceeding diligently and in good faith
until such action or proceeding shall be concluded.
(c) Any reference to the "obligations of this lease",
and words of like import, shall be construed to refer to the
covenants to pay Fixed Net Rent (or the Reduced Fixed Net Rent, as
the case may be) and additional rent under this lease and all of
the other covenants, conditions and agreements contained in this
lease, whether to be performed by Landlord or Tenant. Any
provisions in this lease that one party, the other party, or both
shall do, shall not do, or shall cause or permit, or not cause or
permit, a particular act, condition, or circumstance shall be
construed to mean that such party so covenants or both parties so
covenant, as the case may be.
(d) Any reference to "Tenant's obligations
hereunder", and words of like import, and "Landlord's obligations
hereunder", and words of like import, shall be construed to refer
to the obligations of this lease that are to be performed or
observed by Tenant or by Landlord, as the case may be. Reference
to "performance" of either party's obligations under this lease
shall be construed as including both performance and observance.
(e) Any reference to Landlord as having "no liability
to Tenant" or being "without liability to Tenant", or words of
like import, shall be construed to mean that Tenant is not
entitled to terminate this lease, to claim actual or constructive
eviction (whether partial or total), to receive any abatement or
diminution of rent, to be relieved in any manner of any of its
other obligations hereunder, to be compensated for loss or injury
suffered, or to enforce any other kind of liability whatsoever
against Landlord under, or with respect to, this lease, or with
respect to Tenant's use or occupancy of the Leased Premises.
(f) Any reference to the "termination of this lease",
or words of similar import, shall be construed to include the
expiration or earlier termination of the term of this lease, or
the cancellation of this lease pursuant to any of the provisions
of this lease or according to the requirements of public
authorities. Upon a termination of this lease, the term and
estate granted by this lease shall end at midnight of the date of
termination as if such date were the Expiration Date, and neither
party shall have any further obligation or liability to the other
after such termination, except:
(i) as shall expressly be provided for in this
lease;
(ii) for such obligations as, by their nature or
under the circumstances, can only be, or by the provisions of
this lease may be, performed after such termination;
(iii) unless otherwise expressly provided in this
lease, as to any liability for a payment that shall have accrued
to, or with respect to, any prior period ending at the time of
termination; and
(iv) for Landlord's liability for repayment of
the Loan pursuant to the terms and conditions of the Loan
Agreement and all other applicable documents (if the same shall
not theretofore have been repaid),
all of which exceptions shall survive the termination of this
lease.
(g) Any reference to an "assignee", a "subtenant", a
"successor in interest", or other words of similar import, shall
not be construed under any circumstances to grant Tenant any
rights, not herein specifically set forth, to assign this lease,
sublet all or a portion of the Leased Premises, or otherwise to
transfer, assign, grant, create, or vest in any third party any
rights in the Leased Premises and/or the leasehold estate created
hereby.
(h) Any reference to "agents, employees or visitors",
or any combination thereof or addition thereto, shall be deemed to
include agents, employees, servants, licensees, representatives,
contractors, visitors, invitees and the like, unless otherwise
expressly mentioned in the context.
(i) The terms "include", "including" and "such as"
and words of similar import shall each be construed as if followed
by the phrase "without being limited to".
(j) The term "mortgage" shall be construed to include
an indenture of mortgage and deed of trust to a trustee to secure
an issue of bonds, and the term "mortgagee" shall be construed to
include such a trustee.
(k) The term "repair" shall be construed to include
such replacement of parts as may be necessary to achieve and/or
maintain good working order and condition.
(l) The terms "herein", "hereof', "hereby",
"hereunder" and words of similar import shall be construed to
refer to this lease as a whole and not to any particular Article
or subdivision thereof unless expressly so stated.
(m) The captions of this lease and the table of
contents preceding this lease are for convenience and reference
only, and are not intended in any way to define, limit, or
describe the scope or intent of this lease, nor in any way affect
this lease.
(n) All the provisions of this lease shall be deemed
and construed to be conditions" as well as "covenants", as though
the words specifically expressing or importing covenants and
conditions were used in each separate provision hereof.
(o) Words of any gender in this lease shall be held
to include any other gender and words in the singular number shall
be held to include the plural when the sense requires.
(p) The rule of ejusdem generis shall not be
applicable to limit a general statement (whether preceding,
following, or referable to an enumeration of specific matters) to
matters similar to the matters specifically mentioned.
(q) If, and to the extent that, a provision of this
lease shall be unlawful or contrary to public policy, the same
shall not be construed to invalidate the other provisions of this
lease.
(r) Nothing contained in this lease shall be
construed as creating a partnership, a joint venture, or any other
business or other relationship between Landlord and Tenant, other
than the relationship of landlord and tenant, nor shall anything
set forth in this lease be construed in any manner as making
Landlord liable for the debts, defaults, obligations and/or losses
of Tenant.
(s) The provisions of this lease shall be construed,
in all respects, without reference to any rule or canon requiring
or permitting the construction of provisions of documents against
the interest of the party responsible for the drafting of the
same, it being the intention and agreement of the parties that
this lease be conclusively deemed to be the joint product of both
parties and their counsel.
ARTICLE 43
SHORT FORM OF LEASE
43.1 At the request of either party, Landlord and Tenant
shall promptly execute, acknowledge and deliver a memorandum with
respect to this lease sufficient for recording, for the sole
purpose of giving record notice of the Initial Term under this
lease, in the form annexed hereto as Exhibit G. Tenant shall have
the right to file additional memorandum to evidence the existence
of an extension under Sections 1.4, 1.5, 1.6 or 1.7 upon the
exercise of such extension. The party requesting that such
memorandum be recorded shall pay the recording charges for the
same. Should a memorandum be filed by either Landlord or Tenant
prior to the Term Commencement Date, Landlord and Tenant shall
file an amended and restated memorandum within ten (10) days after
the Term Commencement Date to reflect the Term Commencement Date
therein.
43.2 In the event that a memorandum with respect to this
lease shall be recorded, Tenant shall, promptly after Landlord's
written demand given at any time after this lease shall terminate
or expire, execute in recordable form and return to Landlord such
instrument or instruments as shall reasonably be required to
reflect or evidence such termination or expiration of record, even though any
such memorandum shall, by its terms, automatically terminate if the Term
Commencement Date does not occur or at the end of the Initial Term or any
extension thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement of Lease as of the day and year first above
written.
MORRIS COMPANIES, INC.
By: ______________________________
Robert Morris, Vice President
GUEST SUPPLY, INC.
By: ______________________________
Paul Xenis, Vice President - Finance<PAGE>
EXHIBITS TO LEASE AGREEMENT
DATED MARCH 16, 1995 BETWEEN
THE COMPANY AND MORRIS COMPANIES, INC.
EXHIBIT A Site Description
Blueprints for the site containing the building to be constructed.
EXHIBIT B Floor Plan
Blueprints for the floor plan of the building to be constructed.
EXHIBIT C Permitted Encumbrances
1. A first mortgage not to exceed $8,500,000.00
2. Subject to easements as set forth on Filed Map No. 5134 File
No. 975.
3. Subject to utility easement to J.C.P. & L. as set forth
in Deed Book 1002, Page 295 and Deed Book 1002, Page 292.
4. Subject to Deed of Declaration Protective Covenants
Joseph D. Morris and Robert Morris, a New Jersey General
Partnership as set forth in Deed Book 3611, page 516.
5. Subject to rights of others in and to Kennedy Drive and Main
Street.
6. Subject to rights of Conrail for drainage and slope rights.
7. Statement of Facts on Survey dated February 2, 1995 by
Michael L. Roman.
8. Subject to easement of water line as set forth in Deed Book
3358 page 766.
9. Subject to easements, restrictions, terms and conditions as
set forth in Deed Book 1957 page 39.
10. Subject to easements for sewer line as set forth in Deed Book
2006 page 440.
11. Subject to 50 foot wide easement for use and subject to
rental agreement as set forth in Deed Book 2017 page 202.
12. Subject to sewer easement as set forth in Deed Book
2225 page 297.
13. Subject to utility easement as set forth in Deed Book 2346
page 477.
14. Subject to utility easement as set forth in Deed Book 2570
page 1175.
15. Subject to right of way agreement as set forth in Deed Book
2572 page 28.
16. Subject to rights of others in Haul Road as set forth in Deed Book 3577
page 730.
17. Subject to 50 foot wide easement by Middlesex County
Sewerage Authority as set forth in Deed Book 3577 page 730.
18. Subject to slope and drainage rights in favor of The Garden
State Parkway Authority.
19. Subject to Deed of Declaration, Easement and Protective
Covenant to be filed by Landlord for the purpose of installing a
detention pond, drainage swale and sewer line on the Leased
Premises (at Landlord's sole cost and expense) that provides for
the allocation of the costs to maintain and replace said
facilities among the users of the same (the Leased Premises and
Block 330.05, Lot 1.04) based on building square footage of the
user as compared to total building square footage of all users to
be in form reasonably satisfactory to Landlord and Tenant.
Provided that none of the above encumbrances unreasonably
interfere with the use and occupancy of the Leased Premises as
contemplated hereunder.
<PAGE>
EXHIBIT D Specifications
Summary of the required specifications to be followed or adhered to by the
developer in the construction of the new building.
EXHIBIT E Estoppel Certificate
Copy of the Estoppel Certificate.
EXHIBIT F Construction Schedule
Copy of proposed construction schedule.
EXHIBIT G Tenant Fixturing Work
Summary of the fixture required in the building by the Company.
EXHIBIT H Form of Non-Disturbance
Copy of the non-disturbance agreement between
EXHIBIT I
Form of Memorandum of Lease
