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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[MARK ONE]
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM COMMISSION FILE NUMBER
TO 01-19826
MOHAWK INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 52-1604305
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
P. O. BOX 12069, 160 S. INDUSTRIAL BLVD., CALHOUN, GEORGIA 30701
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (706) 629-7721
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [_]
The aggregate market value of the Common Stock of the Registrant held by non-
affiliates of the Registrant (37,645,351 shares) on March 8, 1999 was
$1,185,828,557. The aggregate market value was computed by reference to the
closing price of the Common Stock on such date.
Number of shares of Common Stock outstanding as of March 8, 1999: 60,578,367
shares of Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement for the 1999 Annual Meeting of
Stockholders--Part III
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PART I
ITEM 1. BUSINESS
GENERAL
Mohawk Industries, Inc. ("Mohawk" or the "Company," a term which includes the
Company and its subsidiaries, including its primary operating subsidiaries,
Mohawk Carpet Corporation ("Mohawk Carpet"), Aladdin Manufacturing Corporation
("Aladdin Manufacturing", formerly known as Mohawk Manufacturing Corporation),
World Carpets, Inc. ("World"), American Weavers, LLC ("American Weavers") and
Newmark & James, Inc. ("Newmark")) is a leading producer of woven and tufted
broadloom carpet and rugs for principally residential applications. The Company
is the second largest carpet and rug manufacturer in the United States, with
1998 net sales of approximately $2.6 billion. The Company designs, manufactures
and markets carpet and rugs in a broad range of colors, textures and patterns.
The Company is widely recognized through its premier brand names, some of which
are "Mohawk," "Aladdin," "Alexander Smith," "American Rug Craftsmen," "American
Weavers," "Bigelow," "Durkan," "Galaxy," "Harbinger," "Helios," "Horizon,"
"Image," "Karastan," "Mohawk Commercial," "Newmark Rug," and "World," and
markets its products primarily through carpet retailers, home centers, mass
merchandisers, department stores, commercial dealers and commercial end users.
Mohawk's operations are vertically integrated from the extrusion of resin and
post-consumer plastics into fiber, to the conversion of fiber into yarn and to
the manufacture and shipment of finished carpet and rugs.
HISTORY
The Company was organized in Delaware in 1988 to acquire Aladdin Manufacturing
from its predecessor owner, Mohasco Corporation, in a leveraged buyout
transaction. The Company completed its initial public offering of Common Stock
in April 1992, raising approximately $42.5 million in proceeds, which were used
to retire indebtedness and redeem preferred stock outstanding at that time.
Mohawk acquired Horizon Industries, Inc. ("Horizon") in October 1992 for cash of
approximately $63.9 million and 4,009,500 shares of Common Stock valued at
approximately $22.5 million. Mohawk purchased American Rug Craftsmen, Inc.
("American Rug") in April 1993 for approximately $32.0 million in cash and
Karastan Bigelow in July 1993 for approximately $155.5 million, which was
substantially all cash. In May 1993, the Company completed an offering of
4,725,000 shares of Common Stock. Of the total number of shares, 3,600,000
shares were sold by the Company and 1,125,000 shares were sold by selling
stockholders. The net proceeds to the Company were approximately $46.0 million.
On February 25, 1994, Mohawk acquired all of the common stock of Aladdin Mills,
Inc. ("Aladdin") in exchange for approximately 20,343,000 shares of Common
Stock, valued at $386.5 million, based upon the closing stock price at the date
the agreement was executed. On January 13, 1995, Mohawk acquired all of the
capital stock of Galaxy Carpet Mills, Inc. ("Galaxy") for $42.2 million in cash.
On July 23, 1997, the Company acquired certain assets of Diamond Rug & Carpet
Mills, Inc. ("Diamond") and other assets owned by Diamond's principal
shareholders for approximately $36.0 million, which consisted of $19.6 million
in cash at closing, $7.0 million in cash over the six-month period following
closing and a $9.4 million note payable in seven annual installments of
principal plus interest at 6%. The acquisition was accomplished through a plan
of reorganization filed by Diamond under Chapter 11 of the United States
Bankruptcy Code.
The Company completed its acquisitions of Newmark and American Weavers, on
June 30, 1998 and August 10, 1998, respectively. On November 12, 1998 the
Company acquired all of the outstanding capital stock of World in exchange for
approximately 4,900,000 shares of the Company's common stock valued at $149.5
million, based on the closing stock price on the day the agreement was executed.
On January 29, 1999, the Company acquired certain assets of Image Industries,
Inc. ("Image") for approximately $193 million, including the assumption of $30
million of tax exempt bonds, and on March 1, 1999, the Company acquired all of
the outstanding capital stock of Durkan Patterned Carpets, Inc. ("Durkan") for
3,150,000 shares valued at $116.5 million based on the closing stock price the
day the letter of intent was executed.
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On October 23, 1997, the Board of Directors of the Company declared a 3-for-2
stock split that was paid as a 50% stock dividend on December 4, 1997, to
holders of record on November 4, 1997. All share information presented herein
gives effect to this stock split and the World merger.
INDUSTRY
According to the most recent figures available from the United States
Department of Commerce, worldwide carpet and rug sales volume of American
manufacturers and their domestic divisions was 1.7 billion square yards in 1997.
This volume represents a market in excess of approximately $10.3 billion at the
"mill level," which management believes, based on standard industry mark-ups,
translates into approximately $16.4 billion to $18.5 billion at the retail
level. Based upon data obtained from recent industry publications, the
worldwide carpet and rug sales volume of American manufacturers in 1998 was
approximately 1.8 billion square yards and $10.7 billion. The overall level of
sales in the carpet industry is influenced by a number of factors, including
consumer confidence in spending for durable goods, interest rates, turnover in
housing, the condition of the residential and commercial construction industries
and the overall strength of the economy.
Broadloom carpet (defined as carpet over six feet by nine feet in size)
represented 80% of the volume shipped by the industry in 1997. Tufted broadloom
carpet (a category that refers to the manner of construction in addition to
size) represented 96% of the broadloom industry volume shipped in 1997. The
broadloom carpet industry has two primary markets, residential and commercial,
with the residential market making up approximately 74% of industry volume
shipped and the commercial market comprising approximately 26% in 1997. An
estimated 55% of industry shipments is made in response to replacement demand,
which usually involves exact yardage (or "cut order") shipments that typically
provide higher profit margins than sales of carpet sold in full rolls. Because
the replacement business generally involves higher quality carpet cut to order
by the manufacturer, rather than the dealer, this business tends to be more
profitable for manufacturers than the new construction business.
PRODUCTS AND MARKETS
The Company designs, manufactures and markets hundreds of styles of carpet,
rugs and mats in a broad range of colors, textures and patterns. Mohawk
positions its products in all price ranges and emphasizes quality, style,
performance and service. The Company is widely recognized through its premier
brand names, "Mohawk," "Aladdin," "Alexander Smith," "American Rug Craftsmen,"
"American Weavers," "Bigelow," "Bigelow Commercial," "Durkan," "Galaxy,"
"Harbinger," "Helios," "Horizon," "Image," "Karastan," "Karastan Contract,"
"Mohawk Commercial," "Newmark Rug," and "World," and markets its products
primarily through carpet retailers, home centers, mass merchandisers, department
stores, commercial dealers, and commercial end users. Some products are also
marketed through private labeling programs.
Mohawk markets certain of its products outside the United States, but does not
consider sales of such products to be material.
Sales to residential customers represent a significant portion of the total
industry and the majority of the Company's sales. The Company currently markets
approximately 900 residential products to more than 25,000 customers which
include independent retailers, department stores, mass merchandisers, buying
groups, and building and tenant improvement contractors.
The Company has positioned its premier residential brand names across all
price ranges. "Mohawk," "Alexander Smith," "Bigelow," "Galaxy," "Horizon,"
"Karastan" and "World" are positioned to sell primarily in the medium-to-high
retail price range in the residential broadloom market and these lines are also
sold under private labels. These lines have substantial brand name recognition
among carpet dealers and retailers with the "Karastan," "Mohawk," and "Bigelow"
brands having the highest consumer recognition in the industry. "Karastan" is
the leader in the exclusive high end market. The "Aladdin" brand name competes
in the low-to-medium retail price range.
Based on an industry survey, the Company is considered a leader within the
industry of U.S. carpet manufacturers providing marketing support. Through
dealer programs like Karastan Gallery, Mohawk Brand Excellence, New
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Visions, Hamilton, Ciboney, Mohawk Carpet Color Center and Floor Scapes, the
Company offers intensive marketing and advertising support. These programs offer
varying degrees of support to dealers in sales and management training, display
racks, exclusive promotions and assistance in certain administrative functions
such as computer systems, accounting and insurance.
The Company generally markets its residential products through its residential
sales forces that report to common management on a regional basis. All of the
regional vice presidents report to one senior vice president of sales. Each
region has responsibility for sales, distribution and inventory management in
its region, all of which is coordinated by the senior vice president of sales at
a national level. The inventory management on a regional level is accomplished
by a hub-and-spoke distribution network. In this system, Company trucks
generally deliver carpet from mill sites to regional warehouses. From there, it
is shipped to local distribution warehouses, then to retailers. The Company
believes that the current structure of the residential sales group has
contributed to a more efficient and profitable organization.
The commercial customer base is divided into several groups: educational
institutions, corporate office space, hospitality facilities, retail space and
health care facilities. In addition, Mohawk produces and sells carpet for the
export market, the federal government and other niche businesses. Different
purchase decision makers and decision-making processes exist for each group. For
example, in the corporate office group, decisions are usually made by architects
or specifiers, whose responsibility is to manage the project budget and
coordinate interior design. In the institutional group, by comparison, decisions
are often made by purchasing agents employed by the end user who have
longstanding relationships with carpet manufacturers. The commercial market is
generally a more complex market in which to sell than the residential market.
In the commercial market, the Company markets its products under the brand
names "Mohawk Commercial," "Harbinger," "Aladdin," "Karastan Contract" and
"Bigelow Commercial." The marketing strategy of the Mohawk Commercial, Karastan
Contract and Bigelow Commercial brands is to leverage the brands' traditional
sales strength in the educational institution part of the market to the office,
hospitality, retail and health care groups. These brands are comprised of
specialized products for these groups that emphasize product quality and
specification rather than just price.
The Harbinger brand is a specialized line of commercial carpet generally
specified by architects and designers for end users in the hospitality,
corporate, health care and institutional market sectors. Harbinger products are
largely custom designed and colored and are marketed through its sales
organization of commercial carpet sales specialists. The Harbinger brand is
considered to be an industry leader in product quality, styling and innovation
for the high-end commercial market. Harbinger products were the first to
introduce "graphics" tufting technology to the industry and have maintained
their product development leadership by employing tufting and dyeing
technologies that produce intricate multicolored patterns.
The Aladdin brand is marketed primarily to the "mainstreet" sector of the
commercial market. The "mainstreet" sector is generally comprised of the low-to-
medium price range styles and is distributed primarily through retail dealers
for smaller installations.
Woven commercial products accounted for a significant portion of the Company's
net sales of commercial product in 1998, including the Mohawk Commercial brand's
exclusive woven interlock products, which are manufactured by a unique weaving
process that increases performance, wear and durability. The Company's ability
to make woven carpet under the Mohawk Commercial, Karastan Contract and Bigelow
Commercial brand names in large volume for commercial applications
differentiates it from other manufacturers, most of which produce tufted carpet
almost exclusively. Woven carpet and specifically the Company's woven interlock
products sell at higher prices than tufted carpet and generally produce higher
profit margins. Management believes that the Company is the largest producer of
woven carpet in the United States and that the Company has several carpet
weaving machines and processes that no other manufacturer has, thereby allowing
the Company to create carpet to meet specifications that its competitors cannot
duplicate.
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The machine-made rug market is currently the fastest growing segment of the U.
S. carpet and rug industry with an annual growth rate estimated to be
approximately 12% in 1998. Much of this growth has occurred at the low-to-
medium retail price ranges. The distribution channels for the rug market
primarily include department stores, mass merchants, floorcovering stores,
catalog stores, home centers and furniture stores.
The Company's product lines include a broad array of rugs. The Karastan brand
name rugs represent the higher retail price ranges with one of the most valued
brand names in the industry and are distributed through specialty stores, along
with department and furniture stores. These are higher quality woven wool rugs
manufactured primarily on Axminster looms.
The Company emphasizes the fast growing lower retail price ranges through its
American Rug Craftsmen and American Weavers brand names. The rugs sold under
these brands are primarily woven polypropylene area rugs, tufted border rugs and
decorative mats, which are made from purchased matting material that is cut,
serged and screen printed by the Company. These products are distributed
primarily through mass merchants and home centers.
The Company also sells to the bath mat and washable bath rug segments of the
rug market through its Newmark Rug and Aladdin brand names. The Aladdin products
are tufted nylon products which are distributed through department stores and
mass merchants. The Newmark products are high-end washable cotton bath rugs
that are distributed to the luxury market of department stores, specialty
stores, and catalogue businesses.
ADVERTISING AND PROMOTION
The Company promotes its products in the form of co-operative advertising,
point-of-sale displays and marketing literature provided to assist in marketing
various carpet styles. Mohawk also continues to rely on the substantial brand
name identification of its "Aladdin," "Alexander Smith," "American Rug
Craftsmen," "American Weavers," "Bigelow," "Bigelow Commercial," "Durkan,"
"Galaxy," "Harbinger," "Helios," "Horizon," "Image," "Karastan," "Karastan
Contract," "Mohawk," "Mohawk Commercial," "Newmark Rug," and "World," lines.
The cost of producing display samples, a significant promotional expense, is
partially offset by sales of samples and support from raw materials suppliers.
MANUFACTURING AND OPERATIONS
The Company's manufacturing operations are vertically integrated and include
the extrusion of resin and post-consumer plastics into polypropylene, polyester
and nylon fiber, yarn processing, tufting, weaving, dyeing, coating and
finishing. Capital expenditures are primarily focused on increasing capacity,
improving productivity and reducing costs. Mohawk incurred $115.1 million in
capital expenditures over the past three years, including acquisitions. These
expenditures increased manufacturing efficiency and capacity, while improving
overall cost competitiveness.
RAW MATERIALS AND SUPPLIERS
The principal raw materials the Company uses are nylon staple fibers; nylon
filament fibers; raw wool; polypropylene filament fibers; polyester staple
fibers; olefin and polyester resins and post-consumer plastics; synthetic
backing materials, polyurethane and latex; and various dyes and chemicals.
Mohawk obtains all of its major raw materials from independent sources and all
of its externally purchased nylon fibers from four major suppliers: E.I. du Pont
de Nemours and Company, Monsanto Company, BASF Corporation and AlliedSignal,
Inc. Most of the fibers the Company uses in carpet production are treated with
stain-resistant chemicals. The Company has not experienced significant shortages
of raw materials in recent years. The Company believes that the loss of any one
supplier would not have a material effect on the Company and that an alternative
supply arrangement could be made in a relatively short period of time.
COMPETITION
All of the markets in which the Company does business are highly competitive,
with less than 100 companies engaged in the manufacture and sale of carpet in
the United States. Carpet manufacturers also face competition from
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the hard surface floorcovering industry. Based on industry publications, the top
twenty North American carpet and rug manufacturers (including their American and
foreign divisions) in 1997 had worldwide sales in excess of $10.0 billion, and
the top twenty manufacturers in 1990 had sales in excess of $6 billion. Mohawk,
with 1998 net sales of approximately $2.6 billion, is the second largest
producer of carpet and rugs (in terms of sales volume).
Certain of the Company's competitors have greater financial and other
resources than the Company. In particular, the industry has one large
competitor, Shaw Industries, Inc. ("Shaw"), who in 1998 held the largest share
of the domestic wholesale market based on sales. Shaw's size could permit
significant raw material purchasing power and certain other manufacturing cost
advantages compared with the rest of the industry.
The principal methods of competition within the industry are price, style,
quality and service. In each of the Company's markets, price competition and
market coverage are particularly important because there is relatively little
perceived differentiation among competing product lines. Mohawk's recent
investments in modernized, advanced manufacturing and data processing equipment,
the extensive diversity of equipment in which it has invested and its marketing
strategy contribute to its ability to compete primarily on the basis of
performance, quality, style and service, rather than just price.
TRADEMARKS
Mohawk uses several trademarks that it considers important in the marketing of
its products, including "Aladdin," "Alexander Smith (R)," "American Rug
Craftsmen," "Bigelow (R)," "Ciboney (R)," "Commercial Horizons (R)," "Galaxy(R)"
"Hamilton (R)" "Harbinger (R)," "Helios (R)," "Horizon (R)," "Image," "Karastan
(R)," "Mohawk (R)," "Mohawk Color Center (R)," "Mohawk Commercial," "Tommy
Mohawk (R)," "Townhouse," and "World."
SALES TERMS AND MAJOR CUSTOMERS
The Company's sales terms are the same as those generally available throughout
the industry. The Company generally permits its customers to return broadloom
carpet purchased from it within 30 days from the date of sale if the customer is
not satisfied with the quality of the carpet. This return policy is consistent
with the Company's emphasis on quality, style and performance and promotes
customer satisfaction without generating enough returns to affect materially the
Company's operating results or financial position.
During 1998, no single customer accounted for more than 5.0% of Mohawk's total
net sales. The Company believes the loss of one or a few major customers would
not have a material adverse effect on the Company's business.
BACKLOG
Backlog of orders is generally insignificant in the carpet manufacturing
business because most residential orders are filled within several days and
commercial backlogs reflect the terms of the relevant contracts, which generally
require delivery within four to six weeks.
EMPLOYEES
As of December 31, 1998, the Company employed approximately 18,200 persons.
Approximately 280 Mohawk employees are members of the Union of Needletrades,
Industrial and Textile Employees, AFL-CIO, CLC with which the Company is party
to a collective bargaining agreement. Other than with respect to these
employees, the Company is not a party to any collective bargaining agreements.
Additionally, the Company has not experienced any strikes or work stoppages. The
Company believes that its relations with its employees are good.
ENVIRONMENTAL MATTERS
The Company's operations must meet federal, state and local regulations
governing the discharge of materials into the environment. All of the plants
operated by the Company were built or have been upgraded to meet current
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environmental standards. The Company believes it is in material compliance with
all applicable regulations. The Company estimates that any expenses incurred in
maintaining compliance with these regulations will not materially affect
earnings.
CYCLICAL NATURE OF INDUSTRY; CURRENT ECONOMIC CONDITIONS
The carpet industry is a cyclical business, influenced by a number of general
economic factors, including consumer confidence and spending for durable goods,
disposable income, interest rates, turnover in housing and the condition of the
residential and commercial construction industries (including the number of new
housing starts and the level of commercial construction). During economic
downturns, the carpet industry can be expected to experience a general decline
in sales and profitability.
ITEM 2. PROPERTIES
The Company owns a 47,500 square foot headquarters office in Calhoun, Georgia
on an eight acre site. The following table lists the principal manufacturing
and distribution facilities owned by the Company:
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APPROX.
ENCLOSED
AREA IN
SQUARE
LOCATION PRIMARY PRODUCTS OR PURPOSES FOOTAGE
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Dalton, GA........... Carpet and rug manufacturing and warehousing.. 1,832,600
Dalton, GA........... Carpet manufacturing, distribution and offices 1,103,200
Dalton, GA........... Carpet manufacturing, distribution and offices 396,900
Dalton, GA........... Carpet and yarn manufacturing................. 1,101,600
Chatsworth, GA....... Carpet manufacturing, warehousing and offices. 787,800
Dublin, GA........... Carpet manufacturing, warehousing and offices. 831,000
Lyerly, GA........... Carpet manufacturing and warehousing.......... 635,000
Eden, NC............. Carpet and rug manufacturing.................. 784,200
Calhoun, GA.......... Carpet manufacturing and distribution center.. 792,000
Dalton, GA........... Carpet manufacturing.......................... 342,000
Eton, GA............. Carpet manufacturing.......................... 577,205
Armuchee, GA......... Carpet manufacturing.......................... 232,000
Chatsworth, GA....... Distribution center........................... 812,075
Shannon, GA.......... Distribution center........................... 567,000
Landrum, SC.......... Weaving and finishing of carpet............... 350,000
Dalton, GA(1)........ Carpet dyeing................................. 259,000
Dalton, GA........... Carpet dyeing................................. 216,000
Dalton, GA........... Sample storage and distribution............... 123,000
Eden, NC............. Carpet and rug distribution................... 194,000
Summerville, GA...... Sample manufacturing and distribution......... 235,000
Chatsworth, GA....... Sample manufacturing.......................... 291,800
Sugar Valley, GA..... Rug manufacturing, warehousing and offices.... 472,500
Dalton, GA........... Rug manufacturing and offices................. 135,000
Calhoun, GA.......... Rug manufacturing and warehousing............. 250,000
Chatsworth, GA....... Yarn extrusion................................ 257,800
Summerville, GA...... Yarn extrusion................................ 579,000
Dahlonega, GA........ Yarn manufacturing............................ 336,716
Calhoun Falls, SC.... Yarn manufacturing............................ 425,000
Bennettsville, SC.... Yarn manufacturing............................ 412,000
Dalton, GA........... Yarn manufacturing............................ 105,400
Laurel Hill, NC...... Yarn manufacturing............................ 203,000
Fort Oglethorpe, GA.. Yarn manufacturing............................ 194,000
Dalton, GA........... Yarn manufacturing............................ 231,000
Dalton, GA........... Yarn manufacturing............................ 180,000
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Calhoun, GA.......... Yarn manufacturing............................ 121,000
Calhoun, GA.......... Yarn manufacturing............................ 113,800
Belton, SC (1)....... Yarn manufacturing............................ 106,000
Dillon, SC........... Yarn manufacturing............................ 102,000
South Pittsburg, TN.. Yarn manufacturing............................ 102,000
Chatsworth, GA....... Yarn manufacturing............................ 138,100
Rome, GA............. Yarn manufacturing............................ 240,400
Rome, GA............. Yarn manufacturing............................ 224,000
Cartersville, GA..... Yarn manufacturing............................ 178,100
Chatsworth, GA....... Yarnset plant................................. 121,200
Chatsworth, GA....... Commercial warehouse.......................... 128,000
Eton, GA............. Storage warehouse............................. 121,300
Greenville, NC....... Wool processing............................... 103,000
</TABLE>
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(1) Operations have been discontinued and these facilities are held for sale.
The following table lists the Company's material leased office, manufacturing
and warehouse facilities:
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<CAPTION>
APPROX.
ENCLOSED
AREA IN LEASE
SQUARE TERM
LOCATION PRIMARY PRODUCTS OR PURPOSES FOOTAGE THROUGH (1)
-------- ---------------------------- ---------- -----------
<S> <C> <C> <C>
Calhoun, GA......... Carpet manufacturing and administrative offices (2) 62,000 Jul. 2000
Calhoun, GA......... Mat manufacturing and warehouse (2)................ 164,400 June 2004
Philadelphia, PA.... Warehouse.......................................... 53,100 Dec. 2000
Calhoun, GA......... Rug manufacturing, warehouse and offices........... 233,455 Apr. 2003
Haiwassee, GA....... Rug manufacturing.................................. 63,500 June 2003
La Mirada, CA....... Distribution warehouse............................. 220,000 Aug. 2001
Grand Prairie, TX... Distribution warehouse............................. 208,000 June 2004
Glen Burnie, MD..... Distribution warehouse............................. 187,000 June 2004
Pompton Plains, NJ.. Distribution warehouse............................. 164,000 June 2004
Miami, FL........... Distribution warehouse............................. 120,600 May 2001
Columbus, OH........ Distribution warehouse............................. 112,500 Aug. 2004
Romeoville, IL...... Distribution warehouse............................. 108,000 Nov. 1999
Hayward, CA......... Distribution warehouse............................. 102,500 Aug. 2001
Dalton, GA.......... Distribution warehouse............................. 80,000 Aug. 2002
Kent, WA............ Distribution warehouse............................. 67,250 Jan. 2003
San Diego, CA....... Distribution warehouse............................. 63,000 Sep. 2006
Rome, GA............ Warehouse.......................................... 140,000 Jan. 2000
Kensington, GA...... Warehouse.......................................... 136,000 May 1999
Lyerly, GA.......... Warehouse.......................................... 74,250 Nov. 2002
Calhoun, GA......... Warehouse.......................................... 68,700 Aug. 2000
Calhoun, GA......... Warehouse.......................................... 60,000 Oct. 2001
</TABLE>
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(1) Include renewal options exercisable by the Company.
(2) Includes a number of separately leased adjoining or adjacent buildings with
varying lease terms. The expiration date shown in the table is the earliest
expiration date of the respective group of leases.
The Company's properties are in good condition and adequate for its
requirements. The Company also believes its principal plants are generally
adequate to meet its production plans pursuant to its long-term sales goals. In
the ordinary course of its business, the Company monitors the condition of its
facilities to ensure that they remain adequate to meet long-term sales goals and
production plans.
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ITEM 3. LEGAL PROCEEDINGS
The Company is involved in routine litigation from time to time in the regular
course of its business. Except as noted below, there are no material legal
proceedings pending or known to be contemplated to which the Company is a party
or to which any of its property is subject.
In December 1995, the Company and four other carpet manufacturers were added
as defendants in a purported class action lawsuit, In re Carpet Antitrust
Litigation, pending in the United States District Court for the Northern
District of Georgia, Rome Division. The amended complaint alleges price fixing
regarding polypropylene products in violation of Section One of the Sherman Act.
In September 1997, the Court determined that the plaintiffs met their burden of
establishing the requirements for class certification and granted the
plaintiffs' motion to certify the class. The Company is a party to two
consolidated lawsuits captioned Gaehwiler v. Sunrise Carpet Industries, Inc. et.
al. and Patco Enterprises, Inc. v. Sunrise Carpet Industries, Inc. et. al.; both
of which were filed in the Superior Court of the State of California, City and
County of San Francisco in 1996. Both complaints were brought on behalf of a
purported class of indirect purchasers of carpet in the State of California and
seek damages for alleged violations of California antitrust and unfair
competition laws. The complaints filed do not specify any amount of damages but
do request for any unlawful conduct to be enjoined and treble damages plus
reimbursement for fees and costs. In October 1998, two plaintiffs, on behalf of
an alleged class of purchasers of nylon carpet products, filed a complaint in
the United States District Court for the Northern District of Georgia against
the Company and two of its subsidiaries as well as a competitor and one of its
subsidiaries. The complaint alleges that the Company acted in concert with other
carpet manufacturers to restrain competition in the sale of certain nylon carpet
products. The Company has filed an answer and denied the allegations in the
complaint and set forth its defenses. In February 1999, a similar complaint was
filed in the Superior Court of the State of California, City and County of San
Francisco, on behalf of a purported class based on indirect purchases of nylon
carpet in the State of California and alleges violations of California antitrust
and unfair competition laws. The complaints described above do not specify any
specific amount of damages but do request injunctive relief and treble damages
plus reimbursement for fees and costs. The Company believes it has meritorious
defenses and intends to vigorously defend against these actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company during
the fourth quarter ended December 31, 1998.
9
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET FOR THE COMMON STOCK
On December 16, 1997, the Common Stock began trading on the New York Stock
Exchange ("NYSE") under the symbol "MHK." From the time of the Company's
initial public offering in April 1992 until December 15, 1997, the Common Stock
was listed on the Nasdaq National Market ("NNM") under the symbol "MOHK." The
table below sets forth the high and low bid or sales prices per share of the
Common Stock as reported on either the NNM or the NYSE Composite Tape, as
applicable, for each fiscal period indicated.
<TABLE>
<CAPTION>
MOHAWK
COMMON STOCK
------------------
HIGH LOW
---------- -------
<S> <C> <C>
1997
----
First Quarter..................... $18.67 13.92
Second Quarter.................... 17.33 12.92
Third Quarter..................... 18.29 14.58
Fourth Quarter.................... 22.00 17.75
1998
----
First Quarter..................... $33.50 20.50
Second Quarter.................... 35.50 28.44
Third Quarter..................... 34.94 22.63
Fourth Quarter.................... 42.44 22.69
1999
----
First Quarter (through March 8, 1999) $42.00 29.50
</TABLE>
As of March 8, 1999, there were 443 holders of record of Common Stock. Mohawk
has not paid or declared any cash dividends on shares of its Common Stock since
completing its initial public offering. The Company's policy is to retain all
net earnings for the development of its business, and it does not anticipate
paying cash dividends on the Common Stock in the foreseeable future. The payment
of future cash dividends will be at the sole discretion of the Board of
Directors and will depend upon the Company's profitability, financial condition,
cash requirements, future prospects and other factors deemed relevant by the
Board of Directors. The payment of cash dividends is limited by certain
covenants in various of the Company's loan agreements.
On November 12, 1998, the Company issued 4,899,992 shares of Common Stock to
the former shareholders of World in exchange for all of their shares of World.
This issuance of securities was made in reliance on the exemption from
registration provided under Section 4(2) of the Securities Act of 1933 as a
transaction by an issuer not involving a public offering. All of the securities
were acquired by the recipients for investment and with no view toward the
public resale or distribution of the securities without registration. There was
not any public solicitation and the issues stock certificates bear restrictive
legends.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth the selected financial data of the Company for
the periods indicated, derived from the consolidated financial statements of the
Company. On February 25, 1994, the Company exchanged 20,343,336 shares of Common
Stock for all of the outstanding shares of Aladdin common stock in a transaction
recorded using the pooling- of-interests basis of accounting. All financial data
were restated to include the accounts and results of operations of Aladdin. On
January 13, 1995, the Company acquired all of the outstanding capital stock of
Galaxy. The operating results of Galaxy are included in the 1995 consolidated
statement of earnings from the date of its acquisition. On July 23, 1997, the
Company acquired certain assets of Diamond Rug & Carpet Mills, Inc. and other
assets owned by Diamond's principal shareholders. The acquisitions of Galaxy and
Diamond were recorded using the purchase method of accounting. On November 12,
1998, the Company acquired all of the outstanding capital stock of World in
exchange for 4,899,992 shares of the Company's common stock in a transaction
recorded using the pooling-of-interests basis of accounting. All financial data
are restated to include the accounts and results of operations of World. The
selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements and notes thereto included
elsewhere herein.
<TABLE>
<CAPTION>
AT OR FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------- ----------- ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales............................................... $ 2,639,200 2,327,341 2,153,016 1,965,374 1,712,112
Cost of sales (a)....................................... 1,998,903 1,808,137 1,675,221 1,545,796 1,341,703
------------ ------------- ----------- ------------- ------------
Gross profit.......................................... 640,297 519,204 477,795 419,578 370,409
Selling, general and administrative expenses............ 406,170 354,528 340,770 325,276 265,044
Restructuring costs (b)................................. - - 700 8,439 -
Carrying value reduction of property, plant
and equipment and other assets (c).................... 2,900 5,500 3,060 23,711 -
Compensation expense for stock option exercises (d)..... - 2,600 - 4,000 -
------------ ------------- ----------- ------------- ------------
Operating income...................................... 231,227 156,576 133,265 58,152 105,365
------------ ------------- ----------- ------------- ------------
Interest expense........................................ 29,290 34,551 37,522 39,981 31,210
Acquisition costs - Aladdin/World Mergers (e)........... 17,700 - - - 10,201
Other expense, net...................................... 1,849 447 4,080 1,206 689
------------ ------------- ----------- ------------- ------------
48,839 34,998 41,602 41,187 42,100
------------ ------------- ----------- ------------- ------------
Earnings before income taxes.......................... 182,388 121,578 91,663 16,965 63,265
Income taxes (f)........................................ 74,776 48,154 38,285 6,951 26,599
------------ ------------- ----------- ------------- ------------
Net earnings.......................................... $ 107,612 73,424 53,378 10,014 36,666
============ ============= =========== ============= ============
Basic earnings per share (g)............................ $ 1.88 1.29 0.95 0.19 0.68
============ ============= =========== ============= ============
Weighted-average common shares outstanding (g).......... 57,243 56,812 56,160 54,085 53,568
============ ============= =========== ============= ============
Diluted earnings per share (g).......................... $ 1.86 1.28 0.94 0.18 0.67
============ ============= =========== ============= ============
Weighted-average common and dilutive potential
common shares outstanding (g)......................... 57,984 57,303 56,749 55,335 54,961
============ ============= =========== ============= ============
BALANCE SHEET DATA:
Working capital......................................... $ 419,217 382,108 387,067 301,790 351,346
Total assets............................................ 1,331,406 1,176,557 1,177,510 1,061,826 996,999
Short-term note payable................................. - - 21,200 50,000 -
Long-term debt (including current portion).............. 355,968 377,738 458,741 405,100 448,442
Stockholders' equity.................................... 586,709 477,133 399,047 336,447 321,984
</TABLE>
11
<PAGE>
_____________
(a) Certain of the Company's facilities suffered damage during the March 1993
blizzard, and the Company finalized settlement of the insurance claim
during the first quarter of 1994. The Company recorded a reduction of $6.0
million in cost of sales in 1994 for reimbursements of business
interruption costs
(b) During 1995 and 1996, the Company recorded pre-tax restructuring costs of
$8.4 million and $0.7 million, respec-tively, related to certain mill
closings whose operations have been consolidated into other Mohawk
facilities.
(c) During 1995, the Company adopted FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," as of January 1, 1995. A charge of $23.7 million was recorded for the
reduction of the carrying value of property, plant and equipment at
certain mills. During 1996, the Company recorded a charge of $3.1 million
arising from the write-down of property, plant and equipment to be
disposed of related to the closing of a manufacturing facility in 1996 and
a revision in the estimate of fair value of certain property, plant and
equipment based on current market conditions related to mill closings in
1995. During 1997, the Company recorded a charge of $5.5 million arising
from a revision in the estimated fair value of certain property, plant and
equipment held for sale based on current appraisals and other market
information related to a mill closing in 1995. During 1998, the Company
recorded a charge of $2.9 million for the write-down of assets to be
disposed of relating to the acquisition of World.
(d) Charges of $4.0 million and $2.6 million were recorded in 1995 and 1997,
respectively, for income tax reimburse-ments to be made to certain
executives related to the exercise of stock options granted in 1988 and
1989 in connec-tion with the Company's 1988 leveraged buyout.
(e) The Company recorded one-time charges of $10.2 million and $17.7 million
in 1994 and 1998, respectively, for transaction expenses related to the
Aladdin and World Mergers, respectively.
(f) During 1994, the Company reduced income tax expense by $2.0 million to
reflect a reduction in its effective tax rate and certain other changes in
the Company's federal and state income tax status.
(g) The Board of Directors declared a 3-for-2 stock split on October 23, 1997,
which was paid on December 4, 1997 to holders of record on November 4,
1997. Earnings per share and weighted-average common share data have been
restated to reflect the split.
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
During the three-year period ended December 31, 1998, the Company continued to
experience significant growth both internally and through acquisitions. On July
23, 1997, the Company acquired certain assets of Diamond and other assets owned
by Diamond's principal shareholders for $36.0 million, including acquisition
costs, which consisted of $19.6 million in cash, at closing, $7.0 million in
cash over the six-month period following closing and a $9.4 million note payable
in seven annual installments of principal plus interest at 6%. The Diamond
business combination was accounted for using the purchase method of accounting.
The Company completed its acquisitions of Newmark and American Weavers on June
30, 1998 and August 10, 1998, respectively. Both of these acquisitions were
accounted for using the purchase method of accounting. On November 12, 1998,
the Company acquired all of the outstanding capital stock of World in exchange
for approximately 4,900,000 shares of the Company's common stock valued at
$149.5 million, based on the closing stock price on the day the agreement was
executed. The acquisition of World was accounted for using the pooling-of-
interests method of accounting.
On January 29, 1999, the Company acquired certain assets of Image for
approximately $193 million, including acquisition costs and the assumption of
$30 million of tax exempt debt, and on March 9, 1999, the Company acquired all
of the outstanding capital stock of Durkan for 3,150,000 shares of the Company's
common stock valued at $116.5 million based on the closing stock price the day
the letter of intent was executed. The Image acquisition will be accounted for
using the purchase method of accounting and the Durkan acquisition will be
accounted for using the pooling-of-interests method of accounting.
These acquisitions have created opportunities to enhance Mohawk's operations
by (i) broadening price points, (ii) increasing vertical integration efforts,
(iii) expanding distribution capabilities and (iv) facilitating entry into niche
businesses, such as rugs, decorative throws and table runners.
Through the Company's restructuring efforts over the past three years, new
information technology systems have been installed throughout all of the
organization, all of which are Year 2000 compliant. In addition, the Company
has concluded identification of all other significant information technology
systems that are not Year 2000 compliant. The Company is reviewing its
equipment and software with the respective vendors from whom it purchased the
equipment and software to address any noncompliance issues. However, the
Company believes that certain Year 2000 issues exist with respect to its
business systems. The Company has formed a committee of employees familiar with
its information technology systems to assess and prioritize the need to act, on
the basis of each system's importance, to ensure that its business systems will
be made Year 2000 compliant. The Company has also begun a review of all process
control systems, both proprietary and non-proprietary. This review revealed
that certain Year 2000 issues exist. The Company does not believe these issues
are material and will obtain the necessary technical resources to assist in
making these systems Year 2000 compliant. Although the Company can provide no
assurances, it estimates that it will cost no more than approximately $1,000,000
of incremental costs to make its business systems Year 2000 compliant and that
these upgrades will be completed in the second quarter of 1999.
The Company has also begun to review its top suppliers and customers to
determine their progress in becoming Year 2000 compliant. This will allow the
Company to determine whether a Year 2000 problem will impede the ability of its
suppliers and customers to provide goods and services as the Year 2000 is
approached and reached. An initial review indicated that all of its major
suppliers and customers appear to be in the process of resolving any of their
Year 2000 compliance issues and that they do not foresee any material problems.
The Company will follow-up with all of its suppliers and customers to insure
that all potential problems, including those of our individual plant locations
and local suppliers, are managed correctly.
If the Company cannot successfully and timely resolve its Year 2000 issues,
its business, results of operations and financial condition could be materially
adversely affected. The Company has not developed a contingency plan in the
event of a Year 2000 problem, however, based upon the results of its internal
review, the Company does not believe a contingency plan is necessary. The
Company will, however, continue to evaluate the need for a contingency plan.
13
<PAGE>
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 AS COMPARED WITH YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------
Net sales for the year ended December 31, 1998 were $2,639.2 million,
reflecting an increase of $311.9 million, or approximately 13%, over the
$2,327.3 million reported in the year ended December 31, 1997. All major
product categories achieved sales increases in 1998 as compared to 1997. These
sales increases were impacted by continued favorable industry conditions and a
gain in the Company's market share which the Company believes primarily resulted
from continued emphasis on supporting its dealers and strong customer acceptance
of new product introductions.
Quarterly net sales and the percentage changes in net sales by quarter for
1998 versus 1997 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
1998 1997 CHANGE
---------- --------- -------
<S> <C> <C> <C>
First Quarter............... $ 561,664 514,993 9.1 %
Second Quarter.............. 662,569 581,539 13.9
Third Quarter............... 691,954 600,843 15.2
Fourth Quarter.............. 723,013 629,966 14.8
---------- --------- ----
Total Year................ $2,639,200 2,327,341 13.4 %
========== ========= ====
</TABLE>
Gross profit for 1998 was $ 640.3 million (24.3% of net sales) and represented
an increase over the gross profit of $519.2 million (22.3% of net sales) for
1997. Gross profit dollars for the current year were impacted favorably by
better absorption of fixed costs through higher production volume and continued
improvements in manufacturing efficiencies from restructuring efforts.
Selling, general and administrative expenses for 1998 were $406.2 million
(15.4% of net sales) compared to $354.5 million (15.2% of net sales) for 1997.
Selling, general and administrative expenses as a percentage of net sales
increased primarily due to higher sample expenses due to the introduction of new
products in 1998.
During the fourth quarter of 1998, the Company recorded a charge of $2.9
million for the write-down of fixed assets to be disposed of in connection with
the World acquisition. Also, a $17.7 million charge was recorded for non-
recurring costs associated with the World acquisition.
During the fourth quarter of 1997, the Company revised its estimate of the
fair value of certain property, plant and equipment held for sale. The revision
resulted in a $5.5 million write-down to the carrying value of those assets.
The revision was based upon current appraisals and other market information. In
addition, a $2.6 million charge was recorded for additional income tax
reimbursements to be made to certain executives for the exercise of stock
options. The income tax reimbursements were recorded in connection with stock
options granted in 1988 and 1989 related to the Company's 1988 leveraged buyout.
Interest expense for the current year was $29.3 million compared to $34.6
million in 1997. The primary factor contributing to the decrease was a
significant reduction in debt levels.
In the current year, income tax expense was $74.8 million, or 41.0% of
earnings before income taxes. In 1997, income tax expense was $48.2 million,
representing 39.6% of earnings before income taxes. The primary reason for the
increase in the 1998 effective income tax rate is that certain costs included in
the non recurring pre-tax charge of $17.7 million related to the World
acquisition are not deductible for income tax purposes.
YEAR ENDED DECEMBER 31, 1997 AS COMPARED WITH YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------
Net sales for the year ended December 31, 1997 were $2,327.3 million,
reflecting an increase of $174.3 million, or approximately 8%, over the $2,153.0
million reported in the year ended December 31, 1996. All major product
categories achieved sales increases in 1997 as compared to 1996. These sales
increases were attributable to an improvement in the Company's market share
which the Company believes primarily resulted from competitive changes in the
retail segment of the industry, strong customer acceptance of new product
introductions, expansion of residential warehousing operations, and further
refinement of the sales organization to achieve better regional customer focus.
14
<PAGE>
Quarterly net sales and the percentage changes in net sales by quarter for
1997 versus 1996 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996 CHANGE
----------- --------- -------
<S> <C> <C> <C>
First Quarter..................... $ 514,993 466,201 10.5%
Second Quarter.................... 581,539 555,671 4.7
Third Quarter..................... 600,843 557,724 7.7
Fourth Quarter.................... 629,966 573,420 9.9
---------- --------- ----
Total Year...................... $2,327,341 2,153,016 8.1%
========== ========= ====
</TABLE>
Gross profit for 1997 was $519.2 million (22.3% of net sales) and represented
an increase over the gross profit of $477.8 million (22.2% of net sales) for
1996. Gross profit dollars for 1997 were impacted favorably by manufacturing
improvements from restructuring and consolidating the residential operations,
higher production levels resulting in better absorption of fixed costs and a
reduction in certain raw material prices.
Selling, general and administrative expenses for 1997 were $354.5 million
(15.2% of net sales) compared to $340.8 million (15.8% of net sales) for 1996.
Selling, general and administrative expenses as a percentage of net sales
decreased primarily due to lower administrative, bad debt and sample expenses.
During the fourth quarter of 1997, the Company revised its estimate of the
fair value of certain property, plant and equipment held for sale. The revision
resulted in a $5.5 million write-down to the carrying value of those assets.
The revision was based upon current appraisals and other market information. In
addition, a $2.6 million charge was recorded for additional income tax
reimbursements to be made to certain executives for the exercise of stock
options. The income tax reimbursements were recorded in connection with stock
options granted in 1988 and 1989 related to the Company's 1988 leveraged buyout.
During 1996, the Company recorded nonrecurring charges of (i) $3.1 million
which included $0.9 million, primarily to reduce the carrying value of certain
assets, related to the decision to close a spinning mill in Belton, South
Carolina and $2.2 million primarily arising from a revision in the estimate of
the fair value of certain land and buildings that were recently sold and (ii)
$0.7 million related to restructuring costs for the Belton spinning mill
closing.
Interest expense for 1997 was $34.6 million compared to $37.5 million in 1996.
The primary factor contributing to the decrease was a significant reduction in
debt levels.
In 1997, income tax expense was $48.2 million, or 39.6% of earnings before
income taxes. In 1996, income tax expense was $38.3 million, representing 41.8%
of earnings before income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for working capital, capital
expenditures and acquisitions. The Company's capital needs are met through a
combination of internally-generated funds, bank credit lines and credit terms
from suppliers.
The level of accounts receivable increased from $286.9 million at the
beginning of 1998 to $321.1 million at December 31, 1998. The $34.2 million
increase is attributable to strong sales growth. Inventories increased from
$367.1 million at the beginning of 1998 to $412.2 million at December 31, 1998,
due primarily to acquisitions and the need for a higher level of inventory to
meet the increased sales volume.
Capital expenditures totaled $78.5 million during 1998, and the Company spent
an additional $36.6 million related to the Newmark and American Weavers
acquisitions. The capital expenditures made during 1998 were incurred
primarily to modernize and expand manufacturing facilities and equipment. The
Company's capital projects are primarily focused on increasing capacity,
improving productivity and reducing costs. Capital expenditures for Mohawk,
including the $21.2 million of equipment used for the extrusion of polypropylene
yarn that was acquired in a noncash transaction in 1996 and $72.8 million for
acquisitions, have totaled $265.8 million over the past three years. Capital
spending during 1999 is expected to range from $95 million to $105 million, the
majority of which will be used to purchase equipment
15
<PAGE>
to increase production capacity and productivity. This amount excludes the $193
million that was paid in January 1999 to purchase Image.
On January 28, 1999, the Company amended and restated its revolving credit
agreement to increase total availability to $450 million, comprised of the
Tranche A commitment of $250 million due on January 28, 2004 and the Tranche B
commitment of $200 million due on January 27, 2000.
IMPACT OF INFLATION
Inflation affects the Company's manufacturing costs and operating expenses.
The carpet industry has experienced moderate inflation in the prices of raw
materials and outside processing for the last three years. The Company has
generally passed along nylon fiber price increases to its customers.
SEASONALITY
The carpet business is seasonal, with the Company's second, third and fourth
quarters typically producing higher net sales and operating income. By
comparison, results for the first quarter tend to be the weakest. This
seasonality is primarily attributable to consumer residential spending patterns
and higher installation levels during the spring and summer months.
FORWARD-LOOKING INFORMATION
Certain of the matters discussed in the preceding pages, particularly
regarding anticipating future financial performance, business prospects, growth
and operating strategies, proposed acquisitions, new products and similar
matters, and those preceded by, followed by or that otherwise include the words
"believes," "expects," "anticipates," "intends," "estimates," or similar
expressions constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended. For those statements,
Mohawk claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. Forward-
looking statements involve a number of risks and uncertainties. The following
important factors, in addition to those discussed elsewhere in this document,
affect the future results of Mohawk and could cause those results to differ
materially from those expressed in the forward-looking statements: materially
adverse changes in economic conditions generally in the carpet, rug and
floorcovering markets served by Mohawk; competition from other carpet, rug and
floorcovering manufacturers, raw material prices, timing and level of capital
expenditures, the successful integration of acquisitions including the
challenges inherent in diverting Mohawk's management attention and resources
from other strategic matters and from operational matters for an extended period
of time, the successful introduction of new products, the successful
rationalization of existing operations, and other risks identified from time to
time in the Company's SEC reports and public announcements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk-sensitive instruments do not subject the Company to
material market risk exposures.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Reports............................................................... 17
Consolidated Balance Sheets as of December 31, 1998 and 1997................................ 19
Consolidated Statements of Earnings for the Years ended December 31, 1998, 1997 and 1996.... 20
Consolidated Statements of Stockholders' Equity for the Years ended
December 31, 1998, 1997 and 1996....................................................... 21
Consolidated Statements of Cash Flows for the Years ended December 31, 1998, 1997 and 1996.. 22
Notes to Consolidated Financial Statements.................................................. 23
</TABLE>
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Mohawk Industries, Inc.:
We have audited the consolidated financial statements of Mohawk Industries, Inc.
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedules as listed in Item 14(a)2. These consolidated
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules based on our
audits. We did not audit the consolidated financial statements of World
Carpets, Inc. and Subsidiary, a wholly owned subsidiary, as of June 28, 1998 and
for each of the years in the two-year period ended June 28, 1998 (not presented
herein), which financial statements have been combined with those of Mohawk
Industries, Inc. and subsidiaries as of December 31, 1997 and for each of the
years in the two-year period ended December 31, 1997, respectively. The
consolidated financial statements of World Carpets, Inc. and Subsidiary reflect
total assets constituting 18 percent as of December 31, 1997 and total net sales
constituting 19 percent for each of the years in the two-year period ended
December 31, 1997, of the related consolidated totals. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for World Carpets, Inc.
and Subsidiary, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Mohawk Industries, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.
KPMG LLP
Atlanta, Georgia
February 5, 1999, except for the
seventh paragraph
of note 2 as to which the date is
March 9, 1999
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors
and Shareholders of
World Carpets, Inc.
In our opinion, the consolidated balance sheets and the related consolidated
statements of operations, of changes in shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of World
Carpets, Inc. and its subsidiary (the "Company") at June 28, 1998, and the
results of their operations and their cash flows for the years ended June 28,
1998 and June 29, 1997 (not presented separately herein), in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above. We have not
audited the consolidated financial statements of the Company for any period
subsequent to June 28, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
September 21, 1998
18
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1998 1997
--------------- --------------
<S> <C> <C>
Current assets:
Cash............................................................................ $ - 145
Receivables..................................................................... 321,126 286,871
Inventories..................................................................... 412,194 367,076
Prepaid expenses................................................................ 21,283 15,547
Deferred income taxes........................................................... 52,304 39,082
--------------- --------------
Total current assets............................................. 806,907 708,721
Property, plant and equipment, net..................................................... 422,922 391,101
Other assets........................................................................... 101,577 76,735
--------------- --------------
$ 1,331,406 1,176,557
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............................................... $ 34,176 41,529
Accounts payable and accrued expenses........................................... 353,514 285,084
--------------- --------------
Total current liabilities........................................ 387,690 326,613
Deferred income taxes.................................................................. 29,835 30,311
Long-term debt, less current portion................................................... 321,792 336,209
Other long-term liabilities............................................................ 5,380 6,291
--------------- --------------
Total liabilities................................................ 744,697 699,424
--------------- --------------
Stockholders' equity:
Preferred stock, $.01 par value; 60 shares authorized; no shares issued......... - -
Common stock, $.01 par value; 150,000 shares authorized; 57,383 and 57,067
shares issued in 1998 and 1997, respectively.................................. 574 571
Additional paid-in capital...................................................... 168,797 164,140
Retained earnings............................................................... 417,338 312,422
--------------- --------------
Total stockholders' equity...................................... 586,709 477,133
Commitments and contingencies (Notes 10 and 13)........................................
--------------- --------------
$ 1,331,406 1,176,557
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ---------
<S> <C> <C> <C>
Net sales............................................. $2,639,200 2,327,341 2,153,016
Cost of sales ........................................ 1,998,903 1,808,137 1,675,221
---------- --------- ---------
Gross profit..................................... 640,297 519,204 477,795
Selling, general and administrative expenses.......... 406,170 354,528 340,770
Restructuring costs................................... - - 700
Carrying value reduction of property, plant
and equipment and other assets....................... 2,900 5,500 3,060
Compensation expense for stock option exercises....... - 2,600 -
---------- --------- ---------
Operating income................................. 231,227 156,576 133,265
---------- --------- ---------
Other expense:
Interest expense.................................... 29,290 34,551 37,522
Acquisition costs - World Merger.................... 17,700 - -
Other expense, net.................................. 1,849 447 4,080
---------- --------- ---------
48,839 34,998 41,602
---------- --------- ---------
Earnings before income taxes..................... 182,388 121,578 91,663
Income taxes.......................................... 74,776 48,154 38,285
---------- --------- ---------
Net earnings..................................... $ 107,612 73,424 53,378
========== ========= =========
Basic earnings per share.............................. $ 1.88 1.29 0.95
========== ========= =========
Weighted-average common shares outstanding............ 57,243 56,812 56,160
========== ========= =========
Diluted earnings per share............................ $ 1.86 1.28 0.94
========== ========= =========
Weighted-average common and dilutive potential
common shares outstanding............................ 57,984 57,303 56,749
========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN RETAINED TREASURY STOCK STOCKHOLDER'S
----------------------
SHARES AMOUNT CAPITAL EARNINGS STOCK OPTIONS EQUITY
--------- --------- --------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1995......... 51,591 $ 516 122,575 155,822 (115) (317) 278,481
Pooling of World...................... 4,900 49 28,071 29,846 - - 57,966
Stock options exercised............... 116 1 1,207 - 115 - 1,323
Dividends paid........................ - - - (24) - - (24)
Tax benefit from exercise of stock
options.......................... - - 7,606 - - - 7,606
Amortization of deferred
compensation..................... - - - - - 317 317
Net earnings.......................... - - - 53,378 - - 53,378
---------- ---------- --------- --------- -------- -------- ---------
Balances at December 31, 1996......... 56,607 566 159,459 239,022 - - 399,047
Stock options exercised............... 460 5 3,631 - - - 3,636
Dividends paid........................ - - - (24) - - (24)
Tax benefit from exercise of stock
options.......................... - - 1,050 - - - 1,050
Net earnings.......................... - - - 73,424 - - 73,424
---------- ---------- --------- --------- -------- -------- ---------
Balances at December 31, 1997......... 57,067 571 164,140 312,422 - - 477,133
Stock options exercised............... 316 3 4,414 - - - 4,417
Dividends paid........................ - - - (24) - - (24)
Tax benefit from exercise of stock
options.......................... - - 243 - - - 243
Adjustments to conform fiscal year end
of World......................... - - - 2,672) - - (2,672)
Net earnings.......................... - - - 107,612 - - 107,612
---------- ---------- --------- --------- -------- -------- ---------
Balances at December 31, 1998......... 57,383 $ 574 168,797 417,338 - - 586,709
========== =========== ========= ========= ======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings............................................................. $ 107,612 73,424 53,378
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization....................................... 67,897 68,377 62,281
Deferred income taxes............................................... (13,744) (3,440) 4,348
Provision for doubtful accounts..................................... 13,173 8,434 13,213
(Gain) loss on sale of property, plant and equipment................ 2,121 (396) 1,302
Carrying value reduction of property, plant and equipment and other
assets............................................................. 2,900 5,500 3,060
Compensation expense for stock option exercises..................... - 2,600 -
Changes in assets and liabilities, net of effects of acquisitions:
Receivables...................................................... (38,743) (29,254) (69,560)
Inventories...................................................... (30,251) 25,725 (12,662)
Accounts payable and accrued expenses............................ 60,159 26,607 3,359
Other assets and prepaid expenses................................ (8,530) 1,941 (7,291)
Other liabilities................................................ (1,672) (2,571) 4,868
------------ ---------- ----------
Net cash provided by operating activities...................... 160,922 176,947 56,296
------------ ---------- ----------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment and other assets.... - 2,092 3,284
Additions to property, plant and equipment.............................. (78,488) (42,953) (49,985)
Acquisitions............................................................ (36,574) (34,141) (2,122)
Other................................................................... - 895 159
Net cash used in investing activities.......................... (115,062) (74,107) (48,664)
------------ ---------- ----------
Cash flows from financing activities:
Net change in revolving line of credit................................... 85,347 (83,131) (27,179)
Payment of note payable.................................................. - (21,200) -
Payments on term loans................................................... (35,958) (20,337) (13,754)
Redemption of acquisition indebtedness................................... (102,201) - -
Proceeds from new loan................................................... - 10,661 24,681
Proceeds from Industrial Revenue Bonds and other, net of payments........ 11,329 11,593 -
Change in outstanding checks in excess of cash........................... (6,486) (5,841) (391)
Dividends paid........................................................... (24) (24) (24)
Common stock transactions................................................ 1,988 4,686 9,246
------------ ---------- ----------
Net cash used in financing activities......................... (46,005) (103,593) (7,421)
------------ ---------- ----------
Net change in cash............................................ (145) (753) 211
Cash, beginning of year....................................................... 145 898 687
------------ ---------- ----------
Cash, end of year............................................................. $ - 145 898
============ ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The consolidated financial statements include the accounts of Mohawk
Industries, Inc. and its subsidiaries (the "Company" or "Mohawk"). All
significant intercompany balances and transactions have been eliminated in
consolidation. On November 12, 1998, the Company acquired all of the outstanding
capital stock of World Carpets, Inc. ("World") in exchange for approximately
4,900 shares of the Company's common stock ("Merger"). On November 12, 1998, the
Securities and Exchange Commission declared effective a shelf registration
statement to register for resale approximately 4,900 shares of Company common
stock issued in connection with the Merger. The historical consolidated
financial statements have been restated to give retroactive effect to the
Merger. The Merger is being accounted for as a pooling-of-interests in the
accompanying consolidated financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(b) Accounts Receivable and Revenue Recognition
The Company is a broadloom carpet and rug manufacturer and sells
carpet and rugs throughout the United States for principally residential use.
The Company grants credit to customers, most of whom are retail carpet dealers,
under credit terms that are customary in the industry.
Revenues are recognized when goods are shipped. The Company provides
allowances for expected cash discounts, returns, claims and doubtful accounts
based upon historical bad debt and claims experience and periodic evaluations of
the aging of the accounts receivable.
(c) Inventories
Inventories are stated at the lower of cost or market (net realizable
value). Cost is determined using the last-in, first-out (LIFO) method, which
matches current costs with current revenues, for substantially all inventories
and the first-in, first-out (FIFO) method for the remaining inventories.
(d) Property, Plant and Equipment
Property, plant and equipment is stated at cost, including interest on
funds borrowed to finance the acquisition or construction of major capital
additions. Depreciation is calculated on a straight-line basis over the
estimated remaining useful lives of the respective assets.
(e) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
23
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(f) Earnings per Share ("EPS")
The Company applies the provisions of Financial Accounting Standards
Board ("FASB") FAS No. 128, Earnings per Share, which requires companies to
present basic EPS and diluted EPS. Basic EPS excludes dilution and is computed
by dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company.
The Company's weighted-average common and dilutive potential common
shares outstanding have been adjusted for the 3-for-2 stock split approved by
the Board of Directors on October 23, 1997 and paid on December 4, 1997 to
holders of record on November 4, 1997 and the World merger. Dilutive common
stock options are included in the diluted EPS calculation using the treasury
stock method. Common stock options that were not included in the diluted EPS
computation because the options' exercise price was greater than the average
market price of the common shares for the periods presented are immaterial.
(g) Financial Instruments
The Company's financial instruments consist primarily of cash,
accounts receivable, accounts payable, notes payable and long-term debt. The
carrying amount of cash, accounts receivable, accounts payable and notes payable
approximates their fair value because of the short-term maturity of such
instruments. Interest rates that are currently available to the Company for
issuance of long-term debt with similar terms and remaining maturities are used
to estimate the fair value of the Company's long-term debt. The estimated fair
value of the Company's long-term debt at December 31, 1998 and 1997 was $363,121
and $388,848, compared to a carrying amount of $355,968 and $377,738,
respectively.
(h) Fiscal Year
The Company ends its fiscal year on December 31. Each of the first
three quarters in the fiscal year ends on the Saturday nearest the calendar
quarter end.
(i) Goodwill
Goodwill arises in connection with business combinations accounted for
as purchases. Goodwill is amortized primarily on a straight-line basis over 40
years. Amortization charged to earnings was $2,437 in 1998, $2,518 in 1997 and
$2,047 in 1996.
(j) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the
provisions of FAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. Under FAS No. 121, the Company
evaluates impairment of long-lived assets on a business unit basis, rather than
on an aggregate entity basis, whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, an impairment loss is recognized. Measurement of an
impairment loss for long-lived assets is based on the fair value of the asset.
(k) Effect of New Accounting Pronouncement
In 1997, the FASB issued FAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which supersedes FAS No. 14, Financial
Reporting for Segments of a Business Enterprise. This statement, which the
Company was required to adopt in fiscal year 1998, requires public companies to
report certain financial and descriptive information about their reportable
operating segments, including related disclosures about products and services,
geographic areas and major customers. The implementation of FAS No. 131 did not
have a material effect on the Company's consolidated financial statements.
24
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(l) Reclassifications
Certain prior period financial statement balances have been
reclassified to conform with the current period's presentation.
(2) ACQUISITIONS
On July 23, 1997, the Company acquired certain assets of Diamond Rug &
Carpet Mills, Inc. ("Diamond") and other assets owned by Diamond's principal
shareholders for approximately $36,000, including acquisition costs, which
consisted of $19,600 in cash, at closing, $7,000 in cash over the six-month
period following closing and a $9,350 note payable in seven annual installments
of principal plus interest at 6%. The acquisition was accomplished through a
plan of reorganization filed by Diamond under Chapter 11 of the United States
Bankruptcy Code.
The Company completed its acquisitions of Newmark & James, Inc. and
American Weavers, LLC on June 30, 1998 and August 10, 1998, respectively. Both
of these acquisitions have been accounted for under the purchase method of
accounting and their results are included in the Company's 1998 consolidated
statement of earnings from the respective dates of acquisition.
On November 12, 1998, the Company acquired all of the outstanding capital
stock of World in exchange for approximately 4,900 shares of the Company's
common stock. The acquisition of World has been accounted for under the pooling-
of-interests basis of accounting and, accordingly, the Company's historical
consolidated financial statements have been restated to include the accounts and
results of operations of World. The Company incurred before tax, nonrecurring
charges aggregating $20,600 in the fourth quarter of 1998 related to the Merger
with World, of which $17,700 of the charge is recorded as non-operating expense
and $2,900 of the charge is recorded as a write-down of World computer equipment
that will be disposed of.
The results of operations previously reported by the separate enterprises
and the combined amounts presented in the accompanying consolidated financial
statements are presented below:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
------------------------
SEPT. 26, 1998 1997 1996
--------------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Net sales:
Mohawk............... $ 1,582,493 1,901,352 1,779,389
World................ 333,694 425,989 373,627
--------- --------- ---------
Combined......... $ 1,916,187 2,327,341 2,153,016
========= ========= =========
Net earnings:
Mohawk............... $ 77,829 68,030 49,050
World................ 4,984 5,394 4,328
--------- --------- ---------
Combined......... $ 82,813 73,424 53,378
========= ========= =========
</TABLE>
Prior to the combination, World's fiscal year ended on the Sunday closest
to June 30. In recording the pooling-of-interests combination, World's financial
statements for the year ended December 31, 1998 were combined with Mohawk's
consolidated financial statements for the same period. World's financial
statements for the years ended June 28, 1998 and June 29, 1997 were combined
with Mohawk's financial statements for the years ended December 31, 1997 and
1996, respectively. An adjustment has been made to stockholders' equity in the
year ended December 31, 1998 to eliminate the effect of including World's
results of operations for the six months ended June 28, 1998 in the Company's
consolidated financial statements for the years ended December 31, 1998 and
1997. There were no significant intercompany transactions between Mohawk and
World prior to the combination.
On January 29, 1999, the Company acquired certain assets of Image
Industries, Inc. for approximately $193,000, including acquisition costs and the
assumption of $30,000 of tax exempt debt. The acquisition will be accounted for
using the purchase method of accounting.
25
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On March 9, 1999, the Company acquired all of the outstanding capital stock
of Durkan Patterned Carpets, Inc. ("Durkan") and certain notes payable to Durkan
shareholders for 3,150 shares of the Company's common stock.
The acquisition of Durkan will be accounted for under the pooling-of-interests
basis of accounting and, accordingly, the Company's historical consolidated
financial statements will be restated to include the accounts and results of
operations of Durkan.
(3) RECEIVABLES
Receivables are as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -------------
<S> <C> <C>
Customers, trade.......................................................... $ 375,448 337,520
Other..................................................................... 2,919 956
----------- -------------
378,367 338,476
Less allowance for discounts, returns, claims and doubtful accounts....... 57,241 51,605
Net receivables............................................ ----------- -------------
$ 321,126 286,871
=========== =============
</TABLE>
(4) INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -------------
<S> <C> <C>
Finished goods.................................................... $ 215,365 185,162
Work in process................................................... 57,829 53,892
Raw materials..................................................... 139,000 128,022
----------- -------------
Total inventories......................................... $ 412,194 367,076
=========== =============
</TABLE>
(5) PROPERTY, PLANT AND EQUIPMENT
Following is a summary of property, plant and equipment:
<TABLE>
<CAPTION>
1998 1997
----------- -------------
<S> <C> <C>
Land...................................................................... $ 13,449 12,746
Buildings and improvements................................................ 160,917 153,486
Machinery and equipment................................................... 571,175 527,218
Furniture and fixtures.................................................... 32,306 18,590
Leasehold improvements.................................................... 4,143 3,256
Construction in progress.................................................. 43,237 20,666
----------- -------------
825,227 735,962
Less accumulated depreciation and amortization............................ 402,305 344,861
----------- -------------
Net property, plant and equipment................................. $ 422,922 391,101
=========== =============
</TABLE>
Property, plant and equipment includes capitalized interest of $1,661, $799
and $1,180 in 1998, 1997 and 1996, respectively.
During 1998, the Company recorded a charge of $2,900 related to a write-
down of computer equipment acquired in the World acquisition that will be
disposed of.
During 1997, the Company recorded a charge of $5,500 arising from a
revision in the estimated fair value of certain property, plant and equipment
held for sale based on current appraisals and other market information related
to a mill closing in 1995.
During 1996, the Company recorded a charge of $3,060 arising from (a) the
write-down of property, plant and equipment to be disposed of related to the
closing of a manufacturing facility in 1996 and (b) a revision in the estimate
of fair value of certain property, plant and equipment based on current market
conditions related to mill closings in 1995.
26
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(6) OTHER ASSETS
The components of other assets are summarized below:
<TABLE>
<CAPTION>
1998 1997
-------------- -------------
<S> <C> <C>
Goodwill, net of accumulated amortization of $10,363 and $8,266,
respectively..................................................... $ 85,972 59,823
Other assets....................................................... 15,605 16,912
-------------- -------------
Total other assets........................................ $ 101,577 76,735
============== =============
</TABLE>
(7) LONG-TERM DEBT
On April 15, 1997, the Company amended and restated its credit agreement to
provide for an interest rate of either (i) LIBOR plus 0.2% to 0.5%, depending
upon the Company's performance measured against certain financial ratios, or
(ii) the prime rate less 1.0%. Additionally, the termination date of the credit
agreement was extended to May 15, 2002. At December 31, 1998, the Company had
credit availability of $250,000 under its revolving credit line of which
$121,078 was unused. The credit agreement contains customary financial and other
covenants and restricts cumulative dividend payments to $10,000 as adjusted
based on the Company's performance and dividend payments. The Company must pay
an annual facility fee ranging from .0015 to .0025 of the total credit
commitment, depending upon the Company's performance measured against specific
coverage ratios, under the revolving credit line.
The capital stock of each of the Company's subsidiaries has been pledged as
collateral under the credit agreement, the term loans and the senior notes.
On February 7, 1997, World amended the terms of its revolving and term loan
facility. Under the amended terms, World could borrow up to $102,000, based on
eligible accounts receivable and inventory balances. Interest on the revolving
credit facility is payable monthly at a rate equal to the prime rate minus 0.25%
or LIBOR plus 2% (8.25% at June 28, 1998. Interest on the term loans is payable
monthly at a rate equal to the prime rate plus 0.25% or LIBOR plus 2.5% (8.5% at
June 28, 1998). The line of credit expires February 7, 2002. The term loans are
payable in sixty equal monthly principal instalments of approximately $321, plus
interest at the rate stated above. The loans are secured by substantially all
accounts receivable, inventory and property, plant and equipment of World. Under
the terms of the revolving line of credit agreement, World incurs a fee equal to
3/8% per year on the unused balance of the revolving line of credit. The fee is
paid monthly.
On January 28, 1999, the Company amended and restated its credit agreement
to increase the total availability to $450,000, comprised of the Tranche A
commitment of $250,000 due on January 28, 2004 and the Tranche B commitment of
$200,000 due on January 27, 2000.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1998 1997
--------------- -------------
<S> <C> <C>
Revolving line of credit, due May 15, 2002..................................... $128,922 48,800
World revolving line of credit, due February 7, 2002........................... - 58,872
World term loans............................................................... - 21,857
8.46% senior notes, payable in annual principal installments beginning in
1998, due September 16, 2004, interest payable quarterly.................... 85,714 100,000
7.14%-7.23% senior notes, payable in annual principal installments
beginning in 1997, due September 1, 2005, interest payable semiannually..... 66,111 75,556
8.48% term loans, payable in annual principal installments, due October 26,
2002, interest payable quarterly............................................ 22,857 28,571
9.5% senior notes, payable in annual principal installments, due April 1,
1998, interest payable semiannually......................................... - 3,750
7.58% senior notes, payable in annual principal installments beginning in
1997, due July 30, 2003, interest payable semiannually...................... 7,143 8,571
</TABLE>
27
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<S> <C> <C>
6% term note, payable in annual principal and interest
installments beginning in 1998, due July 23, 2004.............................. 8,014 9,350
Industrial Revenue Bonds and other................................................ 37,207 22,411
----------- ----------
Total long-term debt........................................................... 355,968 377,738
Less current portion.............................................................. 34,176 41,529
----------- ----------
Long-term debt, excluding current portion $ 321,792 336,209
=========== ==========
</TABLE>
The aggregate maturities of long-term debt as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1999....................................................... $ 34,176
2000....................................................... 33,786
2001....................................................... 33,361
2002....................................................... 162,237
2003....................................................... 27,389
Thereafter................................................. 65,019
---------------
$ 355,968
===============
</TABLE>
(8) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are as follows:
<TABLE>
<CAPTION>
1998 1997
------------ ----------
<S> <C> <C>
Outstanding checks in excess of cash.................................... $ 26,894 33,655
Accounts payable, trade................................................. 153,217 138,699
Accrued expenses........................................................ 122,532 70,986
Accrued compensation.................................................... 50,871 41,744
------------ ----------
Total accounts payable and accrued expenses......................... $ 353,514 285,084
============ ==========
</TABLE>
(9) STOCK OPTIONS AND STOCK COMPENSATION
Under the Company's 1992 and 1993 stock option plans, options may be
granted to directors and key employees through 2002 and 2003 to purchase a
maximum of 2,250 and 675 shares of common stock, respectively. During 1998,
options to purchase 165 and 9 shares, respectively, were granted under these
plans. Options granted under each of these plans expire ten years from the date
of grant and become exercisable at such dates and at prices as determined by the
Compensation Committee of the Company's Board of Directors.
During 1996, the Company adopted the 1997 Non-Employee Director Stock
Compensation Plan. The plan provides for awards of common stock of the Company
for non-employee directors to receive in lieu of cash for their annual
retainers. During 1998, a total of 3 shares were awarded to the non-employee
directors under the plan.
During 1997, the Board of Directors adopted the 1997 Long-Term Incentive
Plan whereby the Company reserved 2,550 shares of common stock for issuance in
connection with options and awards. During 1998, a total of 21 shares were
awarded to employees under this plan.
Additional information relating to the Company's stock option plans
follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- ---------
<S> <C> <C> <C>
Options outstanding at beginning of year............... 1,568 2,142 3,839
Options granted........................................ 174 65 621
Options exercised...................................... (316) (460) (2,069)
Options canceled....................................... (39) (179) (249)
--------- -------- ---------
Options outstanding at end of year..................... 1,387 1,568 2,142
========= ======== =========
Options exercisable at end of year..................... 686 742 655
========= ======== =========
</TABLE>
28
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<S> <C> <C> <C>
Option prices per share:
Options granted during the year...................... $ 17.23 - 32.31 5.67 - 19.38 9.94 - 11.33
=============== ============= =============
Options exercised during the year.................... $ 5.67 - 19.38 .02 - 19.17 .01 - 14.50
=============== ============= =============
Options canceled during the year..................... $ 5.67 - 31.94 5.67 - 19.17 5.67 - 19.17
=============== ============= =============
Options outstanding at end of year................... $ 5.61 - 32.31 5.61 - 19.38 .03 - 19.17
=============== ============= =============
</TABLE>
A charge of $2,600 was recorded in the fourth quarter of 1997 for income
tax reimbursements to be made to certain executives for the exercise of stock
options. The income tax reimbursements were recorded in connection with stock
options granted in 1988 and 1989 related to the Company's 1988 leveraged buyout.
The agreements allowed the Company to receive an income tax benefit on its tax
return for the tax effect of the taxable compensation provided to the
individuals upon the exercise of these options. Such income tax benefit resulted
in a direct increase in stockholders' equity of $7,606 in 1996 primarily from
the exercise of these options.
FAS No. 123, Accounting for Stock-Based Compensation, established a new
method of accounting for stock-based compensation arrangements with an entity's
employees. The new method is a fair value based method rather than the intrinsic
value based method prescribed by APB No. 25, Accounting for Stock Issued to
Employees. FAS No. 123 allows entities to retain the current approach set forth
in APB No. 25 for recognizing stock-based compensation expense in the basic
financial statements. Entities electing to apply the provisions of APB No. 25
are required to make pro forma disclosures of net earnings and earnings per
share as if the fair value based method had been used. The Company continues to
apply the provisions of APB No. 25 for purposes of measuring compensation cost
in adopting FAS No. 123. The effect of the pro forma disclosure requirements of
FAS No. 123 on the Company's results of operations for the years presented is
immaterial.
(10) EMPLOYEE BENEFIT PLANS
The Company has a 401(k) retirement savings plan (the "Plan") open to
substantially all of its employees who have completed one year of eligible
service. The Company contributes $0.50 for every $1.00 of employee contributions
up to a maximum of 4% of the employee's salary. Employee and employer
contributions to the Plan were $12,345 and $4,213 in 1998, $9,334 and $3,075 in
1997 and $6,499 and $2,132 in 1996, respectively.
A portion of the employees who were not eligible to participate in the Plan
participated in a defined contribution profit sharing plan through June 1997.
After June 1997, the employee balances in the profit sharing plan were rolled
over into the 401(k) retirement savings plan. Contributions were discretionary
and the Company expensed $991 and $2,130 for the years ended December 31, 1997
and 1996, respectively.
World maintains the World Carpet Savings Retirement Plan (the "Plan"), a
defined contribution 401(k) plan covering substantially all employees. Employees
are eligible to participate upon completion of one year of service. Under the
terms of the Plan, World may match employee contributions up to a maximum of 2%
of the employee's salary and employees vest in the contributions based on years
of credited service. For the years ended December 31, 1998, 1997 and 1996, the
Company contributed approximately $703, $698 and $629 to the Plan, respectively.
(11) RESTRUCTURING COSTS
During the fourth quarter of 1996, the Company decided to close a spinning
mill in Belton, South Carolina, the operations of which were consolidated into
other Mohawk facilities. For the year ended December 31, 1996, the Company
recorded restructuring costs of $700 related to employee termination benefits,
environmental clean-up and other costs associated with the mill closing. The
after-tax effect of the restructuring costs for the year was $415. Additionally,
in 1996 the Company made payments of $1,125 and reclassed $5,266 to other
liability or reserve accounts in connection with mill closings in 1996 and prior
years.
(12) INCOME TAXES
Income tax expense attributable to earnings before income taxes for the
years ended December 31, 1998, 1997 and 1996 consists of the following:
29
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------------- ------------ -------------
<S> <C> <C> <C>
1998:
U.S. federal...................................... $ 72,218 (11,767) 60,451
State and local................................... 17,099 (2,774) 14,325
------------- ------------ -------------
$ 89,317 (14,541) 74,776
============= ============ =============
1997:
U.S. federal...................................... $ 42,994 (2,800) 40,194
State and local................................... 8,600 (640) 7,960
------------- ------------ -------------
$ 51,594 (3,440) 48,154
============= ============ =============
1996:
U.S. federal...................................... $ 31,363 955 32,318
State and local................................... 2,574 3,393 5,967
------------- ------------ -------------
$ 33,937 4,348 38,285
============= ============ =============
</TABLE>
Income tax expense attributable to earnings before income taxes differs
from the amounts computed by applying the U.S. federal income tax rate of 35%
for Mohawk and 34% for World to earnings before income taxes as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------- ------------- -------------
<S> <C> <C> <C>
Computed "expected" tax expense........................ $ 63,836 42,461 31,993
State and local income taxes, net of federal
income tax benefit................................... 9,311 4,810 2,377
Amortization of goodwill............................... 746 472 519
Other, net............................................. 883 411 3,396
-------------- ------------- -------------
$ 74,776 48,154 38,285
============== ============= =============
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1998 and 1997 are presented below:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable.............................................. $ 16,845 19,387
Inventories...................................................... 6,946 969
Accrued expenses................................................. 28,583 18,451
Purchased net operating loss carryforwards....................... - 6,025
Other............................................................ 1,990 1,385
------------- -------------
Gross deferred tax assets................................ 54,364 46,217
------------- -------------
Deferred tax liabilities:
Plant and equipment.............................................. (31,895) (32,946)
Other............................................................ - (4,500)
------------- -------------
Gross deferred tax liabilities............................... (31,895) (37,446)
------------- -------------
Net deferred tax asset....................................... $ 22,469 8,771
============= =============
</TABLE>
Based upon the level of historical and projected taxable income over
periods which the deferred tax assets are deductible, the Company's management
believes it is more likely than not the Company will realize the benefits of
these deductible differences at December 31, 1998.
(13) COMMITMENTS AND CONTINGENCIES
The Company is obligated under various operating leases for office and
manufacturing space, machinery and equipment.
Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) at December 31, 1998
are:
30
<PAGE>
OHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1999.......................................... $ 18,207
2000.......................................... 15,813
2001.......................................... 11,932
2002.......................................... 8,140
2003.......................................... 6,595
Thereafter.................................... 4,960
-----------
Total minimum lease payments.................. $ 65,647
===========
</TABLE>
Rental expense under operating leases was $26,882, $20,475 and $17,677 in
1998, 1997 and 1996, respectively.
In December 1995, the Company and four other carpet manufacturers were
added as defendants in a purported class action lawsuit, In re Carpet Antitrust
Litigation, pending in the United States District Court for the Northern
District of Georgia, Rome Division. The amended complaint alleges price fixing
regarding polypropylene products in violation of Section One of the Sherman Act.
In September 1997, the Court determined that the plaintiffs met their burden of
establishing the requirements for class certification and granted the
plaintiffs' motion to certify the class. The Company is a party to two
consolidated lawsuits captioned Gaehwiler v. Sunrise Carpet Industries, Inc. et.
al. and Patco Enterprises, Inc. v. Sunrise Carpet Industries, Inc. et. al.; both
of which were filed in the Superior Court of the State of California, City and
County of San Francisco in 1996. Both complaints were brought on behalf of a
purported class of indirect purchasers of carpet in the State of California and
seek damages for alleged violations of California antitrust and unfair
competition laws. The complaints filed do not specify any amount of damages but
do request for any unlawful conduct to be enjoined and treble damages plus
reimbursement for fees and costs. In October 1998, two plaintiffs, on behalf of
an alleged class of purchasers of nylon carpet products, filed a complaint in
the United States District Court for the Northern District of Georgia against
the Company and two of its subsidiaries as well as a competitor and one of its
subsidiaries. The complaint alleges that the Company acted in concert with other
carpet manufacturers to restrain competition in the sale of certain nylon carpet
products. The Company has filed an answer and denied the allegations in the
complaint and set forth its defenses. In February 1999, a similar complaint was
filed in the Superior Court of the State of California, City and County of San
Francisco, on behalf of a purported class based on indirect purchases of nylon
carpet in the State of California and alleges violations of California antitrust
and unfair competition laws. The complaints described above do not specify any
specific amount of damages but do request injunctive relief and treble damages
plus reimbursement for fees and costs. The Company believes it has meritorious
defenses and intends to vigorously defend against these actions.
(14) CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION
Supplemental disclosures of cash flow information are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Net cash paid during the year for:
Interest.................................. $ 29,156 35,926 37,949
============= ============= =============
Income taxes.............................. $ 72,174 52,368 23,721
============= ============= =============
</TABLE>
(15) QUARTERLY FINANCIAL DATA (UNAUDITED)
The supplemental quarterly financial data are as follows:
<TABLE>
<CAPTION>
QUARTERS ENDED
---------------------------------------------------------------
MARCH 28, JUNE 27, SEPT. 26, DEC. 31,
1998 1998 1998 1998
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales...................................... $ 561,664 662,569 691,954 723,013
Gross profit................................... 124,839 165,963 167,293 182,202
Net earnings................................... 14,595 33,495 34,723 24,799
Basic earnings per share....................... 0.26 0.59 0.61 0.43
Diluted earnings per share..................... 0.25 0.58 0.60 0.43
</TABLE>
31
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------
MARCH 29, JUNE 28, SEPT. 27, DEC . 31,
1997 1997 1997 1997
--------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales.................................. $ 514,993 581,539 600,843 629,966
Gross profit............................... 109,881 129,852 136,231 143,240
Net earnings............................... 8,731 18,899 22,184 23,610
Basic earnings per share................... 0.15 0.33 0.39 0.41
Diluted earnings per share................. 0.15 0.33 0.39 0.41
</TABLE>
32
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference to
information contained in the Company's Proxy Statement for the 1999 Annual
Meeting of Stockholders under the following headings: "Election of Directors--
Director, Director Nominee and Executive Officer Information"; "--Nominees for
Director"; "--Continuing Directors"; "--Executive Officers;" and "--Section 16a
Beneficial Ownership Reporting Compliance."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to
information contained in the Company's Proxy Statement for the 1999 Annual
Meeting of Stockholders under the following headings: "Executive Compensation
and Other Information--Summary of Cash and Certain Other Compensation"; "--
Option Grants"; "--Option Exercises and Holdings"; "--Pension Plans"; "--Certain
Relationships and Related Transactions"; and "Election of Directors--Meetings
and Committees of the Board of Directors."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to
information contained in the Company's Proxy Statement for the 1999 Annual
Meeting of Stockholders under the following heading: "Executive Compensation and
Other Information--Principal Stockholders of the Company."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to
information contained in the Company's Proxy Statement for the 1999 Annual
Meeting of Stockholders under the following heading: "Executive Compensation and
Other Information--Certain Relationships and Related Transactions."
33
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of Mohawk Industries, Inc. and
subsidiaries listed in Item 8 of Part II are incorporated by reference into this
item.
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
Schedule I-Condensed Financial Information of Registrant............46
Schedule II-Consolidated Valuation and Qualifying Accounts..........49
Schedules not listed above have been omitted because they are not applicable
or the required information is included in the consolidated financial statements
or notes thereto.
3. EXHIBITS
The exhibit number for the exhibit as originally filed is included in
parentheses at the end of the description.
MOHAWK
EXHIBIT
NUMBER DESCRIPTION
------ -----------
*2.1 Amended and Restated Agreement and Plan of Merger, including exhibits
thereto, by and among Mohawk, Horizon Acquisition Corp. and Horizon
dated as of July 29, 1992 and amended as of September 29, 1992.
(Incorporated herein by reference to Exhibit 2 in Mohawk's
Registration Statement on Form S-4, Registration No. 33-52542.)
*2.2 Stock Purchase Agreement dated as of March 8, 1993 among Mohawk, John
C. Thornton, William Robert Fowler, Dave M. Reynolds and American
Rug Craftsmen, Inc. (Incorporated herein by reference to Exhibit 5
in Mohawk's Current Report on Form 8-K dated March 8, 1993.)
*2.3 Asset Purchase Agreement dated as of June 3, 1993 between Fieldcrest
Cannon, Inc. and Mohawk (Incorporated herein by reference to Exhibit
5 in Mohawk's Current Report on Form 8-K dated June 3, 1993.)
*2.4 Agreement and Plan of Merger dated as of December 3, 1993 and amended
as of January 17, 1994 among Mohawk, AMI Acquisition Corp., Aladdin
and certain Shareholders of Aladdin. (Incorporated herein by
reference to Exhibit 2(i)(a) in Mohawk's Registration Statement on
Form S-4, Registration No. 33-74220.)
*2.5 Stock Purchase Agreement by and among Mohawk, Galaxy and the
Stockholder of Galaxy dated December 1, 1994. (Incorporated herein
by reference to Exhibit 2 in Mohawk's Current Report on Form 8-K
dated January 13, 1995.)
*2.6 Agreement and Plan of Merger by and among Mohawk, WC Acquisition
Corp., World Carpets, Inc. and the shareholders of World Carpets,
Inc. dated as of October 22, 1998. (Incorporated herein by reference
to Appendix A of the Mohawk Registration Statement on Form S-3,
Registration No. 333-66061, as filed October 22, 1998).
34
<PAGE>
*2.7 Asset Purchase Agreement by and among Aladdin Manufacturing
Corporation, Image Industries, Inc. and The Maxim Group, Inc. dated
as of November 12, 1998, as amended and restated on January 29,
1999. (Incorporated herein by reference to Exhibit 2.1 in Mohawk's
Current Report on Form 8-K dated January 29, 1999).
3.1 Restated Certificate of Incorporation of Mohawk, as amended.
*3.2 Amended and Restated Bylaws of Mohawk. (Incorporated herein by
reference to Exhibit 3.2 in Mohawk's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996).
*4.1 See Article 4 of the Restated Certificate of Incorporation of Mohawk.
(Incorporated herein by reference to Exhibit 3.1 in Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.)
*4.2 See Articles 2, 6, and 9 of the Amended and Restated Bylaws of Mohawk.
(Incorporated herein by reference to Exhibit 3.2 in Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.)
*10.1 Lease dated August 1, 1985 between Horizon and Kay D. Owens concerning
Coater I and General Administration Offices and Plant at South
Industrial Boulevard in Calhoun, Georgia. (Incorporated herein by
reference to Exhibit 10.3 of Horizon's Annual Report on Form 10-K
for the fiscal year ended September 28, 1985 (SEC File No. 0-
11492).)
*10.2 Lease dated April 1, 1988 between Horizon and Kay D. Owens concerning
the addition between the Tufting and Coater Buildings on South
Industrial Boulevard in Calhoun, Georgia. (Incorporated herein by
reference to Exhibit 10.24 in Mohawk's Registration Statement on
Form S-1, Registration No. 33-53932.)
*10.3 Lease dated August 15, 1989 between Joan Jones Webb and assigns and
Aladdin related to a finished goods distribution warehouse in Miami,
Florida. (Incorporated herein by reference to Exhibit 10.27 of
Mohawk's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.)
*10.4 Lease dated October 15, 1990 between NBD Trust Company of Illinois and
Aladdin related to a finished goods distribution warehouse in
Romeoville, Illinois. (Incorporated herein by reference to Exhibit
10.28 of Mohawk's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.)
*10.5 Lease dated October 3, 1994 between Almoda and Aladdin related to a
finished goods distribution warehouse in Columbus, Ohio.
(Incorporated herein by reference to Exhibit 10.29 of Mohawk's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994.)
*10.6 Lease dated October 17, 1994 between Ventura County Employees'
Retirement Association and Aladdin related to a finished goods
distribution warehouse in Kent, Washington. (Incorporated herein by
reference to Exhibit 10.34 of Mohawk's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.)
*10.7 Lease dated March 1, 1994 between Design Leasing and Holding Company,
Inc. and American Rug Craftsmen, Inc. related to a manufacturing
facility and warehouse in Calhoun, Georgia. (Incorporated herein by
reference to Exhibit 10.35 of Mohawk's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.)
35
<PAGE>
10.8 Lease dated May 1, 1997 between Opus East, LLC and Mohawk concerning a
distribution warehouse in Glen Burnie, Maryland.
10.9 Lease dated April 1, 1996 between Love Lock, LLC and Mohawk concerning
a distribution warehouse in San Diego, California.
10.10 Lease dated September 23, 1996 between West End Road Associates and
Mohawk concerning a distribution warehouse in Pompton Plains, New
Jersey.
10.11 Lease dated September 1, 1996 between Catellus Development Corp. and
Mohawk concerning a distribution warehouse in LaMirada, California.
10.12 Lease dated November 27, 1996 between CP-Regency Business Park LTD and
Aladdin concerning a distribution warehouse in Grand Prairie, Texas.
10.13 Lease dated December 31, 1985 between General Bag & Burlap Company and
Mohawk concerning a distribution warehouse in Philadelphia,
Pennsylvania.
10.14 Lease dated May 23, 1996 between Echota Properties, LLC and American
Weavers concerning a manufacturing and warehousing facility in
Calhoun, Georgia.
10.15 Lease dated May 23, 1996 between Echota Properties, LLC and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Calhoun, Georgia.
10.16 Lease dated May 23, 1996 between Echota Properties, LLC and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Calhoun, Georgia.
10.17 Lease dated May 1, 1998 between Echota Properties, LLC and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Calhoun, Georgia.
10.18 Lease dated February 1, 1998 between Hugh C. Hoodenpyle and American
Weavers concerning a manufacturing and warehousing facility in
Haiwassee, Georgia.
10.19 Lease dated October 1, 1998 between Hugh C. Hoodenpyle and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Haiwassee, Georgia.
10.20 Lease dated September 14, 1993 between WBP Properties and Newmark
concerning a distribution warehouse in Dalton, Georgia.
10.21 Lease dated November 21, 1987 between First American Bank of New York
and Image, as amended on December 3, 1997 by an agreement between
Charles Milford Morgan, Jr. d/b/a Morgan Trust Properties and Image,
and as further amended on July 17, 1998 by an agreement between
Milford Morgan Trust Properties and Image with respect to that
certain warehouse located on Highway 114 in Lyerly, Georgia.
10.22 Lease dated November 19, 1997 between James S. Owens Residual Trust,
Diana O. Layson, Trustee, and Image with respect to that certain
warehouse located at 713 South River Street in Calhoun, Georgia.
10.23 Lease dated December 12, 1997 between Kay D. Owens Estate, Diana O.
Layson, Executrix, and Image with respect to that certain warehouse
located at 713 South River Street in Calhoun, Georgia.
36
<PAGE>
10.24 Lease dated December 14, 1992, between First Union National Bank of
Georgia, as Trustee under item 8 u/w of James E. Minge; First Union
National Bank of Georgia, as Trustee u/a W. G. Minge, dated
September 15, 1987; First Union National Bank of Georgia and Jerry
L. Minge, co-executors u/w/o C. A. Minge and Image, as amended by
that certain lease modification and extension agreement dated July
24, 1995 with respect to that certain warehouse located at 15 Old
Airport Road in Rome, Georgia.
10.25 Lease dated June 1, 1998 between Intemark USA, Inc. and Image
concerning a warehouse in Kensington, Georgia.
10.26 Lease dated November 10, 1997 between Mohawk and Hayward Industrial
Park Associates concerning a warehouse in Hayward, California.
*10.27 Consolidated Amended and Restated Note Agreement dated as of
September 3, 1993 for $70 million of senior notes, including $20
million uncommitted shelf facility, among Mohawk, Mohawk Carpet and
The Prudential Insurance Company of America. (Incorporated herein by
reference to Exhibit 10.2 in Mohawk's quarterly report on Form 10-Q
for the quarter ended October 2, 1993.)
*10.28 Letter dated February 24, 1994 amending the Consolidated, Amended and
Restated Note Agreement dated September 3, 1993 among Mohawk, Mohawk
Carpet and The Prudential Insurance Company of America.
(Incorporated herein by reference to Exhibit 10.2 of Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.)
*10.29 Letter dated as of September 16, 1994 of the Second Modification to
the Consolidated, Amended and Restated Note Agreement dated
September 3, 1993 among Mohawk, Mohawk Carpet Corporation and The
Prudential Insurance Company of America. (Incorporated herein by
reference to Exhibit 10.2 of Mohawk's Quarterly Report on Form 10-Q
for the quarter ended October 1, 1994.)
*10.30 Letter dated as of July 19, 1995 of the Third Modification to the
Consolidated, Amended and Restated Note Agreement dated as of
September 3, 1993 among Mohawk, Mohawk Carpet Corporation and The
Prudential Insurance Company of America. (Incorporated herein by
reference to Exhibit 10.6 of Mohawk's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.)
*10.31 Letter dated as of September 29, 1995 of the Fourth Modification to
the Consolidated, Amended and Restated Note Agreement dated as of
September 3, 1993 among Mohawk, Mohawk Manufacturing Corporation
(f/k/a Mohawk Carpet Corporation) and The Prudential Insurance
Company of America. (Incorporated herein by reference to Exhibit
10.10 of Mohawk's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.)
*10.32 Letter dated as of March 12, 1996 of the Fifth Modification to the
Consolidated, Amended and Restated Note Agreement dated September 3,
1993 among Mohawk, Mohawk Manufacturing Corporation (f/k/a Mohawk
Carpet Corporation) and The Prudential Insurance Company of America.
(Incorporated herein by reference to Exhibit 10.26 of Mohawk's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995.)
*10.33 Letter dated as of October 17, 1997 of the Sixth Modification to the
Consolidated, Amended And Restated Note Agreement dated September 3,
1993 among Mohawk, Aladdin Manufacturing Corporation (f/n/a Mohawk
Manufacturing Corporation and prior to that k/a Mohawk Carpet
Corporation) and The Prudential Insurance Company of America.
(Incorporated herein by reference to Exhibit 10.1 in Mohawk's
Registration Statement on Form S-3, Registration No. 333-45683.)
37
<PAGE>
*10.34 Second Amended and Restated Credit Agreement dated as of January 13,
1995 among Mohawk Carpet, Mohawk, Wachovia Bank of Georgia, N.A. and
First Union National Bank of Georgia. (Incorporated herein by
reference to Exhibit 10.3 of Mohawk's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994.)
*10.35 Third Amended and Restated Credit Agreement dated as of April 15,
1997 among Mohawk, Aladdin Manufacturing Corporation, Wachovia Bank
of Georgia, N.A. and First Union National Bank of Georgia.
(Incorporated herein by reference to Exhibit 10 of Mohawk's
Quarterly Report on Form 10-Q for the quarter ended March 29, 1997.)
*10.36 Fourth Amended and Restated Credit Agreement dated as of January 28,
1999 among Mohawk, Aladdin Manufacturing Corporation, Wachovia Bank
of Georgia, N.A. and First Union National Bank of Georgia.
(Incorporated herein by reference to Exhibit 99.1 of Mohawk's
Current Report on Form 8-K dated February 2, 1999.)
*10.37 First Amendatory Agreement dated as of June 23, 1995 to the Second
Amended and Restated Credit Agreement dated as of January 13, 1995
among Mohawk Carpet Corporation, Mohawk, Wachovia Bank of Georgia,
N.A. and First Union National Bank of Georgia. (Incorporated herein
by reference to Exhibit 10.1 of Mohawk's Quarterly Report on Form
10-Q for the quarter ended July 1, 1995.)
*10.38 Second Amendatory Agreement and Waiver dated as of July 19, 1995 to
the Second Amended and Restated Credit Agreement dated as of January
13, 1995 among Mohawk Carpet Corporation, Mohawk, Wachovia Bank of
Georgia, N.A. and First Union National Bank of Georgia.
(Incorporated herein by reference to Exhibit 10.1 of Mohawk's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1995.)
*10.39 Third Amendatory Agreement dated as of September 28, 1995 to the
Second Amended and Restated Credit Agreement dated as of January 13,
1995 among Mohawk Manufacturing Corporation (f/k/a Mohawk Carpet
Corporation), Mohawk, Wachovia Bank of Georgia, N.A. and First Union
National Bank of Georgia. (Incorporated herein by reference to
Exhibit 10.2 of Mohawk's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995.)
*10.40 Fourth Amendatory Agreement dated as of December 22, 1995 to the
Second Amended and Restated Credit Agreement dated as of January 13,
1995 among Mohawk Manufacturing Corporation (f/k/a Mohawk Carpet
Corporation), Mohawk, Wachovia Bank of Georgia, N.A. and First Union
National Bank of Georgia. (Incorporated herein by reference to
Exhibit 10.31 of Mohawk's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
*10.41 Fifth Amendatory Agreement dated as of December 31, 1995 to the
Second Amended and Restated Credit Agreement dated as of January 13,
1995 among Mohawk Manufacturing Corporation (f/k/a Mohawk Carpet
Corporation), Mohawk, Wachovia Bank of Georgia, N.A. and First Union
National Bank of Georgia. (Incorporated herein by reference to
Exhibit 10.32 of Mohawk's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
*10.42 Sixth Amendatory Agreement dated as of December 31, 1996 to the
Second Amended and Restated Credit Agreement dated as of January 13,
1995 among Aladdin Manufacturing Corporation (f/k/a Mohawk
Manufacturing Corporation and prior to that known as Mohawk Carpet
Corporation), Mohawk, Wachovia Bank of Georgia, N.A. and First Union
National Bank of Georgia.
*10.43 Note Purchase Agreement dated as of August 15, 1993 for 9.5% Senior
Notes due April 1, 1998 among Mohawk Carpet, Mohawk, Horizon,
American Rug Craftsmen, Burton Carpets & Rugs, Inc. and The
Harbinger Company, Inc., and Alexander Hamilton Life Insurance
Company of America, Connecticut Mutual Life Insurance Company, The
Franklin Life Insurance Company and Principal Mutual Life
38
<PAGE>
Insurance Company. (Incorporated herein by reference to Exhibit 10.5
of Mohawk's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.)
*10.44 First Amendment and Waiver Agreement dated as of February 25, 1994 of
the Note Purchase Agreement dated as of August 15, 1993 for 9.5%
Senior Notes due April 1, 1998 among Mohawk Carpet, Mohawk, American
Rug Craftsmen, Inc., Burton Carpets & Rugs, Inc., Aladdin, Mohawk
Marketing, Inc., Alexander Hamilton Life Insurance Company of
America, Connecticut Mutual Life Insurance Company, Principal Mutual
Life Insurance Company and The Franklin Life Insurance Company.
(Incorporated herein by reference to Exhibit 10.6 of Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.)
*10.45 Second and Third Amendment Agreements dated as of September 16, 1994
of the Note Purchase Agreement dated as of August 15, 1993 for 9.5%
Senior Notes due April 1, 1998 among the Company, Mohawk Carpet
Corporation, American Rug Craftsmen, Aladdin, Mohawk Marketing,
Inc., Alexander Hamilton Life Insurance Company of America,
Connecticut Mutual Life Insurance Company, The Franklin Life
Insurance Company and Principal Mutual Life Insurance Company.
(Incorporated herein by reference to Exhibit 10.3 of Mohawk's
Quarterly Report on Form 10-Q for the quarter ended October 1,
1994.)
*10.46 Fourth Amendment and Waiver Agreement dated as of July 19, 1995 of
the Note Purchase Agreement dated as of August 15, 1993 for 9.5%
Senior Notes due April 1, 1998 among Mohawk Carpet Corporation,
Mohawk, Aladdin Mills, Inc., Mohawk Marketing, Inc., Galaxy Carpet
Mills, Inc., Mohawk Mills, Inc., Mohawk Manufacturing Corporation,
Alexander Hamilton Life Insurance Company of America, Connecticut
Mutual Life Insurance Company, The Franklin Life Insurance Company
and Principal Mutual Life Insurance Company. (Incorporated herein by
reference to Exhibit 10.3 of Mohawk's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.)
*10.47 Fifth Amendment Agreement dated as of September 29, 1995 of the Note
Purchase Agreement dated as of August 15, 1993 for 9.5% Senior Notes
due April 1, 1998 among Mohawk Manufacturing Corporation (f/k/a
Mohawk Carpet Corporation), Mohawk, Aladdin Mills, Inc., Mohawk
Marketing, Inc., Galaxy Carpet Mills, Inc., Mohawk Mills, Inc.,
Mohawk Carpet Corporation, Alexander Hamilton Life Insurance Company
of America, Connecticut Mutual Life Insurance Company, American
General Life Insurance Company and Principal Mutual Life Insurance
Company. (Incorporated herein by reference to Exhibit 10.7 of
Mohawk's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.)
*10.48 Sixth Amendment Agreements dated as of March 12, 1996 of the Note
Purchase Agreement dated as of August 15, 1993 for 9.5% Senior Notes
due April 1, 1998 among the Company, Mohawk Manufacturing
Corporation (f/k/a Mohawk Carpet Corporation), Aladdin, Mohawk
Marketing, Inc., Galaxy Carpet Mills, Inc., Mohawk Mills, Inc.,
Mohawk Carpet Corporation, Alexander Hamilton Life Insurance Company
of America, Connecticut Mutual Life Insurance Company, The Franklin
Life Insurance Company and Principal Mutual Life Insurance Company.
(Incorporated herein by reference to Exhibit 10.38 of Mohawk's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995.)
*10.49 Seventh Amendment Agreements dated as of October 17, 1997 of the Note
Purchase Agreement dated as of August 15, 1993 for 9.5% Senior Notes
due April 1, 1998 among the Company, Aladdin Manufacturing
Corporation (f/k/a Mohawk Manufacturing Corporation and prior to
that k/a Mohawk Carpet Corporation), Mohawk Marketing, Inc., Mohawk
Mills, Inc., Mohawk Carpet Corporation (f/n/a Mohawk Limited),
Alexander Hamilton Life Insurance Company of America, Massachusetts
Mutual Life Insurance Company, The Franklin Life Insurance Company
and Principal Mutual Life Insurance Company. (Incorporated herein by
reference to Exhibit 10.4 in Mohawk's Registration Statement on Form
S-3, Registration No. 333-45683.)
39
<PAGE>
*10.50 Note Purchase Agreement dated as of August 15, 1993 for $85 million of
Senior Notes due September 1, 2005 among Mohawk Carpet, Mohawk, Horizon,
American Rug Craftsmen, Burton Carpets & Rugs, Inc. and The Harbinger
Company, Inc., and John Hancock Mutual Life Insurance Company, John
Hancock Variable Life Insurance Company, John Hancock Life Insurance
Company of America, Principal Mutual Life Insurance Company, Principal
National Life Insurance Company, UNUM Life Insurance Company of America
and The Franklin Life Insurance Company. (Incorporated herein by
reference to Exhibit 10.7 of Mohawk's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.)
*10.51 First Amendment and Waiver Agreement dated as of February 25, 1994 of the
Note Purchase Agreement dated as of August 15, 1993 for $85 million
Senior Notes due September 1, 2005 among Mohawk Carpet, Mohawk, American
Rug Craftsmen, Inc., Burton Carpets & Rugs, Inc., Aladdin, Mohawk
Marketing, Inc., John Hancock Mutual Life Insurance Company, John Hancock
Variable Life Insurance Company, John Hancock Life Insurance Company of
America, Principal Mutual Life Insurance Company, Principal National Life
Insurance Company, UNUM Life Insurance Company and The Franklin Life
Insurance Company. (Incorporated herein by reference to Exhibit 10.8 of
Mohawk's Annual Report on Form 10-K for the fiscal year ended December
31, 1993.)
*10.52 Second and Third Amendment Agreements dated as of September 16, 1994 of
the Note PurchaseAgreement dated as of August 15, 1993 for $85 million
Senior Notes due September 1, 2005 among the Company, Mohawk Carpet
Corporation, American Rug Craftsmen, Aladdin, Mohawk Marketing, Inc.,
John Hancock Mutual Life Insurance Company, John Hancock Variable Life
Insurance Company, John Hancock Life Insurance Company of America,
Principal Mutual Life Insurance Company, Principal National Life
Insurance Company, UNUM Life Insurance Company and The Franklin Life
Insurance Company. (Incorporated herein by reference to Exhibit 10.4 of
Mohawk's Quarterly Report on Form 10-Q for the quarter ended October 1,
1994.)
*10.53 Fourth Amendment and Waiver Agreement dated as of July 19, 1995 of the
Note Purchase Agreement dated as of August 15, 1993 for $85 million of
Senior Notes due September 1, 2005 among Mohawk Carpet Corporation,
Mohawk, Aladdin Mills, Inc., Mohawk Marketing, Inc., Galaxy Carpet Mills,
Inc., Mohawk Mills, Inc., Mohawk Manufacturing Corporation, John Hancock
Mutual Life Insurance Company, John Hancock Variable Life Insurance
Company, John Hancock Life Insurance Company of America, Principal Mutual
Life Insurance Company, UNUM Life Insurance Company of America and The
Franklin Life Insurance Company. (Incorporated herein by reference to
Exhibit 10.4 of Mohawk's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.)
*10.54 Fifth Amendment Agreement dated as of September 29, 1995 of the Note
Purchase Agreement dated as of August 15, 1993 for $85 million of Senior
Notes due September 1, 2005 among Mohawk Manufacturing Corporation (f/k/a
Mohawk Carpet Corporation), Mohawk, Aladdin Mills, Inc., Mohawk
Marketing, Inc., Galaxy Carpet Mills, Inc., Mohawk Mills, Inc., Mohawk
Carpet Corporation, John Hancock Mutual Life Insurance Company, John
Hancock Variable Life Insurance Company, John Hancock Life Insurance
Company of America, Principal Mutual Life Insurance Company, UNUM Life
Insurance Company of America and American General Life Insurance Company.
(Incorporated herein by reference to Exhibit 10.8 of Mohawk's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995.)
*10.55 Sixth Amendment Agreement dated as of March 12, 1996 of the Note
PurchaseAgreement dated as of August 15, 1993 for $85 million Senior
Notes due September 1, 2005 among the Company, Mohawk Manufacturing
Corporation (f/k/a Mohawk Carpet Corporation), Aladdin, Mohawk Marketing,
Inc.,Galaxy Carpet Mills, Inc., Mohawk Mills, Inc., Mohawk Carpet
Corporation, John Hancock Mutual Life Insurance Company, John Hancock
Variable Life Insurance Company, John Hancock Life Insurance Company of
America, Principal Mutual Life Insurance Company, Principal National Life
Insurance Company, UNUM Life Insurance Company and The Franklin Life
Insurance Company.
40
<PAGE>
(Incorporated herein by reference to Exhibit 10.44 of Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.)
*10.56 Seventh Amendment Agreement dated as of October 17, 1997 for $85 million
Senior Notes due September 1, 2005 among the Company, Aladdin
Manufacturing Corporation (f/k/a Mohawk Manufacturing Corporation and
prior to that k/a Mohawk Carpet Corporation), Mohawk Marketing, Inc.,
Mohawk Mills, Inc., Mohawk Carpet Corporation (f/n/a Mohawk Limited),
John Hancock Mutual Life Insurance Company, John Hancock Variable Life
Insurance Company, John Hancock Life Insurance Company of America,
Principal Mutual Life Insurance Company, The Prudential Insurance Company
of America and The Franklin Life Insurance Company. (Incorporated herein
by reference to Exhibit 10.3 in Mohawk's Registration Statement on
Form S-3, Registration No. 333-45683.)
*10.57 Note Purchase Agreement dated as of September 16, 1994 for $100 million
of Senior Notes due September 16, 2004 among the Company, Mohawk Carpet
Corporation, American Rug Craftsmen, Aladdin, Mohawk Marketing, Inc., The
Prudential Insurance Company of America, Principal Mutual Life Insurance
Company, John Hancock Mutual Life Insurance Company, Connecticut Mutual
Life Insurance Company, Alexander Hamilton Life Insurance Company of
America and The Franklin Life Insurance Company. (Incorporated herein by
reference to Exhibit 4.1 of Mohawk's Quarterly Report on Form 10-Q for
the quarter ended October 1, 1994.)
*10.58 Letter dated as of July 19, 1995 of the First Modification to the Note
Purchase Agreement dated as of September 16, 1994 for $100 million of
Senior Notes due September 16, 2004 among Mohawk, Mohawk Carpet
Corporation, The Prudential Insurance Company of America, Principal
Mutual Life Insurance Company, John Hancock Mutual Life Insurance
Company, Connecticut Mutual Life Insurance Company, Alexander Hamilton
Life Insurance Company of America and The Franklin Life Insurance
Company. (Incorporated herein by reference to Exhibit 10.5 of Mohawk's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995.)
*10.59 Letter dated as of September 29, 1995 of the Second Modification to the
Note Purchase Agreement dated as of September 16, 1994 for $100 million
of Senior Notes due September 16, 2004 among Mohawk, Mohawk Manufacturing
Corporation (f/k/a Mohawk Carpet Corporation), The Prudential Insurance
Company of America, Principal Mutual Life Insurance Company, John Hancock
Mutual Life Insurance Company, Connecticut Mutual Life Insurance Company,
Alexander Hamilton Life Insurance Company of America and American General
Insurance Company. (Incorporated herein by reference to Exhibit 10.9 of
Mohawk's Quarterly Report on Form 10-Q for the quarter ended September
30, 1995.)
*10.60 Letter dated as of March 12, 1996 of the Third Modification to the Note
Purchase Agreement dated as of September 16, 1994 for $100 million of
Senior Notes due September 16, 2004 among Mohawk, Mohawk Manufacturing
Corporation (f/k/a Mohawk Carpet Corporation), The Prudential Insurance
Company of America, Principal Mutual Life Insurance Company, John Hancock
Mutual Life Insurance Company, Connecticut Mutual Life Insurance Company,
Alexander Hamilton Life Insurance Company of America and American General
Insurance Company. (Incorporated herein by reference to Exhibit 10.48 of
Mohawk's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
*10.61 Letter dated as of October 17, 1997 of the Fourth Modification to the
Note Purchase Agreement dated as of September 16, 1994 for $100 million
of Senior Notes due September 16, 2004 among Mohawk, Aladdin
Manufacturing Corporation (f/k/a Mohawk Manufacturing Corporation and
prior to that k/a Mohawk Carpet Corporation), The Prudential Insurance
Company of America, Principal Mutual Life Insurance Company, John Hancock
Mutual Life Insurance Company of America, Massachusetts Mutual Life
Insurance Company, Alexander Hamilton Life Insurance Company of America
and The
41
<PAGE>
Franklin Life Insurance Company. (Incorporated herein by reference to
Exhibit 10.2 in Mohawk's Registration Statement on Form S-3, Registration
No. 333-45683.)
*10.62 Second Amended and Restated Intercreditor Agreement among the Collateral
Agent, First UnionNational Bank of Georgia, Wachovia Bank of Georgia,
N.A., The Prudential Insurance Company of America, John Hancock Mutual
Life Insurance Company, John Hancock Variable Life Insurance Company,
John Hancock Life Insurance Company of America, Principal Mutual Life
InsuranceCompany, Principal National Life Insurance Company, UNUM Life
Insurance Company, The Franklin Life Insurance Company, Alexander
Hamilton Life Insurance Company of America and Connecticut Mutual Life
Insurance Company, and the related Amended and Restated Security
Agreements dated as of September 16, 1994 between the Collateral Agent
for the benefit of the parties to that Intercreditor Agreement and the
Company and Mohawk Carpet Corporation. (Incorporated herein by reference
to Exhibit 10.5 of Mohawk's Quarterly Report on Form 10-Q for the quarter
ended October 1, 1994.)
*10.63 Registration Rights Agreement by and among Mohawk, Citicorp Investments,
Inc., ML-Lee Acquisition Fund, L.P. and Certain Management Investors.
(Incorporated herein by reference to Exhibit 10.14 of Mohawk's
Registration Statement on Form S-1, Registration No. 33-45418.)
*10.64 Voting Agreement, Consent of Stockholders and Amendment to 1992
Registration Rights Agreement dated December 3, 1993 by and among
Aladdin, Mohawk, Citicorp Investments, Inc., ML-Lee Acquisition Fund,
L.P., David L. Kolb, Donald G. Mercer, Frank A. Procopio and John D.
Swift. (Incorporated herein by reference to Exhibit 10(b) of Mohawk's
Registration Statement on Form S-4, Registration No. 33-74220.)
*10.65 Registration Rights Agreement by and among Mohawk and the former
shareholders of Aladdin. (Incorporated herein by reference to Exhibit
10.32 of Mohawk's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.)
*10.66 Waiver Agreement between Alan S. Lorberbaum and Mohawk dated as of March
23, 1994 to the Registration Rights Agreement dated as of February 25,
1994 between Mohawk and those other persons who are signatories thereto.
(Incorporated herein by reference to Exhibit 10.3 of Mohawk's Quarterly
Report on Form 10-Q for the quarter ended July 2, 1994.)
*10.67 Stock Restriction and Registration Rights Agreement dated as of October
22, 1998 by and among Mohawk and the former shareholders of World.
(Incorporated herein by reference to Exhibit 99.1 of Mohawk's Current
Report on Form 8-K dated February 19, 1999.)
Exhibits Related to Executive Compensation Plans, Contracts and other
Arrangements:
*10.68 Mohawk Carpet Corporation Retirement Savings Plan, as amended.
(Incorporated herein by reference to Exhibit 10.1 of Mohawk's
Registration Statement on Form S-1, Registration No. 33-45418.)
*10.69 Mohawk Carpet Corporation Supplemental Executive Retirement Plan, as
amended. (Incorporated herein by reference to Exhibit 10.2 of Mohawk's
Registration Statement on Form S-1, Registration No. 33-45418.)
10.70 World Carpets, Inc. Savings and Retirement Plan dated January 1, 1989.
*10.71 Mohawk Industries, Inc. Employee Stock Purchase Plan together with forms
of related Management Investment Agreement, Non-Qualified Stock Option
Agreement, and amendments thereto. (Incorporated herein by reference to
Exhibit 10.3 of Mohawk's Registration Statement on Form S-1, Registration
No. 33-45418.)
42
<PAGE>
*10.72 Stock Purchase Agreement dated as of December 30, 1988 between Mohawk and
Mohasco as supplemented by Supplement to Stock Purchase Agreement dated
December 30, 1988. (Incorporated herein by reference to Exhibit 10.4 of
Mohawk's Registration Statement on Form S-1, Registration No. 33-45418.)
*10.73 Securities Purchase and Holders Agreement dated as of December 31, 1988,
as amended and restated March 30, 1989, together with amendments thereto
and forms of related Non-Qualified Stock Option Agreement and amendments
thereto. (Incorporated herein by reference to Exhibit 10.5 of Mohawk's
Registration Statement on Form S-1, Registration No. 33-45418.)
*10.74 Investment Agreement dated as of March 31, 1989 among Mohawk, Mohawk
Carpet, Citicorp Capital Investors Ltd., Citicorp Venture Capital Ltd.
and ML-Lee Acquisition Fund, L.P. (Incorporated herein by reference to
Exhibit 10.6 of Mohawk's Registration Statement on Form S-1, Registration
No. 33-45418.)
*10.75 Equity Securities Agreement dated March 31, 1989 among Mohawk, ML-Lee
Acquisition Fund, L.P. and Citicorp Venture Capital Ltd. (Incorporated
herein by reference to Exhibit 10.7 of Mohawk's Registration Statement on
Form S-1, Registration No. 33-45418.)
*10.76 Securities Holders Agreement among Mohawk and Certain Management
Investors dated as of March 6, 1992. (Incorporated herein by reference to
Exhibit 10.40 of Mohawk's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.)
*10.77 Mohawk Industries, Inc. 1992 Stock Option Plan. (Incorporated herein by
reference to Exhibit 10.8 of Mohawk's Registration Statement on Form S-1,
Registration No. 33-45418.)
*10.78 Amendment dated July 22, 1993 to the Mohawk Industries, Inc. 1992 Stock
Option Plan. (Incorporated herein by reference to Exhibit 10.2 in
Mohawk's quarterly report on Form 10-Q for the quarter ended July 3,
1993.)
*10.79 Mohawk Industries, Inc. 1992 Mohawk-Horizon Stock Option Plan.
(Incorporated herein by reference to Exhibit 10.15 of Mohawk's
Registration Statement on Form S-1, Registration Number 33-53932.)
*10.80 Amendment dated July 22, 1993 to the Mohawk Industries, Inc. 1992 Mohawk-
Horizon Stock Option Plan. (Incorporated herein by reference to Exhibit
10.1 of Mohawk's quarterly report on Form 10-Q for the quarter ended July
3, 1993.)
*10.81 Mohawk Industries, Inc. 1993 Stock Option Plan. (Incorporated herein by
reference to Exhibit 10.39 of Mohawk's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.)
*10.82 Form of Promissory Note between Mohawk and each of the following; David
L. Kolb, John D. Swift and Frank A. Procopio. (Incorporated herein by
reference to Exhibit 10.75 of Mohawk's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)
*10.83 The Mohawk Industries, Inc. Executive Deferred Compensation Plan.
(Incorporated herein by reference to Exhibit 10.65 of Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994.)
*10.84 The Mohawk Industries, Inc. Management Deferred Compensation Plan.
(Incorporated herein by reference to Exhibit 10.66 of Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994.)
*10.85 1997 Non-Employee Director Stock Compensation Plan. (Incorporated herein
by reference to Exhibit
43
<PAGE>
10.79 of Mohawk's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.)
*10.86 1997 Long-Term Incentive Plan. (Incorporated herein by reference to
Exhibit 10.80 of Mohawk's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.)
*10.87 Amendment No. 1 to 1997 Non-Employee Director Stock Compensation Plan.
(Incorporated herein by reference to Exhibit 10.74 of Mohawk's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997.)
11 Statement re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent - KPMG LLP.
23.2 Consent of Independent Accountants - PricewaterhouseCoopers LLP.
27.1 1998 Financial Data Schedule.
27.2 1997 Financial Data Schedule (restated).
27.3 1996 Financial Data Schedule (restated).
________
* Indicates exhibit incorporated by reference.
(B) REPORTS ON FORM 8-K.
1. Current Report on Form 8-K dated February 5, 1998.
2. Current Report on Form 8-K dated October 15, 1998.
3. Current Report on Form 8-K dated November 12, 1998.
4. Current Report on Form 8-K dated November 12, 1998.
5. Current Report on Form 8-K dated November 20, 1998.
6. Current Report on Form 8-K dated December 23, 1998.
7. Current Report on Form 8-K dated January 29, 1999.
8. Current Report on Form 8-K dated February 2, 1999.
9. Current Report on Form 8-K dated February 4, 1999.
10. Current Report on Form 8-K dated February 19, 1999.
44
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Mohawk Industries, Inc.
Dated: March 2, 1999
By: /s/ David L. Kolb
---------------------------------------------
David L. Kolb,
Chairman of the Board and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
Dated: March 2, 1999 /s/ David L. Kolb
-------------------------------------------------
David L. Kolb,
Chairman of the Board and Chief Executive Officer
(principal executive officer)
Dated: March 2, 1999 /s/ John D. Swift
-------------------------------------------------
John D. Swift,
Chief Financial Officer, Vice President-Finance
and Assistant Secretary
(principal financial and accounting officer)
Dated: March 2, 1999 /s/ Leo Benatar
-------------------------------------------------
Leo Benatar,
Director
Dated: March 2, 1999 /s/ Bruce C. Bruckmann
-------------------------------------------------
Bruce C. Bruckmann,
Director
Dated: March 2, 1999 /s/ Alan S. Lorberbaum
-------------------------------------------------
Alan S. Lorberbaum,
Director
Dated: March 2, 1999 /s/ Jeffrey S. Lorberbaum
-------------------------------------------------
Jeffrey S. Lorberbaum,
Director
Dated: March 2, 1999 /s/ Larry W. McCurdy
-------------------------------------------------
Larry W. McCurdy,
Director
Dated: March 2, 1999 /s/ Robert N. Pokelwaldt
-------------------------------------------------
Robert N. Pokelwaldt,
Director
45
<PAGE>
SCHEDULE I
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
MOHAWK INDUSTRIES, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1998 1997
-----------------------------
<S> <C> <C>
Current assets - intercompany receivable................................................. $ 40,729 38,765
Investment in subsidiaries............................................................... 545,980 438,368
----------- --------
$ 586,709 477,133
=========== ========
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 60 shares authorized; no shares issued.................. $ - -
Common stock, $.01 par value; 150,000 shares authorized; 57,383 and 57,067
shares issued in 1998 and 1997, respectively.......................................... 574 571
Additional paid-in capital............................................................... 168,797 164,140
Retained earnings........................................................................ 417,338 312,422
----------- --------
$ 586,709 477,133
=========== ========
</TABLE>
46
<PAGE>
SCHEDULE I
(CONTINUED)
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
MOHAWK INDUSTRIES, INC.
STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- -----------
<S> <C> <C> <C>
Equity in earnings of subsidiaries........................................... $ 107,612 73,424 53,378
----------- ---------- -----------
Net earnings......................................................... $ 107,612 73,424 53,378
=========== ========== ===========
</TABLE>
47
<PAGE>
SCHEDULE I
(CONTINUED)
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
MOHAWK INDUSTRIES, INC.
STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
-------------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.................................................... $ 107,612 73,424 53,378
Adjustments to reconcile net earnings to net cash used in
operating activities:
Equity in earnings of subsidiaries........................ (107,612) (73,424) (53,378)
Increase in intercompany receivable....................... (1,964) (4,662) (9,222)
------------ ----------- --------
Net cash used in operating activities..................... (1,964) (4,662) (9,222)
------------ ---------- --------
Cash flows from financing activities:
Stock options exercised......................................... 4,417 3,636 1,323
Tax benefit from exercise of stock options...................... 243 1,050 7,606
Other........................................................... (2,696) (24) 293
------------ ---------- --------
Net cash provided by financing activities................. 1,964 4,662 9,222
------------ ---------- --------
Net change in cash.................................. - - -
Cash, beginning of year................................................ - - -
------------ ---------- --------
Cash, end of year...................................................... $ - - -
============ ========== ========
</TABLE>
48
<PAGE>
SCHEDULE II
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS (1) OF YEAR
--------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C>
Year ended December 31, 1996:
Allowance for doubtful accounts - trade.. $ 17,956 13,213 15,466 15,703
Provision for cash discounts............. 5,879 48,577 47,407 7,049
Provision for claims and allowances...... 13,585 109,399 105,736 17,248
--------------- ------------- ------------------- -------------
Total............................... $ 37,420 171,189 168,609 40,000
=============== ============= =================== =============
Year ended December 31, 1997:
Allowance for doubtful accounts - trade.. $ 15,703 8,434 7,069 17,068
Provision for cash discounts............. 7,049 51,023 48,111 9,961
Provision for claims and allowances...... 17,248 119,232 111,904 24,576
--------------- ------------- ------------------- -------------
Total............................... $ 40,000 178,689 167,084 51,605
=============== ============= =================== =============
Year ended December 31, 1998:
Allowance for doubtful accounts - trade.. $ 17,068 13,173 7,362 22,879
Provision for cash discounts............. 9,961 72,275 70,074 12,162
Provision for claims and allowances...... 24,576 187,287 189,663 22,200
--------------- ------------- ------------------- -------------
Total............................... $ 51,605 272,735 267,099 57,241
=============== ============= =================== =============
</TABLE>
_______________
(1) Represents charge offs, net of recoveries, to the reserves.
49
<PAGE>
EXHIBIT INDEX
MOHAWK
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Restated Certificate of Incorporation of Mohawk, as amended.
10.8 Lease dated May 1, 1997 between Opus East, LLC and Mohawk concerning a
distribution warehouse in Glen Burnie, Maryland.
10.9 Lease dated April 1, 1996 between Love Lock, LLC and Mohawk concerning
a distribution warehouse in San Diego, California.
10.10 Lease dated September 23, 1996 between West End Road Associates and
Mohawk concerning a distribution warehouse in Pompton Plains, New
Jersey.
10.11 Lease dated September 1, 1996 between Catellus Development Corp. and
Mohawk concerning a distribution warehouse in LaMirada, California.
10.12 Lease dated November 27, 1996 between CP-Regency Business Park LTD and
Aladdin concerning a distribution warehouse in Grand Prairie, Texas.
10.13 Lease dated December 31, 1985 between General Bag & Burlap Company and
Mohawk concerning a distribution warehouse in Philadelphia,
Pennsylvania.
10.14 Lease dated May 23, 1996 between Echota Properties, LLC and American
Weavers concerning a manufacturing and warehousing facility in
Calhoun, Georgia.
10.15 Lease dated May 23, 1996 between Echota Properties, LLC and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Calhoun, Georgia.
10.16 Lease dated May 23, 1996 between Echota Properties, LLC and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Calhoun, Georgia.
10.17 Lease dated May 1, 1998 between Echota Properties, LLC and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Calhoun, Georgia.
10.18 Lease dated February 1, 1998 between Hugh C. Hoodenpyle and American
Weavers concerning a manufacturing and warehousing facility in
Haiwassee, Georgia.
10.19 Lease dated October 1, 1998 between Hugh C. Hoodenpyle and American
Weavers concerning an addition to a manufacturing and warehousing
facility in Haiwassee, Georgia.
10.20 Lease dated September 14, 1993 between WBP Properties and Newmark
concerning a distribution warehouse in Dalton, Georgia.
10.21 Lease dated November 21, 1987 between First American Bank of New York
and Image, as amended on December 3, 1997 by an agreement between
Charles Milford Morgan, Jr. d/b/a Morgan Trust Properties and Image,
and as further amended on July 17, 1998 by an agreement between
Milford Morgan Trust Properties and Image with respect to that
certain warehouse located on Highway 114 in Lyerly, Georgia.
50
<PAGE>
10.22 Lease dated November 19, 1997 between James S. Owens Residual Trust,
Diana O. Layson, Trustee, and Image with respect to that certain
warehouse located at 713 South River Street in Calhoun, Georgia.
10.23 Lease dated December 12, 1997 between Kay D. Owens Estate, Diana O.
Layson, Executrix, and Image with respect to that certain warehouse
located at 713 South River Street in Calhoun, Georgia.
10.24 Lease dated December 14, 1992, between First Union National Bank of
Georgia, as Trustee under item 8 u/w of James E. Minge; First Union
National Bank of Georgia, as Trustee u/a W. G. Minge, dated September
15, 1987; First Union National Bank of Georgia and Jerry L. Minge,
co-executors u/w/o C. A. Minge and Image, as amended by that certain
lease modification and extension agreement dated July 24, 1995 with
respect to that certain warehouse located at 15 Old Airport Road in
Rome, Georgia.
10.25 Lease dated June 1, 1998 between Intemark USA, Inc. and Image
concerning a warehouse in Kensington, Georgia.
10.26 Lease dated November 10, 1997 between Mohawk and Hayward Industrial
Park Associates concerning a warehouse in Hayward, California.
10.70 World Carpets, Inc. Savings and Retirement Plan dated January 1, 1989.
11 Statement re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent - KPMG LLP.
23.2 Consent of Independent Accountants - PricewaterhouseCoopers LLP.
27.1 1998 Financial Data Schedule.
27.2 1997 Financial Data Schedule (restated).
27.3 1996 Financial Data Schedule (restated).
51
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
MOHAWK INDUSTRIES, INC.
MOHAWK INDUSTRIES, INC. (the "Corporation") is a corporation duly organized
and existing under the General Corporation Law of the State of Delaware. Its
original Certificate of Incorporation was filed with the Secretary of State of
Delaware on December 22, 1988.
This Restated Certificate of Incorporation was duly adopted by the Board of
Directors of the Corporation in accordance with the provisions of Section 245 of
the General Corporation Law of the State of Delaware.
This Restated Certificate of Incorporation merely restates and integrates the
provisions of the Corporation's Certificate of Incorporation as heretofore
amended and supplemented, does not further amend such provisions and contains no
discrepancy between such provisions and the provisions hereof.
1. Name. The name of the Corporation is Mohawk Industries, Inc.
2. Registered Office and Agent. The address of its registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware and to possess and exercise all
of the powers and privileges granted by such law and other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the
Corporation shall have authority to issue is 75,060,000 shares, divided into two
(2) classes consisting of 75,000,000 shares of common stock, par value $.01 per
share ("Common Stock"), and 60,000 shares of preferred stock, par value $.01 per
share ("Preferred Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class.
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(a) Common Stock
(i) Dividends. Holders of Common Stock will be entitled to
receive such dividends as may be declared by the Board of Directors.
(ii) Distribution of Assets. In the event of the voluntary or
involuntary liquidation, dissolution or winding-up of the
Corporation, holders of Common Stock will be entitled to receive pro
rata all of the remaining assets of the Corporation available for
distribution to its stockholders after all amounts to which the
holders of Preferred Stock are entitled have been paid or set aside
in cash for payment.
(iii) Voting Rights. The holders of Common Stock shall have the
general right to vote for all purposes, including the election of
directors, as provided by law. Each holder of Common Stock shall be
entitled to one vote for each share thereof held.
(b) Preferred Stock
(i) Issue in Series. Preferred Stock may be issued from time to
time in one or more series, each such series to have the terms
stated herein and in the resolution of the Board of Directors of the
Corporation providing for its issue. All shares of any one series of
Preferred Stock will be identical, but shares of different series of
Preferred Stock need not be identical or rank equally except insofar
as provided by law or herein.
(ii) Creation of Series. The Board of Directors shall have
authority by resolution to cause to be created one or more series of
Preferred Stock, and to determine and fix with respect to each
series prior to the issuance of any shares of the series to which
such resolution relates:
(A) The distinctive designation of the series and the
number of shares which will constitute the series, which number
may be increased or decreased (but not below the number of
shares then outstanding) from time to time by action of the
Board of Directors;
(B) The dividend rate and the times of payment of
dividends on the shares of the series, whether dividends will
be cumulative, and if so, from what date or dates;
(C) Whether or not the shares of the series will be
redeemable and, if redeemable, the price or prices at which,
and the terms and conditions on which, the shares of the series
may be redeemed at the option of the Corporation;
(D) Whether or not the shares of the series will be
entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and provisions
relative to the operation thereof;
(E) Whether or not the shares of the series will be
convertible into, or exchangeable for, any other shares of
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stock of the Corporation or other securities, and if so
convertible or exchangeable, the conversion price or prices, or
the rates of exchange, and any adjustments thereof, at which
such conversion or exchange may be made, and any other terms
and conditions of such conversion or exchange;
(F) The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation;
(G) Whether or not the shares of the series will have
priority over or be on a parity with or be junior to the shares
of any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of
shares of any other series or class having priority over or
being on a parity with the shares of such series in any
respect, or restricting the payments of dividends on or the
making of other distributions in respect of shares of any other
series or class ranking junior to the shares of the series as
to dividends or assets, or restricting the purchase or
redemption of the shares of any such junior series or class,
and the terms of any such restriction;
(H) Whether the series will have voting rights, in
addition to any voting rights provided by law, and, if so, the
terms of such voting rights; and
(I) Any other preferences, qualifications, privileges,
options and other relative or special rights and limitations of
that series.
(iii) Dividends. Holders of Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of
funds legally available for the payment thereof, dividends at the
rates fixed by the Board of Directors for the respective series, and
no more, before any dividends shall be declared and paid, or set
apart for payment, on Common Stock with respect to the same dividend
period.
(iv) Preference on Liquidation. In the event of the voluntary
or involuntary liquidation, dissolution or winding-up of the
Corporation, holders of each series of Preferred Stock will be
entitled to receive the amount fixed for such series plus, in the
case of any series on which dividends will have been determined by
the Board of Directors to be cumulative, an amount equal to all
dividends accumulated and unpaid thereon to the date of final
distribution whether or not earned or declared before any
distribution shall be paid, or set aside for payment, to holders of
Common Stock. If the assets of the Corporation are not sufficient to
pay such amounts in full, holders of all shares of Preferred Stock
will participate in the distribution of assets ratably in proportion
to the full amounts to which they are entitled or in such order of
priority, if any, as will have been fixed in the resolution or
resolutions providing for the issue of the series of Preferred
Stock. Neither the merger nor consolidation of the Corporation into
or with any other corporation, nor a sale, transfer or lease of all
part of its assets, will be deemed a liquidation, dissolution or
winding-up of the Corporation within the meaning of this paragraph
except to the extent specifically provided for in the resolution or
resolutions providing for the issue of the series of Preferred
Stock.
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(v) Redemption. The Corporation, at the option of the Board of
Directors, may, if so provided for in the resolutions providing for
its issue, redeem all or part of the shares of any series of
Preferred Stock on the terms and conditions fixed for such series.
(vi) Voting Rights. Except as otherwise required by law, as
otherwise provided herein or as otherwise determined by the Board of
Directors as to the shares of any series of Preferred Stock prior to
the issuance of any such shares, the holders of Preferred Stock
shall have no voting rights and shall not be entitled to any notice
of meeting of stockholders.
5. Term. The Corporation shall have perpetual existence.
6. By-laws. The Board of Directors of the Corporation is expressly
authorized to adopt, alter, amend or repeal the By-laws of the Corporation,
except as otherwise specifically provided therein.
7. Elections of Directors. Election of directors need not be by written
ballot unless the By-laws of the Corporation shall so provide.
8. Number of Directors.
(a) The business and affairs of the Corporation shall be managed by,
or under the direction of, a Board of Directors comprised as follows:
(i) The number of directors of the Corporation shall be not
less than two (2) and not more than eleven (11), the exact number
within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the Board of
Directors.
(ii) The Board of Directors shall be divided into three classes
consisting, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The
first class of directors shall be elected for a year term expiring
upon the next following Annual Meeting of Stockholders and the
election and qualification of their respective successors, the
second class of directors shall be elected for a term expiring upon
the second next Annual Meeting of Stockholders and the election and
qualification of their respective successors, and the third class of
directors shall be elected for a term expiring upon the third next
Annual Meeting of Stockholders and the election and qualification of
their respective successors. At each succeeding Annual Meeting of
Stockholders, successors to the class of directors whose term
expires at that Annual Meeting of Stockholders shall be elected for
a three-year term. If the number of directors has changed, any
increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as
possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such a class shall hold office
for a term that shall coincide with the remaining term of that
class, unless otherwise required by law, but in no case shall a
decrease in the number of directors for a class shorten the term of
an incumbent director.
(iii) A director shall hold office until the Annual Meeting of
Stockholders upon which his term expires and until his successor
shall be elected and qualified, subject, however, to prior death,
resignation or removal from office.
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(iv) Any vacancy on the Board of Directors that results from an
increase in the number of directors or from the death, resignation
or removal from office of a director shall be filled by a majority
of the Board of Directors then in office, though less than a quorum,
or by the sole remaining director, and any director so chosen shall
have the same remaining term as that of his predecessor.
(v) Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of Preferred Stock issued by the
Corporation shall have the right, voting separately by class or
series, to elect directors at an Annual or Special Meeting of
Stockholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms
of this Certificate of Incorporation and the resolution of the Board
of Directors creating such class or series, to the extent applicable
thereto, and such directors so elected shall not be divided into
classes pursuant to this Section (a) of Article 8 unless expressly
provided by such terms.
(b) Notwithstanding any other provision of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the
fact that a lesser percentage for separate class vote for certain actions
may be permitted by law, by this Certificate of Incorporation or by the
By-laws of the Corporation), the affirmative vote of the holders of not
less than 80% of the votes entitled to be cast by the holders of all then
outstanding shares of capital stock, voting together as a single class,
shall be required to make, alter, amend, change, add to or repeal any
provision of this Article 8 or any other provision of this Certificate of
Incorporation or the By-laws of the Corporation in a manner inconsistent
with this Article 8.
(c) The invalidity or unenforceability of this Article 8 or any
portion hereof, or of any action taken pursuant to this Article 8, shall
not affect the validity or enforceability of any other provision of this
Certificate of Incorporation, any action taken pursuant to such other
provision, or any action taken pursuant to this Article 8.
9. Written Consent. Action required to be taken or which may be taken at any
Annual Meeting or Special Meeting of the Stockholders may be taken without a
meeting, without prior notice and without a vote if a consent in writing,
setting forth the action so taken, shall be signed by all the holders of
outstanding shares of stock entitled to vote on such action.
10. Right to Amend. The Corporation reserves the right to amend the provisions
in this Certificate, as the same may from time to time be in effect, in the
manner now or hereafter provided by law, and all rights conferred on
stockholders or others hereunder or thereunder are granted subject to such
reservation.
11. Limited Liability. No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law ("DGCL"), or (iv) for any transaction from which the director derived an
improper personal benefit. If the DCGL is amended hereafter to authorize the
further elimination or limitation of the personal liability of directors, or to
authorize the elimination or limitation of the personal liability of officers or
other agents of the Corporation, then the liability of such person or persons
shall be eliminated or limited to the fullest extent permitted by the DGCL, as
so amended. Any repeal or modification of this Article 11 shall be prospective
only, and shall not affect to the detriment of any director, or officer or other
agent if applicable thereto, of the Corporation any limitation on the personal
liability of such person existing at the time of such repeal or modification.
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12. Indemnification. The Corporation shall indemnify any person who is or was
a director or officer of the Corporation, or any other person who is serving or
did serve at the request of the Corporation in any such capacity with another
corporation, partnership, joint venture, trust or other enterprise to the
fullest extent permitted by the laws of the State of Delaware as in effect on
the date hereof or as may hereafter be amended.
IN WITNESS WHEREOF, the Company has caused its corporate seal to be hereunto
affixed and this Certificate to be executed by David L. Kolb, its Chairman and
Chief Executive Officer and by Barbara B. Lance its Secretary, this the 13th day
of February, 1997.
MOHAWK INDUSTRIES, INC.
/s/ DAVID L. KOLB
--------------------------------------
David L. Kolb
Chairman and Chief Executive Officer
Attest:
/s/ BARBARA B. LANCE
- ------------------------
Barbara B. Lance
Secretary
[CORPORATE SEAL]
6
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MOHAWK INDUSTRIES, INC.
MOHAWK INDUSTRIES, INC., a corporation organized and existing under and by
virtue of the Delaware General Corporation Law (the "Corporation"), DOES HEREBY
CERTIFY:
FIRST: That on February 27, 1998 the Board of Directors of the
Corporation adopted resolutions setting forth a proposed amendment of the
Restated Certificate of Incorporation of the Corporation, declaring said
amendment to be advisable and submitting the proposed amendment to the
stockholders of the Corporation for their consideration and approval. The
proposed amendment is as follows:
NOW, THEREFORE, BE IT HEREBY RESOLVED, that the Board of Directors deems it
advisable that the following amendment (the "Amendment") to the Corporation's
Restated Certificate of Incorporation be adopted:
"RESOLVED, that the Restated Certificate of Incorporation of the
Corporation, as in force and effect on the date hereof, be and hereby is,
amended by deleting the introductory paragraph of Article 4 in its entirety
and by substituting in lieu thereof the following:
4. Authorized Capital. The aggregate number
of shares of stock which the Corporation shall have
authority to issue is 150,060,000 shares, divided into two
(2) classes consisting of 150,000,000 shares of common
stock, par value $.01 per share ("Common Stock"), and
60,000 shares of preferred stock, par value $.01 per share
("Preferred Stock")."
SECOND: That thereafter on May 21, 1998, the stockholders of the
Corporation approved the proposed amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, Mohawk Industries, Inc. has caused this certificate to
be signed by a duly authorized officer this 2nd day of June, 1998.
MOHAWK INDUSTRIES, INC.
By: /s/ Barbara B. Lance
------------------------------
Barbara B. Lance
Secretary
<PAGE>
EXHIBIT 10.8
STANDARD COMMERCIAL NET MOHAWK INDUSTRIES, INC.
LEASE AGREEMENT 79 1910 Park 100 Drive
Glen Burnie, MD 21061
187,200 Square Feet
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between Opus East, L.L.C., a
Delaware limited liability company hereinafter referred to as "Landlord" and
Mohawk Industries, Inc. (a Delaware corporation) hereinafter referred to as
"Tenant";
W I T N E S S E T H :
1. Premises and Term. In consideration of the obligation of Tenant to pay
rent herein provided, and in consideration of the other terms, provisions and
convenants hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby takes from Landlord certain premises situated within the County of Anne
Arundel, State of Maryland, more particularly described on Exhibit "A" attached
hereto and incorporated herein by reference, together with all rights,
privileges, easements, appurtenances and immunities belonging to or in any way
pertaining to the premises and together with the buildings and other
improvements situated or to be upon said premises said real property, buildings
and improvements being hereinafter referred to as the "premises").
TO HAVE AND TO HOLD the same for a term commencing on the "commencement
date", as hereinafter defined, and ending 120 months thereafter, provided,
however, that, in the event the "commencement date" is a date other than the
first day of a calendar month said term shall extend for said number of months
in addition to the remainder of the calendar month following the "commencement
date." (see Addendum Paragraph 1)
A. The "commencement date" shall be May 1, 1997. Tenant acknowledges that
it has inspected and accepts the premises, and specifically the buildings and
improvements comprising the same, in their present condition as suitable for the
purpose to which the premises are leased. Taking of possession by Tenant shall
be deemed conclusively to establish that said buildings and other improvements
are in good and satisfactory condition as of when possession was taken. Tenant
further acknowledges that no representations as to the repair of the premises,
nor promises to alter, remodel or improve the premises have been made by
Landlord, unless such are expressly set forth in this lease. If this lease is
executed before the premises become vacant or otherwise available and ready for
occupancy, or if any present tenant or occupant of the premises holds over, and
Landlord cannot acquire possession of the premises prior to said "commencement
date," Landlord shall not be deemed to be in default hereunder, and Tenant
agrees to accept possession of the premises at such time as Landlord is able to
tender the same, which date shall thenceforth be deemed the "commencement date";
and Landlord hereby waives payment of rent covering any period prior to the
tendering of possession to Tenant hereunder. After the commencement date Tenant
shall, upon demand, execute and deliver to Landlord a letter of acceptance of
delivery of the premises.
B. In the event this lease pertains to a building to be constructed, the
provisions of this subparagraph B shall apply in lieu of the provisions of
subparagraph A above and the "commencement date" shall be the date upon which
the buildings and other improvements erected and to be erected upon the premises
shall have been substantially completed in accordance with the plans and
specifications described on Exhibit "B" attached hereto and incorporated herein
by reference. Landlord shall notify Tenant in writing as soon as Landlord deems
said buildings and other improvements to be completed and ready for occupancy as
aforesaid. In the event that said buildings and other improvements have not in
fact been substantially completed as aforesaid, Tenant shall notify Landlord in
writing of its objections. Landlord shall have a reasonable time after delivery
of such notice in which to take such corrective action as may be necessary, and
shall notify Tenant in writing as soon as it deems such corrective action has
been completed so that said buildings and other improvements are completed and
ready for occupancy. Taking of possession by Tenant shall be deemed conclusively
to establish that said buildings and other improvements have been competed in
accordance with the plans and specifications and that the premises are in good
and satisfactory condition, as of when possession was so taken. Tenant
acknowledges that no representations as to the repair of the premises have been
made by Landlord, unless such are expressly set forth in this lease. After such
"commencement date" Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the premises. In the event of any dispute as
to substantial completion or work performed or required to be performed by
Landlord, the certificate of Landlord's architect or general contractor shall be
conclusive.
2. Base Rent and Security Deposits
A. Tenant agrees to pay to Landlord rent for the premises in advance,
without demand, deduction or set off, for months one (1) through forty-eight
(48) of the [ILLEGIBLE] hereof at the rate of Sixty-Four Thousand Seven Hundred
Forty and No/100 Dollars ($64,740.00) per month (See Addendum Paragraph 2). One
such monthly installment shall be due and payable on the date hereof and a like
monthly installment shall be due and payable, without demand, on or before the
first day of each calendar month succeeding the "commencement date" during the
hereby demised term, except that the rental payment for any fractional calendar
month at the commencement of the lease term shall be prorated.
B. In addition, Tenant agrees to deposit with Landlord on the date hereof
the sum of Sixty-Four Thousand Seven Hundred Forty and No/100 Dollars
($64,740.00), which sum shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's covenants and obligations
under this lease, it being expressly understood and agreed that such deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any event of default by Tenant,
Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, use such fund to the extent necessary to make good
any arrears of rent or other payments due Landlord hereunder, and any other
damage, injury, expense or liability caused by such event of default, and Tenant
shall pay to Landlord, on demand, the amount so applied in order to restore the
security deposit to its original amount. Although the security deposit shall be
deemed the property of Landlord, any remaining balance of such deposit shall be
returned by Landlord to Tenant at such time after termination of this lease that
all of the Tenant's obligations under this lease have been fulfilled.
3. Use. The premises shall be used only for the purpose of receiving,
storing, shipping and selling (other than retail) products, materials and
merchandise made and/or distributed by Tenant, and for such other lawful
purposes as may be incidental thereto. Outside storage is prohibited without
Landlord's prior written consent. Tenant shall, as its own cost and expense,
obtain any and all licenses and permits necessary for any such use. Tenant shall
comply with all governmental laws, ordinances and regulations applicable to the
condition, occupancy and use of the premises, and shall promptly comply with all
governmental orders and directives for the correction, prevention and abatement
of nuisances in or upon, or connected with, the premises, all at Tenant's sole
expense. Tenant shall not permit any objectionable or unpleasant odors, smoke,
dust, gas noise or vibrations to emanate from the premises, nor take any other
action which would constitute a nuisance or would disturb or endanger any other
tenants of the building in which the premises are situated or unreasonably
interfere with their use of their respective premises. Without Landlord's prior
written consent, Tenant shall not receive, store or otherwise handle any
product, material or merchandise which is explosive or highly inflammable.
Tenant will not permit the premises to be used for any purpose or in any manner
(including without limitation any method of storage) which would render the
insurance thereon void or the insurance risk more hazardous or cause the State
Board of Insurance or other insurance authority to disallow any sprinkler
credits.
4. Taxes
A. Tenant agrees to pay before they become delinquent all taxes
assessments, and governmental charges of any kind and nature whatsoever
(hereinafter collectively referred to as the "taxes") lawfully levied or
assessed against the building and the grounds, parking areas, driveways and
alleys around the building. Tenant shall furnish to Landlord, not later than
twenty (20) days before the date any such taxes become delinquent, official
receipts of the appropriate taxing authority or other evidence satisfactory to
Landlord evidencing payment thereof. If Tenant should fail to pay any taxes,
assessments, or governmental charges required to be paid by Tenant hereunder, in
addition to any other remedies provided herein, Landlord may, if it so elects,
pay such taxes, assessments, and governmental charges. Any sums so paid by
Landlord shall be deemed to be so much additional rental owing by Tenant to
Landlord and due and payable, on demand, by Landlord. together with interest
thereon, as the rate of ten per cent (10%) per annum from date paid by Landlord
to data of repayment by Tenant.
B. In the event the premises constitute a portion of a multiple occupancy
building, In lieu of Tenant paying the "taxes" as above provided, Landlord
agrees to pay, before they become delinquent, all "taxes" lawfully levied or
assessed against such building and the grounds, parking areas, driveways and
alleys around the building, and Tenant agrees to pay to Landlord, an additional
rental, upon demand, the amount of Tenant's "proportionate share" of all such
"taxes" paid by Landlord. Tenant's "proportionate share", as used in this lease,
shall mean a fraction, the numerator of which is the space contained in the
premises and the denominator of which is the entire space contained in the
building.
C. If, at any time during the term of this lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments or governmental charges levied, assessed or imposed on real estate
and the improvements thereon, there shall be levied, assessed or imposed on
Landlord a capital levy or other tax directly on the rents received therefrom
and/or a franchise tax, assessment, levy or charge measured by or based, in
whole or in part, upon such rents for the present or any future building or
buildings on the premises, then all such taxes, assessments, levies or charges,
or the part thereof so measured or based, shall be deemed to be included within
the term "taxes" for the purposes hereof.
D. Tenant may, alone or along with any other tenants of said building, at
its or their sole cost and expense, in its or their own name(s) and/or in the
name of Landlord, dispute and contest any "taxes" by appropriate proceedings
diligently conducted in good faith, but only after Tenant and all other tenants,
if any, joining with Tenant in such contest, have deposited with Landlord the
amount so contested and unpaid, or their proportionate shares thereof, as the
case may be, which shall be held by Landlord without obligation for interest
until the termination of the proceedings, as which time the amount(s) deposited
shall be applied by Landlord toward the payments of the items held valid
(plus any court costs, interest, penalties, and other liabilities associated
with the proceedings), and Tenants share of any excess shall be returned to
Tenant. Tenant further agrees to pay to Landlord, upon demand, Tenant's share
(as among all tenants who participated in the contest) of all court costs,
interest penalties, and other liabilities relating to such proceedings. Tenant
hereby indemnifies and agrees to hold harmless the Landlord from and against any
cost, damage, or expense (including attorneys' fees) in connection with any
such proceedings.
E. Any payment to be made pursuant to this Paragraph 4, with respect to
the real estate tax year in which this lease commences or terminates shall be
prorated.
5. Repairs and Maintenance
A. Except as expressly set forth in Section 5.F below, Tenant shall, at
its own cost and expense, keep and maintain all parts of the premises in good
condition, promptly making all necessary repairs and replacements, interior and
exterior, structural and non-structural, ordinary and extraordinary, including
but not limited to, windows, glass and plate glass, doors and any special office
entry, walls and finish work, floors and floor covering, roof, foundation, down-
<PAGE>
spouts, gutters, heating and air conditioning systems, dock boards, truck doors,
dock bumpers, paving, plumbing work and fixtures, termite and pest
extermination, regular removal of trash and debris, regular mowing of any grass,
trimming, weed removal and general landscape maintenance, including rail spur
areas, keeping the parking areas, driveways, alleys and the whole of the
premises in a clean and sanitary condition, and maintaining any spur track
serving the premises (Tenant agrees to sign a joint maintenance agreement with
the railroad company servicing the premises, if requested by the railroad
company). Tenant shall at its own cost and expense repaint exterior overhead
doors, canopies, entries, handrails, gutters, and other exposed parts of the
building which reasonably require periodic repainting to prevent deterioration
or to maintain aesthetic standards.
B. The cost of maintenance and repair of any common party wall (any wall,
divider, partition or any other structure separating the premises from any
adjacent premises occupied by other tenants) shall be shared equally by Tenant
and the tenant occupying adjacent premises. Tenant shall not damage any party
wall or disturb the integrity and support provided by any party wall and shall,
as its sole cost and expense, promptly repair any damage or injury to any party
wall caused by Tenant or its employees, agents or invitees.
C. In the event the premises constitute a portion of a multiple occupancy
building, Tenant and its employees, customers and licensees shall have the
exclusive right to use the parking areas, if any, as may be designated by
Landlord in writing, subject to such reasonable rules and regulations as
Landlord may from time to time prescribe, Further, in multiple occupancy
buildings, Landlord reserves the right to perform the roof, paving, and
landscape maintenance, exterior painting and common sewage line plumbing which
are otherwise Tenant's obligations under subparagraph A above, and Tenant shall,
in lieu of the obligations set forth under subparagraph A above with respect to
such items, be liable for its proportionate share (as defined in subparagraph
4(B) above) of the cost and expense of the care for the grounds around the
building, including but not limited so, the mowing of grass, care of shrubs,
general landscaping, maintenance of parking areas, driveways and alleys, roof
maintenance, exterior repainting and common sewage line plumbing; provided,
however, that Landlord shall have the right to require Tenant so pay such other
reasonable proportion of said mowing, shrub care and general landscaping costs
as may be determined by Landlord in its sole discretion; and further provided
that if Tenant or any other particular tenant of the building can be clearly
identified as being responsible for obstruction or stoppage of the common
sanitary sewage lien then Tenant, if Tenant is responsible, or such other
responsible tenant, shall pay the entire cost thereof, upon demand, as
additional rent. Tenant shall pay when due its share, determined as aforesaid,
of such costs and expenses along with the other tenants of the building to
Landlord upon demand, as additional rent, for the amount of its share as
aforesaid of such costs and expenses in the events Landlord elects to perform or
cause to be performed such work. (See Addendum Paragraph 3)
D. In the event the premises constitute a portion of a multiple occupancy
building, Landlord shall be responsible for coordinating any repairs and other
maintenance of any rail tracks serving or to serve the building, and if Tenant
uses such rail tracks, Tenant shall reimburse Landlord from time to time upon
demand, as additional rent, for a share of the costs of such repairs and
maintenance and any other sums specified in any agreement to which Landlord is a
party respecting such tracks, such share so be a fraction the numerator of which
is the space contained in the premises, and the denominator of which is the
entire space occupied by rail users in the building.
E. Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all heating and air conditioning systems and equipment within the
premises. The maintenance contractor and the contract must be approved by
Landlord. The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective (and a copy thereof delivered to Landlord) within thirty (30) days of
the date Tenant takes possession of the premises. (See Addendum Paragraph 4)
6. Alteration. Tenant shall not make any alterations, additions or
improvements to the premises without the prior written consent of Landlord.
Tenant may, without the consent of Landlord, but as its own cost and expense and
in a good workmanlike manner make such minor alterations, additions or
improvements or erect, remove or alter such partitions, or erect such shelves,
bins, machinery and trade fixtures as it may deem advisable, without altering
the basic character of the building or improvements and without overloading or
damaging such building or improvements, and in each case complying with all
applicable governmental laws, ordinances, regulations and other requirements.
All alterations, additions, improvements and partitions erected by Tenant shall
be and remain the property of Tenant during the term of this lease and Tenant
shall unless Landlord otherwise elects as hereinafter provided, remove all
alterations, additions, improvements and partitions erected by Tenant and
restore the premises so their original condition by the date of termination of
this lease; provided, however, that if Landlord so elects prior to termination
of this lease, such alterations, additions, improvements and partitions shall
become the property of Landlord as of the date of termination of this lease and
shall be delivered up to the Landlord with the premises. All shelves, bins,
machinery and trade fixtures installed by Tenant may be removed by Tenant prior
to the termination of this lease if Tenant so elects, and shall be removed if
required by Landlord; upon any such removal Tenant shall restore the premises to
their original condition. All such removals and restoration shall be
accomplished in a good workmanlike manner so as not to damage the primary
structure or structural qualities of the buildings and other improvements
situated on the premises.
7. Signs. Tenant shall have the right to install signs upon the premises
only when first approved in writing by Landlord and subject to any applicable
governmental laws, ordinances, regulations and other requirements. Tenant shall
remove all such signs by the termination of this lease. Such installations and
removals shall be made is such manner as to avoid injury or defacement of the
building and other improvements, and Tenant shall repair any injury or
defacement including without limitation discoloration, caused by such
installation or removal.
8. Inspection. Landlord and Landlord's agents and representatives shall
have the right to enter and inspect the premises at any reasonable time during
business hours, for the purpose of ascertaining the condition of the premises or
in order to make such repairs as may be required or permitted to be made by
Landlord under the terms of this lease. During the period that is six (6) months
prior to the end of the term hereof, Landlord and Landlord's agents and
representatives shall have the right to enter the premises at any reasonable
time during business hours for the purpose of showing the premises, and shall
have the right to erect on the premises a suitable sign indicating that the
premises are available. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the premises and shall arrange to meet with
Landlord for joint inspection of the premises as the time of vacating. In the
event of Tenant's failure to give such notice or arrange such joint inspection,
Landlord's inspection at or after Tenant's vacating the premises shall be
conclusively deemed correct for purposes of determining Tenant's responsibility
for repairs and restoration.
9. Utilities. Landlord agrees to provide, as its cost, water, electricity
and telephone service connections to the premises; but Tenant shall pay for all
water, gas, heat, light, power, telephone, sewer, sprinkler charges and other
utilities and services used on or from the premises, together with any taxes,
penalties, surcharges or the like pertaining thereto, and maintenance charges
for utilities, and shall furnish all electric light bulbs and fixtures. If any
such services are not separately metered to Tenant, Tenant shall pay a
reasonable proportion, as determined by Landlord, of all charges jointly metered
with other premises. Landlord shall in no event be liable for any interruption
or failure of utility services on the premises.
10. Assignment and Subletting. Tenant shall not have the right to assign
this lease or to sublet the whole or any part of the premises without the prior
written consent of Landlord. Notwithstanding any permitted assignment or
subletting, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent herein specified and for
compliance with all of Tenant's other obligations under the terms, provisions
and covenants of this lease. Upon the occurrence of an "event of default" as
hereinafter defined, if the premises or any part thereof are then assigned or
sublet, Landlord, in addition to any other remedies herein provided or provided
by law, may at its option collect directly from such assignee or subtenant all
rents becoming due to Tenant under such assignment or sublease and apply such
rent against any sums due to Landlord from Tenant hereunder, and no such
collection shall be construed to constitute a novation or a release of Tenant
from the further performance of Tenant's obligations hereunder.
11. Insurance, Fire end Casualty Damages.
A. Landlord agrees to maintain insurance covering the building of which
the premises are a part in an amount not less than eighty percent (80%) (or such
greater percentage as may be necessary to comply with the provisions of any
co-insurance clauses of the policy) of the "replacement cost" thereof as such
term is defined in the Replacement Cost Endorsement to be attached thereto,
insuring against the perils of Fire, Lightning, Extended Coverage, Vandalism and
Malicious Mischief, extended by Special Extended Coverage Endorsement to insure
against all other Risks of Direct Physical Loss, such coverages and endorsements
to be as defined, provided and limited in the standard bureau forms prescribed
by the insurance regulatory authority for the State in which the premises are
situated for use by insurance companies admitted in such state for the writing
of such insurance on risks located within such state. Subject to the provisions
of subparagraphs 11B and 11D below, such insurance shall be for the sole benefit
of Landlord and under its sole control. Tenant agrees to pay, to Landlord, as
additional rental, Landlord's cost of maintaining such insurance on said
building (or, in the event the premises constitute a portion of a multiple
occupancy building, Tenant's full proportionate share (as defined in
subparagraph 4(B) above) of such cost. Said payments shall be made to Landlord
within ten (10) days after presentation to Tenant of Landlord's statement
setting forth the amount due. Any payments to be made pursuant to this
subparagraph A, with respect to the year in which this lease commences or
terminates shall bear the same ratio to the payment which would be required to
be made for the full year as that part of such year covered by the term of this
lease bears to a full year.
B. If the buildings situated upon the premises should be damaged or
destroyed by any peril covered by the insurance to be provided by Landlord under
subparagraph 11A above, Tenant shall give immediate notice thereof to Landlord
and Landlord shall at its sole cost and expense thereupon proceed with
reasonable diligence so rebuild and repair such buildings to substantially the
condition in which they a existed prior to such damage or destruction, except
that Landlord shall not be required to rebuild, repair or replace any part of
the partitions, fixtures, additions and other improvements which may have been
placed in, on or about the premises by Tenant and except that Tenant shall pay
to Landlord, upon demand, any applicable deductible amount specified under
Landlord's insurance. The rent payable hereunder shall in no event abate by
reason of any damage or destruction. (See Addendum Paragraph 5)
C. If the buildings situated upon the premises should he damaged or
destroyed by a casualty other than a peril covered by the insurance to be
provided by Landlord under subparagraph 11A. above, or if any other improvements
situated on the premises should be in any manner damaged or destroyed, Tenant
shall at its sole cost and expense thereupon proceed with reasonable diligence
to rebuild and repair such buildings and/or other improvements to substantially
the condition in which they existed prior to such damage or destruction, subject
to Landlord's approval of the plans and specifications for such rebuilding and
repairing, which approval shall not be unreasonably withheld.
D. Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon all rights and obligations hereunder shall
cease and terminate.
E. Each of Landlord and Tenant hereby releases the other from any and all
liability or responsibility to the other or any claiming through or under them
by way of subrogation or otherwise for any loss or damage to property caused by
fire or any other perils insured in policies of insurance covering such
property, even if such loss or damage shall have been caused by the fault or
negligence of the other party, or anyone for whom such party may be responsible,
provided, however, that this release shall be applicable and in force and effect
only with respect to loss or damage occurring during such times as the
releasor's policies shall contain a clause or endorsement to the effect that any
such release shall not adversely affect or impair said policies or prejudice the
right of the releasor to recover thereunder and then only to the extent of the
insurance proceeds payable under such policies. Each of Landlord and Tenant
agrees that it will request its insurance carriers to include in its policies
such a clause or endorsement. If extra cost shall be charged therefor, each
party shall advise the other thereof and of the amount of the extra cost, and
the other party, at its election, may pay the same, but shall not be obligated
to do so.
<PAGE>
12. Liabilities. Landlord shall not be liable to Tenant or Tenant's
employees, agents, patrons or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the premises, resulting
from and/or caused in part or whole by the negligence or misconduct of Tenant,
its agents, servants or employees, or of any other person entering upon the
premises, or caused by the buildings and improvements located on the premises
becoming out of repair, or caused by leakage of gas, oil, water or steam, or by
electricity emanating from the premises, or due to any cause whatsoever, and
Tenant hereby covenants and agrees that it will at all times indemnify and hold
safe and harmless the property, the Landlord (including without limitation the
trustee and beneficiaries if Landlord is a trust), Landlord's agents and
employees from any loss, liability, claims, suits, costs, expenses, including
without limitation attorneys' fees and damages, both real and alleged, arising
out of any such damages or injury; except injury to persons or damage to
property the sole cause of which is the negligence of Landlord. Tenant shall
procure and maintain throughout the term of this lease a policy or policies of
insurance, at its sole cost and expense, insuring both Landlord and Tenant
against all claims, demands, or actions arising out of or in connection with:
(i) the premises; (ii) the condition of the premises; (iii) Tenant's operations
in and maintenance and use of the premises; and (iv) Tenant's liability assumed
under this lease, the limits of such policy or policies to be in the amount of
not less than $2,000,000 per occurrence for bodily injury and property damage
(See Addendum Paragraph 6). All such policies shall be procured by Tenant from
responsible insurance companies satisfactory to Landlord. Certified copies of
such policies, together with receipt evidencing payment of premiums therefor,
shall be delivered to Landlord prior to the commencement date of this lease. Not
less than fifteen (15) days prior to the expiration date of any such policies,
certified copies of the renewals thereof (bearing notations evidencing the
payment of renewal premiums) shall be delivered to the Landlord. Such policies
shall further provide that not less than thirty (30) days' written notice shall
be given to Landlord before such policy may be cancelled or changed to reduce
insurance provided thereby.
13. Condemnation.
A. If the whole or any substantial part of the premises should be taken
for any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the use of
the premises for the purpose for which they are then being used, this lease
shall terminate and the rent shall be abated during the unexpired portion of
this lease, effective when the physical taking of said premises shall occur.
B. If part of the premises shall be taken for any public or quasi-public
use under any governmental law, ordinance or regulation, or by right of eminent
domain, or by private purchase in lieu thereof, and this lease is not terminated
as provided in the subparagraph above, this Lease shall not terminate, but the
rent payable hereunder during the unexpired portion of the lease shall be
reduced to such extent as may be fair and reasonable under all the
circumstances.
C. In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings.
14. Holding Over. Tenant will, at the termination of this lease by lapse
of time or otherwise, yield up immediate possession to Landlord. In the event of
any holding over by Tenant or any of its successors in interest after the
expiration or termination of this lease, unless the parties hereto otherwise
agree to writing, the hold over tenancy shall be subject to termination by
Landlord at any time upon not less than five (5) days advance written notice, or
by Tenant at any time upon not less than thirty (30) days advance written
notice, and all of the other terms and provisions of this lease shall be
applicable during that period, except that Tenant shall pay Landlord from time
to time upon demand, as rental for the time of any hold over, an amount equal to
one and one half (1 1/2) the rent in effect on the termination date, computed on
a daily basis for each day of the holdover period. No holding over by Tenant,
whether with or without consent of Landlord, shall operate to extend this Lease
except as otherwise expressly provided.
15. Quiet Enjoyment. Landlord covenants that it now has, or will acquire
before Tenant takes possession of the premises, good title to the premises, free
and clear of all liens and encumbrances excepting only the lien for current
taxes not yet due, such mortgage or mortgages as are permitted by the terms of
this lease, zoning ordinances, and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions, and other conditions of the record. In the event this lease is a
sublease, then Tenant agrees to take the premises subject to the provisions of
the prior leases. Landlord represents and warrants that it has full right and
authority to enter into this lease and that Tenant, upon paying the rental
herein set forth and performing its other covenants and agreements herein set
forth, shall peaceably and quietly have, hold, and enjoy the premises for the
term hereof without hindrance or molestation from Landlord, subject to the terms
and provisions of this Lease.
16. Events of Default. The following events shall be deemed to be events
of default by Tenant under this lease:
(a) Tenant shall fall to pay any installment of the rent hereby
reserved when due, or any payment with respect to taxes hereunder when
due, or any other payment or reimbursement to Landlord required herein
when due, and such failure shall continue for a period of five (5) days
from the date such payment was due.
(b) Tenant shall become insolvent, or shall make a transfer in fraud
of creditors, or shall make an assignment for the benefit of creditors.
(c) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute
of the United States or any State thereof; or Tenant shall be adjudged
bankrupt or insolvent in proceeding filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant.
(e) Tenant shall desert or vacate any substantial portion of the
premises.
(f) Tenant shall fail to comply with any term, provision, or
covenant of this lease (other than the foregoing in this Paragraph 16),
and shall not cure such failure within twenty (20) days after written
notice thereof to Tenant.
17. Remedies, Upon the occurrence of any of such events of default
described in Paragraph 16 hereof, Landlord shall have the option to pursue any
one or more of the following remedies without any notice or demand whatsoever:
(a) Terminate this lease, in which event Tenant shall immediately
surrender the premises to Landlord, and if Tenant fails to do so, Landlord
may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
premises and expel or remove Tenant and any other person who may be
occupying such premises or any thereof, by force if necessary, without
being liable for prosecution or any claim or damages therefor; and Tenant
agrees to pay to Landlord on demand the amount of any loss and damage
which Landlord may suffer by reason of such termination (See addendum
Paragraph 7), whether through inability to relet the premises on
satisfactory terms or otherwise.
(b) Enter upon and take possession of the premises and expel or
remove Tenant and any other person who may be occupying such premises or
any part thereof, by force if necessary, without being liable for
prosecution or any claims for damages therefor, and Tenant agrees to pay
to the Landlord on demand any deficiency that may arise by reason of such
reletting. In the event Landlord is successful in reletting the premises
at a rental in excess of that agreed to be paid by Tenant pursuant to the
terms of this Agreement, Landlord and Tenant each mutually agree that
Tenant shall not be entitled, under any circumstances, to such excess
rental, and Tenant does hereby specifically waive any claim to such excess
rental.
(c) Enter upon the premises, by force if necessary, without being
liable for prosecution or any claim for damages therefor, whatever Tenant
is obligated to do under the terms of this lease; and Tenant agrees to
reimburse Landlord, on demand, for any expenses which Landlord may incur
in thus effecting compliance with Tenant's obligations under this lease,
and Tenant further agrees that Landlord shall not be liable for any
damages resulting to the Tenant from such action, whether caused by the
negligence of the Landlord or otherwise. Notwithstanding the foregoing, in
the event of an emergency, Landlord shall have the right to perform for
Tenant's account prior to the expiration of any cure period.
In the event Tenant fails to pay any installment of rent hereunder
as and when such installment is due, to help defray the additional cost to
Landlord for processing late payments Tenant shall pay to Landlord on
demand a late charge in an amount equal to five percent (5%) of and the
failure to pay such amount within ten (10) days after demand therefor
shall be an event of default hereunder. The provision for such late
charges shall be in addition to all of Landlord's other rights and
remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Landlord hereunder or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. No act or thing done by Landlord or its agents during the term hereby
granted shall be decried a termination of this lease or an acceptance of the
surrender of the premises, and no agreement to terminate this lease or to accept
a surrender of said premises shall be valid unless in writing signed by
Landlord. No waiver by Landlord or any violation or breach of any of the terms,
provisions covenants herein contained. Landlord's acceptance of the payment of
rental or other payments hereunder after the occurrence of an event of default
shall not be construed as a waiver of such default, unless Landlord so notifies
Tenant in writing. Forbearance by Landlord to enforce one or more of the
remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default or of Landlord's right to
enforce any such remedies with respect to such default or any subsequent
default. If, on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of said lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any reasonable attorneys' fees so incurred.
18. Landlord's Lien. In addition to any statutory lien for rent in
Landlord's favor, Landlord shall have and Tenant hereby grants to Landlord a
continuing security interest for all rentals and other sums of money becoming
due hereunder from Tenant, upon all goods, wares, equipment, fixtures,
furniture, inventory, accounts, contract rights, chattel paper and other
personal property of Tenant, situated on the premises, and such property shall
not be removed therefrom without the consent of Landlord until all arranges in
rent as well as any and other sums of money then due to the hereunder shall
first have been paid and discharged. In the event of default under this lease,
Landlord shall have, in addition to any other remedies provided herein or by
law, all rights and remedies under the Uniform Commercial Code, including
without limitation the right to sell the property described in this Paragraph 18
at public or private sale upon five (5) days notice to Tenant. Tenant hereby
agrees to execute such financing statements and other instruments necessary or
desirable in Landlord's discretion to perfect the security interest hereby
created. Any stationary lien for rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
19. Mortgages. Tenant accepts this lease subject and subordinate to any
mortgage(s) and/or deed(s) of trust now or at any time hereafter constituting a
lien or charge upon the premises or the improvements situated thereon; provided,
however, that if the mortgagee, trustee, or holder of any such mortgage or deed
of trust elects to have Tenant's interest in this lease superior to any such
instrument, then by notice to Tenant from such mortgagee, trustee or holder,
this lease shall be deemed superior to such lien, whether this lease was
executed before or after said notice or deed of trust. Tenant shall at any time
hereafter, on demand, execute any instruments, releases or other documents which
may be required by any mortgagee for the purpose of subjecting and subordinating
this lease to the lien of any such mortgage.
<PAGE>
20. Landlord's Default. In the event Landlord should become in default in
any payments due on any such mortgage described in Paragraph 19 hereof, Tenant
is authorized and empowered, after giving Landlord five (5) days prior written
notice of such default and Landlord's failure to cure such default, to pay any
such items for and on behalf of Landlord, and use amount of any item so paid by
Tenant for or on behalf of Landlord, together with any interest or penalty
required to be paid in connection therewith, shall be payable on demand by
Landlord to Tenant; provided, however that Tenant shall not be authorized and
empowered to make any payment under the terms of this Paragraph 20, unless the
item paid shall be superior to Tenant's interest hereunder. In the event Tenant
pays any mortgage debt in full, in accordance with this paragraph, it shall, at
its election, be entitled to the mortgage security by assignment or subrogation.
21. Mechanic's Liens. Tenant shall have no authority, express or implied,
to create or place any lien or encumbrance, of any kind or nature whatsoever
upon, or in any maneuver to bind, the interest of Landlord in the premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Tenant, including those who may furnish materials or perform labor
for any construction or repairs, and each such claim shall affect and each such
lien shall attach to, if at all, only the leasehold interest granted to Tenant
by this instrument. Tenant covenants and agrees that it will pay or cause to be
paid all sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the premises on
which any lien is or can be validly and legally asserted against its leasehold
interest in the premises or the improvements thereon and that it will save and
hold Landlord harmless from any and loss, cost or expense based on or arising
out of asserted claims or liens against the leasehold estate or against the
tight, title and interest of thus Landlord in the premises or under the terms of
this lease.
22. Notices. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
by Landlord to Tenant or with reference to the sending, mailing or delivery of
any notice or the making of any payment by Tenant to Landlord shall be deemed to
be complied with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address herein
below set forth or at such other address as Landlord may specify from time
to time by written notice delivered in accordance herewith. Tenant's
obligation to pay rent and any other amounts to Landlord under the terms
of this lease shall not be deemed satisfied until such rent and other
amounts have been actually received by Landlord.
(b) All payment required to be made by Landlord to Tenant hereunder
shall be payable to Landlord at the address herein below set forth, or at
such other address within the continental United States as Tenant may
specify from time so time by written notice delivered in accordance
herewith.
(c) Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered when actually received when
deposited in the United States Mail, postage prepaid, Certified or
Registered Mail, hand delivery or overnight mail, addressed to the parties
hereto at the respective addresses set out below, or as such other address
as they have theretofore specified by written notice delivered in
accordance herewith.
Landlord: Tenant:
Opus East, L.L.C. Mohawk Industries, Inc.
6707 Democracy Boulevard, Suite 510 1910 Park 100 Drive
Bethesda, Maryland 20817 Glen Burnie, Maryland 21061
Attn: Geoffrey R. Lilja, Director Attn: Larrry Morris, Vice President
of Leasing
(See Addendum Paragraph 8)
If and when included within the term "Landlord", as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual as some specific address for the receipt of notices
and payments to Landlord; if and when included within the term "Tenant", as used
in this instrument, there are more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of such a
notice specifying some individual at some specific address within the
continental United States for the receipt of notices and payments to Tenant. All
parties included within the terms "Landlord" and "Tenant", respectively, shall
be bound by notices given in accordance with the provisions of this paragraph to
the same effect as if each had received such notice.
23. Miscellaneous.
A. Words of any gender used in this lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the contest otherwise requires.
B. The terms, provisions, covenants, and conditions contained in this
lease shall apply to, insure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors and
permitted assigns except as otherwise herein expressly provided. Each party
agrees to furnish the other, promptly upon demand, a corporate resolution, proof
of due authorization by partners, or other appropriate documentation evidencing
the due authorization of such party to enter into this lease.
C. The captions inserted in this lease are for convenience only and in no
way define, limit or otherwise describe the scope or intent of this lease, or
any provision hereof, or in any way affect the interpretation of this lease.
D. Tenant agrees from time so time within ten (10) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this lease is in full force and effect, the date to
which rent has been paid, the unexpired term of this lease and such other
matters pertaining so this lease as may be reasonably requested by Landlord. It
is understood and agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this lease.
E. This lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
F. All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the premises. Upon the expiration or
earlier termination of the term hereof, and prior to Tenant vacating the
premises, Tenant shall pay to Landlord any amount reasonably estimated by
Landlord as necessary to put the premises, including without limitation all
heating and air conditioning systems and equipment therein, in good condition
and repair. Tenant shall also, prior to vacating the premises, pay to Landlord
the amount, as estimated by Landlord, of Tenant's obligation hereunder for real
estate taxes and insurance premiums one year in which the lease expires or
terminates. All such amounts shall be used and held by Landlord for payments of
such obligations of Tenant hereunder, with Tenant being liable for any
additional costs therefor upon demand by Landlord, or with any excess to be
returned so Tenant after all such obligations have been determined and
satisfied, as the case may be. Any security deposit held by Landlord shall be
credited against the amount payable by Tenant under this Paragraph 23(F).
G. If any clause or provision of this lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
lease, then and in that event, it is the intention of the parties hereto that
the remainder of this lease shall not be affected thereby, and it is also the
intention of the parties of this lease that in lieu of each clause or provision
of this lease that is illegal, invalid or unenforceable, there be added as a
part of this lease contract a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may be possible and be
legal, valid and enforceable.
H. Because the premises are on the open market and are presently being
shown, this lease shall be treated as an offer with the premises being subject
to prior lease and offer subject to withdrawal or non-acceptance by Landlord or
to other use of the premises without notice, and this lease shall not be valid
or binding unless and until accepted by Landlord in writing and a fully executed
copy delivered to both parties hereto.
I. All references in this lease to "the date hereof" or similar references
shall be deemed to refer to the last date, in point of time, on which all
parties hereto have executed this lease.
24. Additional Provisions.
EXECUTED BY LANDLORD, this 14th day of March, 1997.
LANDLORD:
Attest/Witness OPUS EAST, L.L.C.
-----------------------------------
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- ----------------------------------- -----------------------------------
Title: Vice President Title: President
- ----------------------------------- -----------------------------------
EXECUTED BY TENANT, this 10th day of March, 1997.
TENANT
Attest/Witness: Theal E. Mackey, Jr. MOHAWK INDUSTRIES, INC.
- ----------------------------------- -----------------------------------
/s/ Theal E. Mackey, Jr. By: /s/ [ILLEGIBLE]
- ----------------------------------- -----------------------------------
Title: Controller Title: Exec. V.P.
- ----------------------------------- -----------------------------------
<PAGE>
ADDENDUM TO LEASE
BY AND BETWEEN
OPUS EAST, L.L.C.
AND
MOHAWK INDUSTRIES, INC.
The printed part of the Lease Agreement is hereby modified and supplemented as
follows. Wherever there is any conflict between this Addendum and the printed
part of the Lease Agreement, the provisions of this Addendum are paramount and
the Lease Agreement shall be construed accordingly.
1. Insert the following language at the end of Section 1, as indicated:
"Termination. Tenant shall have the right to terminate this Lease
effective 12:01 a.m. local time on the first day of the eighty-fifth (85th) full
month of the Lease Term by providing Landlord with two hundred seventy (270)
days prior written notice. Upon such termination, each party shall be relieved
of its obligations to the other party hereunder, except with respect to
indemnifications by each party relating to events occurring during the Lease
term. It is understood that in the event of default, termination of the Lease
will not release Tenant from any obligation under the Lease. Upon such
termination, each party shall be relieved of its obligation to the other party
hereunder, except with respect to indemnification by each party relating to
events occurring during the Lease term, and any other matters which either
expressly or by their very nature survive termination."
2. Insert the following language where indicated in Section 2.A:
";and, for months forty-nine (49) through eighty-four (84) of the term
hereof at the rate of Sixty-Seven Thousand Eight Hundred Sixty and No/100
Dollars ($67,860.00) per month; and, for months eighty-five (85) through one
hundred twenty (120) of the term hereof at the rate of Seventy-Four Thousand One
Hundred and No/100 Dollars ($74,100.00) per month."
3. Insert the following language at the end of Section 5.C., as indicated:
"During the term, Tenant will pay as additional rent to Landlord Tenant's
proportionate share of common area expenses. The term "common area" shall mean
those areas and facilities which may be furnished from time to time by the
Landlord at or near the premises for the nonexclusive use of Landlord's tenants,
their officers, employees, invitees and customers. The term "common area
expense" shall include but not be limited to the total cost and expenses
incurred by the Landlord, including property management fees not to exceed 3% of
gross receipts from Tenant, landscaping maintenance, trash removal, exterior
painting, utility casts, snow removal, policing of the premises, Anne Arundel
County Fire Protection charge, and other costs of maintaining, repairing,
lighting and cleaning the common areas or any off-site easement areas to the
extent of any charges incurred by Landlord. Tenant agrees to pay its
proportionate share of the common area expenses within ten (10) days after
written request therefore by Landlord and Tenant further agrees that, in lieu
thereof, that upon prior request of the Landlord, Tenant will pay the same in
equal monthly installments as estimated in bills for each lease year with
appropriate adjustments being made at the end of each lease year. The Tenant's
proportionate share of common area expenses shall be one hundred percent (100%)
of the project.
Tenant acknowledges that the Premises are part of a larger development,
and that certain dues or assessments may be levied in connection with
maintenance and repair of signage serving the occupants of the development, as
the same may be erected from time to time. In the event any such signage is
erected and Tenant is included thereon, tenant shall be responsible for its
prorata share of costs related to the maintenance and repair of the signage"
<PAGE>
4. Insert the following language as Section 5F, as indicated:
"5.F. Landlord shall at its expense maintain only the roof, foundation and
the structural soundness of the exterior walls of the building in good repair,
reasonable wear and tear excepted. Tenant shall repair, and pay for any damage
caused by the negligence of Tenant, or Tenant's employees, agents or invitees,
or caused by Tenant's default hereunder. The term "walls" as used herein shall
not include windows, glass or plate glass, doors, special store fronts or office
entrys. Tenant shall immediately give Landlord written notice of defect or need
for repairs, after which Landlord shall have reasonable opportunity to repair
same or cure such defect. Landlord's liability with respect to any defects,
repairs or maintenance for which Landlord is responsible under any of the
provisions of this lease shall be limited to the cost of such repairs or
maintenance or the curing of such defect."
5. Insert the following language at the end of Section 11B of the Lease as
indicated:
"If during the last two (2) years of the Lease term the premises or a
substantial portion of the building in which the premises are located are
rendered substantially or wholly untenantable as a result of fire, the elements,
unavoidable accident or other casualty, Landlord shall have the option either to
restore the premises to their condition immediately prior to the casualty or to
terminate this Lease. In the event Landlord elects to terminate this Lease, such
option shall be exercised by Landlord by written notice to Tenant within ninety
(90) days after the fire, accident or casualty. In the event of such
termination, the rent reserved hereunder shall be adjusted as of the date of the
fire, accident or casualty."
6. Insert the following language where indicated in Section 12:
"Additionally, Tenant shall at its expense procure and maintain throughout
the Term the following insurance policies: (1) insurance covering the full value
of Tenant's property and improvements, and other property (including property of
others), in the Premises; (2) workman's compensation insurance, containing a
waiver of subrogation endorsement reasonably acceptable to Landlord, and (3)
business interruption insurance. Tenant's insurance shall provide primary
coverage to Landlord when any policy issued to Landlord provides duplicate or
similar coverage, and in such circumstance Landlord's policy will be excess over
Tenant's policy.
In addition, Tenant shall procure such other insurance and in such amounts
as may from time to time be reasonably required by Landlord, against other
insurable hazards which at the time are commonly insured against in the case of
premises and/or buildings or improvements similar in construction, design,
general location, use and occupancy to those on or appurtenant to the Premises.
The insurance set forth in Paragraphs 11 and 12 shall be maintained by
Tenant at not less than the limits set forth herein until reasonably required to
be changed from time to time by Landlord, in writing, whereupon Tenant covenants
to obtain and maintain thereafter such protection in the amount or amounts so
required by Landlord."
7. Insert the following language where indicated in Section 17 of the Lease:
"which may include all rental and other payments owed to Landlord
hereunder accrued to the date of termination plus an amount equal to the present
value of the total rental and other payments owed hereunder for the remainder of
the lease term."
8. Insert the following additional notice addresses in Section 22 as indicated:
"Additional notice addresses are as follows:
if to Landlord:
OPUS U.S. Corporation
700 Opus Center
9900 Bren Road
Minnetonka, MN 55343
Attn: Dan F. Nicol, Esquire
<PAGE>
if to Tenant:
Mohawk Industries, Inc.
2001 Antioch Road
Dalton, Georgia 30720
Attn: Jack Sharpe"
9. Insert the following language as Section 25 of the Lease:
"WAIVER OF TRIAL BY JURY. Landlord and Tenant hereby waive trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other with regard to any matter whatsoever arising out of, or
in any way connected with this Lease, the relationship of Landlord and Tenant
hereunder, Tenant's use or occupancy of the Leased Premise, and/or any claim of
injury or damage."
10. Insert the following language as Section 26 of the Lease:
"HAZARDOUS WASTE. The term "Hazardous Substances", as used in this lease
shall mean pollutants, contaminants, toxic or hazardous wastes, or any other
substances, the use and/or the removal of which is required or the use of which
is restricted, prohibited or penalized by any "Environmental Law," which term
shall mean any federal, state or local law, ordinance or other statute of a
governmental or quasi-governmental authority relating to pollution or protection
of the environment. Tenant hereby agrees that (i) no activity will be conducted
on the Premises that will produce any Hazardous Substance, except for such
activities that are part of the ordinary course of Tenant's business activities
(the "Permitted Activities") provided said Permitted Activities are conducted in
accordance with all Environmental Laws and have been approved in advance in
writing by Landlord; Tenant shall be responsible for obtaining any required
permits and paying any fees and providing any testing required by any
governmental agency; (ii) the Premises will not be used in any manner for the
storage of any Hazardous Substances except for the temporary storage of such
materials that are used in the ordinary course of Tenant's business (the
"Permitted Materials") provided such Permitted Materials are properly stored in
a manner and location meeting all Environmental Laws and approved in advance in
writing by Landlord; Tenant shall be responsible for obtaining any required
permits and paying any fees and providing any testing required by any
governmental agency, (iii) no portion of the Premises will be used as a landfill
or a dump; (iv) Tenant will not install any underground tanks of any type; (v)
Tenant will not allow any surface or subsurface conditions to exist or come into
existence that constitute, or with the passage of time may constitute public or
private nuisance; (vi) Tenant will not permit any Hazardous Substances to be
brought onto the Premises, except for the Permitted Materials described below,
and if so brought or found located thereon, the same shall be immediately
removed, with proper disposal, and all required cleanup procedures shall be
diligently undertaken pursuant to all Environmental Laws. Landlord or Landlord's
representative shall have the right but not the obligation to enter the Premises
for the purpose of inspecting the storage, use and disposal of Permitted
Materials to ensure compliance with all Environmental Laws. Should it be
determined, in Landlord's sole opinion, that said Permitted Materials are being
improperly stored, used, or disposed of, then Tenant shall immediately take such
corrective action as requested by Landlord. Should Tenant fail to take such
corrective action within 24 hours, Landlord shall have the right to perform such
work and Tenant shall promptly reimburse Landlord for any and all costs
associated with said work. If at any time during or after the term of the lease,
the Premises is found to be so contaminated or subject to said conditions,
Tenant shall diligently institute proper and thorough cleanup procedures at
Tenant's sole cost, and Tenant agrees to indemnify and hold Landlord harmless
from all claims, demands, actions, liabilities, costs, expenses, damages and
obligations of any nature arising from or as a result of the presence of
Hazardous Substances, to the extent caused by Tenant, its agents, employees,
contractors, invitees and the like. The foregoing indemnifications and the
responsibilities of Tenant shall survive the termination or expiration of this
Lease."
11. Insert the following language as Section 27 of the Lease:
"RENEWAL. Provided that this lease is in full force and effect and
provided that Tenant is not in default hereunder, (either at the time of the
giving of notice or at the time of the commencement of the renewal term) Tenant
(but no other person or entity, whether or not such person is a subtenant or
assignee of Tenant) shall be entitled to renew this lease for one (1) additional
term which is hereinafter referred to as "the Renewal Term") of five (5) years,
<PAGE>
commencing on the date on which (but for such renewal) the term would have
expired and terminating on the fifth (5th) anniversary of such date (which
anniversary shall, if this lease is so renewed, thereafter be the Termination
Date for all purposes of the provisions of this lease as applicable thereafter),
by and only by giving to the Landlord express, written notice of such renewal
not less than two hundred seventy (270) days before the date on which the
Renewal Term is to commence (in which event the Term shall automatically be
deemed to have been extended by the length of the Renewal Term, and all
reference to "the Term" in the provisions of this lease shall thereafter mean
the Term as so extended). All terms and conditions of this lease shall continue
in full force and effect, except that (i) the Monthly Base Rent during the
Renewal Term shall be the greater of (a) the fair market rent ("Market Rate")
for equivalent buildings in equivalent areas or (b) the rent in the last twelve
(12) months of the original term and (ii) Tenant shall have no further renewal
options.
Tenant and Landlord shall make an effort in good faith to agree on such
Market Rate. Any such determination of the Market Rate shall be for the period
of time during which such rent is to be in effect and not for the period of time
during which rental is being determined. In the event the Landlord and Tenant
are unable to agree upon the Market Rate within 30 days of Tenant's notice to
Landlord to renew, Landlord and Tenant shall each promptly appoint a real estate
appraiser who is a member of the American Institute of Real Estate Appraisers
(or its equivalent) to assist in the determination of the Market Rate, and the
two appraisers shall appoint a third appraiser who is also a member of the
American Institute of Real Estate Appraisers (or its equivalent). The
determination of the Market Rate by the agreement of any two of such three
appraisers shall be accepted by and binding upon Landlord and Tenant as the
Market Rate, which rate shall thereafter be payable until further adjustment as
provided hereunder. Landlord and Tenant will use all reasonable diligence to
cause their appointed appraisers to perform in good faith and in a timely manner
in order to make the determination of the Market Rate on or before the date on
which the Market Rate is to become effective. In the event such appraisers shall
not make such determination prior to the date on which the Market Rate is to
become effective, this Lease shall nevertheless continue in full force and
effect until such determination is made, and the rental for such period shall be
payable at the rate otherwise payable hereunder. Upon the determination by such
appraisers of the Market Rate, the payment of the Market Rate shall commence on
the first day of the month following the date of such determination, and in
addition to such monthly installment of rental, Tenant shall pay to Landlord the
increase in the rental payable hereunder, if any, applicable to the period from
the date on which the Market Rate was scheduled to become effective to the
payment of the first installment at the Market Rate. Landlord and Tenant shall
each bear the costs and fees of their respective appraisers and shall share
equally the cost of the third appraiser."
12. Insert the following language as Section 28 of the Lease:
"Landlord, at its sole cost and expense, shall improve the Premises in
accordance with the Plans and Specifications, drawings A1-A3, prepared by Robert
T. Hofmann & Associates dated February 17, 1997 which shall consist of the
following:
a) Minimum of twenty (20) dock doors (Series 426, 24 gauge sectional
steel with single lite or equal) equipped with manual edge of dock
plates and bumpers (MEOD 7220 or equal) and dock seals (TS183H or
Equal);
b) Metal halide light fixtures to provide 20 foot candles at floor
level in a vacant warehouse;
c) Approximately 8,000 square feet of office improvements built in
accordance with the schematic shown in Exhibit B herein; and
d) Up to $20,000 allowance for miscellaneous warehouse electric."
13. Insert the following language as Section 29 of the Lease:
"LIABILITY OF SHAREHOLDERS. Any obligation or liability whatsoever of the
Landlord (or Lessor) which may arise at any time under this Agreement or any
obligation or liability which may be incurred by it pursuant to any other
instrument, transaction or undertaking contemplated hereby shall be satisfied,
if at all, out of the Landlord's (or Lessor's) interest in the Premises and the
project which they form a part. No such obligations or liability shall be
personally binding upon nor shall resort for the enforcement thereof be had to
any other property of the Landlord (or Lessor) or the private property of any of
its Trust Property Managers,
<PAGE>
Shareholders, officers, employees or agents, regardless of whether such
obligations or liability is in the nature of contract, tort or otherwise."
14. Insert the following language as Section 30 of the Lease:
"Notwithstanding any provision of this Lease to the contrary, if this
Lease is entered into on or before March 14, 1997 and that certain Purchase and
Sale Agreement dated February 28, 1997 between Opus East, L.L.C. and Trammell
Crow NE, Inc. ("the Purchase Agreement") is subsequently terminated due to
either (i) Trammell Crow NE, Inc. not issuing the Affirmative Notice under
paragraph 5.1.1. of the Purchase Agreement or (ii) the failure of any other
Condition Precedent in subsection 5.3 of the Purchase Agreement to be satisfied
in accordance with the terms thereof, then this Lease shall automatically
terminate."
15. Insert the following language as Section 31 of the Lease:
"Landlord and Tenant represent to each other that they have not dealt with
any brokers in connection with this Lease other than CB Commercial, whose
commissions shall be paid by Landlord pursuant to separate agreements. Landlord
and Tenant shall indemnify and hold each other harmless against any claims for
brokerage or other commissions arising by reason of a breach of the aforesaid
representation and warranty."
16. Insert the following language as Section 32 of the Lease:
"This Lease shall be governed by and construed under the laws of the State
of Maryland, without reference to its conflicts of laws principles. Tenant
hereby consents to jurisdiction and venue in any court in the State of
Maryland."
<PAGE>
EXHIBIT A
BY AND BETWEEN
OPUS EAST L.L.C.
AND
MOHAWK INDUSTRIES, INC.
Lot 2-R, as shown on Administrative Plat recorded in Plat Book 190 at pages 27
and 28, being formerly part of Lot 2 and Reserved Parcel 3, PARK 100 INDUSTRIAL
DEVELOPMENT, Section 1, as shown on plat recorded in Plat Book 135 at pages 47
and 48 among the land records of Anne Arundel County, Maryland, and
Lots 41, 42, 43, 44, 51, 52 and 53 Block L, as shown on Plat entitled "ARUNDEL
MANOR", as recorded among the land records of Anne Arundel County, Maryland, in
Plat Book 15, Page 3.
[GRAPHIC]
<PAGE>
EXHIBIT B
BY AND BETWEEN
OPUS EAST L.L.C.
AND
MOHAWK INDUSTRIES, INC.
[GRAPHIC]
<PAGE>
EXHIBIT C
BY AND BETWEEN
OPUS EAST LL.C.
AND
MOHAWK INDUSTRIES, INC.
Current Rules and Regulations
1. The sidewalks in front of premises shall not be obstructed by the Tenant or
used for any purposes other than ingress and egress from and to the Tenant's
offices. Tenant shall remove promptly at its own expense, without the use of
chemical, any snow or other debris from the sidewalks in front of premises. The
Landlord shall in all cases retain the right to control or prevent access
thereto by any person whose presence, in the Landlord's judgment, would be
prejudicial to the safety, peace, character or reputation of the Building or of
any tenant of the Property.
2. The toilet rooms, water closets, sinks, faucets, plumbing and other service
apparatus of any kind shall not be used by the Tenant for any purpose other than
those for which they were installed, and no sweepings, rubbish, rags, ashes,
chemicals or other refuse or injurious substances shall be placed therein or
used in connection therewith by the Tenant.
3. No skylight, window, door or transom of the Building shall be covered or
obstructed by the Tenant, and no window shade, blind curtain, screen, storm
window, awning or other material shall be installed or placed on any window or
in any window space, except as approved in writing by the landlord. If the
Landlord has installed or hereafter installs any shade, blind or curtain in the
premises, the Tenant shall not remove it without first obtaining the Landlord's
written consent hereto.
4. No sign, lettering, insignia, advertisement, notice or other thing shall be
inscribed, painted, installed, erected or placed in any portion of the premises
which may be seen from outside the Building, or on any window, window space or
other part of the exterior or interior of the Building, unless first approved in
writing by the Landlord. Names on suite entrances shall be provided by and only
by the Landlord and at the Tenant's expense, using in each instance lettering of
a design and in a form consistent with the other lettering in the Building, and
first approved in writing by the Landlord. The Tenant shall not erect any stand,
booth or showcase or other article or matter in or upon the premises and/or the
Building without first obtaining the Landlord's written consent thereto.
5. The Tenant shall not place any additional lock upon the door within the
premises or elsewhere upon the Property without Landlord's written consent, and
shall surrender all keys or all such locks at the end of the Term. The Landlord
shall provide the Tenant with one set of keys to the premises when the Tenant
assumes possession thereof.
6. The Tenant shall not do or permit to be done anything which obstructs or
interferes with the rights of any other tenant of the Property. The Tenant shall
not keep anywhere within the Property any matter having an offensive odor, or
any kerosene, gasoline, benzine, camphene, fuel or other explosive or highly
flammable material. No bird, fish or other animal shall be brought into or kept
in or about the premises.
7. If the Tenant desires to install signaling, telegraphic, telephonic,
protective alarm or other wires, apparatus or devices within the premises, the
Landlord shall direct where and how they are to be installed and, except as so
directed, no installation, boring or cutting shall be permitted. The Landlord
shall have the right (a) to prevent or interrupt the transmission of excessive,
dangerous or annoying current of electricity or otherwise into or through the
Building or the premises, (b) to require compliance with such reasonable rules
as the Landlord may establish relating thereto, and (c) in the event of
noncompliance with such requirements or rules, immediately to cut wiring or do
whatever else it considers necessary to remove the danger,
<PAGE>
the number of the office to which such wire leads and the purpose for which it
is used, together with the names of the Tenant or other concern, if any,
operating or using it.
8. The Tenant shall have access to the premises at all reasonable times. The
Landlord shall in no event be responsible for admitting or excluding any person
from the premises. In case of invasion, hostile attack, insurrection, mob
violence, riot, public excitement or other commotion, explosion, fire or any
casualty, the Landlord shall have the right to bar or limit access to the
Building to protect the safety of occupants of the Property, or any property
within the Property.
9. Tenant and its employees, agents and invitees, shall observe and comply with
the driving and parking signs and markers on the premises surrounding the
Building.
10. The Landlord shall have the right to rescind, suspend or modify the Rules
and Regulations and to promulgate such other Rules or Regulations as, in the
Landlord's reasonable judgment, are from time to time needed for the safety,
care maintenance, operation and cleanliness of the Building, or for the
preservation of good order therein. Upon the Tenant's having been given notice
of the taking of any such action, the Rules and Regulations as so rescinded,
suspended, modified or promulgated shall have the same force and effect as if in
effect at the time at which the Tenant's lease was entered into (except that
nothing in the Rules and Regulations shall be deemed in any way to alter or
impair any provision of such lease).
11. The use of any room within the Building as sleeping quarters is strictly
prohibited at all times.
12. Nothing in these Rules and Regulations shall give any Tenant any right or
claim against the Landlord or any other person if the Landlord does not enforce
any of them against any other tenant or person (whether or not the Landlord has
the right to enforce them against such tenant or person), and no such
nonenforcement with respect to any tenant shall constitute a waiver of the right
to enforce them as to the Tenant or any other tenant person.
<PAGE>
SUBORDINATION NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement (this
"Agreement") dated March 21, 1997, is made among Mohawk Industries, Inc., a
Delaware Corporation ("Tenant"), Opus East, L.L.C., a Delaware L.L.C.
("Landlord") and NationsBank, N.A., a national banking association
("Mortgagee").
WHEREAS, Mortgagee is the owner of a promissory note (herein, as it may
have been or may be from time to time renewed, extended, amended or
supplemented, called the "Note") dated 10-30-96, executed by Opus East, L.L.C.,
(the "Borrower") payable to the order of Mortgagee in the principal face amount
of $5,400,000, bearing interest and payable as therein provided, secured by,
among other things, a Deed of Trust (herein, as it may have been or may be from
time to time renewed, extended, amended or supplemented, called the "Mortgage"),
recorded in Volume 7660. Page 411, real property records of Anne Arundel County,
MD. covering, among other property, the land (the "Land") described in Exhibit
"A" which is attached hereto and incorporated herein by reference, and the
improvements ("Improvements") thereon (such Land and Improvements being herein
together called the "Property");
WHEREAS, Tenant is the tenant under a lease which, including all
amendments and supplements thereto, is described as follows: 187,200 SQUARE FEET
AT 1910 PARK 100 DRIVE (herein, as it may from time to time be renewed,
extended, amended or supplemented, called the "Lease"), covering a portion of
the Property (said portion being herein referred to as the "Premises"); and
WHEREAS, the term "Landlord" as used herein means the present landlord
under the Lease or, if the landlord's interest is transferred in any manner, the
successor(s) or assign(s) occupying the position of landlord under the Lease at
the time in question;
THEREFORE, in consideration of the mutual agreements herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Subordination. Tenant agrees and covenants that the Lease and the
rights of Tenant thereunder, all of Tenant's right, title and interest in and to
the property covered by the Lease, and any lease thereafter executed by Tenant
covering any part of the Property, are and shall be subordinate and inferior to
(a) the Mortgage and the rights of Mortgagee thereunder, and all right, title
and interest of Mortgagee in the Property, and (b) all other security documents
now or hereafter securing payment of say indebtedness of the Landlord (or any
prior landlord) to Mortgagee which cover or affect the Property (the "Security
Documents"). This Agreement is not intended and shall not be construed to
subordinate the Lease to any mortgage, deed of trust or other security document
other than those referred to in the preceding sentence, securing the
indebtedness to Mortgagee. Without limitation of any other provision hereof,
Mortgagee may, at its option and without joinder or further consent of Tenant,
Landlord, or anyone else, at any time after the date hereof subordinate the lien
of the Mortgage (or any other lien or security interest held by Mortgagee which
covers or affects the Property) to the Lease by executing an instrument which is
intended for that purpose and which specifies such subordination and, in the
event of any such election by Mortgagee to subordinate, Tenant will execute any
documents required to evidence such subordination; provided however,
notwithstanding that the Lease may by unilateral subordination by Mortgagee
hereafter be made superior to the lien of the Mortgage, the provisions of the
Mortgage relative to the rights of Mortgagee with respect to proceeds arising
from an eminent domain taking (including a voluntary conveyance by Landlord)
and/or insurance payable by reason of damage to or destruction of the Premises
shall be prior and superior to and shall control over any contrary provisions in
the Lease.
2. Non-Disturbance. Mortgagee agrees that so long as the Lease is in full
force and effect and Tenant is not in default in the payment of rent, additional
rent, or other payments or in the performance of any of the other terms,
covenants or conditions of the Lease on Tenant's part to be performed (beyond
the period, if any. specified in the Lease within which Tenant may cure such
default),
(a) Tenants possession of the Premises under the Lease shall not be
disturbed or interfered with by Mortgagee in the exercise of any of its
rights under the Mortgage, including any foreclosure or conveyance in lieu
of foreclosure, and
(b) Mortgagee will not join Tenant as a party defendant for the
purpose of terminating Tenant's interest and estate under the Lease in any
proceeding for foreclosure of the Mortgage.
3. Attornment.
(a) Tenant covenants and agrees that in the event of foreclosure of
the Mortgage, whether by power of sale or by court action, or upon a
transfer of the Property by conveyance in lieu of foreclosure (the
purchaser at foreclosure or the transferee in lieu of foreclosure,
including Mortgagee if it is such purchaser or transferee, being herein
called "New Owner"), Tenant shall attorn to the New Owner as Tenants new
landlord, and agrees that the Lease shall continue in full force and
effect as a direct lease between Tenant and New Owner upon all of the
terms, covenants, conditions and agreements set forth in the Lease and
this Agreement, except for provisions which are impossible for Mortgagee
to perform; provided, however, that in no event shall the New Owner be:
(i) liable for any act, omission, default, misrepresentation,
or breach of warranty, of any previous landlord (including Landlord)
or obligations accruing prior to New Owner's actual ownership of the
property;
(ii) subject to any offset, defense, claim or counterclaim
which Tenant might be entitled to assert against any previous
landlord (including Landlord);
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 1
<PAGE>
(iii) bound by any payment of rent, additional rent or other
payments, made by Tenant to any previous landlord (including
Landlord) for more than one (1) month in advance;
(iv) bound by any amendment, or modification of the Lease
hereafter made, or consent by any previous landlord (including
Landlord) under the Lease to any assignment or sublease hereafter
granted, without the written consent of Mortgagee; or
(v) liable for any deposit that Tenant may have given to any
previous landlord (including Landlord) which has nor, as such, been
transferred to New Owner.
(b) The provisions of this Agreement regarding attornment by Tenant
shall be self-operative and effective without the necessity of execution
of any new lease or other document on the part of any party hereto or the
respective heirs, legal representatives, successors or assigns of any such
party. Tenant agrees, however, to execute and deliver at any time and from
time to time, upon the request of Landlord or of any holder(s) of any of
the indebtedness or other obligations secured by the Mortgage, any
instrument or certificate which, in the reasonable judgement of Landlord
or of such holder(s), may be necessary or appropriate in any such
foreclosure proceeding or otherwise to evidence such attornment,
including, if requested, a new lease of the Premises on the same terms and
conditions as the Lease for the then unexpired term of the Lease.
4. Estoppel Certificate. Tenant agrees to execute and deliver from time to
time, upon the request of Landlord or of any holder(s) of any of the
indebtedness or other obligations secured by the Mortgage, a certificate
regarding the status of the Lease, consisting of statements, if true (or if not,
specifying why not), (a) that the Lease is in full force and effect, (b) the
date through which rentals have been paid, (c) the date of the commencement of
the term of the Lease, (d) the nature of any amendments or modifications of the
Lease, (e) that no default, or state of facts which with the passage of time or
notice (or both) would constitute a default, exists under the Lease, and (f)
such other matters as may be reasonably requested.
5. Acknowledgement and Agreement by Tenant. Tenant acknowledges and agrees
as follows:
(a) Tenant acknowledges that Landlord will execute and deliver to
Mortgagee in connection with the financing of the Property an Assignment
of Leases and Rents assigning absolutely the rent and all other sums due
under the Lease. Tenant hereby expressly consents to such absolute
assignment and agrees that such assignment shall, in all respects, be
superior to any interest Tenant has in the Lease or the Property, subject
to the provisions of this Agreement. Tenant will not amend, alter,
terminate, or waive any provision of, or consent to the amendment,
alteration, termination or waiver of any provision of the Lease without
the prior written consent of Mortgagee, and no termination of the Lease,
whether pursuant to the terms of the Lease or otherwise, will be effective
without the prior written consent of Mortgagee. Tenant shall not prepay
any rents or other sums due under the lease for more than one (1) month in
advance of the due date therefor. Tenant acknowledges that Mortgagee will
rely upon this instrument in connection with such financing.
(b) Mortgagee, in making any disbursements to Landlord, is under no
obligation or duty to oversee or direct the application of the proceeds of
such disbursements, and such proceeds may be used by Landlord for purposes
other than improvement of the Property.
(c) From and after the date hereof, in the event of any act or
omission by Landlord which would give Tenant the right, either immediately
or after the lapse of time, to terminate the Lease or to claim a partial
or total eviction, Tenant will not exercise any such right (i) until it
has given written notice of such act or omission to the Mortgagee; and
(ii) until the same period of time as is given to Landlord under the Lease
to cure such act or omission shall have elapsed following such giving of
notice to Mortgagee and following the time when Mortgagee shall have
become entitled under the Mortgage to remedy the same, but in any event 30
days after receipt of such notice or such longer period of time as may be
necessary to cure or remedy such default, act, or omission including such
period of time necessary to obtain possession of the Property and
thereafter cure such default, act, or omission, during which period of
time Mortgagee shall be permitted to cure or remedy such default, act, or
omission; provided, however, that Mortgagee shall have no duty or
obligation to cure or remedy any breach or default. It is specifically
agreed that Tenant stall not, as to Mortgagee, require cure of any such
default which is personal to Landlord and therefore not susceptible to
cure by Mortgagee.
(d) In the event that Mortgagee notifies Tenant of a default under
the Mortgage, Note, or Security Documents and demands that Tenant pay its
rent and all other sums due under the Lease directly to Mortgagee, Tenant
shall honor such demand and pay the full amount of its rent and all other
sums due under the Lease directly to Mortgagee or as otherwise required
pursuant to such notice beginning with the payment next due after such
notice of default, without inquiry as to whether a default actually exists
under the Mortgage, Security Documents or otherwise in connection with the
Note, and notwithstanding any contrary instructions of or demands from
Landlord.
(e) Tenant shall send a copy of any notice or statement under the
Lease to Mortgagee at the same time such notice or statement is sent to
Landlord.
(f) Tenant has no right or option of any nature whatsoever, whether
pursuant to the Lease or otherwise, to purchase the Premises or the
Property, or any portion thereof or any interest therein, and to the
extent that Tenant has had, or hereafter acquires, any such right or
option, same is hereby acknowledged to be subject and subordinate to the
Mortgage and is hereby waived and released as against Mortgagee.
(g) This Agreement satisfies any condition or requirement in the
Lease relating to the granting of a non-disturbance agreement and Tenant
waives any requirement to the contrary in the Lease.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 2
<PAGE>
(h) Mortgagee and any New Owner shall have no liability to Tenant or
any other party for any conflict between the provisions of the Lease and
the provisions of any other lease affecting the Property, including, but
not limited to, any provisions relating to exclusive or non-conforming
uses or rights, renewal options and options to expand, and in the event of
such a conflict, Tenant shall have no right to cancel the Lease or take
any other remedial action against Mortgagee or New Owner, or against any
other party for which Mortgagee or any New Owner would be liable.
(i) Mortgagee and any New Owner shall have no obligation nor incur
any liability with respect to the erection or completion of the
improvements in which the Premises are located or for completion of the
Premises or any improvements for Tenant's use and occupancy, either at the
commencement of the term of the Lease or upon any renewal or extension
thereof or upon the addition of additional space, pursuant to any
expansion rights contained in the Lease.
(j) Mortgagee and any New Owner shall have no obligation nor incur
any liability with respect to any warranties of any nature whatsoever,
whether pursuant to the Lease or otherwise, including, without limitation,
any warranties respecting use, compliance with zoning, Landlord's title,
Landlord's authority, habitability, fitness for purpose or possession.
(k) In the event that Mortgagee or any New Owner shall acquire title
to the Premises or the Property, Mortgagee or such New Owner shall have no
obligation, nor incur any liability, beyond Mortgagee's or New Owners then
equity interest, if any, in the Property or the Premises, and Tenant shall
look exclusively to such equity interest of Mortgagee or New Owner, if
any, for the payment and discharge of any obligations imposed upon
Mortgagee or New Owner hereunder or under the Lease or for recovery of any
judgment from Mortgagee, or New Owner, and in no event shall Mortgagee,
New Owner, nor any of their respective officers, directors, shareholders,
agents, representatives, servants, employees or partners ever be
personally liable for such judgement.
(l) Nothing heroin contained is intended, nor shall it be construed,
to abridge or adversely affect any right or remedy of Landlord under the
Lease in the event of any default by Tenant in the payment of rent and/or
any other sums due under the Lease or in the performance of any of the
other terms, covenants or conditions of the Lease on Tenant's part to be
performed.
(m) Landlord has not agreed to any abatement of rent or other sums
or period of "free rent" for the Premises unless same is specifically
provided in the Lease, and Tenant agrees that in the event Mortgagee, or
any New Owner becomes the owner of the Property, no agreement for
abatement of rent or any other sum not specifically provided in the Lease
will be binding on Mortgagee or New Owner.
(n) Tenant has never permitted, and will not permit, the generation,
treatment, storage or disposal of any hazardous substance as defined under
federal, state, or local law, on the Premises or Property except for such
substances of a type and only in a quantity normally used in connection
with the occupancy or operation of buildings (such as non-flammable
cleaning fluids and supplies normally used in the day to day operation of
first class industrial building, which substances are being held, stored,
and used in strict compliance with federal, state, and local laws. Tenant
shall be solely responsible for and shall reimburse Landlord for any loss,
liability, claim or expense, including without limitation, cleanup and all
other expenses, that Landlord may incur by reason of Tenant's violation of
the requirements of this Paragraph 5(n).
6. Acknowledgement and Agreement by Landlord. Landlord, as landlord under
the Lease and grantor under the Mortgage, acknowledges and agrees for itself and
its heirs, representatives, successors and assigns, that: (a) this Agreement
does not constitute a waiver by Mortgagee of any of its rights under the
Mortgage, Note, or Security Documents, or in any way release Landlord from its
obligations to comply with the terms, provisions, conditions, covenants,
agreements and clauses of the Mortgage, Note, and Security Documents; (b) the
provisions of the Mortgage, Note, or Security Documents remain in full force and
effect and must be complied with by Landlord; and (c) Tenant is hereby
authorized to pay its rent authorized and all other sums due under the Lease
directly to Mortgagee upon receipt of a notice as set forth in paragraph 5(d)
above from Mortgagee and that Tenant is not obligated to inquire as to whether a
default actually exists under the Mortgage, Security Documents or otherwise in
connection with the Note. Landlord hereby releases and discharges Tenant of and
from any liability to Landlord resulting from Tenant's payment to Mortgagee in
accordance with this Agreement. Landlord represents and warrants to Mortgagee
that a true and complete copy of the Lease has been delivered by Landlord to
Mortgagee.
7. Lease Status. Landlord and Tenant certify to Mortgagee that neither
Landlord nor Tenant has knowledge of any default on the part of the other under
the Lease, that the Lease is bona fide and contains all of the agreements of the
parties thereto with respect to the letting of the Premises and that all of the
agreements and provisions therein contained are in full force and effect.
8. Notices. All notices, requests, consents, demands and other
communications required or which any party desires to give hereunder shall be in
writing and shall be deemed sufficiently given or furnished if delivered by
personal delivery, by telegram, telex, or facsimile, by expedited delivery
service with proof of delivery, or by registered or certified United States
mail, postage prepaid, at the addresses specified at the end of this Agreement
(unless changed by similar notice in writing given by the particular party whose
address is to be changed). Any such notice or communication shall be deemed to
have been given either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempted delivery at the
address and in the manner provided herein, or, in the case of telegram, telex or
facsimile, upon receipt. Notwithstanding the foregoing, no notice of change of
address shall be effective except upon receipt. This Paragraph 8 shall not be
construed in any way to affect or impair any waiver of notice or demand provided
in this Agreement or in the lease or in any document evidencing, securing or
pertaining to the loan evidenced by the Note or to require giving of notice or
demand to or upon any person in any situation or for any reason.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 3
<PAGE>
9. Miscellaneous.
(a) This Agreement supersedes any inconsistent provision of the
Lease.
(b) Nothing contained in this Agreement shall be construed to
derogate from or in any way impair or affect the lien, security interest
or provisions of the Mortgage, Note, or Security Documents.
(c) This Agreement shall inure to the benefit of the parties hereto,
their respective successors and permitted assigns, and any New Owner, and
its heirs, personal representatives, successors and assigns; provided,
however, that in the event of the assignment or transfer of the interest
of Mortgagee, all obligations and liabilities of the assigning Mortgagee
under this Agreement shall terminate, and thereupon all such obligations
and liabilities shall be the responsibility of the party to whom
Mortgagee's interest is assigned or transferred; and provided further that
the interest of Tenant under this Agreement may not be assigned or
transferred without the prior written consent of Mortgagee.
(4) THIS AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND AND APPLICABLE
UNITED STATES FEDERAL LAW EXCEPT ONLY TO THE EXTENT, IF ANY THAT THE LAWS
OF THE STATE IN WHICH THE PROPERTY IS LOCATED NECESSARILY CONTROL.
(e) The words "herein", "hereof", "hereunder" and other similar
compounds of the word "here" as used in this Agreement refer to this
entire Agreement and not to any particular section or provision.
(f) This Agreement may not be modified orally or in any manner other
than by an agreement in writing signed by the parties hereto or their
respective successors in interest.
(g) If any provision of the Agreement shall be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not apply to or affect any other provision hereof,
but this Agreement shall be construed as if such invalidity, illegality,
or unenforceability did not exist.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ADDRESS OF MORTGAGEE: MORTGAGE:
10 Light Street NATIONSBANK, N.A.
Baltimore, Maryland 21202
Real Estate Finance Group By: /s/ Mindy Fang
Attention: Mindy Fang ------------------------------------
Name: Mindy Fang
Title: Vice President
ADDRESS OF TENANT: TENANT:
1910 PARK 100 DRIVE MOHAWK INDUSTRIES, INC.
GLEN BURNIE, MARYLAND 21061
Attention: LARRY MORRIS By: /s/ S.H. Sharpe
------------------------------------
Name: S.H. Sharpe
Title: Exec. V.P.
ADDRESS OF LANDLORD: LANDLORD:
c/o Opus East, L.L.C. Opus East, L.L.C.
6707 Democracy Boulevard
Suite 510 By: /s/ Joseph J. Rauenhorst
Bethesda, Maryland 20817 ------------------------------------
Attention: Joseph J. Rauenhorst Name: Joseph J. Rauenhorst
Title: PRESIDENT
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 4
<PAGE>
GUARANTOR'S CONSENT
_________________, guarantor of the Lease, signs below to express its
consent to the foregoing Agreement and its agreement that its guaranty of the
Lease is and shall remain in full force and effect.
--------------------------------------
By:
----------------------------------
Title:
-------------------------------
STATE OF MARYLAND
CITY OF BALTIMORE
This instrument was acknowledged before on March 21st, 1997, by Mindy Fang
of NationsBank, a national banking association, on behalf of said association.
/s/ Marcia L. Simpson
--------------------------------------
Notary Public, State of Maryland
My Commission Expires:
Aug. 3, 1998 Marcia L. Simpson
--------------------------------------
Printed Name of Notary Public
STATE OF GEORGIA
CITY OF WHITFIELD
This instrument was acknowledged before me on MARCH 14, 1997 by S.H.
Sharpe of [Tenant] Executive Vice President, on behalf of said MOHAWK INDUSTR.
/s/ Cheryl W. Lindsey
--------------------------------------
Notary Public, State of GEORGIA
My Commission Expires:
Notary Public, Whitfield County, Georgia
My Commission Expires January 19, 1998
Cheryl W. Lindsey
--------------------------------------
Printed Name of Notary Public
STATE OF MARYLAND
CITY OF MONTGOMERY
This instrument was acknowledged before me on THE 19TH OF MARCH, 1997, by
JOSEPH J. RAUENHORST of [Landlord] President, a _____________ on behalf of said
OPUS EAST, L.L.C.
/s/ Diane B. Defibaugh
--------------------------------------
Notary Public, State of Maryland
My Commission Expires:
October 25, 1999
Diane B. Defibaugh
--------------------------------------
Printed Name of Notary Public
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 1
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
Lot 2-R, as shown on Administrative Plat recorded in Plat Book 190 at pages 27
and 28, being formerly part of Lot 2 and Reserved Parcel 3, PARK 100 INDUSTRIAL
DEVELOPMENT, Section 1, as shown on plat recorded in Plat Book 135 at pages 47
and 48 among the land records of Anne Arundel County, Maryland, and
Lots 41, 42, 43, 44, 51, 52 and 53 Block L, as shown on Plat entitled "ARUNDEL
MANOR", as recorded among the land records of Anne Arundel County, Maryland, in
Plat Book 15, Page 3.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 3
<PAGE>
STATE OF _______ ss.
ss.
COUNTY OF ______ ss.
This instrument was acknowledged before me on ____________, 19__, by
__________________________ of [Guarantor]____________, a ______________________,
on behalf of said _____________.
______________________________________
Notary Public, State of ______________
My Commission Expires:
______________________
______________________________________
Printed Name of Notary Public
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Page 2
<PAGE>
EXHIBIT 10.9
[LETTERHEAD OF LEE & ASSOCIATES]
February 29, 1996
Mr. Jack Sharpe
MOHAWK INDUSTRIES, INC.
P.O. Box 2208
Dalton, GA 30722
Re: Confirmation of Lessor for 5225 Lovelock Street, San Diego, CA
Dear Jack,
This letter is written to formally confirm the legal name of the Lessor for the
above referenced property.
The lease as written was prepared with Escondido - Trafalgar Limited Partnership
as Lessor. This partnership recently reformed itself as Lovelock LLC. The lease
has been modified by hand by the representative of the Lessor, Mr. Harry Brown.
The Federal Taxpayer's I.D. No. for Lovelock LLC is 33-0673063. In the event
Mohawk needs to contact Mr. Brown his telephone number is (714) 498-4328 and
his facsimile number is (714) 498-0260.
Base rent payments and other notices for the Lessor should be sent to:
Lovelock LLC
Mr. Harry S. Brown
P.O. Box 1431
San Clemente, CA 92674
Should you have any questions, please feel free to call me.
Sincerely,
LEE & ASSOCIATES
COMMERCIAL REAL ESTATE SERVICES
/s/ Chris Coyte
Chris Coyte
Senior Vice President
<PAGE>
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-MODIFIED NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
February 5, 1996, is made by and between Lovelock, L.L.C., ("Lessor") and Mohawk
Industries, Inc. a Georgia Corporation ("Lessee") (collectively the "Parties,"
or individually a "Party").
1.2(a) Premises: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 5225 Lovelock Street, located in the
City of San Diego, County of San Diego, State of California, with zip code
92110, as outlined on Exhibit a attached hereto ("Premises"). The "Building" is
that certain building containing the Premises and generally described as
(describe briefly the nature of the Building): An approximately 63,000 square
foot Industrial/Office building on approximately 2.72 acres. Accessors Parcel #
436-400-25.
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any
rights to the roof, exterior walls or utility raceways of the Building or to any
other buildings in the Industrial Center. The Premises, the Building, the Common
Areas, the land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the "Industrial
Center." (Also see Paragraph 2.)
1.2(b) Parking: See Addendum unreserved vehicle parking spaces
("Unreserved Parking Spaces"); and See Addendum reserved vehicle parking spaces
("Reserved Parking Spaces"). (Also see Paragraph 2.6.)
1.3 Term: 5 years and 6 months ("Original Term") commencing April 1, 1996
("Commencement Date") and ending September 30, 2001 ("Expiration Date"). (Also
see Paragraph 3).
1.4 Early Possession: February 15, 1996 ("Early Possession Date"). (Also
see Paragraph 3.2 and 3.3.)
1.5 Base Rent: $_____________ per month ("Base Rent"), payable on the
First day of each month commencing April 1, 1996. (Also see Paragraph 4.)
|X| If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum 1, attached hereto.
1.6(a) Base Rent Paid Upon Execution: $3,655.00 as Base Rent for the
period April 1, 1996 - April 30, 1996.
1.6(b) Lessee's Share of Common Area Operating Expenses: Thirteen percent
(13.49%) ("Lessee's Share") as determined by prorata square footage of the
Premises as compared to the total square footage of the Building or |_| other
criteria as described in Addendum _____.
1.7 Security Deposit: $____________ ("Security Deposit"). (Also see
Paragraph 5.)
1.8 Permitted Use: Warehousing, wholesaling and distribution of carpet and
related products as well as general office use. ("Permitted Use"). (Also see
Paragraph 6.)
1.9 Insuring Party. Lessor is the "Insuring Party." (Also see Paragraph
8.)
1.10(a) Real Estate Brokers. The following real estate broker(s)
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
|X| VOIT COMMERCIAL BROKERAGE represents Lessor exclusively ("Lessor's
Broker);
|X| LEE & ASSOC. COMMERCIAL REAL ESTATE represents Lessee exclusively
("Lessee's Broker").
|_| ____________________________ represents both Lessor and Lessee ("Dual
Agency"). (Also see Paragraph 15.)
1.10(b) Payment to Brokers. Upon the excution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor an said Broker(s) (or in the event there is no
separate written agreement between Lessor and said Broker(s), the sum of
$____________) for brokerage services rendered by said Broker(s) in connection
with this transaction.
1.11 Guarantor. The Obligations of the Lessee under this Lease are to be
guaranteed by N/A ____________________________________________________________
______________________________________________________________________________
("Guarantor"). (Also see Paragraph 37.)
1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 54, and Exhibits A through ___________, all
of which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental and/or Common Area Operating Expenses, is
an approximation which Lessor and Lessee agree is reasonable and Lessee's Share
(as defined in Paragraph 1.6(b)) based thereon is not subject to revision
whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system. lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in operating condition on the Commencement Date.
If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
thirty (30) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) shall comply with all applicable covenants or restrictions
of record and applicable building codes, regulations and ordinances in effect on
the Commencement Date. Lessor further warrants to Lessee that Lessor has no
knowledge of any claim having been made by any governmental agency that a
violation or violations of applicable building codes, regulations, or ordinances
exist with regard to the Premises as of the Commencement Date. Said warranties
shall not apply to any Alterations or Utility Installations (defined in
Paragraph 7.3 (a)) made or to be made by Lessee. If the Premises do not comply
with said warranties, Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee given within six (6) months
following the Commencement Date and setting forth with specificity the nature
and extent of such non-compliance, take such action, at Lessor's expense, as may
be reasonable or appropriate to rectify the non-compliance. Lessor makes no
warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Laws (as defined in Paragraph 2.4).
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has
been advised by the Broker(s) to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, and compliance with the Americans with
Disabilities Act and applicable zoning, municipal, county, state and federal
laws, ordinances and regulations and any covenants or restrictions of record
(collectively, "Applicable Laws") and the present and future suitability of the
Premises for Lessee's intended use; (b) that Lessee has made such investigation
as it deems necessary with reference to such matters, is satisfied with
reference thereto, and assumes all responsibility therefore as the same relate
to Lessee's occupancy of the Premises and/or the terms of this Lease; and (c)
that neither Lessor, nor any of Lessor's agents, has made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease.
<PAGE>
2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)
(a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice to Lessee, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.
(c) Lessor shall at the Commencement Date of this Lease, provide the
parking facilities required by Applicable Law.
2.7 Common Areas - Definition. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.
2.8 Common Areas - Lessee's Rights. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.
2.9 Common Areas - Rules and Regulations. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable, Rules and Regulations with respect thereto in
accordance with Paragraph 40. Lessee agrees to abide by and conform to all such
Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessees of the Industrial Center.
2.10 Common Areas - Changes. Lessor shall have the right, in Lessor's sole
discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking areas, loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land outside the boundaries of the Industrial
Center to be a part of the Common Areas (but Common Area Operating Expenses
shall not be increased as a result of any such designation);
(d) To add additional buildings and improvements to the Common Areas
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and
(f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Industrial Center as Lessor may,
in the exercise of sound business judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If an Early Possession Date is specified in
Paragraph 11.4 and if Lessee totally or partially occupies the Premises after
the early Possession Date but prior to the Commencement Date, the obligation to
pay Base Rent shall be abated for the period of such early occupancy. All other
terms of this lease, however, (including but not limited to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.
3.3 Delay in Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to Lessor within ten (10) days after
the end of said sixty (60) day period, cancel this Lease, in which event the
parties shall be discharged from all obligations hereunder; provided further,
however, that if such written notice of Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this lease hereunder shall
terminate and be of no further force or effect. Except as may be otherwise
provided, and regardless of when the Original Term actually commences, if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the
date of delivery of possession and continue for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it is
due under the terms of this Lease. Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.
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5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor as an addition to the Security Deposit so that the
total amount of the Security Deposit shall at all times bear the same proportion
to the then current Base Rent as the initial Security Deposit bears to the
initial Base Rent set forth in Paragraph 1.5. Lessor shall not be required to
keep all or any part of the Security Deposit separate from its general accounts.
Lessor shall, at the expiration or earlier termination of the term hereof and
after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.
6. Use.
6.1 Permitted Use.
(a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit the
use of the Premises in a manner that is unlawful, creates waste or a nuisance,
or that disturbs owners and/or occupants of, or causes damage to the Premises or
neighboring premises or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the Permitted
Use, so long as such use is not a Reportable Use and does not expose the
Premises or neighboring properties to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may (but
without any obligation to do so) condition its consent to any Reportable Use of
Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited to
the installation (and, at Lessor's option, removal on or before Lease expiration
or earlier termination) or reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give Lessor written notice thereof, together with a copy of
any statement, report, notice, registration, application, permit, business plan,
license, claim, action, or proceeding given to, or received from, any
governmental authority or private party concerning the presence, spill, release,
discharge of, or exposure to, such Hazardous Substance including but not limited
to all such documents as may be involved in any Reportable Use involving the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including, without limitation,
through the plumbing or sanitary sewer system).
(c) Indemnification. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or permitted by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances, unless specifically so agreed by Lessor in writing at the
time of such agreement.
6.3 Lessee's Compliance with Requirements. Lessee shall, at Lessee's sole
cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall, within five (5) days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information, including
but not limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor; and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
failure by Lessee or the Premises to comply with any Applicable Requirements.
6.4 Inspection; Compliance with Law. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lenders") shall have the right
to enter the Premises at any time in the case of an emergency, and otherwise at
reasonable times, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease and all Applicable
Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to
employ experts and/or consultants in connection therewith to advise Lessor with
respect to Lessee's activities, including but not limited to Lessee's
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance on or from the Premises. The costs and expenses of any such
inspections shall be paid by the party requesting same, unless a violation of
Applicable Requirements or a contamination, caused or materially contributed to
by Lessee, is found to exist, or unless the inspection is requested or ordered
by a governmental authority as the result of any such existing violation or
contamination. In such case, Lessee shall, within twenty (20) days after receipt
of invoice, reimburse Lessor or Lessor's Lender, as the case may be, for the
costs and expenses of such inspections.
7. Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment, or facilities specifically serving the
Premises, such as plumbing, heating, air conditioning, ventilating, electrical,
lighting facilities, boilers, fired or unfired pressure vessels, fire hose
connections if within the Premises, fixtures, interior walls, interior surfaces
of exterior walls, ceilings, floors windows, doors, plate glass, and skylights,
but excluding any items which are responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair.
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses). 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls and structural condition of interior bearing walls,
exterior roof, fire sprinkler and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
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and/or smoke detection systems and equipment, fire hydrants, parking lots,
walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as
well as providing the services for which there is a Common Area Operating
Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the
exterior or interior surfaces of exterior walls nor shall Lessor be obligated to
maintain, repair or replace windows, doors or plate glass of the Premises.
Lessee expressly waives the benefit of any statute now or hereafter in effect
which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
Building, Industrial Center or Common Areas in good order, condition and repair.
7.3 Utility Installations, Trade Fixtures, Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and [ILLEGIBLE] in, or about the Premises. The term "Trade Fixtures"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "Alterations" shall mean any
modification of the improvements on the Premises which are provided by the
Lessor under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be
made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without Lessor's consent but upon notice to Lessor, so long as they
are not visible from the outside of the Premises, do not involve puncturing,
relocating or removing the roof or any existing walls, or changing or
interfering with the fire sprinkler or fire detection systems and the cumulative
cost thereof during the term of this Lease as extended does not exceed
$2,500.00.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may, (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.
(c) Lien Protection. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on, or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises. If Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one
and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
Lessor may require Lessee to Lessor's attorney's fees and costs in participating
in such action if Lessor shall decide it is to its best interest to do so.
7.4 Ownership, Removal, Surrender, and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises, Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon the
Premises and be surrendered with the Premises by Lessee.
(b) Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be [ILLEGIBLE]
by the expiration or earlier termination of this Lease, notwithstanding that
their installation may have been consented to by Lessor. Lessor may [ILLEGIBLE]
the removal at any time of all or part of any Alterations or Utility
Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date, clean
and free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted. Ordinary wear and tear shall not include any
damage or deterioration that would have been prevented by good maintenance
practice or by Lessee performing all of its obligations under this Lease. Except
as otherwise agreed or specified herein, the Premises, as surrendered, shall
include the Alterations and Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Lessee-Owned Alterations and Utility Installations, as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Requirements and/or good practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.
8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) As used herein, the term "Insurance Cost Increase" is defined as
any increase in the actual cost of the insurance applicable to the Building and
required to be carried by Lessor pursuant to Paragraph 8.2(b), 8.3(a) and
8.3(b), ("Required Insurance"), over and above the Base Premium, as hereinafter
defined, calculated on an annual basis. "Insurance Cost Increase" shall include,
but not be limited to, requirements of the holder of a mortgage or deed of trust
covering the Premises, increased valuation of the Premises, and/or a general
premium rate increase. The term "Insurance Cost Increase" shall not, however,
include any premium increases resulting from the nature of the occupancy of any
other lessee of the Building. If the parties insert a dollar amount in Paragraph
1.9, such amount shall be considered the "Base Premium." If a dollar amount has
not been inserted in Paragraph 1.9 and if the Building has been previously
occupied during the twelve (12) month period immediately preceding the
Commencement Date, the "Base Premium" shall be the annual premium applicable to
such twelve (12) month period. If the Building was not fully occupied during
twelve (12) month period, the "Base Premium" shall be the lowest annual premium
reasonably obtainable for the Required Insurance as of the Commencement Date,
assuming the most nominal use possible of the Building. In no event, however,
shall Lessee be responsible for any portion of the premium cost attributable to
liability Insurance coverage in excess of $1,000,000 procured under Paragraph
8.2(b).
(b) Lessee shall pay any Insurance Cost Increase to Lessor pursuant
to Paragraph 4.2 Premiums for policy periods commencing prior to, or extending
beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "insured contract"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contribution with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.
(b) Carried by Lessor. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be named
as an additional insured therein.
8.3 Property Insurance-Building, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender or included in the base premium),
including coverage for any additional costs resulting from debris removal and
reasonable amounts of coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of any undamaged sections of the
Building required to be demolished or removed by reason of the enforcement of
any building, zoning, safety or land use laws as the result of a covered loss,
but not including plate glass insurance. Said policy or policies shall also
contain an agreed valuation provision in lieu of any co-insurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located.
(b) Rental Value. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s), insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
Real Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating Expenses
shall include any deductible amount in the event of such loss.
(c) Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
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(d) Lessee's Improvements. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question become the property of Lessor under
the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to exceed $50,000
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property and the restoration of Trade Fixtures and
Lessee-Owned Alterations and Utility Installations. Upon request from Lessor,
Lessee shall provide Lessor with written evidence that such insurance is in
force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender, as set forth
in the most current issue of "Best's Insurance Guide." Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable be Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor' negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss, of rents and/or damages,
costs, liens, judgments, penalties, loss of permits, attorneys' and consultants'
fees, expenses and/or liabilities arising out of, involving, or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action proceeding involved therein, and whether or
not (in case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee's employees, contractors, invitees, customers, or any other person in or
about the Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether said injury or damage results from conditions arising upon the Premises
or upon other portions of the Building of which the Premises are a part, from
other sources or places, and regardless of whether the cause of such damage or
injury or the means of repairing the same is accessible or not. Lessor shall not
be liable for any damages arising from any act or neglect of any other lessee of
Lessor nor from the failure by Lessor to enforce the provisions of any other
lease in the Industrial Center. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
or for any loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and
Utility installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be
Premises Total Destruction.
(c) "Insured Loss" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or coverage
limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Premises Partial Damage -- Insured Loss. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessors expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect, if
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.
9.3 Partial Damage - Uninsured Loss. if Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessees expense and this
Lease shall continue in full force and effect), Lessor may at Lessor's option,
either (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee withIn thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease [ILLEGIBLE] of the date sixty (60) days following the date
of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessees commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide Lessor with
the required funds or satisfactory assurance thereof within thirty (30) days
following such commitment from Lessee. In such event this Lease Shall continue
in full force and effect, and Lessor shall proceed to make such repairs as soon
as reasonably possible after the required funds are available, if Lessee does
not give such notice and provide the funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in Lessors
notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's
option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to exercise
such option and provide such funds or assurance during such period, then this
Lease shall terminate as of the date set forth in the first sentence of this
Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Bass Rent
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, Shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired, but not in excess of
proceeds from insurance required to be carried under Paragraph 8.3(b). Except
for abatement of Base Rent Common Area Operating Expenses and other charges, if
any, as aforesaid, all other obligations of Lessee hereunder shall be performed
by Lessee, and Lessee shall have no claim against Lessee for any damage suffered
by reason of any such damage, destruction, repair, remediation or restoration.
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(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect "commence" as used in this Paragraph 9.6
shall mean either the unconditional authorization of the preparation of the
retired plans, or the beginning of the actual work on the Premises, whichever
occurs first.
9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor on which case Lessee shall
make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessors option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000 whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue In
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified In Lessors notice of termination.
9.8 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 Waiver of Statutes, Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premise and
the Building with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent it is inconsistent
therewith.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Industrial Center, and except as
otherwise provided in Paragraph 10.3, any increases in such amounts over the
Base Real Property Taxes shall be included in the calculation of Common Area
Operating Expenses in accordance with the provisions of Paragraph 4.2.
10.2 Real Property Tax Definition.
(a) As used herein, the term "Real Property Taxes" shall include any
form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed upon the Industrial Center by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage, or other improvement
district thereof, levied against any legal or equitable interest of Lessor in
the Industrial Center or any portion thereof, Lessor's right to rent or other
income therefrom, and/or Lessor's business of leasing the Premises. The term
"Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring, or
changes in Applicable Law taking effect, during the term of this Lease,
including but not limited to a change in the ownership of the Industrial Center
or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties.
(b) As used herein, the term "Base Real Property Taxes" shall be the
amount of Real Property Taxes, which are assessed against the Property Taxes for
any real estate tax year shall be included in the calculation of Real Property
Taxes for such calendar year based upon the number of which such calendar year
and tax year have in common.
10.3 Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.
10.4 Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
10.5 Lessee's Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. Utilities. Lessee shall pay directly for all utilities and services supplied
to the Premises, including but not limited to electricity, telephone, security,
gas and cleaning of the Premises, together with any taxes thereon. If any such
utilities or services are not separately metered to the Premises or separately
billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined by Lessor of all such charges jointly metered or billed with other
premises in the Building, in the manner and within the time periods set forth in
Paragraph 4.2(d).
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five
percent (25%) or more of the voting control of Lessee shall constitute a change
in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing
refinancing. transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of full
execution and delivery of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, at whichever time
said Net Worth of Lessee was or is greater, shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably withhold its consent. "Net
Worth of Lessee" for purposes of this Lease shall be the net worth of Lessee
(excluding any Guarantors) established under generally accepted accounting
principles consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessors option, be a
[ILLEGIBLE] curable after notice per Paragraph 13.1, or a non-curable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such represented to assignment or subletting as a non-curable Breach, Lessor
shall have the right to either: (i) terminate this Lease, or (ii) upon thirty
(30) days' written notice ("Lessors Notice"), increase the monthly Base Rent for
the Premises to the greater of the then fair market rental value of the
Premises, as reasonably determined by Lessor, or one hundred ten percent (110%)
of the Base Rent then in effect. Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and rental
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lease shall be subject to similar adjustment to the then fair market value as
reasonably determined by Lessor (without the Lease being considered an
encumbrance or any deduction for depreciation or obsolescence, and considering
the Premises at its highest and best use and in good condition) or one hundred
ten percent (110%) of the price previously in effect, (ii) any index-oriented
rental or price adjustment formulas contained in this Lease shall be adjusted to
require that the base index be determined with reference to the index applicable
to the time of such adjustment, and (iii) any fixed rental adjustments scheduled
during the remainder of the Lease term shall be increased in the same ratio as
the new rental bears to the Base Rent in effect immediately prior to the
adjustment specified in Lessor's Notice.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease.
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(d) In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the monthly Base Rent applicable to
the portion of the Premises which is subject of the proposed assignment or
sublease, whichever is greater, as reasonable consideration for Lessor's
considering and processing the request for consent. Lessee agrees to provide
Lessor with such other or additional information and/or documentation as may be
reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior defaults
or breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee under a sublease approved by Lessor shall further
assign or sublet all or any part of the Premises without Lessor's prior written
consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The sublessee
shall have a right of reimbursement and offset from and against Lessee for any
such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "Default by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"Breach" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent, Lessee's Share of Common
Area Operating Expenses, or any other monetary payment required to be made by
Lessee hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of
three (3) days following written notice thereof by or on behalf of Lessor to
Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (i) duly
executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 18 or 37, (v) the subordination or non-subordination of
this Lease per Paragraph 30, (vi) the guaranty of the performance of Lessee's
obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the
execution of any document requested under Paragraph 42 (easements), or (viii)
any other documentation or information which Lessor may reasonably require of
Lessee under the terms of this lease, where any such failure continues for a
period of ten (10) days following written notice by or on behalf of Lessor to
Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that
are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessees
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessees becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessees assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days: or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement of Lessee
or of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially
(g) If the performance of Lessee's oblIgations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without written notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due
and payable by Lessee to Lessor upon invoice therefor. If any check given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor
at its own option, may require all future payments to be made under this Lease
by Lessee to be made only by cashier's check. In the event of a Breach of this
Lease by Lessee (as defined in Paragraph 13.1), with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained
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through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding the unpaid rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit for such rent and/or damages. If a notice and grace period
required under Subparagraph 13.1(b), (c) or (d) was not previously given, a
notice to pay rent or quit, or to perform or quit, as the case may be, given to
Lessee under any statute authorizing the forfeiture of leases for unlawful
detainer shall also constitute the applicable notice for grace period purposes
required by Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace
period under the unlawful detainer statute shall run concurrently after the one
such statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect
(in California under California Civil Code Section 1951.4) after Lessee's Breach
and recover the rent as it becomes due, provided Lessee has the right to sublet
or assign, subject only to reasonable limitations. Lessor and Lessee agree that
the limitations on assignment and subletting this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under this Lease, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Inducement Recapture in Event of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
portion of the Common Areas designated for Lessee's parking, is taken by
condemnation, Lessee may, at Lessee's option, to be exercised in writing within
ten (10) days after Lessor shall have given Lessee written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not terminated this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the Base
Rent shall be reduced in the same proportion as the rentable floor area of the
Premises taken bears to the total rentable floor area of the Premises. No
reduction of Base Rent shall occur if the condemnation does not apply to any
portion of the Premises. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution of value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation, separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above Lessee's Share of
the legal and other expenses incurred by Lessor in the condemnation matter,
repair any damage caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. Brokers' Fees.
15.1 Procuring Cause. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.
15.2 Additional Terms. Unless Lessor and Broker(s) have otherwise agreed
in writing, Lessor agrees that: (a) if Lessee exercises any Option (as defined
in paragraph 39.1) granted under this Lease or any Option subsequently granted,
or (b) if Lessee acquires any rights to the Premises or other premises in which
Lessor has an interest, or (c) if Lessee remains in possession of the Premises
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Broker(s) a fee in accordance with the schedule of said Broker(s) in effect
at the time of the execution of this Lease.
15.3 Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.
15.4 Representations and Warranties. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker
or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorney's fees
reasonably incurred with respect thereto.
16. Tenancy and Financial Statements.
16.1 Tenancy Statement. Each Party (as "Responding Party") shall within
ten (10) days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "Tenancy Statement" form published by
the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.
16.2 Financial Statement. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
public financial statements of Lessee and such Guarantors as may be reasonably
required by such lender or purchaser, including but not limited to Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises. In the event of
a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within ten (10) days following
the date on which it was due, shall bear interest from the date due at the prime
rate charged by the largest state chartered bank in the state in which the
Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.
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23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23. The addresses noted adjacent to a
Party's signature on this Lease shall be that Party's address for delivery or
mailing of notice purposes. Either Party may by written notice to the other
specify a different address for notice purposes, except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for the purpose of mailing or delivering notices to Lessee. A copy of
all notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any
notice is transmitted by facsimile transmission or similar means, the same shall
be deemed served or delivered upon telephone or facsimile confirmation of
receipt of the transmission thereof, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any such act shall not be deemed to render unnecessary the
obtaining of such Lessors consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any Default or Breach by
Lessee of any provision hereof. Any payment given Lessor by Lessee may be
accepted by the Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to two hundred percent
(200%) of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event or Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission or any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other Party or Broker of its claim or defense. The
attorneys' fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred. Lessor shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach. Broker(s) shall be intended
third party beneficiaries of this Paragraph 31.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor may at any time place on or about the
Premises or Building any ordinary "For Sale" signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place on or
about the Premises any ordinary "For Lease" signs. All such activities of Lessor
shall be without abatement or rent of liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to reasonable architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for
any Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
-9-
<PAGE>
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.
39. Options
39.1 Definition. As used in this Lease, the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to Lessee in
the this Lease is personal to the original Lessee named in paragraph 1.1 hereof,
and cannot be voluntarily or involuntarily assigned or exercised by any person
or entity other than said original Lessee while the original Lessee is in full
and actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later option cannot be exercised unless the
prior Options to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i) during
the commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Defaults under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.
40. Rules and Regulations. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Offer. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
-10-
<PAGE>
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF
ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS,
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE
LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS
LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE
WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at:
------------------------------
on:
---------------------------------------
By LESSOR:
- ------------------------------------------
- ------------------------------------------
By:
--------------------------------------
Name Printed: Harry S. Brown
Title:
------------------------------------
By:
---------------------------------------
Name Printed:
-----------------------------
Title:
------------------------------------
Address:
----------------------------------
- ------------------------------------------
Telephone: (714) 498-4328
--------------------------------
Facsimile: (714) 498-0260
--------------------------------
BROKER:
Executed at:
---------------------------------
on:
---------------------------------------
By:
---------------------------------------
Name Printed: Jeff Barnes
-----------------------------
Title:
------------------------------------
Address: 4370 La Jolla Village Drive, #990
----------------------------------
San Diego, CA 92122-1233
- ------------------------------------------
Telephone: (619) 453-0505
--------------------------------
Facsimile: (619) 453-1981
--------------------------------
Executed at: DALTON, GA
------------------------------
on: FEB. 19, 1996
---------------------------------------
By LESSEE:
- ------------------------------------------
- ------------------------------------------
By: Mohawk Industries, Inc. a Georgia Corporate
--------------------------------------
Name Printed: S.W. Sharpe
-------------------------------------
Title: Exec. V.P.
------------------------------------
By: /s/ S.H. Sharpe
---------------------------------------
Name Printed:
-----------------------------
Title:
------------------------------------
Address:
----------------------------------
- ------------------------------------------
Telephone: ( )
--------------------------------
Facsimile: ( )
--------------------------------
BROKER:
Executed at:
---------------------------------
on:
---------------------------------------
By: /s/ Chris Coyte
---------------------------------------
Name Printed: Chris Coyte
-----------------------------
Title: Senior Vice President
------------------------------------
Address: 3991 MacArthur Blvd., Suite 100
----------------------------------
Newport Beach, CA 92660
- ------------------------------------------
Telephone: (714) 724-1000
--------------------------------
Facsimile: (714) 833-0608
--------------------------------
NOTICE: These forms are often modified to meet changing requirements
of law and needs of the industry. Always write or call to
make sure you are utilizing the most current form: AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So. Figueroa St.,
Suite M-l, Los Angeles, California 90071 (213) 687-8777.
-11-
<PAGE>
EXHIBIT A
SITE PLAN OF PREMISES
[GRAPHIC]
WASHINGTON DISTRIBUTION CENTER
11954 E. WASHINGTON BOULEVARD o SANTA FE SPRINGS
<PAGE>
EXHIBIT "A"
SITE PLAN OF PREMISES
[GRAPHIC]
5225 LOVELOCK STREET
SAN DIEGO
NOT TO SCALE
<PAGE>
EXHIBIT 10.10
INTEROFFICE MEMO
TO: THERAL MACKEY
LINDA BARTENFIELD
FROM: JACK SHARPE
DATE: SEPTEMBER 23, 1996
SUBJECT: NEW WAREHOUSE - NORTHEAST REGION
- --------------------------------------------------------------------------------
During the month of December of this year or January, 1997, we will move from
our current New Jersey warehouse to a larger warehouse.
We are in the process of signing a new lease as follows:
LOCATION: 100 Alexander Ave., Industrial Park
Pompton Plains, NJ
EFFECTIVE DATE: January 01, 1997
TERMS: 7 1/2 years with right to cancel in 5 years.
OPTIONS: One for 2 1/2 years, one for 5 years - Total 7 1/2 years
SIZE: Total 164,437 sq. ft., initially we will only occupy
98,137 sq. ft.
LANDLORD: Westend Road Associates
C/O The Opper Group
1460 Valley Road
P.O. Box 559
Wayne, NJ 07474-0559
RENT: BASE = $28,623.29 For January, 1997
DEPOSIT = $28,623.29
----------
TOTAL = $57,246.58 Due 09/23/96
==========
ADDITIONAL DEPOSIT = 28,623.29 09/25/96
<PAGE>
LEASE
Between
WEST END ROAD ASSOCIATES,
a New Jersey Partnership
Landlord
and
MOHAWK INDUSTRIES, INC.,
a Delaware Corporation
Tenant
Dated: September 23, 1996
SILLS CUMMIS ZUCKERMAN RADIN
TISCHMAN EPSTEIN & GROSS, P.A.
The Legal Center
One Riverfront Plaza
Newark, New Jersey 07102-5400
<PAGE>
TABLE OF CONTENTS
-----------------
Section
- -------
Premises
1 Term
2 Rent
3 Proportionate Share
4 Additional Rent
5 Operating Costs
6 Landlord's Obligations
7 Intentionally Omitted
8 Net Lease
9 Additional Space
10 Purpose
11 Default in Payment of Rent -
Abandonment of Premises -
Relating
12 Subletting and Assignment
13 Condition of Premises; Repairs -
Clean and Sanitary and Repairs
14 Utilities, Services, Costs, Expenses, Taxes
15 Mechanics' Liens
16 Non-Liability of Landlord - Landlord Indemnity
17 Liability Insurance
18 Tenant's Own Insurance
19 Mutual Waiver of Subrogation
20 Failure to Obtain Insurance
21 Unavailability of Fire Insurance
22 Right to Inspect and Exhibit
23 Total or Partial Destruction
24 Laws and Ordinances
25 Signs
26 Priority of Fee Mortgages
27 Security Deposit - First Month's Rent
28 Rules and Regulations
29 Tenant's Violation of Terms - Re-entry by
Landlord
30 Notices
31 Entire Agreement; No Oral Changes
32 Insolvency of Tenant
33 Eminent Domain; Condemnation
34 Delivery of Lease
35 Lease Provisions Not Exclusive
36 Heirs, Etc.
37 Date of Possession
38 Real Estate Taxes
39 Tax Appeals by Landlord
40 Quiet Enjoyment
41 Reservation of Title
42 Outside Storage
43 Certificate of Occupancy
44 Holding Over
45 Consents to Defaults
46 Payments in Event of Default
47 Financial Statements
48 Table of Contents and Marginal Notes
49 Broker
50 Accord and Satisfaction
51 Consents
52 Hazardous Substances
53 Negotiated Agreement
54 Processing Charge
55 Mortgagee Protection Clause
56 Interpretation
57 Right of First Refusal
58 Modifications Requested by Mortgagee
59 Intentionally Omitted
<PAGE>
60 Renewal Options
61 Cancellation Option
62 Parties Duly Authorized
63 Septic System
Signatures
Schedule "A" - Description of Premises
Schedule "B" - Roof Work
Schedule "C" - Landlord Alteration
Schedule "D" - Letter from James C. Anderson
Associates, Inc.
Schedule "E" - Letter from The Whitman
Companies, Inc.
<PAGE>
LEASE
-----
THIS AGREEMENT, entered into this 23 day of September, 1996, between WEST
END ROAD ASSOCIATES, a New Jersey Partnership, having offices c/o The Opper
Group, 1460 Valley Road, P.O. Box 559, Wayne, New Jersey 07474-0559, hereinafter
referred to as "Landlord", and MOHAWK INDUSTRIES, INC., a corporation of the
State of Delaware, having offices at 2001 Antioch Road, Dalton, Georgia 30721,
hereinafter referred to as "Tenant".
W I T N E S S E T H:
PREMISES: Landlord hereby demises and leases unto Tenant and Tenant hereby
--------
hires and takes from Landlord, for the term and upon the rentals, terms and
conditions hereinafter specified, the premises described on Schedule "A" (the
"Premises") consisting of the entire building (the "Building") containing
approximately 164,437 square feet of space and the common areas appurtenant
thereto located at 100 Alexander Avenue Industrial Park, Pompton Plains, New
Jersey (the "Park") ; provided, however, that until the approximately 62,000
square feet of the Park presently occupied by 3B Trucking (the "3B Space") and
the approximately 4,300 square feet of the Park presently occupied by Peridot
(the "Peridot Space") become part of the Premises pursuant to Section 9 below,
Tenant's rights with respect to the common areas of the Park shall be limited to
a right of access to the Premises and all common areas of the Park, including
all trailer parking, together with thirty (30) designated parking spaces in the
front of the Park. The Premises are to be delivered in the "AS IS" condition as
of the date hereof, subject to normal wear from the date hereof to the date of
delivery of the Premises (or respective part thereof), except that (a) Landlord
shall cause the work set forth on Schedule "B" to be undertaken to the roof of
the Building, so that the roof is to be delivered free of
-1-
<PAGE>
leaks and in good repair, (b) all mechanicals (i.e. heating, ventilating, air
conditioning, electrical and plumbing) are to be in good working order (and the
heating system is to be in good working order at the beginning of the heating
season), (c) the parking area and loading area are to be delivered in good
condition, with patching or paving where needed, and with adequate drainage so
that there are no large areas of freestanding water, and (d) broken glass is to
be replaced, (e) all light fixtures are to be in working order, (f) the exterior
of the Building is to be painted, (g) the oil water separator is to be pumped,
(h) Landlord shall complete all of the alterations set forth on Schedule "C"
(the "Landlord Alteration") , and (i) Landlord shall spend up to an aggregate of
Ten Thousand ($10,000.00) Dollars as directed by Tenant on account of repairs,
alterations and/or renovations to the Premises not delineated in (a) through (h)
above.
The Premises, the 3B Space and the Peridot Space may, at Tenant's option to
be exercised prior to January 1, 1997, be measured by a licensed engineer or
architect reasonably acceptable to Landlord, in which event the Basic Rent (as
defined in Section 2 below) and Tenant's Proportionate Share (as defined in
Section 3 below) shall be adjusted to reflect the square footages as certified
by such engineer or architect. Tenant shall be responsible for the payment of
the fees of the engineer or architect.
SECTION 1: TERM:
----------------
The term of this demise shall be seven (7) years and six (6) months
beginning on January 1, 1997 and ending at midnight on June 30, 2004 (the
"Term"), subject, however, to the terms contained herein. Notwithstanding the
foregoing, Tenant may occupy the Premises commencing on November 1, 1996, and in
consideration therefore, Tenant shall comply with all of the terms and
provisions of the Lease for the period from November 1, 1996 through December
31, 1996. In no event, however, shall Tenant be obligated to pay Rent (as
defined below) with respect to the 3B Space and/or the Peridot Space for any
period of time
-2-
<PAGE>
prior to January 1, 1997, regardless of whether Tenant occupies the 3B Space
and/or the Peridot Space at any time prior to January 1, 1997.
SECTION 2: RENT:
---------------
The basic rent during the Term of this Lease ("Basic Rent") shall be Four
Million Five Hundred Sixty-three Thousand One Hundred Twenty-six and 75/100
($4,563,126.75) Dollars. The Basic Rent from January 1, 1997 through December
31, 2001 shall accrue at an annual rate of Five Hundred Seventy-five Thousand
Five Hundred Twenty-nine and 50/100 ($575,529.50) Dollars and be payable in
equal monthly installments of Forty-seven Thousand Nine Hundred Sixty and 79/100
($47,960.79) Dollars; and the Basic Rent from January 1, 2002 through June 30,
2004 shall accrue at an annual rate of Six Hundred Seventy-four Thousand One
Hundred Ninety-one and 70/100 ($674,191.70) Dollars and be payable in equal
monthly installments of Fifty-six Thousand One Hundred Eighty-two and 64/100
($56,182.64) Dollars. Notwithstanding the foregoing, if any time during the Term
either the 3B Space and/or the Peridot Space is, not part of the Premises, then
for that period of time, Tenant shall receive a credit against the Basic Rent
for the square footage of such space(s) not leased at the rate of $3.50 per
square foot per annum for the first 5 years of the initial Term, $4.10 per
square foot per annum for the last 2 years and 6 months of the initial Term, and
the rates set forth in Section 60(c) below for the two renewal terms. Each
monthly installment of Basic Rent shall be paid and be payable in equal monthly
installments on or before the first day of each month, in advance, at the office
of Landlord or at such other place as shall be designated by Landlord, without
any prior notice or demand therefor and without any deduction, abatement or set-
off for any reason whatsoever.
The Basic Rent and any additional rent are hereinafter referred to as
"Rent".
-3-
<PAGE>
SECTION 3: PROPORTIONATE SHARE:
------------------------------
For the purposes of this Lease, Landlord and Tenant agree that the Premises
constitute 100% of the Park ("Proportionate Share") , except as follows:
(a) So long as the Premises excludes both the 3B Space and the Peridot
Space, the Proportionate Share shall be 60%;
(b) So long as the Premises excludes the 3B Space but includes the Peridot
Space, the Proportionate Share shall be 62.3%; and
(c) So long as the Premises excludes the Peridot Space but includes the 3B
Space, the Proportionate Share shall be 97.4%.
SECTION 4: ADDITIONAL RENT:
--------------------------
Tenant shall pay, as Additional Rent, its Proportionate Share of all of the
Operating Costs as defined in Section 5 of this Lease. So long as Tenant is
paying all of the Operating Costs and the Premises exclude the 3B Space and/or
the Peridot Space, Tenant shall receive a credit against the Basic Rent and/or
additional rent such that the net result is that it is only paying its
Proportionate Share of Operating Costs. However, notwithstanding anything to the
contrary, Landlord shall continue to pay taxes and charge Tenant for its
Proportionate Share as set forth in Section 5 below.
SECTION 5: OPERATING COST:
-------------------------
Operating Costs, for the purposes of this Lease, shall mean the aggregate
of all expenses of operating the common areas of the Park and its appurtenances
and shall include, but shall not be limited to, the following: all expenses for
maintaining, operating and repairing the Park and its appurtenances, including
the expenses of normal replacement of worn out equipment, facilities and
installations; the cost of electricity, water, and other utilities; security;
gardening and other landscaping; snow removal (notwithstanding anything to the
contrary, Tenant shall undertake all snow removal in the Park at its sole cost,
regardless of whether it occupies the entire Park, and if
-4-
<PAGE>
Tenant's Proportionate Share is less than 100% at the time it undertakes any
snow removal, Tenant shall receive a credit against the Basic Rent and/or
additional rent which is a percentage of the cost of such snow removal equal to
the difference between 100% and Tenant's Proportionate Share; however, such
credit shall not duplicate any portion of the credit described in Section 4
above allocable to snow removal); maintenance and repair of the parking lot;
fire insurance, liability insurance and rent insurance (if Tenant defaults under
any provision of this Lease, or if Landlord's mortgagee so requires, Tenant's
Proportionate Share of such insurance costs shall be payable monthly to Landlord
in an amount equal to one-twelfth (1/12th) of the annual insurance costs); taxes
as defined in Section 38 of this Lease (if Tenant defaults under any provision
of this Lease, or if Landlord's mortgagee so requires, Tenant's Proportionate
Share of such taxes shall be payable monthly to Landlord in an amount equal to
one-twelfth (1/12th) of the annual taxes); painting; supplies; sales or use
taxes on supplies or services; the charges of any independent contractor who
performs or does any of the work of operating, maintaining, or repairing the
Park and its appurtenances; and any other expenses or charges of any nature
whatsoever, whether or not herein mentioned, which is in accordance with sound
accounting and management principles generally accepted with respect to the
operation of a first-class industrial park, would be considered as Operating
Costs.
Operating Costs shall not include, however, those matters described as
Landlord's obligations in Section 6 below, executive salaries, leasing
commissions, depreciation, interest on and amortization of mortgages, franchise,
income and other taxes based upon the income of Landlord, provided the same
shall not have been levied as a substitute for real property taxes and shall not
include any items otherwise constituting such expense
-5-
<PAGE>
to the extent payment therefor is received from, or payable by, another tenant
of the Park.
SECTION 6: LANDLORD'S OBLIGATIONS:
---------------------------------
Landlord shall, at its own expense, make all structural repairs, to include
replacement and major repairs of structural beams and columns, foundation and
building slab, and any required replacement, maintenance and repairs to the
roof, unless such replacement, maintenance and/or repairs are necessitated by
negligence, acts or omissions of Tenant, its servants, agents or employees, in
which event said replacement, maintenance and/or repairs shall be made by
Landlord upon reasonable prior notice to Tenant at Tenant's expense.
SECTION 7: INTENTIONALLY OMITTED.
--------------------------------
SECTION 8: NET LEASE:
---------------------
This Lease is a net lease and the Basic Rent shall be absolutely net to
Landlord so that, except as expressly provided in this Lease, this Lease shall
yield, net, to Landlord, the Basic Rent during the Term.
SECTION 9: ADDITIONAL SPACE:
---------------------------
Once the 3B Space becomes vacant, Landlord shall notify Tenant in writing,
and the 3B Space shall be deemed part of the Premises upon the first to occur of
(a) the thirtieth (30th) day following such notice from Landlord to Tenant, but
in no event earlier than the day after 3B Trucking vacates the 3B Space and same
is available for occupancy, or (b) Tenant's occupancy of all or part of said
space; provided, however, that Tenant shall have the right to require that
Landlord notify 3B Trucking to vacate said space on 30 days prior written
notice, in which event the 3B Space shall be deemed part of the Premises upon 3B
Trucking surrendering and delivering possession of same to Landlord; provided,
however, that except in the event of a default by 3B Trucking under its lease,
Landlord may not, without Tenant's consent, notify 3B Trucking to vacate the 3B
Space. Once the Peridot Space becomes vacant (Peridot is obligated to vacate
said
-6-
<PAGE>
space on or before April 30, 1998), Landlord shall notify Tenant in writing, and
the Peridot Space shall be deemed part of the Premises on the first to occur of
(a) the thirtieth (30th) day following such notice from Landlord to Tenant, but
in no event earlier than the day after Peridot vacates the Peridot Space and
same is available for occupancy, or (b) Tenant's occupancy of all or part of the
Peridot Space. When both spaces become part of the Premises, the Premises shall
consist of the entire Park, and Tenant shall be responsible for, and shall
directly pay for, all of the Operating Costs of the Park, except as set forth in
the last sentence of Section 4 above, and except as limited by Section 6 above;
provided, however, that Landlord shall have the right to continue to provide, at
Tenant's cost, the insurance coverage constituting a part of Operating Costs,
unless Tenant is able to provide insurance coverage in amounts no less than that
carried by Landlord, insuring against the same liabilities, by a carrier duly
authorized in New Jersey and having a Best's (or similar) rating comparable to
that of Landlord's carrier, and which policies shall provide Landlord no less
than thirty (30) days prior written notice of cancellation, in which event
Tenant may maintain and pay for such insurance coverage as part of Operating
Costs.
SECTION 10: PURPOSE:
--------------------
Tenant covenants and agrees to use the Premises for a distribution and
trucking facility, which, however, shall not include the use of red-labeled
material, and further agrees not to use or permit the Premises to be used for
any other purposes without the prior written consent of Landlord, which consent
shall not be unreasonably withheld.
SECTION 11: DEFAULT IN PAYMENT OF RENT - ABANDONMENT
-----------------------------------------------------
OF PREMISES - RELETTING:
-----------------------
Tenant shall, without any previous demand therefor, pay to Landlord, or its
agent, the Rent and at the times and in the manner herein provided. In the event
of the non-payment of the Rent, or any installment thereof, at the times and in
the manner
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<PAGE>
above provided, and if the same shall remain in default for five (5) days
following written notice from Landlord to Tenant of such non-payment, or if
Tenant shall be dispossessed for non-payment of Rent, or if the Premises shall
be deserted or vacant, Landlord or its agents shall have the right to and may
enter the Premises as the agent of Tenant, either by force or otherwise, without
being liable for any prosecution or damages therefor, and may, but shall not be
under any obligation to, relet the Premises as the agent of Tenant, and receive
the rent therefor, upon such terms as shall be reasonably satisfactory to
Landlord, and all rights of Tenant to repossess the Premises under this Lease
shall be forfeited. Such re-entry by Landlord shall not operate to release
Tenant from any Rent to be paid or covenants to be performed hereunder during
the full term of this Lease. For the purpose of reletting, Landlord shall be
authorized to make such reasonable repairs or alterations in or to the Premises
as may be reasonably necessary to place the same in the condition they were at
the commencement of the term. Tenant shall be liable to Landlord for the
reasonable cost of such repairs or alterations and all reasonable expenses of
such reletting. If the sum realized or to be realized from the reletting is
insufficient to satisfy the Rent provided in this Lease, Landlord, at its
option, may require Tenant to pay such deficiency month by month, or may hold
Tenant in advance for the entire deficiency to be realized during the term of
the reletting. Tenant shall not be entitled to any surplus accruing as a result
of the reletting. Landlord shall have the right, as agent of Tenant, to take
possession of any furniture, fixtures or other personal property of Tenant found
in or about the Premises after Tenant has vacated or abandoned the Premises, and
sell the same at public or private sale and to apply the proceeds thereof to the
payment of any monies becoming due under this Lease, Tenant hereby waiving the
benefit of all laws exempting property from execution, levy and sale on distress
or judgment. Tenant agrees to pay, as
-8-
<PAGE>
additional rent, all reasonable attorney's fees and other expenses incurred by
Landlord in enforcing Tenant's obligation to pay Rent or any other default of
Tenant, whether or not a trial ensues.
SECTION 12: SUBLETTING AND ASSIGNMENT:
-------------------------------------
Tenant shall not, without first obtaining the written consent of Landlord,
assign, mortgage, pledge or encumber this Lease in whole or in part, or sublease
the Premises or any part thereof, which consent shall not be unreasonably
withheld. This covenant shall be binding upon the legal representatives of
Tenant and on every person to whom Tenant's interest under this Lease passes by
operation of law, but shall not apply to an assignment or subletting to the
parent or another subsidiary of the parent or an affiliated corporation of the
parent or a corporation under the same control as the parent, or a division of
the parent, or the sale of Tenant's business including its equipment, or its
transfer of its leasehold interest occasioned by a consolidation or merger
involving Tenant so long as the net worth after such consolidation or merger is
equal to or greater than the net worth of Tenant prior to such consolidation or
merger. At the time Tenant makes a request to Landlord to assign or sublet the
Premises, Tenant shall disclose all documents relating to the proposed
assignment or sublease and all documents relating to the sale of Tenant's
assets, including without limitation the financial statements of the proposed
assignee or sublessee, the financial statements of Tenant, and the proposed
sublease or assignment. In the event Landlord shall consent to an assignment or
subletting, that fact shall not relieve Tenant from the obligations or
liabilities of this Lease nor relieve Tenant from obtaining the consent of
Landlord in the event of a further assignment or subletting.
In the event that Tenant requests such an assignment or subletting except
to the parent or another subsidiary of the parent or an affiliated corporation
of the parent or a
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<PAGE>
corporation under the same control as the parent or to a division of the parent,
or the sale of Tenant's business including its equipment, or its transfer of its
leasehold interest occasioned by a consolidation or merger involving Tenant so
long as the net worth after such consolidation or merger is equal to or greater
than the net worth of Tenant prior to such consolidation or merger, Landlord
reserves the right to (a) approve said assignment or subletting without
releasing Tenant from any liability pursuant to this Lease, or (b) with respect
to an assignment or a sublease of at least fifty (50%) percent of the floor
space of the Premises, to terminate this Lease, take back the Premises and
release Tenant from the obligation to further perform under the terms and
conditions of this Lease, or (c) withhold its consent (but not unreasonably) to
said assignment or subletting. Landlord shall have twenty (20) days from receipt
of request for such assignment or subletting all information required hereunder
in which to notify Tenant of its decision and shall notify Tenant in writing
within said period of its decision. Landlord may enter into lease negotiations
directly with such proposed subtenant (but only if the proposed sublease is for
at least fifty (50%) percent of the floor space of the Premises) or such
proposed assignee. Notwithstanding that Tenant shall remain primarily liable
under this Lease, any assignment or sublease consented to by Landlord shall
provide that such assignee or sublessee shall assume all of the obligations of
Tenant hereunder. Tenant shall, at its expense, strictly enforce the terms and
conditions of this Lease against such assignee or sublessee. If Tenant is in a
payment default under this Lease, then on demand, any assignee or subtenant
shall make payments directly to Landlord. If Landlord consents to any assignment
or sublease where its consent is required hereunder, Tenant shall pay to
Landlord, as Additional Rent, all consideration received by Tenant for any
assignment, and all profit (determined on a dollar per square foot basis)
received by Tenant on any sublease
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<PAGE>
transaction, net of tenant improvements required to be made in connection
therewith, broker's fees reasonable legal fees, advertising and any other
reasonable direct costs relating to the assignment or sublease.
Notwithstanding anything to the contrary, except in the event of an
assignment or subletting in connection with the sale of Tenant's business to a
third party, Landlord shall have the absolute right to disapprove any assignment
or subletting where the proposed assignee or subtenant has an S.I.C. number
subject to the provisions of ISRA (as defined in Section 52 below) or where the
proposed use would, in Landlord's reasonable judgment, subject the Premises to
ISRA mandated cleanup obligations.
SECTION 13: CONDITION OF PREMISES: REPAIRS-CLEAN AND SANITARY AND REPAIRS:
--------------------------------------------------------------------------
Tenant shall keep the Premises in good condition, repair and appearance.
Tenant shall quit and surrender the Premises at the end of the Term in good
condition, reasonable wear and tear excepted, and shall not make any
alterations, additions or improvements to the Premises without the prior written
consent of Landlord, which consent shall not be unreasonably withheld; provided,
however, in the event Landlord does consent to Tenant's making any alterations,
additions or improvements, Landlord reserves the right, thirty (30) days prior
to the end of the Term, to demand that Tenant remove said alterations or
improvements or leave same; provided, further, that Tenant may, without
Landlord's consent, convert the offices so designated on Schedule "A" to
warehouse use, without the obligation to restore same to office use at or prior
to the end of the Term. In the event that Landlord requires the removal of said
alterations or improvements, then Tenant shall restore the Premises to their
condition prior to the installation of said additions or improvements. All
erections, alterations, additions and improvements, which are permanent in
character, which may be made upon the Premises either by Landlord or Tenant,
except furniture or movable fixtures, machinery and equipment installed at the
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<PAGE>
expense of Tenant, shall be the property of Landlord and shall remain upon and
be surrendered with the Premises as a part thereof at the expiration or sooner
termination of this Lease, without compensation to Tenant, unless Landlord has
required their removal as aforesaid. Tenant further agrees to keep the Premises
and all parts thereof, including, but not limited to, the loading docks,
electrical wiring, plumbing and heating, ventilating and air conditioning
equipment, platforms, windows, walkways, exits and entrances to the Premises, in
a clean and sanitary condition and free from trash, snow, ice, inflammable
materials and other objectionable matter.
SECTION 14: UTILITIES, SERVICES, COSTS, EXPENSES, TAXES:
-------------------------------------------------------
(a) Tenant shall furnish heat and air conditioning at its own cost and
expense.
(b) Tenant shall repair all utility, ventilating, heating, air
conditioning, electrical, gas and other utility lines within the Premises except
if damage outside of the Premises is caused by the negligence, acts or omissions
of Tenant, its agents, servants or employees, in which event Tenant shall
likewise repair same outside of the Premises. Tenant shall replace, at its own
expense, any and all glass which may be broken in and on the Premises.
(c) Tenant shall pay all costs for electricity, water, standby sprinkler
charges, repairs to the sprinkler system, gas and other utilities and services
consumed by it.
(d) In the event that any utility deposits are necessary, Tenant shall
pay said deposits to the utility company.
SECTION 15: MECHANICS' LIENS:
----------------------------
In the event that any mechanic's lien is filed against the Premises as a
result of alterations, additions or improvements made by Tenant, Tenant shall,
within ten (10) days after receiving notice from Landlord, remove said lien or
post any bond which may be required, which bond shall be with adequate surety.
In the event that Tenant fails to file a bond as set forth above,
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<PAGE>
then Landlord may, at its option, terminate this Lease and may pay said lien,
without inquiring into the validity thereof, and Tenant shall forthwith
reimburse Landlord the total expense incurred by Landlord in discharging said
lien, as additional rent.
SECTION 16: NON-LIABILITY OF LANDLORD - LANDLORD INDEMNITY:
----------------------------------------------------------
(a) Landlord shall not be liable or responsible for the loss of or damage
to property, or injury to persons, including Tenant, occurring in or about the
Premises or the Park by reason of any existing or future condition, defect,
matter or thing in the Premises or the Park or for the acts, omissions or
negligence of other persons or tenants in and about the Park, or for acts or
omissions or defects in design or construction caused by the contractor or any
subcontractors responsible for the construction of or repairs or alterations to
the Park or the Premises. Tenant agrees to indemnify and save Landlord harmless
from all claims and liability for loss of or damage to property, or injuries to
persons occurring in or about the Premises or the Park due to the negligent acts
or omissions of Tenant, its servants, agents, employees or invitees. Tenant's
obligation pursuant to this Section 16 (a) shall be satisfied provided that it
obtains insurance as set forth in Section 17.
(b) The liability of Landlord shall in any event be limited to its
interest in the Park and Tenant agrees that, in the event of any claim or action
against Landlord, Tenant shall not look to any assets of Landlord or any of its
partners other than the Park.
SECTION 17: LIABILITY INSURANCE:
-------------------------------
Tenant, at its cost, shall maintain public liability and property damage
insurance with liability limits of not less than Five Million ($5,000,000)
Dollars of Combined Single Limit insuring against all liability of Tenant, its
agents, servants and employees arising out of and in connection with Tenant's
use of the Premises and the Park. All of the aforesaid insurance
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<PAGE>
shall insure both Tenant and Landlord, who shall be named as co-insureds, and
Tenant shall deliver to Landlord, ten (10) days prior to the expiration of said
policy, a renewal thereof.
SECTION 18: TENANT'S OWN INSURANCE:
----------------------------------
Tenant may effect, for its own account, any insurance not required under
the provisions of this Lease, but any insurance effected by Tenant on the
Premises, whether or not required pursuant to this Lease, shall be for the
mutual benefit of Landlord and Tenant and shall be subject to all provisions of
this Lease.
SECTION 19: MUTUAL WAIVER OF SUBROGATION:
----------------------------------------
It is covenanted and agreed by and between the parties hereto that Tenant
shall relieve Landlord of all liability for loss or damage to Tenant's property,
whether real or personal, caused by fire and/or the perils covered in a standard
form fire insurance policy with Extended Coverage, due to any acts of commission
or omission of Landlord; and Landlord shall relieve Tenant of all liability for
loss or damage to Landlord's property, whether real or personal, caused by fire
and/or the perils covered in a standard form fire insurance policy with Extended
Coverage, due to any acts of commission or omission of Tenant.
SECTION 20: FAILURE TO OBTAIN INSURANCE:
---------------------------------------
If any of the policies of insurance as in this Lease provided to be
obtained and maintained by Tenant or Landlord cannot be obtained and/or kept in
force through Tenant's fault, and Tenant shall fail to commence to cure, remedy
and correct the condition which makes it impossible to obtain and keep in force
said policies within fifteen (15) days after written notice given by Landlord to
Tenant, and Tenant fails, neglects or refuses to proceed diligently to cure such
condition, Landlord may terminate this Lease by giving at least fifteen (15)
days' notice of such termination to Tenant, and this Lease shall terminate at
the expiration of said fifteen (15) days with the same force and
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<PAGE>
effect as if that were the original expiration date thereof, and Tenant shall be
and remain liable to Landlord for all damages and losses suffered by it in the
same manner as if this Lease were terminated for any other default of Tenant. In
lieu of exercising such right of termination, Landlord may, at its option,
obtain such policies at regular or increased rates and pay the premiums
therefor, and Tenant shall reimburse Landlord for the amount of such premium
upon demand, and, if not paid, the amount thereof, together with interest at two
(2%) per cent per month, shall be added to the amount of the next month's rent
as Additional Rent.
SECTION 21: UNAVAILABILITY OF FIRE INSURANCE:
--------------------------------------------
If, because of Tenant's occupancy, it shall be impossible to obtain fire
insurance on the Park in an amount and in the form and in fire insurance
companies licensed in the State of New Jersey, Landlord may, if Landlord so
elects, at any time thereafter, terminate this Lease and the Term thereof on
giving to Tenant thirty (30) days' notice in writing of Landlord's intention so
to do, and, upon the giving of such notice, this Lease and the Term thereof
shall terminate and come to an end, and the parties shall have no liability from
one to the other except for accrued obligations with respect to periods of time
prior to the date of termination.
SECTION 22: RIGHT TO INSPECT AND EXHIBIT:
----------------------------------------
Landlord, or its agent, shall have the right to enter the Premises at
reasonable hours in the day, and at night in the case of emergency, upon
reasonable prior verbal notice (except in the case of emergency), to examine the
same, or to run telephone or other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety, preservation or
restoration of the improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation, however, unless expressly
set forth herein, on the part of Landlord to make any such repairs, additions or
alterations), or
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<PAGE>
to exhibit the same to prospective purchasers and put upon the Premises a
suitable "To Let" sign during the six (6) months prior to the expiration of the
Term. For twelve (12) months prior to the expiration of the Term, Landlord, or
its agents, may similarly exhibit the Premises to prospective tenants.
SECTION 23: TOTAL OR PARTIAL DESTRUCTION:
----------------------------------------
In the event of:
(a) the total destruction of the Premises or the Park by fire,
explosion, the elements or otherwise during the Term or previous thereto, or
(b) such partial destruction thereof as to render the Premises wholly
untenantable or unfit for occupancy, and, in the case of (a) or (b), should the
Premises be so badly damaged that the same cannot be repaired within one hundred
twenty (120) days from the happening of such damage, then and in such case the
Term shall, at the option of Landlord or Tenant, to be exercised by notice to
the other party sent within thirty (30) days from the date of such damage, cease
and become null and void from the date of such damage or destruction, and Tenant
shall immediately surrender the Premises and all Tenant's interest therein to
Landlord, and shall pay Rent only to the time of such damage, in which event
Landlord may re-enter and repossess the Premises thus discharged from this Lease
and may remove all parties therefrom. If neither party exercises its option to
cancel, or should the Premises be rendered untenantable and unfit for occupancy,
but yet be repairable within one hundred twenty (120) days from the happening of
said damage, Landlord shall enter and repair or rebuild the Premises as nearly
as possible to their previous condition with reasonable speed and the Rent, to
the extent hereinafter provided, shall continue to be paid while repairs are
being made. The Rent accrued and accruing shall cease and determine if the
Premises are totally unusable by Tenant, If a portion is usable, the Rent shall
be reduced pro rata for the untenantable portion until the repairs are
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completed. Tenant shall immediately notify Landlord in case of fire or other
damage to the Premises.
SECTION 24: LAWS AND ORDINANCES:
-------------------------------
Tenant agrees to observe and comply with all laws, ordinances, rules and
regulations of the Federal, state, county and municipal authorities applicable
to the Premises, including the making of structural and non-structural
alterations due to Tenant's occupancy. Tenant agrees not to do or permit to be
done at any time during the Term anything in the Premises, or keep anything
therein, which will increase the rate of fire insurance premiums on the
improvements or any part thereof, or on the property kept therein, above the
present rate.
SECTION 25: SIGNS:
-----------------
No sign shall be affixed to or placed upon any exterior part of the
Premises by Tenant, except in such manner, and of such size, design and color as
shall be approved in advance by Landlord in writing, which consent shall not be
unreasonably withheld.
SECTION 26: PRIORITY OF FEE MORTGAGES:
-------------------------------------
This Lease shall be subject and subordinate to any present or future
mortgages of the entire fee interest of the Park and any renewals,
modifications, replacements or extensions thereof; provided, however, that as a
condition to such subordination, Landlord shall obtain a standard form of
nondisturbance agreement in favor of Tenant from the holders of all such
mortgages. No further document shall be necessary to effect said subordination.
Tenant shall, however, on demand of Landlord, execute, acknowledge and deliver
to any mortgagee an agreement to attorn to such mortgagee as landlord if such
mortgagee becomes landlord hereunder. If the holder of any mortgage of the
entire fee interest of the land and building of which the Premises are a part
requires that this Lease have priority over such mortgage. Tenant shall, upon
request of such holder, execute, acknowledge
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<PAGE>
and deliver to such holder an agreement acknowledging such priority.
SECTION 27: SECURITY DEPOSIT - FIRST MONTH'S RENT:
-------------------------------------------------
(a) To secure the covenants and promises of Tenant contained herein,
Tenant shall deposit with Landlord the sum of Fifty-seven Thousand Two Hundred
Forty-six and 58/100 ($57,246.58) Dollars by check, subject to collection, as a
security deposit (the "security deposit"). At any time that the Basic Rent
increases hereunder, Tenant shall deposit with Landlord such additional sum so
that the total security deposit shall equal two (2) months' Basic Rent then
payable hereunder. The total sum shall be returned to Tenant without interest at
the expiration of the Term provided Tenant has performed in accordance with the
terms hereof. If Landlord applies any part of the security deposit to cure any
default of Tenant, Tenant shall, upon demand, deposit with Landlord the amount
so applied so that Landlord shall have the full security deposit on hand at all
times during the Term of this Lease. If, at the end of the Term, repairs are
necessary to correct any condition beyond ordinary wear and tear, then the
security deposit, or a portion thereof, may be used by Landlord to make such
repairs and the balance remaining shall be returned to Tenant. The security
deposited under this Lease shall not be mortgaged, assigned or encumbered by
Tenant without the written consent of Landlord. Tenant hereby waives any future
law or laws which may require Landlord to segregate the security deposit or to
pay interest on the security deposit.
(b) Upon the execution hereof, Tenant shall pay to Landlord the first
month's Basic Rent of Twenty-eight Thousand Six Hundred Twenty-three and 29/100
($28,623.29) Dollars, which sum assumes that neither the 3B Space nor the
Peridot Space will be part of the Premises as of January 1, 1997.
(c) In the event that Landlord shall sell the Park, it shall deliver to
the Purchaser the balance of the security
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deposit and notify Tenant of the balance delivered to the purchaser of the Park.
After the sale, Tenant shall have no further claim against Landlord for the
security deposit.
SECTION 28: RULES AND REGULATIONS:
---------------------------------
Reasonable rules and regulations regarding the Premises, including the
walkways and parking areas, and the use thereof, which may hereafter be
promulgated by Landlord, shall be observed by Tenant and Tenant's employees,
agents and business invitees. Landlord reserves the right to rescind any rules
promulgated hereafter, and to make such other and further rules and regulations
as in its reasonable judgment may from time to time be desirable for the safety,
care and cleanliness of the Premises and for the preservation of good order
therein, which rules, when so made and reasonable notice given to Tenant, shall
have the same force and effect as if originally made a part of this Lease. Such
other and further reasonable rules shall not, however, be inconsistent with the
proper and rightful enjoyment by Tenant of the Premises in the conduct of its
business.
SECTION 29: TENANT'S VIOLATION OF TERMS - RE-ENTRY BY LANDLORD:
--------------------------------------------------------------
In case of violation by Tenant of any of the covenants, agreements and
conditions of this Lease (other than the nonpayment of Rent hereunder), or of
the rules and regulations hereafter to be reasonably established by Landlord,
and upon failure to discontinue such violation within twenty (20) days after
notice thereof given to Tenant, unless a greater time is reasonably necessary to
cure said violation, this Lease shall thenceforth, at the option of Landlord,
become null and void, and Landlord may re-enter without further notice or
demand. The Rent for the remainder of the Term in such case shall become due and
be paid, and Tenant shall be liable for all loss or damage resulting from such
violation as aforesaid. No waiver by Landlord of any violation or breach of
condition by Tenant shall constitute or be construed as a waiver of any other
violation or breach of condition, nor shall lapse of time after breach of
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condition by Tenant before Landlord shall exercise its option under this Section
operate to defeat the right of Landlord to declare this Lease null and void and
to re-enter upon the Premises after the said breach or violation. Landlord shall
have the option of correcting said default and charging the cost thereof to
Tenant as additional rent, which shall be due and payable with the next rent
payment.
SECTION 30: NOTICES:
-------------------
All notices and demands, legal or otherwise, incidental to this Lease, or
the occupancy of the Premises, shall be in writing. If Landlord or its agent
desires to give or serve upon Tenant any notice or demand, it shall be
sufficient to send a copy thereof by certified mail, return receipt requested,
or by nationally recognized overnight courier, addressed to Tenant at the
Premises, and copies thereof to Tenant at the address at the beginning of this
Lease, Attention: Jack Sharp, and to Schiffman, Berger, Abraham, Kaufman &
Ritter, Attention: Robert L. Ritter, Esq., 25 Main Street, Court Plaza North,
P.O. Box 568, Hackensack, New Jersey 07602-0568. Notices from Tenant to Landlord
shall be sent by certified mail, return receipt requested, or by nationally
recognized overnight courier, at the address at the beginning of this Lease and
a copy thereof to Sills Cummis Zuckerman Radin Tischman Epstein & Gross, P.A.,
Attention: Morris Yamner, Esq., One Riverfront Plaza, Newark, New Jersey 07102-
5400 or to such other party or place as Landlord or Tenant may from time to time
designate in writing. Notice shall be deemed given upon receipt or rejection as
evidenced by the green certified mail receipt card or the records of the
overnight courier, as the case may be.
SECTION 31: ENTIRE AGREEMENT: NO ORAL CHANGES:
---------------------------------------------
(a) There are no oral agreements between Landlord and Tenant and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
letters of intent, lease proposals, brochures, agreements, representations,
promises, warranties and
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<PAGE>
undertakings between Landlord and Tenant with respect to the subject matter
hereof and none thereof shall be used to interpret or construe this Lease.
(b) This Lease, including the exhibits hereto and any addenda hereto, sets
forth all of the covenants, promises, agreements, conditions and undertakings
between Landlord and Tenant concerning the Premises and the Park. No alteration,
amendment, change or addition to this Lease shall be binding upon Landlord or
Tenant unless reduced to writing, signed by them and mutually delivered between
them.
SECTION 32: INSOLVENCY OF TENANT:
--------------------------------
It is further agreed that if at any time during the Term of this Lease
Tenant shall make any assignment for the benefit of creditors, or be decreed
insolvent or bankrupt according to law, or if a receiver shall be appointed for
Tenant, and the same is not dismissed within thirty (30) days, then Landlord
may, at its option, terminate this Lease, exercise of such option to be
evidenced by notice to that effect served upon the assignee, receiver, trustee
or other person in charge of the liquidation of the property of Tenant or
Tenant's estate, but such termination shall not release or discharge any payment
of rent payable hereunder and then accrued, or any liability then accrued by
reason of any agreement or covenant herein contained on the part of Tenant or
Tenant's legal representatives. Anything in this Section 32 to the contrary
notwithstanding, if in any bankruptcy or reorganization proceedings the full
rental due and payable to Landlord shall be paid and Tenant shall continue to
observe all the other terms and conditions of this Lease, Landlord's right to
terminate shall not be operative.
SECTION 33: EMINENT DOMAIN; CONDEMNATION:
----------------------------------------
If the entire Park or any substantial part thereof wherein the Premises are
located, including Tenant's loading area, shall be taken by public or quasi-
public authority under any power of eminent domain or condemnation, this Lease
shall terminate upon
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the taking of actual possession by the condemning authority and Tenant shall
have no claim or interest in or to any award or damages for such taking. If
proceedings for such taking are instituted by such authority, a deed given by
Landlord in lieu of condemnation shall have the same effect as a taking by
eminent domain or condemnation. Tenant shall have no claim or right to claim or
be entitled to any portion of money as a result of such condemnation
proceedings, and all rights of Tenant thereto, if any, are hereby assigned to
Landlord; provided, however, that Tenant shall be entitled to receive an award
-------- -------
for any personalty or trade fixtures which are taken and, in addition, Tenant
shall be entitled to claim its moving expenses and any separate award for loss
of business; provided, however, that no award to Tenant shall diminish the award
of Landlord. Tenant hereby irrevocably assigns to Landlord any award which may
be made for its unexpired leasehold interest.
SECTION 34: DELIVERY OF LEASE:
-----------------------------
No rights are to be conferred upon Tenant until this Lease has been signed
by Landlord and an executed copy of the Lease has been delivered to Tenant.
SECTION 35: LEASE PROVISIONS NOT EXCLUSIVE:
------------------------------------------
The rights and remedies of Landlord contained in this Lease are not
intended to be exclusive but as additional to all other rights and remedies
Landlord would otherwise have by law.
SECTION 36: HEIRS, ETC.:
----------------------
All of the terms, covenants and conditions of this Lease shall inure to the
benefit of, and be binding upon, the respective heirs, executors,
administrators, successors and assigns of the parties hereto, except as provided
in Section 12 hereof.
SECTION 37: DATE OF POSSESSION:
------------------------------
Landlord shall not be liable for failure to give possession of the Premises
upon the commencement date by reason of the fact that the Premises are not ready
for occupancy, or due to a prior
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tenant wrongfully holding over or any other person wrongfully in possession, or
because of Landlord's failure to complete the Landlord Alteration, or for any
other reason; in such event, the Rent shall not commence until possession is
given or is available. Landlord shall make reasonable efforts to remove all
persons wrongfully in possession as soon as possible, and shall undertake the
Landlord Alteration in a workmanlike and diligent manner.
SECTION 38: REAL ESTATE TAXES:
-----------------------------
The term "real estate taxes" shall mean all taxes imposed on the Park,
special assessments, water and sewer charges and other governmental charges not
levied against the land and buildings. If the system of taxation shall be
changed during the term of this Lease, or any extension thereof, so that in lieu
of, or in addition to, the regular municipal real estate taxes now assessed or
levied against real property, a tax shall be imposed on such rental income or
rental value, or on some other basis, and Landlord shall be burdened in part or
in whole with such additional tax or taxes, Tenant shall pay or reimburse
Landlord its Proportionate Share of the amount of such substitute or additional
tax or taxes. If Landlord and Tenant cannot agree on such computation, the
matter shall be submitted to arbitration in Newark, New Jersey in accordance
with the rules of the American Arbitration Association.
SECTION 39: TAX APPEALS BY LANDLORD:
-----------------------------------
If Landlord shall institute a tax appeal, and said tax appeal shall result
in a reduction in taxes, then Tenant shall pay to Landlord its Proportionate
Share of Landlord's cost of said appeal, but in no event shall that amount
exceed the reduction in taxes and Tenant shall receive or be credited with its
Proportionate Share of any refund or reduction.
Tenant shall cooperate in any proceedings described herein. The recovery,
if any, shall be divided proportionately between
-23-
<PAGE>
Landlord and Tenant after Landlord deducts any and all costs and expenses.
SECTION 4O: QUIET ENJOYMENT:
---------------------------
Landlord has the full right and power to execute and perform this Lease
and to grant the estate demised herein, and Tenant, on payment of the Rent
herein reserved and performing the covenants and agreements hereof, shall
peaceably and quietly have, hold and enjoy the Premises and all rights,
easements, appurtenances and privileges belonging or in anywise appertaining
thereto during the Term without molestation or hindrance of any person
whomsoever.
SECTION 41: RESERVATION OF TITLE:
--------------------------------
Tenant may not consent to the reservation of any title to property by any
conditional vendor to any property which may be affixed to the Premises so as to
become a part thereof (excluding trade fixtures and trade machinery and
equipment used in Tenant's business), wholly or in any portion, without material
injury to the Premises. Landlord hereby states that the reservation of any such
title by any conditional vendor or similar party shall be null and void.
SECTION 42: OUTSIDE STORAGE:
---------------------------
Tenant shall not store any goods, other than temporarily in connection
with the delivery of any item, outside of the Premises any place in the Park;
provided, however, that subject to municipal laws, ordinances and requirements,
Tenant may store goods in the outside trailer parking on the Premises.
SECTION 43: CERTIFICATE OF OCCUPANCY:
------------------------------------
It is a condition of this Lease that Tenant be able to obtain, prior to
commencement of the Term, a Certificate of Occupancy allowing the Premises to be
used for the purpose described in Section 10 above, 24 hours a day, 7 days a
week, failing which this Lease shall be deemed null and void, and Landlord shall
return all monies paid by Tenant upon execution hereof. Landlord will cooperate
with Tenant in obtaining said
-24-
<PAGE>
Certificate of Occupancy, provided such cooperation is at no cost to Landlord;
provided, however, that Landlord shall be responsible, at its sole costs, for
correcting any building and/or fire code violations preventing the issuance of a
Certificate of Occupancy, but Landlord shall not be responsible for any work
required in order to obtain a Certificate of Occupancy as a result of Tenant's
proposed use of the Premises.
SECTION 44: HOLDING OVER:
------------------------
If Tenant shall hold over, with or without Landlord's consent, after the
Term, then such holding over shall be constituted as a tenancy from month to
month, subject to all of the provisions, conditions and obligations of this
Lease, except that the Basic Rent shall be double the Basic Rent for the last
month of the Term.
SECTION 45: CONSENTS TO DEFAULTS:
--------------------------------
No consent or waiver, express or implied, by Landlord, to or of any
breach or default in the performance by Tenant of Tenant's obligations hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach
or default in the performance by Tenant of the same or any other obligations of
Tenant hereunder. Failure on the part of Landlord to complain of any act or
failure to act of Tenant or to declare Tenant in default, irrespective of how
long such act or failure continues, shall not constitute a waiver by Landlord of
its rights hereunder.
SECTION 46: PAYMENTS IN EVENT OF DEFAULT:
----------------------------------------
(a) In the event that Tenant fail to pay Rent on or before the tenth
(10th) day of the month, Tenant shall pay to Landlord a late charge equal to two
(2%) per cent per month of the Rent due, but in no event less than One Hundred
($100.00) Dollars.
(b) In the event that Tenant fails, after notice, to take any action
required of it under this Lease, which action is taken by Landlord, Tenant shall
pay to Landlord any monies reasonably expended by Landlord to cure any default
of Tenant together with
-25-
<PAGE>
interest at the rate of two (2%) per cent per month until the date of payment.
(c) All payments due pursuant to this Section 46 shall be deemed
additional rent. In the event that said payments are not allowable by law, then
the sum to be paid by Tenant to Landlord shall be the highest sum allowed by
law.
SECTION 47: FINANCIAL STATEMENTS:
--------------------------------
Tenant shall, if required by Landlord's mortgagee or any future
mortgagee, or prospective mortgagee or prospective purchaser, submit to
Landlord, any prospective mortgagee or purchaser, without cost to Landlord, a
copy of Tenant's financial statement which shall be considered "confidential" by
the recipient. Tenant shall also, without cost to Landlord, submit to any
prospective mortgagee or purchaser such prior statements as it may have, as and
when required by Landlord or Landlord's mortgagee or prospective mortgagee or
prospective purchaser.
SECTION 48: TABLE OF CONTENTS AND CAPTIONS:
------------------------------------------
The Table of Contents, captions or notes in the margin of this Lease are
inserted only as a matter of convenience and in no way to define, limit or
describe the scope or intent of this Lease, or the terms, conditions and
provisions hereof, nor as affecting the meaning of the text of any article or
section hereof in any way.
SECTION 49: BROKER:
------------------
Landlord agrees to pay, pursuant to a separate agreement, all brokerage
commissions payable in connection with the negotiations for, and execution of,
this Lease. Tenant and Landlord warrant that they have not dealt with any real
estate brokers except SBWE, Inc., Charles Klatskin & Company, Inc. and Resource
Realty in connection with this Lease. In the event of any misrepresentation by
either Landlord or Tenant, each party agrees to hold the other harmless,
including any costs, interest and legal fees.
-26-
<PAGE>
SECTION 50: ACCORD AND SATISFACTION:
-----------------------------------
No payment by Tenant or receipt by Landlord of lesser amount than the
Rent stipulated in this Lease shall be deemed to be other than on account of the
earliest stipulated Rent, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided in this Lease by law.
SECTION 51: CONSENTS:
--------------------
With respect to any provision of this Lease which requires that Landlord
shall not unreasonably withhold or unreasonably delay any consent or approval,
Tenant shall not make or assert any claim for, and Tenant hereby waives any
claim for money damages. Tenant shall not claim any money damages by way of
setoff, counterclaim or defense, based upon any claim or assertion by Tenant
that Landlord has unreasonably withheld or unreasonably delayed any consent or
approval. Tenant's sole and exclusive remedy shall be an action or proceeding
for specific performance, injunction or declaratory judgment.
SECTION 52: HAZARDOUS SUBSTANCES:
--------------------------------
(a) In the event that Tenant causes the Premises to become an "industrial
establishment" (as such term is defined in the New Jersey Industrial Site
Recovery Act, N.J.S.A. 13: 1K-6 et seq., and the regulations promulgated
-- ---
thereunder ("ISRA"), Tenant shall, at Tenant's sole cost and expense, comply
with ISRA. Tenant's obligations under this paragraph (a) shall arise if there is
any contemplated "closing, terminating or transferring of operations of any
industrial establishment," or shifting, buying, selling, or transferring of
corporate shares (as such term is currently or in the future defined in ISRA) at
the Premises. Tenant shall, at Tenant's sole cost and expense, make all
submissions to, provide all information to, and comply with
-27-
<PAGE>
all requirements of, the New Jersey Department of Environmental Protection, or
any agency or subdivision thereof or any agency or subdivision responsible for
enforcing ISRA (collectively, the "DEP"). Should the DEP or any other
governmental agency having jurisdiction determine that a cleanup plan be
prepared and that a cleanup be undertaken because of any spills or discharges of
hazardous substances or wastes at the Premises which occurred during the term of
the Lease as a result of Tenant's use and occupancy of the Premises, then Tenant
shall, at Tenant's sole cost and expense, prepare and submit the required plans
and financial assurances, and carry out the approved plans. Tenant shall fully
comply with ISRA and the requirements of the DEP prior to the end of the Term of
the Lease.
(b) In the event that ISRA compliance becomes necessary at the Premises
as a result of Tenant's use and occupancy of the Premises, then, at Landlord's
election:
(i) Tenant shall comply with the requirements of ISRA inasmuch as
such compliance relates to the Premises and Tenant shall be responsible
for paying the costs of such compliance within 30 days after Landlord's
demand therefor; or
(ii) Tenant shall be responsible for promptly, and within the time
frame established by Landlord, complying with ISRA inasmuch as such
compliance relates to the Premises and to pay the costs of such ISRA
compliance. Tenant shall also promptly, after Landlord's request (but in
no event later than 30 days after Landlord's request), provide all
information requested by Landlord, sign any factually accurate affidavits
prepared by Landlord concerning ISRA and Tenant's use and occupancy of
the Premises and pay all costs of such ISRA compliance that are
attributable to Tenant's use and occupancy of the Premises.
(c) Tenant shall indemnify and hold Landlord harmless from and against
any loss, cost, liability or expense including,
-28-
<PAGE>
without limitation, attorney's fees, resulting from any environmental condition
caused or allowed to occur by Tenant, or from Tenant's failure to comply with
ISRA, including, without limitation, any claims made by any succeeding tenant.
Tenant shall vacate the Premises immediately upon fully complying with ISRA and
the requirements of the DEP.
(d) Tenant represents, covenants and warrants that Tenant shall not use
the Premises to "discharge" (as such term is defined in the Spill Compensation
and Control Acts, N.J.S.A. 58:10-23.11 et seq., ("Spill Act")) "hazardous
------- -- ---
substances" (as such term is defined in the Spill Act). In the event that there
should be filed a lien against the Premises pursuant to and in accordance with
the Spill Act, arising from the intentional or unintentional action or omission
of Tenant or Tenant's employees, agents, contractors, licensees, invitees,
assigns or subtenants, then Tenant shall, within thirty (30) days after the date
Tenant is given notice of the lien or in such shorter a period of time in the
event that the State of New Jersey, or any agency or subdivision thereof, has
commenced steps to cause the Premises to be sold pursuant to the lien, pay the
claim and remove the lien from the Premises. If Tenant fails to do such by the
said period, Landlord shall be entitled to resort to such remedies as are
provided in the Lease as in the case of any default of the Lease, in addition to
such as are permitted by law, in equity, or otherwise.
(e) Tenant represents, covenants, and warrants that Tenant shall not use
the Premises in such a manner so as to become liable under the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C. 9601, et seq.
-- ---
("CERCLA") . In the event that there shall be filed a lien against the Premises
pursuant to and in accordance with CERCLA arising from the intentional or
unintentional action or omission of Tenant or Tenant's employees, agents,
contractors, licensees, invitees, assigns, or sub-tenants, then Tenant shall,
within 30
-29-
<PAGE>
days from the date Tenant is given notice of the lien or in such shorter a
period of time in the event that the United States, or any agency or subdivision
thereof, has commenced steps to cause the Premises to be sold pursuant to the
lien, pay the claim and remove the lien from the Premises. If Tenant fails to do
so by said period, Landlord shall be entitled to resort to such remedies as such
are provided in the Lease as in the case of any default of the Lease, in
addition to such as are permitted by law, in equity or otherwise.
(f) In amplification of these paragraphs related to environmental
obligations, and not by way of limitation, Tenant shall indemnify, defend and
hold harmless Landlord from and against all fines, suits, procedures, claims,
actions, damages, liabilities, judgments, costs and expenses (including, without
limitation, reasonable attorney's fees) of any kind arising out of or in any way
connected with Tenant or Tenant's employees, agents, contractors, licensees,
invitees, assignees or subtenants whose actions or inactions or failure to
maintain the Premises results in any spills or discharges of hazardous
substances, hazardous wastes, or pollutants at the Premises which occurred
during the Term of this Lease; and from all fines, suits, procedures, claims,
actions, damages, liabilities, judgments, costs and expenses (including, without
limitation, reasonable attorney's fees) of any kind arising out of Tenant's
failure to provide all information, make all submissions and take all actions
required by the DEP in order to comply with ISRA, the Spill Act, CERCLA or any
other environmental law.
(g) Tenant's obligations and liabilities under this Section 52 shall
continue after expiration of the Term of this Lease for so long as Landlord
remains responsible for any spills or discharges of hazardous substances or
hazardous wastes at the Premises which occur during the Term of this Lease.
(h) Landlord and any employee, representative, agent or contractor of
Landlord, the DEP or any other federal, state, or
-30-
<PAGE>
local governmental body, agency or division having applicable jurisdiction, may
enter the Premises for the purpose of inspecting same for compliance with any
environmental law, at reasonable hours, upon reasonable prior notice.
(i) Landlord shall indemnify and hold Tenant harmless from and against
any loss, cost, liability or expense including, without limitation, attorney's
fees, resulting from any environmental condition at the Premises pre-dating
Tenant's occupancy thereof. Landlord represents that it knows of no such
environmental condition at the Premises other than as disclosed in the letter
from James C. Anderson Associates, Inc. dated May 22, 1995 set forth on Schedule
"D", and the letter from The Whitman Companies, Inc. dated August 23, 1996 set
forth on Schedule "E".
SECTION 53: NEGOTIATED AGREEMENT:
--------------------------------
This is a negotiated Lease Agreement, and this Lease Agreement shall not
be construed against Landlord by reason of this Lease being prepared by Landlord
and/or its attorneys.
SECTION 54: PROCESSING CHARGE:
-----------------------------
Tenant agrees to reimburse Landlord for reasonable attorneys' fees
incurred by Landlord in connection with the processing and documentation of any
assignment, subletting, license, concession, creation of a security interest,
granting of a collateral assignment, change of ownership or other transfer
required by Tenant for which Landlord's consent is required or sought, it being
agreed that Tenant's obligation to reimburse Landlord for such reasonable
attorneys' fees shall be deemed an additional rent obligation hereunder.
SECTION 55: MORTGAGEE PROTECTION CLAUSE: Tenant agrees to give all
---------------------------------------
mortgagees and/or trust deed holders, by certified mail, a copy of any notice of
default served on Landlord, provided that prior to such notice Tenant has been
notified, in writing (by way of notice of assignment of rents and leases or
otherwise), of the name and address of such mortgagees and/or trust deed
holders.
-31-
<PAGE>
The mortgagees and/or trust deed holders shall have the same time within which
to cure such default as is given to Landlord under this Lease.
SECTION 56: INTERPRETATION: The laws of the State of New Jersey shall
--------------------------
govern the validity, performance and enforcement of this Lease. The invalidity
or unenforceability of any provision hereof shall not affect or impair any other
provision.
SECTION 57: RIGHT OF FIRST REFUSAL:
----------------------------------
In the event that any or all of Tenant's interest in the Premises and/or
this Lease is transferred by operation of law to any trustee or receiver, or to
Tenant as a debtor in possession, and subsequently any or all of Tenant's
interest in the Premises and/or this Lease is offered or to be offered by Tenant
or any trustee, receiver, or other representative or agent of Tenant as to its
estate or property (such person, firm or entity being hereinafter referred to as
the "Grantor"), for assignment, conveyance, lease, or other disposition to a
person, firm or entity other than Landlord (each such transaction being
hereinafter referred to as a "Disposition"), it is agreed that Landlord has and
shall have a right of first refusal to purchase, take, or otherwise acquire, the
same upon the same terms and conditions as the Grantor thereof shall accept upon
such Disposition to such other person, firm, or entity; and as to each such
Disposition the Grantor shall give written notice to Landlord in reasonable
detail of all of the terms and conditions of such Disposition within twenty (20)
days next following its determination to accept the same but prior to accepting
the same, and Grantor shall not make the Disposition until and unless Landlord
has failed or refused to accept such right of first refusal as to the
Disposition, as set forth herein.
Landlord shall have twenty (20) days next following its receipt of the
written notice as to such Disposition in which to exercise the option to acquire
Tenant's interest by such Disposition, and the exercise of the option by
Landlord shall be
-32-
<PAGE>
effected by written notice to that effect sent to the Grantor by certified or
registered mail; but nothing herein shall require Landlord to accept a
particular Disposition or any Disposition, nor does the rejection of any one
such offer of first refusal constitute a waiver or release of the obligation of
the Grantor to submit other offers hereunder to Landlord. In the event Landlord
accepts such offer of first refusal, the transaction shall be consummated
pursuant to the terms and conditions of the Disposition described in the notice
to Landlord. In the event Landlord rejects such offer of first refusal, Grantor
may consummate the Disposition with such other person, firm, or entity; but any
decrease in price of more than two (2%) percent of the price sought from
Landlord or any change in the terms of payment for such Disposition shall
constitute a new transaction requiring a further option of first refusal to be
given to Landlord hereunder.
The provisions of this Section 57 shall not apply to an assignment or
sublease permitted under the terms and provisions of Section 12 above.
SECTION 58: MODIFICATIONS REQUESTED BY MORTGAGEE: In the event that a
------------------------------------------------
prospective mortgagee of the Park shall request a reasonable change in the
language of the terms of this Lease, or the execution of any document in
connection therewith, Tenant agrees to make such change or execute such document
provided the same shall not increase Tenant's obligations or liabilities under
this Lease.
SECTION 59: INTENTIONALLY OMITTED.
---------------------------------
SECTION 60: RENEWAL OPTIONS: Tenant is hereby granted two (2) options to
---------------------------
renew this Lease upon the following terms and conditions:
(a) At the time of the exercise of each option to renew and at the time
of each said renewal, Tenant shall not be in default in accordance with the
terms and provisions of this Lease, and shall be in possession of the Premises
pursuant to this Lease.
-33-
<PAGE>
(b) Notice of the exercise of each option shall be sent to Landlord, in
writing, at least nine (9) months before the expiration of the Term, as same may
have previously been renewed.
(c) The first renewal term shall be for the term of two (2) years and six
(6) months to commence on July 1, 2004 and end on December 31, 2006; the second
renewal term shall be for the term of five (5) years to commence on January 1,
2007 and end on December 31, 2011; and all of the terms and conditions of this
Lease, other than the Basic Rent, shall apply during the renewal terms.
(d) The annual Basic Rent to be paid during the first renewal term shall
be the square footage of the Premises multiplied by Four and 50/100 ($4.50)
Dollars; and the annual Basic Rent to be paid during the second renewal term
shall be the square footage of the Premises multiplied by the greater of (i)
Four and 50/100 ($4.50) Dollars, or (ii) Three and 50/100 ($3.50) Dollars,
increased by the percentage increase, if any, in the cost of living between
October 1996 and October 2006.
(e) The cost of living referred to in this Section, shall be determined
from the revised Consumer Price Index for Urban Wage Earners and Clerical
Workers - New York, N.Y. - Northeastern N.J., as published by the Bureau of
Labor Statistics of the United States Department of Labor (1982-1984=100) and
such Cost of Living Index shall be final and binding upon both Landlord and
Tenant. If, at the time required for the determination of the annual Basic Rent
for the renewal term, the aforesaid Index is no longer published or issued, the
parties shall use such other index as is then generally recognized and accepted
for similar determinations of cost of living increases.
SECTION 61: CANCELLATION OPTION:
-------------------------------
Tenant shall have the right to cancel this Lease by written notice
provided to Landlord no later than June 30, 2001, and which cancellation shall
only be effective as of December 31, 2001. In the event Tenant shall so elect to
cancel this Lease, it shall
-34-
<PAGE>
vacate and surrender the Premises to Landlord on or before December 31, 2001 as
if same were the last day of the Term provided for herein, and in such event the
parties hereto shall have no further obligations from one to the other, except
for past due Rent obligations from Tenant to Landlord, past due monetary
obligations from one party to the other, and any indemnification and/or hold
harmless agreements by either party contained in this Lease.
SECTION 62: PARTIES DULY AUTHORIZED:
-----------------------------------
Landlord and Tenant represent and warrant one to the other that the
individual(s) executing this Lease on their respective behalves have been duly
authorized to do same by appropriate partnership (for Landlord) and corporate
(for Tenant) action.
SECTION 63: SEPTIC SYSTEM:
-------------------------
Notwithstanding anything to the contrary, the parties acknowledge and
agree that Tenant shall be responsible at its sole cost and expense for the
pumping, maintenance and repair of the septic system serving the Premises;
provided, however, that if the septic system is required to be replaced, Tenant
shall be responsible for the first Twenty-five Thousand ($25,000.00) Dollars of
the cost of replacement, and Landlord shall be responsible for any such cost in
excess of Twenty-five Thousand ($25,000.00) Dollars.
IN WITNESS WHEREOF, the parties have executed these presents the day and
year first above written.
WITNESS: WEST END ROAD ASSOCIATES, Landlord
_____________________________ By________________________________
Melvin Opper, Partner
ATTEST: MOHAWK INDUSTRIES, INC., Tenant
/s/ Theral Mackey By /s/ Jack Sharpe
- ----------------------------- --------------------------------
Jack Sharpe, Executive Vice
President
-35-
<PAGE>
SCHEDULE "A"
-----------
DESCRIPTION OF PREMISES
<PAGE>
SCHEDULE "B"
-----------
ROOF WORK
<PAGE>
MULLEN ENTERPRISES, INC.
4 LITTLE FALLS ROAD FAIRFIELD, NJ 07004
(201) 227-7866 FAX (201) 227-0778
August 12, 1996
Mr. Mel Opper
West End Road Associates
1460 Valley Road
P.O. Box 559
Wayne, NJ 07474-0559
RE: 100 Alexander Ave., Pompton Plains, NJ
Dear Mel:
After making a thorough inspection of the above mentioned roof we found the
following: the roof membrane is made out of a rubber system. The field of the
roof itself seems to be in very good condition, although we would recommend the
following items be performed on this roof:
1. Re-flash skylights, vents, fans and any other penetrations through
the roof.
2. Re-seal the gutter and all brackets holding the gutter to the roof.
3. Re-roof approximately 600 square feet of roofing where low spot is
located.
4. Re-flash parapit walls.
5. Complete any minor repairs throughout the roof.
6. Re-do all the seams in the field of the roof with tape.
7. Roof will be cleaned out of any and all debris, drains and gutters
will be functionable.
If the above mentioned items are completed for a cost of $38,860.00, in our
professional opinion this roof should give you many more years of good service.
We will also guarantee this roof for 7 1/2 years after the completion of the
repair work with the following conditions. You will agree to sign up with our
maintenance program to inspect this roof twice a year starting in 1997. If you
have any questions please call.
Sincerely,
/s/ John R. Mullen
John R. Mullen
<PAGE>
SCHEDULE "C"
-----------
LANDLORD ALTERATION
<PAGE>
EXHIBIT C
SEPTEMBER 13, 1996
ALADDIN CARPET RENOVATION
100 ALEXANDER AVE
PEQUANNOCK TOWNSHIP, NEW JERSEY
Landlord to provide 19 new 8' by 10' overhead door openings, 19 new 8' by 10'
overhead doors, 6 new 9' by 9' overhead doors at existing locations, 20 new dock
levelers and 24 new dock seals. A detailed itemization for the cost of such work
is as follows:
<TABLE>
<CAPTION>
EA COST
-- ----
<S> <C> <C>
MASON LABOR FOR DOOR OPENINGS 18 51,960.00
PREPARE 2 NEW DOCKS 2 4,200.00
ADD NEW DOOR AND STEPS 1 3,266.40
REVISE EXISTING DOOR AND STEPS 1 1,680.00
ADD BOLLARDS 4 1,920.00
NEW STEEL FRAMES 18 17,712.00
60,000 LB CAPACITY DOCK LEVELERS 20 93,550.20*
REPAIR EXISTING DOCK LEVELERS 4 4,512.00
OVERHEAD DOORS, STEEL INSULATED 25 27,801.25
DOCK SEALS 8X10 INCLUDING LABOR 18 13,251.87 *
9X9 " " 6 4,975.35 *
ELECTRICAL FOR NEW DOCK LEVELERS 20 20,400.00
ADD 3 NEW 400 WATT MH EXT FIXTURES 3 2,160.00
REGRADE DOCK AT WEST END 1 16,502.50
8'X15' PAD 1 828.00
DOCK CANOPY 6' DEEP 440 36,862.10
TWO DOCK OFFICES + 4 WINDOWS 6,379.20
DUMPSTERS 4 2,160.00
RENOVATE UPSTAIRS OFFICE (4,800 SF) 73,108.00 - See page 3 for breakdown
TOTAL COST 383,228.87
</TABLE>
Page 1
* See per unit cost on page 2 - total line cost on page 1 includes 15% add-on
for Landlord's overhead and profit.
<PAGE>
EXHIBIT C
SEPTEMBER 13, 1996
ALADDIN CARPET RENOVATION
PEQUANNOCK TOWNSHIP, NEW JERSEY
PRICES ARE FOR PEQUANNOCK PER NELSON LETTER
BASIC DOCK LEVELER 3,229.41
WEATHER SEAL -NO CHARGE 9-5 LETTER 0.00
AUTO RETURN 241.17
TELESCOPING FOOT PROTECTION 66.30
MODEL H41218 LAM DOCK BUMPERS 35.29
FLOOR PANS PER 8-14 QUOTE 265.00
TOTALS 3,837.17
TAX 230.23
TOTAL COST PER DOCK LEVELER 4,067.40
DOOR SEALS MODEL 200P 8X10 DOOR 364.70
LABOR TO INSTALL 181.25
WEAR PLEATS 58.00
TOTALS 603.95
TAX 36.24
TOTAL COST PER DOCK SEAL 640.19
DOOR SEALS MODEL 200P 9X9 DOOR 441.00
LABOR TO INSTALL 181.25
WEAR PLEATS 58.00
TOTALS 680.25
TAX 40.82
TOTAL COST PER DOCK SEAL 721.07
Page 2
<PAGE>
EXHIBIT C
SEPTEMBER 13,1996
ALADDIN CARPET RENOVATION
PEQUANNOCK TOWNSHIP, NEW JERSEY
TRADE COST
PERMITS 960.00
SUPERVISION 0.00
DEMOLITION INCLUDING 2ND FL CARPET 3,600.00
DRYWALL PARTITIONS + WALL INSULATION 13,200.00
DOORS AND FRAMES 4,320.00
TWO ALU DOORS 3,600.00
ACC CEILING REPAIR + NEW IN EXEC AREA 4,560.00
CARPET & VAT TILE BY ALADDIN 0.00
OFF PAINTING BY ALADDIN 0.00
ACCORDION DOOR BY ALADDIN 0.00
SHELVING BY ALADDIN 0.00
TOILET PART 3,240.00
PLUMBING 18,400.00
ADD SHOWER 2,880.00
SPRINKLER 2,880.00
CONCEALED HEADS IN EXEC AREA 2,760.00
H V A C (NEW REGISTERS IN EXEC AREA) 672.00
ELECTRICAL + NEW LENSES IN EXEC AREA 12,036.00
TOTAL COST 73,108.00
Page 3
<PAGE>
SCHEDULE "D"
------------
LETTER FROM JAMES C. ANDERSON
ASSOCIATES, INC.
<PAGE>
JAMES C. ANDERSON ASSOCIATES, INC.
CONSULTING ENGINEERS, SCIENTISTS, PLANNERS.
SURVETORS AND LICENSED DRILLERS
181 WESTFIELD AVENUE. CLARK NEW JERSEY 07066. (906) 388-2626. FAX 906(388-
2115)
SENT VIA FACSIMILE AND REGULAR MAIL
- -----------------------------------
May 22, 1995
Mr. Kris Bauman
DKM Properties Corporation
Princeton Pine Corporate Center
1009 Lenox Drive
Post Office Box 6540
Lawrenceville, New Jersey 08648
Re: 100 Alexander Avenue
Pompton Plains, New Jersey
JCA Project No.: H95DKMM-319
JCA Proposal No.: H958MKT-582.B
Dear Mr. Bauman:
As we discussed on the telephone yesterday, James C. Anderson
Associates, Inc. (JCA) has prepared a Scope of Services, Cost Estimate and
Schedule for remediate the soils at the above referenced property.
On December 7,1994, a cleanup, in the form of soil excavation of
visually stained soils, was conducted at the above referenced facility. six
small areas were remediated. A total of four 55-gallon drums of soil were
excavated. One post-excavation sample was collected from each area and analyzed
for total petroleum hydrocarbons (TPHC). Four of these samples contained over
1,000 milligrams per kilogram (mg/kg) TPHC, and following New Jersey Department
of Environmental Protection (NJDEP) guidelines, were analyzed for volatile
organic compounds (VOCs); no VOCs were detected. A single sample (B-1) exceeded
the NJDEP Residential Direct Contact Soil Cleanup Criteria of 10,000 mg/kg total
organic compounds. As such, JCA recommended an additional cleanup in this area
in our letter to you dated January 19, 1995. The activities associated with this
cleanup are described below.
As noted in our letters of January 13 and 19, 1995, the data described
above suggests that a release of hazardous materials has occurred at this site.
Such a release should be reported to the NJDEP by the owner or his agent under
the Spill Compensation and Control Act (N.J.A.C. 58:10-23.11 et seq.). A
reported spill would be assigned a case number and instructions issued to
conduct a site investigation/remedial action following the NJDEP's Technical
Requirements for Site Remediation (N.J.A.C. 7:26E).
<PAGE>
Mr. Kris Bauman May 19 1996
Re: 100 Alexander Avenue, Pompton Plains, NJ Page 2
If a report has not been made, the remediation may be conducted under
the Voluntary Cleanup Program. Under this program, an application would be filed
for a Memorandum of Agreement (MOA). The remedial action could be conducted
concurrent with the application process. Following the remediation, a Remedial
Action Report would be filed with the NJDEP. If this report meets with the
NJDEP's approval, they will issue a letter of No Further Action.
The remediation itself consists of three steps: 1) obtain and review
contractor bids; 2) supervise the remediation, and collect and analyze past-
excavation soil samples; and, 3) prepare a report for the NJDEP documenting
remedial activities.
The estimated costs associated with these tasks are attached. Please
note that the actual remedial costs will depend on the bids received. For your
planning purposes, we have estimated these costs. Also attached is a schedule to
complete these tasks. You may indicate your acceptance of this proposal by
signing in the space provided below and returning the original copy of JCA.
As we discussed, I will return from vacation or Wednesday, May 31, 1995.
Should you have any questions or comments regarding this estimate before that
time, you may contact Kristen Main in my absence or I will be happy to answer
any of your questions upon my return, James C. Anderson Associates, Inc.
appreciates the opportunity to propose our environmental consulting services to
you.
Sincerely,
James C. Anderson Associates, Inc.
/s/ Kathleen M. Murray
Kathleen M. Murray
Associate
/s/ Douglass G. Hill, P.G.
Douglass G. Hill, P.G.
Principal
KMM/vag
Attachment
Authorized By: _________________________________________________________________
Signature
Name: _________________________________ Date: __________________________________
<PAGE>
COST ESTIMATE
Remediation & Post Excavation Sampling
100 Alexander Avenue
Pompton Plains, New Jersey
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Task 1: Coordination with NJDEP & Application for Memorandum of Agreement
Associate: 2 Hours @ $105/hour $ 210.00
Environmental Scientist: 4 Hours @ $45/hour 180.00
----------
Task 1 Total: $ 390.00
Task 2: Obtain and Review Bids from Remediation Contractors
Associate: 4 Hours @ $105/hour $ 420.00
Engineer: 4 Hours @ $105/hour 420.00
----------
Task 2 Total: $ 840.00
Task 3: Soil Remediation, Oversight and Post-Excavation Sample Collection
and Analysis
. Soil Excavation (separately contracted):
Labor; 8 Hours @ $35/hour $ 280.00
Truck: 8 Hours @ $30/hour 240.00
Drums: 4 Drums @ $30/drum 120.00
Clean Fill: 4 Drums @ $50/drum 200.00
Compressor: 1 Compressor @ $150/day 150.00
----------
Soil Excavation Total: $ 990.00
. Transportation & Disposal (separately contracted):
Disposal of 4 Drums of Nonhazardous Soil @ $140/drum $ 560.00
Transportation/Approval Lump Sum 650.00
----------
Transportation & Disposal Total: $ 1,210.00
. Sample Collection & Oversight:
Geologist: 10 Hours @ $85/hour $ 850.00
----------
Sample Collection & Oversight Total: $ 850.00
</TABLE>
100 Alexander Avenue - JCA Coal Estimate Attachment Page 1
<PAGE>
COST ESTIMATE
Remediation & Post Excavation Sampling
100 Alexander Avenue
Pompton Plains, New Jersey
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Task 3: Soil Remediation, Oversight and Post-Excavation Sample Collection and
Analysis (cont'd)
. Sample Analysis:
5 Samples for TPHC at $50/sample $ 250.00
1 Sample for VOC+10, B/N+15 and
PP Metals @ $705/sample $ 705.00
1 Field Blank for VO+10 @ $203 203.00
----------
Sample Analysis Total: $ 1,158.00
Task 3 Total: $ 4,209.00
Task4: Report Preparation:
Associate: 6 Hours @ $105/hour $ 630.00
Environmental Scientist: 12 Hours @ $45/hour 540.00
----------
Task 4 Total: $ 1,170.00
GRAND TOTAL: $ 6,608.00
----------
</TABLE>
100 ALEXANDER AVENUE - JCA COST ESTIMATE ATTACHMENT PAGE 11
<PAGE>
PROJECT SCHEDULE
100 Alexander Avenue
Soil Remediation & Post Excavation Samples
[GRAPH APPEARS HERE]
<PAGE>
SCHEDULE "E"
------------
LETTER FROM THE
THE WHITMAN COMPANIES, INC.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
August 23, 1996
Mr. Al Schneider
Aladdin Mills
487 Edward Ross Drive
Elmwood Park, New Jersey 07407
RE: Environmental Services
100 Alexander Avenue
Pequannock Township, New Jersey
Whitman Project No. 96-07-13
Dear Mr. Schneider:
The Whitman Companies, Inc. is pleased to present this letter report for
environmental services performed at 100 Alexander Avenue in Pequannock Township,
New Jersey. The site is identified as Block 309, Lot 1 on Sheet 23 of the
Official Tax Map for Pequannock Township.
Several significant areas of environmental concern (AECs) were addressed by
Arrow Group Industries, the former operator of the site (1969-1991), under the
New Jersey Department of Environmental Protection (NJDEP) Industrial Site
Recovery Act (ISRA). A summary of the individual AECs investigated under ISRA is
provided In Section 1.0.
Additional cleanup work is being conducted at the site, subsequent to the
ISRA investigation, under the NJDEP's voluntary cleanup program. A description
of these remedial activities is provided in Section 2.0. Based on information
obtained by the NJDEP Northern Field Office, there is one (1) AEC at the
property that may require further investigation and/or remediation.
1.0 ISRA (FORMERLY ECRA) FILE REVIEW
--------------------------------
Arrow Group Industries, a former industrial establishment located at the
property, was subject to a previous environmental Investigation (Case #88578)
under the New Jersey Environmental Cleanup Recovery Act (ECRA). A file review
was conducted at NJDEP's offices in Trenton on August 7. 1996. The file review
was conducted to determine the nature and extent of the prior cleanup actions
conducted at the site.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 2
The property was subject to ECRA for the cessation of Arrow Group
Industries' operations. The ISRA initial notice forms were submitted to the
NJDEP during 1988. A Negative Declaration Approval was issued by NJDEP in
December 1991.
Arrow Group Industries (Arrow) operated at the site from when it was
developed in 1968 until approximately December 1991. Arrow's operations at the
property included corporate offices and warehousing of unassembled storage sheds
manufactured at other Arrow facilities. A small print shop for printing flyers
and Instruction sheets was present on the east side of the building. A small
area on the west side of the building was used for the repair and maintenance of
delivery trucks and equipment. Waste oil from the repair and maintenance
operations was stored in a 275 gallon aboveground storage tank.
Six (6) areas of environmental concern (AECs) were identified during the
ECRA site investigation and cleanup. The areas identified included the
following:
1. Transformers
2. Main Septic System
3. Side Septic System
4. Old Septic System Leach Field
5. 4,000 Gallon Underground Diesel Fuel Tank
6. Diesel Fuel Spills
The investigation of the ABCs included soil sampling, soil excavation and
disposal, and ground water sampling. The ECRA activities conducted at each of
the AECs are described below.
1.1 Transformers
A letter obtained from JCP&L indicates that absent of testing of the
transformer's dielectric fluid, the transformers are assumed to be PCB
contaminated. Therefore, soil samples were collected from the perimeter of the
transformer pad for Polychlorinated Biphenyls (PCBs). The samples were collected
to verify that the transformers had not
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 3
leaked. The analytical results indicated no detected levels of PCBs. NJDEP
approved no further actions for this AEC.
1.2 Main Septic System
The main septic system is one of three (3) septic systems present on the
property. The main septic system is located in front of the building and is
active. The main septic system is connected to the buildings' bathrooms and a
sink in a former darkroom.
The main septic system is composed of two (2) settling tanks in series.
Overflow from the settling tanks flows to one of four effluent discharge tanks.
Samples were collected of the settling tank sludge and aqueous phases, and from
soils adjacent to the settling and effluent discharge tanks. Samples were
analyzed for Petroleum Hydrocarbons (PHC), Volatile Organics + 15 (VO+IS),
Priority Pollutant Metals (Metals), and Cyanides.
The contaminants detected in the soil samples above the NJDEP soil cleanup
criteria in effect in 1988 included Cadmium, Beryllium, Thallium, and Lead.
Methylene Chloride, Toluene, and PHCs were detected in the sludge sample above
the NJDEP soil cleanup criteria in effect in 1988.
The contents of the septic system tanks were removed and disposed off site.
The contaminated soil was left in place pending the results of a ground water
investigation. Based on the ground water investigation results, NJDEP required
no further actions for this AEC.
Some of the NJDEP soil cleanup criteria have changed since 1988. If the
property were to become subject to ISRA, current NJDEP procedures would require
an order of magnitude analysis to determine if the contaminant levels remaining
from former sampling/remedial actions exceed the current NJDEP soil cleanup
criteria for unrestricted property use. If the remaining contaminant levels are
more than ten (10) times the current standard, then either additional soil
remediation or a Declaration of Environmental Restrictions (DER) for the
contaminated area would be required. A DER is similar to a deed notice, which
restricts the use of the contaminated area.
A comparison of the soil sample results to the current NJDEP soil cleanup
criteria indicate the presence of Cadmium, Beryllium. and Thallium above the
current NJDEP soil cleanup criteria of 39 ppm, 1 ppm, and 2 ppm, respectively.
However, these contaminants
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23. 1996
Page 4
do not exceed the current NJDEP soil cleanup criteria for unrestricted use by an
order of magnitude. Therefore, additional soil remediation and/or a DER are not
required.
1.3 Side Septic System
The side septic system was located on the west side of the building. This
septic system received discharges from a sink located in the former repair and
maintenance area. The side septic system was composed of a single settling tank.
Samples were collected of the settling tank sludge and aqueous phases, and from
soils adjacent to the settling tank. Samples were analyzed for PHC and
Base/Neutrals + 15 (BN + 15).
PHCs were detected in the soil and settling tank samples in concentrations
above the NJDEP soil cleanup criteria in effect in 1988. The settling tank and
adjacent contaminated soil were excavated on April 28, 1988. Past-excavation
samples collected for PHCS verified remediation to below the NJDEP cleanup
criteria in effect in 1988.
The soil samples collected from this area did not include analysis for VO+
15 or Metals. These contaminants are a potential concern based on the use of a
parts washer. Based on the ground water investigation results and an affidavit
provided by Arrow, NJDEP required no further actions for this AEC.
A comparison of the soil sample results to the current NJDEP soil cleanup
criteria indicated that the remediation meets the current NJDEP soil cleanup
criteria for unrestricted property use.
1.4 Old Septic System
The old septic system was located in approximately the same location as the
main septic system. The [each field for the aid system was just west of the main
system settling tanks. Soil samples were collected from the old septic system
leach field for PHC, VO + 15, Metals, and Cyanide analyses.
The contaminants detected in the soil samples above the NJDEP soil cleanup
criteria in effect in 1988 included Cadmium, Beryllium, and Thallium. The
contaminated soil was left in place pending the results of a ground water
investigation. Based on the ground water investigation results, NJDEP required
no further actions for this AEC.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 5
A comparison of the soil sample results to the current NJDEP soil cleanup
criteria indicated the presence of Cadmium, Beryllium, and Thallium above the
current NJDEP soil cleanup criteria of 39 ppm, 1 ppm, and 2 ppm, respectively.
However, these contaminants do not exceed the current NJDEP soil cleanup
criteria for unrestricted use by an order of magnitude.
1.5 4,000 GALLON UNDERGROUND DIESEL FUEL TANK
A 4,000 gallon underground diesel fuel tank was located on the west side of
the building. The rank was excavated on April 28, 1988. Post-excavation soil
samples were collected from the tank excavation for PHC and Polycyclic Aromatic
Hydrocarbons (PAHs) analyses. The presence of PHCs or PAHs was not detected.
NJDEP approved no further actions for this AEC.
1.6 DIESEL FUEL SPILLS
Two diesel fuel spills occurred at the northwest corner of the building.
The contaminated soil was excavated on April 28, 1988. Post-excavation soil
samples were collected for PHC and PAR analyses. PHCs were detected above the
NJDEP soil cleanup criteria in effect in 1988. Therefore, additional soil was
excavated from this area on July 27, 1988. Additional post-excavation soil
samples were collected for PHC analysis. The presence of PHCs was not detected
in the additional post-excavation soil samples.
NJDEP approved no further actions for this AEC.
1.7 GROUND WATER INVESTIGATION
Based on the results of sampling conducted at the main and old septic
systems, a ground water investigation was required by NJDEP.
On April 13 and 14, 1989, four (4) ground water monitoring wells were
installed at the property. Three (3) wells were installed near three of the
septic tanks and the fourth was installed upgradient from the septic system.
Ground water was encountered at a depth of approximately ten (10) feet below
grade. Ground water flow was from southwest to northeast.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 6
Three (3) rounds of ground water samples were collected during April, June
and August 1989. The first two (2) rounds of samples were analyzed for PHC, VO +
15, BN + 15, and Metals. The third round was analyzed for BN + 15 and Metals
only.
The first sampling round indicated the presence of BN + 15 and the metals
Arsenic, Chromium, and Lead above the NJDEP ground water cleanup criteria in
effect in 1989. The highest contaminant levels were detected in the upgradient
well. This indicated the source of ground water contamination was likely from an
off-site source.
No contamination above the NJDEP ground water cleanup criteria in effect in
1989 was detected in the second and third round of samples. The second and third
round of samples for metals analysis were filtered, which removes sediment from
the sample. This is likely why the level of metals detected was significantly
lower than in the first sampling round.
Based on the results of the second and third sampling rounds and likely
off-site source of contamination detected, NJDEP approved no further actions
with respect to ground water. The four (4) monitoring wells were subsequently
sealed.
The NJDEP ground water cleanup criteria have changed since 1989. A
comparison of the PHC, VO + 15, and BN + 15 results to the current NJDEP ground
water cleanup criteria indicated that these contaminants are not a concern. One
(1) BN + 15, bis(2-Ethyl-hexyl)phthalate, was detected in the first sampling
round above the current cleanup criteria in one well, but was not detected in
the subsequent sampling rounds.
A comparison of the Metals results to the current NJDEP ground water
cleanup criteria indicated the presence of the metals Arsenic, Cadmium,
Chromium, Lead, and Nickel above their respective current cleanup criteria in
the unfiltered ground water samples. Chromium and Thallium were detected above
their respective current cleanup criteria in the third round of filtered ground
water samples.
The NJDEP currently does not accept the results of filtered metals samples.
None of the metals detected in the unfiltered samples exceed the current cleanup
criteria by an order of magnitude. Furthermore, the sample results indicated an
off-site source of ground water contamination.
One (1) copy of the materials reproduced from the NJDEP ISRA file are
provided with this letter report.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 7
2.0 MOA FILE REVIEW
---------------
A copy of a letter report prepared by James C. Anderson Associates, Inc.
(JCA), dated May 22, 1995, was obtained by Whitman from Aladdin Mills. The
report indicates that soil excavation of visually stained soils was conducted at
six (6) small areas on the property on December 7, 1994. Four (4) 55 gallon
drums of soil were excavated from these areas and remain on site in the rear
parking lot area. The specific locations where soil was removed was not
identified in the letter report. A copy of the letter is provided as Attachment
1.
One (1) post-excavation soil sample was collected from each area and
analyzed for total petroleum hydrocarbons (TPH). Four (4) of these samples
contained TPH concentrations above 1,000 parts per million (ppm). Following
NJDEP guidelines, each of these samples was analyzed for Volatile Organic
Compounds (VOCs). No VOCs were detected. One (1) of the samples (B-1), however,
exhibited a TPH concentration above the applicable Soil Cleanup Criteria of
10,000 ppm.
3B Warehouse and Distribution, Inc., the current tenant at the property,
entered into a Memorandum of Agreement (MOA) with the NJDEP in April 1996 (Case
#96-4-9-1613-06) for remedial action of the area in the vicinity where sample
B-1 was collected. The MOA is a process whereby the applicant proposes to
perform a voluntary cleanup in response to a reported discharge. The case has
been assigned to the NJDEP Northern Field Office. Tom McClachrie, the NJDEP Case
Manager, was contacted by telephone for information on the current status of the
remedial activity.
According to Mr. McClachrie, JCA submitted a letter report to NJDEP on June
13, 1996 with the results of additional sampling conducted in the vicinity where
sample B-1 was originally collected. The report indicated the following items:
. A volume of approximately 10 cubic yards of soil was to be remediated to
an approximate depth of 18 to 24 inches, above the abandoned railroad
siding.
. The contaminated soil would be disposed off site.
. Five (5) post-excavation samples would be collected.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 8
As of August 22, 1996, the NJDEP Northern Field Office has not received the
post-excavation soil sample results. A small soil pile, estimated at two (2)
cubic yards, remains stockpiled on site in the rear parking lot area, in
addition to the four (4) drums of contaminated soil generated in December 1994.
According to Mr. McClachrie, prior sampling activity conducted along the
railroad siding may not have been representative of worst case conditions since
the samples were collected from loose soil material located within the gravel
pack. He indicated that the Department may require the collection of soil
samples from material beneath the gravel railroad bed to establish actual site
conditions.
The MOA case remains open at this time, pending NJDEP receipt and review of
the most recent sampling data. Department approval of the remedial activity
conducted under the MOA program would be strictly limited to the specific area
investigated and would not make any representation regarding the environmental
conditions of any other areas at the property.
3.0 ENVIRONMENTAL DATABASE SEARCH
-----------------------------
Whitman conducted a review of Standard Environmental Record Sources
(Federal/State) as determined by ASTM Standard E1527-94. This review was
facilitated by obtaining a radius search report for the required environmental
databases from EcoSearch Environmental Resources (EER), Indianapolis, Indiana, a
commercial database service. The purpose of obtaining such a report is to
identify any history of hazardous waste activity known to have taken place at
the subject property or at any site within the approximate minimum search
distance specified in the ASTM Standard E1527-94.
The subject property was listed as a RCRA Generator site in connection with
prior disposal of hazardous materials generated by Arrow Group Industries. The
property was also listed as a UST site in connection with the former underground
diesel tank. The subject property was not listed in any of the other
environmental databases researched by EER.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 9
Edwards Engineering Corp. located on the adjoining southern property, is
listed as a RCRA Generator and Toxic Release Inventory (TRI) site. The TRI
database contains information from facilities that manufacture, process, or
import any of over 300 listed toxic chemicals which are released directly into
the air, water or land, or are transported off site. The database includes facts
on amounts of chemica1s stored and emitted from the facility. This database is
released on an infrequent basis by the USEPA.
TRI data for Edwards Engineering Corp from 1989 to 1991 indicates that
various metals compounds and VOCs were released into the air or transferred off
site during this period. There were no reports of a release into water or land
at the site.
The Pequannock Township Department of Public Works facility, located just
to the west of the subject property, is listed as a RCRA Generator and a
Registered New Jersey Underground Storage Tank (UST) site. This township site is
not listed in the Leaking Underground Storage Tank (LUST) database.
The nearest contaminated sites listed in the EER report are identified
below.
. Franks Chevron - 0.3 miles west of the subject property.
. Citgo Service Station - 0.3 miles west-southwest of the subject property
. Merit Service Station - 0.35 miles east of the subject property
. Getty Service Station - 0.35 miles northeast of the subject property
. Rentals Unlimited, Inc. - 0.36 miles east-southeast of the subject
property
No other contaminated sites were identified within a 0.5 mile radius of the
subject property. A copy of the EER report is provided as Attachment 2.
4.0 SITE INSPECTION
---------------
Whitman conducted inspections of the site on July 29, 1996 and August 16,
1996. No sampling or testing of air quality, soil, water or other materials
(e.g. asbestos) was conducted. The following site conditions were observed:
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 10
Outside Areas
-------------
. A transformer is located outside the southwest corner of the building.
No evidence of staining or spillage was found at the base of the
transformer. A blue sticker "no PCBs" was affixed to the transformer
indicating that its contents do not contain PCBs.
. A propane storage shed is located outside the northwest corner of the
building.
. The area being investigated under the MOA program is located above a
railroad siding near the northwest corner of the building. The
excavation measures approximately 12 feet (length) by 5 feet (width) by
1 foot (depth). This area is enclosed by temporary orange fencing.
. Four (4) 55 gallon steel drums of contaminated soil are staged in the
rear parking lot area near the northwest corner of the building.
Hazardous waste labels are affixed to each of the drums. The labels
indicate that the waste material was generated on December 7, 1994.
. Spillage of a petroleum product was found adjacent to a 5 gallon pail in
the rear parking lot area. The spillage was confined to a small area of
pavement and was located approximately 20 feet from the nearest storm
water drain.
. Approximately 2 cubic yards of soil were covered with plastic sheeting
and stockpiled in the rear parking lot area. It is believed that this
material was generated during recent excavation of contaminated soils
above the railroad siding.
. Numerous stormwater drains are located in the rear loading dock and
parking lot areas. Visual observations indicate that the discharge point
of the drains is to Woodland Lake, located immediately to the north and
east of the site.
Inside Areas
------------
. The building is currently used for office and warehousing purposes,
primarily storage of food and beverage products.
<PAGE>
[LETTERHEAD OF THE WHITMAN COMPANIES APPEARS HERE]
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 11
. Two (2) 55 gallon drums of antifreeze were located along the interior
north wall of the warehouse. Three (3) 15 gallon drums of multi-purpose
grease were also stored at this location.
. Two (2) unidentified 55 gallon drums were located along the interior
north wall of the warehouse. Oil spillage was evident on the top of
these drums. One (1) 15-gallon drum of gear lubricant was also stored at
this location.
. A vehicle service area, with one (1) electric lift, was located at the
northwest corner of the warehouse. A Safety-Kleen parts washer, wash
sink, and miscellaneous small containers of automotive fluids were
located in this area. A closet adjoining the vehicle service area
contained a 275-gallon aboveground motor oil tank, one (1) 55-gallon
drum of antifreeze and two (2) 15-gallon drums of gear oil. Several
other closets were locked and inaccessible at the time of the site
inspections.
. Some oil staining was evident on the slab floor in the vehicle service
area; however, no significant spillage was found and there were no
floor drains visible in this area.
No records of adverse environmental history were found at the Pequannock
Township municipal offices. A review of building permits recorded by the
Township from January 1988 to the present revealed no permits for environmental
work, including, but not limited to, UST removal or asbestos abatement projects.
A historical aerial photograph review for 1961, 1966, 1976, 1986 and 1990
was conducted by Whitman at the Morris County Planning Department on August 12,
1996. The results of the aerial photograph review are presented below.
The subject property was occupied by several small buildings/sheds and
facilities, which may be consistent with a sand/gravel mining operation from
pre-1961 through 1966. The existing warehouse facility was evident on the 1976,
1986, and 1990 aerial photographs. Several small sheds, formerly located on the
northeast portion of the site, were removed between 1986 and 1990. The parking
lot area may have been unpaved prior to 1976.
The adjoining northern and eastern properties have been occupied by
Woodland Lake from pre-1961 to the present. The existing industrial building has
been located on the adjoining southern property from pre-1961 to present. Land
use on the adjoining western properties was residential and agricultural in
nature from pre-1961 through 1976. Farmland was abandoned and converted into
residential land use between 1976 and 1986.
<PAGE>
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 12
6.0 SUMMARY AND RECOMMENDATIONS
---------------------------
Several significant areas of environmental concern (AECs) were addressed by
Arrow Group Industries, the former operator of the site (1969-1991), under the
NJDEP ISRA program. The ISRA initial notice forms were submitted to the NJDEP
during 1988. A Negative Declaration Approval was issued by NJDEP in December
1991.
Additional cleanup work is being conducted at the site, subsequent to the
ISRA investigation, under the NJDEP'S voluntary cleanup program. Based on
information obtained from the NJDEP Northern Field Office, there is one (1) AEC
that may require further investigation and/or remediation. The case remains open
at this time, pending NJDEP receipt and review of the most recent sampling data.
Whitman recommends that Aladdin Mills receive some assurance from the current
tenant that the remedial activity specified in the MOA will be completed in a
timely manner and that the cleanup will not extend to other areas of the site.
The subject property was listed as a RCRA Generator site in connection with
prior disposal of hazardous materials generated by Arrow Group Industries. The
property was also listed as a UST site in connection with the former underground
diesel tank. The subject property was not listed in any of the other
environmental databases researched by EER.
Contaminated soil remains on site at two (2) locations in the rear parking
lot area. The drums of contaminated soil generated on December 7, 1994 are of
particular concern, since RCRA regulations require that all hazardous materials
be disposed within 90 days. The small pile of stockpiled soil was generated much
more recently, apparently within the past several weeks.
Whitman recommends that all chemical products, including known or
suspected hazardous materials, be properly removed or disposed off site, prior
to occupancy of the building by Aladdin Mills. In addition to the drums of
contaminated soil located outside the building, several drums located inside the
facility may need to be identified, prior to disposal.
<PAGE>
Mr. Al Schneider
Aladdin Mills
August 23, 1996
Page 13
We appreciate the opportunity to assist your company with the anticipated
move to the warehouse facility in Pequannock Township, New Jersey. If you have
any questions, please contact our office at (908) 390-5858.
Very truly yours,
/s/ Gary Rakow
Gary Rakow
Project Scientist
cc: Robert Ritter, Esquire
Janet Hennick, SBWE
Mel Opper, The Opper Group
<PAGE>
EXHIBIT 10.11
DUPLICATE ORIGINAL
SINGLE TENANT INDUSTRIAL LEASE
------------------------------
Effective Date: December 4, 1995
(The date set forth below Landlord's signature.)
BASIC LEASE INFORMATION
-----------------------
Landlord: CATELLUS DEVELOPMENT CORPORATION, a
Delaware corporation
Landlord's Address
For Notice: 1065 N, PacifiCenter Drive, Suite 200
Anaheim, CA 92806
Attn: Asset Management
Telephone: (714) 630-8100
Fax: (714) 237-7416
Landlord's Address
For Payment of Rent: File #53694
Los Angeles, CA 90074-3694
Tenant: MOHAWK INDUSTRIES, INC., a Georgia corporation
Tenant's Address P.O. Box 2208
-----------------------------------
For Notice: Dalton, CA, 30722
-----------------------------------
Attn: JACK SHARPE
-----------------------------
Telephone: 706-277-1100
------------------------
Fax: 706-277-1440
------------------------------
Project: 16400 Trojan Way
Building: Approximately 220,000 rentable square feet as
shown in Exhibit A.
---------
Building Address:
Street: 16400 Trojan Way
City and State: La Mirada, CA 90638
Lot: The tax parcel on which the Building is located.
Term: Sixty (60) months
Estimated Commencement
Date: September 1, 1996
Base Rent Per Month: Seventy Four Thousand Eight Hundred Dollars
($74,800.00)
Security Deposit: None
Broker: Lee & Associates
Lease Year: Shall refer to each three hundred sixty-five
(365) day period during the Term commencing on
the Commencement Date and on each anniversary
thereof.
Permitted Uses: Warehousing and distribution of carpet and no
other uses shall be permitted without the prior
written consent of Landlord.
(i)
<PAGE>
EXHIBITS
A - Building/Lot - Premises
B - Work Letter
B-I - Space Plan
C - Commencement Date Memorandum
D - Insurance Certificate
E - Prohibited Uses
F - Correction Items
G - Estoppel Certificate
The Basic Lease Information set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Basic Lease Information shall mean the
respective information above and shall be construed to incorporate all of the
terms provided under the particular Lease paragraph pertaining to such
information. In the event of any conflict between the Basic Lease Information
and the provisions of the Lease, the latter shall control.
LANDLORD (ILLEGIBLE) AND TENANT (JV) AGREE.
------ ------
initial initial
X
(ii)
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
1. PREMISES...................................................... 1
1.1 Premises................................................ 1
1.2 Reserved Rights......................................... 1
2. TERM.......................................................... 1
2.1 Lease Term and Commencement Date........................ 1
2.2 Possession.............................................. 1
3. RENT.......................................................... 2
3.1 Rent.................................................... 2
3.2 Late Charge and Interest................................ 2
3.3 Intentionally Omitted................................... 2
4. UTILITIES..................................................... 2
5. TAXES......................................................... 2
5.1 Real Property Taxes..................................... 2
5.2 Personal Property Taxes................................. 3
6. TRIPLE NET LEASE.............................................. 3
7. INSURANCE..................................................... 3
7.1 Landlord................................................ 3
7.2 Tenant.................................................. 3
7.3 General................................................. 4
7.4 Indemnity............................................... 4
7.5 Exemption of Landlord from Liability.................... 5
8. REPAIRS AND MAINTENANCE....................................... 5
8.1 Landlord................................................ 5
8.2 Tenant.................................................. 5
8.3 Roof - Repair and Replacement........................... 6
8.4 Condition of the Premises............................... 6
9. ALTERATIONS................................................... 6
9.1 Trade Fixtures; Alterations............................. 6
9.2 Damage; Removal......................................... 6
9.3 Liens................................................... 6
10. USE........................................................... 7
11. ENVIRONMENTAL MATTERS......................................... 7
11.1 Hazardous Meterials..................................... 7
11.2 Indemnification......................................... 7
11.3 Landlord's Disclosure................................... 8
11.4 Storage Tank Removal.................................... 8
12. DAMAGE AND DESTRUCTION........................................ 8
12.1 Casualty................................................ 8
12.2 Tenant's Fault.......................................... 8
12.3 Uninsured Casualty...................................... 9
12.4 Waiver.................................................. 9
13. EMINENT DOMAIN................................................ 9
13.1 Total Condemnation...................................... 9
13.2 Partial Condemnation.................................... 9
13.3 Award................................................... 9
13.4 Temporary Condemnation.................................. 9
</TABLE>
(iii)
<PAGE>
<TABLE>
<S> <C>
14. DEFAULT....................................................... 9
14.1 Events of Defaults..................................... 9
14.2 Remedies............................................... 10
14.3 Cumulative............................................. 11
15. ASSIGNMENT AND SUBLETTING.................................... 11
16. ESTOPPEL, ATTORNMENT AND SUBORDINATION....................... 11
16.1 Estoppel............................................... 11
16.2 Subordination.......................................... 11
16.3 Attornment............................................. 12
17. MISCELLANEOUS................................................ 12
17.1 General................................................ 12
17.2 Signs.................................................. 12
17.3 Waiver................................................. 12
17.4 Financial Statements................................... 13
17.5 Limitation of Liability................................ 13
17.6 Notices................................................ 13
17.7 Brokerage Commission................................... 13
17.8 Authorization.......................................... 13
17.9 Holding Over; Surrender................................ 13
17.10 Joint and Several...................................... 13
17.11 Covenants and Conditions............................... 13
17.12 Addenda................................................ 13
</TABLE>
(iv)
<PAGE>
1. PREMISES.
1.1 Premises. Landlord hereby leases to Tenant the Building and that
--------
portion of the Lot (or all thereof if the Building constitutes the material
improvement thereon) upon which the same is situated (hereinafter collectively
referred to as the "Premises") as shown on Exhibit A attached hereto.
---------
1.2 Reserved Rights. Landlord reserves the right to enter the Premises
---------------
upon reasonable notice to Tenant (except in case of an emergency) and/or to
undertake the following: inspect the Premises and/or the performance by Tenant
of the terms and conditions hereof; grant easements on the Project, dedicate for
public use portions thereof and record covenants, conditions and restrictions
("CC&R's") affecting the Project and/or amendments to existing CC&R's which do
not unreasonably interfere with Tenant's use of the Premises; change the name of
the Project; and, during the last nine (9) months of the Term, show the Premises
to prospective tenants.
2. TERM.
----
2.1 Lease Term and Commencement Date. The Term of the Lease shall be for a
--------------------------------
period of sixty (60) months, subject to extension in accordance with Section 20
below. The Term shall commence (the "Commencement Date") on the first day of the
first full calendar month following the Possession Date (as defined in Section
2.2.2), except that if the Possession Date occurs on the first day of a month,
that day shall also be the Commencement Date. Tenant shall execute and deliver
to Landlord, upon request by Landlord, a Commencement Date Memorandum in the
form attached hereto as Exhibit C acknowledging (i) the Commencement Date (and,
---------
if requested, the Possession Date and Rent Commencement Date, as defined below),
(ii) the final square footage of the Premises, and (iii) Tenant's acceptance of
the Premises.
2.2 Possession.
----------
2.2.1 Landlord's Possession. Tenant acknowledges that the Premises
---------------------
are currently occupied by an existing tenant thereof and that Landlord's
delivery of possession of the Premises is contingent upon such tenant vacating
the Premises. Landlord presently anticipates that the current tenant will vacate
the Premises and restore possession thereof to Landlord on or about September 1
1996 and Landlord shall use its commercially reasonable efforts to recover
possession on such date or as soon as practicable thereafter. In the event that
Landlord does not recover possession of the Premises on or before such date, as
a result of the failure of the existing tenant to vacate the Premises on or
before such date, Landlord shall not be subject to any liability therefor and
such failure shall not affect the validity of this Lease or the obligations of
either party hereunder, provided, however, that if the existing tenant fails to
vacate the Premises on or before November 1, 1996 (subject to Force Majeure
events), either Landlord or Tenant may, at its option, by written notice to the
other party given within ten (10) days thereafter, terminate this Lease, in
which event Landlord shall return to Tenant all funds paid in advance and the
Parties shall be discharged from all further obligations hereunder.
Notwithstanding anything set forth in this Section 2.2, Tenant shall not be
obligated to pay Base Rent for its use and occupancy of the Premises until the
Rent Commencement Date, as defined in Section 3.1.
2.2.2 Tender of Possession to Tenant. Landlord shall tender
------------------------------
possession of the Premises to Tenant as soon as practicable following the date
on which Landlord receives possession thereof. Tenant's possession and use of
the Premises from the date on which Landlord tenders possession thereof to
Tenant (the "Possession Date") to the Commencement Date (the "Early Possession
Period") shall be subject to all the provisions of this Lease. During the Early
Possession Period, Tenant shall (i) arrange for and pay for all utilities
delivered to the Premises (ii) arrange for, and maintain in effect, the
insurance coverages required to be obtained by Tenant pursuant to Section 7.2
of this Lease, (iii) pay to Landlord as and when due, all sums payable to
Landlord hereunder, including, without limitation. amounts payable for Real
Property Taxes (as defined in Section 5) and insurance premiums, and (iv)
perform all other obligations required by Tenant pursuant to this Lease.
2.2.3 Tenant Improvements. Landlord shall arrange for the
-------------------
construction of certain Tenant improvements (as defined in the Work Letter
attached hereto as Exhibit B) in accordance with and subject to the terms of the
---------
Work Letter. Landlord shall commence the construction of the Tenant improvements
and diligently pursue such construction to completion as soon as reasonably
practicable following the Possession Date. Tenant's use of the Premises shall
not unreasonably interfere with Landlord's contractor(s) or otherwise impede the
completion of the Tenant Improvements. The construction of the Tenant
improvements shall not delay the occurrence of the Commencement Date. Tenant has
determined that the Premises are acceptable for Tenant's use and Tenant
acknowledges that, except as set forth in the Work Letter, neither Landlord nor
any broker or agent has made any representations or warranties in connection
with the physical condition of the Premises or their fitness for Tenant's use
upon which Tenant has relied directly or indirectly for any purpose.
2.2.4 Substantial Completion. The Tenant improvements shall be
----------------------
deemed to be "Substantially Complete" on the date on which Landlord files or
causes to be filed with the City in which the Premises are located (if required)
and
1.
<PAGE>
delivers to Tenant an architect's notice of substantial completion, or similar
written notice that the Tenant Improvements are Substantially Complete. As used
herein, the term "Substantially Complete" means that the Tenant Improvements
have been constructed in substantial compliance with the applicable plans and
specifications, except only minor "punchlist" items. Landlord shall promptly
complete such punchlist items to the reasonable satisfaction of Tenant.
3. RENT.
----
3.1 Rent.
----
3.1.1 Tenant's obligation to pay Base Rent shall commence on the
first (1st) calendar day following the date on which the Tenant Improvements are
Substantially Complete and possession of the Premises has been tendered to
Tenant (the "Rent Commencement Date"). Tenant shall pay to Landlord, at
Landlord's Address for Payment of Rent designated in the Basic Lease
Information, or at such other address as Landlord may from time to time
designate in writing to Tenant for the payment of Rent, the Base Rent, without
notice, demand, offset or deduction, in advance, on the first day of each
calendar month. Upon the execution of this Lease, Tenant shall pay to Landlord
the first month's Base Rent. Base Rent for the period from the Rent Commencement
Date to the first day of the next calendar month shall be prorated on a per diem
basis. All sums other than Base Rent which Tenant is obligated to pay under this
Lease shall be deemed to be additional rent due hereunder, whether or not such
sums are designated "additional rent." The term "Rent" means the Base Rent and
all additional rent payable hereunder.
3.1.2 As set forth in the Basic Lease Information, the initial Base
Rent shall be the sum of $74,800.00 per month which is calculated on the basis
of $0.34 per square foot. Tenant acknowledges that the Premises contains
approximately 220,000 rentable square feet of space. The parties acknowledge
that such measurement is an estimate and that the Base Rent shall not be
adjusted on the basis of a difference in the actual number of rentable square
feet.
3.2 Late Charge and Interest. The late payment of any Rent will cause
------------------------
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service
("Delinquency Costs"). If Landlord has not received any installment of Rent
within ten (l0) days after such amount is due, Tenant shall pay a late charge
of five percent (5%) of the delinquent amount, which is agreed to represent a
reasonable estimate of the Delinquency Costs incurred by Landlord. In addition,
all such delinquent amounts shall bear interest from the date such amount was
due until paid in full at a rate per annum ("Applicable Interest Rate") equal to
the lesser of (a) the maximum interest rate permitted by law or (b) five percent
(5%) above the rate publicly announced by Bank of America, N.A. (or if Bank of
America, N.A. ceases to exist, the largest bank then headquartered in the State
of California ("Bank") as its "Reference Rate." If the use of the announced
Reference Rate is discontinued by the Bank, then the term Reference Rate shall
mean the announced rate charged by the Bank which is, from time to time,
substituted for the Reference Rate. Landlord and Tenant recognize that the
damage which Landlord shall suffer as a result of Tenant's failure to pay such
amounts is difficult to ascertain and said late charge and interest are the best
estimate of the damage which Landlord shall suffer in the event of late payment
If a late charge becomes payable for any three (3) installments of Rent within
any twelve (l2) month period, then the Rent shall automatically become due and
payable quarterly in advance.
3.3 Intentionally Omitted.
---------------------
4. UTILITIES. Tenant shall make all arrangements for and shall pay all charges
---------
for heat, water, gas, electricity, telephone and any other utilities used on or
provided to the Premises including, without limitation, paying any deposits and
"hook up charges." Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement.
The cost of maintaining and repairing the plumbing, electrical distribution, and
mechanical systems, and other utility installations shall be borne by the
parties as provided in Section 8.
5. TAXES.
-----
5.1 Real Property Taxes. Landlord shall pay to the proper taxing
-------------------
authorities as the same become due all Real Property Taxes applicable to the
Premises, subject to reimbursement by Tenant as provided below. The term "Real
Property Taxes" shall be the sum of the following: all real property taxes,
possessory-interest taxes, business or license taxes or fees, service payments
in lieu of such taxes or fees, annual or periodic license or use fees, excises,
transit and traffic charges, housing fund assessments, open space charges, child
care fees, school, sewer and parking fees or any other assessments, levies,
fees, executions or charges, general and special, ordinary and extraordinary,
unforeseen as well as foreseen (including fees "in-lieu" of any such tax or
assessment) which are assessed, levied, charged, conferred or imposed by any
public authority upon the Premises (or any real property comprising any portion
thereof) or its operations, together with all taxes, assessments or other fees
imposed by any public authority upon or measured by any Rent or other charges
payable hereunder, including any gross receipts tax or excise tax levied by any
governmental authority with respect to receipt of rental income, or upon, with
respect to or by reason of the development, possession, leasing, operation,
management, maintenance alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or documentary transfer taxes upon this
transaction or
2.
<PAGE>
any document to which Tenant is a party creating or transferring an interest in
the Premises, together with any tax imposed in substitution, partially or
totally, of any tax previously included within the aforesaid definition or any
additional tax the nature of which was previously included within the aforesaid
definition, together with the costs and expenses (including attorneys and expert
witness fees and costs) of challenging any of the foregoing or seeking the
reduction in or abatement, redemption or return of any of the foregoing, but
only to the extent of any such reduction, abatement, redemption or return.
Nothing contained in this Lease shall require Tenant to pay any franchise,
corporate, estate or inheritance tax of Landlord, or any income, profits or
revenue tax or charge upon the net income of Landlord.
5.1.1 Reimbursement By Tenant. Tenant shall pay to Landlord an
-----------------------
amount equal to the Real Property Taxes then due within fifteen (15) days after
delivery to Tenant by Landlord of an invoice for the same, together with a copy
of the corresponding tax bill. Landlord may, at Landlord's option, deliver
statements from different taxing authorities at different times or deliver all
such statements at one time; provided however, that Landlord shall not change
the method of invoicing Tenant for Real Property Taxes more than one (1) time
in each three (3) year period and, in each case, shall give Tenant thirty (30)
days notice prior to any change in such method of invoicing Tenant. In addition,
Landlord may elect to collect such Real Property Taxes from Tenant in advance,
on a monthly or quarterly basis, based upon Landlord's reasonable estimate of
such Real Property Taxes. If the amount of monthly or quarterly payments for
estimated Real Property Taxes received by Landlord from Tenant is more or less
than the actual Real Property Taxes due, an appropriate adjustment shall be made
by Landlord and Tenant.
5.1.2 Partial Years. Real Property Taxes for partial tax fiscal
-------------
years, if any, falling within the Term, shall be prorated. Tenant's obligations
for Real Property Taxes for the last full or partial year of the Term shall
survive the expiration or earlier termination of this Lease.
5.2 Personal Property Taxes. Prior to delinquency, Tenant shall pay all
-----------------------
taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Premises by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.
6. TRIPLE NET LEASE. It is intended that this Lease be a "triple net lease."
----------------
and that the Rent to be paid hereunder by Tenant will be received by Landlord
without any deduction or offset whatsoever by Tenant, foreseeable or
unforeseeable. Except as expressly provided to the contrary in this Lease,
Landlord shall not be required to make any expenditure, incur any obligation, or
incur any liability of any kind whatsoever in connection with this Lease or the
ownership, construction, maintenance, operation or repair of the Premises.
Notwithstanding the foregoing. Tenant shall reimburse Landlord monthly, as
additional rent, for all costs and fees reasonably incurred by Landlord in
connection with the management of this Lease and the Premises including the cost
of those services which are customarily performed by a property management
services company.
7. INSURANCE.
---------
7.1 Landlord. Landlord shall maintain insurance insuring the Building
--------
against fire and extended coverage (including, if Landlord elects, "all risk"
coverage, earthquake/volcanic action, flood and/or surface water insurance) for
the full replacement cost of the Building, with deductibles and the form and
endorsements of such coverage as selected by Landlord, together with rental
abatement insurance against loss of Rent in an amount equal to the amount of
Rent for a period of at least twelve (12) months commencing on the date of loss.
Landlord may also carry such other insurance as Landlord may deem prudent or
advisable, including, without limitation, liability insurance in such amounts
and on such terms as Landlord shall determine. Tenant shall pay to Landlord an
amount equal to the premiums then due within fifteen (15) days after delivery to
Tenant by Landlord of an invoice for any such premiums. Landlord may, at
Landlord's option, elect to collect such premiums from Tenant in advance, on a
monthly or quarterly basis, based upon Landlord's reasonable estimate of such
premiums. If the amount of monthly or quarterly payments for estimated premiums
received by Landlord from Tenant are more or less than the actual premiums due,
an appropriate adjustment shall be made by Landlord and Tenant.
7.2 Tenant. Tenant shall, at Tenant's expense, obtain and keep in force at
------
all times the following insurance:
7.2.1 Commercial General Liability Insurance (Occurrence Form). A
-------------------------------------------------------
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000.000) per
occurrence and Two Million Dollars ($2,000,000) aggregate per location if Tenant
has multiple locations, providing coverage for, among other things, blanket
contractual liability, premises, products/completed operations and personal and
advertising injury coverage, with deletion of (a) the exclusion for operations
within fifty (50) feet of a railroad track (railroad protective liability), if
applicable, and (b) the exclusion for explosion, collapse or underground hazard,
if applicable, and, if necessary, Tenant shall provide for restoration of the
aggregate limit;
3.
<PAGE>
7.2.2 Automobile Liability Insurance. Comprehensive automobile
------------------------------
liability insurance having a combined single limit of not less than Two Million
Dollars ($2,000,000) per occurrence and insuring Tenant against liability for
claims arising out of ownership, maintenance, or use of any owned, hired or non-
owned automobiles;
7.2.3 Workers' Compensation and Employer's Liability Insurance.
--------------------------------------------------------
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises (including
the all states endorsement and, if applicable, the volunteers endorsement),
together with employer's liability insurance coverage in the amount of at least
One Million Dollars ($1,000,000); and
7.2.4 Property Insurance. "All risk" property insurance including
------------------
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any of Tenant's personal property, fixtures, equipment and alterations,
including electronic data processing equipment (collectively "Tenant's
Property") (and coverage for the full replacement cost thereof including
business interruption of Tenant), together with, if the property of Tenant's
invitee's is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitee's and located in the Premises.
7.3 General.
-------
7.3.1 Insurance Companies. Insurance required to be maintained by
-------------------
Tenant shall be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of at
least A 8 (or such higher rating as may be required by a lender having a lien on
the Premises) as set forth in the most current issue of "Best's Insurance
Guide."
7.3.2 Certificates of Insurance. Tenant shall deliver to Landlord
-------------------------
certificates of insurance for all insurance required to be maintained by Tenant
in the form of Exhibit D, attached hereto, no later than seven (7) days prior to
---------
the date of possession of the Premises. Tenant shall, at least ten (10) days
prior to expiration of the policy, furnish Landlord with certificates of renewal
or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after sixty (60) days prior written notice to the parties named as additional
insured in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least (10)
days' notice has been given to Landlord). If Tenant fails to maintain any
insurance required in this Lease, Tenant shall be liable for all losses and cost
resulting from said failure.
7.3.3 Additional Insured. Landlord and any property management
------------------
company of Landlord for the Premises shall be named as additional insured under
all of the policies required by Section 7.2.1. The policies required under
Section 7.2.1 shall provide for severability of interest.
7.3.4 Primary Coverage. All insurance to be maintained by Tenant
----------------
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. Any umbrella
liability policy or excess liability policy (which shall be in "following form")
shall provide that if the underlying aggregate is exhausted, the excess coverage
will drop down as primary insurance. The limits of insurance maintained by
Tenant shall not limit Tenant's liability under this Lease.
7.3.5 Mutual Waiver of Subrogation. Tenant waives any right to
----------------------------
recover against Landlord for claims for damages to Tenant's Property to the
extent covered, or required by this Lease to be covered by insurance. Landlord
waives any right to recover against Tenant for damages to Landlord's property to
the extent covered, or required by this Lease to be covered by property
insurance. This provision is intended to waive fully, and for the benefit of
Landlord and Tenant, any rights and/or claims which might give rise to a right
of subrogation in favor of any insurance carrier. The coverage obtained by
Landlord and Tenant pursuant to this Lease shall include, without limitation, a
waiver of subrogation endorsement attached to the certificate of insurance.
7.3.6 Notification of Incidents. Tenant shall notify Landlord
-------------------------
within seventy-two (72) hours after the occurrence of any accidents or incidents
in the Premises which could give rise to a claim under any of the insurance
policies required under this Section 7.
7.4 Indemnity.
---------
7.4.1 Tenant's Indemnity. Tenant shall indemnify, protect, defend
------------------
(by counsel reasonably acceptable to both Landlord and Tenant) and hold harmless
Landlord and its partners, directors, officers, employees, shareholders,
lenders, agents, contractors and each of their successors and assigns from and
against any and all claims, judgments, causes of action, damages, penalties,
costs, liabilities, and expenses, including all costs, attorneys' fees, expenses
and liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon, arising at any time during or after the Term as a
result (directly or indirectly) of or in connection with (i) any default in the
performance of any obligation on Tenant's part to be
4.
<PAGE>
performed under the terms of this Lease, or (ii) Tenant's use of the Premises,
the conduct of Tenant's business or any activity, work or things done, permitted
or suffered by Tenant in or about the Premises or other portions of the Project,
except to the extent caused by Landlord's gross negligence or wilful misconduct.
The obligations of Tenant under this Section 7.4 shall survive the termination
of this Lease with respect to any claims or liability arising out of any act,
omission, or event occurring on or before the date of such termination.
7.4.2 Landlord's Indemnity. Except as expressly provided in this
--------------------
Lease, and subject to the limitations of Section 17.5, Landlord shall indemnify,
protect, defend (by counsel reasonably acceptable to both Landlord and Tenant)
and hold harmless Tenant and its partners, directors, officers, employees,
shareholders, lenders, agents, contractors and each of their successors and
assigns from and against any and all claims, judgments, causes of action,
damages, penalties, costs, liabilities, and expenses, including all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon, arising at any time during or
after the Term as a result (directly or indirectly) of or in connection with (i)
any default in the performance of any obligation on Landlord's part to be
performed under the terms of this Lease, or (ii) Landlord's gross negligence or
intentional misconduct in connection with Landlord's activities in or about the
Premises. The obligations of Landlord under this Section 7.4 shall survive the
termination of this Lease with respect to any claims or liability arising out of
any act, omission, or event occurring on or before the date of such termination.
7.5 Exemption of Landlord from Liability. Tenant, as a material part of
------------------------------------
the consideration to Landlord, hereby assumes all risk of damage to property
including, but not limited to, Tenant's fixtures, equipment, furniture and
alterations or injury to persons in, upon or about the Premises or other
portions of the Project arising from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord, except to the extent such claims are
caused by the gross negligence or wilful misconduct of Landlord, its employees,
agents, and contractors. Tenant hereby agrees that Landlord shall not be liable
for injury to Tenant's business or any loss of income therefrom or for damage to
the property of Tenant, or injury to or death of Tenant, Tenant's employees,
invitee's, customers, agents or contractors or any other person in or about the
Premises or the Project, whether such damage or injury is caused by fire, steam,
electricity, gas, water or rain, or from the breakage, leakage or other defects
of sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury results from
conditions arising upon the Premises, or from other sources or places, and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant, except to the extent caused by the
gross negligence or wilful misconduct of Landlord, its employees, agents, and
contractors.
8. REPAIRS AND MAINTENANCE.
-----------------------
8.1 Landlord. Landlord shall, subject to the following sentence, maintain
--------
the structural portions of the roof, foundation, and load-bearing portions of
walls (excluding wall coverings, painting, glass and doors) of the Improvements.
Landlord shall not be required to make any repair resulting from (i) any
alteration or modification to the Improvements or to mechanical equipment within
the Improvements performed by, for or because of Tenant or to special equipment
or systems installed by, for or because of Tenant, (ii) the installation, use or
operation of Tenant's property, fixtures and equipment, (iii) the moving of
Tenant's property in or out of the Improvements or in and about the Premises,
(iv) Tenant's use or occupancy of the Premises in violation of Section l0 of
this Lease or in the manner not contemplated by the parties at the time of the
execution of this Lease, (v) the acts or omissions of Tenant and Tenant's
employees, agents, invitees, subtenants, licensees or contractors, (vi) fire and
other casualty, except as provided by Section 12 of this Lease or (vii)
condemnation, except as provided in Section 13 of this Lease. Landlord shall
make repairs under this Section 8.1 as soon as reasonably practicable after
receipt of written notice from Tenant of the need for such repairs. Landlord
shall procure and maintain, at Tenant's expense, regularly scheduled preventive
maintenance/service contracts for (i) the maintenance and repair of the fire
detection and sprinkler system, and (ii) the regular and routine maintenance and
annual inspection of the roof membrane. Tenant shall reimburse Landlord upon
thirty (30) days written notice for the reasonable cost thereof. Tenant waives
any right to repair the Premises at the expense of Landlord under any applicable
governmental laws, ordinances, statutes, orders or regulations now or hereafter
in effect which might otherwise apply.
8.2 Tenant. Except for the portions of the Premises expressly required to
------
be maintained by Landlord under Section 8.1, Tenant, at Tenant's expense, shall
maintain the Premises in good order, condition and repair, including, without
limitation, subfloors and floor coverings, walls and wall coverings, mechanical,
electrical, and plumbing systems, doors, windows, parking lots, and truck
aprons, gutters and downspouts, landscaping and any signage. During the Term of
this Lease, or any extensions thereof, Tenant shall procure and maintain, at
Tenant's expense, regularly scheduled preventive maintenance/service contracts
with maintenance contractors reasonably acceptable to Landlord for (i) servicing
all hot water and heating and air conditioning systems and equipment ("HVAC") in
the Premises, and (ii) the landscape maintenance. Tenant shall provide Landlord
with a copy of the HVAC contract and shall furnish a copy of all reports and
correspondence involving the condition of the HVAC equipment to Landlord. Each
contract shall provide that the maintenance contractor will notify Landlord in
writing at least ten (10) days prior to any termination of the contract.
Notwithstanding the foregoing, Landlord reserves the right to procure and
maintain the foregoing maintenance/service contracts, and Tenant shall promptly
reimburse Landlord upon thirty (30) days written notice for the cost thereof. In
the event Tenant fails, in the reasonable judgment of Landlord, to maintain the
Premises in good order, condition and repair. Landlord shall have the right to
perform such maintenance, repairs or refurbishing at Tenant's expense.
5.
<PAGE>
8.3 Roof - Repair and Replacement. As provided in Section 8.1, Landlord,
-----------------------------
at its cost, shall maintain the structural portions of the roof during the Term
of this Lease. In addition, Landlord shall arrange for regular and routine
maintenance and annual inspection of the roof surface and membrane, subject to
Tenant's reimbursement to Landlord for the reasonable cost thereof within thirty
(30) days' written notice. In the event that the surface and membrane of the
roof needs to be replaced as a matter of prudent building management and
ownership, as reasonably determine by an independent and qualified roofing
consultant, during the initial Term of this Lease or, if the Term is extended
pursuant to Section 20, during the First Extension Term, Landlord shall arrange
and pay for the replacement thereof at Landlord's sole cost and expense. If the
Term of this Lease is further extended, either pursuant to Section 20 or by
other agreement of the parties, and the roof surface and membrane needs to be
replaced as a matter of prudent building management and ownership, as reasonably
determined by an independent and qualified roofing consultant, during such
additionally extended term. Tenant shall arrange and pay for the replacement
thereof at Tenant's sole cost and expense.
8.4 Condition of the Premises.
-------------------------
8.4.1 Landlord warrants to Tenant that the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Tenant will put the Premises or to any
alterations or utility installations made or to be made by Tenant. If the
Premises do not comply with said warranty, Landlord shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Tenant
setting forth with specificity the nature and extent of such condition of
non-compliance, rectify the same at Landlord's expense. If Tenant fails to give
Landlord written notice of a condition of non-compliance with this warranty
within six (6) months after the Possession Date, the correction of such
condition of non-compliance shall be the obligation of Tenant at Tenant's sole
cost and expense.
8.4.2 Landlord and Tenant have jointly conducted a walk-through of
the Premises and have agreed that those items which are set forth in Exhibit F
---------
hereto require correction and that such items shall be corrected by Landlord, at
its sole cost and expense. On or about the Possession Date, Landlord and Tenant
shall conduct a subsequent walk-through of the Premises and shall jointly and
reasonably determine if there are any new and additional items in the Premises
which require correction and, if so, such items shall be added to Exhibit F.
---------
Landlord shall cause the items set forth in Exhibit F, as the same may be
---------
revised following the Possession Date walk through, to be corrected promptly and
at Landlord's sole cost and expense.
9. ALTERATIONS.
-----------
9.1 Trade Fixtures: Alterations. Tenant may install necessary trade
---------------------------
fixtures, equipment and furniture in the Premises, provided that such items are
installed and are removable without structural or material damage to the
Premises or the Project. Tenant shall not construct, nor allow to be
constructed, any alterations or physical additions in, about or to the Premises
without obtaining the prior written consent of Landlord, which consent shall be
conditioned upon Tenant's compliance with Landlord's reasonable requirements
regarding construction of improvements and alterations but such consent
otherwise shall not be unreasonably withheld. Tenant shall submit plans and
specifications to Landlord with Tenant's request for approval and shall
reimburse Landlord for all costs which Landlord may incur in connection with
granting approval to Tenant for any such alterations and additions, including
any costs or expenses which Landlord may incur in electing to have outside
architects and engineers review said matters. Tenant shall file a notice of
completion after completion of such work and provide Landlord with a copy
thereof. Tenant shall provide Landlord with a set of "as-built" drawings for any
such work.
9.2 Damage: Removal. Tenant shall repair all damage to the Premises caused
---------------
by the installation or removal of Tenant's fixtures, equipment, furniture and
alterations. Upon the termination of this Lease, Tenant shall remove any or all
alterations, additions, improvements and partitions made or installed by Tenant
and restore the Premises to its condition existing prior to the construction of
any such items; provided, however, Landlord may permit, upon written notice to
Tenant, any such items designated by Landlord to remain on the Premises, in
which event (and if Tenant elects to leave such items on the Premises) they
shall be and become the property of Landlord upon the termination of this Lease.
All such removals and restoration shall be accomplished in a good and
workmanlike manner and so as not to cause any damage to the Premises or the
Project whatsoever.
9.3 Liens. Tenant shall promptly pay and discharge all claims for labor
-----
performed, supplies furnished and services rendered at the request of Tenant and
shall keep the Premises free of all mechanics' and materialmen's liens in
connection therewith. Tenant shall provide at least ten (l0) days prior
written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to
post on the Premises notices of non-responsibility. If any lien is filed, Tenant
shall cause such lien to be released and removed within ten (10) days after the
date of filing, and if Tenant fails to do so. Landlord may take such action as
may be necessary to remove such lien and Tenant shall pay Landlord such amounts
expended by Landlord together with interest thereon at the Applicable Interest
Rate from the date of expenditure.
6.
<PAGE>
10. USE. The Premises shall be used only for the Permitted Uses set forth in
---
the Basic Lease Information and for no other uses. Tenant's use of the Premises
shall be in compliance with and subject to all applicable governmental laws,
ordinances, statutes, orders and regulations and any CC&R's or any supplement
thereto recorded in any official or public records with respect to the Project
or any portion thereof. In no event shall the Premises be used for any of the
Prohibited Uses set forth on Exhibit E attached hereto. Tenant shall comply with
---------
the reasonable rules and regulations as Landlord may from time to time
prescribe. Tenant shall not commit waste, overload the floors or structure of
the Premises, subject the Premises or the Project to any use which would damage
the same or increase the risk of loss or violate any insurance coverage, permit
any unreasonable odors, smoke, dust, gas, substances, noise or vibrations to
emanate from the Premises, take any action which would constitute a nuisance or
would disturb, obstruct or endanger any other tenants of the Project, take any
action which would abrogate any warranties, or use or allow the Premises to be
used for any unlawful purpose. Tenant shall have the right to use for its
employees and invitees, the parking areas on the Premises. Landlord shall not be
responsible for non-compliance by any other tenant or occupant of the Project
with, or Landlord's failure to enforce, any of the rules or regulations or any
other terms or provisions of such tenant's or occupant's lease. Tenant shall
promptly comply with the reasonable requirements of any board of fire insurance
underwriters or other similar body now or hereafter constituted. Tenant shall
not do any act which shall in any way encumber the title of Landlord in and to
the Premises or the Project.
11. ENVIRONMENTAL MATTERS.
---------------------
11.1 Hazardous Materials. Tenant shall not cause nor permit, nor allow any
-------------------
of Tenant's employees, agents, customers, visitors, invitee's, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to cause
or permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises or the Project, except for routine office and janitorial
supplies in usual and customary quantities stored, used and disposed of in
accordance with all applicable Environmental Laws. As used herein, "Hazardous
Materials" means any chemical, substance, material, controlled substance,
object, condition, waste, living organism or combination thereof which is or may
be hazardous to human health or safety or to the environment due to its
radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity,
carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other harmful or
potentially harmful properties or effects, including, without limitation,
petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls
(PCBs) and all of those chemicals, substances, materials, controlled substances,
objects, conditions, wastes, living organisms or combinations thereof which are
now or become in the future listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, "Environmental Laws" means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, decisions of courts, ordinances, rules, codes, orders, decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant, the Premises, the Building or the Project. Tenant and Tenant's
Parties shall comply with all Environmental Laws and promptly notify Landlord of
the violation of any Environmental Law or presence of any Hazardous Materials,
other than office and janitorial supplies as permitted above, on the Premises.
Landlord shall have the right to enter upon and inspect the Premises and to
conduct tests, monitoring and investigations. If such tests indicate the
presence of any environmental condition which occurred during the Term of this
Lease, Tenant shall reimburse Landlord for the cost of conducting such tests.
The phrase "environmental condition" shall mean any adverse condition relating
to any Hazardous Materials or the environment, including surface water,
groundwater. drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, noise, vibration, light
and odors. In the event of any such environmental condition. Tenant shall
promptly take any and all steps necessary to rectify the same to Landlord's
reasonable satisfaction or shall, at Landlord's election, reimburse Landlord,
upon demand, for the cost to Landlord of performing rectifying work. The
reimbursement shall be paid to Landlord in advance of Landlord's performing such
work, based upon Landlord's reasonable estimate of the cost thereof, and upon
completion of such work by Landlord, Tenant shall pay to Landlord any shortfall
within thirty (30) days after Landlord bills Tenant therefore or Landlord shall
within thirty (30) days refund to Tenant any excess deposit, as the case may be.
11.2 Indemnification. Tenant shall indemnify, protect, defend (by
---------------
counsel acceptable to Landlord) and hold harmless Landlord and its partners,
directors, officers, employees, shareholders, lenders, agents, contractors and
each of their respective successors and assigns (individually and collectively,
"Indemnitees") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses and expenses
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence of
Hazardous Materials on, under or about the Premises or other property as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties' activities,
or failure to act, in connection with the Premises. This indemnity shall include
the cost of any required or necessary repair, cleanup or detoxification, and the
preparation and implementation of any closure, monitoring or other required
plans, whether such action is required or necessary prior to or following the
termination of this Lease. Neither the written consent by Landlord to the
presence of Hazardous Materials on, under or about the Premises, nor the strict
compliance by Tenant with all Environmental Laws, shall excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Tenant's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.
7.
<PAGE>
11.3 Landlord's Disclosure. Landlord has no actual knowledge and has
---------------------
received no written notice that (i) any Hazardous Materials are located on,
under, or in the Premises, or (ii) there is a pending proceeding, inquiry,
investigation, or order by any governmental authority with respect to any
Hazardous Materials on, under, or in the Premises. As use herein, the term
"actual knowledge" means that the specific matter has come to the actual
attention of the person or persons employed by Landlord who are responsible and
authorized to act with respect to such matter.
11.4 Storage Tank Removal. The parties acknowledge that the previous
--------------------
tenant of the Premises had installed a 10,000 gallon underground diesel storage
tank (the "Tank"). Landlord shall remove or cause the Tank to be removed in
accordance with all applicable laws and regulations and within sixty (60) days
following the Commencement Date. Landlord further acknowledges and agrees that
Tenant shall have no liability for any cost or expense arising out of the
installation, use, or removal of the Tank.
12. DAMAGE AND DESTRUCTION.
----------------------
12.1 Casualty. If the Premises should be damaged or destroyed by fire or
--------
other casualty, Tenant shall give immediate written notice to Landlord. Within
thirty (30) days after receipt thereof. Landlord shall notify Tenant whether the
necessary repairs can reasonably be made: (a) within ninety (90) days; (b) in
more than ninety (90) days but in less than one hundred eighty (180) days; or
(c) in more than one hundred eighty (180) days from the date of such notice.
12.1.1 Less Than 90 Days. If the Premises should be damaged only to
-----------------
such extent that rebuilding or repairs can reasonably be completed within ninety
(90) days, this Lease shall not terminate and, provided that insurance proceeds
are available to fully repair the damage. Landlord shall repair the Premises
utilizing such insurance proceeds and shall not recover any of such repair costs
from Tenant pursuant to Section 6. Landlord shall not be required to rebuild,
repair or replace any alterations, partitions, fixtures, additions and other
improvements (collectively, "Improvements") which may have been placed in, on or
about the Premises by or for the benefit of Tenant, it being the intent of the
parties that Tenant shall replace such Improvements utilizing insurance proceeds
available to Tenant pursuant to Section 7.2.4. If Tenant is required to vacate
all or a portion of the Premises during Landlord's repair thereof, the Base Rent
payable hereunder shall be abated proportionately from the date Tenant vacates
all or a portion of the Premises only to the extent rental abatement insurance
proceeds are received by Landlord and only during the period the Premises are
unfit for occupancy.
12.1.2 Greater Than 90 Days. If the Premises should be damaged only
--------------------
to such extent that rebuilding or repairs can reasonably be completed in more
than ninety (90) days but in less than one hundred eighty (180) days, then
Landlord shall have the option of: (a) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Premises; or (b) electing to repair the Premises, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
Improvements which may have been placed In, on or about the Premises by or for
the benefit of Tenant). If Tenant is required to vacate all or a portion of the
Premises during Landlord's repair thereof, the Base Rent payable hereunder shall
be abated proportionately from the date Tenant vacates all or a portion of the
Premises only to the extent rental abatement insurance proceeds are received by
Landlord and only during the period the Premises are unfit for occupancy. In the
event that Landlord should fail to substantially complete such repairs within
one hundred eighty (180) days after the date upon which Landlord is notified by
Tenant of the casualty (such period to be extended for delays caused by Tenant
or because of any items of Force Majeure, as hereinafter defined) and Tenant has
not re-occupied the Premises, Tenant shall have the right, as Tenant's exclusive
remedy, within ten (10) days after the expiration of such one hundred eighty
(180) day period, to terminate this Lease by delivering written notice to
Landlord as Tenant's exclusive remedy, whereupon all rights hereunder shall
cease and terminate thirty (30) days after Landlord's receipt of such notice.
12.1.3 Greater Than 180 Days. If the Premises should be so damaged
---------------------
that rebuilding or repairs cannot be completed within one hundred eighty (180)
days, either Landlord or Tenant may terminate this Lease by giving written
notice within ten (10) days after notice from Landlord specifying such time
period of repair; and this Lease shall terminate and the Rent shall be abated
from the date Tenant vacates the Premises. In the event that neither party
elects to terminate this Lease, Landlord shall promptly commence and diligently
prosecute to completion the repairs to the Premises, provided insurance proceeds
are available to repair the damage (except that Landlord shall not be required
to rebuild, repair or replace any Improvements which may have been placed in, on
or about the Premises by or for the benefit of Tenant). If Tenant is required to
vacate all or a portion of the Premises during Landlord's repair thereof, the
Base Rent payable hereunder shall be abated proportionately from the date Tenant
vacates all or a portion of the Premises only to the extent rental abatement
insurance proceeds are received by Landlord and only during the period that the
Premises are unfit for occupancy.
12.2 Tenant's Fault. If the Premises or any portion of the Premises is
--------------
damaged resulting from the negligence or breach of this Lease by Tenant or any
of Tenant's Parties, Rent shall not be reduced during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused thereby
to the extent such cost is not covered by insurance proceeds.
8.
<PAGE>
12.3 Uninsured Casualty. In the event that the Premises or any portion of
------------------
the Premises is damaged to the extent Tenant is unable to use the Premises and
such damage is not covered by insurance proceeds received by Landlord or in the
event that the holder of any indebtedness secured by the Premises requires that
the insurance proceeds be applied to such indebtedness, then Landlord shall have
the right at Landlord's option either (i) to repair such damage as soon as
reasonably possible at Landlord's expense, or (ii) to give written notice to
Tenant within thirty (30) days after the date of the occurrence of such damage
of Landlord's intention to terminate this Lease as of the date of the occurrence
of such damage. In the event Landlord elects to terminate this Lease, Tenant
shall have the right (but not the obligation) within ten (10) days after receipt
of such notice to give written notice to Landlord of Tenant's intention to pay
the cost of repair of such damage, in which event this Lease shall continue in
full force and effect, Landlord shall make such repairs as soon as reasonably
possible and Tenant shall reimburse Landlord for such repairs within fifteen
(15) days after receipt of an invoice from Landlord. If Tenant is required to
vacate all or a portion of the Premises during Landlord's repair thereof, the
Base Rent payable hereunder shall be abated proportionately from the date Tenant
vacates all or a portion of the Premises only to the extent rental abatement
insurance proceeds are received by Landlord and only during the period that the
Premises are unfit for occupancy. If Tenant does not give such notice within the
ten (l0) day period, this Lease shall terminate automatically as of the date
of the occurrence of the damage.
12.4 Waiver. With respect to any damage or destruction which Landlord is
------
obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law and not specifically set forth herein.
13. EMINENT DOMAIN.
--------------
13.1 Total Condemnation. If all of the Premises is condemned by eminent
------------------
domain, inversely condemned or sold under threat of condemnation for any public
or quasi-public use or purpose ("Condemned"), this Lease shall terminate as of
the earlier of the date the condemning authority takes title to or possession of
the Premises, and Rent shall be adjusted to the date of termination.
13.2 Partial Condemnation. If any portion of the Premises is Condemned and
--------------------
such partial condemnation materially impairs Tenant's ability to use the
Premises for Tenant's business as reasonably determined by Landlord, Landlord
shall have the option of either (i) relocating Tenant to comparable space within
the Project or (ii) terminating this Lease as of the earlier of the date title
vests in the condemning authority or as of the date an order of immediate
possession is issued and Rent shall be adjusted to the date of termination. If
such partial condemnation does not materially impair Tenant's ability to use the
Premises for the business of Tenant, Landlord shall promptly restore the
Premises to the extent of any condemnation proceeds recovered by Landlord,
excluding the portion thereof lost in such condemnation, and this Lease shall
continue in full force and effect except that after the date of such title
vesting Rent shall be adjusted as reasonably determined by Landlord.
13.3 Award. If the Premises are wholly or partially Condemned, Landlord
-----
shall be entitled to the entire award paid for such condemnation, and Tenant
waives any claim to any part of the award from Landlord or the condemning
authority; provided, however, Tenant shall have the right to recover from
Landlord such compensation, if any, as may be specifically awarded to Landlord
in connection with costs in removing Tenant's merchandise, furniture, fixtures,
leasehold improvements and equipment to a new location. No condemnation of any
kind shall be construed to constitute an actual or constructive eviction of
Tenant or a breach of any express or implied covenant of quiet enjoyment.
13.4 Temporary Condemnation. In the event of a temporary condemnation not
----------------------
extending beyond the Term, this Lease shall remain in effect, Tenant shall
continue to pay Rent and Tenant shall receive any award made for such
condemnation except damages to any of Landlord's property. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of initial occupancy by the condemning authority and
any such award shall be distributed in accordance with the preceding section. If
a temporary condemnation remains in effect at the expiration or earlier
termination of this Lease, Tenant shall pay Landlord the reasonable cost of
performing any obligations required of Tenant with respect to the surrender of
the Premises, unless Landlord receives such costs from the condemning authority.
14. DEFAULT
-------
14.1 Events of Defaults. The occurrence of any of the following events
------------------
shall, at Landlord's option, constitute an "Event of Default":
14.1.1 Vacation or abandonment of the Premises for a period of
thirty (30) consecutive days;
14.1.2 Failure to pay Rent on the date when due and the failure
continuing for a period of five (5) days after such payment is due;
14.1.3 Failure to perform Tenant's covenants and obligations
hereunder (except default in the payment of Rent) where such failure continues
for a period of thirty (30) days after written notice from Landlord: provided,
however, if the
9.
<PAGE>
nature of the default is such that more than thirty (30) days are reasonably
required for its cure. Tenant shall not be deemed to be in default if Tenant
commences the cure within the thirty (30) day period and diligently prosecutes
such cure to completion;
14.l.4 The making of a general assignment by Tenant for the
benefit of creditors: the filing of a voluntary petition by Tenant or the filing
of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors and, in the case of an
involuntary action, the failure to remove or discharge the same within sixty
(60) days of such filing; the appointment of a receiver or other custodian to
take possession of substantially all of Tenant's assets or this leasehold:
Tenant's insolvency or inability to pay Tenant's debts or failure generally to
pay Tenant's debts when due; any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenants assets;
Tenant taking any action toward the dissolution or winding up of Tenant's
affairs: the cessation or suspension of Tenant's use of the Premises; or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets or this leasehold;
14.1.5 The making of any material misrepresentation or omission by
Tenant or any successor in interest of Tenant in any materials delivered by or
on behalf of Tenant to Landlord or Landlord's lender pursuant to this Lease; or
14.l.6 The occurrence of an Event of Default set forth in Section
14.l.4 or l5.l.5 with respect to any guarantor of this Lease, if applicable.
14.2 Remedies.
--------
14.2.1 Termination. In the event of the occurrence of any Event of
-----------
Default, Landlord shall have the right to give a written termination notice to
Tenant and, on the date specified in such notice, this Lease shall terminate
unless on or before such date all arrears of Rent and all other sums payable by
Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of
Default at the time existing shall have been fully remedied to the satisfaction
of Landlord.
14.2.l.l Repossession. Following termination, without
------------
prejudice to other remedies Landlord may have, Landlord may (i) peaceably re-
enter the Premises upon voluntary surrender by Tenant or remove Tenant therefrom
and any other persons occupying the Premises, using such legal proceedings as
may be available; (ii) repossess the Premises or relet the Premises or any part
thereof for such term (which may be for a term extending beyond the Term), at
such rental and upon such other terms and conditions as Landlord in Landlord's
sole discretion shall determine, with the right to make reasonable alterations
and repairs to the Premises; and (iii) remove all personal property therefrom.
14.2.l.2 Unpaid Rent. Landlord shall have all the rights
-----------
and remedies of a landlord provided by applicable law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that bad been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the Applicable Interest Rate, and as used in (c)
above, shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
14.2.2 Continuation. Even though an Event of Default may
------------
have occurred, this Lease shall continue in effect for so long as Landlord does
not terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due. Landlord, without terminating this Lease, may, during
the period Tenant is in default, enter the Premises and relet the same, or any
portion thereof, to third parties for Tenant's account and Tenant shall be
liable to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of remodeling the
Premises and like costs. Reletting may be for a period shorter or longer than
the remaining Term. Tenant shall continue to pay the Rent on the date the same
is due. No act by Landlord hereunder, including acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease. In the event that Landlord elects to relet the
Premises, the rent that Landlord receives from reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base Rent
and Real Property Taxes: second, all costs, including maintenance, incurred by
Landlord in reletting; and, third, Base Rent and Real Property Taxes under this
Lease. After deducting the payments referred to above, any sum remaining from
the rental Landlord receives from reletting shall be held by Landlord and
applied in payment of future Rent as Rent becomes due under this Lease. In no
event, and notwithstanding anything in Section 15 to the contrary, shall Tenant
be entitled to any excess rent received by Landlord. If, on the date Rent is due
under this Lease, the rent received from the reletting is less than the Rent due
on that date. Tenant shall pay to Landlord, in addition to the remaining
10.
<PAGE>
Rent due, all costs, including maintenance, which Landlord incurred in reletting
the Premises that remain after applying the rent received from reletting as
provided hereinabove. So long as this Lease is not terminated, Landlord shall
have the right to remedy any default of Tenant, to maintain or improve the
Premises, to cause a receiver to be appointed to administer the Premises and new
or existing subleases and to add to the Rent payable hereunder all of Landlord's
reasonable costs in so doing, with interest at the Applicable Interest Rate from
the date of such expenditure.
14.3 Cumulative. Each right and remedy of Landlord provided for herein or
----------
now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.
15. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, sublet or otherwise
-------------------------
transfer, whether voluntarily or involuntarily or by operation of law, the
Premises or any part thereof without Landlord's prior written approval, which
shall not be unreasonably withheld. The merger of Tenant with any other entity
or the transfer of any controlling or managing ownership or beneficial interest
in Tenant, or the assignment of a substantial portion of the assets of Tenant,
whether or not located at the Premises, shall constitute an assignment
hereunder. If Tenant desires to assign this Lease or sublet any or all of the
Premises, Tenant shall give Landlord written notice thereof with copies of all
related documents and agreements associated with the assignment or sublease,
including without limitation, the financial statements of any proposed assignee
or subtenant, forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Tenant shall pay Landlord's reasonable attorneys'
fees incurred in the review of such documentation plus an administrative fee of
Three Hundred Fifty Dollars ($350.00) for each proposed transfer. Landlord shall
have a period of thirty (30) days following receipt of such notice and all
related documents and agreements to notify Tenant in writing of Landlord's
approval or disapproval of the proposed assignment or sublease. If Landlord
fails to notify Tenant in writing of such election, Landlord shall be deemed to
have approved such assignment or subletting. This Lease may not be assigned by
operation of law. Any purported assignment or subletting contrary to the
provisions hereof shall be void and shall constitute an Event of Default
hereunder. If Tenant receives rent or other consideration for any such transfer
in excess of the Rent, or in case of the sublease of a portion of the Premises,
in excess of such Rent that is fairly allocable to such portion, after
appropriate adjustments to assure that all other payments required hereunder are
appropriately taken into account, Tenant shall pay landlord fifty percent (50%)
of the difference between each such payment of rent or other consideration and
the Rent required hereunder. During any period in which an Event of Default (as
defined in Section 14.1) remains uncured, Landlord may, without waiving any
other rights or remedies, collect rent from the assignee, subtenant or occupant
and apply the net amount collected to the Rent herein reserved and apportion any
excess rent so collected in accordance with the terms of the preceding sentence.
Tenant shall continue to be liable as a principal and not as a guarantor or
surety to the same extent as though no assignment or subletting had been made.
Landlord may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to the Lease by assignees of Tenant without
notifying Tenant or any successor of Tenant and without obtaining their consent.
No permitted transfer shall be effective until there has been delivered to
Landlord a counterpart of the transfer instrument in which the transferee agrees
to be and remain jointly and severally liable with Tenant for the payment of
Rent pertaining to the Premises and for the performance of all the terms and
provisions of this Lease relating thereto arising on or after the date of the
transfer. Subject to the provisions hereof and provided Landlord receives thirty
(30) days prior written notice and a true and correct copy of the assignment
instrument. Landlord hereby consents to the assignment of Tenant's interest in
and to this Lease to any wholly owned subsidiary of Tenant.
16. ESTOPPEL ATTORNMENT AND SUBORDINATION.
-------------------------------------
l6.l Estoppel. Within ten (l0) days after request by Landlord, Tenant
--------
shall deliver an Estoppel certificate duly executed (and acknowledged if
required by any lender), in the form attached hereto as Exhibit G, or in such
---------
other form as may be acceptable to the lender, which form may include some or
all of the provisions contained in Exhibit G, to any proposed mortgagee,
---------
purchaser or Landlord. Tenant's failure to deliver said statement in such time
period shall be an Event of Default hereunder and shall be conclusive upon
Tenant that (a) this Lease is in full force and effect, without modification
except as may be represented by Landlord; (b) there are no uncured defaults in
Landlord's performance and Tenant has no right of offset, counterclaim or
deduction against Rent hereunder, and (c) no more than one month's Base Rent has
been paid in advance. If any financier should require that this Lease be amended
(other than in the description of the Premises, the Term, the Permitted Use, the
Rent or as will substantially, materially and adversely affect the rights of
Tenant), Landlord shall give written notice thereof to Tenant, which notice
shall be accompanied by a Lease supplement embodying such amendments. Tenant
shall, within ten (10) days after the receipt of Landlord's notice, meet and
confer with Landlord in good faith with respect to such proposed amendments.
l6.2 Subordination. This Lease shall be subject and subordinate to all
-------------
ground leases and the lien of all mortgages and deeds of trust which now or
hereafter affect the Premises or the Project or Landlord's interest therein, and
all amendments thereto, all without the necessity of Tenant's executing further
instruments to effect such subordination. If requested, Tenant shall execute and
deliver to Landlord within ten (10) days after Landlord's request whatever
documentation that may
11.
<PAGE>
reasonably be required to further effect the provisions of this paragraph. With
respect to any new mortgage or deed of trust encumbering the Premises after the
date of this Lease, Landlord shall use its best efforts to obtain from such
mortgagee or beneficiary under the deed of trust a non-disturbance agreement in
such party's usual and customary form protecting the interest of Tenant
hereunder.
l6.3 Attornment. In the event of a foreclosure proceeding, the exercise
----------
of the power of sale under any mortgage or deed of trust or the termination of a
ground lease, Tenant shall, if requested, attorn to the purchaser thereupon and
recognize such purchaser as Landlord under this Lease; provided, however,
Tenant's obligation to attorn to such purchaser shall be conditioned upon
Tenant's receipt of a non-disturbance agreement protecting the interest of
Tenant hereunder.
17. MISCELLANEOUS
-------------
17.1 General.
-------
17.1.1 Entire Agreement. This Lease sets forth all the agreements
----------------
between Landlord and Tenant concerning the Premises; and there are no
agreements either oral or written other than as set forth herein.
17.1.2 Time of Essence. Time is of the essence of this Lease.
---------------
17.13 Attorneys' Fees. In any action or proceeding which either
---------------
party brings against the other to enforce its rights hereunder, the unsuccessful
party shall pay all costs incurred by the prevailing party, including reasonable
attorneys' fees, which amounts shall be a part of the judgment in said action or
proceeding.
17.1.4 Severability. If any provision of this Lease or the
------------
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
17.1.5 Law. This Lease shall be construed and enforced in
---
accordance with the laws of the state in which the Premises are located.
17.1.6 No Option. Submission of this Lease to Tenant for
---------
examination or negotiation does not constitute an option to lease, offer to
lease or a reservation of, or option for, the Premises; and this document shall
become effective and binding only upon the execution and delivery hereof by
Landlord and Tenant.
17.1.7 Successors and Assigns. This Lease shall be binding upon and
----------------------
inure to the benefit of the successors and assigns of Landlord and, subject to
compliance with the terms of Section 15, Tenant.
17.1.8 Third Party Beneficiaries. Nothing herein is intended to
-------------------------
create any third party benefit.
17.1.9 Memorandum of Lease. Tenant shall not record this Lease or a
-------------------
short form memorandum hereof without Landlord's prior written consent.
17.1.10 Agency. Partnership or Joint Venture. Nothing contained
------
herein nor any acts of the parties hereto shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture by the parties hereto
or any relationship other than the relationship of landlord and tenant.
17.1.11 Merger. The voluntary or other surrender of this Lease by
------
Tenant or a mutual cancellation thereof or a termination by Landlord shall not
work a merger and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
17.1.12 Headings. Section headings have been inserted solely as a
--------
matter of convenience and are not intended to define or limit the scope of any
of the provisions contained therein.
17.2 Signs. All signs and graphics of every kind visible in or from
-----
public view or the exterior of the Premises shall be subject to Landlord's prior
written approval and shall be subject to any applicable governmental laws,
ordinances, and regulations and in compliance with Landlord's signage program.
Tenant shall remove all such signs and graphics prior to the termination of this
Lease. Such installations and removals shall be made in such manner as to avoid
injury or defacement of the Premises; and Tenant shall repair any injury or
defacement, including without limitation, discoloration caused by such
installation or removal.
17.3 Waiver. No waiver of any default or breach hereunder shall be
------
implied from any omission to take action on account thereof, notwithstanding any
custom and practice or course of dealing. No waiver by either party of any
provision under this Lease shall be effective unless in writing and signed by
such party. No waiver shall affect any default other than
12.
<PAGE>
the default specified in the waiver and then such waiver shall be operative only
for the time and to the extent therein stated. Waivers of any covenant shall not
be construed as a waiver of any subsequent breach of the same.
17.4 Financial Statements. Tenant shall provide to any lender, purchaser
--------------------
or Landlord, within ten (10) days after request, a current, accurate, certified
financial statement for Tenant and Tenant's business prepared under generally
accepted accounting principles consistently applied and such other certified
financial information as may be reasonably required by Landlord, purchaser or
any lender of either.
17.5 Limitation of Liability. The obligations of Landlord under this Lease
-----------------------
are not personal obligations of the individual partners, directors, officers,
shareholders, agents or employees of Landlord; and Tenant shall look solely to
the Premises for satisfaction of any liability of Landlord and shall not look to
other assets of Landlord nor seek recourse against the assets of the individual
partners, directors, officers, shareholders, agents or employees of Landlord.
Whenever Landlord transfers its interest, Landlord shall be automatically
released from further performance under this Lease and from all further
liabilities and expenses hereunder and the transferee of Landlord's interest
shall assume all liabilities and obligations of Landlord hereunder from the date
of such transfer.
17.6 Notices. All notices to be given hereunder shall be in writing and
-------
mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile
(immediately followed by one of the preceding methods), to Landlord's Address
and Tenant's Address, or to such other place as Landlord or Tenant may designate
in a written notice given to the other party. Notices shall be deemed served
upon the earlier of receipt or three (3) days after the date of mailing.
17.7 Brokerage Commission. Landlord shall pay a brokerage commission to
--------------------
Broker in accordance with a separate agreement between Landlord and Broker.
Tenant warrants to Landlord that Tenant's sole contact with Landlord or with the
Premises in connection with this transaction has been directly with Landlord and
Broker, and that no other broker or finder can properly claim a right to a
commission or a finder's fee based upon contacts between the claimant and
Tenant. Tenant agrees to indemnify and hold Landlord harmless from any claims or
liability, including reasonable attorneys' fees, in connection with a claim by
any person for a real estate broker's commission, finder's fee or other
compensation based upon any statement, representation or agreement of Tenant,
and Landlord agrees to indemnify and hold Tenant harmless from any such claims
or liability, including reasonable attorneys' fees, based upon any statement,
representation or agreement of Landlord.
17.8 Authorization. Each individual executing this Lease on behalf of
-------------
Tenant represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of Tenant and that such execution is binding upon
Tenant.
17.9 Holding Over Surrender.
----------------------
17.9.1 Holding Over. If Tenant holds over the Premises or any part
------------
thereof after expiration of the Term, such holding over shall constitute a
month-to-month tenancy, at a rent equal to one hundred twenty-five percent
(125%) of the Base Rent in effect immediately prior to such holding over and
shall otherwise be on all the other terms and conditions of this Lease. This
paragraph shall not be construed as Landlord's permission for Tenant to hold
over. Acceptance of Rent by Landlord following expiration or termination shall
not constitute a renewal of this Lease or extension of the Term except as
specifically set forth above. If Tenant fails to surrender the Premises upon
expiration or earlier termination of this Lease. Tenant shall indemnify and hold
Landlord harmless from and against all loss or liability resulting from or
arising out of Tenant's failure to surrender the Premises, including, but not
limited to, any amounts required to be paid to any tenant or prospective tenant
who was to have occupied the Premises after the expiration or earlier
termination of this Lease and any related attorneys' fees and brokerage
commissions.
l7.9.2 Surrender. Upon the termination of this Lease or Tenant's
---------
right to possession of the Premises, Tenant will surrender the Premises,
together with all keys, in good condition and repair, reasonable wear and tear
excepted. Conditions existing because of Tenant's failure to perform
maintenance, repairs or replacements shall not be deemed "reasonable wear and
tear."
17.l0 Joint and Several. If Tenant consists of more than one person, the
-----------------
obligation of all such persons shall be joint and several.
17.1l Covenants and Conditions. Each provision to be performed by Tenant
------------------------
hereunder shall be deemed to be both a covenant and a condition.
l7.l2 Addenda. The Addenda attached hereto, if any, and identified with
-------
this Lease are incorporated herein by this reference as if fully set forth
herein.
13.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
set forth above.
"Landlord" "Tenant"
CATELLUS DEVELOPMENT CORPORATION, MOHAWK INDUSTRIES. INC.,
a Delaware corporation a Georgia corporation
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------- ----------------------------
Its: VP Its: PRESIDENT
--------------------------- ------------------------
Date: 12-4-95 Date: 11-28-95
--------------------------- ------------------------
<PAGE>
ADDENDUM TO LEASE
-----------------
THIS ADDENDUM TO LEASE ("Addendum") is attached to and constitutes an
integral part of the Lease between CATELLUS DEVELOPMENT CORPORATION, as
Landlord, and MOHAWK INDUSTRIES, INC., as Tenant. The terms of this Addendum
shall be incorporated in the Lease for all purposes. In the event of a conflict
between the provisions of the Lease and the provisions of this Addendum, this
Addendum shall control.
THE FOLLOWING NEW SECTIONS ARE HEREBY ADDED TO THE LEASE WHICH STATE IN THEIR
ENTIRETY AS FOLLOWS:
18. Force Majeure Event. For purposes of this Lease, the term "Force Majeure
-------------------
Event" shall mean and include the following: any delay caused by any action,
inaction, order, ruling, moratorium, regulation, statute, condition or other
decision of any governmental agency having jurisdiction over any portion of the
Project, over the construction anticipated to occur thereon or over any uses
thereof, or by fire, flood, inclement weather, strikes, lockouts or other labor
or industrial disturbance (whether or not on the part of agents or employees of
either party hereto engaged in the construction of the Premises), civil
disturbance, order of any government, court or regulatory body claiming
jurisdiction or otherwise, act of public enemy, war, riot, sabotage, blockade,
embargo, failure or inability to secure materials, supplies or labor through
ordinary sources by reason of shortages or priority, discovery of hazardous or
toxic materials, earthquake, or other natural disaster, or any cause whatsoever
beyond the reasonable control (excluding financial inability) of the party whose
performance is required, or any of its contractors or other representatives,
whether or not similar to any of the causes hereinabove stated.
19. CPI Adjustment. Effective as of the first day of the thirty-first (31st)
--------------
month of the Term (the "CPI Adjustment Date"), the Base Rent in effect
immediately before the CPI Adjustment Date shall be increased, in accordance
with the percentage increase, if any, in the Consumer Price Index, to an amount
which is equal to the product of (i) the Index (as hereinafter defined) for the
third month preceding the CPI Adjustment Date, multiplied by (ii) the initial
Base Rent set forth in the Basic Lease Information, divided by (iii) the Basic
Index (as hereinafter defined); provided, however, in no event shall the Base
Rent (as adjusted) in effect immediately prior to the CPI Adjustment Date be
decreased, nor shall it be increased as a result of a CPI adjustment by more
than six percent (6%) per Lease Year, compounded annually. The "Index" shall
mean the Consumer Price Index, All Items, 1982-1984 = 100, All Urban Consumers,
for the Los Angeles/Riverside/Anaheim Area, as published by the United States
Department of Labor, Bureau of Labor Statistics, or its successor index, and the
"Basic Index" shall mean the Index published for the third month preceding the
Commencement Date. The adjusted Base Rent shall be rounded to the nearest $1.00.
If the Index required for the calculation specified in this subsection is not
available on the CPI Adjustment Date in question, Tenant shall continue to pay
the same amount of Base Rent payable during the period immediately preceding the
CPI Adjustment Date until the Index is available and the necessary calculation
is made. As soon as such calculation is made, Tenant shall immediately pay to
Landlord the amount of any underpayment of Base Rent for the month(s) that may
have elapsed. In the event the compilation or publication of the Index shall be
transferred to any other governmental department, bureau or agency or shall be
discontinued, the index most nearly the same as the Index shall be used to make
such calculation.
15.
<PAGE>
20. Options to Extend.
-----------------
20.1 Terms of Options. Provided (i) Tenant is not in default under the
----------------
terms of this Lease at the time each renewal option is exercised or at the
commencement of the applicable Extension Term (as hereinafter defined), (ii)
Tenant is occupying at least ninety percent (90%) of the Premises, including any
expansion space, and (iii) Landlord has not given more than two (2) notices of
default in any twelve (12) month period for nonpayment of monetary obligations,
Tenant shall have two (2) options to renew this Lease for an additional period
of sixty (60) months each (the "First and Second Extension Terms"). The
Extension Terms shall be on all the terms and conditions of this Lease, except
that Landlord shall have no additional obligation for free rent, leasehold
improvements or for any other tenant inducements for the Extension Terms. Base
Rent shall be increased (but not decreased) as set forth below. There shall be
no additional extension terms beyond the Extension Terms set forth herein.
Tenant must exercise its options to extend this Lease by giving Landlord written
notice of its election to do so not less than one hundred eighty (180) days
prior to the end of the initial Term, or the First Extension Term, as
applicable. Any notice not given in a timely manner shall be void, and Tenant
shall be deemed to have waived its extension rights. The extension options set
forth herein are personal to Tenant and shall not be included in any assignment
of this Lease.
20.2 Base Rent During First Extension Term. Effective as of the first day
-------------------------------------
of the First Extension Term, and on the first day of the thirty-first (31st)
month thereafter (the "First Extension CPI Adjustment Date(s)"), the monthly
Base Rent shall be increased in accordance with the percentage increase, if any,
in the Consumer Price Index, calculated in the manner set forth in Section 19;
provided, however, in no event shall the Base Rent (as adjusted) in effect
immediately prior to the applicable First Extension CPI Adjustment Date be
decreased, nor shall it be increased as a result of a CPI adjustment by more
than six percent (6%) per Lease Year, compounded annually.
20.3 Base Rent During Second Extension Term. The monthly Base Rent payable
--------------------------------------
for the first thirty (30) months of the Second Extension Term shall be increased
(but not decreased) to 98% of the fair market rental rate ("Market Rent") to be
determined as follows:
20.3.1 Agreement on Base Rent. Landlord and Tenant shall have thirty
----------------------
(30) days after Landlord receives the exercise notice in which to agree on the
Base Rent during the Second Extension Term. Notwithstanding anything in this
Section 20.3 to the contrary, in no event shall the Base Rent for the Second
Extension Term be less than the Base Rent in effect immediately prior to the
Second Extension Term.
20.3.2 Appraisal. If Landlord and Tenant are unable to agree upon the
---------
Base Rent for the Second Extension Term within such thirty (30) day period, then
within fifteen (15) days after the expiration of the thirty (30) day period,
each party, by giving notice to the other party, shall appoint a real estate
appraiser who is a current member of the American Institute of Real Estate
Appraisers, with at least five (5) years of experience appraising building space
comparable to the Premises in the city and county where the Premises is located
to determine the Market Rent. Market Rent shall mean the monthly amount per
rentable square foot in the Premises that a willing, non-equity new tenant would
pay and a willing landlord would accept at arm's length for space in a
comparable building or buildings, with comparable tenant improvements, in a
comparable location, giving appropriate consideration to monthly rental rates
per rentable square foot, the presence or absence of rent escalation clauses
such as operating expense and tax pass-throughs, length of lease term, size and
location of premises being leased and other
16.
<PAGE>
generally applicable terms and conditions of tenancy for a similar building or
buildings. If the two (2) appraisers are unable to agree on the Market Rent for
the Second Extension Term within twenty (20) days, they shall select a third
appraiser meeting the qualifications stated in this Section within five (5) days
after the last day the two (2) appraisers are given to set the Market Rent for
the Second Extension Term. The third appraiser, however selected, shall be a
person who has not previously acted in any capacity for either party. Within
twenty (20) days after the selection of the third appraiser, a majority of the
appraisers shall set the Market Rent for the Second Extension Term. If a
majority of the appraisers is unable to set the Market Rent within the twenty
(20) day period, the two (2) closest appraisals shall be added together and
their total divided by two (2). The resulting quotient shall be the Market Rent
for the first thirty (30) months of the Second Extension Term. Each party shall
be responsible for the costs, charges and fees of the appraiser appointed by
that party plus one-half of the cost of the third appraiser.
20.3.3 Amendment of Lease. Immediately after the Base Rent is
------------------
determined pursuant to this Section 20.3, Landlord and Tenant shall execute an
amendment to this Lease stating the new Base Rent in effect.
20.3.4 Base Rent Increase During Second Extension Term. Effective
-----------------------------------------------
as of the first day of the thirty-first (31st) month of the Second Extension
Term (the "Second Extension CPI Adjustment Date"), the monthly Base Rent shall
be increased in accordance with the percentage increase, if any, in the Consumer
Price Index, calculated in the manner set forth in Section 19; except that the
Index shall be multiplied by the monthly Base Rent payable during the first
thirty (30) months of the Second Extension Term, and the Basic Index shall mean
the Index published for the third month preceding the commencement of the Second
Extension Term; provided, however, in no event shall the Base Rent in effect
after the Second Extension CPI Adjustment Date be less than the Base Rent in
effect immediately preceding the Second Extension CPI Adjustment Date.
LANDLORD'S INITIALS ILLEGIBLE TENANT'S INITIALS JL
----------- --------
17.
<PAGE>
EXHIBIT A
[PLAN APPEARS HERE]
<PAGE>
EXHIBIT B
---------
WORK LETTER
-----------
Tenant Improvements.
- -------------------
1.1 Landlord shall construct or cause to be constructed in and to the Premises,
at Landlord's cost and expense, not to exceed One Hundred Eighty Thousand
Dollars ($180,000.00), certain tenant improvements, including space planning,
permits and related costs (the "Tenant Improvements"), substantially in
accordance with the space plan or other appropriate exhibit (the "Space Plan")
attached hereto, marked Exhibit B-1 and made a part hereof and in accordance
-----------
with Landlord's current building standards. If said Exhibit is not attached, the
Space Plan shall be prepared by Landlord and submitted to Tenant for approval,
which approval shall be given within five (5) days following receipt thereof,
and evidenced by Tenant's signature thereon. A failure by Tenant to respond
within said five (5) day period shall be deemed approval. Upon approval by both
parties, the Space Plan shall be deemed incorporated herein by reference,
although not attached hereto.
1.2 The Tenant Improvements shall include costs approved by Landlord and
associated with the design, permit process and construction (including, a fee
equal to five percent (5%) of the total cost thereof as reimbursement for the
expense of Landlord's administration and coordination) of the Tenant
Improvements, including but not limited to, architect's fees, plan check and
permit fees, and fees for utility and telephone service hook-ups. The Tenant
Improvements shall not include any improvements which Landlord, in its sole
discretion, considers specialized, or any equipment or trade fixtures of Tenant,
nor any improvements not shown on the Space Plan which Tenant may desire or
governing agencies may require.
1.3 In the event that Tenant desires any change in the Tenant Improvements
which is reasonable and practical (which shall be conclusively determined by the
Architect), such change may only be requested by the delivery to Landlord by
Tenant of a proposed written "Change Order" specifically setting forth the
requested change. Landlord shall have five (5) business days from the receipt of
the proposed Change Order to provide Tenant with the Architect's disapproval of
the proposed change stating the reason(s) for such disapproval, or if the
Architect approves the proposed change, the following items: (i) a summary of
any increase in the cost caused by such change (the "Change Order Cost"), (ii) a
statement of the number of days of any delay caused by such proposed change (the
"Change Order Delay"), and (iii) a statement of the cost of the Change Order
Delay (the "Change Order Delay Expense"), which Change Order Delay Expense shall
be the product of the number of days of delay multiplied by $2,500.00. Tenant
shall then have three (3) business days to approve the Change Order Cost, the
Change Order Delay and the Change Order Delay Expense. If Tenant gives timely
written notice of approval of the Change Order Cost, the Change Order Delay and
the Change Order Delay Expense, Landlord shall promptly execute the Change Order
and cause the appropriate changes to the Plans and Specifications to be made.
Tenant's approval shall include full payment of the Change Order Cost and
Change Order Delay Expense. If Tenant fails to respond to Landlord within said
three (3) business day period, the Change Order Cost, the Change Order Delay and
the Change Order Delay Expense shall be deemed disapproved by Tenant and
Landlord shall have no further obligation to perform any work set forth in the
proposed Change Order. The Change Order Cost shall include all costs associated
with the Change Order, including, without limitation, architectural fees and
construction costs, as conclusively determined by the Architect and the General
Contractor, respectively, together with a five percent (5%) fee of these costs
as reimbursement for the expense of administration and coordination of such
Change Order by Landlord. The Change Order Delay shall include all delays caused
by the Change Order, including, without limitation, all architectural and
construction delays, as conclusively determined by the Architect and the General
Contractor, respectively.
1.4 Landlord hereby to assign to Tenant, upon request, the benefit of any and
all contractor's and manufacturer's warranties received by Landlord in
connection with the construction of the Tenant Improvements.
LANDLORD'S INITIALS ILLEGIBLE TENANT'S INITIALS ______
----------
<PAGE>
EXHIBIT B-1
-----------
SPACE PLAN
----------
<PAGE>
EXHIBIT C
---------
COMMENCEMENT DATE MEMORANDUM
----------------------------
With respect to that certain lease ("Lease") dated ___________, 19
__, between __________________, a_________________("Tenant"), and Catellus
Development Corporation, a Delaware corporation ("Landlord"), whereby Landlord
leased to Tenant and Tenant leased from Landlord approximately _______ rentable
square feet of the building located at ________________________("Premises"),
Tenant hereby acknowledges and certifies to Landlord as follows:
(1) Landlord delivered possession of the Premises to Tenant in a
Substantially completed condition on _____________________
("Possession Date");
(2) The Commencement Date is _________________________
(3) The Premises contain ________ square feet of space; and
(4) Tenant has accepted and is currently in possession of the Premises
and the Premises are acceptable for Tenant's use.
IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this _____
day of _____________, 199_.
"Tenant"
_______________________________
a _____________________________
By: ___________________________
Its: ________________________
By: ___________________________
Its: ________________________
<PAGE>
[LOGO] CERTIFICATE OF INSURANCE ISSUE DATE (MM/DD/YY)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS
NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND,
EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
--------------------------------------------------------------------------------
COMPANIES AFFORDING COVERAGE
(Must have "Best" Rating of "A, B" or better)
--------------------------------------------------------------------------------
COMPANY
LETTER A
--------------------------------------------------------------------------------
- ----------------------------------
COMPANY
INSURED LETTER B
--------------------------------------------------------------------------------
COMPANY
LETTER C
--------------------------------------------------------------------------------
COMPANY D
LETTER
--------------------------------------------------------------------------------
COMPANY E
LETTER
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COVERAGES
THIS IS TO CERTIFY THAT POLICIES OF INSURANCE LISTED BELOW HAVE SEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED NOTWITHSTANDING
ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH
RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE
AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
EXCLUSIONS, AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN
REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CO TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE POLICY EXPIRATION
LTR DATE (MM/DD/YY) DATE (MM/DD/YY) DATE (MM/DD/YY)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL LIABILITY
[X] COMMERICAL GENERAL LIABILITY
[_] [_] CLAIMS MADE [X] OCCURRENCE
[X] OWNER'S & CONTRACTORS PROTECTIVE
[X] Railroad Prot. Liab.
[X] X C 11 Included
- --------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
[X] ANY AUTO
[_] ALL DAMAGED AUTOS
[_] SCHEDULED AUTOS
[X] HIRED AUTOS
[X] NON-OWNED AUTOS
[X] GARAGE LIABILITY
[_] ___________________
- --------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY
[X] Following Form
[_] OTHER THAN UMBRELLA FORM
- --------------------------------------------------------------------------------------------------------------------------------
WORKERS COMPENSATION
AND
EMPLOYERS' LIABILITY
- --------------------------------------------------------------------------------------------------------------------------------
OTHER
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CO TYPE OF INSURANCE ALL LIMITS IN THOUSANDS
LTR
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GENERAL LIABILITY GENERAL AGGREGATE $ 2,000
--------------------------------------------------
[X] COMMERICAL GENERAL LIABILITY PRODUCTS -COMP/OPS AGGREGATE $ 2,000
--------------------------------------------------
[_] [_] CLAIMS MADE [X] OCCURRENCE PERSONAL & ADVERTISING [ILLEGIBLE] $ 2,000
--------------------------------------------------
[X] OWNER'S & CONTRACTORS PROTECTIVE EACH OCCURRENCE $ 2,000
--------------------------------------------------
[X] Railroad Prot. Liab. FIRE DAMAGE (ANY ONE FIRE) $ 50
--------------------------------------------------
[X] X C 11 Included MEDICAL EXPENSE (ANY ONE PERSON) $ 5
- --------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
[X] ANY AUTO CK $ 2,000
--------------------------------------------------
[_] ALL DAMAGED AUTOS BODILY
INJURY
[_] SCHEDULED AUTOS PER PERSON $
--------------------------------------------------
[X] HIRED AUTOS BODILY
INJURY
[X] NON-OWNED AUTOS PER
ACCIDENT
--------------------------------------------------
[X] GARAGE LIABILITY PROPERTY
DAMAGE $
[_] ___________________
- --------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY EACH AGGREGATE
OCCURRENCE
[X] Following Form $ $
[_] OTHER THAN UMBRELLA FORM
- --------------------------------------------------------------------------------------------------------------------
STATUTORY
---------------------------------------------------
WORKERS COMPENSATION $ 1,000 (EACH ACCIDENT)
AND $ 1,000 ([ILLEGIBLE] POLICY
EMPLOYERS' LIABILITY $ 1,000 ([ILLEGIBLE]- EACH EMPLOYEE
- --------------------------------------------------------------------------------------------------------------------
OTHER
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/RESTRICTIONS/SPECIAL ITEMS
Certificate holder is named as additional insured as respects:
___________________________________________________________________ (Location)
Refer to Additional Insured endorsement attached. Aggregate limits apply per
location.
<TABLE>
<CAPTION>
CERTIFICATE HOLDER CANCELLATION
<S> <C>
CATELLUS DEVELOPMENT CORPORATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
1065 N. PACIFICENTER DRIVE, SUITE 200 EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO
ANAHEIM, CA 92806 MAIL 60 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE
ATTN: ASSET MANAGEMENT LEFT
FAX (714) 237-7416 ____________________________________________________________________
AUTHORIZED REPRESENTATIVE
</TABLE>
<PAGE>
ACORD EVIDENCE OF PROPERTY INSURANCE DATE (MM/DD/YY)
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN
FORCE, AND CONVEYS ALL THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY.
(Must have "Best" Rating of "A 8" OR Better
<TABLE>
<S> <C> <C> <C>
[ILLEGIBLE] Company
CODE SUB-CODE
[ILLEGIBLE] LOAN NUMBER POLICY NUMBER
EFFECTIVE DATE (MM/DD/YY) OPERATION DATE (MM/DD/YY) CONT. UNTIL
TERMINATED
[ILLEGIBLE]
[ILLEGIBLE] REPLACES FROM EVIDENCE DATED:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROPERTY INFORMATION
LOCATION/DESCRIPTION
(provide address of leased premises)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
COVERAGE INFORMATION
COVERAGE INFORMATION AMOUNT OF INSURANCE DEDUCTABLE
<S> <C> <C>
Business Personal Property (including Tenants Improvements
and Betterments, if applicable) $ ______________ $ _____________
Business Income (100% contribution) $ ______________ $ _____________
Boiler & Machinery (if applicable) $ ______________ $ _____________
Warehousers legal liability (if applicable) $ ______________ $ _____________
Replacement Cost Coverage, special form
- --------------------------------------------------------------------------------------------------------------------------
REMARKS (Including Special Conclusions)
Waiver of Subrogation provision included (per lease)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
CANCELLATION
THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR EACH
POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL GIVE THE
ADDITIONAL INTEREST IDENTIFIED BELOW 60 DAYS WRITTEN NOTICE, AND WILL SEND
NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD AFFECT THAT INTEREST.
IN ACCORDANCE WITH THE POLICY PROVISIONS OR AS REQUIRED BY LAW.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INTEREST
NAME AND ADDRESS NATURE OF INTEREST
<S> <C> <C>
CATELLUS DEVELOPMENT CORPORATION [ILLEGIBLE] ADDITIONAL [ILLEGIBLE]
1065 N. PACIFICENTER DRIVE, SUITE 200
ANAHEIM, CA 92808 LOSS PATEE (OTHERS) Landlord
-----------------------------------------------------------------------------
ATTN: ASSET MANAGEMENT SIGNATURE OF AUTHORIZED AGENT OF COMPANY
FAX 714) 237-7416
ACORD 27 (2/88) D ACORD CORPORATION 19[ILLEGIBLE]
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT E
----------
PROHIBITED USES
---------------
The following types of operations and activities are expressly prohibited on the
Premises:
1. automobile/truck maintenance, repair or fueling;
2. battery manufacturing or reclamation;
3. ceramics and jewelry manufacturing or finishing;
4. chemical (organic or inorganic) storage, use or manufacturing;
5. drum recycling;
6. dry cleaning;
7. electronic components manufacturing;
8. electroplating and metal finishing;
9. explosives manufacturing, use or storage;
10. hazardous waste treatment, storage, or disposal;
11. leather production, tanning or finishing;
12. machinery and tool manufacturing;
13. medical equipment manufacturing and hospitals;
14. metal shredding, recycling or reclamation;
15. metal smelting and refining;
16. mining;
17. paint, pigment and coating operations;
18. petroleum refining;
19. plastic and synthetic materials manufacturing;
20. solvent reclamation;
21. tire and rubber manufacturing;
22. above- and/or underground storage tanks; and
23. residential use or occupancy.
<PAGE>
EXHIBIT F
---------
CORRECTION ITEMS
----------------
<PAGE>
EXHIBIT G
---------
TENANT ESTOPPEL CERTIFICATE
---------------------------
To: Bank of America National Trust
and Savings Association ("Bank")
Real Estate Industries Division No. _______
____________________________________
____________________________________
Attn: ______________________________
Re: Lease Dated: __________________
Current Landlord: __________________
Current Tenant: __________________
Square Feet: Approximately ____
Floor(s): __________________
Located at: __________________
____________ ("Tenant") hereby certifies that as of ________________, 199_.
1. Tenant is the present owner and holder of the tenant's interest under
the lease described above, as it may be amended to date (the "Lease") with
________________ as Landlord (who is called "Borrower" for the purposes of this
Certificate). (USE THE NEXT SENTENCE IF THE LANDLORD OR TENANT NAMED IN THE
------------------------------------------------------------
LEASE IS A PREDECESSOR TO THE CURRENT LANDLORD OR TENANT.) [The original
- --------------------------------------------------------
landlord under the Lease was _____________________, and the original tenant
under the Lease was ________________.] The Lease covers the premises commonly
known as ________________ (the "Premises") in the building (the "Building") at
the address set forth above.
(CHOOSE ONE OF THE FOLLOWING SECTION 2(a)s BELOW)
-------------------------------------------------
[2. (a) A true, correct and complete copy of the Lease (including all
modifications, amendments, supplements, side letters, addenda and riders of and
to it) is attached to this Certificate as Exhibit A.]
[2 (a) The attached Exhibit A accurately identifies the Lease and all
---------
modifications, amendments, supplements, side letters, addenda and riders of and
to it.]
(b) (IF APPLICABLE) [The Lease provides that in addition to the
-------------
Premises, Tenant has the right to use or rent ______ [assigned/unassigned]
parking spaces near the Building or in the garage portion of the building during
the term of the Lease.]
(c) The term of the Lease commenced on _________ 199__ and will
expire on ______________, ___, including any presently exercised option or
renewal term. (CHOOSE ONE OF THE FOLLOWING TWO SENTENCES.) [Tenant has no option
-----------------------------------------
or right to renew, extend or cancel the Lease, or to lease additional space in
the Premises or Building, or to use any parking (IF APPLICABLE) [other than that
-------------
specified in Section 2(b) above].] [Except as specified in Paragraph(s) _______
of the Lease (copy attached), Tenant has no option or right to renew, extend or
cancel the Lease, or to lease additional space in the Premises or Building, or
to use any parking (IF APPLICABLE) [other than that specified in Section 2(b)
-------------
above].]
(CHOOSE ONE OF THE FOLLOWING SECTION 2(d)s)
-----------------------------------------
[(d) Tenant has no option or preferential right to purchase all or
any part of the Premises (or the land of which the Premises are a part). Tenant
has no right or interest with respect to the Premises or the Building other than
as Tenant under the Lease.]
<PAGE>
[(d) Except as specified in Paragraph(s) ___________ of the Lease
(copy attached), Tenant has no option or preferential right to purchase all or
any part of the Premises (or the land of which the Premises are a part). Except
for the foregoing, Tenant has no right or interest with respect to the Premises
or the Building other than as Tenant under the Lease.]
(e) The annual minimum rent currently payable under the Lease is
$___________ and such rent has been paid through _____________, 199__. (IF
--
APPLICABLE) [The annual percentage rent currently payable under the Lease is at
- ----------
the rate of _______ and such rent has been paid through ______________, 199_.]
(f) (IF APPLICABLE) [Additional rent is payable under the Lease
-------------
for (i) operating, maintenance or repair expenses, (ii) property taxes, (iii)
consumer price index cost of living adjustments, or (iv) percentage of gross
sales adjustments (i.e., adjustments made based on underpayments of percentage
----
rent). Such additional rent has been paid in accordance with Borrower's rendered
bills through ___________, 199_. The base year amounts for additional rental
items are as follows: (1) operating, maintenance or repair expenses
$________________ (2) property taxes $___________, and (3) consumer price index
______________ (please indicate base year CPI level).]
(g) Tenant has made no agreement with Borrower or any agent,
representative or employee of Borrower CONCERNING FREE RENT, PARTIAL rent,
rebate of rental payments or any other similar rent concession (IF APPLICABLE)
-------------
[except as expressly set forth in Paragraph(s) ___ of the Lease (copy
attached)].
(h) Borrower currently holds a security deposit in the amount of
$_____________ which is to be applied by Borrower or returned to Tenant in
accordance with Paragraph(s) __ of the Lease. Tenant acknowledges and agrees
that Bank shall have no responsibility or liability for any security deposit,
except to the extent that any security deposit shall have been actually received
by Bank.
3. (a) The Lease constitutes the entire agreement between Tenant and
Borrower with respect to the Premises, has not been modified changed, altered or
amended and is in full force and effect in the form (CHOOSE ONE) [attached
----------
as/described in] Exhibit A. There are no other agreements, written or oral,
which affect Tenant's occupancy of the Premises.
(b) All insurance required of Tenant under the Lease has been
provided by Tenant and all premiums have been paid.
(c) To the best knowledge of Tenant, no party is in default under
the Lease. To the best knowledge of Tenant, no event has occurred which, with
the giving of notice or passage of time, or both, would constitute such a
default.
(d) The interest of Tenant in the Lease has not been assigned or
encumbered. Tenant is not entitled to any credit against any rent or other
charge or rent concession under the Lease except as set forth in the Lease. No
rental payments have been made more than one month in advance.
4. All contributions required to be paid by Borrower to date for
improvements to the Premises have been paid in full and all of Borrower's
obligations with respect to tenant improvements have been fully performed.
Tenant has accepted the Premises, subject to no conditions other than those set
forth in the Lease.
5. Neither Tenant nor any guarantor of Tenant's obligations under the
Lease is the subject of any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships.
6. (a) As used here, "Hazardous Substance" means any substance, material
or waste (including petroleum and petroleum products) which is designated,
classified or regulated as being "toxic" or "hazardous" or a "pollutant" or
which is similarly designated, classified or regulated, under any federal, state
or local law, regulation or ordinance.
(b) Tenant represents and warrants that it has not used, generated,
released, discharged, stored or disposed of any Hazardous Substances on, under,
in or about the Building or the land on which the Building is located (IF
--
APPLICABLE) [,other than Hazardous Substances used in the ordinary and
- ----------
commercially reasonable course of Tenant's business in compliance with all
applicable laws]. (IF APPLICABLE) [Except for such commercially reasonable use
-------------
by Tenant,] Tenant has no actual knowledge that any Hazardous Substance is
present, or has been used, generated, released, discharged, stored or disposed
of by any party, on, under, in or about such Building or land.
2
<PAGE>
7. Tenant hereby acknowledges that Borrower (CHOOSE ONE) [intends to
----------
encumber/has encumbered] the property containing the Premises with a Deed of
Trust in favor of Bank. Tenant acknowledges the right of Borrower, Bank and any
and all of Borrower's present and future lenders to rely upon the statements and
representations of Tenant contained in this Certificate and further acknowledges
that any loan secured by any such Deed of Trust or further deeds of trust will
be made and entered into in material reliance on this Certificate.
8. Tenant hereby agrees to furnish Bank with such other and further
estoppel as Bank may reasonably request.
___________________________
By:________________________
Name:______________________
Title: ____________________
3
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT ("Agreement") is made and entered into as of
this 4/th/ day of DEC., 1995 by and between LA MIRADA REDEVELOPMENT AGENCY, a
public body, corporate and politic ("Agency"), and MOHAWK INDUSTRIES, INC., a
Georgia corporation ("Participant"), with reference to the following:
RECITALS
--------
A. Agency exists and is organized under, and exercises governmental
functions and powers pursuant, to the Community Redevelopment Law of the State
of California (California Health and Safety Code Section 33000, et seq.).
--------------------------------- ------
B. Agency desires to implement that certain Redevelopment Plan For
Project Area I adopted by Ordinance No. 221 of the City Council of the City of
La Mirada ("City") on July 16, 1974, as amended by Ordinance No. 390 on December
23, 1986 and further amended by Ordinance No. 420 on June 28, 1998 (the
"Redevelopment Plan").
C. Participant has acquired, or intends to acquire, fee title to, or a
leasehold interest in, certain real property located at 16400 Trojan Way, La
Mirada, California, which real property had previously been developed urban use
property and which real property, is identified and described in Exhibit A
---------
attached hereto (the "Property"), for the purpose of developing and operating
an approximately 220,000 square foot distribution and sales facility for sale
and/or distribution of carpeting and related products.
D. In connection with implementation of the Redevelopment Plan, Agency
desires to encourage and provide for Participant's proposed development,
improvement and use of the Property on the terms and conditions contained
herein.
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Agency and Participant agree as
follows:
1. Recitals. Each of the recitals set forth above is true and correct,
--------
and is incorporated herein by this reference.
2. Purpose. This Agreement is intended to effectuate the California
-------
Community Redevelopment Law of the State of California (California Health and
---------------------
Safety Code Section 33000, et seq.) by
- ----------- ------
<PAGE>
providing for the development, improvement and use of the Property. In
particular, but without limitation, the development, improvement and use of the
Property as contemplated in this Agreement will assist in the generation of
additional sales tax and property tax revenues to the City and Agency as well as
assist in the creation of additional jobs and economic opportunities for the
residents of the City. Consequently, the development, improvement and use of the
Property as contemplated herein, and the fulfillment generally of this
Agreement, are in the vital and best interests of the City and the welfare of
its residents, and in accordance with the public purposes and provisions of
applicable federal, state and local laws and requirements.
3. Financial Assistance. In consideration of Participant's development,
--------------------
improvement, use and operation of the Property and its entry into this
Agreement, for a period of up to ten (10) years Agency shall periodically pay to
Participant the Specified Amount (as defined below) at the times, in the amounts
and subject to the conditions contained herein.
3.1 Conditions Precedent. Notwithstanding anything to the contrary
--------------------
contained in this Agreement, Agency's obligation to pay the Specified Amount to
Participant is expressly contingent and conditional upon (i) Participant paying
any and all taxes applicable to or arising out of Participant's ownership
(whether a fee or leasehold interest), operation, use and/or enjoyment of the
Property (including, without limitation, all taxes attributable to sales
occurring on the Property), (ii) Participant timely delivering to Agency full
and complete copies of the Sales Tax Reports (as defined below), (iii) City
receiving and having the legal right under state law to retain and control the
disposition of its portion of all Sales Tax Revenues (as defined below), (iv)
Participant retaining and continuing to solely own either fee title or a
leasehold interest in the Property in its entirety, and (v) Participant's
continued use and occupancy of substantially all of the Property in compliance
with all of the terms of this Agreement including, without limitation, use and
operation of the Property for the purpose of sale and distribution of carpeting
and related products (the "Specified Use") as provided in Paragraph 5.1 below,
-------------
maintenance of the Property as provided in Paragraph 5.2 below, and compliance
-------------
with the non-discrimination provisions of Paragraph 19 below. In the event that
------------
any or all of conditions (i) through (v) above shall not be satisfied or shall
no longer be satisfied, Agency shall be relieved of its obligations under this
Agreement for payment of the Specified Amount and Agency may terminate this
Agreement upon written notice to Participant.
3.2 Specified Amount. As used herein, the term "Specified Amount"
----------------
shall mean the following:
-2-
<PAGE>
(a) for the first and second Contract Years (as defined below), the
Specified Amount shall be an amount equal to the sum of (1) one hundred
percent (100%) of the Sales Tax Revenues for each Contract Year in excess
of $150,000 but not exceeding $300,000, and (2) fifty percent (50%) of the
Sales Tax Revenue for each Contract Year in excess of $300,000.
(b) for the third, fourth and fifth Contract Years, the Specified
Amount shall be an amount equal to the sum of (1) one hundred percent
(100%) of the Sales Tax Revenues for each Contract Year in excess of
$200,000 but not exceeding $400,000, and (2) fifty percent (50%) of the
Sales Tax Revenue for each Contract Year in excess of $400,000.
(c) for the sixth through tenth Contract Years, the Specified Amount
shall be an amount equal to the sum of (1) one hundred percent (100%) of
the Sales Tax Revenues for each Contract Year in excess of $250,000 but
not exceeding $500,000, and (2) fifty percent (50%) of the Sales Tax
Revenue for each Contract Year in excess of $500,000.
The Specified Amount due Participant under this Agreement shall be paid by
Agency in arrears, on an annual basis, within sixty (60) days of City's and/or
Agency's receipt of all of its share of such Sale Tax Revenues during the
preceding four (4) calendar quarters.
3.3 Contract Year. As used herein, the term "Contract Year" shall
-------------
mean a period of four (4) full calendar quarters. The first Contract Year shall
be deemed to have commenced as of the first day of the calendar quarter in which
Participant shall have substantially opened for business at the Property. For
example, if Participant were to substantially open for business on July 15,
1995, the first Contract Year would be deemed to have commenced as of July 1,
1995 and each subsequent Contract Year would be deemed to have commenced as of
July 1 of such subsequent years.
3.4 Sales Tax Revenues. As used herein, the term "Sales Tax Revenues"
------------------
shall mean the total tax revenues paid by Participant and ultimately remitted by
the State Board of Equalization to City and/or Agency (the disposition of which
under then applicable state law is controlled by City and/or Agency) with
respect to the sale of any carpeting, related products or incidental goods sold
on the Property, or from a point of sale location outside the City, pursuant to
the Bradley-Burns Uniform Sales and Use Tax Law (California Revenue and Taxation
-------------------------------
Code Section 7200 et seq.), as such law may be amended from time to time;
- ---- ------
provided, however, that such tax revenues, for the purposes of this Agreement,
shall be deemed never to exceed a maximum of one percent (1%) of the total
taxable sales on the
-3-
<PAGE>
Property or from such other point of sale location outside the City.
3.5 Sales Tax Reports. As used herein, the term "Sales Tax Reports"
-----------------
shall mean the statements and quarterly reports, and any other or supplemental
reports, statements or submissions, actually filed or required to be filed by
Participant with the State Board of Equalization relating to or in connection
with the collection, remittance and/or calculation of Sales Tax Revenues from
the Property and/or any other facilities owned or operated by Participant within
the State of California. The Sales Tax Reports shall be delivered by Participant
to Agency on or before January 31, April 30, July 31 and October 31 of each
fiscal year (July 1-June 30).
3.6 Termination. Agency's obligations under this Agreement for
-----------
periodic payment of the Specified Amount to Participant shall terminate upon the
earlier of (i) written notice by Agency to Participant of the occurrence of any
of the events specified in Paragraph 3.1(i) through (v) above, (ii) breach of
----------------------------
this Agreement by Participant, (iii) expiration of the tenth (10th) Contract
Year, or (iv) written notice of termination by Participant to Agency pursuant to
Paragraph 7 below. In addition, this Agreement shall terminate in the event that
- -----------
Participant shall fail to acquire fee title to, or a leasehold interest in, all
of the Property, and thereby qualify as "participant" within the meaning of the
Redevelopment Plan, on or before December 31, 1995.
4. Compliance With Laws and Requirements. Participant acknowledges and
-------------------------------------
agrees that the execution of this Agreement by Agency does not in any way
constitute, nor shall the same be inferred to constitute, waiver by Agency or
City of any applicable laws, regulations, requirements, permits, fees or
agreements pertaining to or affecting Participant's acquisition, or proposed
development, improvement, construction, occupancy or use, of the Property all of
which shall continue to be and remain fully applicable and effective with the
same force and effect as if this Agreement had never been executed by Agency and
Participant.
5. Use and Maintenance of the Property. As additional consideration to
-----------------------------------
Agency to enter into this Agreement, and as a material and substantial
inducement to Agency in the absence of which Agency would not have entered into
this Agreement, Participant agrees to use and maintain the Property as provided
herein.
5.1 Use of the Property. Participant shall continuously use and
-------------------
operate substantially all of the Property for the Specified Use. Participant
specifically acknowledges and agrees that, as provided in Paragraph 3.1(v)
----------------
above, Participant's
-4-
<PAGE>
continued use and operation of the Property for the Specified Use is a condition
precedent to Agency's obligations under this Agreement. Participant covenants
and agrees that Participant shall not either directly or indirectly, in its own
name or in the name of any affiliated entity, enter into any other sales tax
subsidy agreement or a similar agreement with any other governmental agency or
take any other action which would cause or facilitate the transfer to another
location or locations of the sales contemplated in this Agreement to occur from
the Property's operation for the Specified Use. In addition, Participant
expressly covenants and agrees that for the full remaining term of the
Redevelopment Plan and irrespective of the earlier expiration or termination of
this Agreement, Participant shall not use or permit the use of the Property for
any purpose other than the purposes authorized in the Redevelopment Plan.
5.2 Maintenance of the Property. Participant covenants and agrees to
---------------------------
maintain all improvements on the Property in good condition and repair (and, as
to landscaping, in a healthy condition) and in accordance with all other
applicable laws, rules, ordinances, orders, and regulations of all federal,
state, county, municipal, and other governmental agencies and bodies having or
claiming jurisdiction and all their respective departments, bureaus, and
officials. In addition, Participant shall keep the Property free from all
graffiti and any accumulation of debris or waste material. Participant shall
make all repairs and replacements necessary to keep the improvements in good
condition and repair and shall promptly eliminate all graffiti and replace dead
and diseased plants and landscaping with comparable approved materials. In the
event that Participant breaches any of the covenants contained in this Paragraph
---------
5.2 and such default continues for a period of five (5) business days after
- ---
written notice from Agency (with respect to landscaping, graffiti, debris, waste
material, and general maintenance) or thirty (30) days after written notice from
Agency (with respect to building improvements), then Agency and/or City, in
addition to whatever other remedy it may have at law or in equity, shall have
the right to enter upon the Property and perform or cause to be performed all
such acts and work necessary to cure the default. Pursuant to such right of
entry, Agency and/or City shall be permitted (but are not required) to enter
upon the Property and perform all acts and work necessary to protect, maintain,
and preserve the improvements and landscaped areas on the Property, and to
attach a lien on the Property, or to assess the Property, in the amount of the
expenditures arising from such acts and work of protection, maintenance, and
preservation by Agency and/or City and/or costs of such cure, including a
fifteen percent (15%) administrative charge, which amount shall be promptly paid
by Participant to Agency upon demand.
-5-
<PAGE>
In addition to any other remedy that Agency may have, it shall be entitled
to pay to the City the amount of any duly imposed assessments against the
Property, and to reduce the Specified Amount in a corresponding sum. Such
assessments might include, but shall not be limited to, the amounts required for
parking lot maintenance, landscape maintenance, graffiti removal or debris or
hazardous waste removal. No such assessment shall be made unless the provisions
of this Agreement have been complied with and the City's nuisance abatement
procedures.
6. No Third-Party Beneficiaries. Nothing contained in this Agreement is
----------------------------
intended nor shall this Agreement be construed as creating any third party
beneficiary to this Agreement, and no person or entity other than Agency and
Participant, and to the extent expressly permitted hereunder their permitted
successors and assigns, shall be authorized to enforce the provisions of this
Agreement.
7. Indemnification. Participant shall indemnify, defend (with counsel
---------------
selected by Agency), protect and hold harmless Agency and City, and each of
their officers, officials, employees and agents from and against any and all
challenges (including, without limitation, CEQA challenge to the development,
improvement or use of the Property as contemplated herein), claims, damages,
liabilities, causes of action, losses and expenses (including, without
limitation, attorneys' fees and costs) arising out of or incurred in connection
with this Agreement and/or Participant's performance or non-performance hereof;
provided, however, (i) in the event that any judicial action is filed against
Agency by any third party challenging the validity or enforceability of this
Agreement or seeking to prohibit the performance of this Agreement (including,
without limitation, CEQA challenge to the development, improvement or use of the
Property as contemplated herein), within thirty (30) days of receipt of written
notice of such judicial action Participant may terminate this Agreement by
written notice of termination to Agency, (ii) after that date which is one (1)
year from the date Participant shall substantially open for business at the
Property, Participant's obligation to indemnify, defend, protect and hold
harmless Agency and City as provided in this paragraph shall be limited to
challenges, claims, damages, liabilities, causes of action, losses and expenses
(including, without limitation, attorneys' fees and costs) arising out of or
incurred in connection with Participant's performance or non-performance hereof,
and (iii) Participant shall have no obligation under this paragraph to
indemnify, defend, protect and hold harmless Agency and the City from any
challenges, claims, damages, liabilities, causes of action, losses and expenses
(including, without limitation, attorneys' fees and costs) arising out of or
incurred by reason of negligent acts or intentional misconduct of Agency or
City.
-6-
<PAGE>
8. Attorneys' Fees. If Agency or Participant institutes any legal action
---------------
or arbitration proceeding against the other in connection with any controversy
related to, concerning or arising out of the Agreement, or any facts based upon
or involving the Agreement, the prevailing party, whether in court, through
arbitration, or by way of out-of-court settlement, shall be entitled to recover
from the non-prevailing party such prevailing party's attorney's fees, court
costs, expert witness fees and other expenses relating to such controversy,
including such fees, costs and expenses on appeal, if any, and the
arbitrator(s), if any, is hereby authorized to make such an award to the
prevailing party in arbitration.
9. Entire Agreement. This Agreement shall constitute the entire agreement
----------------
between Agency and Participant with respect to the subject matter hereof, and
all prior or contemporaneous negotiations and agreements relating thereto,
whether oral or written, are merged herein and shall be of no further force or
effect.
10. Time of the Essence. Time is of the essence of this Agreement and each
-------------------
and every provision hereof.
11. Counterparts. Agency and Participant agree that this Agreement may be
------------
executed in two or more counterparts, each of which shall be an original but all
of the same when taken together shall be deemed one and the same instrument.
12. Modifications. This Agreement may only be modified in writing pursuant
-------------
to a written agreement executed by both Agency and Participant.
13. Notices. Any notice required or permitted to be given under this
-------
Agreement, shall be in writing and personally delivered or sent by United States
mail, registered or certified mail, or sent by Federal Express or other
nationally recognized overnight delivery service, postage prepaid, return
receipt requested, and addressed to the addressee at the address set forth below
(or such other address as either party may from time to time specify in writing
to the other in the manner provided herein), and shall be deemed to have been
given upon the date of actual delivery (or refusal to accept delivery) as
indicated on the return receipt.
If to Agency: La Mirada Redevelopment Agency
13700 La Mirada Boulevard
La Mirada, CA 90638
Attn: Economic Development
Department
-7-
<PAGE>
If to Participant: Mohawk Industries, Inc.
P.O. Box 2208
---------------------------
Dalton GA 30722
---------------------------
Attn: Jack Sharpe
-------------------
14. Assignment. Participant acknowledges and agrees that the rights,
----------
benefits, duties and obligations of Participant as provided in this Agreement
are personal to Participant. Neither this Agreement nor any rights, benefits,
duties or obligations of Participant may be assigned or delegated to any other
person or entity except as follows:
(a) upon compliance with the requirements of subparagraph (b) below,
without the prior consent of Agency, Participant may assign all, but not a
portion, of Participant's rights, benefits, duties and obligations under
this Agreement to (i) any affiliated person or entity, any successor by
merger or other entity resulting from a corporate reorganization
("Affiliated Transferee"), or (ii) any unaffiliated person or entity which
will use and operate the Property for a retail sales and distribution
center which is reasonably anticipated to produce Sales Tax Revenues from
the Property comparable or in excess of that produced by Participant from
the Property ("Unaffiliated Transferee");
(b) each Affiliated Transferee or Unaffiliated Transferee
(collectively, "Transferee") shall (i) acquire Participant's entire
interest in the Property, (ii) continue to use, operate and maintain the
Property as provided in this Agreement, and (iii) execute, acknowledge and
deliver to Agency a written assumption agreement in form and substance
reasonably acceptable to Agency.
Except as provided in subparagraph (a) above, any purported assignment or
delegation by Participant without such consent, at Agency's option, shall be
void and of no force or effect. Agency expressly reserves the right to assign
and delegate its obligations under this Agreement.
15. Captions. The paragraph headings or captions used herein are for
--------
convenience only and are not a part of this instrument and do not in any way
limit, define or amplify the scope or intent of the terms and provisions hereof.
16. Invalidity of Provision. If any provision of this Agreement shall be
-----------------------
adjudged by a court of competent jurisdiction to be void or unenforceable for
any reason, the same shall in no way affect (to the maximum extent permissible
by law) any other provision of this Agreement or the application of any such
provision under circumstances different from those adjudicated by
-8-
<PAGE>
the court, or the validity or enforceability of the instrument as a whole.
17. Recording. At Agency's sole option to evidence of record Agency's
---------
acquisition of certain interests in the Property as specifically provided in
this Agreement, within ten (10) days of Agency's written request to Participant,
Participant shall execute, acknowledge and deliver to Agency a memorandum of
this Agreement in the form attached hereto as Exhibit B, which memorandum may be
---------
filed and/or recorded by Agency in the office of the County Recorder of Los
Angeles County, California.
18. Governing Law. This Agreement and the terms hereof shall be governed
-------------
by and construed in accordance with the laws of the State of California.
19. Non-Discrimination.
------------------
19.1 Obligation to Refrain from Discrimination. There shall be no
-----------------------------------------
discrimination against, or segregation of, any persons, or group of persons, on
account of race, color, creed, religion, sex, marital status, ancestry, or
national origin in the enjoyment of the Property, nor shall Participant itself,
or any person claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy of tenants, lessees, subtenants,
sublessees, or vendees of the Property or any portion thereof.
19.2 Form Non-Discrimination and Non-Segregation Clauses. Participant
---------------------------------------------------
shall refrain from restricting the rental, sale, or lease of any portion of the
Property, or contracts relating to the Property, on the basis of race, color,
creed, religion, sex, marital status, ancestry, or national origin of any
person. All such deeds, leases or contracts shall contain or be subject to
substantially the following non-discrimination or non-segregation clauses:
(a) In deeds: "The grantee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all
persons claiming under or through them, that there shall be no
discrimination against or segregation of any person or group of persons on
account of race, color, creed, religion, sex, marital status, ancestry, or
national origin in the sale, lease, sublease, transfer, use, occupancy,
tenure, or enjoyment of the land herein conveyed, nor shall the grantee or
any person claiming under or through him or her, establish or permit any
such practice or practices of discrimination or segregation with reference
to the selection, location, number, use, or occupancy of tenants, lessees,
sublessees,
-9-
<PAGE>
or vendees in the land herein conveyed. The foregoing covenants shall run
with the land."
(b) In leases: "The lessee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all
persons claiming under or through him or her, and this lease is made and
accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed, religion,
sex, marital status, ancestry, or national origin in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the
land herein leased, nor shall the lessee himself, or any person
claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference
to the selection, location, number, use, or occupancy of tenants,
lessees, sublessees, subtenants, or vendees in the land herein
leased."
(c) In contracts: "That there shall be no discrimination against or
segregation of any person or group of persons on account of race, color,
creed, religion, sex, marital status, ancestry, or national origin in the
leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of
the land herein leased, nor shall the transferee himself, or any person
claiming under or through him or her establish or permit any such practice
or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy of tenants, lessees,
sublessees, subtenants, or vendees of land."
19.3 Effect of Covenants. Agency is deemed a beneficiary of the terms
-------------------
and provisions of this Agreement and of the restrictions and covenants for and
in its own right and for the purposes of protecting the interests of the
community and other parties, public or private, in whose favor and for whose
benefit the covenants have been provided. Agency shall have the right, if any of
the covenants set forth in this Agreement which are provided for its benefit are
breached, to exercise all rights and remedies and to maintain any actions or
suits at law or in equity or other proper proceedings to enforce the curing of
such
-10-
<PAGE>
breaches to which it or any other beneficiaries of such covenants may be
entitled.
IN WITNESS WHEREOF, Agency and Participant have executed this Agreement in
duplicate as of the day and year first above written.
AGENCY:
- ------
LA MIRADA REDEVELOPMENT AGENCY
By: /s/ C. David Peters
----------------------------
C. David Peters, Chairman
Attest: /s/ Gail A. Vasquez
-----------------------
Gail A. Vasquez
Assistant Secretary
Approved as to form: /s/ Scott D. Rogers
-------------------------
Scott D. Rogers
Landels, Ripley & Diamond
Attorneys for Agency
PARTICIPANT:
- -----------
MOHAWK INDUSTRIES, INC.,
a Georgia corporation
By: /s/ [SIGNATURE ILLEGIBLE]
----------------------------
Its: President
---------------------------
By: /s/ [SIGNATURE ILLEGIBLE]
----------------------------
Its: ILLEGIBLE
---------------------------
-11-
<PAGE>
EXHIBIT A
DESCRIPTION OF PROPERTY
-----------------------
PARCEL 1 OF PARCEL MAP NO. 1492 AS SHOWN ON MAP FILED IN BOOK 28, PAGE 88,
OF PARCEL MAPS FILED NOVEMBER 18, 1990 IN THE OFFICE OF THE COUNTY RECORDER
OF LOS ANGELES COUNTY, CALIFORNIA
<PAGE>
EXHIBIT B
Recording Requested By and
When Recorded Mail To:
LA MIRADA REDEVELOPMENT AGENCY
13700 La Mirada Boulevard
La Mirada, CA 90638
Attn: Economic Development Department
- --------------------------------------------------------------------------------
MEMORANDUM OF AGREEMENT
-----------------------
THIS MEMORANDUM OF AGREEMENT (this "Memorandum") is made and entered
into as of the 4th day of December, 1995 by and among MOHAWK INDUSTIES, INC., a
Georgia corporation ("Participant"), and LA MIRADA REDEVELOPMENT AGENCY, a
public body, corporate and politic ("Agency"), with reference to the following:
R E C I T A L S
---------------
A: Participant is the current owner of a leasehold or fee title interest
in and to certain real property located in the City of La Mirada, State of
California and more particularly described in attached Exhibit 1 (the
"Property").
B. Participant and Agency have entered that certain unrecorded
Participation Agreement dated as of ___________, 1995 (the "Agreement"). The
Agreement provides, among other things, that Agency will make certain financial
assistance available to Participant and that Participant will develop, improve,
use and maintain the Property, all as more specifically provided therein.
C. Pursuant to the Agreement, Participant and Agency have agreed to
record this Memorandum to reflect of record and provide notice of the Agreement
and Agency's acquisition of certain interests in the Property.
A G R E E M E N T
-----------------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Participant and Agency for
themselves and all of their respective successors and assigns acknowledge and
agree as follows:
1. Recitals; Incorporation of Agreement: Definitions. Each of the
-------------------------------------------------
recitals set forth above is true and correct and is incorporated herein by this
reference. All of the terms and conditions of the Agreement are incorporated
herein by this
-13-
<PAGE>
reference with the same effect as if set forth herein in full. All words and
phrases having their initial letters capitalized in this Memorandum and not
specifically defined herein shall have the meanings set forth in the Agreement.
2. Financial Assistance From Agency. As provided in the Agreement, Agency
--------------------------------
does hereby agree to pay to Participant the Specified Amount at the times, in
the amounts and subject to the terms and conditions set forth in the Agreement.
3. Grant of Interest; Covenants of Participant. As provided in the
-------------------------------------------
Agreement, Participant does hereby agree to, and grants to Agency an interest in
the Property sufficient to cause Participant to, comply with applicable laws,
use and maintain the Property and indemnify Agency and the City of La Mirada as
provided in and subject to the terms and conditions set forth in the Agreement.
Without limiting the foregoing, as provided in the Agreement, Participant
specifically covenants and agrees that the Property shall only be used and
operated for the purpose of sale and distribution of carpeting and related
products.
4. Covenant Running With the Land. The Agreement and this Memorandum
------------------------------
shall be and constitute a covenant running with the land, such that this
Agreement and this Memorandum shall be binding and effective against the
Property and each and every current and subsequent owner of all or any portion
of the Property or right or interest therein.
5. Interpretation. In the event of any conflict between the terms
--------------
contained in this Memorandum and the terms contained in
-14-
<PAGE>
the Agreement, the terms contained in the Agreement shall prevail and be
controlling.
IN WITNESS WHEREOF, Agency and Participant have executed this
Memorandum effective as of the date first set forth above.
AGENCY:
- ------
LA MIRADA REDEVELOPMENT AGENCY
By: _______________________________
C. David Peters, Chairman
Attest: _____________________
Gail A. Vasquez,
Assistant Secretary
Approved as to form: ___________________
Scott D. Rogers
Landels, Ripley & Diamond
Attorneys for Agency
PARTICIPANT :
- -----------
MOHAWK INDUSTRIES, INC.
a Georgia corporation
By: _________________________
Its : _______________________
By : ________________________
Its: ________________________
[ALL SIGNATURES TO BE ACKNOWLEDGED]
-15-
<PAGE>
EXHIBIT 1
DESCRIPTION OF PROPERTY
-----------------------
PARCEL 1 OF PARCEL MAP NO. 1492 AS SHOWN ON MAP FILED IN BOOK 28, PAGE 88,
OF PARCEL MAPS FILED NOVEMBER 18, 1990 IN THE OFFICE OF THE COUNTY RECORDER
OF LOS ANGELES COUNTY, CALIFORNIA
-16-
<PAGE>
SINGLE TENANT INDUSTRIAL LEASE
------------------------------
Effective Date: December 4, 1995
(The date set forth below Landlord's signature.)
BASIC LEASE INFORMATION
-----------------------
Landlord: CATELLUS DEVELOPMENT CORPORATION, a Delaware
corporation
Landlord's Address
For Notice: 1065 N. PacifiCenter Drive, Suite 200
Anaheim, CA 92806
Attn: Asset Management
Telephone: (714) 630-8100
Fax: (714) 237-7416
Landlord's Address
For Payment of Rent: File #53694
Los Angeles, CA 90074-3694
Tenant: MOHAWK INDUSTRIES, INC., a Georgia corporation
Tenant's Address
For Notice: P.O. Box 2208
---------------------------------
Dalton CA, 30722
---------------------------------
Attn: Jack Sharpe
----------------------------
Telephone: 706-277-1100
-----------------------
Fax: 706-277-1440
-----------------------------
Project: 16400 Trojan Way
Building: Approximately 220,000 rentable square feet as
shown in Exhibit A.
---------
Building Address:
Street: 16400 Trojan Way
City and State: La Mirada, CA 90638
Lot: The tax parcel on which the Building is located.
Term: Sixty (60) months
Estimated Commencement
Date: September 1, 1996
Base Rent Per Month: Seventy Four Thousand Eight Hundred Dollars
($74,800.00)
Security Deposit: None
Broker: Lee & Associates
Lease Year: Shall refer to each three hundred sixty-five
(365) day period during the Term commencing on
the Commencement Date and on each anniversary
thereof.
Permitted Uses: Warehousing and distribution of carpet and no
other uses shall be permitted without the prior
written consent of Landlord.
(i)
<PAGE>
EXHIBITS
A - Building\Lot-Premises
B - Work Letter
B-1 - Space Plan
C - Commencement Date Memorandum
D - Insurance Certificate
E - Prohibited Uses
F - Correction Items
G - Estoppel Certificate
The Basic Lease Information set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Basic Lease Information shall mean the
respective information above and shall be construed to incorporate all of the
terms provided under the particular Lease paragraph pertaining to such
information. In the event of any conflict between the Basic Lease Information
and the provisions of the Lease, the latter shall control.
LANDLORD [ILLEGIBLE] AND TENANT (JV) AGREE.
initial initial
(ii)
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. PREMISES......................................................... 1
1.1 Premises.................................................. 1
1.2 Reserved Rights........................................... 1
2. TERM............................................................. 1
2.1 Lease Term and Commencement Date........................... 1
2.2 Possession................................................. 1
3. RENT............................................................. 2
3.1 Rent....................................................... 2
3.2 Late Charge and Interest................................... 2
3.3 Intentionally Omitted...................................... 2
4. UTILITIES........................................................ 2
5. TAXES............................................................ 2
5.1 Real Property Taxes........................................ 2
5.2 Personal Property Taxes.................................... 3
6. TRIPLE NET LEASE................................................. 3
7. INSURANCE........................................................ 3
7.1 Landlord................................................... 3
7.2 Tenant .................................................... 3
7.3 General.................................................... 4
7.4 Indemnity.................................................. 4
7.5 Exemption of Landlord from Liability....................... 5
8. REPAIRS AND MAINTENANCE.......................................... 5
8.1 Landlord................................................... 5
8.2 Tenant..................................................... 5
8.3 Roof - Repair and Replacement.............................. 6
8.4 Condition of the Premises.................................. 6
9. ALTERATIONS...................................................... 6
9.1 Trade Fixtures; Alterations................................ 6
9.2 Damage; Removal............................................ 6
9.3 Liens...................................................... 6
10. USE.............................................................. 7
11. ENVIRONMENTAL MATTERS............................................ 7
11.1 Hazardous Materials........................................ 7
11.2 Indemnification............................................ 7
11.3 Landlord's Disclosure...................................... 8
11.4 Storage Tank Removal....................................... 8
12. DAMAGE AND DESTRUCTION........................................... 8
12.1 Casualty................................................... 8
12.2 Tenant's Fault ............................................ 8
12.3 Uninsured Casualty......................................... 9
12.4 Waiver..................................................... 9
13. EMINENT DOMAIN................................................... 9
13.1 Total Condemnation ........................................ 9
13.2 Partial Condemnation....................................... 9
13.3 Award...................................................... 9
13.4 Temporary Condemnation..................................... 9
</TABLE>
(iii)
<PAGE>
<TABLE>
<S> <C>
14. DEFAULT............................................................. 9
14.1 Events of Defaults............................................ 9
14.2 Remedies...................................................... 10
14.3 Cumulative.................................................... 11
15. ASSIGNMENT AND SUBLETTING........................................... 11
16. ESTOPPEL, ATTORNMENT AND SUBORDINATION.............................. 11
16.1 Estoppel...................................................... 11
16.2 Subordination................................................. 11
16.3 Attornment.................................................... 12
17. MISCELLANEOUS....................................................... 12
17.1 General....................................................... 12
17.2 Signs ........................................................ 12
17.3 Waiver........................................................ 12
17.4 Financial Statements.......................................... 13
17.5 Limitation of Liability....................................... 13
17.6 Notices....................................................... 13
17.7 Brokerage Commission ......................................... 13
17.8 Authorization................................................. 13
17.9 Holding Over, Surrender....................................... 13
17.10 Joint and Several............................................. 13
17.11 Covenants and Conditions...................................... 13
17.12 Addenda....................................................... 13
</TABLE>
(iv)
<PAGE>
1. PREMISES.
--------
1.1 Premises. Landlord hereby leases to Tenant the Building and that
--------
portion of the Lot (or all thereof if the Building constitutes the material
improvement thereon) upon which the same is situated (hereinafter collectively
referred to as the "Premises") as shown on Exhibit A attached hereto.
---------
1.2 Reserved Rights. Landlord reserves the right to enter the Premises
---------------
upon reasonable notice to Tenant (except in case of an emergency) and/or to
undertake the following: inspect the Premises and/or the performance by Tenant
of the terms and conditions hereof; grant easements on the Project, dedicate for
public use portions thereof and record covenants, conditions and restrictions
("CC&R's") affecting the Project and/or amendments to existing CC&R's which do
not unreasonably interfere with Tenant's use of the Premises; change the name of
the Project; and, during the last nine (9) months of the Term, show the Premises
to prospective tenants.
2. TERM.
----
2.1 Lease Term and Commencement Date. The Term of the Lease shall be for a
--------------------------------
period of sixty (60) months, subject to extension in accordance with Section 20
below. The Term shall commence (the "Commencement Date") on the first day of the
first full calendar month following the Possession Date (as defined in Section
2.2.2), except that if the Possession Date occurs on the first day of a month,
that day shall also be the Commencement Date. Tenant shall execute and deliver
to Landlord, upon request by Landlord, a Commencement Date Memorandum in the
form attached hereto as Exhibit C acknowledging (i) the Commencement Date (and,
---------
if requested, the Possession Date and Rent Commencement Date, as defined below),
(ii) the final square footage of the Premises, and (iii) Tenant's acceptance of
the Premises.
2.2 Possession.
----------
2.2.1 Landlord's Possession. Tenant acknowledges that the Premises
---------------------
are currently occupied by an existing tenant thereof and that Landlord's
delivery of possession of the Premises is contingent upon such tenant vacating
the Premises. Landlord presently anticipates that the current tenant will vacate
the Premises and restore possession thereof to Landlord on or about September 1,
1996 and Landlord shall use its commercially reasonable efforts to recover
possession on such date or as soon as practicable thereafter. In the event that
Landlord does not recover possession of the Premises on or before such date, as
a result of the failure of the existing tenant to vacate the Premises on or
before such date, Landlord shall not be subject to any liability therefor and
such failure shall not affect the validity of this Lease or the obligations of
either party hereunder, provided, however, that if the existing tenant fails to
vacate the Premises on or before November 1, 1996 (subject to Force Majeure
events), either Landlord or Tenant may, at its option, by written notice to the
other party given within ten (10) days thereafter, terminate this Lease, in
which event Landlord shall return to Tenant all funds paid in advance and the
Parties shall be discharged from all further obligations hereunder.
Notwithstanding anything set forth in this Section 2.2, Tenant shall not be
obligated to pay Base Rent for its use and occupancy of the Premises until the
Rent Commencement Date, as defined in Section 3.1.
2.2.2 Tender of Possession to Tenant. Landlord shall tender
------------------------------
possession of the Premises to Tenant as soon as practicable following the date
on which Landlord receives possession thereof. Tenant's possession and use of
the Premises from the date, on which Landlord tenders possession thereof to
Tenant (the "Possession Date") to the Commencement Date (the "Early Possession
Period") shall be subject to all the provisions of this Lease. During the Early
Possession Period, Tenant shall (i) arrange for and pay for all utilities
delivered to the Premises, (ii) arrange for, and maintain in effect, the
insurance coverages required to be obtained by Tenant pursuant to Section 7.2 of
this Lease, (iii) pay to Landlord, as and when due, all sums payable to Landlord
hereunder, including, without limitation, amounts payable for Real Property
Taxes (as defined in Section 5) and insurance premiums, and (iv) perform all
other obligations required by Tenant pursuant to this Lease.
2.2.3 Tenant Improvements. Landlord shall arrange for the
-------------------
construction of certain Tenant Improvements (as defined in the Work Letter
attached hereto as Exhibit B) in accordance with and subject to the terms of the
---------
Work Letter. Landlord shall commence the construction of the Tenant improvements
and diligently pursue such construction to completion as soon as reasonably
practicable following the Possession Date. Tenant's use of the Premises shall
not unreasonably interfere with Landlord's contractor(s) or otherwise impede the
completion of the Tenant improvements. The construction of the Tenant
Improvements shall not delay the occurrence of the Commencement Date. Tenant has
determined that the Premises are acceptable for Tenant's use and Tenant
acknowledges that, except as set forth in the Work Letter, neither Landlord nor
any broker or agent has made any representations or warranties in connection
with the physical condition of the Premises or their fitness for Tenant's use
upon which Tenant has relied directly or indirectly for any purpose.
2.2.4 Substantial Completion. The Tenant Improvements shall be deemed
----------------------
to be "Substantially Complete" on the date on which Landlord files or causes to
be filed with the City in which the Premises are located (if required) and
1.
<PAGE>
delivers to Tenant an architect's notice of substantial completion, or similar
written notice that the Tenant Improvements are Substantially Complete. As used
herein, the term "Substantially Complete" means that the Tenant Improvements
have been constructed in substantial compliance with the applicable plans and
specifications, except only minor "punchlist" items. Landlord shall promptly
complete such punchlist items to the reasonable satisfaction of Tenant.
3. RENT.
----
3.1 Rent.
----
3.1.1 Tenant's obligation to pay Base Rent shall commence on the
first (1st) calendar day following the date on which the Tenant Improvements are
Substantially Complete and possession of the Premises has been tendered to
Tenant (the "Rent Commencement Date"). Tenant shall pay to Landlord, at
Landlord's Address for Payment of Rent designated in the Basic Lease
Information, or at such other address as Landlord may from time to time
designate in writing to Tenant for the payment of Rent, the Base Rent, without
notice, demand, offset or deduction, in advance, on the first day of each
calendar month. Upon the execution of this Lease, Tenant shall pay to Landlord
the first month's Base Rent. Base Rent for the period from the Rent Commencement
Date to the first day of the next calendar month shall be prorated on a per diem
basis. All sums other than Base Rent which Tenant is obligated to pay under this
Lease shall be deemed to be additional rent due hereunder, whether or not such
sums are designated "additional rent." The term "Rent" means the Base Rent and
all additional rent payable hereunder.
3.1.2 As set forth in the Basic Lease Information, the initial Base
Rent shall be the sum of $74,800.00 per month, which is calculated on the basis
of $0.34 per square foot. Tenant acknowledges that the Premises contains
approximately 220,000 rentable square feet of space. The parties acknowledge
that such measurement is an estimate and that the Base Rent shall not be
adjusted on the basis of a difference in the actual number of rentable square
feet.
3.2 Late Charge and Interest. The late payment of any Rent will cause
------------------------
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service
("Delinquency Costs"). If Landlord has not received any installment of Rent
within ten (10) days after such amount is due, Tenant shall pay a late charge
of five percent (5%) of the delinquent amount, which is agreed to represent a
reasonable estimate of the Delinquency Costs incurred by Landlord. In addition,
all such delinquent amounts shall bear interest from the date such amount was
due until paid in full at a rate per annum ("Applicable Interest Rate") equal to
the lesser of(a) the maximum interest rate permitted by law or (b) five percent
(5%) above the rate publicly announced by Bank of America, N.A. (or if Bank of
America, N.A. ceases to exist, the largest bank then headquartered in the State
of California ("Bank") as its "Reference Rate." If the use of the announced
Reference Rate is discontinued by the Bank, then the term Reference Rate shall
mean the announced rate charged by the Bank which is, from time to time,
substituted for the Reference Rate. Landlord and Tenant recognize that the
damage which Landlord shall suffer as a result of Tenant's failure to pay such
amounts is difficult to ascertain and said late charge and interest are the best
estimate of the damage which Landlord shall suffer in the event of late payment.
If a late charge becomes payable for any three (3) installments of Rent within
any twelve (12) month period, then the Rent shall automatically become due and
payable quarterly in advance.
3.3 Intentionally Omitted.
---------------------
4. UTILITIES. Tenant shall make all arrangements for and shall pay all charges
---------
for heat, water, gas, electricity, telephone and any other utilities used on or
provided to the Premises including, without limitation, paying any deposits and
"hook up charges." Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement.
The cost of maintaining and repairing the plumbing, electrical distribution, and
mechanical systems, and other utility installations shall be borne by the
parties as provided in Section 8.
5. TAXES.
-----
5.1 Real Property Taxes. Landlord shall pay to the proper taxing
-------------------
authorities as the same become due all Real Property Taxes applicable to the
Premises, subject to reimbursement by Tenant as provided below. The term "Real
Property Taxes" shall be the sum of the following: all real property taxes,
possessory-interest taxes, business or license taxes or fees, service payments
in lieu of such taxes or fees, annual or periodic license or use fees, excises,
transit and traffic charges, housing fund assessments, open space charges, child
care fees, school, sewer and parking fees or any other assessments, levies,
fees, exactions or charges, general and special, ordinary and extraordinary,
unforeseen as well as foreseen (including fees "in-lieu" of any such tax or
assessment) which are assessed, levied, charged, conferred or imposed by any
public authority upon the Premises (or any real property comprising any portion
thereof) or its operations, together with all taxes, assessments or other fees
imposed by any public authority upon or measured by any Rent or other charges
payable hereunder, including any gross receipts tax or excise tax levied by any
governmental authority with respect to receipt of rental income, or upon, with
respect to or by reason of the development, possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or documentary transfer taxes upon this
transaction or
2.
<PAGE>
any document to which Tenant is a party creating or transferring an interest in
the Premises, together with any tax imposed in substitution, partially or
totally, of any tax previously included within the aforesaid definition or any
additional tax the nature of which was previously included within the aforesaid
definition, together with the costs and expenses (including attorneys and expert
witness fees and costs) of challenging any of the foregoing or seeking the
reduction in or abatement, redemption or return of any of the foregoing, but
only to the extent of any such reduction, abatement, redemption or return.
Nothing contained in this Lease shall require Tenant to pay any franchise,
corporate, estate or inheritance tax of Landlord, or any income, profits or
revenue tax or charge upon the net income of Landlord.
5.1.1 Reimbursement By Tenant. Tenant shall pay to Landlord an amount
-----------------------
equal to the Real Property Taxes then due within fifteen (15) days after
delivery to Tenant by Landlord of an invoice for the same, together with a copy
of the corresponding tax bill. Landlord may, at Landlord's option, deliver
statements from different taxing authorities at different times or deliver all
such statements at one time; provided, however, that Landlord shall not change
the method of invoicing Tenant for Real Property Taxes more than one (1) time
in each three (3) year period and, in each case, shall give Tenant thirty (30)
days notice prior to any change in such method of invoicing Tenant. In addition,
Landlord may elect to collect such Real Property Taxes from Tenant in advance,
on a monthly or quarterly basis, based upon Landlord's reasonable estimate of
such Real Property Taxes. If the amount of monthly or quarterly payments for
estimated Real Property Taxes received by Landlord from Tenant is more or less
than the actual Real Property Taxes due, an appropriate adjustment shall be made
by Landlord and Tenant.
5.1.2 Partial Years. Real Property Taxes for partial tax fiscal
-------------
years, if any, falling within the Term, shall be prorated. Tenant's obligations
for Real Property Taxes for the last full or partial year of the Term shall
survive the expiration or earlier termination of this Lease.
5.2 Personal Property Taxes. Prior to delinquency, Tenant shall pay all
-----------------------
taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Premises by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.
6. TRIPLE NET LEASE. It is intended that this Lease be a "triple net lease,"
----------------
and that the Rent to be paid hereunder by Tenant will be received by Landlord
without any deduction or offset whatsoever by Tenant, foreseeable or
unforeseeable. Except as expressly provided to the contrary in this Lease,
Landlord shall not be required to make any expenditure, incur any obligation, or
incur any liability of any kind whatsoever in connection with this Lease or the
ownership, construction, maintenance, operation or repair of the Premises.
Notwithstanding the foregoing, Tenant shall reimburse Landlord monthly, as
additional rent, for all costs and fees reasonably incurred by Landlord in
connection with the management of this Lease and the Premises including the cost
of those services which are customarily performed by a property management
services company.
7. INSURANCE.
---------
7.1 Landlord. Landlord shall maintain insurance insuring the Building
--------
against fire and extended coverage (including, if Landlord elects, "all risk"
coverage, earthquake/volcanic action, flood and/or surface water insurance) for
the full replacement cost of the Building, with deductibles and the form and
endorsements of such coverage as selected by Landlord, together with rental
abatement insurance against loss of Rent in an amount equal to the amount of
Rent for a period of at least twelve (12) months commencing on the date of loss.
Landlord may also carry such other insurance as Landlord may deem prudent or
advisable, including, without limitation, liability insurance in such amounts
and on such terms as Landlord shall determine. Tenant shall pay to Landlord an
amount equal to the premiums then due within fifteen (15) days after delivery to
Tenant by Landlord of an invoice for any such premiums. Landlord may, at
Landlord's option, elect to collect such premiums from Tenant in advance, on a
monthly or quarterly basis, based upon Landlord's reasonable estimate of such
premiums. If the amount of monthly or quarterly payments for estimated premiums
received by Landlord from Tenant are more or less than the actual premiums due,
an appropriate adjustment shall be made by Landlord and Tenant.
7.2 Tenant. Tenant shall, at Tenant's expense, obtain and keep in force at
------
all times the following insurance:
7.2.1 Commercial General Liability Insurance (Occurrence Form). A
--------------------------------------------------------
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000,000) per
occurrence and Two Million Dollars ($2,000,000) aggregate per location if Tenant
has multiple locations, providing coverage for, among other things, blanket
contractual liability, premises, products/completed operations and personal and
advertising injury coverage, with deletion of (a) the exclusion for operations
within fifty (50) feet of a railroad track (railroad protective liability), if
applicable, and (b) the exclusion for explosion, collapse or underground hazard,
if applicable, and, if necessary, Tenant shall provide for restoration of the
aggregate limit.
3.
<PAGE>
7.2.2 Automobile Liability Insurance. Comprehensive automobile
------------------------------
liability insurance having a combined single limit of not less than Two Million
Dollars ($2,000,000) per occurrence and insuring Tenant against liability for
claims arising out of ownership, maintenance, or use of any owned, hired or non-
owned automobiles:
7.2.3 Workers' Compensation and Employer's Liability Insurance.
--------------------------------------------------------
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises (including
the all states endorsement and, if applicable, the volunteers endorsement),
together with employer's liability insurance coverage in the amount of at least
One Million Dollars ($1,000,000); and
7.2.4 Property Insurance. "All risk" property insurance including
------------------
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any of Tenant's personal property, fixtures, equipment and alterations,
including electronic data processing equipment (collectively "Tenant's
Property") (and coverage for the full replacement cost thereof including
business interruption of Tenant), together with, if the property of Tenant's
invitee's is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitee's and located in the Premises.
7.3 General.
-------
7.3.1 Insurance Companies. Insurance required to be maintained by
-------------------
Tenant shall be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of at
least A 8 (or such higher rating as may be required by a lender having a lien on
the Premises) as set forth in the most current issue of "Best's Insurance
Guide."
7.3.2 Certificates of Insurance. Tenant shall deliver to Landlord
-------------------------
certificates of insurance for all insurance required to be maintained by Tenant
in the form of Exhibit D, attached hereto, no later than seven (7) days prior to
---------
the date of possession of the Premises. Tenant shall, at least ten (10) days
prior to expiration of the policy, furnish Landlord with certificates of renewal
or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after sixty (60) days prior written notice to the parties named as additional
insured in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least (10)
days' notice has been given to Landlord). If Tenant fails to maintain any
insurance required in this Lease, Tenant shall be liable for all losses and cost
resulting from said failure.
7.3.3 Additional Insured. Landlord and any property management
------------------
company of Landlord for the Premises shall be named as additional insured under
all of the policies required by Section 7.2.1. The policies required under
Section 7.2.1 shall provide for severability of interest.
7.3.4 Primary Coverage. All insurance to be maintained by Tenant
----------------
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. Any umbrella
liability policy or excess liability policy (which shall be in "following form")
shall provide that if the underlying aggregate is exhausted, the excess coverage
will drop down as primary insurance. The limits of insurance maintained by
Tenant shall not limit Tenant's liability under this Lease.
7.3.5 Mutual Waiver of Subrogation. Tenant waives any right to
----------------------------
recover against Landlord for claims for damages to Tenant's Property to the
extent covered, or required by this Lease to be covered by insurance. Landlord
waives any right to recover against Tenant for damages to Landlord's property to
the extent covered, or required by this Lease to be covered by property
insurance. This provision is intended to waive fully, and for the benefit of
Landlord and Tenant, any rights and/or claims which might give rise to a right
of subrogation in favor of any insurance carrier. The coverage obtained by
Landlord and Tenant pursuant to this Lease shall include, without limitation, a
waiver of subrogation endorsement attached to the certificate of insurance.
7.3.6 Notification of Incidents. Tenant shall notify Landlord within
-------------------------
seventy-two (72) hours after the occurrence of any accidents or incidents in the
Premises which could give rise to a claim under any of the insurance policies
required under this Section 7.
7.4 Indemnity.
---------
7.4.1 Tenant's Indemnity. Tenant shall indemnify, protect, defend (by
------------------
counsel reasonably acceptable to both Landlord and Tenant) and hold harmless
Landlord and its partners, directors, officers, employees, shareholders,
lenders, agents, contractors and each of their successors and assigns from and
against any and all claims, judgments, causes of action, damages, penalties,
costs, liabilities, and expenses, including all costs, attorneys' fees, expenses
and liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon, arising at any time during or after the Term as a
result (directly or indirectly) of or in connection with (i) any default in the
performance of any obligation on Tenant's part to be
4.
<PAGE>
performed under the terms of this Lease, or (ii) Tenant's use of the Premises,
the conduct of Tenant's business or any activity, work or things done, permitted
or suffered by Tenant in or about the Premises or other portions of the Project,
except to the extent caused by Landlord's gross negligence or willful
misconduct. The obligations of Tenant under this Section 7.4 shall survive the
termination of this Lease with respect to any claims or liability arising out of
any act, omission, or event occurring on or before the date of such termination.
7.4.2 Landlord's Indemnity. Except as expressly provided in this
--------------------
Lease, and subject to the limitations of Section 17.5, Landlord shall indemnify,
protect, defend (by counsel reasonably acceptable to both Landlord and Tenant)
and hold harmless Tenant and its partners, directors, officers, employees,
shareholders, lenders, agents, contractors and each of their successors and
assigns from and against any and all claims, judgments, causes of action,
damages, penalties, costs, liabilities, and expenses, including all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon, arising at any time during or
after the Term as a result (directly or indirectly) of or in connection with (i)
any default in the performance of any obligation on Landlord's part to be
performed under the terms of this Lease, or (ii) landlord's gross negligence or
intentional misconduct in connection with Landlord's activities in or about the
Premises. The obligations of Landlord under this Section 7.4 shall survive the
termination of this Lease with respect to any claims or liability arising out of
any act, omission, or event occurring on or before the date of such termination.
7.5 Exemption of Landlord from Liability. Tenant, as a material part of
------------------------------------
the consideration to Landlord, hereby assumes all risk of damage to property
including, but not limited to, Tenant's fixtures, equipment, furniture and
alterations or injury to persons in, upon or about the Premises or other
portions of the Project arising from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord, except to the extent such claims are
caused by the gross negligence or willful misconduct of Landlord, its employees,
agents, and contractors. Tenant hereby agrees that Landlord shall not be liable
for injury to Tenant's business or any loss of income therefrom or for damage to
the property of Tenant, or injury to or death of Tenant, Tenant's employees,
invitee's, customers, agents or contractors or any other person in or about the
Premises or the Project, whether such damage or injury is caused by fire, steam,
electricity, gas, water or rain, or from the breakage, leakage or other defects
of sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury results from
conditions arising upon the Premises, or from other sources or places, and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant, except to the extent caused by the
gross negligence or willful misconduct of Landlord, its employees, agents, and
contractors.
8. REPAIRS AND MAINTENANCE.
-----------------------
8.1 Landlord. Landlord shall, subject to the following sentence, maintain
--------
the structural portions of the roof, foundation, and load-bearing portions of
walls (excluding wall coverings, painting, glass and doors) of the Improvements.
Landlord shall not be required to make any repair resulting from (i) any
alteration or modification to the Improvements or to mechanical equipment within
the Improvements performed by, for or because of Tenant or to special equipment
or systems installed by, for or because of Tenant, (ii) the installation, use or
operation of Tenant's property, fixtures and equipment, (iii) the moving of
Tenant's property in or out of the Improvements or in and about the Premises,
(iv) Tenant's use or occupancy of the Premises in violation of Section 10 of
this Lease or in the manner not contemplated by the parties at the time of the
execution of this Lease, (v) the acts or omissions of Tenant and Tenant's
employees, agents, invitees, subtenants, licensees or contractors, (vi) fire and
other casualty, except as provided by Section 12 of this Lease or (vii)
condemnation, except as provided in Section 13 of this Lease. Landlord shall
make repairs under this Section 8.1 as soon as reasonably practicable after
receipt of written notice from Tenant of the need for such repairs. Landlord
shall procure and maintain, at Tenant's expense, regularly scheduled preventive
maintenance/service contracts for (i) the maintenance and repair of the fire
detection and sprinkler system, and (ii) the regular and routine maintenance and
annual inspection of the roof membrane. Tenant shall reimburse Landlord upon
thirty (30) days written notice for the reasonable cost thereof. Tenant waives
any right to repair the Premises at the expense of Landlord under any applicable
governmental laws, ordinances, statutes, orders or regulations now or hereafter
in effect which might otherwise apply.
8.2 Tenant. Except for the portions of the Premises expressly required to
------
be maintained by Landlord under Section 8.1, Tenant, at Tenant's expense, shall
maintain the Premises in good order, condition and repair, including, without
limitation, subfloors and floor coverings, walls and wall coverings, mechanical,
electrical, and plumbing systems, doors, windows. parking lots, and truck
aprons, gutters and downspouts, landscaping and any signage. During the Term of
this Lease, or any extensions thereof, Tenant shall procure and maintain, at
Tenant's expense, regularly scheduled preventive maintenance/service contracts
with maintenance contractors reasonably acceptable to Landlord for (i) servicing
all hot water and heating and air conditioning systems and equipment ("HVAC") in
the Premises, and (ii) the landscape maintenance. Tenant shall provide Landlord
with a copy of the HVAC contract and shall furnish a copy of all reports and
correspondence involving the condition of the HVAC equipment to Landlord. Each
contract shall provide that the maintenance contractor will notify Landlord in
writing at least ten (10) days prior to any termination of the contract.
Notwithstanding the foregoing, Landlord reserves the right to procure and
maintain the foregoing maintenance/service contracts, and Tenant shall promptly
reimburse Landlord upon thirty (30) days written notice for the cost thereof. In
the event Tenant fails, in the reasonable judgment of Landlord, to maintain the
Premises in good order, condition and repair, Landlord shall have the right to
perform such maintenance, repairs or refurbishing at Tenant's expense.
5.
<PAGE>
8.3 Roof -- Repair and Replacement. As provided in Section 8.1. Landlord,
------------------------------
at its cost, shall maintain the structural portions of the roof during the Term
of this Lease. In addition, Landlord shall arrange for regular and routine
maintenance and annual inspection of the roof surface and membrane, subject to
Tenant's reimbursement to Landlord for the reasonable cost thereof within thirty
(30) days' written notice. In the event that the surface and membrane of the
roof needs to be replaced as a matter of prudent building management and
ownership, as reasonably determine by an independent and qualified roofing
consultant, during the initial Term of this Lease or, if the Term is extended
pursuant to Section 20, during the First Extension Term, Landlord shall arrange
and pay for the replacement thereof at Landlord's sole cost and expense. If the
Term of this Lease is further extended, either pursuant to Section 20 or by
other agreement of the parties, and the roof surface and membrane needs to be
replaced as a matter of prudent building management and ownership, as reasonably
determined by an independent and qualified roofing consultant, during such
additionally extended term, Tenant shall arrange and pay for the replacement
thereof at Tenant's sole cost and expense.
8.4 Condition of the Premises.
-------------------------
8.4.1 Landlord warrants to Tenant that the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Tenant will put the Premises or to any
alterations or utility installations made or to be made by Tenant. If the
Premises do not comply with said warranty, Landlord shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Tenant
setting forth with specificity the nature and extent of such condition of non-
compliance, rectify the same at Landlord's expense. If Tenant fails to give
Landlord written notice of a condition of non-compliance with this warranty
within six (6) months alter the Possession Date, the correction of such
condition of non-compliance shall be the obligation of Tenant at Tenant's sole
cost and expense.
8.4.2 Landlord and Tenant have jointly conducted a walk-through of
the Premises and have agreed that those items which are set forth in Exhibit F
---------
hereto require correction and that such items shall be corrected by Landlord, at
its sole cost and expense. On or about the Possession Date, Landlord and Tenant
shall conduct a subsequent walk-through of the Premises and shall jointly and
reasonably determine if there are any new and additional items in the Premises
which require correction and, if so, such items shall be added to Exhibit F.
---------
Landlord shall cause the items set forth in Exhibit F, as the same may be
---------
revised following the Possession Date walk through, to be corrected promptly and
at Landlord's sole cost and expense.
9. ALTERATIONS.
-----------
9.1 Trade Fixtures; Alterations. Tenant may install necessary trade
---------------------------
fixtures, equipment and furniture in the Premises, provided that such items are
installed and are removable without structural or material damage to the
Premises or the Project. Tenant shall not construct, nor allow to be
constructed, any alterations or physical additions in, about or to the Premises
without obtaining the prior written consent of Landlord, which consent shall be
conditioned upon Tenant's compliance with Landlord's reasonable requirements
regarding construction of improvements and alterations but such consent
otherwise shall not be unreasonably withheld. Tenant shall submit plans and
specifications to Landlord with Tenant's request for approval and shall
reimburse Landlord for all costs which Landlord may incur in connection with
granting approval to Tenant for any such alterations and additions, including
any costs or expenses which Landlord may incur in electing to have outside
architects and engineers review said matters. Tenant shall file a notice of
completion after completion of such work and provide Landlord with a copy
thereof. Tenant shall provide Landlord with a set of "as-built" drawings for any
such work.
9.2 Damage; Removal. Tenant shall repair all damage to the Premises caused
---------------
by the installation or removal of Tenant's fixtures, equipment, furniture and
alterations. Upon the termination of this Lease, Tenant shall remove any or all
alterations, additions, improvements and partitions made or installed by Tenant
and restore the Premises to its condition existing prior to the construction of
any such items; provided, however, Landlord may permit, upon written notice to
Tenant, any such items designated by Landlord to remain on the Premises, in
which event (and if Tenant elects to leave such items on the Premises) they
shall be and become the property of Landlord upon the termination of this Lease.
All such removals and restoration shall be accomplished in a good and
workmanlike manner and so as not to cause any damage to the Premises or the
Project whatsoever.
9.3 Liens. Tenant shall promptly pay and discharge all claims for labor
-----
performed, supplies furnished and services rendered at the request of Tenant and
shall keep the Premises free of all mechanics' and materialmen's liens in
connection therewith. Tenant shall provide at least ten (10) days prior written
notice to Landlord before any labor is performed, supplies furnished or services
rendered on or at the Premises and Landlord shall have the right to post on the
Premises notices of non-responsibility. If any lien is filed, Tenant shall cause
such lien to be released and removed within ten (10) days after the date of
filing, and if Tenant fails to do so, Landlord may take such action as may be
necessary to remove such lien and Tenant shall pay Landlord such amounts
expended by Landlord together with interest thereon at the Applicable interest
Rate from the date of expenditure.
6.
<PAGE>
10. USE. The Premises shall be used only for the Permitted Uses set forth in the
---
Basic Lease Information and for no other uses. Tenant's use of the Premises
shall be in compliance with and subject to all applicable governmental laws,
ordinances, statutes, orders and regulations and any CC&R's or any supplement
thereto recorded in any official or public records with respect to the Project
or any portion thereof. In no event shall the Premises be used for any of the
Prohibited Uses set forth on Exhibit E attached hereto. Tenant shall comply with
---------
the reasonable rules and regulations as Landlord may from time to time
prescribe. Tenant shall not commit waste, overload the floors or structure of
the Premises, subject the Premises or the Project to any use which would damage
the same or increase the risk of loss or violate any insurance coverage, permit
any unreasonable odors, smoke, dust, gas, substances, noise or vibrations to
emanate from the Premises, take any action which would constitute a nuisance or
would disturb, obstruct or endanger any other tenants of the Project, take any
action which would abrogate any warranties, or use or allow the Premises to be
used for any unlawful purpose. Tenant shall have the right to use for its
employees and invitees, the parking areas on the Premises. Landlord shall not be
responsible for non-compliance by any other tenant or occupant of the Project
with, or Landlord's failure to enforce, any of the rules or regulations or any
other terms or provisions of such tenant's or occupant's lease. Tenant shall
promptly comply with the reasonable requirements of any board of fire insurance
underwriters or other similar body now or hereafter constituted. Tenant shall
not do any act which shall in any way encumber the title of Landlord in and to
the Premises or the Project.
11. ENVIRONMENTAL MATTERS.
---------------------
11.1 Hazardous Materials. Tenant shall not cause nor permit, nor allow any
-------------------
of Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to cause
or permit, any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed or used on, under or
about the Premises or the Project, except for routine office and janitorial
supplies in usual and customary quantities stored, used and disposed of in
accordance with all applicable Environmental Laws. As used herein, "Hazardous
Materials" means any chemical, substance, material, controlled substance,
object, condition, waste, living organism or combination thereof which is or may
be hazardous to human health or safety or to the environment due to its
radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity,
carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other harmful or
potentially harmful properties or effects, including, without limitation,
petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls
(PCBs) and all of those chemicals, substances, materials, controlled substances.
objects, conditions, wastes, living organisms or combinations thereof which are
now or become in the future listed, defined or regulated in any manner by any
Environmental Law based upon, directly or indirectly, such properties or
effects. As used herein, "Environmental Laws" means any and all federal, state
or local environmental, health and/or safety-related laws, regulations,
standards, decisions of courts, ordinances, rules, codes, orders, decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant, the Premises, the Building or the Project. Tenant and Tenant's
Parties shall comply with all Environmental Laws and promptly notify Landlord of
the violation of any Environmental Law or presence of any Hazardous Materials,
other than office and janitorial supplies as permitted above, on the Premises.
Landlord shall have the right to enter upon and inspect the Premises and to
conduct tests, monitoring and investigations. If such tests indicate the
presence of any environmental condition which occurred during the Term of this
Lease, Tenant shall reimburse Landlord for the cost of conducting such tests.
The phrase "environmental condition" shall mean any adverse condition relating
to any Hazardous Materials or the environment, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, noise, vibration, light
and odors. In the event of any such environmental condition, Tenant shall
promptly take any and all steps necessary to rectify the same to Landlord's
reasonable satisfaction or shall, at Landlord's election, reimburse Landlord,
upon demand, for the cost to Landlord of performing rectifying work. The
reimbursement shall be paid to Landlord in advance of Landlord's performing such
work, based upon Landlord's reasonable estimate of the cost thereof; and upon
completion of such work by Landlord, Tenant shall pay to Landlord any shortfall
within thirty (30) days after Landlord bills Tenant therefore or Landlord shall
within thirty (30) days refund to Tenant any excess deposit, as the case may be.
11.2 Indemnification. Tenant shall indemnify, protect, defend (by counsel
---------------
acceptable to Landlord) and hold harmless Landlord and its partners, directors,
officers, employees, shareholders, lenders, agents, contractors and each of
their respective successors and assigns (individually and collectively,
"Indemnitees") from and against any and all claims, judgments, causes of action,
damages, penalties, fines, taxes, costs, liabilities, losses and expenses
arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence of
Hazardous Materials on, under or about the Premises or other property as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties' activities,
or failure to act, in connection with the Premises. This indemnity shall include
the cost of any required or necessary repair, cleanup or detoxification, and the
preparation and implementation of any closure, monitoring or other required
plans, whether such action is required or necessary prior to or following the
termination of this Lease. Neither the written consent by Landlord to the
presence of Hazardous Materials on, under or about the Premises, nor the strict
compliance by Tenant with all Environmental Laws, shall excuse Tenant from
Tenant's obligation of indemnification pursuant hereto. Tenant's obligations
pursuant to the foregoing indemnity shall survive the termination of this Lease.
7.
<PAGE>
11.3 Landlord's Disclosure. Landlord has no actual knowledge and has
---------------------
received no written notice that (i) any Hazardous Materials are located on,
under, or in the Premises, or (ii) there is a pending proceeding, inquiry,
investigation, or order by any governmental authority with respect to any
Hazardous Materials on, under, or in be Premises. As use herein, the term
"actual knowledge" means that the specific matter has come to the actual
attention of the person or persons employed by Landlord who are responsible and
authorized to act with respect to such matter.
11.4 Storage Tank Removal. The parties acknowledge that the previous
--------------------
tenant of the Premises had installed a 10,000 gallon underground diesel storage
tank (the "Tank"). Landlord shall remove or cause the Tank to be removed in
accordance with all applicable laws and regulations and within sixty (60) days
following the Commencement Date. Landlord further acknowledges and agrees that
Tenant shall have no liability for any cost or expense arising out of the
installation, use, or removal of the Tank.
12. DAMAGE AND DESTRUCTION.
----------------------
12.1 Casualty. If the Premises should be damaged or destroyed by fire or
--------
other casualty, Tenant shall give immediate written notice to Landlord. Within
thirty (30) days after receipt thereof, Landlord shall notify Tenant whether the
necessary repairs can reasonably be made: (a) within ninety (90) days; (b) in
more than ninety (90) days but in less than one hundred eighty (180) days; or
(c) in more than one hundred eighty (180) days from the date of such notice.
12.1.1 Less Than 90 Days. If the Premises should be damaged only to
-----------------
such extent that rebuilding or repairs can reasonably be completed within ninety
(90) days, this Lease shall not terminate and, provided that insurance proceeds
are available to fully repair the damage. Landlord shall repair the Premises
utilizing such insurance proceeds and shall not recover any of such repair costs
from Tenant pursuant to Section 6. Landlord shall not be required to rebuild,
repair or replace any alterations, partitions, fixtures, additions and other
improvements (collectively, "Improvements") which may have been placed in, on or
about the Premises by or for the benefit of Tenant, it being the intent of the
parties that Tenant shall replace such Improvements utilizing insurance proceeds
available to Tenant pursuant to Section 7.2.4. If Tenant is required to vacate
all or a portion of the Premises during Landlord's repair thereof, the Base Rent
payable hereunder shall be abated proportionately from the date Tenant vacates
all or a portion of the Premises only to the extent rental abatement insurance
proceeds are received by Landlord and only during the period the Premises are
unfit for occupancy.
12.1.2 Greater Than 90 Days. If the Premises should be damaged only
--------------------
to such extent that rebuilding or repairs can reasonably be completed in more
than ninety (90) days but in less than one hundred eighty (180) days, then
Landlord shall have the option of: (a) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Premises; or (b) electing to repair the Premises, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
Improvements which may have been placed in, on or about the Premises by or for
the benefit of Tenant). If Tenant is required to vacate all or a portion of the
Premises during Landlord's repair thereof, the Base Rent payable hereunder shall
be abated proportionately from the date Tenant vacates all or a portion of the
Premises only to the extent rental abatement insurance proceeds are received by
Landlord and only during the period the Premises are unfit for occupancy. In the
event that Landlord should fail to substantially complete such repairs within
one hundred eighty (180) days after the date upon which Landlord is notified by
Tenant of the casualty (such period to be extended for delays caused by Tenant
or because of any items of Force Majeure, as hereinafter defined) and Tenant has
not re-occupied the Premises. Tenant shall have the right, as Tenant's exclusive
remedy, within ten (10) days after the expiration of such one hundred eighty
(180) day period, to terminate this Lease by delivering written notice to
Landlord as Tenant's exclusive remedy, whereupon all rights hereunder shall
cease and terminate thirty (30) days after Landlord's receipt of such notice.
12.1.3 Greater Than 180 Days. If the Premises should be so damaged
---------------------
that rebuilding or repairs cannot be completed within one hundred eighty (180)
days, either Landlord or Tenant may terminate this Lease by giving written
notice within ten (10) days after notice from Landlord specifying such time
period of repair; and this Lease shall terminate and the Rent shall be abated
from the date Tenant vacates the Premises. In the event that neither party
elects to terminate this Lease. Landlord shall promptly commence and diligently
prosecute to completion the repairs to the Premises, provided insurance proceeds
are available to repair the damage (except that Landlord shall not be required
to rebuild, repair or replace any Improvements which may have been placed in, on
or about the Premises by or for the benefit of Tenant). If Tenant is required to
vacate all or a portion of the Premises during Landlord's repair thereof, the
Base Rent payable hereunder shall be abated proportionately from the date Tenant
vacates all or a portion of the Premises only to the extent rental abatement
insurance proceeds are received by Landlord and only during the period that the
Premises are unfit for occupancy.
12.2 Tenant's Fault. If the Premises or any portion of the Premises is
--------------
damaged resulting from the negligence or breach of this Lease by Tenant or any
of Tenant's Parties. Rent shall not be reduced during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused thereby
to the extent such cost is not covered by insurance proceeds.
8.
<PAGE>
12.3 Uninsured Casualty. In the event that the Premises or any portion of
------------------
the Premises is damaged to the extent Tenant is unable to use the Premises and
such damage is not covered by insurance proceeds received by Landlord or in the
event that the holder of any indebtedness secured by the Premises requires that
the insurance proceeds be applied to such indebtedness, then Landlord shall have
the right at Landlord's option either (i) to repair such damage as soon as
reasonably possible at Landlord's expense, or (ii) to give written notice to
Tenant within thirty (30) days after the date of the occurrence of such damage
of Landlord's intention to terminate this Lease as of the date of the occurrence
of such damage. In the event Landlord elects to terminate this Lease, Tenant
shall have the right (but not the obligation) within ten (10) days after receipt
of such notice to give written notice to landlord of Tenant's intention to pay
the cost of repair of such damage, in which event this Lease shall continue in
full force and effect, Landlord shall make such repairs as soon as reasonably
possible and Tenant shall reimburse Landlord for such repairs within fifteen
(15) days after receipt of an invoice from Landlord. If Tenant is required to
vacate all or a portion of the Premises during Landlord's repair thereof, the
Base Rent payable hereunder shall be abated proportionately from the date Tenant
vacates all or a portion of the Premises only to the extent rental abatement
insurance proceeds are received by Landlord and only during the period that the
Premises are unfit for occupancy. If Tenant does not give such notice within the
ten ( 10) day period, this Lease shall terminate automatically as of the date of
the occurrence of the damage.
12.4. Waiver. With respect to any damage or destruction which Landlord is
------
obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law and not specifically set forth herein.
13. EMINENT DOMAIN.
--------------
13.1 Total Condemnation. If all of the Premises is condemned by eminent
------------------
domain, inversely condemned or sold under threat of condemnation for any public
or quasi-public use or purpose ("Condemned"), this Lease shall terminate as of
the earlier of the date the condemning authority takes title to or possession of
the Premises, and Rent shall be adjusted to the date of termination.
13.2 Partial Condemnation, If any portion of the Premises is Condemned and
--------------------
such partial condemnation materially impairs Tenant's ability to use the
Premises for Tenant's business as reasonably determined by Landlord. Landlord
shall have the option of either (i) relocating Tenant to comparable space within
the Project or (ii) terminating this Lease as of the earlier of the date title
vests in the condemning authority or as of the date an order of immediate
possession is issued and Rent shall be adjusted to the date of termination. If
such partial condemnation does not materially impair Tenant's ability to use the
Premises for the business of Tenant, Landlord shall promptly restore the
Premises to the extent of any condemnation proceeds recovered by Landlord,
excluding the portion thereof lost in such condemnation, and this Lease shall
continue in full force and effect except that after the date of such title
vesting Rent shall be adjusted as reasonably determined by Landlord.
13.3 Award. If the Premises are wholly or partially Condemned, Landlord
-----
shall be entitled to the entire award paid for such condemnation, and Tenant
waives any claim to any part of the award from Landlord or the condemning
authority; provided, however, Tenant shall have the right to recover from
Landlord such compensation, if any, as may be specifically awarded to Landlord
in connection with costs in removing Tenant's merchandise, furniture, fixtures,
leasehold improvements and equipment to a new location. No condemnation of any
kind shall be construed to constitute an actual or constructive eviction of
Tenant or a breach of any express or implied covenant of quiet enjoyment.
13.4 Temporary Condemnation. In the event of a temporary condemnation not
----------------------
extending beyond the Term, this Lease shall remain in effect, Tenant shall
continue to pay Rent and Tenant shall receive any award made for such
condemnation except damages to any of Landlord's property. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of initial occupancy by the condemning authority and
any such award shall be distributed in accordance with the preceding section. If
a temporary condemnation remains in effect at the expiration or earlier
termination of this Lease, Tenant shall pay Landlord the reasonable cost of
performing any obligations required of Tenant with respect to the surrender of
the Premises, unless Landlord receives such costs from the condemning authority.
14. DEFAULT.
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14.1 Events of Defaults. The occurrence of any of the following events
------------------
shall, at Landlord's option, constitute an "Event of Default":
14.1.1 Vacation or abandonment of the Premises for a period of thirty
(30) consecutive days;
14.1.2 Failure to pay Rent on the date when due and the failure
continuing for a period of five (5) days after such payment is due:
14.1.3 Failure to perform Tenant's covenants and obligations
hereunder (except default in the payment of Rent) where such failure continues
for a period of thirty (30) days after written notice from Landlord: provided,
however, if the
9.
<PAGE>
nature of the default is such that more than thirty (30) days are reasonably
required for its cure. Tenant shall not be deemed to be in default if Tenant
commences the cure within the thirty (30) day period and diligently prosecutes
such cure to completion;
14.1.4 The making of a general assignment by Tenant for the benefit
of creditors: the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing; the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold; Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due; any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets; Tenant taking
any action toward the dissolution or winding up of Tenant's affairs; the
cessation or suspension of Tenant's use of the Premises; or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
14.1.5 The making of any material misrepresentation or omission by
Tenant or any successor in interest of Tenant in any materials delivered by or
on behalf of Tenant to Landlord or Landlord's lender pursuant to this Lease; or
14.1.6 The occurrence of an Event of Default set forth in Section
14.1.4 or 15.1.5 with respect to any guarantor of this Lease, if applicable.
14.2 Remedies.
--------
14.2.1 Termination. In the event of the occurrence of any Event of
-----------
Default, Landlord shall have the right to give a written termination notice to
Tenant and, on the date specified in such notice, this Lease shall terminate
unless on or before such date all arrears of Rent and all other sums payable by
Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of
Default at the time existing shall have been fully remedied to the satisfaction
of Landlord.
14.2.1.1 Repossession. Following termination, without
------------
prejudice to other remedies Landlord may have, Landlord may (i) peaceably re-
enter the Premises upon voluntary surrender by Tenant or remove Tenant therefrom
and any other persons occupying the Premises, using such legal proceedings as
may be available; (ii) repossess the Premises or relet the Premises or any part
thereof for such term (which may be for a term extending beyond the Term), at
such rental and upon such other terms and conditions as Landlord in Landlord's
sole discretion shall determine, with the right to make reasonable alterations
and repairs to the Premises; and (iii) remove all personal property therefrom.
14.2.1.2 Unpaid Rent. Landlord shall have all the rights and
-----------
remedies of a landlord provided by applicable law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default, The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the Applicable Interest Rate, and as used in (c)
above, shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
14.2.2 Continuation. Even though an Event of Default may have
------------
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due. Landlord, without terminating this Lease, may, during
the period Tenant is in default, enter the Premises and relet the same, or any
portion thereof, to third parties for Tenant's account and Tenant shall be
liable to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of remodeling the
Premises and like costs. Reletting may be for a period shorter or longer than
the remaining Term. Tenant shall continue to pay the Rent on the date the same
is due. No act by Landlord hereunder, including acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease. In the event that Landlord elects to relet the
Premises, the rent that Landlord receives from reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base Rent
and Real Property Taxes; second, all costs, including maintenance, incurred by
Landlord in reletting; and, third, Base Rent and Real Property Taxes under this
Lease. After deducting the payments referred to above, any sum remaining from
the rental Landlord receives from reletting shall be held by Landlord and
applied in payment of future Rent as Rent becomes due under this Lease. In no
event, and notwithstanding anything in Section 15 to the contrary, shall Tenant
be entitled to any excess rent received by Landlord. If, on the date Rent is due
under this Lease, the rent received from the reletting is less than the Rent due
on that date. Tenant shall pay to Landlord, in addition to the remaining
10.
<PAGE>
Rent due, all costs, including maintenance, which Landlord incurred in reletting
the Premises that remain after applying the rent received from reletting as
provided hereinabove. So long as this Lease is not terminated, Landlord shall
have the right to remedy any default of Tenant, to maintain or improve the
Premises, to cause a receiver to be appointed to administer the Premises and new
or existing subleases and to add to the Rent payable hereunder all of Landlord's
reasonable costs in so doing, with interest at the Applicable Interest Rate from
the date of such expenditure.
14.3 Cumulative. Each right and remedy of Landlord provided for herein or
----------
now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.
15. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, sublet or otherwise
-------------------------
transfer, whether voluntarily or involuntarily or by operation of law, the
Premises or any part thereof without Landlord's prior written approval, which
shall not be unreasonably withheld. The merger of Tenant with any other entity
or the transfer of any controlling or managing ownership or beneficial interest
in Tenant, or the assignment of a substantial portion of the assets of Tenant,
whether or not located at the Premises, shall constitute an assignment
hereunder. If Tenant desires to assign this Lease or sublet any or all of the
Premises, Tenant shall give Landlord written notice thereof with copies of all
related documents and agreements associated with the assignment or sublease,
including without limitation, the financial statements of any proposed assignee
or subtenant, forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Tenant shall pay Landlord's reasonable attorneys'
fees incurred in the review of such documentation plus an administrative fee of
Three Hundred Fifty Dollars ($350.00) for each proposed transfer. Landlord shall
have a period of thirty (30) days following receipt of such notice and all
related documents and agreements to notify Tenant in writing of Landlord's
approval or disapproval of the proposed assignment or sublease. If Landlord
fails to notify Tenant in writing of such election, Landlord shall be deemed to
have approved such assignment or subletting. This Lease may not be assigned by
operation of law. Any purported assignment or subletting contrary to the
provisions hereof shall be void and shall constitute an Event of Default
hereunder. If Tenant receives rent or other consideration for any such transfer
in excess of the Rent, or in case of the sublease of a portion of the Premises,
in excess of such Rent that is fairly allocable to such portion after
appropriate adjustments to assure that all other payments required hereunder are
appropriately taken into account, Tenant shall pay Landlord fifty percent (50%)
of the difference between each such payment of rent or other consideration and
the Rent required hereunder. During any period in which an Event of Default (as
defined in Section 14.1) remains uncured, Landlord may, without waiving any
other rights or remedies, collect rent from the assignee, subtenant or occupant
and apply the net amount collected to the Rent herein reserved and apportion any
excess rent so collected in accordance with the terms of the preceding sentence.
Tenant shall continue to be liable as a principal and not as a guarantor or
surety to the same extent as though no assignment or subletting had been made.
Landlord may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to the Lease by assignees of Tenant without
notifying Tenant or any successor of Tenant and without obtaining their consent.
No permitted transfer shall be effective until there has been delivered to
Landlord a counterpart of the transfer instrument in which the transferee agrees
to be and remain jointly and severally liable with Tenant for the payment of
Rent pertaining to the Premises and for the performance of all the terms and
provisions of this Lease relating thereto arising on or after the date of the
transfer. Subject to the provisions hereof and provided Landlord receives thirty
(30) days prior written notice and a true and correct copy of the assignment
instrument. Landlord hereby consents to the assignment of Tenant's interest in
and to this Lease to any wholly owned subsidiary of Tenant.
16. ESTOPPEL ATTORNMENT AND SUBORDINATION.
-------------------------------------
16.1 Estoppel. Within ten (10) days after request by Landlord, Tenant
--------
shall deliver an estoppel certificate duly executed (and acknowledged if
required by any lender), in the form attached hereto as Exhibit G, or in such
---------
other form as may be acceptable to the lender, which form may include some or
all of the provisions contained in Exhibit G, to any proposed mortgagee,
---------
purchaser or Landlord. Tenant's failure to deliver said statement in such time
period shall be an Event of Default hereunder and shall be conclusive upon
Tenant that (a) this Lease is in full force and effect, without modification
except as may be represented by Landlord; (b) there are no uncured defaults in
Landlord's performance and Tenant has no right of offset, counterclaim or
deduction against Rent hereunder; and (c) no more than one month's Base Rent has
been paid in advance. If any financier should require that this Lease be amended
(other than in the description of the Premises, the Term, the Permitted Use, the
Rent or as will substantially, materially and adversely affect the rights of
Tenant). Landlord shall give written notice thereof to Tenant, which notice
shall be accompanied by a Lease supplement embodying such amendments. Tenant
shall, within ten ( 10) days after the receipt of Landlord's notice, meet and
confer with Landlord in good faith with respect to such proposed amendments.
16.2 Subordination. This Lease shall be subject and subordinate to all
-------------
ground leases and the lien of all mortgages and deeds of trust which now or
hereafter affect the Premises or the Project or Landlord's interest therein, and
all amendments thereto, all without the necessity of Tenant's executing further
instruments to effect such subordination. If requested, Tenant shall execute and
deliver to Landlord within ten (10) days after Landlord's request whatever
documentation that may
11.
<PAGE>
reasonably be required to further effect the provisions of this paragraph. With
respect to any new mortgage or deed of trust encumbering the Premises after the
date of this Lease, Landlord shall use its best efforts to obtain from such
mortgagee or beneficiary under the deed of trust a non-disturbance agreement in
such party's usual and customary form protecting the interest of Tenant
hereunder.
16.3 Attornment. In the event of a foreclosure proceeding, the exercise of
----------
the power of sale under any mortgage or deed of trust or the termination of a
ground lease, Tenant shall, if requested, attorn to the purchaser thereupon and
recognize such purchaser as Landlord under this Lease; provided, however,
Tenant's obligation to attorn to such purchaser shall be conditioned upon
Tenant's receipt of a non-disturbance agreement protecting the interest of
Tenant hereunder.
17. MISCELLANEOUS.
-------------
17.1 General.
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17.1.1 Entire Agreement. This Lease sets forth all the agreements
----------------
between Landlord and Tenant concerning the Premises; and there are no agreements
either oral or written other than as set forth herein.
17.1.2 Time of Essence. Time is of the essence of this Lease.
---------------
17.1.3 Attorneys' Fees. In any action or proceeding which either
---------------
party brings against the other to enforce its rights hereunder, the unsuccessful
party shall pay all costs incurred by the prevailing party, including reasonable
attorneys' fees, which amounts shall be a part of the judgment in said action or
proceeding.
17.1.4 Severability. If any provision of this Lease or the
------------
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
17.1.5 Law. This Lease shall be construed and enforced in
---
accordance with the laws of the state in which the Premises are located.
17.1.6 No Option. Submission of this Lease to Tenant for
---------
examination or negotiation does not constitute an option to lease, offer to
lease or a reservation of, or option for, the Premises; and this document shall
become effective and binding only upon the execution and delivery hereof by
Landlord and Tenant.
17.1.7 Successors and Assigns. This Lease shall be binding upon
----------------------
and inure to the benefit of the successors and assigns of Landlord and, subject
to compliance with the terms of Section 15, Tenant.
17.1.8 Third Party Beneficiaries. Nothing herein is intended to
-------------------------
create any third party benefit.
17.1.9 Memorandum of Lease. Tenant shall not record this Lease or
-------------------
a short form memorandum hereof without Landlord's prior written consent.
17.1.10 Agency Partnership or Joint Venture. Nothing contained
-----------------------------------
herein nor any acts of the parties hereto shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture by the parties hereto
or any relationship other than the relationship of landlord and tenant.
17.1.11 Merger. The voluntary or other surrender of this Lease by
------
Tenant or a mutual cancellation thereof or a termination by Landlord shall not
work a merger and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
17.1.12 Headings. Section headings have been inserted solely as a
--------
matter of convenience and are not intended to define or limit the scope of any
of the provisions contained therein.
17.2 Signs. All signs and graphics of every kind visible in or from public
-----
view or the exterior of the Premises shall be subject to Landlord's prior
written approval and shall be subject to any applicable governmental laws,
ordinances, and regulations and in compliance with Landlord's signage program.
Tenant shall remove all such signs and graphics prior to the termination of this
Lease. Such installations and removals shall be made in such manner as to avoid
injury or defacement of the Premises; and Tenant shall repair any injury or
defacement, including without limitation, discoloration caused by such
installation or removal.
17.3 Waiver. No waiver of any default or breach hereunder shall be implied
------
from any omission to take action on account thereof, notwithstanding any custom
and practice or course of dealing. No waiver by either party of any provision
under this Lease shall be effective unless in writing and signed by such party.
No waiver shall affect any default other than
12.
<PAGE>
the default specified in the waiver and then such waiver shall be operative only
for the time and to the extent therein stated. Waivers of any covenant shall not
be construed as a waiver of any subsequent breach of the same.
17.4 Financial Statements. Tenant shall provide to any lender, purchaser
--------------------
or Landlord, within ten (10) days after request, a current, accurate, certified
financial statement for Tenant and Tenant's business prepared under generally
accepted accounting principles consistently applied and such other certified
financial information as may be reasonably required by Landlord, purchaser or
any lender of either.
17.5 Limitation of Liability. The obligations of Landlord under this Lease
-----------------------
are not personal obligations of the individual partners, directors, officers,
shareholders, agents or employees of Landlord; and Tenant shall look solely to
the Premises for satisfaction of any liability of Landlord and shall not look to
other assets of Landlord nor seek recourse against the assets of the individual
partners, directors, officers, shareholders, agents or employees of Landlord.
Whenever Landlord transfers its interest, Landlord shall be automatically
released from further performance under this Lease and from all further
liabilities and expenses hereunder and the transferee of Landlord's interest
shall assume all liabilities and obligations of Landlord hereunder from the date
of such transfer.
17.6 Notices. All notices to be given hereunder shall be in writing and
-------
mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile
(immediately followed by one of the preceding methods), to Landlord's Address
and Tenant's Address, or to such other place as Landlord or Tenant may designate
in a written notice given to the other party. Notices shall be deemed served
upon the earlier of receipt or three (3) days after the date of mailing.
17.7 Brokerage Commission. Landlord shall pay a brokerage commission to
--------------------
Broker in accordance with a separate agreement between Landlord and Broker.
Tenant warrants to Landlord that Tenant's sole contact with Landlord or with the
Premises in connection with this transaction has been directly with Landlord and
Broker, and that no other broker or finder can properly claim a right to a
commission or a finder's fee based upon contacts between the claimant and
Tenant. Tenant agrees to indemnify and hold Landlord harmless from any claims or
liability, including reasonable attorneys' fees, in connection with a claim by
any person for a real estate broker's commission, finder's fee or other
compensation based upon any statement, representation or agreement of Tenant,
and Landlord agrees to indemnify and hold Tenant harmless from any such claims
or liability, including reasonable attorneys' fees, based upon any statement,
representation or agreement of Landlord.
17.8 Authorization. Each individual executing this Lease on behalf of
-------------
Tenant represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of Tenant and that such execution is binding upon
Tenant.
17.9 Holding Over; Surrender.
-----------------------
17.9.1 Holding Over. If Tenant holds over the Premises or any part
------------
thereof after expiration of the Term, such holding over shall constitute a
month-to-month tenancy, at a rent equal to one hundred twenty-five percent
(125%) of the Base Rent in effect immediately prior to such holding over and
shall otherwise be on all the other terms and conditions of this Lease. This
paragraph shall not be construed as Landlord's permission for Tenant to hold
over. Acceptance of Rent by Landlord following expiration or termination shall
not constitute a renewal of this Lease or extension of the Term except as
specifically set forth above. If Tenant falls to surrender the Premises upon
expiration or earlier termination of this Lease, Tenant shall indemnify and hold
Landlord harmless from and against all loss or liability resulting from or
arising out of Tenant's failure to surrender the Premises, including, but not
limited to, any amounts required to be paid to any tenant or prospective tenant
who was to have occupied the Premises after the expiration or earlier
termination of this Lease and any related attorneys' fees and brokerage
commissions.
17.9.2 Surrender. Upon the termination of this Lease or Tenant's
---------
right to possession of the Premises, Tenant will surrender the Premises,
together with all keys, in good condition and repair, reasonable wear and tear
excepted. Conditions existing because of Tenant's failure to perform
maintenance, repairs or replacements shall not be deemed "reasonable wear and
tear."
17.10 Joint and Several. If Tenant consists of more than one person, the
-----------------
obligation of all such persons shall be joint and several.
17.11 Covenants and Conditions. Each provision to be performed by Tenant
------------------------
hereunder shall be deemed to be both a covenant and a condition.
17.12 Addenda. The Addenda attached hereto, if any, and identified with
-------
this Lease are incorporated herein by this reference as if fully set forth
herein.
13.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
set forth above.
"Landlord" "Tenant"
CATELLUS DEVELOPMENT CORPORATION, MOHAWK INDUSTRIES. INC.,
a Delaware corporation a Georgia corporation
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ [SIGNATURE ILLEGIBLE]
----------------------------- ------------------------------
Its: VP Its: PRESIDENT
------------------------- --------------------------
Date: 12-4-95 Date: 11-28-95
--------------------------- -------------------------
14.
<PAGE>
ADDENDUM TO LEASE
-----------------
THIS ADDENDUM TO LEASE ("Addendum") is attached to and constitutes an
integral part of the Lease between CATELLUS DEVELOPMENT CORPORATION, as
Landlord, and MOHAWK INDUSTRIES, INC., as Tenant. The terms of this Addendum
shall be incorporated in the Lease for all purposes. In the event of a conflict
between the provisions of the Lease and the provisions of this Addendum, this
Addendum shall control.
THE FOLLOWING NEW SECTIONS ARE HEREBY ADDED TO THE LEASE WHICH STATE IN THEIR
ENTIRETY AS FOLLOWS:
18. Force Majeure Event. For purposes of this Lease, the term "Force Majeure
-------------------
Event" shall mean and include the following: any delay caused by any action,
inaction, order, ruling, moratorium, regulation, statute, condition or other
decision of any governmental agency having jurisdiction over any portion of the
Project, over the construction anticipated to occur thereon or over any uses
thereof, or by fire, flood, inclement weather, strikes, lockouts or other labor
or industrial disturbance (whether or not on the part of agents or employees of
either party hereto engaged in the construction of the Premises), civil
disturbance, order of any government, court or regulatory body claiming
jurisdiction or otherwise, act of public enemy, war, riot, sabotage, blockade,
embargo, failure or inability to secure materials, supplies or labor through
ordinary sources by reason of shortages or priority, discovery of hazardous or
toxic materials, earthquake, or other natural disaster, or any cause whatsoever
beyond the reasonable control (excluding financial inability) of the party whose
performance is required, or any of its contractors or other representatives,
whether or not similar to any of the causes hereinabove stated.
19. CPI Adjustment. Effective as of the first day of the thirty-first (31st)
--------------
month of the Term (the "CPI Adjustment Date"), the Base Rent in effect
immediately before the CPI Adjustment Date shall be increased, in accordance
with the percentage increase, if any, in the Consumer Price Index, to an amount
which is equal to the product of (i) the Index (as hereinafter defined) for the
third month preceding the CPI Adjustment Date, multiplied by (ii) the initial
Base Rent set forth in the Basic Lease Information, divided by (iii) the Basic
Index (as hereinafter defined); provided, however, in no event shall the Base
Rent (as adjusted) in effect immediately prior to the CPI Adjustment Date be
decreased, nor shall it be increased as a result of a CPI adjustment by more
than six percent (6%) per Lease Year, compounded annually. The "Index" shall
mean the Consumer Price Index, All Items, 1982-1984 = 100, All Urban Consumers,
for the Los Angeles/Riverside/Anaheim Area, as published by the United States
Department of Labor, Bureau of Labor Statistics, or its successor index, and the
"Basic Index" shall mean the Index published for the third month preceding the
Commencement Date. The adjusted Base Rent shall be rounded to the nearest $1.00.
If the Index required for the calculation specified in this subsection is not
available on the CPI Adjustment Date in question, Tenant shall continue to pay
the same amount of Base Rent payable during the period immediately preceding the
CPI Adjustment Date until the Index is available and the necessary calculation
is made. As soon as such calculation is made, Tenant shall immediately pay to
Landlord the amount of any underpayment of Base Rent for the month(s) that may
have elapsed. In the event the compilation or publication of the Index shall be
transferred to any other governmental department, bureau or agency or shall be
discontinued, the index most nearly the same as the Index shall be used to make
such calculation.
15.
<PAGE>
20. Options to Extend.
-----------------
20.1 Terms of Options. Provided (i) Tenant is not in default under the
----------------
terms of this Lease at the time each renewal option is exercised or at the
commencement of the applicable Extension Term (as hereinafter defined). (ii)
Tenant is occupying at least ninety percent (90%) of the Premises, including any
expansion space, and (iii) Landlord has not given more than two (2) notices of
default in any twelve (12) month period for nonpayment of monetary obligations,
Tenant shall have two (2) options to renew this Lease for an additional period
of sixty (60) months each (the "First and Second Extension Terms"). The
Extension Terms shall be on all the terms and conditions of this Lease, except
that Landlord shall have no additional obligation for free rent, leasehold
improvements or for any other tenant inducements for the Extension Terms. Base
Rent shall be increased (but not decreased) as set forth below. There shall be
no additional extension terms beyond the Extension Terms set forth herein.
Tenant must exercise its options to extend this Lease by giving Landlord written
notice of its election to do so not less than one hundred eighty (180) days
prior to the end of the initial Term, or the First Extension Term, as
applicable. Any notice not given in a timely manner shall be void, and Tenant
shall be deemed to have waived its extension rights. The extension options set
forth herein are personal to Tenant and shall not be included in any assignment
of this Lease.
20.2 Base Rent During First Extension Term. Effective as of the first day
-------------------------------------
of the First Extension Term, and on the first day of the thirty-first (31st)
month thereafter (the "First Extension CPI Adjustment Date(s)"), the monthly
Base Rent shall be increased in accordance with the percentage increase, if any,
in the Consumer Price Index, calculated in the manner set forth in Section 19;
provided, however, in no event shall the Base Rent (as adjusted) in effect
immediately prior to the applicable First Extension CPI Adjustment Date be
decreased, nor shall it be increased as a result of a CPI adjustment by more
than six percent (6%) per Lease Year, compounded annually.
20.3 Base Rent During Second Extension Term. The monthly Base Rent payable
--------------------------------------
for the first thirty (30) months of the Second Extension Term shall be increased
(but not decreased) to 98% of the fair market rental rate ("Market Rent") to be
determined as follows:
20.3.1 Agreement on Base Rent. Landlord and Tenant shall have thirty
----------------------
(30) days after Landlord receives the exercise notice in which to agree on the
Base Rent during the Second Extension Term. Notwithstanding anything in this
Section 20.3 to the contrary, in no event shall the Base Rent for the Second
Extension Term be less than the Base Rent in effect immediately prior to the
Second Extension Term.
20.3.2 Appraisal. If Landlord and Tenant are unable to agree upon the
---------
Base Rent for the Second Extension Term within such thirty (30) day period, then
within fifteen (15) days after the expiration of the thirty (30) day period,
each party, by giving notice to the other party, shall appoint a real estate
appraiser who is a current member of the American Institute of Real Estate
Appraisers, with at least five (5) years of experience appraising building space
comparable to the Premises in the city and county where the Premises is located
to determine the Market Rent. Market Rent shall mean the monthly amount per
rentable square foot in the Premises that a willing, non-equity new tenant would
pay and a willing landlord would accept at arm's length for space in a
comparable building or buildings, with comparable tenant improvements, in a
comparable location, giving appropriate consideration to monthly rental rates
per rentable square foot, the presence or absence of rent escalation clauses
such as operating expense and tax pass-throughs, length of lease term, size and
location of premises being leased and other
16.
<PAGE>
generally applicable terms and conditions of tenancy for a similar building or
buildings. If the two (2) appraisers are unable to agree on the Market Rent for
the Second Extension Term within twenty (20) days, they shall select a third
appraiser meeting the qualifications stated in this Section within five (5) days
after the last day the two (2) appraisers are given to set the Market Rent for
the Second Extension Term. The third appraiser, however selected, shall be a
person who has not previously acted in any capacity for either party. Within
twenty (20) days after the selection of the third appraiser, a majority of the
appraisers shall set the Market Rent for the Second Extension Term. If a
majority of the appraisers is unable to set the Market Rent within the twenty
(20) day period, the two (2) closest appraisals shall be added together and
their total divided by two (2). The resulting quotient shall be the Market Rent
for the first thirty (30) months of the Second Extension Term. Each party shall
be responsible for the costs, charges and fees of the appraiser appointed by
that party plus one-half of the cost of the third appraiser.
20.3.3 Amendment of Lease. Immediately after the Base Rent is
------------------
determined pursuant to this Section 20.3, Landlord and Tenant shall execute an
amendment to this Lease stating the new Base Rent in effect.
20.3.4 Base Rent Increase During Second Extension Term. Effective as
-----------------------------------------------
of the first day of the thirty-first (31st) month of the Second Extension Term
(the "Second Extension CPI Adjustment Date"), the monthly Base Rent shall be
increased in accordance with the percentage increase, if any, in the Consumer
Price Index, calculated in the manner set forth in Section 19; except that the
Index shall be multiplied by the monthly Base Rent payable during the first
thirty (30) months of the Second Extension Term, and the Basic Index shall mean
the Index published for the third month preceding the commencement of the Second
Extension Term; provided, however, in no event shall the Base Rent in effect
after the Second Extension CPI Adjustment Date be less than the Base Rent in
effect immediately preceding the Second Extension CPI Adjustment Date.
LANDLORD'S INITIALS ?? TENANT'S INITIALS JL
----- -----
17.
<PAGE>
EXHIBIT A
[PLAN APPEARS HERE]
<PAGE>
EXHIBIT B
---------
WORK LETTER
-----------
Tenant Improvements.
- -------------------
1.1 Landlord shall construct or cause to be constructed in and to the Premises,
at Landlord's cost and expense, not to exceed One Hundred Eighty Thousand
Dollars ($180,000.00), certain tenant improvements, including space planning,
permits and related costs (the "Tenant Improvements"), substantially in
accordance with the space plan or other appropriate exhibit (the "Space Plan")
attached hereto, marked Exhibit B-1 and made a part hereof and in accordance
-----------
with Landlord's current building standards. If said Exhibit is not attached, the
Space Plan shall be prepared by Landlord and submitted to Tenant for approval,
which approval shall be given within five (5) days following receipt thereof,
and evidenced by Tenant's signature thereon. A failure by Tenant to respond
within said five (5) day period shall be deemed approval. Upon approval by both
parties, the Space Plan shall be deemed incorporated herein by reference,
although not attached hereto.
1.2 The Tenant Improvements shall include costs approved by Landlord and
associated with the design, permit process and construction (including, a fee
equal to five percent (5%) of the total cost thereof as reimbursement for the
expense of Landlord's administration and coordination) of the Tenant
Improvements, including but not limited to, architect's fees, plan check and
permit fees, and fees for utility and telephone service hook-ups. The Tenant
Improvements shall not include any improvements which Landlord, in its sole
discretion, considers specialized, or any equipment or trade fixtures of Tenant,
nor any improvements not shown on the Space Plan which Tenant may desire or
governing agencies may require.
1.3 In the event that Tenant desires any change in the Tenant Improvements which
is reasonable and practical (which shall be conclusively determined by the
Architect), such change may only be requested by the delivery to Landlord by
Tenant of a proposed written "Change Order" specifically setting forth the
requested change. Landlord shall have five (5) business days from the receipt of
the proposed Change Order to provide Tenant with the Architect's disapproval of
the proposed change stating the reason(s) for such disapproval, or if the
Architect approves the proposed change, the following items: (i) a summary of
any increase in the cost caused by such change (the "Change Order Cost"), (ii) a
statement of the number of days of any delay caused by such proposed change (the
"Change Order Delay"), and (iii) a statement of the cost of the Change Order
Delay (the "Change Order Delay Expense"), which Change Order Delay Expense shall
be the product of the number of days of delay multiplied by $2,500.00. Tenant
shall then have three (3) business days to approve the Change Order Cost, the
Change Order Delay and the Change Order Delay Expense. If Tenant gives timely
written notice of approval of the Change Order Cost, the Change Order Delay and
the Change Order Delay Expense, Landlord shall promptly execute the Change Order
and cause the appropriate changes to the Plans and Specifications to be made.
Tenant's approval shall include full payment of the Change Order Cost and Change
Order Delay Expense. If Tenant fails to respond to Landlord within said three
(3) business day period, the Change Order Cost, the Change Order Delay and the
Change Order Delay Expense shall be deemed disapproved by Tenant and Landlord
shall have no further obligation to perform any work set forth in the proposed
Change Order. The Change Order Cost shall include all costs associated with the
Change Order, including, without limitation, architectural fees and construction
costs, as conclusively determined by the Architect and the General Contractor,
respectively, together with a five percent (5%) fee of these costs as
reimbursement for the expense of administration and coordination of such Change
Order by Landlord. The Change Order Delay shall include all delays caused by the
Change Order, including, without limitation, all architectural and construction
delays, as conclusively determined by the Architect and the General Contractor,
respectively.
1.4 Landlord hereby to assign to Tenant, upon request, the benefit of any and
all contractor's and manufacturer's warranties received by Landlord in
connection with the construction of the Tenant Improvements.
LANDLORD'S INITIALS ?? TENANT'S INITIALS _____
-----
<PAGE>
EXHIBIT B-1
-----------
SPACE PLAN
----------
<PAGE>
EXHIBIT C
---------
COMMENCEMENT DATE MEMORANDUM
----------------------------
With respect to that certain lease ("Lease") dated ______, 19__ ,
between ____________________________, a _____________________ ("Tenant"), and
Catellus Development Corporation, a Delaware corporation ("Landlord"), whereby
Landlord leased to Tenant and Tenant leased from Landlord approximately ________
rentable square feet of the building located at ______________________
("Premises"), Tenant hereby acknowledges and certifies to Landlord as follows:
(1) Landlord delivered possession of the Premises to Tenant in a
Substantially completed condition on ________________________
("Possession Date");
(2) The Commencement Date is______________________________.
(3) The Premises contain ________________ square feet of space; and
(4) Tenant has accepted and is currently in possession of the Premises and
the Premises are acceptable for Tenant's use.
IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this ____
day of ________________, 199__ .
"Tenant"
__________________________
a ________________________
By: _____________________
Its: ____________________
By: _____________________
Its: ____________________
<PAGE>
[LOGO] CERTIFICATE OF INSURANCE. ISSUE DATE (MM/DD/YY)
PRODUCER
- --------------------------------------------------------------------------------
THIS CERTIFICATE IS ISSUED AS A MATTER OF
INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE
CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT
AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY
THE POLICIES BELOW.
-------------------------------------------------
COMPANIES AFFORDING COVERAGE
(Must have "Best" Rating or "A B" or better)
-------------------------------------------------
COMPANY
LETTER A
-------------------------------------------------
COMPANY
- ----------------------------
INSURED LETTER B
-------------------------------------------------
COMPANY
LETTER C
-------------------------------------------------
COMPANY
LETTER D
-------------------------------------------------
COMPANY
LETTER E
- --------------------------------------------------------------------------------
COVERAGES
- --------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT POLICIES OF INSURANCE LISTED BELOW HAVE SEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR
OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY
PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS
SUBJECT TO ALL THE TERMS, EXCLUSIONS, AND CONDITIONS OF SUCH POLICIES.
LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CO TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE POLICY EXPIRATION ALL LIMITS IN THOUSANDS
LTR DATE (MM/DD/YY) DATE (MM/DD/YY)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GENERAL LIABILITY GENERAL AGGREGATE $2,000
-----------------------------------------
[X] COMMERCIAL GENERAL LIABILITY PRODUCTS-COMP/OPS AGGREGATE $2,000
-----------------------------------------
[_] [_] CLAIMS MADE [x] OCCURRENCE PERSONAL AND ADVERTISING xxx $2,000
-----------------------------------------
[X] OWNERS & CONTRACTORS PROCECTIVE EACH OCCURRENCE $2,000
-----------------------------------------
[X] RAILROAD Prot. Liab. FIRE DAMAGE (ANY ONE FIRE) $ 50
------------------------------- -----------------------------------------
[X] X C 11 Included MEDICAL EXPENSE (ANY ONE PERSON)$ 5
-------------------------------
-----------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
[X] ANY AUTO CK.
$2000
[_] ALL OWNED AUTOS BODILY
INJURY
PER PERSON $
-----------------------------------------
[_] SCHEDULED AUTOS
[X] HIRED AUTOS BODILY
INJURY
PER
ACCIDENT $
-----------------------------------------
[X] NON-OWNED AUTOS
[_] GARAGE LIABILITY PROPERTY
DAMAGE $
[_] _______________________________
- ------------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY EACH AGGREGATE
[X] Following Form OCCURRENCE
[_]OTHER THAN UMBRELLA FORM $ $
- ------------------------------------------------------------------------------------------------------------------------------------
STATUTORY
-----------------------------------------
WORKERS' COMPENSATION $1, 000 (EACH ACCIDENT)
-----------------------------------------
AND $1, 000 (DISEASE POLICY LIMIT)
-----------------------------------------
EMPLOYERS' LIABILITY $1, 000 (DISEASE EACH EMPLOYEE)
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/RESTRICTIONS/SPECIAL ITEMS
Certificate holder is named as additional insured as respects:
_______________________________________________________________ (Location)
REFER to Additional Insured endorsement attached. Aggregate limits apply
per location.
- --------------------------------------------------------------------------------
CERTIFICATE HOLDER CANCELLATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
CATELLUS DEVELOPMENT CORPORATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED
1065 N. PACIFICENTER DRIVE , SUITE 200 OR LIMITS REDUCED BEFORE THE EXPIRATION DATE THEREOF. THE ISSUING
ANAHEIM, CA 92806 COMPANY WILL ENDEAVOR TO MAIL 60 DAYS WRITTEN NOTICE TO THE
ATTN: ASSET MANAGEMENT CERTIFICATE HOLDER NAMED TO THE LEFT.
FAX (714) 237--7416
------------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EVIDENCE OF PROPERTY INSURANCE
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN
FORCE, AND CONVEYS ALL, THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE
POLICY. (MUST HAVE "BEST" RATING OF "A 8" OR BETTER
<TABLE>
<S> <C> <C>
[ILLEGIBLE] COMPANY
CODE SUB--CODE
LOAN NUMBER POLICY NUMBER
INSURED EFFECTIVE DATE (MM/DD/YY) EXPIRATION DATE (MM/DD/YY)
CONT. UNTIL
TERMINATED
IF CHECKED
THIS REPLACES PRIOR EVIDENCE DATED:
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
PROPERTY INFORMATION
LOCATION/DESCRIPTION
(provide address of leased PREMISES)
- -----------------------------------------------------------------------------
COVERAGE INFORMATION
<TABLE>
<CAPTION>
COVERAGE/PERSONAL/FORMS AMOUNT OF INSURANCE DEDUCTIBLE
<S> <C> <C>
Business Personal. Property (including Tenants Improvements $ ________________ $ _____________
and Betterments, if applicable)
Business Income (100% contribution) $ ________________ $ _____________
Boiler & Machinery (if applicable) $ ________________ $ _____________
Warehousers legal liability (if applicable) $ ________________ $ _____________
Replacement Cost Coverage, special form
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
REMARKS INCLUDING SPECIAL CONDITIONS:
Waiver of Subrogation provision included (per lease)
- ------------------------------------------------------------------------------
CANCELLATION
THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR
EACH POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL
GIVE THE ADDITIONAL INTEREST IDENTIFIED BELOW 60 days WRITTEN NOTICE.
AND WILL SEND NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD
AFFECT THAT INTEREST, IN ACCORDANCE WITH THE POLICY PROVISIONS OR AS
REQUIRED BY LAW.
- --------------------------------------------------------------------------------
ADDITIONAL INTEREST
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AND ADDRESS NATURE OF INTEREST
MORTGAGEE ADDITIONAL INSURED
CATELLUS DEVELOPMENT CORPORATION
1065 N. PACIFICENTER DRIVE, SUITE 200
ANAHEIM, CA 92806 LOSS PAYEE X (OTHER) Landlord
-----------------------------------------------------------------
ATTN: ASSET MANAGEMENT SIGNATURE OF AUTHORIZED AGENT OF COMPANY
FAX 714) 237-7416
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT E
---------
PROHIBITED USES
---------------
The following types of operations and activities are expressly prohibited on the
Premises:
1. automobile/truck maintenance, repair or fueling;
2. battery manufacturing or reclamation;
3. ceramics and jewelry manufacturing or finishing;
4. chemical (organic or inorganic) storage, use or manufacturing;
5. drum recycling;
6. dry cleaning;
7. electronic components manufacturing;
8. electroplating and metal finishing;
9. explosives manufacturing, use or storage;
10. hazardous waste treatment, storage, or disposal;
11. leather production, tanning or finishing;
12. machinery and tool manufacturing;
13. medical equipment manufacturing and hospitals;
14. metal shredding, recycling or reclamation;
15. metal smelting and refining;
16. mining;
17. paint, pigment and coating operations;
18. petroleum refining;
19. plastic and synthetic materials manufacturing;
20. solvent reclamation;
21. tire and rubber manufacturing;
22. above- and/or underground storage tanks; and
23. residential use or occupancy.
<PAGE>
EXHIBIT F
---------
CORRECTION ITEMS
----------------
<PAGE>
EXHIBIT G
---------
TENANT ESTOPPEL CERTIFICATE
To: Bank of America National Trust
and Savings Association ("Bank")
Real Estate Industries Division No.____
___________________________________
___________________________________
Attn: _____________________________
Re: Lease Dated:
Current Landlord: ___________________________
Current Tenant: ___________________________
Square Feet Approximately _____________
Floor(s): ___________________________
Located at: ___________________________
_______________________ ("Tenant") hereby certifies that as of __________,
199__.
1. Tenant is the present owner and holder of the tenant's interest under
the lease described above, as it may be amended to date (the "Lease") with
___________________ as Landlord (who is called "Borrower" for the purposes of
this Certificate). (USE THE NEXT SENTENCE IF THE LANDLORD OR TENANT NAMED IN THE
LEASE IS A PREDECESSOR TO THE CURRENT LANDLORD OR TENANT.) [The original
landlord under the Lease was ______________________, and the original tenant
under the Lease was ______________.] The Lease covers the premises commonly
known as (the "Premises") in the building (the "Building") at the address set
forth above.
(CHOOSE ONE OF THE FOLLOWING SECTION 2(a)s BELOW)
-------------------------------------------------
[2. (a) A true, correct and complete copy of the Lease (including all
modifications, amendments, supplements, side letters, addenda and riders of and
to it) is attached to this Certificate as Exhibit A.]
---------
[2 (a) The attached Exhibit A accurately identifies the Lease and all
---------
modifications, amendments, supplements, side letters, addenda and riders of and
to it.]
(b) (IF APPLICABLE) [The Lease provides that in addition to the
Premises, Tenant has the right to use or rent ______ [assigned/unassigned]
parking spaces near the Building or in the garage portion of the building during
the term of the Lease.]
(c) The term of the Lease commenced on _________ 199__ and will
expire on ____________, ___, including any presently exercised option or renewal
term. (CHOOSE ONE OF THE FOLLOWING TWO SENTENCES:) [Tenant has no option or
------------------------------------------
right to renew, extend or cancel the Lease, or to lease additional space in the
Premises or Building, or to use any parking (IF APPLICABLE) [other than that
-------------
specified in Section 2(b) above].] [Except as specified in Paragraph(s) _______
of the Lease (copy attached), Tenant has no option or right to renew, extend or
cancel the Lease, or to lease additional space in the Premises or Building, or
to use any parking (IF APPLICABLE) [other than that specified in Section 2(b)
-------------
above].]
(CHOOSE ONE OF THE FOLLOWING SECTION 2(d)s)
-----------------------------------------
[(d) Tenant has no option or preferential right to purchase all or any
part of the Premises (or the land of which the Premises are a part). Tenant has
no right or interest with respect to the Premises or the Building other than as
Tenant under the Lease.]
<PAGE>
[(d) Except as specified in Paragraph(s) ____________ of the Lease
(copy attached), Tenant has no option or preferential right to purchase all or
any part of the Premises (or the land of which the Premises are a part). Except
for the foregoing, Tenant has no right or interest with respect to the Premises
or the Building other than as Tenant under the Lease.]
(e) The annual minimum rent currently payable under the Lease is
$________ and such rent has been paid through ________________, 199__. (IF
--
APPLICABLE) [The annual percentage rent currently payable under the Lease is at
- ----------
the rate of and such rent has been paid through _______________, 199__.]
(f) (IF APPLICABLE) [Additional rent is payable under the Lease for
-------------
(i) operating, maintenance or repair expenses, (ii) property taxes, (iii)
consumer price index cost of living adjustments, or (iv) percentage of gross
sales adjustments (i.e., adjustments made based on underpayments of percentage
rent). Such additional rent has been paid in accordance with Borrower's rendered
bills through _______________, 199__. The base year amounts for additional
rental items are as follows: (1) operating, maintenance or repair expenses
$______________ (2) property taxes $____________, and (3) consumer price index
______________ (please indicate base year CPI level).]
(g) Tenant has made no agreement with Borrower or any agent,
representative or employee of Borrower concerning free rent, partial rent,
rebate of rental payments or any other similar rent concession (IF APPLICABLE)
-------------
(except as expressly set forth in Paragraph(s) _____ of the Lease (copy
attached)].
(h) Borrower currently holds a security deposit in the amount of
$___________ which is to be applied by Borrower or returned to Tenant in
accordance with Paragraph(s) of the Lease. Tenant acknowledges and agrees that
bank shall have no responsibility or liability for any security deposit, except
to the extent that any security deposit shall have been actually received by
Bank.
3. (a) The Lease constitutes the entire agreement between Tenant and
Borrower with respect to the Premises, has not been modified changed, altered or
amended and is in full force and effect in the form (CHOOSE ONE) [attached
----------
as/described in] Exhibit A. There are no other agreements, written or oral,
which affect Tenant's occupancy of the Premises.
(b) All insurance required of Tenant under the Lease has been provided
by Tenant and all premiums have been paid.
(c) To the best knowledge of Tenant, no party is in default under the
Lease. To the best knowledge of Tenant, no event has occurred which, with the
giving of notice or passage of time, or both, would constitute such a default.
(d) The interest of Tenant in the Lease has not been assigned or
encumbered. Tenant is not entitled to any credit against any rent or other
charge or rent concession under the Lease except as set forth in the Lease. No
rental payments have been made more than one month in advance.
4. All contributions required to be paid by Borrower to date for
improvements to the Premises have been paid in full and all of Borrower's
obligations with respect to tenant improvements have been fully performed.
Tenant has accepted the Premises, subject to no conditions other than those set
forth in the Lease.
5. Neither Tenant nor any guarantor of Tenant's obligations under the
Lease is the subject of any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships.
6. (a) As used here. "Hazardous Substance" means any substance, material
or waste (including petroleum and petroleum products) which is designated,
classified or regulated as being "toxic" or "hazardous" or a "pollutant" or
which is similarly designated, classified or regulated, under any federal, state
or local law, regulation or ordinance.
(b) Tenant represents and warrants that it has not used, generated,
released, discharged, stored or disposed of any Hazardous Substances on, under,
in or about the Building or the land on which the Building is located (IF
--
APPLICABLE) [, other than Hazardous Substances used in the ordinary and
- -----------
commercially reasonable course of Tenant's business in compliance with all
applicable laws]. (IF APPLICABLE) [Except for such commercially reasonable use
-------------
by Tenant,] Tenant has no actual knowledge that any Hazardous Substance is
present, or has been used, generated, released, discharged, stored or disposed
of by any party, on, under, in or about such Building or land.
2
<PAGE>
7. Tenant hereby acknowledges that Borrower (CHOOSE ONE) [intends to
----------
encumber/has encumbered] the property containing the Premises with a Deed of
Trust in favor of Bank. Tenant acknowledges the right of Borrower, Bank and any
and all of Borrower's present and future lenders to rely upon the statements and
representations of Tenant contained in this Certificate and further acknowledges
that any loan secured by any such Deed of Trust or further deeds of trust will
be made and entered into in material reliance on this Certificate.
8. Tenant hereby agrees to furnish Bank with such other and further
estoppel as Bank may reasonably request.
________________________
By:_____________________
Name:___________________
Title:__________________
3
<PAGE>
EXHIBIT 10.12
INDUSTRIAL LEASE AGREEMENT
DATE: NOVEMBER 27, 1996
BETWEEN
CP-REGENCY BUSINESS PARK, LTD.,
A TEXAS LIMITED PARTNERSHIP
AND
ALADDIN MANUFACTURING CORPORATION,
A DELAWARE CORPORATION
(A DIVISION OF MOHAWK CARPET CORPORATION, INC.)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - DEFINITIONS...................................................................... 1
ARTICLE II - LEASE GRANT..................................................................... 1
ARTICLE III- CONSTRUCTION OF LEASEHOLD IMPROVEMENTS.......................................... 2
Section 3.1 Landlord's Improvements..................................................... 2
Section 3.2 Leasehold Improvements...................................................... 2
Section 3.3 Construction Guaranty....................................................... 3
ARTICLE IV - RENT............................................................................ 3
Section 4.1 Payment of Rent............................................................. 3
Section 4.2 Periodic Payment of Reimbursable Expenses; Adjustments...................... 3
Section 4.3 Rent Adjustment............................................................. 3
Section 4.4 [INTENTIONALLY OMITTED]..................................................... 4
Section 4.5 Survival of Obligations..................................................... 4
Section 4.6 Delinquent Payments......................................................... 4
Section 4.7 Independent Obligations..................................................... 4
ARTICLE V - OTHER ASSESSMENTS................................................................ 4
Section 5.1 Payment of Impositions...................................................... 4
Section 5.2 Other Impositions........................................................... 4
Section 5.3 Landlord's Right to Contest................................................. 5
ARTICLE VI - UTILITIES....................................................................... 5
ARTICLE VII - USE; COMPLIANCE WITH LAWS...................................................... 5
Section 7.1 Permitted Use............................................................... 5
Section 7.2 Hazardous Materials......................................................... 5
Section 7.3 Compliance with Laws and Ordinances......................................... 6
Section 7.4 Compliance with Permitted Encumbrances...................................... 7
ARTICLE VIII - REPAIRS AND MAINTENANCE....................................................... 7
Section 8.1 By Landlord................................................................. 7
Section 8.2 By Tenant................................................................... 7
Section 8.3 Prohibition Against Waste................................................... 7
Section 8.4 Landlord's Right so Effect Repairs.......................................... 7
Section 8.5 Misuse or Neglect........................................................... 7
Section 8.6 Maintenance/Service Contracts............................................... 8
Section 8.7 Common Area................................................................. 8
ARTICLE IX - ALTERATIONS AND IMPROVEMENTS.................................................... 9
ARTICLE X - INDEPENDENT OBLIGATIONS.......................................................... 9
ARTICLE XI - ASSIGNMENT AND SUBLETTING....................................................... 10
ARTICLE XII - LIABILITY...................................................................... 10
ARTICLE XIII - MORTGAGES..................................................................... 11
ARTICLE XIV - INSPECTION..................................................................... 11
ARTICLE XV - INSURANCE; WAIVER OF SUBROGATION................................................ 11
ARTICLE XVI - DESTRUCTION AND RESTORATION.................................................... 12
ARTICLE XVII - CONDEMNATION.................................................................. 12
ARTICLE XVIII - HOLDING OVER................................................................. 13
ARTICLE XIX - TAXES ON TENANT'S PROPERTY..................................................... 13
ARTICLE XX - EVENTS OF DEFAULT............................................................... 13
ARTICLE XXI - LANDLORD'S REMEDIES............................................................ 13
ARTICLE XXII - SURRENDER OF PREMISES......................................................... 14
ARTICLE XXIII - ATTORNEYS' FEES.............................................................. 14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE XXIV - [INTENTIONALLY OMITTED]....................................................... 15
ARTICLE XXV - MECHANIC'S LIEN................................................................ 15
ARTICLE XXVI - SIGNS......................................................................... 15
ARTICLE XXVII - NOTICES...................................................................... 15
ARTICLE XXVIII - SEPARABILITY................................................................ 16
ARTICLE XXIX - QUIET ENJOYMENT............................................................... 16
ARTICLE XXX - EXISTENCE OF BROKER............................................................ 16
ARTICLE XXXI - TENANT'S REMEDIES............................................................. 16
ARTICLE XXXII - ESTOPPEL CERTIFICATES........................................................ 17
ARTICLE XXXIII - NOTICE TO LENDER............................................................ 17
ARTICLE XXXIV - LANDLORD APPROVALS........................................................... 17
ARTICLE XXXV - JOINT AND SEVERAL LIABILITY................................................... 17
ARTICLE XXXVI - GENDER....................................................................... 18
ARTICLE XXXVII - CAPTIONS.................................................................... 18
ARTICLE XXXVIII - ENTIRE AGREEMENT; AMENDMENTS; BINDING EFFECT............................... 18
ARTICLE XXXIX - GOVERNING LAW AND PLACE OF PERFORMANCE....................................... 18
ARTICLE XL - GOOD STANDING/DUE AUTHORIZATION................................................. 18
ARTICLE XLI - MEMORANDUM OF LEASE............................................................ 18
ARTICLE XLII - RENEWAL OPTION................................................................ 19
SCHEDULES AND EXHIBITS
- ----------------------
SCHEDULE 1 - TENANT FINISH CONTRACTORS....................................................... 21
EXHIBIT "A" - LAND........................................................................... 22
EXHIBIT "A-l" - FLOOR PLAN................................................................... 23
EXHIBIT "B" - PERMITTED ENCUMBRANCES......................................................... 25
EXHIBIT "C" - DESIGN CRITERIA................................................................ 26
EXHIBIT "C-1" - PLANS AND SPECIFICATIONS..................................................... 27
EXHIBIT "D" - GUARANTEE...................................................................... 28
</TABLE>
<PAGE>
INDUSTRIAL LEASE AGREEMENT
THIS INDUSTRIAL LEASE AGREEMENT (the "Lease") is made and entered into
by and between the Landlord and Tenant hereinafter named.
ARTICLE I
DEFINITIONS
The following definitions and basic provisions shall be used in
conjunction with and limited by the reference thereto in the provisions of this
Lease:
(a) "Landlord": CP-REGENCY BUSINESS PARK, LTD., a Texas limited
partnership.
(b) "Tenant": ALADDIN MANUFACTURING CORPORATION, a Delaware
corporation (a division of Mohawk Carpet Corporation, Inc., a
Delaware corporation).
(c) "Premises": That portion of the Building (herein so called)
identified on Exhibit "A-1" attached hereto and made a part
hereof, which Building is situated on that certain real property
described on Exhibit "A" attached hereto and made a part hereof
(the "Land"). The Building and the Land are hereinafter
collectively referred to as the "Property".
(d) "Lease Term": A period commencing December 1, 1996 (the
"Commencement Date") and ending on five (5) years and six (6)
months thereafter (the "Expiration Date").
(e) "Basic Rental": $52,413.25 per month.
(f) [INTENTIONALLY OMITTED]
(g) "Permitted Use": Warehousing, cutting and distribution of carpet
and related items (herein, the "Primary Use") and all other lawful
uses permitted by applicable zoning.
(h) "Maximum Rate": The maximum rate of interest permitted by
applicable law or two percent (2%) above the prime rate of
interest, as announced from time to time by NationsBank, N.A. for
its banks in Dallas, Texas, whichever is less.
(i) "Additional Rent": All sums of money, other than Basic Rental,
which become due under Article V, Section 8.7 or Article XV this
Lease, or are otherwise specified to be "Additional Rent" under
this Lease. Basic Rental and Additional Rent shall collectively
constitute the "Rent" or "Rentals" due or to become due under this
Lease and are herein so called.
(j) "Common Area": All areas and facilities that may exist, from time
to time, outside the Building and within the perimeter boundary
line of the Property for the general, non-exclusive use of the
Landlord, the Tenant and other tenants within the Building and
their respective employees, suppliers, shippers, customers and
invitees, including (without limitation, however) parking areas,
loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways, alleys and landscaped areas.
(k) "Tenant's Share": A fraction, the numerator of which is the total
number of square feet of space contained within the Premises and
the denominator of which is the total number of square feet of
space contained within the Building and all other buildings, if
any, on the Property. Under no circumstances shall Tenant's Share
ever exceed Tenant's Share as of the date hereof, which the
parties acknowledge to be 50%.
ARTICLE II
LEASE GRANT
Landlord, in consideration of the Basic Rental to be paid and the other
covenants and agreements to be performed by Tenant and upon the terms and
conditions hereinafter stated, does hereby lease, demise and let unto Tenant the
Premises commencing on the Commencement Date (as defined in Article I(d)
hereof), or as adjusted as hereinafter provided) and ending on the last day of
the Lease Term, unless sooner terminated as herein provided. If this Lease is
executed before the Premises are available and ready for occupancy, and Landlord
cannot deliver possession on the Commencement Date, then Landlord shall not be
deemed to be in default hereunder, and Tenant agrees to accept possession of the
Premises at such time as the Premises are available and ready for occupancy and
such date shall be deemed to be the Commencement Date, and the Expiration Date
set forth in Article I(d) hereof shall be extended for a period equal to the
number of days that the Premises are not available and ready for occupancy
beyond the Commencement Date specified in Article I(d) hereof plus the number of
----
days necessary for the Lease Term to expire on the last day of a month;
provided, however, that if the Leasehold
Initial:
________
INDUSTRIAL LEASE AGREEMENT - Page 1 ________
- --------------------------
<PAGE>
Improvements (as defined in Section 3.2 below) have not been substantially
completed within ninety (90) days following the date upon which Landlord and
Tenant mutually approve the final plans and specifications for the Leasehold
Improvements (as defined in Section 3.2 hereof) (herein, the "Outside Completion
Date"), subject to Excused Delays (as hereinafter defined), then Tenant shall
have the right to terminate this Lease at any time prior to substantial
completion of the Leasehold Improvements, and this Lease shall thereafter be
null and void and of no further force or effect and the Commencement Date
hereunder shall never occur. If the Tenant fails to terminate this Lease prior
to substantial completion or within ten (10) days after Landlord notifies Tenant
that the Leasehold Improvements will not be completed on time, then Tenant shall
be deemed to have waived its right of termination contained herein. If the delay
in completing the Leasehold Improvements by the Outside Completion Date is
caused or contributed to by act or neglect of Tenant, or those acting for or
under Tenant, labor disputes, casualties, acts of God or the public enemy,
governmental embargo restrictions, shortages of fuel, labor, or building
materials, action or non-action of public utilities, or of local, state or
federal governments affecting the work, or other causes beyond Landlord's
reasonable control, then the time of completion of said construction shall be
extended for the additional time caused by such delay. Such delays are each
referred to as an "Excused Delay." Landlord hereby waives payment of Basic
Rental and all Additional Rental and other payments to be made by Tenant
hereunder, all of which shall only commence upon the Commencement Date covering
any period prior to the date the Premises are available and ready for occupancy;
however, should Tenant occupy the Premises prior to the Commencement Date
specified in Article I(d) hereof, the Commencement Date and Lease Term shall be
altered to coincide with said occupancy with the Expiration Date of this Lease
remaining unchanged. For the purpose hereof, the Premises shall be deemed
"available and ready for occupancy" at such time as Landlord has substantially
completed the construction or installation of any Leasehold Improvements (as
defined in Section 3.2 hereof), if any, required to be completed by Landlord
pursuant to Section 3.2 of this Lease to the extent reasonably necessary to as
to allow Tenant to occupy the Premises and commence operations of its business
therein, notwithstanding the fact that there may remain as incomplete certain
minor, "punchlist" items which do not materially interfere with Tenant's
intended use of the Premises; Landlord agrees to promptly attend to and complete
the punchlist items in a good and workmanlike manner. The Leasehold Improvements
shall be deemed to have been substantially completed when the following having
occurred: (i) the issuance of a certificate of occupancy permitting Tenant to
occupy the Premises (or the taking of such other action as may be customary to
permit occupancy or use thereof); and (ii) the issuance of a certificate of
substantial completion by Landlord's architect. Tenant shall endeavor to provide
Landlord with a list of deficiencies in the construction of the Leasehold
Improvements within thirty (30) days after it has taken possession of the
Premises with all Leasehold Improvements completed; provided, further that
nothing herein shall reduce or impair Landlord's Construction Guaranty set forth
in Section 3.3 below. After the Commencement Date of this Lease, Tenant shall,
upon request from Landlord, execute and deliver to Landlord a letter of
acceptance of delivery of the Premises, which letter shall describe any
deficiencies with respect to the Leasehold Improvements of which Tenant has
actual knowledge and shall also state the Commencement Date and Expiration Date;
provided, however, that Landlord also confirms to Tenant the Commencement and
Expiration Dates. The Premises are subject to, and Tenant covenants and agrees
to comply with, the easements, restrictions, reservations and other matters set
forth in Exhibit "B" attached hereto and made a part hereof (collectively, the
"Permitted Encumbrances"). Landlord represents to Tenant that none of the
Permitted Encumbrances will materially interfere with or preclude Tenants
occupancy of the Premises for the Primary Use identified in Article I(g) above.
ARTICLE III
CONSTRUCTION OF LEASEHOLD IMPROVEMENTS
Section 3.1 Landlord's Improvements. The "Landlord's Work" (so called
herein) is described by the Design Criteria set forth on Exhibit "C" attached
hereto and made a part hereof.
Section 3.2 Leasehold Improvements. Any improvements to be made to the
Premises other than the Landlord's Work as described in Section 3.1 above are
herein referred to as the "Leasehold Improvements". Immediately after the
execution hereof, Landlord and Tenant will cooperate with one another to prepare
final plans and specifications for the construction and installation of the
Leasehold Improvements. Such final plans and specifications, when approved in
writing by Landlord and Tenant, shall be attached to this Lease as Exhibit "C-1"
and shall become a part hereof. No failure or refusal on the part of Tenant to
approve final plans and specifications within a reasonable time after the
execution hereof shall render this Lease void or voidable nor shall it delay the
Commencement Date set forth in Article I(d) hereof. No delay caused by Tenant
during the construction or installation of the Leasehold Improvements shall
delay the Commencement Date of this Lease from what it would have been had such
delay not occurred.
Landlord and Tenant acknowledge that Landlord has computed the Basic
Rental by budgeting an allowance of $600,000.00 (the "Allowance") for the
Leasehold Improvements to be constructed within the Premises. Landlord and
Tenant acknowledge that the Allowance is not a firm budget nor final estimate of
costs. Upon mutual approval of the final plans and specifications, Landlord
agrees to obtain competitive bids for the cost of the Leasehold Improvements
from no fewer than three (3) of the contractors listed on Schedule I attached
hereto and made a part hereof. Landlord will provide to Tenant copies of any
bids received by Landlord. It is understood, however, that Landlord need not
necessarily select the contractor providing the lowest bid; however, unless
Landlord provides Tenant a reasonable basis for rejecting the lowest bid,
Landlord will select the contractor providing the lowest bid. Landlord shall
promptly inform Tenant of Landlord's selection of the contractor and the final
cost of the Leasehold Improvements. Should the total cost of the Leasehold
Improvements exceed the Allowance, the Tenant shall pay such excess, in cash, to
Landlord within ten (10) days following the date Landlord informs Tenant of such
excess, and Landlord will not be required to commence construction of the
Leasehold Improvements until Tenant pays such
Initial:
________
INDUSTRIAL LEASE AGREEMENT - Page 2 ________
<PAGE>
excess to Landlord. Any delay in Landlord's commencement of construction
resulting from Tenant's failure to pay such amount to Landlord as required
herein shall not delay the Commencement Date of this Lease from what is would
have been had such delay not occurred. Should the total cost of the Leasehold
Improvements be less than the Allowance, the Tenant shall be entitled to receive
such amount by crediting the first installment(s) of Basic Rental due to the
Landlord following the Abatement Period (as defined in Section 4.1 hereof).
Section 3.3 Construction Guaranty. Landlord guarantees the Leasehold
Improvements against defective workmanship and/or materials or non-compliance
with the final plans and specifications for the Leasehold Improvements for a
period of one year from the date of substantial completion of the Leasehold
Improvements, and Landlord agrees, at its sole cost and expense, to repair or
replace any defective item occasioned by poor workmanship and/or materials or
non-compliance with the final plans and specifications for the Leasehold
Improvements during said one-year period, and performance of such one-year
guaranty shall be Landlord's sole and exclusive obligation with respect to
defective workmanship and/or materials, and Tenant's rights to enforce such
one-year guaranty shall be Tenant's sole and exclusive remedy with respect to
such defective workmanship and/or materials in limitation of any contract,
warranty or other rights, whether express or implied, that Tenant may otherwise
have under applicable law. From and after the expiration of the one year
guaranty of Landlord against defective workmanship and materials, Landlord
agrees to cooperate with Tenant in the enforcement by Tenant, at Tenant's sole
cost and expense, of any express warranties or guaranties of workmanship or
materials given by subcontractors or materialmen that guarantee or warrant
against defective workmanship or materials for a period of time in excess of the
one-year period described above and to cooperate with Tenant in the enforcement
by Tenant, at Tenant's sole cost and expense, of any service contracts that
provide service, repair or maintenance to any item incorporated in the Building
for a period of time in excess of such one-year period.
ARTICLE IV
RENT
Section 4.1 Payment of Rent. In consideration of this Lease, Tenant
promises and agrees to pay Landlord the Basic Rental, without deduction or set
off, except for any set off explicitly provided for herein, for each and every
month of the Lease Term and further promises and agrees to pay all Additional
Rent which becomes due hereunder. The nonpayment of any Additional Rent or any
other sums due by Tenant to Landlord under this Lease shall afford Landlord all
the rights and remedies as are herein provided in the case of nonpayment of the
Basic Rental. Any term or provision of this Lease to the contrary
notwithstanding, the covenant and obligation of Tenant to pay Rent hereunder
shall be independent from any obligations, warranties, representations, express
or implied, if any, of Landlord herein contained.
Tenant's obligation to pay the Basic Rental shall abate for a period
commencing on the Commencement Date and continuing through and until, and
including, May 31, 1997 (the "Abatement Period"). The abatement provided herein
shall apply to Basic Rental only and shall not include any other costs, charges
or expenses payable by Tenant.
Section 4.2 Periodic Payment of Reimbursable Expenses; Adjustments.
Landlord may estimate in advance the amount of any taxes, reimbursable
maintenance expenses and insurance premiums due from Tenant under this Lease
(the "Reimbursable Expenses") for each calendar year during the Lease Term, and
the same shall be payable quarterly, during each twelve (12) month period of the
Lease Term on the same day as Basic Rental is due hereunder, with an adjustment
to be made between the parties at a later date as hereinafter provided. As soon
as practicable following the end of each calendar year, but no later than the
first day of May, beginning with the end of the first calendar year, Landlord
shall submit to Tenant a statement setting forth the exact amount of the
Reimbursable Expenses for the calendar year just completed. Further, Landlord
shall notify Tenant of the difference, if any, between the actual amount of the
Reimbursable Expenses for the calendar year just completed and the estimated
amount of the Reimbursable Expenses (which was paid in accordance with this
paragraph) for such year. Such statement shall also set forth the amount of the
estimated Reimbursable Expenses for the new calendar year computed in accordance
with the foregoing provisions. To the extent that the actual Reimbursable
Expenses for any period covered by such statement is greater than the estimated
amounts which Tenant previously paid during the calendar year just completed,
Tenant shall pay to Landlord the difference within ten (10) days following
receipt of said statement from Landlord. To the extent that the actual
Reimbursable Expenses for the period covered by the statement is less than the
estimated payment previously paid by Tenant during the calendar year just
completed, Landlord shall credit the difference against the Tenant's estimated
payment of Reimbursable Expenses for the current calendar year and such credit
will be applied to the next payment or payments due from Tenant to Landlord. In
addition, until Tenant receives such statement, Tenant's payment of the
Reimbursable Expenses for the new calendar year shall continue to be paid at the
rate for the previous calendar year, but Tenant shall commence payment to
Landlord of the quarterly installments of Reimbursable Expenses on the basis of
the new statement beginning on the first installment date following the date
upon which Tenant receives such statement. If the statement reflects a change in
the reimbursement amount, such difference shall be adjusted by increasing or
decreasing the first reimbursement payment after the statement is given in order
to bring the reimbursement amount for the new calendar year current as of such
date.
Landlord shall retain its records relating to the taxes, insurance and
other reimbursable expenses at Landlord's principal office (or such other office
as Landlord may designate in writing to Tenant), and upon reasonable prior
notice to Landlord, Tenant shall have the right to inspect all of Landlord's
records relating to such costs. Appropriate adjustments shall be made for errors
in the computation of such costs revealed by such audit or inspection. If any
audit by Tenant indicates an overcharge in the amount of Tenant's Share by more
than five percent (5%), the reasonable cost of such audit (up to a maximum of
Initial:
________
INDUSTRIAL LEASE AGREEMENT - Page 3 ________
<PAGE>
$1,500.00) shall be paid on demand by Landlord to Tenant. Landlord shall retain
said records for at least twenty-four (24) months.
Section 4.3 Rent Adjustment. The Basic Rental installment for the first
month of the Lease Term shall be due and payable by Tenant to Landlord
contemporaneously with the execution hereof, and a like monthly installment
shall be due and payable, without demand, on or before the first day of each
calendar month during the Lease Term. Basic Rental for any fractional month at
the beginning or end of the Lease Term shall be prorated. Should a prorated
payment of Basic Rental be owing for a fractional month at the beginning of the
Lease Term, Tenant shall pay such amount to Landlord within ten (10) days
following receipt of Landlord's invoice therefor.
Section 4.4 [INTENTIONALLY OMITTED]
Section 4.5 Survival of Obligations. Notwithstanding any expiration or
earlier termination of this Lease, Tenant's obligation to pay any and all
Additional Rent and other sums due by Tenant to Landlord under this Lease shall
continue and shall cover all periods up to the date this Lease expires or is
terminated. Tenant's obligation to pay any and all Additional Rent and other
sums under this Lease and Landlord's and Tenant's obligation to make the
adjustments referred to in this Lease shall survive any expiration or
termination of this Lease.
Section 4.6 Delinquent Payments. If any Basic Rental payment required to
be paid or which becomes due under this Lease is not paid by the tenth (10th)
day following the day on which it is due, a service charge of five percent (5%)
of such amounts due shall become due and payable in addition to the amounts due.
Said service charge is for the purpose of reimbursing Landlord for the extra
costs and expenses in connection with the handling and processing of late
payments. In addition to such service charge, if any Basic Rental payment is not
paid by the tenth (10th) day following the day on which is becomes due, Tenant
shall pay to Landlord, in addition to such Basic Rental payment and the service
charge, interest on such Basic Rental payment calculated at the Maximum Rate
from the date such Basic Rental payment was due until paid by Tenant. If any
Additional Rent required to be paid or which becomes due under this Lease is not
paid when due, Tenant shall pay to Landlord, in addition to such amounts,
interest on such amounts at the Maximum Rate from the date such amounts were due
until paid by Tenant.
Section 4.7 Independent Obligations. Any term or provision of this Lease
to the contrary notwithstanding, except as explicitly set forth herein, the
covenants and obligations of Tenant to pay Basic Rental and Additional Rent
hereunder shall be independent from any obligations, warranties or
representations, express or implied, if any, of Landlord herein contained.
ARTICLE V
OTHER ASSESSMENTS
Section 5.1 Payment of Impositions. Tenant covenants and agrees to pay
during the term of this Lease, as Additional Rent, before any fine, penalty,
interest or cost may be added thereto for the nonpayment thereof, Tenant's Share
of all real estate taxes and special assessments (all of which are sometimes
herein referred to as "Impositions"), which at any time during the term may have
been or maybe assessed, levied, confirmed, imposed upon, or become a lien on the
Property, or any portion thereof, or any appurtenance thereto. Tenant shall pay
Tenant's Share of all special (or similar) assessments for public improvements
or benefits which, during the term of this Lease shall be laid, assessed, levied
or imposed upon or become payable or become a lien upon the Property, or any
portion thereof; provided, however, that if by law any special assessment is
payable (without default) or, at the option of Landlord, may be paid (without
default) in installments (whether or not interest shall accrue on the unpaid
balance of such special assessment), Tenant may pay the same, together with any
interest accrued on the unpaid balance of such special assessment in
installments as the same respectively become payable and before any fine,
penalty, interest or cost may be added thereto for the nonpayment of any such
installment and the interest thereon. Landlord represents to Tenant that as of
the date of this Lease, Landlord has no knowledge of and has not received any
written notice of any special assessments payable, levied or assessed with
respect to the Property. Tenant shall pay Tenant's Share of all special
assessments or installments thereof (including interest accrued thereon),
whether heretofore or hereafter laid, assessed, levied or imposed upon the
Property, or any portion thereof, which are due and payable during the term of
this Lease. Landlord shall pay all installments of special assessments
(including interest accrued on the unpaid balance) which are payable prior to
the commencement and after the termination date of the term of this Lease.
Tenant shall pay all real estate taxes, whether heretofore or hereafter levied
or assessed upon the Property, or any portion thereof, which are due and payable
during the term of this Lease. Landlord shall pay all real estate taxes and
special assessments which are payable prior to the commencement of the term of
this Lease. Provisions herein to the contrary notwithstanding, Landlord shall
pay that portion of the real estate taxes and installments of special
assessments due and payable in respect to the Property during the year the term
commences and the year in which this term ends which the number of days in said
year not within the term of this Lease bears to 365, and Tenant shall pay
Tenant's Share of the balance of said real estate taxes and installments of
special assessments during said years. Notwithstanding anything to the contrary,
Tenant shall not be obligated to pay any assessment arising from or related to
the original construction of the Building and/or development of the Property.
Section 5.2 Other Impositions. If at any time during the term of this
Lease, the present method of taxation shall be changed so that in lieu of the
whole or any part of any taxes, assessments or governmental charges levied,
assessed or imposed on real estate and the improvements thereon, there shall be
levied, assessed or imposed on Landlord a capital levy or other tax directly on
the Basic Rentals received therefrom and/or a franchise tax assessment, levy or
charge measured by or
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based, in whole or in part, upon such Basic Rentals for the present or any
future building or buildings on the Land, then all such taxes, assessments,
levies or charges, or the part thereof so measured or based, shall be deemed to
be included within the term "Impositions" for the purposes hereof.
Section 5.3 Landlord's Right to Contest. The Landlord shall have the
right to employ a tax consulting firm to attempt to assure a fair tax burden on
the Premises within the applicable taxing jurisdiction. Tenant shall pay to
Landlord upon demand from time to time, as Additional Rent, Tenant's Share of
the reasonable cost of such service.
ARTICLE VI
UTILITIES
Landlord agrees to provide water, gas, sewer, electricity, and telephone
service connections to the Premises; but Tenant shall pay for all water, gas,
heat, light, power, telephone, sewer, fire sprinkler, lawn sprinkler charges and
other utilities and services used on or from the Premises, together with any
taxes, penalties, surcharges or the like pertaining thereto and any maintenance
charges for utilities and shall furnish all electric light bulbs and tubes.
Landlord shall in no event be liable for any interruption or failure of utility
services on the Premises not caused by or attributable to the negligent acts or
omissions of Landlord, its employees, agents, invitees or contractors. Prior to
the Commencement Date, Tenant shall pay for all utilities or services at the
Premises used by it or its agents, employees or contractors. Subject to the
provisions of Section 8.7 and Tenant's responsibility for the payment of
Tenant's Share of Common Area expenses, Landlord agrees to maintain all
utilities and utility lines within the Common Area not maintained by public
utilities, and the expenses relating to such maintenance shall be Common Area
expenses.
ARTICLE VII
USE; COMPLIANCE WITH LAWS
Section 7.1 Permitted Use. Tenant shall use the Premises only for the
Permitted Use (as defined in Article 1(g) hereof). Tenant will not occupy or use
the Premises, or permit any portion of the Premises to be occupied or used, for
any business or purpose other than the Permitted Use without Landlord's prior
written consent or for any use or purpose which is unlawful in part or in whole
or deemed to be disreputable in any manner or extrahazardous on account of fire,
nor permit anything to be done which will in any way increase the rate of fire
insurance on the Building or contents; and in the event that, by reason of acts
of Tenant, there shall be any increase in the rate of insurance on the Building
or contents created by Tenant's acts or conduct of business then such acts of
Tenant shall be deemed to be an event of default hereunder, unless Tenant hereby
agrees to pay to Landlord the amount of such increase on demand and acceptance
of such payment shall not constitute a waiver of any of Landlord's other rights
provided herein. Tenant will conduct its business and control its agents,
employees and invitees in such a manner as not to create any nuisance, nor
interfere wish, annoy or disturb other tenants or Landlord in management of the
project of which the Premises form a part. Landlord agrees to include a
provision substantially similar to the preceding sentence within other tenant
leases respecting the Building. Tenant will maintain the Premises in a clean,
healthful and safe condition and will comply with all laws, ordinances, orders,
rules and regulations (state, federal, municipal and other agencies or bodies
having any jurisdiction thereof) as provided for in Section 7.3 below. Tenant
will not, without the prior written consent of Landlord, paint, install lighting
or decoration, or install any signs, window or door lettering or advertising
media of any type on or about the Premises or any part thereof. Should Landlord
agree in writing to any of the items in the preceding sentence, Tenant will
maintain such permitted item in good condition and repair at all times. Outside
storage, including but not limited to trucks or other vehicles, is also
prohibited without Landlord's prior written consent.
Section 7.2 Hazardous Materials.
(a) As used in this Lease, the term "Hazardous Material" means any
flammable items, explosives, radioactive materials, hazardous or toxic
substances, material or waste or related materials, including any
substances defined as or included in the definition of "hazardous
substances", "hazardous wastes", "infectious wastes", "hazardous
materials" or "toxic substances" now or subsequently regulated under any
applicable federal, state or local laws or regulations including,
without limitation, oil, petroleum-based products, paints, solvents,
lead, cyanide, DDT, printing inks, acids, pesticides, ammonia compounds
and other chemical products, asbestos, PCBs and similar compounds, and
including any different products and materials which are subsequently
found to have adverse effects on the environment or the health and
safety of persons.
(h) As used in this Lease, the term "Hazardous Materials Laws"
shall mean all federal, state and local laws, ordinances and regulations
relating to industrial hygiene, environmental protection or the use,
analysis, generation, manufacture, storage, presence, disposal or
transportation of any Hazardous Materials.
(c) Tenant shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of
in or about the Premises or the Property, by Tenant, its agents,
employees, licensees, invitees, business associates, sublessees,
assigns, contractors, subcontractors or others acting for or on behalf
of Tenant (collectively, "Tenant Related Party") without the prior
written consent of Landlord. Landlord shall be entitled to take into
account such other factors or facts as Landlord may in its good faith
business judgment determine to be
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relevant in determining whether to grant, condition or withhold consent to
Tenant's proposed activity with respect to Hazardous Material. Landlord
acknowledges that incidental to Tenant's business operations, Tenant plans
to store carpet and adhesives which may contain Hazardous Materials, office
supplies, cleaning materials and other similar substances of the type and
quantities typically associated with the operation and maintenance of a
warehouse operation (the "Permitted Substances"). Tenant may store and
utilize the Permitted Substances as long as Tenant complies with all
Hazardous Materials Laws and obtains all permits and approvals relating to
the use, treatment and disposal thereof and (except for office supplies,
cleaning materials and similar substances) so long as all such Permitted
Substances remain, at all times, in their original container and are not
used for any purposes in or about the Premises or the Property. Tenant
shall indemnify, defend and hold Landlord and each of Landlord's partners,
shareholders, officers, directors, employees, agents, attorneys, investment
advisors, portfolio managers, trustees, ancillary trustees, and their
affiliates, successors and assigns and their respective partners,
shareholders, officers, directors and employees (collectively,
"Indemnitees") free and harmless from any and all actions (including,
without limitation, remedial or enforcement actions of any kind,
administrative or judicial proceedings, and orders or judgments arising out
of or resulting therefrom), costs, claims, damages (including, without
limitation, punitive damages), expenses (including, without limitation,
attorneys', consultants' and experts' fees, court costs and amounts paid in
settlement of any claims or actions), fines, forfeitures or other civil,
administrative or criminal penalties, injunctive or other relief (whether
or not based upon personal injury, property damage, contamination of, or
adverse effects upon, the environment, water tables or natural resources),
liabilities or losses (economic or other) (collectively, the "Claims")
arising from a breach of this prohibition by Tenant or any Tenant Related
Party or arising from the use, storage, treatment or disposal of any
Permitted Substances. In no event, however, shall Landlord be required to
consent to the installation or use of any storage tanks in, on or under the
Premises or the Property. If Landlord consents to the generation,
production, use, storage, treatment or disposal of Hazardous Materials
(including, bus not limited to the Permitted Substances) in or about the
Premises by Tenant or any Tenant Related Party, then, in addition to any
other requirements or conditions that Landlord may impose in connection
with such consent, (1) Tenant promptly shall deliver to Landlord copies of
all permits, approvals, filings, reports and hazardous waste manifests
reflecting the legal and proper generation, production, use, storage,
treatment or disposal of all Hazardous Materials generated, used, stored,
treated or removed from the Premises and the Property and, upon Landlord's
request, copies of all hazardous waste manifests relating thereto, and (2)
upon expiration or earlier termination of this Lease, Tenant shall cause
all Hazardous Materials arising out of or related to the use or occupancy
of the Premises and the Property by Tenant or any Tenant Related Party to
be removed from the Premises and transported for use, storage or disposal
in accordance with all applicable laws, regulations and ordinances, and
Tenant shall provide Landlord with evidence reasonably satisfactory to
Landlord of compliance with all applicable laws, regulations and
ordinances.
(d) In the event that Hazardous Materials are discovered upon, in, or
under the Premises, and the applicable governmental agency or entity having
jurisdiction over the Premises requires the removal of such Hazardous
Materials, Tenant shall be responsible for removing those Hazardous
Materials arising out of or related to the use or occupancy of the Premises
by Tenant or any Tenant Related Party. Landlord warrants and represents to
Tenant that, to Landlord's actual knowledge, no Hazardous Materials are
located on, in or under the Property that would interfere with Tenant's use
or occupancy of the Premises or would cause Tenant any liability, cost or
expense. Notwithstanding the foregoing, Tenant shall not take any remedial
action in or about the Premises or the Property, nor enter into any
settlement agreement, consent decree or other compromise with respect to
any claims relating to any Hazardous Material in any way connected with the
Premises or the Property without first notifying Landlord of Tenant's
intention to do so and affording Landlord the opportunity to appear,
intervene or otherwise appropriately assert and protect Landlord's interest
with respect thereto. Tenant immediately shall notify Landlord in writing
of: (1) any spill, release, discharge or disposal of any Hazardous Material
in, on or under the Premises or the Property or any portion thereof, (2)
any enforcement, cleanup, removal or other governmental or regulatory
action instituted, contemplated or threatened pursuant to any Hazardous
Materials Laws; (3) any claim made or threatened by any person against
Tenant or the Premises or the Property relating to damage, contribution,
cost recovery, compensation, loss or injury resulting from or claimed to
result from any Hazardous Materials; and (4) any reports made to any
environmental agency arising out of or in connection with any Hazardous
Materials in, on or removed from the Premises or the Property, including
any complaints, notices, warnings, reports or asserted violations in
connection therewith. Tenant also shall supply to Landlord as promptly as
possible, and in any event within five (5) business days after Tenant first
receives or sends the same, copies of all claims, reports, complaints,
notices, warnings or asserted violations relating in any way to the
Premises, the Property or Tenant's use thereof.
(e) In the event (i) Hazardous Materials are discovered upon, in or
under the Premises or the Property and (ii) Landlord has been given written
notice of the discovery of such Hazardous Materials, then and in that event
Landlord may voluntarily, but shall not be obligated to (unless the
existence of such Hazardous Materials has resulted from the acts of
Landlord), take all necessary action to bring the Premises and the Property
into compliance with Hazardous Materials Laws as Landlord's sole cost
(`Landlord's Remediation Activities"). Tenant agrees not to interfere
unreasonably with Landlord's Remediation Activities, and should Landlord
elect to pursue Landlord's Remediation Activities, Landlord agrees to
perform such activities to as not to interfere unreasonably with Tenant's
occupancy and operations of the Premises.
(f) The respective rights and obligations of Landlord and Tenant under
this Section 7.2 shall survive the expiration or earlier termination of
this Lease.
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Section 7.3 Compliance with Laws and Ordinances. Tenant shall, throughout
the term of this Lease, and at Tenant's sole cost and expense, promptly comply
or cause compliance with or remove or cure any violation of any and all present
and future laws, ordinances, orders, rules, regulations and requirements of all
federal, state, municipal and other governmental bodies having jurisdiction over
the Premises and the appropriate departments, commissions, boards and officers
thereof, and the orders, rules and regulations of any other body now or
hereafter constituted exercising lawful or valid authority over the Premises, or
any portion thereof, or the sidewalks, curbs, roadways, alleys, entrances or
railroad track facilities adjacent or appurtenant thereto, or exercising
authority with respect to the use or manner of use of the Premises, or such
adjacent or appurtenant facilities, and whether the compliance, curing or
removal of any such violation and the costs and expenses necessitated thereby
shall have been foreseen or unforeseen, ordinary or extraordinary, and whether
or not the same shall be presently within the contemplation of Landlord or
Tenant or shall involve any change of governmental policy, or require structural
or extraordinary repairs, alterations or additions by Tenant and irrespective of
the costs thereof. Landlord represents to Tenant that as of the date of this
Lease, Landlord has received no notice of the Property or any portion thereof
failing to comply with any applicable laws, ordinances, orders, rules,
regulations or requirements of any federal, state, municipal and other
governmental bodies having jurisdiction over the Premises. Notwithstanding
anything herein to the contrary, Tenant shall have no obligation to comply with
any current or future laws, ordinances, orders, rules, regulations or
requirements that would require any alterations to the structure or foundation
of the Building and which apply generally to all occupants of buildings and are
not specifically occasioned by Tenant's Permitted Use (as opposed to the general
use of the Premises by any lessee); provided, however, that, if any alteration
to the Building is required to comply with Tenant's particular use of the
Premises, then Tenant shall be responsible for such compliance. As to any law,
regulation or ordinance the compliance of which is Tenant's responsibility under
this Section 7.3. Tenant shall have the right to contest the application or
enforcement thereof so long as such contest is conducted in good faith and at no
cost or expense to Landlord and would not result in any liability to Landlord.
Section 7.4 Compliance with Permitted Encumbrances. Tenant, at its sole
cost and expense, shall comply with all agreements, contracts, easements,
restrictions, reservations or covenants, if any, set forth in Exhibit "B"
attached, or hereafter created by Tenant or consented to, in writing, by Tenant
or requested, in writing, by Tenant. Tenant shall also comply with, observe and
perform all provisions and requirements of all policies of insurance at any time
in force with respect to the Premises and required to be obtained and maintained
under the terms of Article XV hereof.
ARTICLE VIII
REPAIRS AND MAINTENANCE
Section 8.1 By Landlord. Landlord shall at its expense maintain (except
in the event of casualty or other damage contemplated in Article XVI hereof, in
which event the terms of that Article will control) only the roof, foundation
and the structural soundness of the exterior walls of the Building (excluding
all windows, window glass, plate glass, and all doors) in good repair and
condition, except for reasonable wear and tear. Tenant shall give prompt written
notice to Landlord of the need for repairs or corrections and Landlord shall
proceed within a reasonable time after receiving such notice to make such
repairs or corrections. Except as otherwise expressly provided in Article XXXI
hereof, Landlord's liability hereunder shall be limited to the cost of such
repairs or corrections. Tenant shall repair and pay for any damage caused by the
negligence or default hereunder of or by Tenant, its employees, agents or
invitees; the cost of any such damage which is paid by Landlord shall be deemed
Additional Rent which is immediately due and owing from Tenant within ten (10)
days after written demand therefor by Landlord.
Section 8.2 By Tenant. Tenant shall at its own cost and expense keep and
maintain all parts of the Premises (except those for which Landlord is expressly
responsible under the terms of this Lease) in good condition, reasonable wear
and tear excepted, promptly making all necessary repairs and replacements,
including but not limited to, windows, glass and plate glass, doors, and special
office entries, interior walls and finish work, floors and floor coverings
(other than normal wear and tear), downspouts, gutters, heating, air
conditioning and ventilation systems, dock boards, truck doors, dock bumpers,
plumbing work and fixtures, pest extermination, regular removal of trash and
debris, keeping the whole of the Premises in a clean and sanitary condition.
Tenant shall not be obligated to repair any damage caused by fire, tornado or
other casualty covered by the insurance to be maintained by Landlord pursuant to
the provisions of this Lease, except that Tenant shall be obligated to repair
all wind damage to glass not covered by the insurance Landlord is required to
maintain hereunder (or actually covered by any of Landlord's insurance) except
with respect to tornado or hurricane damage and with respect to any damage
required to be covered by Landlord's insurance, as provided for in Article XV
below, or is actually covered by insurance carried by Landlord.
Section 8.3 Prohibition Against Waste. Tenant shall not do or suffer any
waste or damage, disfigurement or injury to the Premises, or any improvements
hereafter erected thereon, or to the fixtures or equipment therein, or permit or
suffer any overloading of the floors or other use of the Building or the
Premises that would place an undue stress on the same or any portion thereof
beyond that for which the same was designed.
Section 8.4 Landlord's Right to Effect Repairs. If Tenant should fail to
perform any of its obligations under this Article VIII, then Landlord may, if it
so elects, in addition to any other remedies provided herein, effect such
repairs and maintenance. Any sums expended by Landlord in effecting such repairs
and maintenance shall be due and payable, on demand, together with interest
thereon at the Maximum Rate from the date of each such expenditure by Landlord
to the date of repayment by Tenant prior to effecting such repairs on behalf of
Tenant, Landlord shall provide Tenant with the opportunity
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to cure provided for in subparagraph (b) of Article XX (except, however, in case
of emergencies or in order to mitigate Landlord's damages, in which case, such
notice as is reasonable shall be given).
Section 8.5 Misuse or Neglect. Tenant shall be responsible for all
repairs to the Building which are made necessary by any misuse or neglect by:
(i) Tenant or any of its officers, agents, employees, contractors, licensees, or
subtenants; or (ii) any visitors, patrons, guests, or invitees of Tenant or its
subtenant while in or upon the Premises. Landlord shall be responsible for all
repairs to the Building arising after the Commencement Date caused by the
negligence or default hereunder of or by Landlord or any of its employees or
agents.
Section 8.6 Maintenance/Service Contracts. Tenant shall, at its own cost
and expense, enter into a regularly scheduled preventive maintenance/service
contract with a reputable maintenance contractor for servicing all heating,
ventilation and air conditioning systems within or serving the Premises. The
service contract must include all services suggested by the equipment
manufacturer within the operation/maintenance manual and must become effective
(and a copy thereof delivered to Landlord) within thirty (30) days of the date
Tenant takes possession of the Premises.
Section 8.7 Common Area.
(a) Landlord hereby grants to Tenant for the term of this Lease
(including all extensions and renewals thereof) the non-exclusive
easement and right to use the Common Areas in common with Landlord and
the other tenants of the Property for parking, ingress and egress,
loading and unloading and other Common Area purposes. Landlord expressly
reserves the right, however, to designate any areas located on the
western half of the Property as cross-hatched on Exhibit "A-2") for the
exclusive use of any other tenant. Landlord shall be responsible for the
operation, maintenance and management of the Common Area and the
facilities located therein, the manner of maintenance and the
expenditures therefor to be in the discretion of Landlord, but shall in
all events keep the Common Areas in good condition and repair so as not
to materially interfere with Tenant's use and occupancy of the Premises
for its Permitted Use. In this regard, Landlord shall perform or have
performed the paving (including striping and bumpers), landscape
maintenance, landscape replacement, exterior painting, maintenance of
exterior lighting fixtures, maintenance of tenant directories and the
maintenance of the irrigation systems and common sewerage line plumbing.
(b) Tenant shall be liable to Landlord for Tenant's Share of all
the costs and expenses relating to the maintenance and operation of the
Common Area, including but not limited to, the cost for mowing of grass;
care of shrubs; landscape replacement; general landscaping; maintenance
of parking areas, parking lot improvements, driveways and alleys;
exterior repainting, maintenance of the exterior lighting fixtures;
maintenance of tenant directories; the maintenance of the irrigation
systems and common sewerage line plumbing; the cost of insurance and any
fee incurred by Landlord incidental to the management of the Premises
(herein, the "Management Fee"). Landlord agrees that Tenant's Share of
the Management Fee shall not exceed $12,600.00 per year, commencing with
calendar year 1997, and Tenant's Share of the Management Fee shall not be
increased by more than three percent (3%) for each calendar year
thereafter over the Tenant's Share of the Management Fee for the previous
calendar year. Additionally included within the costs and expenses
relating to the operation and maintenance of the Common Area are any
costs incurred in complying with or removing or curing any violation of
all present and future laws, ordinances, orders, rules, regulations and
requirements of all federal, state, municipal and other governmental
bodies having jurisdiction over the Property or any portion thereof.
Following calendar year 1997, Tenant's Share of "controllable Common Area
expenses" shall not be increased by more than five percent (5%) over
Tenant's Share of "controllable Common Area expenses" for the previous
calendar year. For the purposes hereof, the term "controllable Common
Area expenses" shall be limited to those expenses relating to the Common
Area which are within the direct control and discretion of Landlord, but
shall not include, without limitation, utility charges, insurance
premiums, the cost of effecting compliance with any applicable laws and
the Management Fee. If Tenant is identified as being responsible for any
damage to the Common Area or any facilities located therein (including,
without limitation obstructions or stoppage of the common sanitary
sewerage line), then Tenant shall pay the entire cost of repairing same
upon demand by Landlord. Tenant's Share of all Common Area costs and
expenses shall be payable by Tenant to Landlord within ten (10) days
after a statement of actual expenses is presented to Tenant, and shall be
subject to periodic estimated payments as provided in Section 4.2 hereof.
Common Area costs and expenses to be shared by Tenant shall not
include (i) expenses incurred in leasing space, such as legal expense,
brokerage commissions or advertising or promotional expenses, (ii)
interest and amortization under mortgages or any other secured or
unsecured loan payable by Landlord, (iii) expenses separately reimbursed
by any other tenants of the Property other than pursuant to the
proportionate Common Area costs and expenses provisions in their
respective leases, (iv) financing and refinancing costs, including fees
paid by Landlord to obtain financing or refinancing such as origination
fees and brokerage commissions, (v) non-cash depreciation, (vi) costs
incurred in connection with the enforcement of leases, including
attorneys' fees or other costs and expenses incurred in connection with
summary proceedings to dispossess any other tenant, (vii) costs for
repaving and restriping of the entirety of the parking area to the extent
such costs exceed the reasonable costs for such paving and striping, but
Common Area costs and expenses may include repaving and restriping
performed not more often than once every ten (10) years for paving and
more often than once every four (4) years for striping, and shall also
include any patching or repairs of paved areas, (viii) any expenses
associated with any special requirements of a particular tenant in
connection with the Common Areas or the maintenance thereof and (ix) any
insurance premium increase caused by
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the use of its premises by Landlord or any tenant other than Tenant or
any such increase in premium attributable to vacant space.
(c) Landlord shall have the right to coordinate any repairs and
other maintenance of any rail tracks serving or to serve the Building,
and if Tenant uses such rail tracks, Tenant shall reimburse Landlord from
time to time upon demand, as Additional Rent, for a share of the costs of
such repairs and maintenance and any other sums specified in any
agreement to which Landlord is a party respecting such tracks, such share
to be a fraction, the numerator of which is the space contained in the
Premises, and the denominator of which is the entire space occupied by
rail users in the Building.
(d) Landlord or such other person as Landlord may appoint shall
have the exclusive control and management of the Common Area and shall
have the right, from time to time, to establish, modify, amend and
enforce reasonable rules and regulations with respect thereto. Tenant
agrees to abide by and conform to all such rules and regulations and to
cause its employees, suppliers, shippers, customers and invitees to so
abide and conform. Landlord shall not be responsible to Tenant for the
non-compliance with said rules and regulations by any other tenants
within the Building. Notwithstanding anything herein to the contrary, no
rule or regulation not contained herein or attached as an exhibit hereto
shall be binding upon Tenant unless same is reasonable in nature, does
not unreasonably interfere with Tenant's use of the Premises for the
Permitted Use, is applicable to all other tenants and occupants of the
Property and is administered by Landlord in a reasonable manner for the
beneficial operation of the Property by all tenants thereof.
(e) Under no circumstances shall the Tenant have the right to
store any property, temporarily or permanently, within the Common Area.
Any such storage shall be permitted only with the prior written consent
by Landlord or Landlord's designated agent, which consent may be revoked
at any time. In the event that any unauthorized storage shall occur, then
Landlord shall have the right, with the notice provided for in
subparagraph (b) of Article XX (or earlier in the case of emergencies or
to mitigate Landlord's damages), in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to
Tenant, which cost shall be immediately payable within ten (10) days
after invoice therefor by Landlord. Landlord acknowledges that trucks
will be loading and unloading Tenant's inventories in the loading areas
adjacent to the Premises and that same may be parked only on that portion
of the Common Areas along the east side of the Building.
(f) Landlord shall have the right, at Landlord's sole discretion
and from time to time to (i) make changes to the Common Area, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, landscaped areas
and walkways; (ii) close temporarily any portion of the Common Area for
maintenance purposes so long as reasonable access to the Premises remains
available; (iii) designate other land outside the boundaries of the
Property to be a part of the Common Area; (iv) add additional buildings
and improvements to the Common Area; (v) use the Common Area while
engaged in making additional improvements or alterations to the Building,
the Property, or any portions thereof; and (vi) do and perform such other
acts and make such other changes in, to or with respect to the Common
Area and the Property as Landlord may, in its discretion, deem to be
appropriate, as long as none of the foregoing materially and unreasonably
interferes with Tenant's use of the Premises or Common Areas as to
parking, access or loading, unloading or shipping articles contained in
the Premises. Additionally, no material change to the Common Areas shall
be made that would materially adversely affect Tenant without Tenant's
prior written consent, such consent not to be unreasonably withheld or
delayed and which consent shall be deemed granted unless expressly denied
in writing within five (5) business days following Landlord's request
therefor.
ARTICLE IX
ALTERATIONS AND IMPROVEMENTS
At the expiration or earlier termination of this Lease, Tenant shall
deliver up the Premises with all improvements located thereon (including all
mechanical, plumbing and HVAC systems) in good repair and condition, reasonable
wear and tear excepted and also excepting any casualty to the extent Landlord is
adequately and sufficiently compensated therefor by means of available insurance
proceeds, and shall deliver to Landlord all keys to the Premises. Tenant shall
also remove all trash and debris from the Premises and leave same in a "broom
clean" condition. The cost and expense repairs necessary to restore the
condition of the Premises to the condition in which they are to be delivered to
Landlord according to the immediately preceding sentence shall be borne by
Tenant. Tenant will not make or allow to be made any alterations or physical
additions in or to the Premises without the prior written consent of Landlord,
which consent shall not be unreasonably withheld as to interior, cosmetic, non-
structural alterations. All alterations, additions or improvements (whether
temporary or permanent in character) made in or upon the Premises, either by
Landlord or Tenant, shall be Landlord's property on expiration or earlier
termination of this Lease and shall remain on the Premises without compensation
to Tenant. All furniture, movable trade fixtures and equipment installed by
Tenant may be removed by Tenant at the expiration or earlier termination of this
Lease if Tenant so elects, and shall be so removed if required by Landlord, or
if not so removed shall, at the option of Landlord, become the property of
Landlord. All such installations, removals and restoration shall be accomplished
in a good, workmanlike manner so as not to damage the Premises or the primary
structure or structural qualities of the Building, the other improvements or the
plumbing, electrical lines or other utilities.
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ARTICLE X
INDEPENDENT OBLIGATIONS
All Basic Rental and Additional Rent shall be paid by Tenant to Landlord
without abatement, deduction, diminution, deferment, suspension, reduction or
setoff, except as otherwise explicitly provided for herein, and the obligations
of Tenant shall not be affected by reason of damage to or destruction of the
Premises from whatever cause; nor shall the obligations of Tenant be affected by
reason of any condemnation, eminent domain or hike takings (except as provided
in Articles XVI and XVII hereof). It is the further express intent of Landlord
and Tenant that (a) the obligations of Landlord and Tenant hereunder shall be
separate and independent covenants and agreements and that the Basic Rental and
Additional Rent, and all other charges and sums payable by Tenant hereunder,
shall commence at the times provided herein and shall continue to be payable in
all events unless the obligations to pay the same shall be terminated or
modified pursuant to an express provision in this Lease; (b) all Impositions,
insurance premiums, utility expense, repair and maintenance expense (except as
expressly stated to be otherwise herein), and all other costs, fees, interest,
charges, expenses, reimbursements and obligations of every kind and nature
whatsoever relating to the Premises, or any portion thereof, which Tenant has
agreed to pay pursuant to this Lease during the term of this Lease, or any
extension or renewal thereof, shall be paid or discharged by Tenant as
Additional Rent.
ARTICLE XI
ASSIGNMENT AND SUBLETTING
Tenant shall not assign this Lease, or allow it to be assigned, in whole
or in part, by operation of law or otherwise or mortgage or pledge the same, or
sublet the Premises, or any part thereof, without the prior written consent of
Landlord and in no event shall any such assignment or sublease ever release
Tenant from any obligation or liability hereunder. No assignee or sublessee of
the Premises or any portion thereof may assign or sublet the Premises or any
portion thereof.
If the Tenant desires to assign or sublet all or any part of the
Premises, it shall so notify Landlord at least thirty (30) days in advance of
the date on which Tenant desires to make such assignment or sublease. Tenant
shall provide Landlord with a copy of the proposed assignment or sublease, and
such information as Landlord might request concerning the proposed assignee or
subtenant(s) to allow Landlord to make informed judgments as to the financial
condition, reputation, operations and general desirability of the proposed
assignee or subtenant(s). Landlord shall request said information no later than
fifteen (15) days after is has received Tenant's proposed assignment or
sublease. Within fifteen (15) days after Landlord's actual receipt of Tenant's
proposed assignment or sublease, and all required information concerning the
proposed assignee or subtenant(s), Landlord shall have the option to:
(a) Cancel this Lease as to the Premises or portion thereof
proposed to be assigned or sublet effective on the proposed effective date of
the assignment or subletting; or
(b) Consent to the assignment or sublease, or
(c) Withhold (but not unreasonably) its consent to the proposed
assignment or sublease, but allow Tenant to continue in the search for an
assignee or sublessee that may be acceptable to Landlord.
Notwithstanding any permitted assignment or subletting, Tenant shall at
all times remain directly, primarily and fully responsible and liable for the
payment of the Rent herein specified and for compliance with all of its other
obligations under the terms, provisions and covenants of this Lease. Upon the
occurrence of an "event of default" as hereinafter defined, if the Premises or
any part thereof are then assigned or sublet, Landlord, in addition to any other
remedies herein provided, or provided by law, may at its option collect directly
from such assignee or subtenant all rents becoming due to Tenant under such
assignment or sublease and apply such rents against any sums due to Landlord
from Tenant hereunder, and no such collection shall be construed to constitute a
novation or a release of Tenant from the further performance of Tenant's
obligations hereunder. In the event of the transfer and assignment by Landlord
of its interest in this Lease and the Premises, and the assumption of Landlord's
future obligations hereunder by the transferee, Landlord shall thereby be
released from any further obligations hereunder, and Tenant agrees to look
solely to such successor in interest of the Landlord for performance of such
obligations occurring after the date of such transfer.
If Landlord consents to Tenant assigning its interest under this Lease
or subletting all or any portion of the Premises, or in the event this Lease is
assigned incidental to the sale of assets at contemplated by the following
paragraph. Tenant shall pay to Landlord (in addition to the Basic Rental and all
other amounts payable by Tenant under this Lease) one hundred percent (100%) of
the aggregate rents and other considerations payable by any assignee or
subtenant(s) in excess of the Basic Rental otherwise payable by Tenant from time
to time under this Lease but in no event will the Basic Rental be reduced as a
result of the same of all assignment and sublease rents and consideration being
less than the Basic Rental. Said additional amount shall be paid to Landlord
immediately upon receipt by Tenant of such rent or other considerations from the
assignee or subtenant.
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Notwithstanding anything in this Lease to the contrary, no consents from
Landlord shall be required with respect to an assignment of this Lease or a
sublease of all or any portion of the Premises to any party that controls, is
controlled by or is under common control with Tenant or any guarantor of this
Lease or an assignment of this Lease incidental to the sale of all or
substantially all Aladdin Manufacturing Corporation's assets in the State of
Texas; provided, however, that any assignee assumes the obligations of Tenant
relating to this Lease. Tenant shall promptly provided Landlord with written
notice of such assignment or subletting.
ARTICLE XII
LIABILITY
Landlord shall not be liable to Tenant or Tenant's employees, agents,
patrons or visitors, or to any other person whomsoever, for any injury to person
or damage to property on or about the Premises, resulting from and/or caused in
part or whole by the negligence or misconduct of Tenant, its agents, servants or
employees, or of any other person entering upon the Premises, or caused by the
Building or other improvements becoming out of repair, or caused by leakage of
gas, oil, water or steam or by electricity emanating from the Premises, or due
to any cause whatsoever, except injury to persons or damage to property the sole
cause of which is the negligence or willful misconduct of Landlord, and Tenant
hereby covenants and agrees that it will at all times indemnify and hold safe
and harmless the Premises, the Landlord, Landlord's agents and employees from
any loss, liability, claims, suits, costs, expenses, including without
limitation attorney's fees and damages, both real and alleged, arising out of
any such damage or injury or out of breach or default by Tenant hereunder. The
provisions of this paragraph shall survive the expiration or earlier termination
of this Lease. Landlord agrees to indemnify and hold Tenant harmless from and
against any and all liabilities, costs, expenses, claims, damages or causes of
action for damages (including without limitation reasonable attorneys' fees and
other costs of legal representation) arising from or attributable to Landlord's
gross negligence or willful misconduct or Landlord's breach or default of its
obligations under this Lease following the expiration of the applicable period
for the cure thereof.
ARTICLE XIII
MORTGAGES
Tenant accepts this Lease subject to any deeds of trust, security
interests or mortgages which might now or hereafter constitute a lien upon the
Premises and to deed restrictions, zoning ordinances and other building and fire
ordinances and governmental regulations relating to the use of the Premises.
Tenant shall at any time hereafter, on demand, execute any instruments, releases
or other documents that may be required by any mortgagee for the purpose of
subjecting and subordinating this Lease to the lien of any such deed of trust,
security interest or mortgage. Tenant agrees to attorn to any mortgagee, trustee
under a deed of trust or purchaser at a foreclosure sale or trustee's sale as
Landlord under this Lease. With respect to any deed of trust, security interest
or mortgage hereafter constituting a lien on the Premises, Landlord, at its sole
option, shall have the right to waive the applicability of this paragraph to
that this Lease will not be subject and subordinate to any such deed of trust,
security interest or mortgage. Tenant shall upon request by Landlord, execute
and deliver from time to time, one or more instruments certifying that this
Lease is in full force and unmodified (or if modified stating the date and
nature of each modification), the date through which the Basic Rental has been
paid, the unexpired term of this Lease, and such other matters pertaining to
this Lease as may be requested by Landlord. Notwithstanding the foregoing, this
Lease shall not be subordinate to mortgages or deeds or trust hereafter arising
unless and until Landlord has provided Tenant with an agreement (herein,
"Non-Disturbance Agreement") from the holder of such lien confirming that so
long as Tenant is not in default in the performance of any covenants,
conditions, terms or provisions of this Lease, Tenant's right of occupancy under
this Lease shall not be disturbed.
ARTICLE XIV
INSPECTION
Landlord and Landlord's agents and representatives shall have the right
to enter upon and inspect the Premises at any reasonable time during business
hours, for the purpose of ascertaining the condition of the Premises or in order
to make such repairs as may be required or permitted to be made by Landlord, and
Landlord's agents and representatives shall have the right to enter upon the
Premises at any reasonable time during business hours for the purpose of showing
the Premises and shall have the right to erect on the Premises a suitable sign
indicating the Premises are available for lease or for sale.
ARTICLE XV
INSURANCE; WAIVER OF SUBROGATION
Landlord agrees to maintain an "all risk" (Special Form) insurance
policy covering the Building in an amount equal to the "replacement cost"
thereof at such term is defined in the Replacement Cost Endorsement to be
attached thereto, insuring against the perils of fire, lightning, vandalism,
malicious mischief and loss of rent, extended by a Special Extended Coverage
Endorsement to insure against all other risks of direct physical loss, such
coverages and endorsements to be as defined, provided and limited in the
standard bureau forms prescribed by the insurance regulatory authority for the
State in which the Premises
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are situated for use by insurance companies admitted in such state for the
writing of such insurance or risks located within such state. Subject to the
provisions of this Lease, such insurance for the Building shall be for the sole
benefit of Landlord and under its sole control. Tenant agrees to pay to
Landlord, as Additional Rent, Tenant's Share of Landlord's cost of maintaining
such insurance, together with such other insurance as Landlord deems reasonable
and prudent. Said payments shall be made to Landlord immediately upon
presentation to Tenant of Landlord's statement setting forth the amount due
which statement shall be accompanied by a copy of the premium notice received by
Landlord. In the event any such amount is not paid within twenty (20) days after
the presentation to Tenant of the amount so due, the unpaid amount shall bear
interest at the Maximum Rate from the date of such presentation until paid by
Tenant. Any payment to be made pursuant to this paragraph with respect to the
year in which this Lease commences, expires or otherwise terminates shall bear
the same ratio to the payment which would be required to be made for the full
year as the part of such year covered by the term of this Lease bears to a full
year.
Tenant shall procure and maintain throughout the term of this Lease a
policy or policies of general commercial liability insurance, at its sole cost
and expense, naming as additional insureds Landlord, and Landlord's managing
agent and Tenant against all claims, demands or actions arising out of or in
connection with: (i) the Premises; (ii) the condition of the Premises; (iii)
Tenant's operations in and maintenance and use of the Premises; and (iv)
Tenant's liability assumed under this Lease, the limits of such policy or
policies to be in the amount of not less than $2,000,000.00 combined single
limited/aggregate coverage. All such policies shall be procured by Tenant from
responsible insurance companies satisfactory to Landlord. Certificates
evidencing such coverage, together with receipts evidencing payment of premiums
therefor, shall be delivered to Landlord prior to the Commencement Date of this
Lease. Not less than fifteen (15) days prior to the expiration date of such
coverage, certificates evidencing the renewal thereof (bearing notations
evidencing the payment of renewal premiums) shall be delivered to Landlord. Such
certificates shall further provide that not less than thirty (30) days written
notice shall be given to Landlord before such coverage may be canceled or
changed.
Anything in this Lease to the contrary notwithstanding, the parties
hereto waive any and all rights of recovery, claim, action or cause of action
against each other, their agents, partners, officers, and employees, for any
loss or damage that may occur to the Premises hereby demised, or any
improvements thereto, or the Building, or any improvements thereto, by reason of
fire, the elements, or any other cause which could be insured against under the
terms of "all-risk" Special Form insurance policies, regardless of cause or
origin, including negligence of the parties hereto, their agents, partners,
officers, and employees. Each party shall cause any policy of insurance carried
by it to include a waiver of subrogation in favor of the other party affecting
the waiver of claims set forth in the immediately preceding sentence.
ARTICLE XVI
DESTRUCTION AND RESTORATION
If the Building should be damaged or destroyed by fire, tornado or other
casualty, Tenant shall give prompt written notice thereof to Landlord.
If the Building should be totally destroyed by fire, tornado or other
casualty, or if it should be so damaged thereby that rebuilding or repairs
cannot in Landlord's estimation be completed within one hundred eighty (180)
days after the date upon which Landlord is notified by Tenant of such damage,
this Lease shall terminate and the Rent shall be abated during the unexpired
portion of this Lease, effective upon the date of the occurrence of such damage.
Landlord shall notify Tenant in writing within forty-five (45) days after such
damage or destruction, whether Landlord shall rebuild the Building within one
hundred eighty (180) days. If Landlord does not so notify Tenant, Tenant shall
be at liberty to terminate this Lease by written notice to Landlord given after
said forty-five (45) day period but prior to the date that Landlord has notified
Tenant that it shall rebuild the Premises.
If the Building should be damaged by any peril covered by the insurance
to be provided by Landlord pursuant to the provisions of this paragraph, but
only to such extent that rebuilding or repairs can in Landlord's estimation be
completed within one hundred eighty (180) days after the date upon which
Landlord is notified by Tenant of such damage, this Lease shall not terminate,
and Landlord shall at its sole cost and expense thereupon proceed with
reasonable diligence to rebuild and repair the Building to substantially the
condition in which it existed prior to such damage, except that Landlord shall
not be required to rebuild, repair or replace any part of the partitions,
fixtures, additions and other improvements (other than the Leasehold
Improvements described in Section 3.2 hereof) which may have been placed in, on
or about the Premises by Tenant and except that Tenant shall pay to Landlord,
upon demand, Tenant's Share of any applicable deductible amount specified under
Landlord's insurance to a maximum of $5,000.00 for Tenant's Share. The Rent
payable hereunder, except to the extent covered by insurance, shall in no event
abate by reason of damage or destruction; however, to the extent insurance is
collectible by Landlord for loss of Rent, then the Rent payable under this Lease
shall abate. In the event that Landlord should fail to commence such repairs and
rebuilding with ninety (90) days or to complete such repairs and rebuilding
within one hundred eighty (180) days after the date upon which Landlord is
notified by Tenant of such damage, Tenant may at its option terminate this Lease
by delivering written notice of termination to Landlord at Tenant's exclusive
remedy, whereupon all rights and obligations hereunder (other than those which
survive the termination of this Lease) shall cease and terminate.
Notwithstanding anything herein to the contrary, in the event the holder
of any indebtedness secured by a mortgage or deed of trust covering the Building
or the Premises requires that the insurance proceeds be applied to such
indebtedness, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within fifteen (15)
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days after such requirement is made by any such holder, whereupon all rights and
obligations hereunder (other than those which survive the termination of this
Lease) shall cease and terminate, subject, however, to in terms of the Non-
Disturbance Agreement.
ARTICLE XVII
CONDEMNATION
If the whole or any substantial part of the Premises should be taken for
any public or quasi-public use under governmental law, ordinance or regulation,
or by right of eminent domain, or by private purchase in lieu thereof and the
taking would prevent or materially interfere with the use of the Premises for
the purposes contemplated by the Permitted Use, this Lease shall terminate and
the Basic Rental shall be abated during the unexpired portion of this Lease,
effective when the physical taking of said Premises shall occur. If part of the
Premises shall be taken for any public or quasi-public use under any
governmental law, ordinance or by right of eminent domain, or by private
purchase in lieu thereof, and this Lease is not terminated as provided in this
paragraph, this Lease shall not terminate but the Basic Rental payable hereunder
during the unexpired portion of this Lease shall be reduced to such extent as
may be fair and reasonable under all of the circumstances.
In the event of any such taking or private purchase in lieu thereof,
Landlord shall be entitled to receive the entire price or award from any such
taking or private purchase in lieu thereof without any payment to Tenant, and
Tenant hereby assigns to Landlord Tenant's interest, if any, in such award.
Landlord shall have full power and authority to negotiate with any public
authority and to direct and control any legal proceedings involving or related
to any such taking or private purchase in lieu thereof. Tenant shall have the
right, to the extent that same shall not diminish Landlord's award, to make a
separate claim against the condemning authority (but not Landlord) for such
compensation as may be separately awarded or recoverable by Tenant for loss of
business or good will or for the taking of Tenant's trade fixtures, if a
separate award for such items is made to Tenant.
ARTICLE XVIII
HOLDING OVER
Should Tenant, or any of its successors in interest, hold over the
Premises, or any part thereof, after the expiration of the Lease Term, unless
otherwise agreed in writing, such holding over shall constitute and be construed
as tenancy from month to month only, at a Basic Rental equal to the Basic Rental
payable for the last month of the term of this Lease plus fifty percent (50%) of
such amount. The holding over by Tenant, or any of its successors, for any part
of a month shall entitle Landlord to collect the Rent called for under this
paragraph for the entirety of such month. The provisions of this paragraph shall
not be construed as Landlord's consent for the Tenant to hold over.
ARTICLE XIX
TAXES ON TENANT'S PROPERTY
Tenant shall be liable for all taxes levied or assessed against personal
property, furniture or fixtures placed by Tenant in the Premises. If any such
taxes for which Tenant is liable are levied or assessed against Landlord or
Landlord's property and if Landlord elects to pay the same or if the assessed
value of Landlord's property is increased by inclusion of personal property,
furniture or fixtures placed by Tenant in the Premises, and Landlord elects to
pay the taxes based on such increase, Tenant shall pay to Landlord upon demand
that part of such taxes for which Tenant is primarily liable hereunder.
ARTICLE XX
EVENTS OF DEFAULT
The following events shall be deemed to be events of default by Tenant
under this Lease:
(a) Tenant shall fail to pay any of the Basic Rental, Additional Rent or
any other sums due by Tenant to Landlord under this Lease, and such failure
shall continue for a period of ten (10) days after written notice thereof to
Tenant; provided, however, that if Landlord has given Tenant two (2) or more
such notices in any twelve (12) month period, no further notice need be given,
and Tenant shall be in default under this Lease if Tenant fails to make any such
payments when due.
(b) Tenant shall fail to comply with any term, provision or covenant of
this Lease, other than the payment of Rent, and shall not cure such failure
within thirty (30) days after written notice thereof to Tenant (or such longer
time as may be reasonable if Tenant commences the cure of such default or breach
within said thirty (30) day period diligently pursues the cure thereafter).
(c) Tenant shall make an assignment for the benefit of creditors.
INDUSTRIAL LEASE AGREEMENT - Page
<PAGE>
(d) Tenant shall file a petition under any section or chapter of the
United States Bankruptcy Code, as amended, or under any similar law or statute
of the United States or any State thereof; or Tenant shall be adjudged bankrupt
or insolvent in proceedings filed against Tenant thereunder and such
adjudication shall not be vacated or set aside within sixty (60) days.
(e) A receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant and such receivership shall not be terminated or
stayed within sixty (60) days.
(f) Tenant shall desert or vacate any substantial portion of the
Premises for a period of ten (10) or more days; provided, however, vacation of
the Premises shall not constitute an event of default hereunder if, and so long
as, (i) Tenant provides Landlord as least sixty (60) days prior written notice
of Tenant's intent to vacate, (ii) Tenant pays any additional insurance premiums
which may result from such vacation, (iii) Tenant takes such action as Landlord
may reasonably request to protect the Premises and Building from vandalism and
trespass, and (iv) Tenant otherwise continues to observe and perform all
Tenant's obligations and covenants contained in this Lease. Should Tenant desert
or vacate the Premises, Landlord shall have the continuing right to enter the
Premises and Building at any time to market the Premises and show the Premises
to prospective tenants. Further, in the event the Premises remain vacant for
sixty (60) days, Landlord may, but shall have no obligation to, cancel and
terminate this Lease by providing written notice of such election to Tenant,
whereupon all rights and obligations hereunder shall cease and terminate except
those which otherwise survive the termination of this Lease.
ARTICLE XXI
LANDLORD'S REMEDIES
Upon the occurrence of any event of default specified in Article XX
hereof, Landlord shall have the option to pursue any one or more of the
following remedies without any further notice or demand whatsoever:
(a) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in Rent, enter upon and take possession and expel or remove Tenant
and any other person who may be occupying said Premises or any part thereof,
without being liable for prosecution or any claim for damages thereof; and
Tenant agrees to pay to Landlord on demand the amount of all loss and damage
which Landlord may suffer by reason of such termination, whether through
inability to relet the Premises on satisfactory terms or otherwise, including
the loss of Rent for the remainder of the Lease Term.
(b) Enter upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim for damages therefor,
and if Landlord so elects, relet the Premises on such terms as Landlord shall
deem advisable and receive the Basic Rental thereof; and Tenant agrees to pay to
Landlord on demand any deficiency that may arise by reason of such reletting for
the remainder of the Lease Term. The deficiency to be paid by Tenant to Landlord
shall be the equivalent of the amount of the Basic Rental and Additional Rent
which would be payable under this Lease by Tenant, less the net proceeds of any
----
reletting effected pursuant to this subsection (b) after deducting all of
Landlord's reasonable expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, alteration costs and expenses of preparation of the
Premises or any portion thereof, for such reletting. Landlord need not give
Tenant any written notice whatsoever, other than that which is required by
Article XX above, of Landlord's intent to take possession of the Premises and
expel or remove Tenant.
(c) Enter upon the Premises, without being liable for prosecution or any
claim for damages therefor, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any
expenses which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease, and Tenant further agrees that Landlord shall not
be liable for any damages resulting to the Tenant from such action.
(d) As any time after an event of default, whether or not Landlord shall
have collected any monthly deficiency as set forth in subsection (b) above,
Landlord shall be entitled to recover from Tenant, and Tenant shall pay to
Landlord, on demand, as and for final damages for Tenant's default, an amount
equal to the difference between the then present worth of the aggregate of the
Basic Rental and Additional Rent and any other charges to be paid by Tenant
hereunder for the unexpired portion of the Lease Term (assuming this Lease had
not been terminated), and the then present worth of the then aggregate
reasonable fair market rent of the Premises for the same period. In computation
of present worth, a discount at the rate of 6% per annum shall be employed.
No re-entry or taking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease, unless a written
notice of such intention be given to Tenant. Notwithstanding any such reletting
or re-entry or taking possession, Landlord may at any time thereafter elect to
terminate this Lease for a previous default. Pursuit of any of the foregoing
remedies shall not preclude pursuit of any of the other remedies herein provided
or any other remedies provided by law, nor shall pursuit of any remedy herein
provided constitute a forfeiture or waiver of any Rent due to Landlord hereunder
or of any damages accruing to Landlord by reason of the violation of any of the
terms, provisions and covenants herein contained. Landlord's acceptance of Rent
following an event of default hereunder shall not be construed as Landlord's
waiver of such event of default. No waiver by Landlord of any violation or
breach of any of the terms, provisions, and
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covenants herein contained shall be deemed or construed to constitute a waiver
of any other violation or breach of any of the terms, provisions, and covenants
herein contained. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed or construed to
constitute a waiver of any other violation or default. The loss or damage that
Landlord may suffer by reason of termination of this Lease or the deficiency
from any reletting as provided for above shall include the expense of
repossession and any repairs or remodeling undertaken by Landlord following
possession. Should Landlord at any time terminate this Lease for any default, in
addition to any other remedy Landlord may have, Landlord may recover from Tenant
all damages Landlord may incur by reason of such default, including the cost of
recovering the Premises and the loss of Rent for the remainder of the Lease
Term.
ARTICLE XXII
SURRENDER OF PREMISES
No act or thing done by the Landlord or its agents during the term
hereby granted shall be deemed an acceptance of a surrender of the Premises, and
no agreement to accept a surrender of the Premises shall be valid unless the
same be made in writing and subscribed by the Landlord.
ARTICLE XXIII
ATTORNEYS' FEES
If on account of any breach or default by either party of its respective
obligations under this Lease is should be necessary or appropriate for the non-
defaulting to bring any action under this Lease or to enforce or defend any of
the non-defaulting's rights hereunder, then the defaulting party agrees in each
and any such case to pay to the non-defaulting a reasonable attorneys' fee.
ARTICLE XXIV
[INTENTIONALLY OMITTED]
ARTICLE XXV
MECHANIC'S LIEN
Tenant shall have no authority, express or implied, to create, place or
allow any lien or encumbrance of any kind or nature whatsoever upon, or in any
manner to bind, the interest of Landlord in the Premises or to charge the Rent
payable hereunder for any claim in favor of any person dealing with Tenant,
including those who may furnish materials or perform labor for any construction
or repairs, and each such claim shall attach to, if at all, only the leasehold
interest granted to Tenant by this instrument. Tenant covenants and agrees that
it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises on which any lien is or can be validly and
legally asserted against its leasehold interest in the Premises or the
improvements thereon and that it will save and hold Landlord harmless from any
and all loss, cost or expense based on or arising out of asserted claims or
liens against the leasehold estate or against the right, title and interest of
the Landlord in the Premises or under the terms of this Lease.
ARTICLE XXVI
SIGNS
Tenant shall have the right to install signs upon the Premises only when
first approved in writing by Landlord and subject to any applicable governmental
laws, ordinances, restrictions, regulations and other requirements. Tenant shall
remove all such signs upon the expiration or other termination of this Lease.
Such installations and removals shall be made in such manner as to avoid injury
to or defacement of any buildings or other improvements on the Premises, and
Tenant shall repair any injury or defacement, including without limitation
discoloration, caused by such installation or removal.
ARTICLE XXVII
NOTICES
Each provision of this Lease, or of any applicable governmental laws,
ordinances, regulations, and other requirements with reference to the sending,
mailing or delivery of any notice, or with reference to the making of any
payment by Tenant to Landlord, shall be deemed to be complied with when and if
the following steps are taken:
(a) All Rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord in Dallas County, Texas, at 1245
Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240, or at such other
address as Landlord may specify from time to time by written notice delivered in
accordance herewith.
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<PAGE>
(b) Except as otherwise specifically set forth herein, any notice or
document required to be delivered hereunder shall be in writing and shall be
deemed received when delivered if sent by a recognized, commercial courier for
same day delivery and shall be deemed received on the next business day if sent
by a nationally recognized overnight courier (such as Federal Express or
Purolator) with delivery specified for the next business day or two (2) business
days after being deposited in the United States mail, postage prepaid, certified
or registered mail, return receipt requested, addressed to the parties hereto at
the respective addresses set out opposite their names below, or at such other
address as they have theretofore specified by written notice delivered in
accordance herewith:
LANDLORD: CP-REGENCY BUSINESS PARK, LTD.
5430 LBJ Freeway, Suite 1245
Dallas, Texas 75240
WITH COPY TO: Stanley K. Barth
Andrews & Barth, P.C.
8235 Douglas Avenue, Suite 1120
Dallas, Texas 75225
TENANT: Aladdin Manufacturing Corporation
2001 Antioch Road
Dalton, Georgia 30720
Attention: S. H. Sharpe, Executive Vice President
WITH COPY TO: Mohawk Carpet Corporation, Inc.
1755 The Exchange
Atlanta, Georgia 30339
Attention: Salvatore J. Perillo, Esquire
ARTICLE XXVIII
SEPARABILITY
If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws, then and in that event, it is the
intention of the parties hereto that the remainder of this Lease shall not be
affected thereby, and it is also the intention of the parties to this Lease that
in lieu of each clause or provision of this Lease that is illegal, invalid, or
unenforceable, there be added as a part of this Lease a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause or provision
as may be possible and be legal, valid and enforceable.
ARTICLE XXIX
QUIET ENJOYMENT
Provided Tenant has performed all of the terms, covenants, agreements
and conditions of this Lease, including the payment of Rent, to be performed by
Tenant, Tenant shall peaceably and quietly hold and enjoy the Premises for the
term hereof, without hindrance from Landlord, subject to the Permitted
Encumbrances and the terms and conditions of this Lease. Landlord covenants and
warrants that Landlord is the true and lawful owner of the Premises (including,
without limitation, the Common Areas), subject only to the Permitted
Encumbrances and has good right and full power to let and lease the same.
ARTICLE XXX
EXISTENCE OF BROKER
Tenant represents and warrants that it has not contacted or dealt with
any real estate broker or agent to connection with the execution of this Lease
other than CB Commercial Real Estate Group, Inc. (the "Agent"). Landlord will be
responsible for the payment of a commission to the Agent pursuant to a separate
written agreement.
Tenant agrees to indemnify and hold harmless Landlord against all
liabilities and costs (including but not limited to attorney's fees) incurred by
Landlord as a result of Tenant's breach of any covenant, agreement, warranty or
representation contained in this Article XXX. Landlord warrants and represents
to Tenant that, except for the commission to be paid to Agent by Landlord,
Landlord has not dealt with any other real estate broker or agent in connection
with the execution of this Lease. Landlord hereby agrees to indemnify and hold
Tenant harmless from and against any and all costs, expenses (including
attorneys' fees) incurred by Tenant as a result of Landlord's breach of any
covenant, agreement, warranty or representation contained in this Article XXX.
ARTICLE XXXI
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<PAGE>
TENANT'S REMEDIES
In the event Landlord defaults in the performance of any of its
obligations to Tenant hereunder, or breaches any warranty or representation,
express or implied, to Tenant in connection with this Lease or the Premises,
and such default or breach continues for a period of thirty (30) days following
written notice thereof from Tenant to Landlord (or such longer time as may be
reasonable if Landlord commences the cure of such default or breach within said
30 day period and diligently pursues the cure thereafter), then Tenant may, as
it sole remedies (i) if the default relates to the Landlord's obligations under
Section 8.1 hereof, Tenant may take such action as is reasonably necessary to
cure Landlord's default if Tenant includes in its written notice to Landlord a
provision that Tenant will take such action (ii) bring suit against Landlord for
damages or (iii) bring suit to specifically enforce Landlord's obligations under
this Lease. Further, if the default relates to Landlord's obligations under
Section 8.1, Landlord shall pay the amount of Tenant's deductible (up to a
maximum amount of $1,000.00) relating to Tenant's insurance claim for any damage
to Tenant's consents. In the event Tenant cures such default by Landlord as
provided in item (i), then Landlord will reimburse Tenant all reasonable costs
and expenses incurred by Tenant in curing Landlord's default. Notwithstanding
the foregoing provisions, if Landlord has failed to maintain the roof as
required by Section 8.1 and the contents of the Premises are in imminent danger
of damage due to water leaking or other elements, then Tenant may cure
Landlord's obligations if Landlord fails to commence the cure thereof within
twenty-four (24) hours following Tenant's notice to Landlord. Tenant shall have
no right of set-off against payments due to Landlord hereunder and shall have no
right to terminate this Lease, and Tenant hereby waives such remedies. It is
expressly agreed that the obligations of Landlord hereunder are independent of
Tenant's obligations. Landlord shall have no personal liability to Tenant for
any such default or breach by Landlord, and have no personal liability to Tenant
for any such default or breach by Landlord, and Tenant specifically agrees to
look solely to Landlord's interest in the Building and the Land situated
thereunder for payment of any damages suffered by Tenant. Pending resolution of
any controversy hereunder (as evidenced by a final, nonappealable order issued
by a court of competent jurisdiction), Tenant shall continue to pay to Landlord
all sums which are and become due to Landlord hereunder, without deduction or
set-off. Following a final, nonappealable order issued by a court of competent
jurisdiction evidencing a monetary sum owed by Landlord to Tenant, Tenant may
offset the amount owed by Landlord from the Basic Rental owed by Tenant to
Landlord; provided, however, the amount of offset each month shall in no event
exceed twenty percent (20%) of the installment of Basic Rental due that month,
unless the aggregate amount to be offset exceeds the total Basic Rental to
accrue for the remainder of the Lease Term, in which event the monthly
limitation as to the amount which may be offset shall be limited to the total
amount owing by Landlord to Tenant divided by the number of months remaining
during the Lease Term. Any sums owed by Landlord to Tenant shall bear interest
at the Maximum Rate. Tenant hereby expressly waives and disclaims any lien or
claim which Tenant has or may have in and to any property belonging to the
Landlord or on the Rent due to the Landlord under this Lease.
The term "Landlord," as used in this Lease so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners at the time in question of the fee of the
Premises, and in the event of any transfer or transfers or conveyance of the
Premises and this Lease and the assumption by the transferee of Landlord's
obligations hereunder, the then grantor shall be automatically freed and
relieved from and after the date of such transfer or conveyance of all liability
as respects the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed (but not as to
matters theretofore occurring), provided that any funds in the hands of such
landlord or the then grantor as the time of such transfer, in which Tenant has
an interest, shall be turned over to the grantee, and any amount then due and
payable to Tenant by Landlord or the then grantor under any provision of this
Lease shall be paid to Tenant. The covenants and obligations contained in this
Lease on the part of Landlord shall, subject to the aforesaid, be binding on
Landlord's successors and assigns, during and in respect of their respective
successive periods of ownership. If Landlord fails to perform any of its
obligations under this Lease and Tenant recovers a money judgment against
Landlord, such judgment may be satisfied only out of (i) proceeds produced upon
execution of such judgment and levy thereon against Landlord's interest in the
Property and improvements thereon, (ii) the rents or other income from the
Property receivable by Landlord, and (iii) if Landlord's failure of performance
is in respect of any covenant or obligation under Articles XVI or XVII,
Landlord's share of any condemnation award and the proceeds of any casualty
insurance maintained by Landlord in respect of the Property. The foregoing
provisions shall not relieve Landlord from the performance of any of Landlord's
obligations under this Lease, but only to limit Landlord's liability in the case
of the recovery of a monetary judgment against it, nor shall the foregoing
provisions limit or otherwise affect Tenant's right to obtain injunctive relief
or specific performance or avail itself of any other right or remedy that this
Lease or the law may accord Tenant.
ARTICLE XXXII
ESTOPPEL CERTIFICATES
Landlord and Tenant agree to furnish from time to time when requested by
the other, a signed certificate confirming and containing such factual
certifications and representations reasonably deemed appropriate by the party
requesting such certificate, and shall, within thirty (30) days following
receipt of said proposed certificate and request for execution, return a fully
executed copy of said certificate to the requesting party. In the event the
party being requested to execute such certificate shall fail to return a fully
executed copy of such certificate to the other party within the foregoing
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<PAGE>
thirty (30) day period, then the party being requested to execute such
certificate shall be deemed to have approved and confirmed all of the terms,
certifications and representations contained in such certificate.
ARTICLE XXXIII
NOTICE TO LENDER
If the Premises or the Building or any part thereof are at any time
subject to a first mortgage or a first deed of trust or other similar instrument
and this Lease or the rentals are assigned to a mortgagee, trustee or
beneficiary and the Tenant is given written notice thereof, including the post
office address of such assignee, then the Tenant shall not take any action on
account of any default on the part of the Landlord that would bind or affect
said assignee without first giving written notice by certified or registered
mail, return receipt requested, or by personal or courier delivery or as
otherwise provided for in the Non-Disturbance Agreement, to such assignee,
specifying the default in reasonable detail, and affording such assignee a
reasonable opportunity to perform, as its election, for and on behalf of the
Landlord.
ARTICLE XXXIV
LANDLORD APPROVALS
Any approval by Landlord or Landlord's architects and/or engineers of
any of Tenant's drawings, plans and specifications which are prepared in
connection with any construction of improvements in the Premises shall not in
any way be construed or operate to bind Landlord or to constitute a
representation or warranty of Landlord as to the adequacy or sufficiency of such
drawings, plans and specifications, or the improvements to which they relate,
for any use, purpose, or condition, but such approval shall merely be the
consent of Landlord as may be required hereunder in connection with Tenant's
construction of improvements in the Premises in accordance with such drawings,
plans and specifications. Landlord shall be responsible for the payment of any
drawings, plans and specifications which are prepared by or on behalf of
Landlord.
ARTICLE XXXV
JOINT AND SEVERAL LIABILITY
If there be more than one Tenant, the obligations hereunder imposed upon
Tenant shall be joint and several. If there be a guarantor of Tenant's
obligations hereunder, the obligations hereunder imposed upon Tenant shall be
the joint and several obligations of Tenant and such guarantor and Landlord need
not first proceed against the Tenant hereunder before proceeding against such
guarantor, nor shall any such guarantor be released from its guaranty for any
reason whattoever, including without limitation, in case of any amendments
hereto, waivers hereof or failure to give such guarantor any notices hereunder.
ARTICLE XXXVI
GENDER
Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
ARTICLE XXXVII
CAPTIONS
The captions contained in this Lease are for convenience of reference
only, and in no way limit or enlarge the terms and conditions of this Lease.
ARTICLE XXXVIII
ENTIRE AGREEMENT; AMENDMENTS; BINDING EFFECT
Neither party to this Lease has made or relied on any representations,
warranties, covenants or agreements with respect to the Premises or any other
matters affecting or relating to this Lease except as contained herein and this
Lease supersedes and replaces any prior representations, warranties, covenants
or agreements, whether written or oral, which may have been made by either party
with respect to the Premises or other matters contained in this Lease. This
Lease contains the entire agreement between the parties hereto with respect to
the Premises and all other matters contained in this Lease and this Lease may
not be altered, changed or amended, except by instrument in writing signed by
both parties hereto. No provision of this Lease shall be deemed to have been
waived by Landlord unless such waiver be in writing signed by Landlord and
addressed to Tenant, nor shall any custom or practice which may grow up between
the parties in the administration of the terms hereof be construed to waive or
lessen the right of Landlord to insist upon the performance by Tenant in strict
accordance with the terms hereof.
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<PAGE>
The terms, provisions, covenants and conditions contained in this Lease shall
apply to, inure to the benefit of, and be binding upon the parties hereto, and
upon their respective successors in interest and legal reprensentatives, except
as otherwise herein expressly provided.
ARTICLE XXXIX
GOVERNING LAW AND PLACE OF PERFORMANCE
This Lease shall be governed by the laws of the State wherein the Land
is located. Tenant shall perform all covenants, conditions and agreements
contained herein, including but not limited to payment of Rent, in Dallas
County, Texas.
ARTICLE XL
GOOD STANDING/DUE AUTHORIZATION
Contemporaneous with the execution of this Lease, Tenant shall provide
to Landlord the following:
(a) A copy of Tenant's Good Standing, or similar certificate,
issued by the Secretary of State of the state of Tenant's incorporation; and
(b) A copy of the appropriate corporate resolutions, certified by
the secretary or the assistant secretary of the Tenant, evidencing the
authorization of the Tenant to execute this Lease.
In the event a guaranty agreement is executed with respect to this
Lease, Tenant shall additionally provide to Landlord, contemporaneous with the
execution of this Lease, the items listed above for the guarantor.
ARTICLE XLI
MEMORANDUM OF LEASE
Upon not less than ten (10) days prior written request by either party,
the parties hereto agree to execute and deliver to each other a Memorandum of
Lease, in recordable form, setting forth the following:
(a) The date of this Lease;
(b) The parties of this Lease;
(c) The term of this Lease;
(d) The legal description of the Land; and
(e) Such other matters reasonably requested by Landlord to be stated
therein.
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<PAGE>
ARTICLE XLII
RENEWAL OPTION
Landlord hereby grants Tenant (but no assignee or subtenant) two (2)
options to renew this Lease, each option to be for a period of sixty (60)
months, for a total of one hundred twenty (120) months in the event both renewal
options are exercised. Each said renewal option shall be exercised by Tenant
notifying Landlord thereof in writing not more than two hundred sen (210) and as
least one hundred eighty (180) days prior to the expiration of the then current
lease or renewal term, as the case may be. In the event a renewal agreement has
not been executed as least one hundred twenty (120) days prior to the expiration
date of the current lease or renewal term, the option shall automatically become
null and void. Each such renewal shall be subject to all of the terms and
conditions of this Lease except that (i) the rentals payable during each renewal
term shall be as set forth below and (ii) no further renewal option shall exist
during the second renewal term. It shall be a condition to Tenant's exercising
any renewal option herein granted that (y) Tenant not be then in default under
this Lease and (z) Tenant shall have previously exercised the immediately
preceding renewal option, if any, so that the second renewal option may not be
exercised if Tenant has failed to exercise the first renewal option.
The Basic Rental for each renewal term shall be based on the then
prevailing rental rates for properties of equivalent quality, size, utility and
location in the Dallas/Forth Worth market, with the length of the lease term and
the creditworthiness of the Tenant taken into account; provided, however, that
in no event shall the Basic Rental in any renewal period be less than the Basic
Rental for the last month immediately preceding said renewal period.
Upon notification from Tenant of its intent to exercise each renewal
option, Landlord shall, within fifteen (15) days thereafter, notify Tenant in
writing of the Basic Rental for the applicable renewal term; Tenant shall,
within fifteen (15) days following receipt of same, notify Landlord in writing
of the acceptance or rejection of the proposed Basic Rental. In the event of
rejection by Tenant, the Basic Rental for the applicable renewal term shall be
determined as follows:
(a) Within fifteen (15) days following notification of rejection,
Landlord and Tenant shall each select an arbitrator who shall be a Licensed
Texas real estate broker having a minimum of five (5) years experience in
leasing industrial space and being a member of the North Chapter of the
Texas Society of Office and Industrial Realtors (or its successor
organization). Notice shall be given to the other party of the name of the
arbitrator selected. If either Landlord or Tenant fails to appoint such an
arbitrator within the allocated time, the arbitrator appointed by the other
party shall make the determination of the Basic Rental and this
determination shall be final and binding on both parties.
(b) If both Landlord and Tenant appoint an arbitrator in accordance
with the provisions above and the two arbitrators cannot agree upon a Basic
Rental for the renewal term within thirty (30) days following their
appointment, the two arbitrators shall forthwith select a third
disinterested and qualified arbitrator having like qualifications and each
of the original arbitrators will immediately submit his or her judgment as
to the appropriate Basic Rental in writing to the third arbitrator. Within
ten (10) days after such submittal, the third arbitrator shall make the
determination of the Basic Rental for such renewal period and the
determination of the third arbitrator shall be final and binding on both
parties. In the event the two arbitrators appointed by the Tenant and
Landlord cannot agree upon a third arbitrator, then the third arbitrator
shall be appointed by the then President of the North Chapter of the Texas
Society of Office and Industrial Realtors (or its successor organization).
The Basic Rental agreed to by the two appointed arbitrators or, if
applicable, the Basic Rental determined by the third arbitrator shall be
final and binding upon the parties hereto. Landlord and Tenant shall each
bear the expense of their arbitrator and the expense of a third arbitrator,
if needed, shall be shared equally by both parties.
ARTICLE XLIII
GENERAL PROVISION
(a) Landlord shall be responsible for and shall pay according to law
any transfer or conveyance taxes or for any documentary stamps, if any,
required to be paid in connection with the making of this Lease or the
recordation of a memorandum hereof.
(b) Whenever a period of time is herein prescribed for action to be
taken by Landlord or Tenant, there shall be excluded from the computation
for any such period of time, any delays due to strikes, riots, acts of God,
shortages of labor or materials, war, governmental laws, regulations or
restrictions or any other causes of any kind whatsoever which are beyond
the control of the party required to take such action; however, there shall
be no extension for the payment of any monetary sums, nor shall any such
matter extend any of the time periods provided in Article XLII hereof.
(c) Except as otherwise expressly provided in this Lease to the
contrary, any consent or approval required to be given or obtained
hereunder by either party shall not be unreasonably withheld, delayed or
conditioned by either party hereto, and any exercise of discretion to be
made
INDUSTRIAL LEASE AGREEMENT - Page 20
<PAGE>
hereunder by either party shall be reasonably made without undue delay. Any
matter that is described herein to be to a party's satisfaction shall be to
such party's reasonable satisfaction.
Executed by Landlord to be effective as of the 27th day of November, 1996.
LANDLORD:
CP-REGENCY BUSINESS PARK, LTD.,
a Texas limited partnership
By: Champion-Regency, Ltd.,
a Texas limited partnership, its General
Partner
By: Regency-Champion, Inc.,
a Texas corporation, its General Partner
By:________________________________
Jeffrey L. Swope, President
ATTEST:
________________
Executed by Tenant to be effective as of the 27th day of November, 1996.
TENANT:
ALADDIN MANUFACTURING CORPORATION,
a Delaware corporation
(a division of Mohawk Carpet Corporation, Inc.)
ATTEST: By:________________________________
Printed Name:______________________
Title:_____________________________
________________
INDUSTRIAL LEASE AGREEMENT - Page 21
<PAGE>
SCHEDULE 1
TENANT FINISH CONTRACTORS
-------------------------
REGENCY I
---------
C.D. Henderson Incorporated
1917 Copper Street
Garland, Texas 75042
Contact: Chris Sorrells (972) 272-5466
Heartland Construction, Inc.
9241 LBJ Freeway, Suite 104
Dallas, Texas 75243
Contact: Milton South (972) 918-0660
Abstract Construction
11157 Ables Lane
Dallas, Texas 75229
Contact: Cindy Jacobs (214) 620-9438
G.C.I. Construction Service
801 Stadium Drive
Arlington, Texas
Contact: Paul Hamilton (817) 543-1293
Stillwell Building Systems, Inc.
6220 North Beltline Road, Suite 212
Irving, Texas 75063
Contact: Alan Stillwell (972) 550-8292
INDUSTRIAL LEASE AGREEMENT - 22
<PAGE>
EXHIBIT "A"
LAND
----
<PAGE>
EXHIBIT "A-1"
FLOOR PLAN
----------
<PAGE>
EXHIBIT "A-2"
Exclusive Easement Area
-----------------------
<PAGE>
EXHIBIT "B"
PERMITTED ENCUMBRANCES
----------------------
1. Easement to Trinity River Authority of Texas, filed October 29, 1979,
recorded in Volume 6833, Page 612, Deed Records of Tarrant County, Texas.
2. Easement to Trinity River Authority of Texas, filed October 16, 1979,
recorded in Volume 6825, Page 1210, Deed Records of Tarrant County, Texas.
3. Terms and conditions of Ordinance No. 71-100, entitled Airport Zoning
Ordinance of the Dallas-Fort Worth Regional Airport, filed September 1, 1982,
recorded in volume 7349, Page 1106, Deed Records of Tarrant County, Texas.
4. Easement to Enserch Corporation, filed October 17, 1995, recorded in Volume
12137, Page 1159, Deed Records of Tarrant County, Texas.
5. Masters as shown on plat recorded in Cabinet A, Slide 2676, Plat Records of
Tarrant County, Texas.
6. Any mortgage, security agreement or other document recorded in the Real
Estate Records of Tarrant County, Texas relating to that certain loan in the
amount of $10,068,000.00 from NationsBank of Texas, N.A. to Landlord.
<PAGE>
EXHIBIT "C"
DESIGN CRITERIA
---------------
<PAGE>
EXHIBIT "C-1"
PLANS AND SPECIFICATIONS
------------------------
<PAGE>
EXHIBIT "D"
GUARANTEE
This is a guarantee of an Industrial Lease Agreement dated as of November
27, 1996 (the "Lease"), by and between CP-REGENCY BUSINESS PARK, LTD., a Texas
limited partnership, hereinafter called "Landlord", and ALADDIN MANUFACTURING
CORPORATION, a Delaware corporation, hereinafter called "Tenant".
FOR VALUE RECEIVED, and in consideration for, and as an inducement to
Landlord to enter into the foregoing Lease, the undersigned hereby jointly and
severally (if more than one) guarantee to Landlord and its successors and
assigns the payment of all rentals specified thereunder and all other payments
to be made by Tenant under the Lease, and the full performance and observance by
Tenant of all the terms, covenants, conditions and agreements therein provided
to be performed and observed by Tenant for which each of the undersigned shall
be jointly and severally liable with Tenant, without requiring any notice of
nonpayment, nonperformance or nonobservance, or proof of notice or demand,
whereby to charge the undersigned, all of which each of the undersigned does
hereby expressly waive, and each of the undersigned expressly agrees that the
Landlord and its successors and assigns may proceed against the undersigned
separately or jointly, before, after or simultaneously with the proceedings
against Tenant for default, and that this Guarantee shall not be terminated,
affected or impaired in any way or manner whatsoever by reason of the assertion
by Landlord against Tenant of any of the rights or remedies reserved to Landlord
pursuant to the provisions of the Lease, or by reason of summary or other
proceedings against Tenant, or by the omission of Landlord to enforce any of its
rights against Tenant or by reason of any extensions of time or indulgences
granted by Landlord to Tenant. Each of the undersigned further covenants and
agrees (i) that the undersigned will be bound by all of the provisions, terms,
conditions, restrictions and limitations contained in the Lease, the same as
though the undersigned was named therein as Tenant; and (ii) that this Guarantee
shall be absolute and unconditional and shall remain and continue in full force
and effect as to any renewal, extension, amendment, addition, assignment,
sublease, transfer or other modification of the Lease, whether or not the
undersigned shall have any knowledge or have been notified of or agreed or
consented to any such renewal, extension, amendment, addition, assignment,
sublease, transfer or other modification of the Lease; however, the undersigned
shall not be bound by any and all modifications to the Lease which are not
consented to in writing by the undersigned. If Landlord at any time is compelled
to take any action or proceeding in court or otherwise to enforce or compel
compliance with the terms of this Guarantee, each of the undersigned shall, in
addition to any other rights and remedies to which the Landlord may be entitled
hereunder or as a matter of law or in equity, be obligated to pay all costs,
including attorneys' fees, incurred or expended by Landlord in connection with
any enforcement by Landlord if Landlord is successful in enforcing or compelling
compliance of any of the terms of this Guarantee. Further, each of the
undersigned hereby covenants and agrees to assume the Lease and to perform all
of the terms and conditions thereunder for the balance of the original term
should the Lease be disaffirmed by any Trustee in Bankruptcy for Tenant. All
obligations and liabilities of the undersigned pursuant to this Guarantee shall
be binding upon the heirs, legal representatives, successors and assigns of each
of the undersigned, and each of the undersigned and its heirs, legal
representatives, successors and assigns shall remain fully liable under the
Lease and this Guarantee regardless of any merger, corporate reorganization or
restructuring involving Tenant regardless of the resulting organization,
structure or ownership of Tenant. This Guarantee shall be governed by and
construed in accordance with the laws of the State of Texas.
Each of the undersigned hereby unconditionally consents and agrees that
any legal action brought under this Guarantee may be brought in any State Court
of the State of Texas, or in a Federal United States Court in Texas and each of
the undersigned hereby unconditionally consents to the jurisdiction of such
courts in connection with any cause of action brought by or against Tenant
and/or Guarantor(s) in any way directly or indirectly related to the Lease or
this Guarantee.
This Guarantee shall be enforceable against each person signing this
Guarantee, even if only one person signs and regardless of any failure of other
persons to sign this Guarantee. If there be more than one signer, all agreements
and promises herein shall be construed to be, and are hereby declared to be,
joint and several, in each and every particular and shall be fully binding upon
and enforceable against either, any or all of the undersigned. Further, the
liability of each of the undersigned shall not be affected or impaired by any
full or partial release of, settlement with, or agreement not to sue, Tenant or
any other guarantor or other person liable in respect of the Lease, which
Landlord is expressly authorized to do, omit or suffer from time to time,
without notice to or approval by any of the undersigned. The singular herein
shall include the plural and the plural shall include the singular when
referring to the undersigned.
At any time that Tenant is required to furnish a certificate pursuant to
the Lease, each of the undersigned, by guarantying the terms and conditions of
the Lease, agree that such Guarantor, upon thirty (30) days prior written
request to Tenant, shall certify (by written instrument, duly executed,
acknowledged and delivered to Landlord and to any third person designated by
Landlord in such request) whether such person concurs with the statements set
forth in said certificate by Tenant (and, if not, identifying specifically the
items or matters to which such Guarantor does not concur) and that the guarantee
of such person remains in full force and effect as to all obligations of Tenant
under the Lease. Failure to deliver such certificate to Landlord (and any such
designated third party) within such thirty (30) day period shall constitute
automatic approval of the requested certificate as though such certificate had
been fully executed and delivered by such Guarantor to Landlord and such
designated third party.
IN WITNESS WHEREOF, the undersigned have set their hands as of ___ day of
________, 19__.
MOHAWK INDUSTRIES, INC., a Delaware corporation
By:________________________________________
Printed Name:______________________________
Title:_____________________________________
<PAGE>
EXHIBIT 10.13
GENERAL PROPERTIES COMPANY
301 City Line Avenue
Bala Cynwyd, PA 19004-1722
(610) 667-2711 FAX (610) 667-3485
June 19, 1995
Mohawk Carpet Corporation
c/o Mohawk Industries, Inc.
Attn: Mr. A. Spencer
Division Vice President
PO Box 1707
Greenville, NC 27835
Re: 3400 East Allen Street
Philadelphia, PA
----------------------
Dear Mr. Spencer:
The purpose of this letter is to confirm the agreement of Mohawk Carpet
Corporation and General Properties Company to extend the term of our present
Lease with you.
We have agreed that the term of the Agreement of Lease dated December 15, 1970,
as stated in Paragraph 2 thereof and as subsequently renewed pursuant to
Paragraph 42 thereof through December 31, 1985, and extended through December
31, 1990, and extended to December 31, 1995 is hereby extended to December 31,
2000.
In addition, the minimum annual rent as stated in Paragraph 4 of the Lease and
as subsequently increased to $55,000, will be reduced to $50,000 annually,
$4,1667.67 monthly and will remain at $50,000 through December 31, 2000.
All other terms of the Lease will remain in effect during the extended term.
Please confirm your agreement of these terms by signing the enclosed additional
copy of this letter and returning it to me for our file. If you have any
questions regarding this matter, please do not hesitate to contact us.
Sincerely,
APPROVED AND ACCEPTED:
By: /s/ A. C. Spencer
-----------------------------
Eric E. Korngold
Secretary/Treasurer Title: Dir V.P. Weal Operator
-------------------------
EEK/mh Date: 6-28-95
Enclosure -------------------------
cc: C. Fowler By: /s/ John D. Gault
----------------------------
Title: Vice President of Finance
--------------------------
Date: 6-30-95
---------------------------
<PAGE>
THIS AGREEMENT OF LEASE made this 15/th/ day of December 1970, by and
between GENERAL BAG & BURLAP COMPANY, a partnership, (hereinafter called
"Landlord") and DELAWARE VALLEY WOOL SCOURING CO., a Pennsylvania corporation,
(hereinafter called "Tenant"),
W I T N E S S E T H:
- - - - - - - - - -
1. Premises. Landlord does hereby demise and let unto Tenant and
--------
Tenant does hereby lease and take from Landlord, for the term and upon the terms
and conditions set forth in this lease, the property located at 3400 E. Allen
Street, Philadelphia, Pennsylvania, (being hereinafter referred to as "the
Premises").
2. Term. The original term of this lease shall commence and possession
----
shall be given on January 1, 1971 and unless further extended or sooner
terminated as hereinafter provided shall end on December 31, 1975.
3. Use of Premises. The Premises shall be used for any lawful purpose
---------------
not harmful to the building.
4. Minimum Annual Rent. Commencing on January 1, 1971 and thereafter
-------------------
throughout the original term of this Lease, Tenant agrees to pay to Landlord,
without notice or demand, and without setoff, a net minimum annual rent of Forty
Thousand Dollars ($40,000), payable in advance in equal monthly installments of
$3,333.33 for eleven months, the twelfth payment to be in the amount of
$3,333,37.
<PAGE>
5. Additional Rent. (a) Taxes and Other Impositions.
-------------- -------------------------------
Subject to the provisions of Article 6 hereof, Tenant shall pay, as
additional rent, throughout the term hereof and any renewal or extension
thereof, before any fine, penalty, interest or cost may be added thereto for the
non-payment thereof (or sooner if elsewhere herein required), all levies, taxes,
assessments, water and sewer rents and charges, liens, charges and imposts and
each and every levy or charge of the same nature, general and special, ordinary
and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever
(all of which are hereinafter referred to as "impositions") which may hereafter
be created, levied, assessed, adjudged, imposed or charged upon or with respect
to the Premises or any improvements made thereto, or on any part of the
foregoing, or indirectly upon this lease or the rents payable hereunder, or
against Landlord, because of Landlord's estate or interest herein, by any
federal, state or municipal government, or under any law, ordinance or
regulation thereof or of any public authority whatsoever, including, among
others, all special tax bills and general, special or other assessments and
liens or charges made on local or general improvements or under any governmental
or public power or authority whatsoever; provided however, if any imposition
shall be created, levied, assessed, adjudged, imposed, charged or become a lien
with respect to a period of time which commences before or ends after the
expiration of the term of this lease (other than by reason of breach of the
terms hereof by Tenant), then Tenant shall only be required to pay that
proportion of such imposition which is, equal to the proportion of said period
which falls within the terms of this lease; and further provided
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<PAGE>
that Tenant's obligation to pay real estate taxes shall begin when rent
commences to accrue.
(b) Right to Contest. Tenant shall furnish Landlord, not later than
----------------
five (5) days before the last day upon which they may be paid without any fine,
penalty or interest, receipts or other evidence satisfactory to Landlord of the
payment of all impositions. Tenant may bring proceedings for contesting the
validity or amount of any imposition, or to recover payments therefor, and
Tenant agrees to save Landlord harmless from all costs and expenses in
connection therewith and may postpone the tax payment only if it does not
constitute a mortgage default or cause the premises to be exposed to a tax sale.
Landlord shall cooperate with Tenant with respect to such proceedings to the
extent reasonably necessary, but all costs,fees and expenses incurred in
connection with such proceedings shall be borne by Tenant.
(c) Possible Payment of Impositions to Mortgagees. Notwithstanding the
---------------------------------------------
foregoing, if the holder of any mortgage upon the fee title to the Premises
requires that payments be made to such holder on account of any imposition, then
deposits by Tenant with such mortgagee of amounts otherwise required to be paid
hereunder shall, to the extent thereof, be in satisfaction of the obligation of
Tenant hereunder, provided that Tenant shall furnish proof satisfactory to
Landlord that such deposits have been made. Tenant agrees, upon notice from
Landlord, to make such deposits on account of impositions with any such
mortgagee according to the terms of any such mortgage.
6. Net Lease. It is understood and agreed that this is a net lease.
---------
It is the intention of the parties that Landlord shall receive all rentals
payable hereunder free from
-3-
<PAGE>
charges required to be paid to maintain and carry the Premises; provided,
however, that nothing herein contained shall require Tenant to pay the principal
of, or interest on, or any other payment under any mortgage of fee title to the
Premises or any estate,inheritance, succession or capital levy tax of Landlord,
or any income, excess profits or revenue tax, or any other tax, assessment,
charge or levy which Landlord is required to pay by reason of the income
represented by the rents reserved hereunder.
7. Insurance.
---------
(a) Tenant, at Tenant's sole cost and expense, shall maintain and
keep in effect throughout the term insurance (evidenced by policies or
certificates delivered to and held by Landlord):
(i) Insurance against loss or damage to the Premises and all other
improvements upon the Premises of such kind and such amounts as are satisfactory
to Landlord; and also boiler insurance;
(ii) Insurance against abatement or loss of rental by reason of any
of the occurrences described in the preceding subparagraph in an amount equal to
minimum and additional rental for the term of this lease, the cost thereof for
twelve (12) months following the occurrence of any such casualty to be borne by
Tenant and the balance of the cost thereof to be borne by Landlord.
(iii) Insurance against loss or liability in connection with bodily
injury or death or property damage in or upon the Premises, under policies of
general public liability insurance, with such limits as to each as may be
reasonably required by Landlord from time to time but not less than $500,000 for
each person or $1,000,000 for each occurrence in respect to bodily injury or
death and $100,000 for each occurrence in respect to property damage.
(b) The policies or certificates of insurance provided for in
subparagraph (a) of this Article 7 shall provide for payment
-4-
<PAGE>
solely to the Landlord and any mortgagees designated by the Landlord, in
accordance with the standard mortgagee endorsement. The policies will also
insure the interests of Tenant and any other tenants in the building. The
policies of general public liability insurance shall name inter alia, Landlord
and Tenant as the insured parties.
(c) All policies (or certificates) shall provide that they shall not
be cancellable without at least thirty (30) days' prior written notice, to
Landlord and to any mortgagee designated as aforesaid by Landlord and shall be
issued by insurers of recognized responsibility licensed to do business in the
State of Pennsylvania. At least five (5) days prior to the commencement of the
term, the originals and a signed duplicate copy of such policies (or in the
alternative a certificate, if the Tenant has blanket policies) shall be
delivered by Tenant to Landlord and at least thirty (30) days before any such
policy shall expire Tenant shall deliver the original and a signed duplicate
copy of a replacement policy (or certificate) to Landlord.
(d) Each of the parties hereto hereby releases the other, to the
extent of the releasing party's actual recovery under its insurance policies,
from any and all liability for any loss or damage which may be inflicted upon
the property of such party even if such loss or damage shall be brought about by
the fault or negligence of the other party, its agents or employees; provided,
however that this release shall be effective only with respect to loss or damage
occurring during such time as the appropriate policy of insurance shall contain
a clause to the effect that this release shall not affect said policy or the
right of the insured to recover thereunder. If any policy does not provide for
such waiver, and if the party to benefit therefrom requests that such a waiver
be obtained, the insured party agrees to obtain an endorsement to its insurance
policies permitting such a waiver of subrogation if it is available. If an
additional premium is
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<PAGE>
charged for such waiver,the party benefitting therefrom if it desires to have
the waiver, agrees to pay to the other the amount of such additional premium
promptly upon being billed therefor.
8. Public Utility Charges. Tenant agrees to pay or cause to be paid
----------------------
all charges for gas, electricity, light, heat, steam, power, water and
sewerage, telephone or other communication services used, and other services
rendered or supplied upon or in connection with the Premises throughout the term
of this lease, and to indemnify Landlord and save Landlord harmless against any
liability or damages on such account.
9. Repairs and Maintenance.
-----------------------
(a) Tenant covenants throughout the term of this lease, at Tenant's
sole cost and expense, to take good care of the Premises, all equipment and
system within it, and the sidewalks and curbs adjoining thereto, and subject to
the provisions of this lease elsewhere set forth, to keep the same in good order
and condition, and promptly at Tenant's own cost and expense to make all
necessary repairs, interior and exterior, structural and non-structural,
ordinary as well as extraordinary, foreseen as well as unforeseen. When used in
this Article, the term "repairs" shall include replacements and renewals, and
all such repairs made by Tenant shall be at least equal in quality and
usefulness to the original improvements and equipment.
(b) Tenant shall keep and maintain all portions of the Premises
including the sidewalks and curbs adjacent thereto, and including any portions
of the building used in common with Landlord or other Tenants, in a clean and
orderly condition, free of accumulations of dirt, rubbish, ice and snow and
shall keep such portion of the street, properly maintained. The boiler(s),
whether used by Tenant or not, must be maintained in good operating condition,
with permits renewed as necessary and with boiler insurance in effect.
-6-
<PAGE>
(c) All improvements, repairs and alterations made or installed
on the Premises by or on behalf of Tenant shall immediately upon completion or
installation thereof be and become the property of Landlord without payment
therefor by Landlord and shall be surrendered to Landlord upon the expiration or
earlier termination of the term of this lease, except that any machinery,
equipment or fixtures installed by Tenant and used in the conduct of Tenant's
business and not to service of the building generally, shall remain Tenant's
property, and shall be removed at the termination of this lease provided that
Tenant fully and promptly restores any damage to the Premises occasioned by the
installation or removal thereof.
(d) Anything elsewhere herein to the contrary notwithstanding,
Landlord covenants throughout the term of this lease, at Landlord's sole cost
and expense, to make all necessary repairs to the roof and exterior structural
walls of the Premises.
10. Compliance with Rules, Ordinances, etc. Tenant covenants
--------------------------------------
throughout the term of this lease, at Tenant's sole cost and expense, promptly
to comply with all laws and ordinances and notices, orders, rules, regulations
and requirements of all federal, state and municipal governments and appropriate
departments, commissions, boards and officers thereof, and notices, orders,
rules and regulations of the National Board of Fire Underwriters, or any other
body now or hereafter constituted exercising similar functions, relating to all
or any part of the Premises, exterior as well as interior, foreseen or
unforeseen, ordinary as well as extraordinary, structural as well as non-
structural, or to the fixtures and equipment thereof and the sidewalks and curbs
in or adjoining the Premises or to the use or manner of use of the Premises,
provided, however, anything elsewhere herein to the contrary notwithstanding,
that Tenant is not obligated
-7-
<PAGE>
to make structural changes in the Premises, at its expense, which are necessary
by reason of deterioration by wear and tear other than wear and tear caused by
Tenant's use of the Premises.
11. Alterations and Additions by Tenant. Tenant agrees
-----------------------------------
that it will not, without on each occasion first obtaining Landlord's prior
written consent (which shall not unreasonably be delayed or withheld), make or
permit to be made any a1terations or additions to the building and other
improvements upon the Premises.
12. Inspection of Premises by Landlord.
----------------------------------
(a) Tenant agrees to permit Landlord and the
authorized representatives of Landlord to enter the Premise. at all, reasonable
times during usual business hours for the purpose of (1) inspecting the same and
(2) making any necessary repairs thereto and performing any work therein that
may be necessary by reason of Tenant's default under the terms of this lease,
after notice to the Tenant of the need therefor. Nothing herein shall imply any
duty upon the part of Landlord to do any such work which under any provisions
of this lease Tenant may be required to perform and the performance thereof by
Landlord shall not constitute a waiver of Tenant's default in failing to perform
the same. Landlord may during the progress of any work in the Premises keep and
store therein all necessary materials, tools and equipment. Landlord shall not
in any event be liable for inconvenience, annoyance, disturbance, loss of
business or other damage to Tenant by reason of making such repairs or the
performance of such work in the Premises, or on account of bringing materials,
supplies and equipment into or through the Premises during the course thereof
and the obligations of Tenant under this lease shall not thereby be affected in
any manner whatsoever.
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<PAGE>
(b) Landlord is hereby given the right during usual
business hours to enter the Premises and to exhibit the same for the purposes of
sale or mortgage and, to exhibit the same to any prospective tenant.
13. Surrender. Tenant agrees, at the expiration or earlier
---------
termination of the term hereof, promptly to yield up, clean and neat and free
from objectionable odors, and in the same condition of order and repair in which
they are required to be kept throughout the term hereof, the Premises and all
improvements, alterations and additions thereto, and all fixtures and equipment
servicing the building; and to remove Tenant's goods and effects and any
machinery, fixtures and equipment installed by Tenant, and to repair any damage
caused by the installation or removal thereof. Tenant further agrees that this
lease shall, unless sooner terminated, pursuant to the provisions hereof, expire
absolutely on the expiration of the term hereof without the requirement of any
notice from Landlord to Tenant.
14. Damage by Fire or other Casualty.
--------------------------------
(a) In case of damage to the Premises by fire or other
insured casualty to such extent that the Premises cannot be restored to their
former condition within 180 days or in the alternative to such extent that more
than 75% of the value of the improvements on the Premises has been destroyed,
either party shall have the right to terminate this lease and all the unaccrued
obligations of the parties hereto (inclusive of minimum and Additional rent) by
sending written notice of such termination to the other party within thirty (30)
days of the occurrence of such damage, the notice to specify a termination date
no less than fifteen (15) days after its transmission. In case of lesser damage
to the Premises by fire or other insured casualty,
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<PAGE>
Tenant shall promptly notify Landlord, and Tenant shall repair the damage. The
work shall be commenced promptly and completed with due diligence, except for
delays due to governmental regulation, unusual scarcity of or inability to
obtain labor or materials, or causes beyond Tenant's reasonable control.
Provided, however, that if the damage occurs during the last three (3) years of
the original term hereof and Tenant does not within thirty (30) days after the
occurrence exercise any renewal option that Tenant has, or, if the damage occurs
during the last three (3) years of any renewal term, and in either case requires
an expenditure of more than the minimum annual rent payable hereunder from the
date of such damage to the end of the term, either party shall have the right
to terminate this lease and all the unaccrued obligations of. the parties hereto
plus any written notice of such termination to the other party within thirty
(30) days of the occurrence of such damage, the notice to specify a termination
date no less then fifteen (15) days after its transmission.
(b) Tenant's obligation to pay minimum and additional rent
(except in the event of termination pursuant to the provision contained in the
first sentence of paragraph 14(a) shall not in any way be affected by damage to,
or destruction of, the Premises or any part thereof, regardless of cause, and
there shall be no abatement, diminution or reduction of rent by reason thereof,
subject to credit for rent insurance payments under Article 7(a)(ii).
15. Signs. Tenant agrees it will not erect or maintain any
-----
exterior sign upon the building which is too heavy for the structure.
16. Assignment and Subletting. Tenant agrees not to assign,
-------------------------
mortgage, pledge or encumber this lease, or sublet the Premises in whole
-10-
<PAGE>
or in part (except the office portion) without first obtaining the written
consent of Landlord, which consent shall not be withheld or delayed
unreasonably. It is contemplated that Tenant will sublet the office portion
subject to the terms and provisions of this lease but Tenant will remain
responsible for compliance with all of the terms and provisions of this lease
and Landlord's reasonable prior approval of the subtenant shall first be
obtained. Tenant shall pay all commissions due by reason of any subletting of
all or any portion of the Premises and shall indemnify, defend and save Landlord
harmless from any claim for any such commission. Tenant agrees that, in the
event of any such subletting or any permitted assignment, it will deliver to
Landlord, at the time of any such assignment or subletting, the assumption by
the assignee or subtenant of all of the obligations.
17. Eminent Domain. If the Premises or any part thereof are
--------------
taken or condemned for a public or quasi-public use (a sale in lieu of
condemnation to be deemed a taking or condemnation), this lease shall, as to the
part taken, terminate as of the date title shall vest in the condemnor. In any
such event, Tenant waives all claims against Landlord and as against the
condemning authority or party and Tenant covenants and agrees that Tenant will
make no claim by reason of the complete or partial taking of the Premises,
except for "special" damages provided for the Tenant in the Eminent Domain Code.
If this lease is not terminated after the exercise of
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<PAGE>
eminent domain the minimum annual rent (and correspondingly the monthly
installments thereof) shall be equitably reduced for the balance of the term
taking into account the character and amount of such taking. If the parties are
unable to agree, within thirty (30) days after the notice of the taking is given
to Tenant, on the extent of the abatement, their dispute shall be referred to
arbitration by the American Arbitration Association in accordance with the rules
of the Association then obtaining. The decision of the arbitrators shall be
final and binding upon the parties and no appeal shall be taken therefrom.
18. Curing Tenant's Defaults. If Tenant shall be in default in
------------------------
the performance of any of its obligations hereunder, Landlord may (but shall not
be obligated to do so), in addition to any other rights it may have in law or
equity and after written notice to Tenant except in case of emergency, cure such
default on behalf of Tenant, and Tenant shall reimburse Landlord for any sums
paid or costs incurred by Landlord in curing such default, including interest at
the rate of eight percent (8%) per annum on all sums advanced by Landlord as
aforesaid, which sums and costs together with interest thereon shall be deemed
additional rent hereunder.
19. Responsibility of Tenant. Tenant agrees to relieve and
------------------------
hereby relieves Landlord from and agrees to indemnify Landlord against all
liability by reason of any injury or damage to Tenant or to any other person or
to property in the Premises, or the building of which the Premises is a part,
whether belonging to Tenant or to any other person, caused by any fire,
breakage, leakage, collapse or other event or occurrence in any portion of the
Premises,
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<PAGE>
or the building of which the Premises is a part, unless such fire, breakage,
leakage, collapse or other event or occurrence, injury or damage be caused by
the negligence of Landlord.
20. Subordination. This lease shall be subject and subordinate
-------------
at all times to the lien of any mortgages and/or rents and/or other
encumbrances now or hereafter placed on the Premises, or the building of which
the Premises is a part, without the necessity of any further instrument or act
on the part of the Tenant to effectuate such subordination but, Tenant covenants
and agrees to execute and deliver upon demand such further instrument or
instruments evidencing such subordination of this lease to the lien of any such
mortgage and/or ground rent and/or other encumbrances as shall be desired by any
mortgagee or proposed mortgagee or by any person.
Landlord agrees that so long as Tenant continues to pay the rent
and additional rent reserved in this lease and otherwise complies with the terms
and provisions hereof, no mortgagee or other lienholder shall disturb the rights
of possession of Tenant in the Premises and Tenant shall not be made a party to
any foreclosure or proceedings in lieu thereof by any mortgagee or other
lienholder affecting the Property.
Provided, however, that the foregoing provisions of this Article
shall be effective only in the event that any such mort-
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<PAGE>
gage or other encumbrance provides, or the holder thereof agrees with Tenant
that, neither such holder nor its successors or assigns will take any action to
interfere with the rights of Tenant, its successors and assigns in the Premises
so long as Tenant is not in default hereunder.
Notwithstanding the foregoing, however, any such holder may
subordinate its mortgage or other encumbrance to this lease, without Tenant's
consent, by notice in writing to Tenant. In such event, this lease shall
thereupon be deemed prior in lien to such mortgage or other encumbrance without
regard to their respective dates of execution and delivery; and in such event
such holder shall have only the same rights with respect to this lease as
though it had been executed and delivered prior to the execution and delivery of
the mortgage or, other encumbrance.
21. Remedies of Landlord. If the Tenant
--------------------
(a) Does not pay in full when due any and all installments
of rent and/or any other charge or payment herein reserved, included, or agreed
to be treated or collected as rent and/or any other charge, expense or cost
herein agreed to be paid by the Tenant, or
(b) Violates or fails to perform or otherwise breaks any
covenant or agreement herein contained; or
(c) Becomes insolvent, or makes an assignment for the
benefit of creditors, or if a petition in bankruptcy is filed by or against the
Tenant, or a bill in equity or other proceeding
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<PAGE>
for the appointment of a receiver for the Tenant is filed, or if proceedings for
reorganization or for composition with creditors under any State or Federal law
be instituted by or against Tenant, not discharged within sixty (60) days
thereafter, or if the real or personal property of the Tenant shall be sold or
levied upon by any Sheriff, Marshall or Constable.
Then and in any or either of said events, there shall be
deemed to be a breach of this lease, and thereupon ipso facto and without entry
or other action by Landlord
(1) The rent for the entire unexpired balance of the
term of this lease, as well as all other charges, payments, costs and expenses
herein agreed to be paid by the Tenant, or at the option of Landlord any part
thereof, and also all costs and officers' commissions including the five per
cent (5%) chargeable by Act of Assembly to the Landlord, shall, in addition to
any and all installments of rent already due and payable and in arrears and/or
any other charge or payment herein reserved, included or agreed to be treated or
collected as rent, and/or any other charge, expense or cost herein agreed to be
paid by the Tenant which may be due and payable and in arrears, be taken to be
due and payable and in arrears as if by the terms and provisions of this lease,
the whole balance of unpaid rent and other charges, payments, taxes, costs and
expenses were on that date payable in advance; and if this lease or any part
thereof is assigned, or if the Premises or any part thereof is sublet, Tenant
hereby irrevocably constitutes and
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<PAGE>
appoints Landlord Tenant's agent to collect the rents due by such assignee or
sublessee and apply the same to the rent hereunder without in any way affecting
Tenant's obligation to pay any unpaid balance of rent due hereunder;
(2) This lease and the term hereby created shall determine and
become absolutely void without any right on the part of the Tenant to save the
forfeiture by payment of any sum due or by other performance of any condition,
term or covenant broken; whereupon, Landlord shall be entitled to recover
damages for such breach in an amount equal to an amount of rent reserved for
the balance of the term of this lease, less the fair rental value of the said
Premises, for the residue of said term.
In the event of any default as above set forth, the Landlord, or
anyone acting on Landlord's behalf, at Landlord's option may lease the Premises
or any part or parts thereof for a term less than or exceeding the balance of
the term of this lease to such person or persons as may in Landlord's discretion
seem best and the Tenant shall be liable for any loss of rent for the balance of
the then current term.
When this lease shall be determined by condition broken, either
during the original term of this lease or any renewal or extension thereof, and
also when and as soon as the term hereby created or any extension thereof shall
have expired, it shall be lawful for any attorney as attorney for Tenant to file
an agreement for entering in any competent Court an amicable action and judgment
in ejectment against Tenant and all persons claiming under Tenant for the
recovery by Landlord the possession of the Premises, for which this lease shall
be his sufficient warrant, whereupon, if Landlord so desires, a writ of
Execution or of Possession may issue forthwith,
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<PAGE>
without any prior writ or proceedings whatsoever, and provided that if for any
reason after such action shall have been commenced the same shall be determined
and the possession of the Premises hereby demised remain in or be restored to
Tenant, Landlord shall have the right upon any subsequent default or defaults,
or upon the termination of this lease as hereinbefore set forth, to bring one or
more amicable action or actions as hereinbefore set forth to recover possession
of said Premises.
In any amicable action of ejectment, Landlord shall first cause
to be filed in such action an affidavit made by Landlord or someone acting for
Landlord setting forth the facts necessary to authorize the entry of judgment,
of which facts such affidavit shall be sufficient evidence, and if a true copy
of this lease (and of the truth of the copy such affidavit shall be sufficient
evidence) be filed in such action, it shall not be necessary to file the
original as a warrant of attorney, any rule of Court, custom or practice to the
contrary notwithstanding.
22. Waivers by Tenant, Stay, Exemption, Inquisition. If
-----------------------------------------------
Proceedings shall be commenced by Landlord to recover possession under the
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<PAGE>
Acts of Assembly, either at the end of the term or sooner termination of this
lease, or for nonpayment of rent or any other reason Tenant specifically waives
the right to the three (3) months' notice and/or the fifteen (15) or thirty (30)
days' notice required by the Act of April 6, 1951, P. L. 69, and agrees that
five (5) days' notice shall be sufficient in either or any other case.
23. Right of Assignee of Landlord. The right to enter judgment
-----------------------------
against Tenant and to enforce all of the other provisions of this lease
hereinabove provided for may, at the option of any assignee of this lease, be
exercised by any assignee of the Landlord's right, title and interest in this
lease in his, her or their own name, notwithstanding the fact that any or all
assignments of the said right, title and interest may not be executed and/or
witnessed in accordance with the Act of Assembly of May 28, 1715, 1. Sm. L. 90,
and all supplements and amendments thereto that have been or may hereafter be
passed and Tenant hereby expressly waives the requirements of said Act of
Assembly and any and all laws regulating the manner and/or form in which such
assignments shall be executed and witnessed.
24. Forbearance. The failure of Landlord to insist in any one or
-----------
more instances upon the performance of any of the covenants or conditions of
this lease or to exercise any right or privilege herein conferred shall not be
construed as thereafter waiving or relinquishing any such covenants, conditions,
rights or privileges and the same shall continue and remain in full force and
effect, and waiver of one default or right shall not constitute waiver of any
other default; and the receipt of any rent by Landlord from Tenant or any
assignee or subtenant of Tenant, whether the same be rent that originally was
reserved or that which may become payable under any covenants herein contained,
or of any portion
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<PAGE>
thereof, shall not operate as a waiver of the right of Landlord to enforce the
payment of the additional rent or of any of the other obligations of this lease
by such remedies as may be appropriate, and shall not waive or avoid the right
of Landlord at any time thereafter to elect to terminate this lease, on account
of such assignment, subletting, transferring of this lease or any other breach
of any covenant herein, or condition of this lease, unless evidenced by
Landlord's written waiver.
25. Grace Period. Notwithstanding anything hereinabove stated,
------------
it is understood and agreed that neither party hereto will exercise any right or
remedy provided for in the lease or allowed by law because of any default of the
other, unless such party shall have first given written notice thereof by
registered mail to the other, and the other, within a period of ten (10) days
thereafter, shall have failed to pay the sum or sums due if the default consists
of the failure to pay money, or if the default consists of something other than
the payment of money, shall have failed, within thirty (30) days thereafter to
begin and actively and diligently in good faith to proceed with the correction
of the default until it shall be fully corrected; provided, however, that no
such notice from Landlord shall be required nor shall Landlord be required to
allow any part of the said notice period more than two (2) times during any
twelve (12) month period or if Tenant shall have removed from or shall be in the
course of removing from the Premises or if a petition in bankruptcy or for
reorganization shall have been filed by or against Tenant, resulting in an
adjudication of bankruptcy or for reorganization or if a Receiver or Trustee is
appointed for Tenant and such appointment and such receivership or trusteeship
is not terminated within sixty (60) days or Tenant makes an assignment for the
benefit
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<PAGE>
of creditors or if Tenant is levied upon and is about to be sold out upon the
Premises by any sheriff, marshal or constable.
So long as Tenant is not in default, Landlord warrants Tenant's
possession will not be disturbed by Landlord or anyone claiming through
Landlord.
26. Notices. All notices required or permitted hereunder from
-------
either of the parties to the other shall be in writing and sent by registered
mail, return receipt requested, postage prepaid. Notices shall be addressed to
Tenant, at the premises with a copy to General Counsel, Fieldcrest Mills, Inc.,
Eden, North Carolina, 27288, and to Landlord at 101 East Princeton Road, Bala-
Cynwyd, Pennsylvania 19004. Either party may at any time, in the manner set
forth for giving notices to the other, set forth a different address to which
notices to it shall be sent.
27. Short Form; Tenant's Certificate. It is understood and
--------------------------------
agreed that the parties will execute and acknowledge simultaneously with the
execution of this lease, a short form thereof for recording purposes, if such is
required by any present or proposed mortgagee of the Premises. Tenant agrees at
any time and from time to time within ten (10) days after Landlord's written
request, to execute, acknowledge and deliver to Landlord a written instrument in
recordable form certifying that this lease is unmodified and in full force and
effect (or if there have been modifications, that the same is in full force and
effect as modified and stating the modifications); that Tenant has accepted
possession of the Premises; the dates to which minimum and additional rent and
other charges have been paid in advance, if any; stating whether or not to the
best knowledge of the signer of such certificate Landlord is in default in the
performance of any covenant, agreement or condition contained in this lease, and
if so, specifying each
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<PAGE>
such default of which the signers may have knowledge, and stating that it is
understood that such instrument may be relied upon by any prospective purchaser
of the fee or any mortgagee.
28. Definition of "Landlord". The word "Landlord" is used herein
-----------------------
to include the Landlord named above as well as its partners, successors and
assigns, and any other subsequent owner of the Premises, as well as the heirs,
personal representatives or successors and assigns of any such subsequent owner,
each of whom shall have the same rights, remedies, powers, authorities and
privileges as he would have had had he originally signed this lease as Landlord,
but any such person, whether or not named herein, shall have no liability
hereunder after he ceases to hold title to the said real estate, except for
obligations which may have theretofore accrued.
29. Definition of "Tenant". The word "Tenant" is used herein to
---------------------
include the Tenant named above as well as its successors and assigns, each of
which shall be under the same obligations, liabilities and disabilities and have
only such rights, privileges, and powers as it would have possessed had it
originally signed this lease as Tenant. However, no such rights, privileges or
powers shall inure to the benefit of any assignee of Tenant, immediate or
remote, unless the assignment to such assignee is permitted or has been approved
in writing by Landlord as aforesaid.
30. Entire Agreement. It is expressly understood and agreed by
----------------
and between the parties hereto that this lease sets forth all the promises,
agreements, conditions and undertakings between Landlord and Tenant with respect
to the Premises, and that there are no promises, agreements, conditions or
understandings, either oral or written, between them other than are herein set
forth.
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<PAGE>
3l. Commissions. Tenant represents and warrants to Landlord that
-----------
Tenant was not shown and did not learn of the availability of the property by or
through any broker or agent and that to the best of the knowledge and belief of
Tenant, no commission is payable in connection with the within transaction.
32. Operation. Tenant or any permitted subtenant or assignee of
---------
Tenant shall at all times, commencing thirty (30) days after the term begins,
during the balance of the term of this lease, operate its business on the
Premises or provide twenty-four (24) hours watchman or electronic service at the
demised Premise.
33. Zoning. It is understood and agreed that the Landlord hereof
------
does not warrant or undertake that the Tenant shall be able to obtain a permit
under any Zoning Ordinance or Regulation for such use as Tenant intends to make
of the Premises, and nothing in this lease contained shall obligate the Landlord
to assist Tenant in obtaining such permits; the Tenant further agrees that in
the event a permit cannot be obtained by Tenant under any Zoning ordinance or
Regulation, this lease shall not terminate without Landlord's consent, and the
Tenant shall use the Premises only in a manner permitted under such Zoning
Ordinance or Regulation.
34. Landlord's Consent. In any situation in which Tenant is
------------------
required to obtain Landlord's consent to perform any act in connection with this
lease or the Premises, Landlord agrees that such consent shall not unreasonably
be withheld or delayed.
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<PAGE>
35. Captions. It is agreed that the captions of this lease are
--------
for convenience only and are not a part of this lease and do not in any way
limit or amplify the terms and provisions of this lease.
36. Assignment by Landlord. Upon the assignment of Landlord's
----------------------
rights, all rights, benefits, powers and remedies, but not duties or
obligations, of the Landlord hereunder shall belong to and be exercisable by the
assignee, its successors and assigns, and Tenant will render performance of
Tenant's obligations hereunder to the assignee, its successors and assigns,
pursuant to the terms of the assignment; provided, however, until written notice
from assignee, its successors or assigns, to the contrary, tenant shall render
performance of all of its obligations under this Lease to Landlord.
37. No Amendments After Assignment. Upon notice of assignment of
------------------------------
this Lease, Tenant will not, without the assignee's prior written consent, be a
party to any changes or modifications in or abbrogation of the agreements
contained in this Lease.
38. Rent Payments After Assignment. Upon receipt of written
------------------------------
notice from the assignee, its successors and assigns, addressed to the Tenant at
the address set forth in this Lease or to such other address as may have been
specified by the Tenant from time to time for the receipt of notices, Tenant
shall pay all rent thereafter falling due after the date of receipt of such
notice directly to the assignee, its successors or assigns, without declaration
or set-off, as aforesaid.
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<PAGE>
39. Delivery of the Premises. Landlord will make delivery of the
------------------------
Premises to Tenant in a broom-clean condition and will make no alterations to
the Premises prior to delivery thereof to Tenant. If Landlord is unable to give
Tenant possession of the Premises, as herein provided, by reason of casualty or
some other cause beyond the control of the Landlord, the Landlord shall not be
liable for damages to the Tenant therefor, and during the period during which
the Landlord is unable to give possession, all rights and remedies of all
parties hereunder shall be suspended.
40. Sprinkler System. Tenant may, at Tenant's expense, change
----------------
the sprinkler system from a wet system to a dry system but Tenant must restore
same at Landlord's request and at Tenant's expense, prior to termination of this
Lease.
41. Roof Signs. Tenant will not place any signs upon the roof of
----------
the Premises and Landlord may continue to rent and collect rent for the existing
sign thereon and the Lessee thereof will be permitted access to said sign
through the Premises, during business hours, for the purpose of maintenance and
repair thereof.
42. Renewal Options. Provided that Tenant is not in default
---------------
thereof, Tenant will have the option to renew the Lease for an additional period
of five (5) years at an annual minimum rental of $47,500 per annum. Provided
that the first option has been exercised, and Tenant is not in default
thereunder, Tenant will have a second option to renew this Lease for an
additional period of five (5) years at a minimum annual rental of $55,000 per
annum.
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<PAGE>
Tenant must give Landlord six (6) months' prior notice of Tenant's intention to
exercise any option. All terms and provisions of this Lease not in conflict with
the terms of this paragraph will apply during any option period.
43. Sublease to Landlord. Landlord reserves the right to
--------------------
sublease from Tenant an area currently occupied by Finishing range measuring
about 14' x 100', at the rate of 80(cents) per square foot per annum for the
period of six (6) months from the commencement of the term herein or any portion
thereof, rental to be payable monthly in advance, pending dismantling.
44. Liens on Tenant's Inventory. Tenant is hereby given
---------------------------
permission to acquire and keep upon the demised premises inventory under any
device or devices by which the title thereto or a lien thereon is reserved in a
person or entity other than Tenant or Landlord. Landlord agrees to execute any
and all waivers and other instruments that may be necessary to enable Lessee to
obtain any such inventory under such device or devices for the retention of
title thereto or a lien thereon, and Landlord shall use its best efforts to
obtain the signature of any mortgagee, lienholder or encumbrancer of the demised
premises to any waiver of such mortgagee's, lienholder's or encumbrancer's
interest in any of the said inventory which is required by the owner, seller or
lienor of the same.
IN WITNESS WHEREOF, the parties hereto have executed this
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<PAGE>
agreement under seal the day and year first above written.
GENERAL BAG & BURLAP COMPANY
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Partner
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Partner
DELAWARE VALLEY WOOL SCOURING CO.
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
President
Attest: /s/ [SIGNATURE ILLEGIBLE]
----------------------------
Secretary
<PAGE>
AMENDMENT TO LEASE AGREEMENT
----------------------------
This Amendment made this day of March 1971, by and between General
Bag & Burlap Company, a partnership (hereinafter called "Landlord") and Delaware
Valley Wool Scouring Co., a Pennsylvania corporation, (hereinafter called
"Tenant").
WITNESSETH, whereas Landlord and Tenant under date of December 15,
1970 entered into a Lease Agreement (hereinafter called "Lease Agreement") of
premises 3400 East Allen Street, Philadelphia, Pennsylvania (hereinafter
referred to as "the Premises"); and
WHEREAS Landlord and Tenant desire to amend the Lease Agreement in the
manner here following:
Now, therefore, LandLord and Tenant covenant and agree with each other
as follows:
1. Attached hereto, hereby made a part hereof and marked
Exhibit "A" is a plan numbered EIB-27151, R-42502. On the
ground floor of the Premises in Building 10 and colored red
is an area of slightly less than 7,000 square feet wherein a
wood floor has been laid over a concrete sub-floor. The Tenant
agrees to leave said wood floor in place and Landlord agrees
that Tenant will not be responsible for any future damages
thereto which are caused by the ordinary day-to-day operations
of Tenant in the Premises.
<PAGE>
2. Also on the first floor of the Premises is a cinder
block wall at the point marked in blue on Exhibit "A". Said
wall may be removed by Tenant, at Tenant's expense, provided
that this is done in a good and workmanlike fashion and
provided that the floor below the existing wall is property
leveled so that the two sections making up Building 10 will
be on the same level and will be one continuous floor.
3. In all other respects the Lease Agreement is hereby
ratified and confirmed.
IN WITNESS WHEREOF, Landlord and Tenant have caused these presents to
be executed under seal the day and year first above written.
GENERAL BAG & BURLAP COMPANY
By:________________________________
Partner
DELAWARE VALLEY WOOL SCOURING CO.
By:________________________________
President
Attest:____________________________
Secretary
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<PAGE>
EXHIBIT 10.14
STATE OF GEORGIA
COUNTY OF GORDON
COMMERCIAL LEASE
THIS LEASE, MADE THIS 23RD DAY OF MAY, 1996, BY AND BETWEEN ECHOTA
PROPERTIES, L.L.C. (HEREINAFTER REFERRED TO AS "LANDLORD"); AND AMERICAN
WEAVERS, L.P. (HEREINAFTER REFERRED TO AS "TENANT");
WITNESSETH:
A FIVE (5) YEAR LEASE AGREEMENT BETWEEN ECHOTA PROPERTIES, L.L.C. (LANDLORD) AND
AMERICAN WEAVERS, L.P. (TENANT). THIS AGREEMENT ALSO INCLUDES AN OPTION TO
RENEW.
PREMISES
1. THAT LANDLORD, FOR AND IN CONSIDERATION OF THE RENTS, COVENANTS,
AGREEMENTS, AND STIPULATIONS HEREINAFTER MENTIONED, RESERVED, AND CONTAINED, TO
BE PAID, KEPT AND PERFORMED BY TENANT, HAS LEASED AND RENTED, AND BY THESE
PRESENTS DOES LEASE AND RENT, UNTO TENANT, AND TENANT HEREBY LEASES AND TAKES
UPON THE TERMS AND CONDITIONS WHICH HEREINAFTER APPEAR, THE FOLLOWING DESCRIBED
PROPERTY (HEREINAFTER CALLED "PREMISES"), TO WIT:
THAT TRACT OR PARCEL OF LAND LYING, BEING AND SITUATED IN LAND LOTS
168 AND 169 IN THE 14TH DISTRICT AND 3RD SECTION OF GORDON COUNTY, GEORGIA, AND
BEING A PORTION OF 3.49 ACRES MORE OR LESS, THEREOF AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BUILDING SIZE IS 150 FT-4 IN. BY 200 FT. BY 18 FT. FOR
MANUFACTURING AND WAREHOUSING AREA. RETAINING APRON BEING DESCRIBED ON THE
ATTACHED EXHIBIT "A".
2. TENANT SHALL HAVE AND HOLD PREMISES FOR A TERM BEGINNING ON THE 1ST DAY
OF SEPTEMBER, 1996, AND ENDING ON THE 31ST DAY OF AUGUST, 2001, AT MIDNIGHT
UNLESS SOONER TERMINATED OR EXTENDED AS HEREINAFTER SPECIFICALLY PROVIDED IN
THIS LEASE.
RENTAL
3. TENANT SHALL PAY LANDLORD AT THE ADDRESS OF LANDLORD SET FORTH
HEREINAFTER
1
<PAGE>
IN THIS LEASE OR OF WHICH TENANT SHALL FROM TIME TO TIME OTHERWISE BE NOTIFIED
PROMPTLY ON THE 1ST DAY OF EACH MONTH IN ADVANCE, DURING ALL TERMS OF THIS
LEASE A MONTHLY RENTAL OF $6,000.00 (30,000 SQ. FT @ $.20 PER SQ. FT.)
UTILITY BILLS
4. TENANT SHALL PAY ALL WATER, SEWER, SEWER SERVICE CHARGES, GAS,
ELECTRICITY, FUEL, LIGHT, HEAT AND POWER BILLS FOR PREMISES OR USED BY TENANT IN
CONNECTION THERE WITH, DURING ALL TERMS OF THIS LEASE.
USE OF PREMISES
5. PREMISES SHALL NOT BE USED FOR ANY ILLEGAL PURPOSES; NOR IN ANY MANNER
TO CREATE ANY NUISANCE OR TRESPASS; NOR IN ANY MANNER TO VITIATE THE INSURANCE
OR INCREASE THE RATE OF INSURANCE ON PREMISES.
ABANDONMENT OF PREMISES
6. TENANT SHALL NOT ABANDON OR VACATE PREMISES DURING ANY TERM OF THIS
LEASE.
REPAIRS BY LANDLORD
7. LANDLORD SHALL KEEP IN GOOD REPAIR THE ROOF, FOUNDATIONS AND EXTERIOR
WALLS OF PREMISES, AND SEWER PIPES OUTSIDE THE EXTERIOR WALLS OF THE BUILDING IN
WHICH PREMISES LOCATED, EXCEPT REPAIRS RENDERED NECESSARY BY THE NEGLIGENCE,
WILLFUL ACT OR OMISSION OF TENANT, TENANT'S AGENTS, EMPLOYEES AND INVITES.
LANDLORD HEREBY GIVES TENANT EXCLUSIVE CONTROL OF PREMISES AND SHALL BE UNDER NO
OBLIGATION TO INSPECT PREMISES. TENANT SHALL PROMPTLY REPORT IN WRITING TO
LANDLORD ANY DEFECTIVE CONDITION KNOWN TO TENANT WHICH LANDLORD IS REQUIRED TO
REPAIR, AND FAILURE TO SO REPORT SUCH DEFECTS SHALL MAKE TENANT RESPONSIBLE TO
LANLORD FOR ANY LIABILITY INCURRED BY LANDLORD BY REASON OF SUCH DEFECTS.
REPAIRS BY TENANT
8. TENANT ACCEPTS PREMISES IN ITS PRESENT CONDITION AND AS SUITED FOR THE
USES INTENDED BY TENANT. TENANT SHALL, THROUGHOUT ALL TERMS OF THIS LEASE, AT
TENANT'S
2
<PAGE>
EXPENSE, MAINTAIN PREMISES IN GOOD ORDER AND REPAIR, EXCEPT THOSE REPAIRS
EXPRESSLY REQUIRED IN PARAGRAPH 7 HEREOF, TO BE MADE BY LANDLORD. TENANT
FURTHER AGREES TO CARE FOR AND CLEAN THE GROUNDS AROUNDING THE BUILDING,
INCLUDING THE MOWING OF GRASS, CLEANING OF THE PAVED AREAS, AND GENERAL
LANDSCAPING. TENANT SHALL RETURN PREMISES TO LANDLORD AT THE EXPIRATION, OR
PRIOR TO TERMINATION, OF THE TERM OF THIS LEASE IN AS GOOD CONDITION AND REPAIR
AS WHEN FIRST RECEIVED, NATURAL WEAR AND TEAR, DAMAGE BY STORM, FIRE, LIGHTNING,
EARTHQUAKE OR OTHER CASUALTY ALONE EXCEPTED.
DESTRUCTION OF OR DAMAGE TO PREMISES
9. IF PREMISES ARE TOTALLY DESTROYED BY STORM, FIRE, LIGHTNING, EARTH-
QUAKE OR OTHER CASUALTY, THIS LEASE SHALL TERMINATE AS OF THE DATE OF SUCH
DESTRUCTION, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND TENANT
AS OF THAT DATE. IF PREMISES ARE DAMAGED BUT NOT WHOLLY DESTROYED BY ANY OF SUCH
CASUALTIES, THE TENANT AND LANDLORD RESERVE THE RIGHT TO CO-DETERMINE THE DEGREE
OF DAMAGE OR LOSS TO THE FACILITY, AND SHOULD LANDLORD ELECT TO RESTORE THE
PREMISES TO SUBSTANTIALLY THE SAME CONDITION AS BEFORE DAMAGE THEN FULL RENTAL
SHALL RECOMMENCE UPON COMPLETION OF SAID RESTORATION. LANDLORD HAS ONE HUNDRED
TWENTY (120) DAYS TO MAKE RESTORATIONS TO THE ORIGINAL CONDITION OR TENANT MAY
HAVE THE OPTION TO TERMINATE THE LEASE AGREEMENT.
INDEMNITY
10. TENANT AGREES TO AND HEREBY DOES, INDEMNIFY AND SAVE LANDLORD HARMLESS
AGAINST ALL CLAIMS FOR DAMAGES TO PERSONS OR PROPERTY BY REASON OF TENANT'S USE
OR OCCUPANCY OF PREMISES, AND ALL EXPENSES INCURRED BY THE LANDLORD AND
MANAGER BECAUSE THEREOF, INCLUDING REASONABLE ATTORNEY'S FEES AND COURT COSTS.
GOVERNMENTAL ORDERS
11. TENANT AGREES, AT TENANT'S OWN EXPENSE, TO PROMPTLY COMPLY WITH ALL
REQUIREMENTS OF ANY LEGALLY CONSTITUTED PUBLIC AUTHORITY MADE NECESSARY BY
REASON
3
<PAGE>
OF TENANT'S OCCUPANCY OF PREMISES.
CONDEMNATION
12. IF THE WHOLE OF PREMISES, OR SUCH PORTION THEREOF AS WILL MAKE
PREMISES UNUSABLE FOR THE PURPOSES HEREIN LEASED, BE CONDEMNED BY ANY LEGALLY
CONSTITUTED AUTHORITY FOR ANY PUBLIC USE OR PURPOSE, THEN IN EITHER OF SAID
EVENTS THIS LEASE SHALL CEASE FROM THE TIME WHEN POSSESSION THEREOF IS TAKEN BY
PUBLIC AUTHORITIES, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND
TENANT AS OF THAT DATE SUCH TERMINATION, HOWEVER, SHALL BE WITHOUT PREJUDICE TO
THE RIGHTS OF EITHER LANDLORD OR TENANT TO RECOVER COMPENSATION AND DAMAGE
CAUSED BY CONDEMNATION FROM THE CONDEMNOR. IT IS UNDERSTOOD THAT CONDEMNATION BY
A PRE-EXISTING CONDITION IS NOT THE RESPONSIBILITY OF THE TENANT. IT IS FURTHER
UNDERSTOOD AND AGREED THAT NEITHER TENANT NOR LANDLORD SHALL HAVE ANY RIGHTS IN
ANY AWARD MADE TO THE OTHER BY ANY CONDEMNATION AUTHORITY NOTWITHSTANDING THE
TERMINATION OF THIS LEASE AS HEREIN PROVIDED.
ASSIGNMENT AND SUBLETTING
13. TENANT SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE LANDLORD
ENDORSED HEREON, ASSIGN OR ENCUMBER THIS LEASE OR ANY INTEREST HEREUNDER, OR
SUBLET PREMISES OR ANY PART THEREOF, OR PERMIT THE USE OF PREMISES BY ANY OTHER
PARTY OTHER THAN TENANT. LANDLORD'S CONSENT TO ANY ASSIGNMENT, ENCUMBRANCE OR
SUBLEASE SHALL NOT NULLIFY THIS PROVISION, AND ALL LATER ASSIGNMENTS,
ENCUMBRANCES OR SUBLEASES SHALL BE MADE LIKEWISE ONLY ON THE PRIOR WRITTEN
CONSENT OF LANDLORD. ASSIGNEE OF TENANT, AT OPTION OF LANDLORD, SHALL BECOME
DIRECTLY LIABLE TO LANDLORD FOR ALL OBLIGATIONS OF TENANT HEREUNDER, BUT NO
SUBLEASE OR ASSIGNMENT BY TENANT SHALL RELIEVE TENANT OF ANY LIABILITY
HEREUNDER
REMOVAL OF FIXTURES AND PROPERTY
14. TENANT MAY (IF NOT IN DEFAULT HEREUNDER) PRIOR TO THE EXPIRATION OF
THIS LEASE,
4
<PAGE>
OR ANY EXTENSION THEREOF, REMOVE ALL PERSONAL PROPERTY, FIXTURES AND EQUIPMENT
WHICH TENANT HAS PLACED IN PREMISES, PROVIDED TENANT SIMULTANEOUSLY REPAIRS ALL
DAMAGE TO PREMISES CAUSED BY SUCH REMOVAL. IF TENANT IS AT THE TIME OF ANY
TERMINATION OF THIS LEASE IN DEFAULT UNDER ANY TERM OR CONDITION HEREOF, TENANT
SHALL NOT BE ENTITLED TO REMOVE ANY OF SUCH PERSONAL PROPERTY, FIXTURES OR
EQUIPMENT AND LANDLORD SHALL HAVE ALL RIGHTS THEREIN AS ARE THEN AVAILABLE TO
LANDLORD BY LAW.
CANCELLATION OF LEASE BY LANDLORD
15. IT IS MUTUALLY AGREED THAT, IN THE EVENT TENANT SHALL DEFAULT IN THE
PAYMENT OF RENT HEREIN RESERVED, WHEN DUE, AND FAILS TO CURE SAID DEFAULT WITHIN
(5) DAYS AFTER THE GIVING OF WRITTEN NOTICE THEREOF BY LANDLORD; OR IF TENANT
SHALL BE IN DEFAULT IN PERFORMING ANY OF THE TERMS OR PROVISIONS OF THIS LEASE
OTHER THAN THE PROVISIONS REQUIRING THE PAYMENT OF RENT, AND FAILS TO CURE SUCH
DEFAULT WITHIN THIRTY (30) DAYS AFTER THE DATE OF WRITTEN NOTICE OF DEFAULT FROM
LANDLORD; OR IF TENANT IS ADJUDICATED BANKRUPT; OR IF A PERMANENT RECEIVER IS
APPOINTED FOR TENANT'S PROPERTY AND SUCH RECEIVER IS NOT REMOVED WITHIN SIXTY
(60) DAYS AFTER WRITTEN NOTICE FROM LANDLORD TO TENANT TO OBTAIN SUCH REMOVAL;
OR IF, WHETHER VOLUNTARILY OR INVOLUNTARILY, TENANT TAKES ADVANTAGE OF ANY
DEBTOR RELIEF PROCEEDINGS UNDER ANY PRESENT OR FUTURE LAW, WHEREBY THE RENT OR
ANY PART THEREOF, OR IS PROPOSED TO BE, REDUCED OR PAYMENT THEREOF DEFERRED; OR
IF TENANT MAKES AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR IF TENANT'S
EFFECTS SHALL BE LEVIED UPON OR ATTACHED UNDER PROCESS AGAINST TENANT, NOT
SATISFIED OR DISSOLVED WITHIN THIRTY (30) DAYS AFTER WRITTEN NOTICE FROM
LANDLORD TO TENANT TO OBTAIN SATISFACTION THEREOF; THEN, AND IN ANY OF SAID
EVENTS, LANDLORD AT ITS OPTIONS MAY AT ONCE, OR WITHIN SIX (6) MONTHS THEREAFTER
(BUT ONLY DURING THE CONTINUANCE OF SUCH DEFAULT OR CONDITION), TERMINATE THIS
LEASE BY WRITTEN NOTICE TO TENANT; WHEREUPON THIS LEASE SHALL END. AFTER AN
AUTHORIZED ASSIGNMENT OR SUBLEASE OF THE ENTIRE PREMISES COVERED BY THIS LEASE,
THE OCCURRING OF ANY OF THE FOREGOING
5
<PAGE>
DEFAULTS OR EVENTS SHALL AFFECT THIS LEASE ONLY IF CAUSED BY, OR HAPPENING TO,
SUCH ASSIGNEE OR SUBLESSEE. ANY NOTICE PROVIDED IN THIS PARAGRAPH 16 MAY BE
GIVEN BY LANDLORD OR ITS ATTORNEY. UPON SUCH TERMINATION BY LANDLORD, TENANT
WILL AT ONCE SURRENDER POSSESSION OF PREMISES TO LANDLORD AND REMOVE THEREFROM
ALL OF TENANT'S EFFECTS IN WHICH LANDLORD CLAIMS NO INTEREST UNDER PARAGRAPH 15
OF THIS LEASE; AND LANDLORD SHALL HAVE THE RIGHT FORTHWITH TO RE-ENTER PREMISES
AND REPOSSESS ITSELF THEREOF, AND REMOVE ALL PERSONS AND EFFECTS THEREFROM,
USING SUCH FORCE AS MAY BE NECESSARY WITHOUT BEING GUILTY OF TRESPASS, FORCIBLE
ENTRY OR DETAINER OR OTHER TORT.
RELETTING BY LANDLORD
16. LANDLORD SHALL HAVE THE RIGHT AT LANDLORD'S OPTION WITHOUT TERMINATING
THIS LEASE, UPON TENANT'S BREACHING THIS CONTRACT, TO ENTER UPON AND, AS
TENANT'S AGENT, RENT PREMISES AT THE BEST PRICE OBTAINABLE BY REASONABLE EFFORT,
WITHOUT ADVERTISEMENT AND BY PRIVATE NEGOTIATIONS AND FOR ANY TERM LANDLORD
DEEMS PROPER. TENANT SHALL BE LIABLE TO LANDLORD FOR THE DEFICIENCY, IF ANY,
BETWEEN THE TENANT'S RENT HEREUNDER AND THE PRICE OBTAINED BY THE LANDLORD ON
RELETTING.
EXTERIOR SIGNS
17. TENANT SHALL PLACE NO SIGNS UPON THE OUTSIDE WALLS OR ROOF OF PREMISES
EXCEPT WITH THE WRITTEN CONSENT OF LANDLORD. ANY AND ALL SIGNS PLACED ON THE
WITHIN LEASED PREMISES BY TENANT SHALL BE MAINTAINED IN COMPLIANCE WITH ALL
GOVERNMENTAL ORDINANCES, RULES, AND REGULATIONS GOVERNING SUCH SIGNS, AND TENANT
SHALL BE RESPONSIBLE TO LANDLORD FOR ANY DAMAGE CAUSED BY INSTALLATION, USE OR
MAINTENANCE OF SAID SIGNS OR VIOLATION OF ORDINANCE, RULE OR REGULATION WITH
REGARD THERETO. UPON ANY REMOVAL OF SAID SIGNS TENANT SHALL SIMULTANEOUSLY
REPAIR ALL DAMAGE INCIDENT TO SUCH REMOVAL. LANDLORD SHALL FREELY GIVE TENANT
PERMISSION TO INSTALL SIGNS.
INTERRUPTION OF SERVICES OR OF OCCUPANCY
18. INTERRUPTION OR CURTAILMENT OF ANY SERVICE TO THE PREMISES, SUCH AS
(BUT NOT
6
<PAGE>
LIMITED TO) UTILITIES, IF CAUSED BY STRIKES, MECHANICAL DIFFICULTIES OR OTHER
CAUSES BEYOND THE LANDLORD'S CONTROL WILL NOT ENTITLE TENANT TO ANY CLAIM
AGAINST LANDLORD OR ANY ABATEMENT IN RENT, NOR WILL IT CONSTITUTE CONSTRUCTIVE
OR PARTIAL EVICTION, UNLESS LANDLORD FAILS TO TAKE MEASURES THAT ARE REASONABLE
IN THE CIRCUMSTANCES TO RESTORE THE SERVICE WITHOUT UNDUE DELAY. IT IS
UNDERSTOOD THAT ANY PRE-EXISTING ENVIRONMENTAL CONDITION IS NOT THE
RESPONSIBILITY OF THE TENANT. IT IS ASSUMED THAT NO SUCH CONDITION EXISTS.
CONSTRUCTIVE EVICTION
19. TENANT WILL NOT BE ENTITLED TO CLAIM A CONSTRUCTIVE EVICTION FROM
PREMISES UNLESS TENANT WILL HAVE FIRST NOTIFIED LANDLORD IN WRITING OF THE
CONDITION GIVING RISE TO THE CLAIM AND, IF THE COMPLAINTS ARE JUSTIFIED, UNLESS
LANDLORD FAILS TO REMEDY THE CONDITION WITHIN A REASONABLE TIME AFTER RECEIPT OF
THE NOTICE.
ENTRY FOR CARDING
20. LANDLORD MAY CARD PREMISES "FOR RENT" OR "FOR SALE" THIRTY (30) DAYS
BEFORE THE TERMINATION OF THIS LEASE. LANDLORD SHALL HAVE THE RIGHT TO ENTER
PREMISES, AFTER CONFIDENTIALITY AGREEMENT IS MADE BETWEEN LANDLORD AND TENANT,
AT REASONABLE HOURS TO EXHIBIT SAME TO PROSPECTIVE PURCHASERS OR TENANTS AND TO
MAKE REPAIRS REQUIRED OF LANDLORD UNDER THE TERMS HEREOF OR TO MAKE REPAIRS TO
LANDLORD'S ADJOINING PROPERTY, IF ANY.
EFFECT OF TERMINATION OF LEASE
21. NO TERMINATION OF THIS LEASE PRIOR TO THE NORMAL ENDING THEREOF, BY
LAPSE OF TIME OR 0THERWISE, SHALL AFFECT LANDLORD'S RIGHT TO COLLECT RENT FOR
THE PERIOD PRIOR TO TERMINATION THEREOF.
MORTGAGEE'S RIGHTS
22. TENANT'S RIGHTS SHALL BE SUBJECT TO ANY BONA FIDE MORTGAGE OR DEED TO
SECURE DEBT WHICH IS NOW, OR MAY HEREAFTER BE, PLACED UPON THE PROPERTY OF WHICH
PREMISES
7
<PAGE>
CONSTITUTE A PART.
NO ESTATE IN LAND
23. THIS LEASE SHALL CREATE THE RELATIONSHIP OF LANDLORD AND TENANT
BETWEEN THE PARTIES HERETO; NO ESTATE SHALL PASS OUT OF LANDLORD. TENANT HAS
ONLY A USUFRUCT, NOT SUBJECT TO LEVY AND SALE, AND NOT ASSIGNABLE BY TENANT
EXCEPT BY LANDLORD'S CONSENT. NEITHER LANDLORD NOR TENANT SHALL CAUSE THIS LEASE
TO BE RECORDED WITHOUT PRIOR WRITTEN CONSENT OF THE OTHER PARTY TO SUCH
RECORDING.
HOLDING OVER
24. IF TENANT REMAINS IN POSSESSION OF PREMISES AFTER EXPIRATION OF THE
TERM HEREOF, WITH LANDLORD'S ACQUIESCENCE AND WITHOUT ANY EXPRESS AGREEMENT OF
PARTIES, TENANT SHALL BE A TENANT AT WILL AT TWO TIMES THE RENTAL RATE IN EFFECT
AT END OF LEASE; AND THERE SHALL BE NO RENEWAL OF THIS LEASE BY OPERATION OF
LAW.
ATTORNEY'S FEES AND HOMESTEAD
25. IF ANY RENT OWING UNDER THIS LEASE IS COLLECTED BY OR THROUGH AN
ATTORNEY AT LAW, TENANT AGREES TO PAY THE FULL AMOUNT OF SUCH REASONABLE
ATTORNEY'S FEES AS LANDLORD INCURS IN SUCH COLLECTION. TENANT WAIVES ALL
HOMESTEAD RIGHTS AND EXEMPTIONS WHICH TENANT MAY HAVE UNDER ANY LAW AS
AGAINST ANY OBLIGATION OWING UNDER THIS LEASE. TENANT HEREBY ASSIGNS TO LANDLORD
TENANT'S HOMESTEAD AND EXEMPTION.
SERVICE OF NOTICE
26. TENANT HEREBY APPOINTS AS TENANTS AGENT TO RECEIVE SERVICE OF ALL
DISPOSSESSORY OR OTHER LEGAL PROCEEDINGS AND NOTICES THEREUNDER, AND ALL
NOTICES REQUIRED UNDER THIS LEASE, THE PERSON IN CHARGE OF PREMISES OR
OCCUPYING PREMISES AT THE TIME OF DELIVERY OR SERVICE OF SUCH NOTICE; AND IF NO
PERSON IS IN CHARGE OF OR OCCUPYING PREMISES AT SUCH TIME, THEN SUCH SERVICE
OR NOTICE MAY BE MADE BY ATTACHING THE SAME ON THE MAIN ENTRANCE TO PREMISES.
A COPY OF ALL NOTICES UNDER THIS LEASE SHALL
8
<PAGE>
ALSO BE SENT TO TENANT'S ADDRESS: AMERICAN WEAVERS, INC. ATTENTION: MR. SCOTT
FLETCHER, 965 NORTH WALL STREET, CALHOUN, GA 30701. ALL NOTICES GIVEN HEREUNDER
BY TENANT TO LANDLORD SHALL BE SENT TO LANDLORD IN CARE OF LANDLORD AT
LANDLORD'S ADDRESS SET FORTH HEREINAFTER IN THIS LEASE, UNLESS IT HAS OTHERWISE
NOTIFIED TENANT OF ANOTHER ADDRESS FOR LANDLORD.
MISCELLANEOUS
27. ALL RIGHTS, POWERS AND PRIVILEGES CONFERRED HEREUNDER UPON PARTIES
HERETO SHALL BE CUMULATIVE BUT NOT RESTRICTIVE TO THOSE GIVEN BY LAW. NO FAILURE
OF LANDLORD TO EXERCISE ANY POWER GIVEN LANDLORD HEREUNDER, OR TO INSIST UPON
STRICT COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF THE PARTIES AT VARIANCE WITH THE TERMS HEREOF SHALL CONSTITUTE A
WAIVER OF LANDLORD'S RIGHT TO DEMAND EXACT COMPLIANCE WITH THE TERMS HEREOF.
"LANDLORD" AS USED IN THIS LEASE SHALL INCLUDE LANDLORD, HIS OR ITS HEIRS,
EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVE, ASSIGNS AND SUCCESSORS IN TITLE
TO PREMISES. "TENANT" SHALL INCLUDE TENANT, HIS OR ITS HEIRS, EXECUTORS,
ADMINISTRATORS, LEGAL REPRESENTATIVES, AND, IF THIS LEASE SHALL BE VALIDLY
ASSIGNED OR SUBLET, SHALL ALSO INCLUDE TENANT'S ASSIGNEES OR SUBLEASES, AS TO
PREMISES COVERED BY SUCH ASSIGNMENT OR SUBLEASE. "LANDLORD", AND "TENANT" SHALL
INCLUDE MALE AND FEMALE, SINGULAR AND PLURAL, CORPORATION, PARTNERSHIP OR
INDIVIDUAL, AS MAY FIT THE PARTICULAR PARTIES. TIME IS OF THE ESSENCE OF THIS
LEASE.
OPTION TO RENEW
28. TENANT IS GIVEN AN OPTION TO EXTEND THE TERM OF THIS LEASE BY A PERIOD
OF THREE (3) YEARS. TENANT MAY EXERCISE THIS OPTION AT ANY TIME BY NOTICE IN
WRITING TO LANDLORD SERVED AT LEAST NINETY (90) DAYS PRIOR TO THE END OF THE
INITIAL TERM. IF TENANT SHALL NOT BE IN DEFAULT, EXCEPT AS THE TERMS MAY NOT BE
RELEVANT OR APPLICABLE. ALL THE TERMS AND CONDITIONS OF THE LEASE SHALL APPLY
FOR THE EXTENDED PERIOD, EXCLUDING THE MONTHLY
9
<PAGE>
RENTAL WHICH SHALL REMAIN AT $6,000.00 OR $.20 PER SQUARE FOOT OF RENTED SPACE
AFTER THE EIGHT YEAR TERM, OPTION TO RENEW WILL BE GRANTED PERPETUALLY IN THREE
YEAR INCREMENTS WITH THE RENTAL RATE BEING INCREASED AT EACH RENEWAL BASED ON
THE ACCUMULATIVE YEARLY INFLATION RATE AS DETERMINED BY THE STATE OF GEORGIA
DEPARTMENT OF COMMERCE. THIS RATE SHALL BE FROM THE INITIAL TERM OF THE LEASE.
TENANT'S OBLIGATION TO INSURE: ALL-INCLUSIVE FORM
29. DURING THE TERM OF THIS LEASE, TENANT, AT ITS SOLE COST AND EXPENSE,
AND FOR THE MUTUAL BENEFIT OF LANDLORD AND TENANT, SHALL CARRY AND MAINTAIN THE
FOLLOWING TYPES OF INSURANCE IN THE AMOUNTS SPECIFIED: COMPREHENSIVE PUBLIC
LIABILITY INSURANCE, INCLUDING PROPERTY DAMAGE, INSURING LANDLORD AND TENANT
AGAINST LIABILITY FOR INJURY TO PERSONS OR PROPERTY OCCURRING IN OR ABOUT THE
LEASED PREMISES OR ARISING OUT OF THE OWNERSHIP, MAINTENANCE, USE, OR OCCUPANCY
THEREOF. THE LIABILITY UNDER SUCH INSURANCE SHALL NOT BE LESS THAN $1,000,000.00
FOR ANY ONE PERSON INJURED OR KILLED AND NOT LESS THAN $5,000,000.00 FOR ANY ONE
ACCIDENT AND NOT LESS THAN $1,000,000.00 FOR PERSONAL PROPERTY DAMAGE PER
ACCIDENT. WRITTEN PROOF OF THIS INSURANCE COVERAGE SHALL BE REQUIRED BY ECHOTA
PROPERTIES, L.L.C. DURING THE TERM OF THIS LEASE.
10
<PAGE>
ENTIRE AGREEMENT
30. THIS LEASE CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND NO
REPRESENTATIONS, INDUCEMENTS, PROMISES, OR AGREEMENTS, ORAL OR OTHERWISE,
BETWEEN THE PARTIES, NOT EMBODIED HEREIN, SHALL BE OF ANY FORCE OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HEREIN HAVE HEREUNTO SET THEIR HANDS AND
SEALS OR CAUSED THIS INSTRUMENT TO BE EXECUTED THROUGH AUTHORIZED OFFICIALS IN
THEIR NAME, IN TRIPLICATE, THE DAY AND YEAR FIRST ABOVE WRITTEN.
SIGNED, SEALED AND DELIVERED LANDLORD:
IN THE PRESENCE OF: STEPHEN FOX, RANDALL FOX, RAYMOND
KING D/B/A ECHOTA PROPERTIES,
L.L.C.
[SIGNATURE ILLEGIBLE] [SIGNATURE ILLEGIBLE] (SEAL)
- ---------------------- ---------------------
UNOFFICIAL WITNESS
[SIGNATURE ILLEGIBLE] [SIGNATURE ILLEGIBLE] (SEAL)
- ---------------------- ---------------------
NOTARY PUBLIC
GA STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS: P O Box 2409
------------
Calhoun GA 30703
---------------------
SIGNED, SEALED AND DELIVERED TENANT:
IN THE PRESENCE OF: AMERICAN WEAVERS, L.P.
BY ITS GENERAL PARTNER
AMERICAN WEAVERS MANAGEMENT, INC.
[SIGNATURE ILLEGIBLE] [SIGNATURE ILLEGIBLE] (SEAL)
- --------------------- ---------------------
UNOFFICIAL WITNESS
[SIGNATURE ILLEGIBLE] _____________________ (SEAL)
- ---------------------
NOTARY PUBLIC
GA. STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS: 965 North Wall St.
------------------
Calhoun GA 30701
-----------------
11
<PAGE>
MR. SCOTT FLETCHER 7/13/94
AMERICAN WEAVERS
903 NORTH WALL STREET
CALHOUN, GEORGIA
EXHIBIT "A"
PERMITS: ALL PERMITS ARE INCLUDED
GRADING AND SITEWORK: EXISTING
FOOTINGS: EXISTING
CONCRETE APRONS: EXISTING
SIDEWALKS:
FURNISH AND INSTALL A 5 FT. X 75 FT. SIDEWALK AT SPECIFIED LOCATION
RETAINING WALLS: EXISTING
PRE-ENGINEERED BUILDING: THE AGREED UPON RENTED SPACE
THE STEEL BUILDING DIMENSIONS WILL BE 150 FT. X 4 IN. WIDE BY 200 FT. LONG WITH
AN EAVELINE HEIGHT OF 18 FT. THE BUILDING WILL BE A TAPERED COLUMN TYPE BUILDING
WITH INTERIOR PIPE COLUMNS PER FRAME. THE BUILDING WILL HAVE 50 FT. SPANS
RUNNING THE WIDTH OF THE BUILDING. LENGTHWISE, THE BUILDING SHALL HAVE VARIABLE
BAYS. THE ROOF SLOPE WILL BE 1:12". THE BUILDING IS DESIGNED TO CARRY AN 80 MPH
WIND AND A 20 PSF LIVE LOAD WITH AN ADDITIONAL 3 PSF AUXILIARY LOAD SYSTEM AND
MISCELLANEOUS LOAD. THE TOTAL RENTED SPACE SHALL BE 30,000 SQ. FT.
CANOPY: ONE (1) 5 FT. X 50 FT. AT THE ENDWALL DOCK DOORS
WALLS OF SAID BUILDING SHALL BE SHEETED WITH 26 GAUGE ARCHITECTURAL WALL PANELS.
ROOF OF SAID BUILDING SHALL BE 26 GAUGE GALVALUME. WALLS SHALL HAVE BAKED ON
PAINT.
<PAGE>
AMERICAN WEAVERS PAGE 2
FURNISH AND INSTALL TWO (2) 3 FT. X 7 FT. STEEL WALK DOORS AT THE SPECIFIED
LOCATIONS. THIS INCLUDES FRAMES, MORTISE LOCKSETS, DOORS AND THRESHOLDS.
ROOF AND WALLS SHALL BE INSULATED WITH VINYL FACE METAL BUILDING INSULATION.
ROLL-UP DOORS:
5 EACH 8 FT. X 10 STEEL ROLLING DOORS
4 EACH EDGE OF DOCK LEVELERS
4 EACH DOCK SEALS
INTERIOR OFFICES:
COMPLETE RESTROOM COMBINATION SHALL BE 20 FT. X 16 FT. 2ND FLOOR OPEN AND
PLYWOOD DECKED.
CEILING:
RESTROOM SHALL HAVE ACOUSTICAL CEILINGS.
FLOORS:
RESTROOM SHALL BE VINYL ASPHALT TILE
STEEL DOORS:
TWO (2) IN RESTROOM WALLS
PAINTING:
INTERIOR STRUCTURAL STEEL SHALL HAVE ONE FACTORY APPLIED COAT OF RED OXIDE PAINT
AND ONE FIELD COAT OF SHERWIN WILLIAMS DTM.
INTERIOR BLOCK WALLS SHALL HAVE ONE PRIMER COAT AND ONE FINISH COAT OF LATEX
SEMI-GLOSS ENAMEL.
<PAGE>
AMERICAN WEAVERS PAGE 3
GYPSUM WALLS SHALL HAVE ONE PRIMER COAT AND ONE FINISH COAT OF LATEX WALL PAINT.
PLUMBING:
4 EACH WALL HUNG LAVATORIES
2 EACH HANDICAP FLUSH VALVE COMMODES
1 EACH FLUSH VALVE URINAL
1 EACH ELONGATED FLUSH VALVE COMMODE
1 EACH GALLON ELECTRIC WATER COOLER
1 EACH SIX (6) GALLON WATER HEATED
2 EACH EXTERIOR HOSE BIBS
ELECTRICAL AND LIGHTING: IN PLACE AS EXISTS
6 EACH EXTERIOR WALL WASHER UNITS
8 EACH RANDOM 110 VOLT OUTLETS
2 EACH EXIT SIGNS AS REQUIRED
2 EACH LOADING DOCK LIGHTS OVER CANOPY
6 EACH ELECTRICAL OUTLETS FOR VENDING MACHINES
SPRINKLER SYSTEM:
FURNISH AND INSTALL A SPRINKLER SYSTEM. SPRINKLER SYSTEM SHALL MEET INSURANCE
SPECIFICATIONS. SPRINKLER SYSTEM SPECIFICATIONS ARE ATTACHED.
HEATING, VENTILATION AND AIR CONDITIONING:
4 EACH 36 IN. HORSEPOWER WALL FANS
2 EACH 300,000 BTU GAS UNIT HEATERS VENTED AS PER CODE
REPAIRS/PAINTING; THE PLYWOOD PROTECTIVE SHEETS AROUND THE INTERIOR PERIMETER OF
THE BUILDING, IN PLACES WHICH NEED REPAIR.
<PAGE>
EXHIBIT 10.15
STATE OF GEORGIA
COUNTY OF GORDON
COMMERCIAL LEASE
THIS LEASE, MADE THIS 23RD DAY OF MAY, 1996, BY AND BETWEEN ECHOTA
------
PROPERTIES, L.L.C. (HEREINAFTER REFERRED TO AS "LANDLORD"); AND AMERICAN
- -----------
WEAVERS, L.L.C. (HEREINAFTER REFERRED TO AS "TENANT");
WITNESSETH:
A FIVE (5) YEAR LEASE AGREEMENT BETWEEN ECHOTA PROPERTIES (LANDLORD) AND
AMERICAN WEAVERS, L.L.C. (TENANT). THIS AGREEMENT ALSO INCLUDES AN OPTION TO
RENEW.
PREMISES
1. THAT LANDLORD, FOR AND IN CONSIDERATION OF THE RENTS, COVENANTS,
AGREEMENTS, AND STIPULATIONS HEREINAFTER MENTIONED, RESERVED, AND CONTAINED, TO
BE PAID, KEPT AND PERFORMED BY TENANT, HAS LEASED AND RENTED, AND BY THESE
PRESENTS DOES LEASE AND RENT, UNTO TENANT, AND TENANT HEREBY LEASES AND TAKES
UPON THE TERMS AND CONDITIONS WHICH HEREINAFTER APPEAR, THE FOLLOWING DESCRIBED
PROPERTY (HEREINAFTER CALLED "PREMISES"), TO WIT:
THAT TRACT OR PARCEL OF LAND LYING, BEING AND SITUATED IN LAND LOTS
168 AND 169 IN THE 14TH DISTRICT AND 3RD SECTION OF GORDON COUNTY, GEORGIA, AND
BEING A PORTION OF 3.49 ACRES MORE OR LESS, THEREOF AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BUILDING SIZE IS 54,046 SQUARE FEET X 22 FT. FOR
MANUFACTURING AND WAREHOUSING AREA. RETAINING APRON BEING DESCRIBED ON THE
ATTACHED EXHIBIT "C".
2. TENANT SHALL HAVE AND HOLD PREMISES FOR A TERM BEGINNING ON THE 1ST
DAY OF SEPTEMBER, 1996, AND ENDING ON THE 31ST DAY OF AUGUST, 2001, AT MIDNIGHT
UNLESS SOONER TERMINATED OR EXTENDED AS HEREINAFTER SPECIFICALLY PROVIDED IN
THIS LEASE.
RENTAL
3. TENANT SHALL PAY LANDLORD AT THE ADDRESS OF LANDLORD SET FORTH
HEREINAFTER
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<PAGE>
IN THIS LEASE OR OF WHICH TENANT SHALL FROM TIME TO TIME OTHERWISE BE NOTIFIED,
PROMPTLY ON THE 1ST DAY OF EACH MONTH IN ADVANCE, DURING ALL TERMS OF THIS
LEASE A MONTHLY RENTAL OF $10,809.00 (54,046 SQ. FT @ $.20 PER SQ. FT.)
UTILITY BILLS
4. TENANT SHALL PAY ALL WATER, SEWER, SEWER SERVICE CHARGES, GAS,
ELECTRICITY, FUEL, LIGHT, HEAT AND POWER BILLS FOR PREMISES OR USED BY TENANT IN
CONNECTION THERE WITH, DURING ALL TERMS OF THIS LEASE.
USE OF PREMISES
5. PREMISES SHALL NOT BE USED FOR ANY ILLEGAL PURPOSES; NOR IN ANY
MANNER TO CREATE ANY NUISANCE OR TRESPASS; NOR IN ANY MANNER TO VITIATE THE
INSURANCE OR INCREASE THE RATE OF INSURANCE ON PREMISES.
ABANDONMENT OF PREMISES
6. TENANT SHALL NOT ABANDON OR VACATE PREMISES DURING ANY TERM OF THIS
LEASE.
REPAIRS BY LANDLORD
7. LANDLORD SHALL KEEP IN GOOD REPAIR THE ROOF, FOUNDATIONS AND
EXTERIOR WALLS OF PREMISES, AND SEWER PIPES OUTSIDE THE EXTERIOR WALLS OF THE
BUILDING IN WHICH PREMISES IS LOCATED, EXCEPT REPAIRS RENDERED NECESSARY BY THE
NEGLIGENCE, WILLFUL ACT OR OMISSION OF TENANT, TENANT'S AGENTS, EMPLOYEES AND
INVITES. LANDLORD HEREBY GIVES TENANT EXCLUSIVE CONTROL OF PREMISES AND SHALL BE
UNDER NO OBLIGATION TO INSPECT PREMISES. TENANT SHALL PROMPTLY REPORT IN WRITING
TO LANDLORD ANY DEFECTIVE CONDITION KNOWN TO TENANT WHICH LANDLORD IS REQUIRED
TO REPAIR, AND FAILURE TO SO REPORT SUCH DEFECTS SHALL MAKE TENANT RESPONSIBLE
TO LANDLORD FOR ANY LIABILITY INCURRED BY LANDLORD BY REASON OF SUCH DEFECTS.
REPAIRS BY TENANT
8. TENANT ACCEPTS PREMISES IN ITS PRESENT CONDITION AND AS SUITED FOR
THE USES INTENDED BY TENANT. TENANT SHALL, THROUGHOUT ALL TERMS OF THIS LEASE,
AT TENANT'S
2
<PAGE>
EXPENSE, MAINTAIN PREMISES IN GOOD ORDER AND REPAIR, EXCEPT THOSE REPAIRS
EXPRESSLY REQUIRED IN PARAGRAPH 7 HEREOF, TO BE MADE BY LANDLORD. TENANT FURTHER
AGREES TO CARE FOR AND CLEAN THE GROUNDS AROUNDING THE BUILDING, INCLUDING THE
MOWING OF GRASS, CLEANING OF THE PAVED AREAS, AND GENERAL LANDSCAPING. TENANT
SHALL RETURN PREMISES TO LANDLORD AT THE EXPIRATION, OR PRIOR TO TERMINATION, OF
THE TERM OF THIS LEASE IN AS GOOD CONDITION AND REPAIR AS WHEN FIRST RECEIVED,
NATURAL WEAR AND TEAR, DAMAGE BY STORM, FIRE, LIGHTNING, EARTHQUAKE OR OTHER
CASUALTY ALONE EXCEPTED.
DESTRUCTION OF OR DAMAGE TO PREMISES
9. IF PREMISES ARE TOTALLY DESTROYED BY STORM, FIRE, LIGHTNING,
EARTHQUAKE OR OTHER CASUALTY, THIS LEASE SHALL TERMINATE AS OF THE DATE OF SUCH
DESTRUCTION, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND TENANT AS
OF THAT DATE. IF PREMISES ARE DAMAGED BUT NOT WHOLLY DESTROYED BY ANY OF SUCH
CASUALTIES, THE TENANT AND LANDLORD RESERVE THE RIGHT TO CO-DETERMINE THE DEGREE
OF DAMAGE OR LOSS TO THE FACILITY, AND SHOULD LANDLORD ELECT TO RESTORE THE
PREMISES TO SUBSTANTIALLY THE SAME CONDITION AS BEFORE DAMAGE THEN FULL RENTAL
SHALL RECOMMENCE UPON COMPLETION OF SAID RESTORATION. LANDLORD HAS ONE HUNDRED
TWENTY (120) DAYS TO MAKE RESTORATIONS TO THE ORIGINAL CONDITION OR TENANT MAY
HAVE THE OPTION TO TERMINATE THE LEASE AGREEMENT.
INDEMNITY
10. TENANT AGREES TO AND HEREBY DOES, INDEMNIFY AND SAVE LANDLORD HARMLESS
AGAINST ALL CLAIMS FOR DAMAGES TO PERSONS OR PROPERTY BY REASON OF TENANT'S USE
OR OCCUPANCY OF PREMISES, AND ALL EXPENSES INCURRED BY THE LANDLORD AND MANAGER
BECAUSE THEREOF, INCLUDING REASONABLE ATTORNEY'S FEES AND COURT COSTS.
GOVERNMENTAL ORDERS
11. TENANT AGREES, AT TENANT'S OWN EXPENSE, TO PROMPTLY COMPLY WITH ALL
REQUIREMENTS OF ANY LEGALLY CONSTITUTED PUBLIC AUTHORITY MADE NECESSARY BY
REASON
3
<PAGE>
OF TENANT'S OCCUPANCY OF PREMISES.
CONDEMNATION
12. IF THE WHOLE OF PREMISES, OR SUCH PORTION THEREOF AS WILL MAKE
PREMISES UNUSABLE FOR THE PURPOSES HEREIN LEASED, BE CONDEMNED BY ANY LEGALLY
CONSTITUTED AUTHORITY FOR ANY PUBLIC USE OR PURPOSE, THEN IN EITHER OF SAID
EVENTS THIS LEASE SHALL CEASE FROM THE TIME WHEN POSSESSION THEREOF IS TAKEN BY
PUBLIC AUTHORITIES, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND
TENANT AS OF THAT DATE. SUCH TERMINATION, HOWEVER, SHALL BE WITHOUT PREJUDICE TO
THE RIGHTS OF EITHER LANDLORD OR TENANT TO RECOVER COMPENSATION AND DAMAGE
CAUSED BY CONDEMNATION FROM THE CONDEMNOR. IT IS UNDERSTOOD THAT CONDEMNATION BY
A PRE-EXISTING CONDITION IS NOT THE RESPONSIBILITY OF THE TENANT. IT IS FURTHER
UNDERSTOOD AND AGREED THAT NEITHER TENANT NOR LANDLORD SHALL HAVE ANY RIGHTS IN
ANY AWARD MADE TO THE OTHER BY ANY CONDEMNATION AUTHORITY NOTWITHSTANDING THE
TERMINATION OF THIS LEASE AS HEREIN PROVIDED.
ASSIGNMENT AND SUBLETTING
13. TENANT SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE LANDLORD
ENDORSED HEREON, ASSIGN OR ENCUMBER THIS LEASE OR ANY INTEREST HEREUNDER, OR
SUBLET PREMISES OR ANY PART THEREOF, OR PERMIT THE USE OF PREMISES BY ANY OTHER
PARTY OTHER THAN TENANT. LANDLORD'S CONSENT TO ANY ASSIGNMENT, ENCUMBRANCE OR
SUBLEASE SHALL NOT NULLIFY THIS PROVISION, AND ALL LATER ASSIGNMENTS,
ENCUMBRANCES OR SUBLEASES SHALL BE MADE LIKEWISE ONLY ON THE PRIOR WRITTEN
CONSENT OF LANDLORD. ASSIGNEE OF TENANT, AT OPTION OF LANDLORD, SHALL BECOME
DIRECTLY LIABLE TO LANDLORD FOR ALL OBLIGATIONS OF TENANT HEREUNDER, BUT NO
SUBLEASE OR ASSIGNMENT BY TENANT SHALL RELIEVE TENANT OF ANY LIABILITY
HEREUNDER.
REMOVAL OF FIXTURES AND PROPERTY
14. TENANT MAY (IF NOT IN DEFAULT HEREUNDER) PRIOR TO THE EXPIRATION
OF THIS LEASE,
4
<PAGE>
OR ANY EXTENSION THEREOF, REMOVE ALL PERSONAL PROPERTY, FIXTURES AND EQUIPMENT
WHICH TENANT HAS PLACED IN PREMISES, PROVIDED TENANT SIMULTANEOUSLY REPAIRS ALL
DAMAGE TO PREMISES CAUSED BY SUCH REMOVAL. IF TENANT IS AT THE TIME OF ANY
TERMINATION OF THIS LEASE IN DEFAULT UNDER ANY TERM OR CONDITION HEREOF, TENANT
SHALL NOT BE ENTITLED TO REMOVE ANY OF SUCH PERSONAL PROPERTY, FIXTURES OR
EQUIPMENT AND LANDLORD SHALL HAVE ALL RIGHTS THEREIN AS ARE THEN AVAILABLE TO
LANDLORD BY LAW.
CANCELLATION OF LEASE BY LANDLORD
15. IT IS MUTUALLY AGREED THAT, IN THE EVENT TENANT SHALL DEFAULT IN
THE PAYMENT OF RENT HEREIN RESERVED, WHEN DUE, AND FAILS TO CURE SAID DEFAULT
WITHIN (5) DAYS AFTER THE GIVING OF WRITTEN NOTICE THEREOF BY LANDLORD; OR IF
TENANT SHALL BE IN DEFAULT IN PERFORMING ANY OF THE TERMS OR PROVISIONS OF THIS
LEASE OTHER THAN THE PROVISIONS REQUIRING THE PAYMENT OF RENT, AND FAILS TO
CURE SUCH DEFAULT WITHIN THIRTY (30) DAYS AFTER THE DATE OF WRITTEN NOTICE OF
DEFAULT FROM LANDLORD; OR IF TENANT IS ADJUDICATED BANKRUPT; OR IF A PERMANENT
RECEIVER IS APPOINTED FOR TENANT'S PROPERTY AND SUCH RECEIVER IS NOT REMOVED
WITHIN SIXTY (60) DAYS AFTER WRITTEN NOTICE FROM LANDLORD TO TENANT TO OBTAIN
SUCH REMOVAL; OR IF, WHETHER VOLUNTARILY OR INVOLUNTARILY, TENANT TAKES
ADVANTAGE OF ANY DEBTOR RELIEF PROCEEDINGS UNDER ANY PRESENT OR FUTURE LAW,
WHEREBY THE RENT OR ANY PART THEREOF, OR IS PROPOSED TO BE, REDUCED OR PAYMENT
THEREOF DEFERRED; OR IF TENANT MAKES AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS;
OR IF TENANT'S EFFECTS SHALL BE LEVIED UPON OR ATTACHED UNDER PROCESS AGAINST
TENANT, NOT SATISFIED OR DISSOLVED WITHIN THIRTY (30) DAYS AFTER WRITTEN NOTICE
FROM LANDLORD TO TENANT TO OBTAIN SATISFACTION THEREOF; THEN, AND IN ANY OF SAID
EVENTS, LANDLORD AT ITS OPTIONS MAY AT ONCE, OR WITHIN SIX (6) MONTHS THEREAFTER
(BUT ONLY DURING THE CONTINUANCE OF SUCH DEFAULT OR CONDITION), TERMINATE THIS
LEASE BY WRITTEN NOTICE TO TENANT; WHEREUPON THIS LEASE SHALL END. AFTER AN
AUTHORIZED ASSIGNMENT OR SUBLEASE OF THE ENTIRE PREMISES COVERED BY THIS LEASE,
THE OCCURRING OF ANY OF THE FOREGOING
5
<PAGE>
DEFAULTS OR EVENTS SHALL AFFECT THIS LEASE ONLY IF CAUSED BY, OR HAPPENING TO,
SUCH ASSIGNEE OR SUBLESSEE. ANY NOTICE PROVIDED IN THIS PARAGRAPH 16 MAY BE
GIVEN BY LANDLORD OR ITS ATTORNEY. UPON SUCH TERMINATION BY LANDLORD, TENANT
WILL AT ONCE SURRENDER POSSESSION OF PREMISES TO LANDLORD AND REMOVE THEREFROM
ALL OF TENANT'S EFFECTS IN WHICH LANDLORD CLAIMS NO INTEREST UNDER PARAGRAPH 15
OF THIS LEASE: AND LANDLORD SHALL HAVE THE RIGHT FORTHWITH TO RE-ENTER PREMISES
AND REPOSSESS ITSELF THEREOF, AND REMOVE ALL PERSONS AND EFFECTS THEREFROM,
USING SUCH FORCE AS MAY BE NECESSARY WITHOUT BEING GUILTY OF TRESPASS, FORCIBLE
ENTRY OR DETAINER OR OTHER TORT.
RELETTING BY LANDLORD
16. LANDLORD SHALL HAVE THE RIGHT AT LANDLORD'S OPTION WITHOUT
TERMINATING THIS LEASE, UPON TENANT'S BREACHING THIS CONTRACT, TO ENTER UPON
AND, AS TENANT'S AGENT, RENT PREMISES AT THE BEST PRICE OBTAINABLE BY REASONABLE
EFFORT, WITHOUT ADVERTISEMENT AND BY PRIVATE NEGOTIATIONS AND FOR ANY TERM
LANDLORD DEEMS PROPER. TENANT SHALL BE LIABLE TO LANDLORD FOR THE DEFICIENCY, IF
ANY, BETWEEN THE TENANT'S RENT HEREUNDER AND THE PRICE OBTAINED BY THE LANDLORD
ON RELETTING.
EXTERIOR SIGNS
17. TENANT SHALL PLACE NO SIGNS UPON THE OUTSIDE WALLS OR ROOF OF
PREMISES EXCEPT WITH THE WRITTEN CONSENT OF LANDLORD. ANY AND ALL SIGNS PLACED
ON THE WITHIN LEASED PREMISES BY TENANT SHALL BE MAINTAINED IN COMPLIANCE WITH
ALL GOVERNMENTAL ORDINANCES, RULES, AND REGULATIONS GOVERNING SUCH SIGNS, AND
TENANT SHALL BE RESPONSIBLE TO LANDLORD FOR ANY DAMAGE CAUSED BY INSTALLATION,
USE OR MAINTENANCE OF SAID SIGNS OR VIOLATION OF ORDINANCE, RULE OR REGULATION
WITH REGARD THERETO. UPON ANY REMOVAL OF SAID SIGNS TENANT SHALL SIMULTANEOUSLY
REPAIR ALL DAMAGE INCIDENT TO SUCH REMOVAL.
INTERRUPTION OF SERVICES OR OF OCCUPANCY
18. INTERRUPTION OR CURTAILMENT OF ANY SERVICE TO THE PREMISES, SUCH
AS (BUT NOT
6
<PAGE>
LIMITED TO) UTILITIES, IF CAUSED BY STRIKES, MECHANICAL DIFFICULTIES OR OTHER
CAUSES BEYOND THE LANDLORD'S CONTROL WILL NOT ENTITLE TENANT TO ANY CLAIM
AGAINST LANDLORD OR ANY ABATEMENT IN RENT, NOR WILL IT CONSTITUTE CONSTRUCTIVE
OR PARTIAL EVICTION, UNLESS LANDLORD FAILS TO TAKE MEASURES THAT ARE REASONABLE
IN THE CIRCUMSTANCES TO RESTORE THE SERVICE WITHOUT UNDUE DELAY. IT IS
UNDERSTOOD THAT ANY PRE-EXISTING ENVIRONMENTAL CONDITION IS NOT THE
RESPONSIBILITY OF THE TENANT. IT IS ASSUMED THAT NO SUCH CONDITION EXISTS.
CONSTRUCTIVE EVICTION
19. TENANT WILL NOT BE ENTITLED TO CLAIM A CONSTRUCTIVE EVICTION FROM
PREMISES UNLESS TENANT WILL HAVE FIRST NOTIFIED LANDLORD IN WRITING OF THE
CONDITION GIVING RISE TO THE CLAIM AND, IF THE COMPLAINTS ARE JUSTIFIED, UNLESS
LANDLORD FAILS TO REMEDY THE CONDITION WITHIN A REASONABLE TIME AFTER RECEIPT OF
THE NOTICE.
ENTRY FOR CARDING
20. LANDLORD MAY CARD PREMISES "FOR RENT" OR "FOR SALE" THIRTY (30)
DAYS BEFORE THE TERMINATION OF THIS LEASE. LANDLORD SHALL HAVE THE RIGHT TO
ENTER PREMISES, AFTER CONFIDENTIALITY AGREEMENT IS MADE BETWEEN LANDLORD AND
TENANT, AT REASONABLE HOURS TO EXHIBIT SAME TO PROSPECTIVE PURCHASERS OR TENANTS
AND TO MAKE REPAIRS REQUIRED OF LANDLORD UNDER THE TERMS HEREOF OR TO MAKE
REPAIRS TO LANDLORD'S ADJOINING PROPERTY, IF ANY.
EFFECT OF TERMINATION OF LEASE
21. NO TERMINATION OF THIS LEASE PRIOR TO THE NORMAL ENDING THEREOF,
BY LAPSE OF TIME OR OTHERWISE, SHALL AFFECT LANDLORD'S RIGHT TO COLLECT RENT FOR
THE PERIOD PRIOR TO TERMINATION THEREOF.
MORTGAGEE'S RIGHTS
22. TENANT'S RIGHTS SHALL BE SUBJECT TO ANY BONA FIDE MORTGAGE OR DEED
TO SECURE DEBT WHICH IS NOW, OR MAY HEREAFTER BE, PLACED UPON THE PROPERTY OF
WHICH PREMISES
7
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CONSTITUTE A PART.
NO ESTATE IN LAND
23. THIS LEASE SHALL CREATE THE RELATIONSHIP OF LANDLORD AND TENANT
BETWEEN THE PARTIES HERETO; NO ESTATE SHALL PASS OUT OF LANDLORD. TENANT HAS
ONLY A USUFRUCT, NOT SUBJECT TO LEVY AND SALE, AND NOT ASSIGNABLE BY TENANT
EXCEPT BY LANDLORD'S CONSENT. NEITHER LANDLORD NOR TENANT SHALL CAUSE THIS LEASE
TO BE RECORDED WITHOUT PRIOR WRITTEN CONSENT OF THE OTHER PARTY TO SUCH
RECORDING.
HOLDING OVER
24. IF TENANT REMAINS IN POSSESSION OF PREMISES AFTER EXPIRATION OF THE
TERM HEREOF, WITH LANDLORD'S ACQUIESCENCE AND WITHOUT ANY EXPRESS AGREEMENT OF
PARTIES, TENANT SHALL BE A TENANT AT WILL AT TWO TIMES THE RENTAL RATE IN EFFECT
AT END OF LEASE; AND THERE SHALL BE NO RENEWAL OF THIS LEASE BY OPERATION OF
LAW.
ATTORNEY'S FEES AND HOMESTEAD
25. IF ANY RENT OWING UNDER THIS LEASE IS COLLECTED BY OR THROUGH AN
ATTORNEY AT LAW, TENANT AGREES TO PAY THE FULL AMOUNT OF SUCH REASONABLE
ATTORNEY'S FEES AS LANDLORD INCURS IN SUCH COLLECTION. TENANT WAIVES ALL
HOMESTEAD RIGHTS AND EXEMPTIONS WHICH TENANT MAY HAVE UNDER ANY LAW AS AGAINST
ANY OBLIGATION OWING UNDER THIS LEASE. TENANT HEREBY ASSIGNS TO LANDLORD
TENANT'S HOMESTEAD AND EXEMPTION.
SERVICE OF NOTICE
26. TENANT HEREBY APPOINTS AS TENANT'S AGENT TO RECEIVE SERVICE OF ALL
DISPOSSESSORY OR OTHER LEGAL PROCEEDINGS AND NOTICES THEREUNDER, AND ALL NOTICES
REQUIRED UNDER THIS LEASE, THE PERSON IN CHARGE OF PREMISES OR OCCUPYING
PREMISES AT THE TIME OF DELIVERY OR SERVICE OF SUCH NOTICE; AND IF NO PERSON IS
IN CHARGE OF OR OCCUPYING PREMISES AT SUCH TIME, THEN SUCH SERVICE OR NOTICE MAY
BE MADE BY ATTACHING THE SAME ON THE MAIN ENTRANCE TO PREMISES. A COPY OF ALL
NOTICES UNDER THIS LEASE SHALL
8
<PAGE>
ALSO BE SENT TO TENANT'S ADDRESS: AMERICAN WEAVERS, L.L.C. ATTENTION: MR. SCOTT
FLETCHER, 965 NORTH WALL STREET, CALHOUN, GA 30701. ALL NOTICES GIVEN HEREUNDER
BY TENANT TO LANDLORD SHALL BE SENT TO LANDLORD IN CARE OF LANDLORD AT
LANDLORD'S ADDRESS SET FORTH HEREINAFTER IN THIS LEASE, UNLESS IT HAS OTHERWISE
NOTIFIED TENANT OF ANOTHER ADDRESS FOR LANDLORD.
MISCELLANEOUS
27. ALL RIGHTS, POWERS AND PRIVILEGES CONFERRED HEREUNDER UPON PARTIES
HERETO SHALL BE CUMULATIVE BUT NOT RESTRICTIVE TO THOSE GIVEN BY LAW. NO FAILURE
OF LANDLORD TO EXERCISE ANY POWER GIVEN LANDLORD HEREUNDER, OR TO INSIST UPON
STRICT COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF THE PARTIES AT VARIANCE WITH THE TERMS HEREOF SHALL CONSTITUTE A
WAIVER OF LANDLORD'S RIGHT TO DEMAND EXACT COMPLIANCE WITH THE TERMS HEREOF.
"LANDLORD" AS USED IN THIS LEASE SHALL INCLUDE LANDLORD, HIS OR ITS HEIRS,
EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVE, ASSIGNS AND SUCCESSORS IN TITLE
TO PREMISES. "TENANT" SHALL INCLUDE TENANT, HIS OR ITS HEIRS, EXECUTORS,
ADMINISTRATORS, LEGAL REPRESENTATIVES, AND, IF THIS LEASE SHALL BE VALIDLY
ASSIGNED OR SUBLET, SHALL ALSO INCLUDE TENANT'S ASSIGNEES OR SUBLEASES, AS TO
PREMISES COVERED BY SUCH ASSIGNMENT OR SUBLEASE. "LANDLORD", AND "TENANT" SHALL
INCLUDE MALE AND FEMALE, SINGULAR AND PLURAL, CORPORATION, PARTNERSHIP OR
INDIVIDUAL, AS MAY FIT THE PARTICULAR PARTIES. TIME IS OF THE ESSENCE OF THIS
LEASE
OPTION TO RENEW
28. TENANT IS GIVEN AN OPTION TO EXTEND THE TERM OF THIS LEASE BY A
PERIOD OF THREE (3) YEARS. TENANT MAY EXERCISE THIS OPTION AT ANY TIME BY NOTICE
IN WRITING TO LANDLORD SERVED AT LEAST NINETY (90) DAYS PRIOR TO THE END OF THE
INITIAL TERM, IF TENANT SHALL NOT BE IN DEFAULT. EXCEPT AS THE TERMS MAY NOT BE
RELEVANT OR APPLICABLE, ALL THE TERMS AND CONDITIONS OF THE LEASE SHALL APPLY
FOR THE EXTENDED PERIOD, EXCLUDING THE MONTHLY
9
<PAGE>
RENTAL WHICH SHALL REMAIN AT $10,809.00 OR $.20 PER SQUARE FOOT OF RENTED SPACE
AFTER THE FIVE YEAR TERM, OPTION TO RENEW WILL BE GRANTED PERPETUALLY IN THREE
YEAR INCREMENTS WITH THE RENTAL RATE BEING INCREASED AT EACH RENEWAL BASED ON
THE ACCUMLATIVE YEARLY INFLATION RATE AS DETERMINED BY THE STATE OF GEORGIA
DEPARTMENT OF COMMERCE. THIS RATE SHALL BE FROM THE INITIAL TERM OF THE LEASE.
TENANT'S OBLIGATION TO INSURE: ALL-INCLUSIVE FORM
29. DURING THE TERM OF THIS LEASE, TENANT, AT ITS SOLE COST AND
EXPENSE, AND FOR THE MUTUAL BENEFIT OF LANDLORD AND TENANT, SHALL CARRY AND
MAINTAIN THE FOLLOWING TYPES OF INSURANCE IN THE AMOUNTS SPECIFIED:
COMPREHENSIVE PUBLIC LIABILITY INSURANCE, INCLUDING PROPERTY DAMAGE, INSURING
LANDLORD AND TENANT AGAINST LIABILITY FOR INJURY TO PERSONS OR PROPERTY
OCCURRING IN OR ABOUT THE LEASED PREMISES OR ARISING OUT OF THE OWNERSHIP,
MAINTENANCE, USE, OR OCCUPANCY THEREOF. THE LIABILITY UNDER SUCH INSURANCE SHALL
NOT BE LESS THAN $1,000,000.00 FOR ANY ONE PERSON INJURED OR KILLED AND NOT LESS
THAN $5,000,000.00 FOR ANY ONE ACCIDENT AND NOT LESS THAN $1,000,000.00 FOR
PERSONAL PROPERTY DAMAGE PER ACCIDENT. WRITTEN PROOF OF THIS INSURANCE COVERAGE
SHALL BE REQUIRED BY ECHOTA PROPERTIES, L.L.C. DURING THE TERM OF THIS LEASE.
10
<PAGE>
ENTIRE AGREEMENT
30. THIS LEASE CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND
NO REPRESENTATIONS, INDUCEMENTS, PROMISES, OR AGREEMENTS, ORAL OR OTHERWISE,
BETWEEN THE PARTIES, NOT EMBODIED HEREIN, SHALL BE OF ANY FORCE OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HEREIN HAVE HEREUNTO SET THEIR HANDS AND
SEALS OR CAUSED THIS INSTRUMENT TO BE EXECUTED THROUGH AUTHORIZED OFFICIALS IN
THEIR NAME, IN TRIPLICATE, THE DAY AND YEAR FIRST ABOVE WRITTEN.
SIGNED, SEALED AND DELIVERED LANDLORD:
IN THE PRESENCE OF: STEPHEN FOX, RANDALL FOX, RAYMOND KING
D/B/A ECHOTA PROPERTIES, L.L.C.
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE]
- ---------------------------- ----------------------------(SEAL)
UNOFFICIAL WITNESS
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE]
- ---------------------------- ----------------------------(SEAL)
NOTARY PUBLIC
GA STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS: P.O Box 2409
------------------------
Calhoun, GA. 30703
--------------------------------
SIGNED, SEALED AND DELIVERED TENANT:
IN THE PRESENCE OF: AMERICAN WEAVERS, L.L.C.
PRESIDENT
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE]
- ---------------------------- ----------------------------(SEAL)
UNOFFICIAL WITNESS
/s/ [SIGNATURE ILLEGIBLE] ___________________________(SEAL)
- ----------------------------
NOTARY PUBLIC
GA. STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS 965 North Wall St.
-------------------
Calhoun, GA 30701
---------------------------
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<PAGE>
MR. SCOTT FLETCHER 1-14-95
AMERICAN WEAVERS
903 NORTH WALL STREET
CALHOUN, GEORGIA
EXHIBIT "C"
PERMITS:
ALL PERMITS ARE INCLUDED
GRADING AND SITEWORK: INCLUDED
FOOTINGS: INCLUDED
CONCRETE APRONS: EXISTING
RETAINING WALLS: EXISTING
PRE-ENGINEERED BUILDING: THE AGREED UPON RENTED SPACE
THE STEEL BUILDING DIMENSIONS WILL BE 220 60/61FT. WIDE BY 435/380 FT. LONG WITH
AN EAVELINE HEIGHT OF 22 FT. THE BUILDING WILL BE A TAPERED COLUMN TYPE BUILDING
WITH A MAXIMUM OF TWO INTERIOR PIPE COLUMNS PER FRAME. THE BUILDING WILL HAVE 60
FT. SPANS RUNNING THE WIDTH OF THE BUILDING. LENGTHWISE, THE BUILDING SHALL HAVE
25 FT. BAYS. THE ROOF SLOPE WILL BE 1:12". THE BUILDING IS DESIGNED TO CARRY AN
80 MPH WIND AND A 20 PSF LIVE LOAD WITH AN ADDITIONAL 3 PSF AUXILIARY LOAD
SYSTEM AND MISCELLANEOUS LOAD. THE TOTAL RENTED SPACE SHALL BE 54,043 SQUARE
FEET.
CANOPY:
ONE (1)5' X 50' AT THE ENDWALL DOCK DOORS.
WALLS OF SAID BUILDING SHALL BE SHEETED WITH 26 GAUGE ARCHITECTURAL WALL PANELS.
ROOF OF SAID BUILDING SHALL BE 26 GAUGE GALVALUME. WALLS SHALL HAVE BAKED ON
PAINT. THE SOUTH ENDWALL AND 75 FT. OF ADJACENT SIDEWALL SHALL HAVE BRICK TO
MATCH THE EXISTING OFFICE APPROXIMATELY 12 FT. IN HEIGHT.
<PAGE>
AMERICAN WEAVERS PAGE 2
FURNISH AND INSTALL 225 FEET OF NEW VALLEY GUTTER INCLUDING DOWNSPOUTS AND
DRAINAGE SYSTEM.
FURNISH AND INSTALL FRENCH DRAINAGE SYSTEM AS PER WEMMER DRAWING #9415.
FURNISH AND INSTALL A LOADING DOCK DRAINAGE SYSTEM AS PER WEMMER DRAWING #9415.
FURNISH AND INSTALL TWO (2) 3' X 7' STEEL WALK DOORS AT THE SPECIFIED LOCATIONS.
THIS INCLUDES FRAMES, MORTISE LOCKSETS, DOORS AND THRESHOLDS.
ROOF AND WALLS SHALL BE INSULATED WITH VINYL FACE METAL BUILDING INSULATION.
ROLL-UP DOORS:
4 EACH 8' X 10' STEEL ROLLING DOORS
4 EACH EDGE OF DOCK LEVELERS
4 EACH DOCK SEALS
1 EACH 12 FT. X 14 FT. STEEL ROLLING DOOR
PAINTING:
INTERIOR STRUCTURAL STEEL SHALL HAVE ONE FACTORY APPLIED COAT OF RED OXIDE PAINT
AND ONE FIELD COAT OF SHERWIN WILLIAMS DTM.
INTERIOR CONCRETE WALLS SHALL HAVE ONE PRIMER COAT AND ONE FINISH COAT OF LATEX
SEMI-GLOSS ENAMEL.
<PAGE>
AMERICAN WEAVERS PAGE 3
ELECTRICAL:
1 EACH 2000 AMPERE, MAIN CIRCUIT BREAKER, 277/480 VOLT SWITCHBOARD WITH THE
FOLLOWING DEVICES:
2 EACH 400 AMPERE CIRCUIT BREAKERS
5 EACH 200 AMPERE CIRCUIT BREAKERS
1 EACH 800 AMPERE CIRCUIT BREAKERS
1 EACH 200 AMPERE MAIN LUG ONLY PANELBOARD, 277/480 VOLT WITH 20 EACH 20/1
CIRCUIT BREAKERS AND 1 EACH 70/1 CIRCUIT BREAKER
1 EACH 45 KVA TRANSFORMER
1 EACH 150 AMPERE, MAIN CIRCUIT BREAKER, 120/208 VOLT PANELBOARD
72 EACH 400 WATT METAL HALIDE HIGH BAY LIGHTING FIXTURES
2 EACH 8 FT. HIGH OUTPUT FLUORESCENT LIGHTING FIXTURES (OVER THE DOCKS)
12 EACH TWIN HEAD 6 VOLT EMERGENCY LIGHT PACKS WITH 90 MINUTE BATTERY PACK
2 EACH LIGHTED EXIT SIGNS WITH 90 MINUTE BATTERY PACK
10 EACH DUPLEX RECEPTACLES (RANDOMLY SPACED ABOUT THE BLDG)
***NOTE: 1. ALL RACEWAY WILL BE E.M.T.
2. ALL CONDUCTOR WILL BE COPPER
3. NO FEEDERS OF WIRING OF MACHINES IS INCLUDED
4. NO HVAC WIRING IS INCLUDED
<PAGE>
AMERICAN WEAVERS PAGE 4
SPRINKLER SYSTEM:
FURNISH AND INSTALL A SPRINKLER SYSTEM. SPRINKLER SYSTEM SHALL MEET INSURANCE
SPECIFICATIONS. SPRINKLER SYSTEM SPECIFICATIONS ARE ATTACHED.
HEATING, VENTILATION AND AIR CONDITIONING:
4 EACH 300,000 BTU GAS UNIT HEATERS VENTED AS PER CODE
<PAGE>
EXHIBIT 10.16
STATE OF GEORGIA
COUNTY OF GORDON
COMMERCIAL LEASE
THIS LEASE, MADE THIS 23RD DAY OF MAY, 1996, BY AND BETWEEN ECHOTA
PROPERTIES, L.L.C. (HEREINAFTER REFERRED TO AS "LANDLORD"); AND AMERICAN
WEAVERS, L.L.C. (HEREINAFTER REFERRED TO AS "TENANT");
WITNESSETH:
A FIVE (5) YEAR LEASE AGREEMENT BETWEEN ECHOTA PROPERTIES, L.L.C. (LANDLORD) AND
AMERICAN WEAVERS, L.L.C. (TENANT). THIS AGREEMENT ALSO INCLUDES AN OPTION TO
RENEW.
PREMISES
1. THAT LANDLORD, FOR AND IN CONSIDERATION OF THE RENTS, COVENANTS,
AGREEMENTS, AND STIPULATIONS HEREINAFTER MENTIONED, RESERVED, AND CONTAINED, TO
BE PAID, KEPT AND PERFORMED BY TENANT, HAS LEASED AND RENTED, AND BY THESE
PRESENTS DOES LEASE AND RENT, UNTO TENANT, AND TENANT HEREBY LEASES AND TAKES
UPON THE TERMS AND CONDITIONS WHICH HEREINAFTER APPEAR, THE FOLLOWING DESCRIBED
PROPERTY (HEREINAFTER CALLED "PREMISES"), TO WIT:
THAT TRACT OR PARCEL OF LAND LYING, BEING AND SITUATED IN LAND LOTS 168 AND
169 IN THE 14TH DISTRICT AND 3RD SECTION OF GORDON COUNTY, GEORGIA, AND BEING A
PORTION OF 2.85 ACRES MORE OR LESS, THEREOF AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BUILDING SIZE IS 63,648 SQUARE FEET X 22 FT. FOR
MANUFACTURING AND WAREHOUSING AREA. RETAINING APRON BEING DESCRIBED ON THE
ATTACHED EXHIBIT "D".
2. TENANT SHALL HAVE AND HOLD PREMISES FOR A TERM BEGINNING ON THE 1ST
DAY OF SEPTEMBER, 1996, AND ENDING ON THE 31ST DAY OF AUGUST, 2001. AT MIDNIGHT
UNLESS SOONER TERMINATED OR EXTENDED AS HEREINAFTER SPECIFICALLY PROVIDED IN
THIS LEASE.
RENTAL
3. TENANT SHALL PAY LANDLORD AT THE ADDRESS OF LANDLORD SET FORTH
HEREINAFTER
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<PAGE>
IN THIS LEASE OR OF WHICH TENANT SHALL FROM TIME TO TIME OTHERWISE BE NOTIFIED,
PROMPTLY ON THE 1ST DAY OF EACH MONTH IN ADVANCE, DURING ALL TERMS OF THIS LEASE
A MONTHLY RENTAL OF $ 12,729.00 (63,648 SQ. FT @ $.20 PER SQ. FT.)
UTILITY BILLS
4. TENANT SHALL PAY ALL WATER, SEWER, SEWER SERVICE CHARGES, GAS,
ELECTRICITY, FUEL, LIGHT, HEAT AND POWER BILLS FOR PREMISES OR USED BY TENANT IN
CONNECTION THERE WITH, DURING ALL TERMS OF THIS LEASE.
USE OF PREMISES
5. PREMISES SHALL NOT BE USED FOR ANY ILLEGAL PURPOSES; NOR IN ANY MANNER
TO CREATE ANY NUISANCE OR TRESPASS; NOR IN ANY MANNER TO VITIATE THE INSURANCE
OR INCREASE THE RATE OF INSURANCE ON PREMISES.
ABANDONMENT OF PREMISES
6. TENANT SHALL NOT ABANDON OR VACATE PREMISES DURING ANY TERM OF THIS
LEASE.
REPAIRS BY LANDLORD
7. LANDLORD SHALL KEEP IN GOOD REPAIR THE ROOF, FOUNDATIONS AND EXTERIOR
WALLS OF PREMISES, AND SEWER PIPES OUTSIDE THE EXTERIOR WALLS OF THE BUILDING IN
WHICH PREMISES LOCATED, EXCEPT REPAIRS RENDERED NECESSARY BY THE NEGLIGENCE,
WILLFUL ACT OR OMISSION OF TENANT, TENANT'S AGENTS, EMPLOYEES AND INVITES.
LANDLORD HEREBY GIVES TENANT EXCLUSIVE CONTROL OF PREMISES AND SHALL BE UNDER NO
OBLIGATION TO INSPECT PREMISES. TENANT SHALL PROMPTLY REPORT IN WRITING TO
LANDLORD ANY DEFECTIVE CONDITION KNOWN TO TENANT WHICH LANDLORD IS REQUIRED TO
REPAIR, AND FAILURE TO SO REPORT SUCH DEFECTS SHALL MAKE TENANT RESPONSIBLE TO
LANDLORD FOR ANY LIABILITY INCURRED BY LANDLORD BY REASON OF SUCH DEFECTS.
REPAIRS BY TENANT
8. TENANT ACCEPTS PREMISES IN ITS PRESENT CONDITION AND AS SUITED FOR THE
USES INTENDED BY TENANT. TENANT SHALL, THROUGHOUT ALL TERMS OF THIS LEASE, AT
TENANT'S
2
<PAGE>
EXPENSE, MAINTAIN PREMISES IN GOOD ORDER AND REPAIR, EXCEPT THOSE REPAIRS
EXPRESSLY REQUIRED IN PARAGRAPH 7 HEREOF, TO BE MADE BY LANDLORD. TENANT FURTHER
AGREES TO CARE FOR AND CLEAN THE GROUNDS AROUNDING THE BUILDING, INCLUDING THE
MOWING OF GRASS, CLEANING OF THE PAVED AREAS, AND GENERAL LANDSCAPING. TENANT
SHALL RETURN PREMISES TO LANDLORD AT THE EXPIRATION, OR PRIOR TO TERMINATION, OF
THE TERM OF THIS LEASE IN AS GOOD CONDITION AND REPAIR AS WHEN FIRST RECEIVED,
NATURAL WEAR AND TEAR, DAMAGE BY STORM, FIRE, LIGHTNING, EARTHQUAKE OR OTHER
CASUALTY ALONE EXCEPTED.
DESTRUCTION OF OR DAMAGE TO PREMISES
9. IF PREMISES ARE TOTALLY DESTROYED BY STORM, FIRE, LIGHTNING,
EARTHQUAKE OR OTHER CASUALTY, THIS LEASE SHALL TERMINATE AS OF THE DATE OF SUCH
DESTRUCTION, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND TENANT AS
OF THAT DATE. IF PREMISES ARE DAMAGED BUT NOT WHOLLY DESTROYED BY ANY OF SUCH
CASUALTIES, THE TENANT AND LANDLORD RESERVE THE RIGHT TO CO-DETERMINE THE DEGREE
OF DAMAGE OR LOSS TO THE FACILITY, AND SHOULD LANDLORD ELECT TO RESTORE THE
PREMISES TO SUBSTANTIALLY THE SAME CONDITION AS BEFORE DAMAGE THEN FULL RENTAL
SHALL RECOMMENCE UPON COMPLETION OF SAID RESTORATION. LANDLORD HAS ONE HUNDRED
TWENTY (120) DAYS TO MAKE RESTORATIONS TO THE ORIGINAL CONDITION OR TENANT MAY
HAVE THE OPTION TO TERMINATE THE LEASE AGREEMENT.
INDEMNITY
10. TENANT AGREES TO AND HEREBY DOES, INDEMNIFY AND SAVE LANDLORD HARMLESS
AGAINST ALL CLAIMS FOR DAMAGES TO PERSONS OR PROPERTY BY REASON OF TENANT'S USE
OR OCCUPANCY OF PREMISES, AND ALL EXPENSES INCURRED BY THE LANDLORD AND MANAGER
BECAUSE THEREOF, INCLUDING REASONABLE ATTORNEY'S FEES AND COURT COSTS.
GOVERNMENTAL ORDERS
11. TENANT AGREES, AT TENANT'S OWN EXPENSE, TO PROMPTLY COMPLY WITH ALL
REQUIREMENTS OF ANY LEGALLY CONSTITUTED PUBLIC AUTHORITY MADE NECESSARY BY
REASON
3
<PAGE>
OF TENANT'S OCCUPANCY OF PREMISES.
CONDEMNATION
12. IF THE WHOLE OF PREMISES, OR SUCH PORTION THEREOF AS WILL MAKE
PREMISES UNUSABLE FOR THE PURPOSES HEREIN LEASED, BE CONDEMNED BY ANY LEGALLY
CONSTITUTED AUTHORITY FOR ANY PUBLIC USE OR PURPOSE, THEN IN EITHER OF SAID
EVENTS THIS LEASE SHALL CEASE FROM THE TIME WHEN POSSESSION THEREOF IS TAKEN BY
PUBLIC AUTHORITIES, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND
TENANT AS OF THAT DATE. SUCH TERMINATION, HOWEVER, SHALL BE WITHOUT PREJUDICE TO
THE RIGHTS OF EITHER LANDLORD OR TENANT TO RECOVER COMPENSATION AND DAMAGE
CAUSED BY CONDEMNATION FROM THE CONDEMNOR IT IS UNDERSTOOD THAT CONDEMNATION BY
A PRE-EXISTING CONDITION IS NOT THE RESPONSIBILITY OF THE TENANT. IT IS FURTHER
UNDERSTOOD AND AGREED THAT NEITHER TENANT NOR LANDLORD SHALL HAVE ANY RIGHTS IN
ANY AWARD MADE TO THE OTHER BY ANY CONDEMNATION AUTHORITY NOTWITHSTANDING THE
TERMINATION OF THIS LEASE AS HEREIN PROVIDED.
ASSIGNMENT AND SUBLETTING
13. TENANT SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE LANDLORD
ENDORSED HEREON, ASSIGN OR ENCUMBER THIS LEASE OR ANY INTEREST HEREUNDER, OR
SUBLET PREMISES OR ANY PART THEREOF, OR PERMIT THE USE OF PREMISES BY ANY OTHER
PARTY OTHER THAN TENANT. LANDLORD'S CONSENT TO ANY ASSIGNMENT, ENCUMBRANCE OR
SUBLEASE SHALL NOT NULLIFY THIS PROVISION, AND ALL LATER ASSIGNMENTS,
ENCUMBRANCES OR SUBLEASES SHALL BE MADE LIKEWISE ONLY ON THE PRIOR WRITTEN
CONSENT OF LANDLORD. ASSIGNEE OF TENANT, AT OPTION OF LANDLORD, SHALL BECOME
DIRECTLY LIABLE TO LANDLORD FOR ALL OBLIGATIONS OF TENANT HEREUNDER, BUT NO
SUBLEASE OR ASSIGNMENT BY TENANT SHALL RELIEVE TENANT OF ANY LIABILITY
HEREUNDER.
REMOVAL OF FIXTURES AND PROPERTY
14. TENANT MAY (IF NOT IN DEFAULT HEREUNDER) PRIOR TO THE EXPIRATION OF
THIS LEASE,
4
<PAGE>
OR ANY EXTENSION THEREOF, REMOVE ALL PERSONAL PROPERTY, FIXTURES AND EQUIPMENT
WHICH TENANT HAS PLACED IN PREMISES, PROVIDED TENANT SIMULTANEOUSLY REPAIRS ALL
DAMAGE TO PREMISES CAUSED BY SUCH REMOVAL. IF TENANT IS AT THE TIME OF ANY
TERMINATION OF THIS LEASE IN DEFAULT UNDER ANY TERM OR CONDITION HEREOF, TENANT
SHALL NOT BE ENTITLED TO REMOVE ANY OF SUCH PERSONAL PROPERTY, FIXTURES OR
EQUIPMENT AND LANDLORD SHALL HAVE ALL RIGHTS THEREIN AS ARE THEN AVAILABLE TO
LANDLORD BY LAW.
CANCELLATION OF LEASE BY LANDLORD
15. IT IS MUTUALLY AGREED THAT, IN THE EVENT TENANT SHALL DEFAULT IN THE
PAYMENT OF RENT HEREIN RESERVED, WHEN DUE, AND FAILS TO CURE SAID DEFAULT WITHIN
(5) DAYS AFTER THE GIVING OF WRITTEN NOTICE THEREOF BY LANDLORD; OR IF TENANT
SHALL BE IN DEFAULT IN PERFORMING ANY OF THE TERMS OR PROVISIONS OF THIS LEASE
OTHER THAN THE PROVISIONS REQUIRING THE PAYMENT OF RENT, AND FAILS TO CURE SUCH
DEFAULT WITHIN THIRTY (30) DAYS AFTER THE DATE OF WRITTEN NOTICE OF DEFAULT FROM
LANDLORD; OR IF TENANT IS ADJUDICATED BANKRUPT; OR IF A PERMANENT RECEIVER IS
APPOINTED FOR TENANT'S PROPERTY AND SUCH RECEIVER IS NOT REMOVED WITHIN SIXTY
(60) DAYS AFTER WRITTEN NOTICE FROM LANDLORD TO TENANT TO OBTAIN SUCH REMOVAL;
OR IF, WHETHER VOLUNTARILY OR INVOLUNTARILY, TENANT TAKES ADVANTAGE OF ANY
DEBTOR RELIEF PROCEEDINGS UNDER ANY PRESENT OR FUTURE LAW, WHEREBY THE RENT OR
ANY PART THEREOF, OR IS PROPOSED TO BE, REDUCED OR PAYMENT THEREOF DEFERRED; OR
IF TENANT MAKES AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR IF TENANT'S
EFFECTS SHALL BE LEVIED UPON OR ATTACHED UNDER PROCESS AGAINST TENANT, NOT
SATISFIED OR DISSOLVED WITHIN THIRTY (30) DAYS AFTER WRITTEN NOTICE FROM
LANDLORD TO TENANT TO OBTAIN SATISFACTION THEREOF; THEN, AND IN ANY OF SAID
EVENTS, LANDLORD AT ITS OPTIONS MAY AT ONCE, OR WITHIN SIX (6) MONTHS THEREAFTER
(BUT ONLY DURING THE CONTINUANCE OF SUCH DEFAULT OR CONDITION), TERMINATE THIS
LEASE BY WRITTEN NOTICE TO TENANT; WHEREUPON THIS LEASE SHALL END. AFTER AN
AUTHORIZED ASSIGNMENT OR SUBLEASE OF THE ENTIRE PREMISES COVERED BY THIS LEASE,
THE OCCURRING OF ANY OF THE FOREGOING
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<PAGE>
DEFAULTS OR EVENTS SHALL AFFECT THIS LEASE ONLY IF CAUSED BY, OR HAPPENING TO,
SUCH ASSIGNEE OR SUBLESSEE. ANY NOTICE PROVIDED IN THIS PARAGRAPH 16 MAY BE
GIVEN BY LANDLORD OR ITS ATTORNEY. UPON SUCH TERMINATION BY LANDLORD, TENANT
WILL AT ONCE SURRENDER POSSESSION OF PREMISES TO LANDLORD AND REMOVE THEREFROM
ALL OF TENANT'S EFFECTS IN WHICH LANDLORD CLAIMS NO INTEREST UNDER PARAGRAPH 15
OF THIS LEASE; AND LANDLORD SHALL HAVE THE RIGHT FORTHWITH TO RE-ENTER PREMISES
AND REPOSSESS ITSELF THEREOF, AND REMOVE ALL PERSONS AND EFFECTS THEREFROM,
USING SUCH FORCE AS MAY BE NECESSARY WITHOUT BEING GUILTY OF TRESPASS, FORCIBLE
ENTRY OR DETAINER OR OTHER TORT.
RELETTING BY LANDLORD
16. LANDLORD SHALL HAVE THE RIGHT AT LANDLORD'S OPTION WITHOUT TERMINATING
THIS LEASE, UPON TENANT'S BREACHING THIS CONTRACT, TO ENTER UPON AND, AS
TENANT'S AGENT, RENT PREMISES AT THE BEST PRICE OBTAINABLE BY REASONABLE EFFORT,
WITHOUT ADVERTISEMENT AND BY PRIVATE NEGOTIATIONS AND FOR ANY TERM LANDLORD
DEEMS PROPER. TENANT SHALL BE LIABLE TO LANDLORD FOR THE DEFICIENCY, IF ANY,
BETWEEN THE TENANT'S RENT HEREUNDER AND THE PRICE OBTAINED BY THE LANDLORD ON
RELETTING.
EXTERIOR SIGNS
17. TENANT SHALL PLACE NO SIGNS UPON THE OUTSIDE WALLS OR ROOF OF PREMISES
EXCEPT WITH THE WRITTEN CONSENT OF LANDLORD. ANY AND ALL SIGNS PLACED ON THE
WITHIN LEASED PREMISES BY TENANT SHALL BE MAINTAINED IN COMPLIANCE WITH ALL
GOVERNMENTAL ORDINANCES, RULES, AND REGULATIONS GOVERNING SUCH SIGNS, AND TENANT
SHALL BE RESPONSIBLE TO LANDLORD FOR ANY DAMAGE CAUSED BY INSTALLATION, USE OR
MAINTENANCE OF SAID SIGNS OR VIOLATION OF ORDINANCE, RULE OR REGULATION WITH
REGARD THERETO. UPON ANY REMOVAL OF SAID SIGNS TENANT SHALL SIMULTANEOUSLY
REPAIR ALL DAMAGE INCIDENT TO SUCH REMOVAL.
INTERRUPTION OF SERVICES OR OF OCCUPANCY
18. INTERRUPTION OR CURTAILMENT OF ANY SERVICE TO THE PREMISES, SUCH AS
(BUT NOT
6
<PAGE>
LIMITED TO) UTILITIES, IF CAUSED BY STRIKES, MECHANICAL DIFFICULTIES OR OTHER
CAUSES BEYOND THE LANDLORD'S CONTROL WILL NOT ENTITLE TENANT TO ANY CLAIM
AGAINST LANDLORD OR ANY ABATEMENT IN RENT, NOR WILL IT CONSTITUTE CONSTRUCTIVE
OR PARTIAL EVICTION, UNLESS LANDLORD FAILS TO TAKE MEASURES THAT ARE REASONABLE
IN THE CIRCUMSTANCES TO RESTORE THE SERVICE WITHOUT UNDUE DELAY. IT IS
UNDERSTOOD THAT ANY PRE-EXISTING ENVIRONMENTAL CONDITION IS NOT THE
RESPONSIBILITY OF THE TENANT. IT IS ASSUMED THAT NO SUCH CONDITION EXISTS.
CONSTRUCTIVE EVICTION
19. TENANT WILL NOT BE ENTITLED TO CLAIM A CONSTRUCTIVE EVICTION FROM
PREMISES UNLESS TENANT WILL HAVE FIRST NOTIFIED LANDLORD IN WRITING OF THE
CONDITION GIVING RISE TO THE CLAIM AND, IF THE COMPLAINTS ARE JUSTIFIED, UNLESS
LANDLORD FAILS TO REMEDY THE CONDITION WITHIN A REASONABLE TIME AFTER RECEIPT OF
THE NOTICE.
ENTRY FOR CARDING
20. LANDLORD MAY CARD PREMISES "FOR RENT" OR "FOR SALE" THIRTY (30) DAYS
BEFORE THE TERMINATION OF THIS LEASE. LANDLORD SHALL HAVE THE RIGHT TO ENTER
PREMISES, AFTER CONFIDENTIALITY AGREEMENT IS MADE BETWEEN LANDLORD AND TENANT,
AT REASONABLE HOURS TO EXHIBIT SAME TO PROSPECTIVE PURCHASERS OR TENANTS AND TO
MAKE REPAIRS REQUIRED OF LANDLORD UNDER THE TERMS HEREOF OR TO MAKE REPAIRS TO
LANDLORD'S ADJOINING PROPERTY, IF ANY.
EFFECT OF TERMINATION OF LEASE
21. NO TERMINATION OF THIS LEASE PRIOR TO THE NORMAL ENDING THEREOF, BY
LAPSE OF TIME OR OTHERWISE, SHALL AFFECT LANDLORD'S RIGHT TO COLLECT RENT FOR
THE PERIOD PRIOR TO TERMINATION THEREOF.
MORTGAGEE'S RIGHTS
22. TENANT'S RIGHTS SHALL BE SUBJECT TO ANY BONA FIDE MORTGAGE OR DEED TO
SECURE DEBT WHICH IS NOW, OR MAY HEREAFTER BE, PLACED UPON THE PROPERTY OF WHICH
PREMISES
7
<PAGE>
CONSTITUTE A PART.
NO ESTATE IN LAND
23. THIS LEASE SHALL CREATE THE RELATIONSHIP OF LANDLORD AND TENANT
BETWEEN THE PARTIES HERETO; NO ESTATE SHALL PASS OUT OF LANDLORD. TENANT HAS
ONLY A USUFRUCT, NOT SUBJECT TO LEVY AND SALE, AND NOT ASSIGNABLE BY TENANT
EXCEPT BY LANDLORD'S CONSENT. NEITHER LANDLORD NOR TENANT SHALL CAUSE THIS LEASE
TO BE RECORDED WITHOUT PRIOR WRITTEN CONSENT OF THE OTHER PARTY TO SUCH
RECORDING.
HOLDING OVER
24. IF TENANT REMAINS IN POSSESSION OF PREMISES AFTER EXPIRATION OF THE
TERM HEREOF, WITH LANDLORD'S ACQUIESCENCE AND WITHOUT ANY EXPRESS AGREEMENT OF
PARTIES, TENANT SHALL BE A TENANT AT WILL AT TWO TIMES THE RENTAL RATE IN EFFECT
AT END OF LEASE; AND THERE SHALL BE NO RENEWAL OF THIS LEASE BY OPERATION OF
LAW.
ATTORNEY'S FEES AND HOMESTEAD
25. IF ANY RENT OWING UNDER THIS LEASE IS COLLECTED BY OR THROUGH AN
ATTORNEY AT LAW, TENANT AGREES TO PAY THE FULL AMOUNT OF SUCH REASONABLE
ATTORNEY'S FEES AS LANDLORD INCURS IN SUCH COLLECTION. TENANT WAIVES ALL
HOMESTEAD RIGHTS AND EXEMPTIONS WHICH TENANT MAY HAVE UNDER ANY LAW AS AGAINST
ANY OBLIGATION OWING UNDER THIS LEASE. TENANT HEREBY ASSIGNS TO LANDLORD
TENANT'S HOMESTEAD AND EXEMPTION.
SERVICE OF NOTICE
26. TENANT HEREBY APPOINTS AS TENANT'S AGENT TO RECEIVE SERVICE OF ALL
DISPOSSESSORY OR OTHER LEGAL PROCEEDINGS AND NOTICES THEREUNDER, AND ALL NOTICES
REQUIRED UNDER THIS LEASE, THE PERSON IN CHARGE OF PREMISES OR OCCUPYING
PREMISES AT THE TIME OF DELIVERY OR SERVICE OF SUCH NOTICE; AND IF NO PERSON IS
IN CHARGE OF OR OCCUPYING PREMISES AT SUCH TIME, THEN SUCH SERVICE OR NOTICE MAY
BE MADE BY ATTACHING THE SAME ON THE MAIN ENTRANCE TO PREMISES. A COPY OF ALL
NOTICES UNDER THIS LEASE SHALL
8
<PAGE>
ALSO BE SENT TO TENANT'S ADDRESS: AMERICAN WEAVERS, L.L.C. ATTENTION: MR. SCOTT
FLETCHER, 965 NORTH WALL STREET, CALHOUN, GA 30701. ALL NOTICES GIVEN HEREUNDER
BY TENANT TO LANDLORD SHALL BE SENT TO LANDLORD IN CARE OF LANDLORD AT
LANDLORD'S ADDRESS SET FORTH HEREINAFTER IN THIS LEASE, UNLESS IT HAS OTHERWISE
NOTIFIED TENANT OF ANOTHER ADDRESS FOR LANDLORD.
MISCELLANEOUS
27. ALL RIGHTS, POWERS AND PRIVILEGES CONFERRED HEREUNDER UPON PARTIES
HERETO SHALL BE CUMULATIVE BUT NOT RESTRICTIVE TO THOSE GIVEN BY LAW. NO FAILURE
OF LANDLORD TO EXERCISE ANY POWER GIVEN LANDLORD HEREUNDER, OR TO INSIST UPON
STRICT COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF THE PARTIES AT VARIANCE WITH THE TERMS HEREOF SHALL CONSTITUTE A
WAIVER OF LANDLORD'S RIGHT TO DEMAND EXACT COMPLIANCE WITH THE TERMS HEREOF.
"LANDLORD" AS USED IN THIS LEASE SHALL INCLUDE LANDLORD, HIS OR ITS HEIRS,
EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVE, ASSIGNS AND SUCCESSORS IN TITLE
TO PREMISES. "TENANT" SHALL INCLUDE TENANT, HIS OR ITS HEIRS, EXECUTORS,
ADMINISTRATORS, LEGAL REPRESENTATIVES, AND, IF THIS LEASE SHALL BE VALIDLY
ASSIGNED OR SUBLET, SHALL ALSO INCLUDE TENANT'S ASSIGNEES OR SUBLEASES, AS TO
PREMISES COVERED BY SUCH ASSIGNMENT OR SUBLEASE. "LANDLORD", AND "TENANT" SHALL
INCLUDE MALE AND FEMALE, SINGULAR AND PLURAL, CORPORATION, PARTNERSHIP OR
INDIVIDUAL, AS MAY FIT THE PARTICULAR PARTIES. TIME IS OF THE ESSENCE OF THIS
LEASE
OPTION TO RENEW
28. TENANT IS GIVEN AN OPTION TO EXTEND THE TERM OF THIS LEASE BY A PERIOD
OF THREE (3) YEARS. TENANT MAY EXERCISE THIS OPTION AT ANY TIME BY NOTICE IN
WRITING TO LANDLORD SERVED AT LEAST NINETY (90) DAYS PRIOR TO THE END OF THE
INITIAL TERM, IF TENANT SHALL NOT BE IN DEFAULT. EXCEPT AS THE TERMS MAY NOT BE
RELEVANT OR APPLICABLE, ALL THE TERMS AND CONDITIONS OF THE LEASE SHALL APPLY
FOR THE EXTENDED PERIOD, EXCLUDING THE MONTHLY
9
<PAGE>
RENTAL WHICH SHALL REMAIN AT $12,729.00 OR $.20 PER SQUARE FOOT OF RENTED SPACE
AFTER THE EIGHT YEAR TERM, OPTION TO RENEW WILL BE GRANTED PERPETUALLY IN THREE
YEAR INCREMENTS WITH THE RENTAL RATE BEING INCREASED AT EACH RENEWAL BASED ON
THE ACCUMULATIVE YEARLY INFLATION RATE AS DETERMINED BY THE STATE OF GEORGIA
DEPARTMENT OF COMMERCE. THIS RATE SHALL BE FROM THE INITIAL TERM OF THE LEASE.
TENANT'S OBLIGATION TO INSURE: ALL-INCLUSIVE FORM
29. DURING THE TERM OF THIS LEASE, TENANT, AT ITS SOLE COST AND EXPENSE,
AND FOR THE MUTUAL BENEFIT OF LANDLORD AND TENANT, SHALL CARRY AND MAINTAIN THE
FOLLOWING TYPES OF INSURANCE IN THE AMOUNTS SPECIFIED: COMPREHENSIVE PUBLIC
LIABILITY INSURANCE, INCLUDING PROPERTY DAMAGE, INSURING LANDLORD AND TENANT
AGAINST LIABILITY FOR INJURY TO PERSONS OR PROPERTY OCCURRING IN OR ABOUT THE
LEASED PREMISES OR ARISING OUT OF THE OWNERSHIP, MAINTENANCE, USE, OR OCCUPANCY
THEREOF. THE LIABILITY UNDER SUCH INSURANCE SHALL NOT BE LESS THAN $1,000,000.00
FOR ANY ONE PERSON INJURED OR KILLED AND NOT LESS THAN $5,000,000.00 FOR ANY ONE
ACCIDENT AND NOT LESS THAN $1,000,000.00 FOR PERSONAL PROPERTY DAMAGE PER
ACCIDENT. WRITTEN PROOF OF THIS INSURANCE COVERAGE SHALL BE REQUIRED BY ECHOTA
PROPERTIES, L.L.C. DURING THE TERM OF THIS LEASE.
10
<PAGE>
ENTIRE AGREEMENT
30. THIS LEASE CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND NO
REPRESENTATIONS, INDUCEMENTS, PROMISES, OR AGREEMENTS, ORAL OR OTHERWISE,
BETWEEN THE PARTIES, NOT EMBODIED HEREIN, SHALL BE OF ANY FORCE OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HEREIN HAVE HEREUNTO SET THEIR HANDS AND
SEALS OR CAUSED THIS INSTRUMENT TO BE EXECUTED THIROUGH AUTHORIZED OFFICIALS IN
THEIR NAME, IN TRIPLICATE, THE DAY AND YEAR FIRST ABOVE WRITTEN.
SIGNED, SEALED AND DELIVERED LANDLORD:
IN THE PRESENCE OF: STEPHEN FOX, RANDALL FOX, RAYMOND KING
D/B/A ECHOTA PROPERTIES, L.L.C.
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE] (SEAL)
- --------------------------- ---------------------------
UNOFFICIAL WITNESS
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE] (SEAL)
- --------------------------- ---------------------------
NOTARY PUBLIC
G.A STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS: P.O Box 2409
------- -------------------
Calhoun, GA 30703
---------------------------
SIGNED, SEALED AND DELIVERED TENANT:
IN THE PRESENCE OF: AMERICAN WEAVERS, L.L.C.
PRESIDENT
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE] (SEAL)
- --------------------------- ---------------------------
UNOFFICIAL WITNESS
/s/ [SIGNATURE ILLEGIBLE] ___________________________ (SEAL)
- ---------------------------
NOTARY PUBLIC
GA. STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS: 965 [ILLEGIBLE] Wall St.
-------- ------------------------
Calhoun, GA 30701
--------------------------------
11
<PAGE>
ECHOTA PROPERTIES, L.L.C. 5/22/96
CALHOUN, GEORGIA
PERMITS:
BUILDING PERMIT AND EXCAVATION PERMIT IS INCLUDED.
TAP FEES: NOT REQUIRED
GRADING AND SITEWORK:
BRING THE BUILDING SITE TO THE PROPER SUBGRADE. ALL FILL MATERIAL SHALL BE
TRUCKED IN AND COMPACTED TO 95% STANDARD PROCTOR DENSITY.
DO NECESSARY FINE GRADING. THE EXISTING GRADE SHALL BE NO MORE THAN PLUS OR
MINUS ONE TENTH OF A FOOT.
FOOTINGS:
COLUMN FOOTINGS SUPPORTING PRE-ENGINEERED BUILDING SHALL BE DESIGNED BY A
GEORGIA REGISTERED ARCHITECT OR ENGINEER AFTER THE DESIGN REACTIONS ARE
RECEIVED FROM THE METAL BUILDING MANUFACTURER.
COLUMN FOOTINGS WILL BE 6 INCHES BELOW FLOOR LEVEL THE CONCRETE USED IN
FOOTINGS WILL BE 3000 P.S.I. CONCRETE. THE FOOTING DESIGNS ARE BASED ON SOIL
BEARING PRESSURE OF 2500 P.S.F.
EXCAVATE FOR AND POUR A 12 FT. X 12 IN. TURNDOWN FOOTING AROUND THE
PERIMETER OF THE CONCRETE FLOOR AT THE REMAINING STEEL BUILDING WALLS WITH
TWO (2) RUNS OF #4 REBAR.
FLOOR SLAB:
THE FLOOR WILL BE SIX INCHES OF 3000 P.S.I. CONCRETE POURED OVER THREE INCHES
OF COMPACTED CRUSHED STONE BASE. THE FLOOR SHALL BE REINFORCED WITH 6 IN.
X 6 IN. X 10 GAUGE WIRE. THE FLOOR WILL HAVE A 4 MIL POLYETHYLENE VAPOR BARRIER.
THE FLOOR WILL RECEIVE A HARD STEEL TROWEL FINISH AND WILL BE SEALED WITH ONE
COAT OF CONCRETE CURING COMPOUND. THE CONTROL JOINTS IN THE FLOOR WILL BE SAW
CUT ON A NINE HUNDRED SQUARE FOOT GRID.
CONTRACTOR SHALL BE RESPONSIBLE FOR BROOM SWEEPING THE FLOOR AND
NOTIFYING THE TENANT OF FINAL COMPLETION. SHOULD THE TENANT OCCUPY THE
BUILDING BEFORE COMPLETION, THE CONTRACTOR SHALL NOT BE RESPONSIBLE FOR
CLEANING FLOORS.
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -2-
RETAINING WALLS:
FORM AND POUR APPROXIMATELY 175 LINEAR FEET OF 8 IN. THICK CONCRETE RETAINING
WALL ALONG THE WEST SIDE OF SAID BUILDING. SAID WALL SHALL BE APPROXIMATELY
2 FT. -4 FT. HIGH. REINFORCED WITH #4 REBAR AT 12 INCH ON CENTER VERTICALLY AND
HORIZONTALLY. THE WALL SHALL BE PLACED ON A FOOTING 12 IN. X 24 IN. WITH THREE
#4 REBAR RUN CONTINUOUS, AND VERTICAL BENDS AT 24 IN. ON CENTERS.
CONCRETE/STEEL STEPS:
FURNISH AND INSTALL ONE SET OF STEEL STEPS AT THE WEST DOCK INCLUDING 42 INCH
HANDRAILS.
CONCRETE APRONS/ROADS:
FORM AND POUR A CONCRETE APRON AT THE LOADING DOCKS. THIS APRON SHALL BE
16,000 SQ. FT. ON THE WEST SIDE. THE CONCRETE SHALL BE 3000 P.S.I. REINFORCED
WITH 6 IN. X 6 IN. X 10 GAUGE WIRE MESH AND HAVE A BROOM FINISH.
PRE-ENGINEERED BUILDING:
THE STEEL BUILDING DIMENSIONS WILL BE 221 FT. WIDE BY 288 FT. LONG WITH AN
EAVELINE HEIGHT OF 22 FT. THE NEW FACILITY SHALL TIE TO THE EXISTING FACILITY ON
THE SOUTH ENDWALL.
THE BUILDING WILL HAVE THREE (3)60 FT., AND ONE (1)41 FT. INTERIOR SPANS RUNNING
THE WIDTH OF THE BUILDING. LENGTHWISE, THE BUILDING SHALL HAVE 26 FT. AND 27 FT.
BAYS RUNNING THE FULL LENGTH OF THE BUILDING. THE ROOF SLOPE WILL BE 1/2:12.
THE BUILDING WILL BE DESIGNED TO CARRY AN 80 MPH WIND AND A 20 PSF LIVE LOAD
WITH AN ADDITIONAL 3 PSF AUXILIARY LOAD SYSTEM AND MISCELLANEOUS LOAD.
ROOF SYSTEM SHALL BE 26 GAUGE GALVALUME ROOF SHEETS INSTALLED OVER
PURLINS. THIS ROOF SYSTEM SHALL BE INSULATED WITH 3 INCH VINYL REINFORCED
VINYL BACKED FIBERGLASS INSULATION.
SIDEWALLS AND ENDWALLS OF BUILDING SHALL BE SHEETED WITH 26 GAUGE ARCHITECTURAL
WALL PANELS. THE WALLS SHALL HAVE BAKED ON PAINT, COLOR TO MATCH THE EXISTING
FACILITY. THIS WALL SYSTEM SHALL BE INSULATED WITH 3 INCH VINYL REINFORCED VINYL
BACKED FIBERGLASS INSULATION.
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -3-
FURNISH AND INSTALL THREE (3) 3 FT. X 7 FT. STEEL WALK DOORS AT THE SPECIFIED
LOCATIONS. THIS INCLUDES FRAMES, MORTISE LOCKSETS, DOORS AND THRESHOLDS.
ONE (1) WALK DOOR SHALL BE CUT INTO THE EXISTING SOUTH ENDWALL.
ROLL-UP DOORS:
5 EACH 8 FT. X 10 FT. MS SOUTHWESTERN MODEL 200 STEEL ROLLING DOORS
5 EACH 8 FT. X 10 FT. DOCK SEALS, 20 IN. PROJECTION, WITH HEAD FLAP
5 EACH 25,000 LB. DLM LEVELERS
1 EACH 14.4 FT. X 14 FT. STRIP DOOR
8 EACH PIPE BOLLARDS 6 IN. X 6 IN. FILLED WITH CONCRETE AND PAINTED
SAFETY YELLOW, TWO (2) AT EACH DOOR
NOTE CUT AND FRAME FOR 12 FT. X 14 FT. DOOR THRU THE EXISTING SOUTH
- ----
ENDWALL
CANOPIES:
FURNISH AND INSTALL A STRUCTURAL CANOPY OVER THE LOADING DOCK THIS CANOPY
SHALL HAVE A 4 FT. PROJECTION.
CABINETS: NOT IN CONTRACT
HARDWARE:
EXTERIOR STEEL DOORS.
PANIC DEVICES AT ALL EMERGENCY EXITS WITH CLOSURES.
PAINTING:
INTERIOR STRUCTURAL STEEL...... ONE (1) FACTORY APPLIED COAT OF RED
OXIDE PAINT AND ONE (1) FIELD APPLIED
COAT OF DTM
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -4-
ELECTRICAL SYSTEM:
FURNISH AND INSTALL A COMPLETE NEW ELECTRICAL SYSTEM FOR SAID BUILDING. SEE
THE ATTACHED ELECTRICAL SPECIFICATIONS.
SPRINKLER SYSTEM:
FURNISH AND INSTALL A SPRINKLER SYSTEM. THE SPRINKLER SYSTEM SHALL MEET
INSURANCE SPECIFICATIONS. SEE THE ATTACHED SPRINKLER SYSTEM SPECIFICATIONS.
HEATING, VENTILATION AND AIR CONDITIONING:
4 EACH 42 INCH WALL MOUNTED EXHAUST FANS
4 EACH 5 FT. X 4 FT. IN-TAKE AIR LOUVERS WITH STATIC DAMPERS
8 EACH 250,000 BTU GAS FIRED UNIT HEATERS INCLUDING GAS PIPING (PAINTING
OF PIPE IS NOT INCLUDED)
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -5-
ELECTRICAL SPECIFICATIONS:
FURNISH AND INSTALL THE FOLLOWING:
1. 400 AMPERE, 277/480 VOLT SERVICE EXTENDED FROM THE EXISTING
SWITCHBOARD TO SOUTHWEST CORNER OF EXISTING BUILDING.
2. 400 AMPERE, M.L.O., 42 SPACE, 277/480 VOLT, COPPER BUSS PANELBOARD
WITH 1 EACH 100A/3 AND 1 EACH 70A/3 CIRCUIT BREAKERS.
3. 1 EACH 100 AMPERE, 277/480 VOLT, M.C.B., 42 SPACE LIGHTING PANEL-BOARD
AND CIRCUIT BREAKERS.
4. 1 EACH 45 KVA TRANSFORMER.
5. 1 EACH 150 AMPERE, 120/208 VOLT, M.C.B., 42 SPACE PANELBOARD AND
CIRCUIT BREAKERS.
6. 85 EACH 400 WATT, METAL HALIDE, HIGH-BAY LIGHTING FIXTURES WITH
17 IN. ALUMINUM REFLECTORS.
7. 9 EACH (SAME AS ABOVE) TO BE EQUIPPED WITH RESTRIKE OPTION.
8. 20 EACH EMERGENCY LIGHTING FIXTURES WITH BATTERY BACKUP.
9. 4 EACH LIGHTED EXIT SIGNS WITH BATTERY BACKUP.
10. 120 VOLT POWER TO 6 EACH UNIT HEATERS.
11. 6 EACH (EXTERIOR) METAL HALIDE WALL PACKS.
12. 480 VOLT POWER TO 4 EACH EXHAUST FANS.
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -6-
SPRINKLER SPECIFICATIONS
COMPLETE INSTALLATION OF TWO (2) AUTOMATIC WET SPRINKLER SYSTEMS HYDRAULICALLY
DESIGNED TO PROVIDE A DENSITY OF .60 GPM OVER THE MOST REMOTE 2000 SQUARE FEET
WITH 500 GPM HOSE ALLOWANCE USING 17/32 ELO-231 X 2860 BRASS UPRIGHT SPRINKLERS.
RELOCATION OF EXISTING VALVE PIT, EXISTING SPRINKLER RISERS AND FIRE HYDRANT IS
INCLUDED IN THIS PROPOSAL NEW 8 INCH UNDERGROUND TO EXTEND TO THE CORNER OF THE
NEW PROPOSED ADDITION. ALL WORK AND MATERIALS TO MEET STATE/LOCAL FIRE MARSHAL
AND INSURANCE COMPANY HAVING JURISDICTION APPROVALS.
ALARM VALVES:
- ------------
TWO (2) 8 INCH ALARM VALVES WITH TRIM AND ACCESSORIES, LOCATED IN THE MAIN
SUPPLY TO TWO (2) SYSTEMS. RELOCATION OF EXISTING RISERS IS INCLUDED IN THIS
PROPOSAL.
WATER TYPE ALARMS:
- -----------------
TWO (2) WATER MOTOR ALARMS TO BE FURNISHED AND CONNECTED TO TWO (2) ALARM
VALVES. THE GONG IS TO BE LOCATED ON THE BUILDING WALL AT A POINT SELECTED BY
THE CONTRACTOR.
IF NECESSARY TO RUN DISCHARGE FROM WATER MOTORS TO SEWER, OWNER IS TO PROVIDE
SEWER CONNECTIONS AND RECEPTACLE CONFORMING TO LOCAL PLUMBING REQUIREMENTS, AT
POINTS OF WATER MOTOR DRAINS.
ELECTRIC ALARMS:
- ---------------
CONTRACTOR TO FURNISH AND INSTALL TWO (2) ELECTRICAL FLOW ALARMS REQUIRED. OWNER
IS TO DO ALL NECESSARY WIRING IN ACCORDANCE WITH APPLICABLE ELECTRICAL
REQUIREMENTS.
GATE VALVE:
- ----------
RELOCATION OF ONE (1) GATE VALVE FOR WATER CONTROL IN VALVE PIT IS INCLUDED IN
THIS PROPOSAL.
CHECK VALVE:
- -----------
RELOCATION OF ONE (1) DOUBLE CHECK VALVE FOR BACKFLOW IN VALVE PIT IS INCLUDED
IN THIS PROPOSAL
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -7-
DRAIN PIPING:
- ------------
DRAIN PIPING TO PROPERLY DRAIN SYSTEM TO BE RUN TO ACCESSIBLE PLACE FOR
DISCHARGE, AT POINTS SELECTED BY CONTRACTOR. IF NECESSARY TO DISCHARGE DRAINS TO
SEWER, OWNER IS TO PROVIDE SEWER CONNECTIONS AND RECEPTACLE CONFORMING TO
APPLICABLE PLUMBING REQUIREMENTS, AT POINTS OF SYSTEM DRAINS.
HANGERS:
- -------
NECESSARY HANGERS IN PLACE FOR SUPPORTING THE SPRINKLER PIPING AS PER NFPA #13.
SPRINKLER CABINET:
- -----------------
TWO (2) SPRINKLER CABINETS WITH TWELVE (12) SPRINKLERS AND SPRINKLER WRENCH FOR
EMERGENCY USE. RELOCATION OF TWO (2) EXISTING IS INCLUDED IN THIS PROPOSAL.
FIRE DEPARTMENT CONNECTION:
- --------------------------
RELOCATION OF EXISTING FIRE DEPARTMENT CONNECTION IS INCLUDED IN THIS PROPOSAL.
SUPPLY PIPING AND EXTRA CONNECTIONS:
- -----------------------------------
SUPPLY TO BE TAKEN FROM EXISTING 8 INCH TAP AND RELOCATED VALVE PIT.
UNDERGROUND PIPE AND FITTINGS:
- -----------------------------
320 FEET OF 8 INCH UNDERGROUND FIRE MAIN IS INCLUDED IN THIS PROPOSAL. ALL
FITTINGS AND PIPE TO CONFORM TO NFPA STANDARDS AS IS APPLICABLE.
CITY WATER CONNECTION: EXISTING
- ---------------------
HYDRANTS:
- --------
RELOCATION OF ONE (1) EXISTING FIRE HYDRANT WITH 3 FT. -6 IN. BURY AS REQUIRED
BY AUTHORITY HAVING JURSIDICTION.
INTERIOR HOSE STATIONS:
- ----------------------
FOUR (4) SMALL INTERIOR HOSE STATIONS WITH EQUIPMENT ARE INCLUDED IN THIS
PROPOSAL, TAKING SUPPLY ADJACENT SYSTEM.
<PAGE>
ECHOTA PROPERTIES, L.L.C. PAGE -8-
TRENCH WORK:
- -----------
TRENCH WORK FOR PROPER INSTALLATION OF UNDERGROUND PIPING INCLUDING EXCAVATION
AND BACKFILLING. IF WATER, QUICKSAND, ROCK, OR ANY OTHER UNFORESEEN OBSTRUCTIONS
ARE ENCOUNTERED, OR SHORING IS REQUIRED, OWNER IS TO PAY FOR AS AN EXTRA TO THE
CONTRACT PRICE, THE ADDITIONAL COST INVOLVED.
INSTALLATION:
- ------------
ALL LABOR REQUIRED FOR THE INSTALLATION OF THE PROPOSED SPRINKLER SYSTEM WILL BE
PERFORMED DURING NORMAL WORKING HOURS (8:00 A.M. UNTIL 5:00 P.M.) MONDAY THROUGH
FRIDAY.
IF WORK IS REQUESTED BY THE OWNER DURING ANY OTHER TIME OF THE DAY OR NIGHT,
WEEKENDS OR HOLIDAYS, THE OWNER IS TO PAY FOR ALL ADDITIONAL COST INVOLVED.
MASONRY AND CARPENTRY WORK:
- --------------------------
PROVIDE ALL OPENINGS FOR PROPER INSTALLATION OF THE WORK, AS SPECIFIED ABOVE IN
WALLS, FLOORS, CEILINGS AND PARTITIONS AND OWNER IS TO DO ALL PATCHING AND
REPAINTING REQUIRED.
PAINTING: PAINTING IS NOT INCLUDED IN THIS PROPOSAL
- --------
SPECIAL:
- -------
1. DELIVER MATERIALS TO OWNERS BUILDING SITE AND DO ALL LOCAL HAULING AND
HANDLING.
2. THIS PROPOSAL DOES NOT INCLUDE ANY ELECTRICAL WIRING.
3. THIS PROPOSAL DOES NOT INCLUDE ANY REPLACEMENT SHRUBBERY, TREES, SOD OR
REGRASSING THAT MAY BE REQUIRED DUE TO TRENCH EXCAVATION OR BACKFILL.
4. AUTOMATIC SPRINKLERS ARE NOT INCLUDED IN THIS PROPOSAL FOR ANY PROCESSING
EQUIPMENT, SUCH AS OVENS, DRYERS, COATERS, ETC.
5. AUTOMATIC SPRINKLERS ARE NOT INCLUDED UNDER ANY HVAC DUCTS.
6. AUTOMATIC SPRINKLERS ARE NOT INCLUDED IN THIS PROPOSAL FOR ANY TYPE OF
STORAGE RACKS OR RACK MEZZANINES.
7. FOX & BRINDLE CONSTRUCTION CO., INC. WILL NOT BE RESPONSIBLE FOR THE
INADEQUACY OF THE WATER SUPPLY.
<PAGE>
EXHIBIT 10.17
STATE OF GEORGIA
COUNTY OF GORDON
COMMERCIAL LEASE
THIS LEASE, MADE THIS 1ST DAY OF MAY, 1998, BY AND BETWEEN ECHOTA
PROPERTIES (HEREINAFTER REFERRED TO AS "LANDLORD"); AND AMERICAN WEAVERS, LLC.
(HEREINAFTER REFERRED TO AS "TENANT");
WITNESSETH:
A FIVE (5) YEAR LEASE AGREEMENT BETWEEN ECHOTA PROPERTIES (LANDLORD) AND
AMERICAN WEAVERS, L.L.C. (TENANT). THIS AGREEMENT ALSO INCLUDES AN OPTION TO
RENEW.
PREMISES
1. THAT LANDLORD, FOR AND IN CONSIDERATION OF THE RENTS, COVENANTS,
AGREEMENTS, AND STIPULATIONS HEREINAFTER MENTIONED, RESERVED, AND CONTAINED, TO
BE PAID, KEPT AND PERFORMED BY TENANT, HAS LEASED AND RENTED, AND BY THESE
PRESENTS DOES LEASE AND RENT, UNTO TENANT, AND TENANT HEREBY LEASES AND TAKES
UPON THE TERMS AND CONDITIONS WHICH HEREINAFTER APPEAR, THE FOLLOWING DESCRIBED
PROPERTY (HEREINAFTER CALLED "PREMISES'), TO WIT:
THAT TRACT OR PARCEL OF LAND LYING, BEING AND SITUATED IN LAND LOTS 168 AND
169 IN THE 14TH DISTRICT AND 3RD SECTION OF GORDON COUNTY, GEORGIA, AND BEING A
PORTION OF 3.49 ACRES MORE OR LESS, THEREOF AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BUILDING SIZE IS (219 FT.-8 1/2 IN. X 375 FT. X 22 FT.)
AND 86,400 SQUAREFEET FOR WAREHOUSING AREA.
2. TENANT SHALL HAVE AND HOLD PREMISES FOR A TERM BEGINNING ON THE 1ST
DAY OF MAY, 1998, AND ENDING ON THE 30TH DAY OF APRIL, 2003, AT MIDNIGHT UNLESS
SOONER TERMINATED OR EXTENDED AS HEREINAFTER SPECIFICALLY PROVIDED IN THIS
LEASE.
1
<PAGE>
RENTAL
3. TENANT SHALL PAY LANDLORD AT THE ADDRESS OF LANDLORD SET FORTH
HEREINAFTER IN THIS LEASE OR OF WHICH TENANT SHALL FROM TIME TO TIME OTHERWISE
BE NOTIFIED, PROMPTLY ON THE 1ST DAY OF EACH MONTH IN ADVANCE, DURING ALL TERMS
OF THIS LEASE A MONTHLY RENTAL OF $ 17,280. (86,400 SQ. FT. @ $.20 PER SQ. FT.)
UTIUTY BILLS
4. TENANT SHALL PAY ALL WATER, SEWER, SEWER SERVICE CHARGES, GAS,
ELECTRICITY, FUEL, LIGHT, HEAT AND POWER BILLS FOR PREMISES OR USED BY TENANT IN
CONNECTION THERE WITH, DURING ALL TERMS OF THIS LEASE.
USE OF PREMISES
5. PREMISES SHALL NOT BE USED FOR ANY ILLEGAL PURPOSES; NOR IN ANY MANNER
TO CREATE ANY NUISANCE OR TRESPASS; NOR IN ANY MANNER TO VITIATE THE INSURANCE
OR INCREASE THE RATE OF INSURANCE ON PREMISES.
ABANDONMENT OF PREMISES
6. TENANT SHALL NOT ABANDON OR VACATE PREMISES DURING ANY TERM OF THIS
LEASE.
REPAIRS BY LANDLORD
7. LANDLORD SHALL KEEP IN GOOD REPAIR THE ROOF, FOUNDATIONS AND EXTERIOR
WALLS OF PREMISES, AND SEWER PIPES OUTSIDE THE EXTERIOR WALLS OF THE BUILDING IN
WHICH PREMISES LOCATED, EXCEPT REPAIRS RENDERED NECESSARY BY THE NEGLIGENCE,
WILLFUL ACT OR OMISSION OF TENANT, TENANT'S AGENTS, EMPLOYEES AND INVITES.
LANDLORD HEREBY GIVES TENANT EXCLUSIVE CONTROL OF PREMISES AND SHALL BE UNDER NO
OBLIGATION TO INSPECT PREMISES. TENANT SHALL PROMPTLY REPORT IN WRITING TO
LANDLORD ANY DEFECTIVE CONDITION KNOWN TO TENANT WHICH LANDLORD IS REQUIRED TO
REPAIR, AND FAILURE TO SO REPORT SUCH DEFECTS SHALL MAKE TENANT RESPONSIBLE TO
LANDLORD FOR ANY LIABILITY INCURRED BY LANDLORD BY REASON OF SUCH DEFECTS.
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<PAGE>
REPAIRS BY TENANT
8. TENANT ACCEPTS PREMISES IN ITS PRESENT CONDITION AND AS SUITED FOR THE
USES INTENDED BY TENANT. TENANT SHALL, THROUGHOUT ALL TERMS OF THIS LEASE, AT
TENANT'S EXPENSE, MAINTAIN PREMISES IN GOOD ORDER AND REPAIR, EXCEPT THOSE
REPAIRS EXPRESSLY REQUIRED IN PARAGRAPH 7 HEREOF, TO BE MADE BY LANDLORD. TENANT
FURTHER AGREES TO CARE FOR AND CLEAN THE GROUNDS AROUNDING THE BUILDING,
INCLUDING THE MOWING OF GRASS, CLEANING OF THE PAVED AREAS, AND GENERAL
LANDSCAPING. TENANT SHALL RETURN PREMISES TO LANDLORD AT THE EXPIRATION, OR
PRIOR TO TERMINATION, OF THE TERM OF THIS LEASE IN AS GOOD CONDITION AND REPAIR
AS WHEN FIRST RECEIVED, NATURAL WEAR AND TEAR, DAMAGE BY STORM, FIRE, LIGHTNING,
EARTHQUAKE OR OTHER CASUALTY ALONE EXCEPTED.
DESTRUCTION OF OR DAMAGE TO PREMISES
9. IF PREMISES ARE TOTALLY DESTROYED BY STORM, FIRE, LIGHTNING,
EARTHQUAKE OR OTHER CASUALTY, THIS LEASE SHALL TERMINATE AS OF THE DATE OF SUCH
DESTRUCTION, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND TENANT AS
OF THAT DATE. IF PREMISES ARE DAMAGED BUT NOT WHOLLY DESTROYED BY ANY OF SUCH
CASUALTIES, THE TENANT AND LANDLORD RESERVE THE RIGHT TO CO-DETERMINE THE DEGREE
OF DAMAGE OR LOSS TO THE FACILITY, AND SHOULD LANDLORD ELECT TO RESTORE THE
PREMISES TO SUBSTANTIALLY THE SAME CONDITION AS BEFORE DAMAGE THEN FULL RENTAL
SHALL RECOMMENCE UPON COMPLETION OF SAID RESTORATION. LANDLORD HAS ONE HUNDRED
TWENTY (120) DAYS TO MAKE RESTORATIONS TO THE ORIGINAL CONDITION OR TENANT MAY
HAVE THE OPTION TO TERMINATE THE LEASE AGREEMENT.
INDEMNITY
10. TENANT AGREES TO AND HEREBY DOES, INDEMNIFY AND SAVE LANDLORD HARMLESS
AGAINST ALL CLAIMS FOR DAMAGES TO PERSONS OR PROPERTY BY REASON OF TENANT'S USE
OR OCCUPANCY OF PREMISES, AND ALL EXPENSES INCURRED BY THE LANDLORD AND MANAGER
BECAUSE THEREOF, INCLUDING REASONABLE ATTORNEY'S FEES AND COURT COSTS.
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<PAGE>
GOVERNMENTAL ORDERS
11. TENANT AGREES, AT TENANT'S OWN EXPENSE, TO PROMPTLY COMPLY WITH ALL
REQUIREMENTS OF ANY LEGALLY CONSTITUTED PUBLIC AUTHORITY MADE NECESSARY BY
REASON OF TENANT'S OCCUPANCY OF PREMISES.
CONDEMNATION
12. IF THE WHOLE OF PREMISES, OR SUCH PORTION THEREOF AS WILL MAKE
PREMISES UNUSABLE FOR THE PURPOSES HEREIN LEASED, BE CONDEMNED BY ANY LEGALLY
CONSTITUTED AUTHORITY FOR ANY PUBLIC USE OR PURPOSE, THEN IN EITHER OF SAID
EVENTS THIS LEASE SHALL CEASE FROM THE TIME WHEN POSSESSION THEREOF IS TAKEN BY
PUBLIC AUTHORITIES, AND RENTAL SHALL BE ACCOUNTED FOR AS BETWEEN LANDLORD AND
TENANT AS OF THAT DATE. SUCH TERMINATION, HOWEVER, SHALL BE WITHOUT PREJUDICE TO
THE RIGHTS OF EITHER LANDLORD OR TENANT TO RECOVER COMPENSATION AND DAMAGE
CAUSED BY CONDEMNATION FROM THE CONDEMNOR. IT IS UNDERSTOOD THAT CONDEMNATION BY
A PRE-EXISTING CONDITION IS NOT THE RESPONSIBILITY OF THE TENANT. IT IS FURTHER
UNDERSTOOD AND AGREED THAT NEITHER TENANT NOR LANDLORD SHALL HAVE ANY RIGHTS IN
ANY AWARD MADE TO THE OTHER BY ANY CONDEMNATION AUTHORITY NOTWITHSTANDING THE
TERMINATION OF THIS LEASE AS HEREIN PROVIDED.
ASSIGNMENT AND SUBLETTING
13. TENANT SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OR THE LANDLORD
ENDORSED HEREON, ASSIGN OR ENCUMBER THIS LEASE OR ANY INTEREST HEREUNDER, OR
SUBLET PREMISES OR ANY PART THEREOF, OR PERMIT THE USE OF PREMISES BY ANY OTHER
PARTY OTHER THAN TENANT. LANDLORD'S CONSENT TO ANY ASSIGNMENT, ENCUMBRANCE OR
SUBLEASE SHALL NOT NULLIFY THIS PROVISION, AND ALL LATER ASSIGNMENTS,
ENCUMBRANCES OR SUBLEASES SHALL BE MADE LIKEWISE ONLY ON THE PRIOR WRITTEN
CONSENT OF LANDLORD. ASSIGNEE OF TENANT, AT OPTION OF LANDLORD, SHALL BECOME
DIRECTLY LIABLE TO LANDLORD FOR ALL OBLIGATIONS OF TENANT HEREUNDER, BUT NO
SUBLEASE OR ASSIGNMENT BY TENANT SHALL RELIEVE TENANT OF ANY LIABILITY HEREUNDER
4
<PAGE>
REMOVAL OF FIXTURES AND PROPERTY
14. TENANT MAY (IF NOT IN DEFAULT HEREUNDER) PRIOR TO THE EXPIRATION OF
THIS LEASE, OR ANY EXTENSION THEREOF, REMOVE ALL PERSONAL PROPERTY, FIXTURES AND
EQUIPMENT WHICH TENANT HAS PLACED IN PREMISES, PROVIDED TENANT SIMULTANEOUSLY
REPAIRS ALL DAMAGE TO PREMISES CAUSED BY SUCH REMOVAL. IF TENANT IS AT THE TIME
OF ANY TERMINATION OF THIS LEASE IN DEFAULT UNDER ANY TERM OR CONDITION HEREOF,
TENANT SHALL NOT BE ENTITLED TO REMOVE ANY OF SUCH PERSONAL PROPERTY, FIXTURES
OR EQUIPMENT AND LANDLORD SHALL HAVE ALL RIGHTS THEREIN AS ARE THEN AVAILABLE TO
LANDLORD BY LAW.
CANCELLATION OF LEASE BY LANDLORD
15. IT IS MUTUALLY AGREED THAT, IN THE EVENT TENANT SHALL DEFAULT IN THE
PAYMENT OF RENT HEREIN RESERVED, WHEN DUE, AND FAILS TO CURE SAID DEFAULT WITHIN
(5) DAYS AFTER THE GIVING OF WRITTEN NOTICE THEREOF BY LANDLORD; OR IF TENANT
SHALL BE IN DEFAULT IN PERFORMING ANY OF THE TERMS OR PROVISIONS OF THIS LEASE
OTHER THAN THE PROVISIONS REQUIRING THE PAYMENT OF RENT, AND FAILS TO CURE SUCH
DEFAULT WITHIN THIRTY (30) DAYS AFTER THE DATE OF WRITTEN NOTICE OF DEFAULT FROM
LANDLORD; OR IF TENANT IS ADJUDICATED BANKRUPT; OR IF A PERMANENT RECEIVER IS
APPOINTED FOR TENANT'S PROPERTY AND SUCH RECEIVER IS NOT REMOVED WITHIN SIXTY
(60) DAYS AFTER WRITTEN NOTICE FROM LANDLORD TO TENANT TO OBTAIN SUCH REMOVAL;
OR IF, WHETHER VOLUNTARILY OR INVOLUNTARILY, TENANT TAKES ADVANTAGE OF ANY
DEBTOR RELIEF PROCEEDINGS UNDER ANY PRESENT OR FUTURE LAW, WHEREBY THE RENT OR
ANY PART THEREOF, OR IS PROPOSED TO BE, REDUCED OR PAYMENT THEREOF DEFERRED; OR
IF TENANT MAKES AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR IF TENANTS
EFFECTS SHALL BE LEVIED UPON OR ATTACHED UNDER PROCESS AGAINST TENANT, NOT
SATISFIED OR DISSOLVED WITHIN THIRTY (30) DAYS AFTER WRITTEN NOTICE FROM
LANDLORD TO TENANT TO OBTAIN SATISFACTION THEREOF; THEN, AND IN ANY OF SAID
EVENTS, LANDLORD AT ITS OPTIONS MAY AT ONCE, OR WITHIN SIX (6) MONTHS THEREAFTER
(BUT ONLY DURING THE CONTINUANCE OF SUCH DEFAULT OR CONDITION), TERMINATE THIS
LEASE BY WRITTEN NOTICE TO TENANT; WHEREUPON THIS LEASE SHALL END. AFTER AN
AUTHORIZED ASSIGNMENT OR SUBLEASE
5
<PAGE>
OF THE ENTIRE PREMISES COVERED BY THIS LEASE, THE OCCURRING OF ANY OF THE
FOREGOING DEFAULTS OR EVENTS SHALL AFFECT THIS LEASE ONLY IF CAUSED BY, OR
HAPPENING TO, SUCH ASSIGNEE OR SUBLESSEE. ANY NOTICE PROVIDED IN THIS PARAGRAPH
16 MAY BE GIVEN BY LANDLORD OR ITS ATTORNEY. UPON SUCH TERMINATION BY LANDLORD,
TENANT WILL AT ONCE SURRENDER POSSESSION OF PREMISES TO LANDLORD AND REMOVE
THEREFROM ALL OF TENANT'S EFFECTS IN WHICH LANDLORD CLAIMS NO INTEREST UNDER
PARAGRAPH 15 OF THIS LEASE; AND LANDLORD SHALL HAVE THE RIGHT FORTHWITH TO RE-
ENTER PREMISES AND REPOSSESS ITSELF THEREOF, AND REMOVE ALL PERSONS AND EFFECTS
THEREFROM, USING SUCH FORCE AS MAY BE NECESSARY WITHOUT BEING GUILTY OF
TRESPASS, FORCIBLE ENTRY OR DETAINER OR OTHER TORT.
RELETTING BY LANDLORD
16. LANDLORD SHALL HAVE THE RIGHT AT LANDLORD'S OPTION WITHOUT TERMINATING
THIS LEASE, UPON TENANTS BREACHING THIS CONTRACT, TO ENTER UPON AND, AS TENANTS
AGENT, RENT PREMISES AT THE BEST PRICE OBTAINABLE BY REASONABLE EFFORT, WITHOUT
ADVERTISEMENT AND BY PRIVATE NEGOTIATIONS AND FOR ANY TERM LANDLORD DEEMS PROPER
TENANT SHALL BE LIABLE TO LANDLORD FOR THE DEFICIENCY, IF ANY, BETWEEN THE
TENANT'S RENT HEREUNDER AND THE PRICE OBTAINED BY THE LANDLORD ON RELETTING.
EXTERIOR SIGNS
17. TENANT SHALL PLACE NO SIGNS UPON THE OUTSIDE WALLS OR ROOF OF PREMISES
EXCEPT WITH THE WRITTEN CONSENT OF LANDLORD. ANY AND ALL SIGNS PLACED ON THE
WITHIN LEASED PREMISES BY TENANT SHALL BE MAINTAINED IN COMPLIANCE WITH ALL
GOVERNMENTAL ORDINANCES, RULES, AND REGULATIONS GOVERNING SUCH SIGNS, AND TENANT
SHALL BE RESPONSIBLE TO LANDLORD FOR ANY DAMAGE CAUSED BY INSTALLATION, USE OR
MAINTENANCE OF SAID SIGNS OR VIOLATION OF ORDINANCE, RULE OR REGULATION WITH
REGARD THERETO. UPON ANY REMOVAL OF SAID SIGNS TENANT SHALL SIMULTANEOUSLY
REPAIR ALL DAMAGE INCIDENT TO SUCH REMOVAL.
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INTERRUPTION OF SERVICES OR OF OCCUPANCY
18. INTERRUPTION OR CURTAILMENT OF ANY SERVICE TO THE PREMISES, SUCH AS
(BUT NOT LIMITED TO) UTILITIES, IF CAUSED BY STRIKES, MECHANICAL DIFFICULTIES OR
OTHER CAUSES BEYOND THE LANDLORD'S CONTROL WILL NOT ENTITLE TENANT TO ANY CLAIM
AGAINST LANDLORD OR ANY ABATEMENT IN RENT, NOR WILL IT CONSTITUTE CONSTRUCTIVE
OR PARTIAL EVICTION, UNLESS LANDLORD FAILS TO TAKE MEASURES THAT ARE REASONABLE
IN THE CIRCUMSTANCES TO RESTORE THE SERVICE WITHOUT UNDUE DELAY. IT IS
UNDERSTOOD THAT ANY PRE-EXISTING ENVIRONMENTAL CONDITION IS NOT THE
RESPONSIBILITY OF THE TENANT. IT IS ASSUMED THAT NO SUCH CONDITION EXISTS.
CONSTRUCTIVE EVICTION
19. TENANT WILL NOT BE ENTITLED TO CLAIM A CONSTRUCTIVE EVICTION FROM
PREMISES UNLESS TENANT WILL HAVE FIRST NOTIFIED LANDLORD IN WRITING OF THE
CONDITION GIVING RISE TO THE CLAIM AND, IF THE COMPLAINTS ARE JUSTIFIED, UNLESS
LANDLORD FAILS TO REMEDY THE CONDITION WITHIN A REASONABLE TIME AFTER RECEIPT OF
THE NOTICE.
ENTRY FOR CARDING
20. LANDLORD MAY CARD PREMISES "FOR RENT" OR "FOR SALE" THIRTY (30)
DAYS BEFORE THE TERMINATION OF THIS LEASE. LANDLORD SHALL HAVE THE RIGHT TO
ENTER PREMISES, AFTER CONFIDENTIALITY AGREEMENT IS MADE BETWEEN LANDLORD AND
TENANT, AT REASONABLE HOURS TO EXHIBIT SAME TO PROSPECTIVE PURCHASERS OR TENANTS
AND TO MAKE REPAIRS REQUIRED OF LANDLORD UNDER THE TERMS HEREOF OR TO MAKE
REPAIRS TO LANDLORD'S ADJOINING PROPERTY, IF ANY.
EFFECT OF TERMINATION OF LEASE
21. NO TERMINATION OF THIS LEASE PRIOR TO THE NORMAL ENDING THEREOF, BY
LAPSE OF TIME OR OTHERWISE, SHALL AFFECT LANDLORD'S RIGHT TO COLLECT RENT FOR
THE PERIOD PRIOR TO TERMINATION THEREOF.
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<PAGE>
MORTGAGEE'S RIGHTS
22. TENANT'S RIGHTS SHALL BE SUBJECT TO ANY BONA FIDE MORTGAGE OR DEED TO
SECURE DEBT WHICH IS NOW, OR MAY HEREAFTER BE, PLACED UPON THE PROPERTY OF WHICH
PREMISES CONSTITUTE A PART.
NO ESTATE IN LAND
23. THIS LEASE SHALL CREATE THE RELATIONSHIP OF LANDLORD AND TENANT
BETWEEN THE PARTIES HERETO; NO ESTATE SHALL PASS OUT OF LANDLORD. TENANT HAS
ONLY A USUFRUCT, NOT SUBJECT TO LEVY AND SALE, AND NOT ASSIGNABLE BY TENANT
EXCEPT BY LANDLORD'S CONSENT. NEITHER LANDLORD NOR TENANT SHALL CAUSE THIS LEASE
TO BE RECORDED WITHOUT PRIOR WRITTEN CONSENT OF THE OTHER PARTY TO SUCH
RECORDING.
HOLDING OVER
24. IF TENANT REMAINS IN POSSESSION OF PREMISES AFTER EXPIRATION OF THE
TERM HEREOF, WITH LANDLORD'S ACQUIESCENCE AND WITHOUT ANY EXPRESS AGREEMENT OF
PARTIES, TENANT SHALL BE A TENANT AT WILL AT TWO TIMES THE RENTAL RATE IN EFFECT
AT END OF LEASE; AND THERE SHALL BE NO RENEWAL OF THIS LEASE BY OPERATION OF
LAW.
ATTORNEY'S FEES AND HOMESTEAD
25. IF ANY RENT OWING UNDER THIS LEASE IS COLLECTED BY OR THROUGH AN
ATTORNEY AT LAW, TENANT AGREES TO PAY THE FULL AMOUNT OF SUCH REASONABLE
ATTORNEY'S FEES AS LANDLORD INCURS IN SUCH COLLECTION. TENANT WAIVES ALL
HOMESTEAD RIGHTS AND EXEMPTIONS WHICH TENANT MAY HAVE UNDER ANY LAW AS AGAINST
ANY OBLIGATION OWING UNDER THIS LEASE. TENANT HEREBY ASSIGNS TO LANDLORD
TENANT'S HOMESTEAD AND EXEMPTION.
SERVICE OF NOTICE
26. TENANT HEREBY APPOINTS AS TENANT'S AGENT TO RECEIVE SERVICE OF ALL
DISPOSSESSORY OR OTHER LEGAL PROCEEDINGS AND NOTICES THEREUNDER, AND ALL NOTICES
REQUIRED UNDER THIS LEASE, THE PERSON IN CHARGE OF PREMISES OR OCCUPYING
PREMISES AT THE TIME OF DELIVERY OR SERVICE OF SUCH NOTICE; AND IF NO PERSON IS
IN CHARGE OF OR
8
<PAGE>
OCCUPYING PREMISES AT SUCH TIME, THEN SUCH SERVICE OR NOTICE MAY BE MADE BY
ATTACHING THE SAME ON THE MAIN ENTRANCE TO PREMISES. A COPY OF ALL NOTICES UNDER
THIS LEASE SHALL ALSO BE SENT TO TENANTS ADDRESS: AMERICAN WEAVERS, L.L.C.
ATTENTION: MR SCOTT FLETCHER, 965 NORTH WALL STREET, CALHOUN, GA 30701. ALL
NOTICES GIVEN HEREUNDER BY TENANT TO LANDLORD SHALL BE SENT TO LANDLORD IN CARE
OF LANDLORD AT LANDLORD'S ADDRESS SET FORTH HEREINAFTER IN THIS LEASE, UNLESS IT
HAS OTHERWISE NOTIFIED TENANT OF ANOTHER ADDRESS FOR LANDLORD.
MISCELLANEOUS
27. ALL RIGHTS, POWERS AND PRIVILEGES CONFERRED HEREUNDER UPON PARTIES
HERETO SHALL BE CUMULATIVE BUT NOT RESTRICTIVE TO THOSE GIVEN BY LAW. NO FAILURE
OF LANDLORD TO EXERCISE ANY POWER GIVEN LANDLORD HEREUNDER, OR TO INSIST UPON
STRICT COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF COMPLIANCE BY TENANT WITH HIS OBLIGATION HEREUNDER, AND NO CUSTOM OR
PRACTICE OF THE PARTIES AT VARIANCE WITH THE TERMS HEREOF SHALL CONSTITUTE A
WAIVER OF LANDLORD'S RIGHT TO DEMAND EXACT COMPLIANCE WITH THE TERMS HEREOF.
"LANDLORD" AS USED IN THIS LEASE SHALL INCLUDE LANDLORD, HIS OR ITS HEIRS,
EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVE, ASSIGNS AND SUCCESSORS IN TITLE
TO PREMISES. "TENANT" SHALL INCLUDE TENANT, HIS OR ITS HEIRS, EXECUTORS,
ADMINISTRATORS, LEGAL REPRESENTATIVES, AND, IF THIS LEASE SHALL BE VALIDLY
ASSIGNED OR SUBLET, SHALL ALSO INCLUDE TENANT'S ASSIGNEES OR SUBLEASES, AS TO
PREMISES COVERED BY SUCH ASSIGNMENT OR SUBLEASE. "LANDLORD", AND "TENANT" SHALL
INCLUDE MALE AND FEMALE, SINGULAR AND PLURAL, CORPORATION, PARTNERSHIP OR
INDIVIDUAL, AS MAY FIT THE PARTICULAR PARTIES. TIME IS OF THE ESSENCE OF THIS
LEASE
OPTION TO RENEW
28. TENANT IS GIVEN AN OPTION TO EXTEND THE TERM OF THIS LEASE BY A PERIOD
OF THREE (3) YEARS. TENANT MAY EXERCISE THIS OPTION AT ANY TIME BY NOTICE IN
WRITING TO LANDLORD SERVED AT LEAST NINETY (90) DAYS PRIOR TO THE END OF THE
INITIAL TERM, IF TENANT SHALL NOT BE IN DEFAULT. EXCEPT AS THE TERMS MAY NOT BE
RELEVANT OR APPLICABLE, ALL THE TERMS AND
9
<PAGE>
CONDITIONS OF THE LEASE SHALL APPLY FOR THE EXTENDED PERIOD, EXCLUDING THE
MONTHLY RENTAL WHICH SHALL REMAIN AT $ 17,077.40 FOR RENTED SPACE AFTER THE FIVE
YEAR TERM, OPTION TO RENEW WILL BE GRANTED PERPETUALLY IN THREE YEAR INCREMENTS
WITH THE RENTAL RATE BEING INCREASED AT EACH RENEWAL BASED ON THE ACCUMULATIVE
YEARLY INFLATION RATE AS DETERMINED BY THE STATE OF GEORGIA DEPARTMENT OF
COMMERCE. THIS RATE SHALL BE FROM THE INITIAL TERM OF THE LEASE.
TENANT'S OBLIGATION TO INSURE: ALL-INCLUSIVE FORM
29. DURING THE TERM OF THIS LEASE, TENANT, AT ITS SOLE COST AND EXPENSE,
AND FOR THE MUTUAL BENEFIT OF LANDLORD AND TENANT, SHALL CARRY AND MAINTAIN THE
FOLLOWING TYPES OF INSURANCE IN THE AMOUNTS SPECIFIED: COMPREHENSIVE PUBLIC
LIABILITY INSURANCE, INCLUDING PROPERTY DAMAGE, INSURING LANDLORD AND TENANT
AGAINST LIABILITY FOR INJURY TO PERSONS OR PROPERTY OCCURRING IN OR ABOUT THE
LEASED PREMISES OR ARISING OUT OF THE OWNERSHIP, MAINTENANCE, USE, OR OCCUPANCY
THEREOF. THE LIABILITY UNDER SUCH INSURANCE SHALL NOT BE LESS THAN $1,000,000.00
FOR ANY ONE PERSON INJURED OR KILLED AND NOT LESS THAN $5,000,000.00 FOR ANY ONE
ACCIDENT AND NOT LESS THAN $1,000,000.00 FOR PERSONAL PROPERTY DAMAGE PER
ACCIDENT. WRITTEN PROOF OF THIS INSURANCE COVERAGE SHALL BE REQUIRED BY ECHOTA
PROPERTIES DURING THE TERM OF THIS LEASE.
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<PAGE>
ENTIRE AGREEMENT
30. THIS LEASE CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND NO
REPRESENTATIONS, INDUCEMENTS, PROMISES, OR AGREEMENTS, ORAL OR OTHERWISE,
BETWEEN THE PARTIES, NOT EMBODIED HEREIN, SHALL BE OF ANY FORCE OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HEREIN HAVE HEREUNTO SET THEIR HANDS AND
SEALS OR CAUSED THIS INSTRUMENT TO BE EXECUTED THROUGH AUTHORIZED OFFICIALS IN
THEIR NAME, IN TRIPLICATE, THE DAY AND YEAR FIRST ABOVE WRITTEN.
SIGNED, SEALED AND DELIVERED LANDLORD:
IN THE PRESENCE OF: STEPHEN FOX, RANDALL FOX, RAYMOND KING
D/B/A ECHOTA PROPERTIES
/s/[SIGNATURE ILLEGIBLE] /s/STEPHEN FOX (SEAL)
__________________________ ______________________
UNOFFICIAL WITNESS
/s/[SIGNATURE ILLEGIBLE] /s/RANDALL FOX (SEAL)
- -------------------------- ----------------------
NOTARY PUBLIC
GA STATE AT LARGE
MY COMMISSION EXPIRES 4/30/98 ADDRESS:
P.O. Box 2409
Calhoun, Georgia 30703
SIGNED, SEALED AND DELIVERED TENANT:
IN THE PRESENCE OF: AMERICAN WEAVERS, L.L.C.
PRESIDENT
/S/ Robert Livingston /s/ Scott Fletcher (SEAL)
- --------------------------- --------------------------
UNOFFICIAL WITNESS
/S/ Tyka Robinson
- --------------------------
NOTARY PUBLIC
GA. STATE AT LARGE
MY COMMISSION EXPIRES: 12/20/98 ADDRESS:
P.O. Box 369
Calhoun, Georgia 30703
11
<PAGE>
EXHIBIT 10.18
Form R140 COMMERCIAL LEASE
This lease is made between H.C. Hoodenpyle of P.O. Box 272, Hiawassee, GA
50546, herein called Lessor, and American Weavers, L.L.C., of P.O. Box 369,
Calhoun, GA 30703, herein called Lessee.
Lessee hereby offers to lease from Lessor the premises situated in the
City of N/A, county of Towns, State of Georgia, described as Hoodenpyle building
off US Highway 76 (Building), upon the following TERMS and CONDITIONS:
1. Term and Rent. Lessor demises the above premises for a term of 13 Months,
commencing January 1, 1998, and termination on February 1, 1998 or sooner as
provided herein at the annual rental of $1.75 per square foot (26,000 sq. ft.)
Forty Five Thousand, Five Hundred Dollars ($45,500.00), payable in equal
installments in advance on the first day of each month for the month's rental,
during the term of this lease. All rental payments shall be made to Lessor, at
the address specified above.
2. Use. Lessee shall use and occupy the premises for manufacturing. The premises
shall be used for no other purpose. Lessor represents that the premises may
lawfully be used for such purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the premises are
in good order and repair, unless otherwise indicated herein. Lessee shall, at
his own expense and at all times, maintain the premises in good and safe
condition, including plate glass, electrical wiring, plumbing and heating
installations and any other system or equipment upon the premises and shall
surrender the same, at termination hereof, in as good condition as received,
normal wear and tear excepted. Lessee shall be responsible for all repairs
required, excepting the roof, exterior walls, structural foundations, and: None,
which shall be maintained by Lessor. Lessee shall also maintain in good
condition such portions adjacent to the premises, such as sidewalks, driveways,
lawns and shrubbery, which would otherwise be required to be maintained by
Lessor.
4. Alterations. Lessee shall not, without first obtaining the written consent of
Lessor, make any alterations, additions, or improvements, in, to or about the
premises.
5. Ordinances and Statutes. Lessee shall comply with all statutes, ordinances
and requirements of all municipal, state and federal authorities now in force,
or which may hereafter be in force, pertaining to the premises, occasioned by or
affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or sublet any
portion of the premises without prior written consent of the Lessor, which shall
not be unreasonably withheld. Any such assignment or subletting without consent
shall be void and, at the option of the Lessor, may terminate this lease.
7. Utilities. All applications and connections for necessary utility services on
the demised premises shall be made in the name of Lessee only, and Lessee shall
be solely liable for utility charges as they become due, including those for
sewer, water, gas, electricity and telephone services.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's agents to enter
upon the premises at reasonable times and upon reasonable notice, for the
purpose of inspecting the same, and will permit Lessor at any time within sixty
(60) days prior to the expiration of this lease, to place upon the premises any
usual "To Let" or "For Lease" signs, and permit persons desiring to lease the
same to inspect the premises thereafter.
13. Destruction of Premises. In the event of a partial destruction of the
premises during the term hereof, from any cause, Lessor shall forthwith repair
the same, provided that such repairs can be made within sixty (60) days under
existing governmental laws and regulations, but such partial destruction shall
not terminate this lease, except that Lessee shall be entitled to a
proportionate reduction of rent while such repairs are being made, based upon
the extent to which the making of such repairs shall interfere with the business
of Lessee on the premises. If such repairs cannot be made within said sixty (60)
days, Lessor, at his option, may make the same within a reasonable time, this
lease continuing in effect with the rent proportionately abated as aforesaid,
and in the event that Lessor shall not elect to make such repairs which cannot
be made within sixty (60) days, this lease may be terminated at the option of
either party. In the event that the building in which the demised premises may
be situated is destroyed to an extent of not less than one-third of the
replacement costs thereof, Lessor may elect to terminate this lease whether the
demised premises be injured or not. a total destruction of the building in which
the premises may be situated shall terminate this lease
14. Lessor's Remedies on Default. If Lessee defaults in the payment of rent, or
any additional rent, or defaults in the performance of any of the other
covenants or conditions hereof, Lessor may give Lessee notice of such default
and if Lessee does not cure any such default within 30 days, after the giving of
such notice (or if such other default is of such nature that it cannot be
completely cured within such period, if Lessee does not commence such curing
within such 30 days and thereafter proceed with reasonable
<PAGE>
================================================================================
[ILLEGIBLE] CERTIFICATE OF LIABILITY INSURANCE OP ID MT Date (MM/DD/YY)
AMERI - 2 05/15/98
- --------------------------------------------------------------------------------
PRODUCER THIS CERTIFICATE ISSUED AS A MATTER OF
INFORMATION ONLY AND CONFERS NO RIGHTS
Huffines-Russell & Associates UPON THE CERTIFICATE HOLDER. THIS
P.O. Box 2190 CERTIFICATE DOES NOT AMEND, EXTEND OR
haretta GA 30023-2190 ALTER THE COVERAGE AFFORDED BY THE
POLICIES BELOW.
------------------------------------------
COMPANIES AFFORDING COVERAGE
------------------------------------------
Scott Russell - Direct COMPANY
Tel No. 770-664-6818 A Kemper National Insurance Co
Fax No. 770-475-0341 ------------------------------------------
COMPANY
American Weavers, L.L.C. B
965 N. Wall Street ------------------------------------------
P.O. Box 369 COMPANY
Calhoun GA 30703 C
------------------------------------------
COMPANY
D
================================================================================
COVERAGES
- --------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CO POLICY EFFECTIVE POLICY EXPIRATION
LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
GENERAL LIABILITY GENERAL AGGREGATE $ 2,000,000
--------------------------------------
A |X| COMMERCIAL GENERAL LIABILITY 3MH305120-00 07/01/97 07/01/98 PRODUCTS - COMP/OP AGG $ 1,000,000
--------------------------------------
|_| |_| CLAIMS MADE |X| OCCUR PERSONAL & ADV INJURY $ 1,000,000
--------------------------------------
|_| OWNER'S & CONTRACTOR'S PROT EACH OCCURRENCE $ 1,000,000
--------------------------------------
A |X| BROAD FORM FIRE DAMAGE (Any one fire) $ 50,000
-------------------------------- --------------------------------------
|_| VENDORS INCL. MED EXP (Any one person) $ 5,000
====================================================================================================================================
AUTOMOBILE LIABILITY
A |X| ANY AUTO F3Y019890-00 07/01/97 07/01/98 COMBINED SINGLE LIMIT $ 1,000,000
--------------------------------------
|_| ALL OWNED AUTOS BODILY INJURY $
(Per person)
--------------------------------------
|_| SCHEDULED AUTOS BODILY INJURY $
|_| HIRED AUTOS (Per accident)
--------------------------------------
|_| NON-OWNED AUTOS PROPERTY DAMAGE $
====================================================================================================================================
GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $
--------------------------------------
|_| ANY AUTO OTHER THAN AUTO ONLY:
--------------------------------------
|_| EACH ACCIDENT $
--------------------------------------
|_| AGGREGATE $
====================================================================================================================================
EXCESS LIABILITY EACH OCCURRENCE $10,000,000
--------------------------------------
A |X| UMBRELLA FORM 3SB118108-00 07/01/97 07/0/98 AGGREGATE $10,000,000
--------------------------------------
|_| OTHER THAN UMBRELLA FORM $
====================================================================================================================================
WORKERS COMPENSATION AND |X| WC STATU-|_| OTHER
EMPLOYERS' LIABILITY TORY LIMITS
--------------------------------------
A THE PROPRIETOR/ |_| INCL 3BR056375-00 07/01/97 07/0/98 EL EACH ACCIDENT $ 100,000
PARTNERS/EXECUTIVE |_| EXCL --------------------------------------
OFFICERS ARE: EL DISEASE - POLICY LIMIT $ 500,000
--------------------------------------
EL DISEASE - EA EMPLOYEE $ 100,000
====================================================================================================================================
OTHER
====================================================================================================================================
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
RE: 2212 US HIGHWAY 76 EAST, HIAWASSEE, GA. HUGH HOODENPLYE IS NAMED AS ADDITIONAL INSURED ON
THIS LOCATION. WAIVER OF SUBROGATION PROVIDED. TENANT SHALL HOLD LANDLORD HARMLESS FROM DAMAGES
ARISING OUT OF ANY DAMAGE TO ANY PERSON OR PROPERTY OCCURRING IN OR ABOUT PREMISES AND THE BUILDING.
====================================================================================================================================
CERTIFICATE HOLDER CANCELLATION
- ------------------------------------------------------------------------------------------------------------------------------------
HOODENP SHOULD OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE
HUGH HOODENPLYLE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE
P.O. BOX 272 CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE
HIAWASSEE, GA 30546 OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
---------------------------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE:
Scott Russell - Director
- ------------------------------------------------------------------------------------------------------------------------------------
ACORD 25-S (1/95) /s/ Scott Russell ACORD CORPORATION 19[ILLEGIBLE]
====================================================================================================================================
</TABLE>
<PAGE>
[LETTERHEAD OF LANEY CONSTRUCTION COMPANY, INC.]
May 20, 1998
Contract/Proposal
Hugh Hoodenpyle
Project (American Weavers)
Hiawassee Georgia Plant
Laney Construction Company, Inc. proposes to furnish labor and material to
construct a 150' x 250' x 23' eave height building at the American Weavers Plant
in Hiawassee, Georgia.
Laney Construction Company, Inc. has included in this quote to:
Grade Work: Complete earth moving for a 150' x 250' building pad and a 100' wide
x 80' long truck ramp for the approach ramp of 6 dock doors on west end wall of
building. There will also be 2 - 24" x 24" drain inlets installed in the truck
ramp area and drained with an 8" underground pipe away from dock area.
Underground drainage will be installed between existing building and new
building for gutter drains with 8" flexible pipe.
Under-slab Plumbing: Under-slab plumbing will consist of 4 water closets, 2 - 4"
pipes for sink drains and 2 vent pipes stubbed level at finish floor for future
bathrooms. A new 6" PVC sewer line will be installed between existing building
and new building to replace old tile sewer line.
Concrete: Concrete Pad will be 150' wide by 250' long. Concrete will be 6" thick
using fiber mesh reinforcing with a 18" wide x 12" deep monolithic footing
around perimeter of building. Footing piers at column locations will be 3' wide
long x 2' deep with 1 mat of #5 rebar 8" o.c.
All concrete inside building will have a smooth steel trowel finish with 1 coat
of cure and seal concrete sealer.
Exterior concrete pad will be 100' wide x 75' long x 6" thick with fibermesh
reinforcing in addition to 1 mat in 8' x 20' sheets of 6" x 6" x 6 gauge
reinforcing wire. Exterior concrete will have a light broom finish with 1 coat
of cure and seal concrete sealer. There will also be a 14' x 14' concrete pad at
the 14' x 14' ground level door.
Concrete walls at loading dock will be 8" thick with #4 rebar 12" o.c. both ways
for reinforcing. Angle iron will be cast in concrete wall to weld dock plates
to. Wing wall
<PAGE>
EXHIBIT 10.19
COMMERCIAL LEASE AND OPTION FOR PURCHASE AGREEMENT
Between, Landlord, HUGH C. HOODENPYLE and
AMERICAN WEAVERS, L.L.C.,
D/B/A AMERICAN WEAVERS in Hiawassee, Georgia, Tenant
Lease
This lease is made and entered into by and between HUGH C. HOODENPYLE,
referred to in this contract as landlord, whose address is Post Office Box 272,
in the City of Hiawassee, County of Towns, State of Georgia, and AMERICAN
WEAVER, L.L.C. D/B/A AMERICAN WEAVERS in Hiawassee, Georgia, Tenant referred to
in this contract as tenant, whose address is 965 North Wall Street, Calhoun,
Georgia 30701, with local offices located at 2212 U.S. Hwy. 76 East, in the
County of TOWNS, State of Georgia.
Section One
Definitions
1. Specific Definitions. As used throughout this lease, the
following terms have the following meanings:
a. Landlord: Hugh C. Hoodenpyle.
b. Tenant: American Weavers, L.L.C. d/b/a American Weavers.
c. Premises or Leased Premises: That Tract or parcel of real
property more particularly described in Exhibit "A" attached
hereto and incorporated herein by reference.
d. Building: Refers to the building currently located on the
Premises and as context requires, the new building to be
constructed, collectively, "the Buildings". The new building
to be constructed in accordance with the Contract/Proposal
between Laney Construction Company, Inc. and Hugh Hoodenpyle,
dated May 20, 1998, and attached hereto as Exhibit "B".
e. Land: The real property on which the building is situated also
known as the Premises.
f. Purpose: This lease is for the purpose of authorizing and
allowing the Tenant to rent the existing building to conduct a
weaving business on the leased premises or land and to
construct a new building on the premises as provided
hereunder. Landlord shall cooperate in the obtaining of all
applicable permits and licenses, zoning applications and
variances. In general, the purpose of this lease shall be to
authorize the business of rug weaving and similar pursuits on
the leased premises.
Page 1 of
<PAGE>
g. Tenant's Notice Address: 965 North Wall Street Calhoun,
Georgia 30701: Attention: Chief Financial Officer.
h. Term: Five (5) years, beginning with the completion of
construction of the new building, [in the event of dispute as
to the date the building is completed and appropriate for
occupancy, both parties shall select one architect to whose
certificate shall be conclusive evidence of the date the
building is suitable for occupancy], and ending five years
after the beginning date. In the event this lease is extended
beyond this ending or later date, "term" means the end of any
such extension period, unless the context indicates otherwise.
i. Rental: The sum of Twelve Thousand Dollars ($12,000.00)
payable monthly in advance.
j. New Building: The building to be constructed. Said building
shall consist of NO LESS THAN 38,000 square feet.
K. Existing Building: The building located on the premises as of
the date of the execution of this contract consisting of
approximately 26,000 square feet.
2. General Definitions. As used throughout this lease, the
following words have the meanings set out after such words, unless the context
in which they appear clearly indicates otherwise.
a. Alteration: Any addition or change to, or modification of, the
premises made by tenant after any initial fixturing period,
including, without limitation, the installation of fixtures,
tenant's trade fixtures, and tenant's improvements as defined
in this lease.
b. Authorized representative: Any officer, agent, employee, or
independent contractor retained or employed by either party,
acting within the authority given him or her by that party.
c. Damage: Death, injury, deterioration, or loss to a person or
injury, deterioration, or loss to property caused by another
person's acts or omissions.
d. Damages: Monetary compensation or indemnity that can be
recovered in the courts by any person who has suffered damage
to the person, property, or rights of such person through
another's act or omission.
e. Destruction: Any damage, as defined in this lease, to or
disfigurement of the premises.
f. Encumbrance: Any deed of trust, mortgage, or other written
security device or agreement affecting the
Page 2
<PAGE>
premises, and the note or other obligation secured by it.
g. Expiration: The coming to an end of the time specified in the
lease as its duration, including any extension of the term, if
applicable.
h. Good condition: The good physical condition of the premises
and each portion of the premises, including, without
limitation, signs, windows, appurtenances, and tenant's
personal property as defined in this lease. "In good
condition" means first class, neat, and broom clean, and is
equivalent to similar phrases referring to physical adequacy
in appearance and for use.
i. Hold harmless: To defend and indemnify from all liability,
losses, penalties, damages as defined in this lease, costs,
expenses (including, without limitation, attorneys' fees),
causes of action, claims, or judgments arising out of or
related to any damage, as defined in this lease, to any person
or property.
j. Law: Any judicial decision, constitution, statute, ordinance,
resolution, regulation, rule, administrative order, or other
requirement of any municipal, county, state, federal, or other
government agency or authority having jurisdiction over the
parties or the premises, or both, in effect either at the time
of execution of the lease or at any time during the term,
including, without limitation, any regulation or order of a
quasi-official entity or body (such as, board of fire
examiners or public utilities).
k. Lender: Beneficiary, mortgagee, secured party, or other
holder of an encumbrance, as defined in this lease.
l. Lien: Charge imposed on the premises by someone other than
landlord, by which the premises are made security for the
performance of an act. Most of the liens referred to in this
lease are mechanics' liens.
m. Maintenance: Repairs, replacement, repainting and cleaning.
n. Person: One or more human beings or legal entities or other
artificial persons, including, without limitation,
partnerships, corporations, trusts, estates, associations, and
any combination of human beings and legal entities.
o. Provision: Any term, agreement, covenant, condition, clause,
qualification, restriction, reservation, or other stipulation
in the lease that defines or otherwise controls, establishes,
or limits the performance required
Page 3
<PAGE>
or permitted by either party.
p. Rent: Base rental, additional rental, prepaid rent, security
deposit, and other similar charges payable by tenant to
landlord.
q. Restoration: Reconstruction, rebuilding, rehabilitation, and
repairs that are necessary to return destroyed portions of the
premises and other property to substantially the same physical
condition as they were in immediately before the destruction.
r. Successor: Any assignee, transferee, personal representative,
heir, or other person or entity succeeding lawfully, and
pursuant to the provisions of this lease, to the rights or
obligations of either party.
s. Tenant's improvements. Any addition to or modification of the
premises made by tenant before, at, or after commencement of
the term, including, without limitation, fixtures (but not
including tenant's trade fixtures, as defined in this lease).
t. Tenant's personal property: Tenant's equipment, furniture,
merchandise, and movable property placed in the premises by
tenant, including tenant's trade fixtures, as defined in this
lease.
u. Tenant's trade fixtures: Any property installed in or on the
premises by tenant for purposes of trade, manufacture,
ornament, or related use.
v. Termination: The ending of the term for any reason before
expiration, as defined in this lease.
Section Two
Delay in Delivery of Possession
If landlord is unable to deliver possession of the premises as a
result of causes beyond landlord's reasonable control, landlord shall not be
liable for any damage caused for failing to deliver possession, and this lease
shall not be void or voidable. Tenant shall not be liable for rent until
landlord delivers possession of the premises to tenant. Notwithstanding the
above, the lease shall be voidable by either party in the event that
construction on the new building does not begin or ground broken within 9 weeks
of the execution of this lease and option agreement.
Page 4
<PAGE>
Section Three
Leasing and Payment of Rental
Landlord leases to tenant and tenant rents from landlord the premises
for the term and for the rent as defined in Section One. Tenant agrees to pay to
landlord each installment of rental as provided above.
The rent shall be paid by tenant to landlord without deduction or
offset, delivered to the building office or to such other person or at such
other place as landlord may from time to time designate in writing.
No security or guaranty which may now or subsequently be furnished
landlord for performance by tenant of the covenants or conditions of this lease
shall in any way be a bar or defense to any action in unlawful detainer, or for
the recovery of the premises, or to any action which landlord may at any time
commence for a breach of any of the covenants or conditions of this lease.
SECTION FOUR
Lessee's Option To Purchase Demised Premise
Lessor grants to lessee an option to buy the leased premises after the
first two years of the lease have been completed. After this two year period,
the lessee may elect to purchase the leased premises at a price of to be
determined as follows: The purchase price shall be based on the average of two
appraisals; one appraisal to be provided by an appraiser selected by the
landlord, and one appraiser selected by the tenant.
If the average of the two appraisal is unacceptable to either party or
one appraisal deviates more than ten percent (10%) from the lower appraisal,
then the parties shall mutually select a third appraiser who shall prepare an
appraisal that shall be binding upon the parties.
All appraiser shall be licensed in the State of Georgia and shall be
qualified experts in Commercial Real Estate Valuation.
The option shall be excised in writing, mailed by certified mail to
the landlord. Closing on the property shall be set within 90 days of the
exercise of the receipt of the option notice to the landlord. The option shall
remain in effect throughout a valid lease period. At closing, the purchase price
shall be payable in cash. Said option is conditional upon the tenant's full
performance the lease.
During the term of this lease, the landlord may not transfer or sell the leased
premisses without the written permission of the Lessee. Notwithstanding the
above, should the lessee breach the
Page 5
<PAGE>
lease in any manner or fashion, this option shall cease by operation of law and
agreement of the parties and the landlord may sell or transfer the leased
premises without the approval of the lessee; however, all other convents,
conditions, and provisions of the lease shall remain in effect. Notwithstanding
the above option, the option shall not operate to prevent the landlord from
borrowing against the leased premises or executing any Deed of Trust, mortgage,
or Deed to Secure Debt. Lessee acknowledges that Lessee's interests as lessee or
under any option agreement is subordinate to the interests of any current or
future lending or financial institution who has a security interest in the
leased premises.
NOTWITHSTANDING THE ABOVE, THE LANDLORD MAY TRANSFER THE PROPERTY TO
ANY STATE, LOCAL OR FEDERAL GOVERNMENT, AUTHORITY OR SUBDIVISION THEREOF, FOR
THE PURPOSE OF DEVELOPING AN INDUSTRIAL PARK.
In the event of the exercise of this option, lessor agrees to convey
the property to lessee by warranty deed free and clear of all encumbrances
except the taxes and assessments which under this lease are to be paid by
lessee. Prior to consummation of the option and during the term of the lease,
lessee may not place deeds to secure debt or deeds of trust on the property.
In the event and on the lessee's exercise of the option to purchase
the premises in the manner provided, a contract for the sale and purchase of the
property exists, and the relationship of lessor and lessee is automatically
terminated, and the lessee shall be in possession of the premises as a vendee
under an executory contract. Whenever lessee shall desire to exercise this
option, it shall give lessor written notice. Lessor will within reasonable time
after receipt of such notice deliver, or cause to be delivered, to lessee a
preliminary title report by private attorney or title company licensed in
Georgia. Defects in title, if any, shown by such report shall be remedied by
lessor within thirty days of notice to Landlord of such defects and Landlord
shall deliver to lessee at the time of closing an owner's policy of title
insurance issued by the company in the amount of the purchase price subject only
to encumbrance, exceptions, and reservations mentioned in this lease.
OPTION TO RENEW FOR ADDITIONAL ONE YEAR PERIOD
----------------------------------------------
Notwithstanding any provision to the contrary, the Lessee shall have
the option to renew the lease for an additional term of 12 months or one year
during an rental period commencing at the expiration of the initial lease term.
All of the terms and conditions of the lease shall apply during the renewal
terms. This option shall be excised by written notice given to the Landlord not
less than thirty (30) days prior to the expiration of the initial lease term. If
notice is not given in the manner provided herein within the time specified,
this option shall expire.
Page 6
<PAGE>
Section Five
Use of Premises
The premises are leased to the tenant for the purpose set forth in
this lease and for no other.
Section Six
Alterations, Mechanics' Liens
Tenant shall not make, directly or indirectly, any alterations without
first obtaining the written consent of landlord. Any alteration shall become at
once a part of the realty and belong to landlord subject, however, to landlord's
right to require removal and restoration as provided in this lease. Tenant shall
keep the premises and the building free from any liens arising out of any work
performed, material furnished, or obligations incurred by tenant. Tenant agrees
that if tenant shall make any alterations of the premises, tenant will not take
such action until five days after receipt by tenant of the written consent of
landlord required by this section, in order that landlord may post appropriate
notices to avoid any possible liability with respect to mechanics' liens or
other such claims. Tenant shall at all times permit such notices to be posted
and to remain posted until the completion and acceptance of such work. Consent
for such alterations shall not be unreasonably withheld by landlord.
Section Seven
Work To Be Performed by Landlord
Landlord shall not be required to perform any work upon the premises
of any type or nature unless specifically required by this lease or a special
agreement to that effect is expressed in a rider attached to and forming a part
of this lease and then only to the extent such work is set forth in the rider.
This rider to be effective shall be signed by both landlord and tenant, and
shall clearly identify its applicability to this lease.
Notwithstanding the above, the landlord shall be responsible for
keeping in good repair the roof, the foundation and the exterior walls, and the
septic system serving both building. Notwithstanding, this provision, the lessee
shall be responsible for all repairs resulting from the lessee's direct actions,
whether negligent, unintentional or intentional by lessee or lessee's agents
and/or employees.
Page 7
<PAGE>
Section Eight
Restrictions on Use
No use shall be made or permitted to be made of the premises, nor acts
done, that will increase the existing rate of insurance upon the building, or
cause a cancellation of any insurance policy covering the building, or any part
of it, nor shall tenant sell, or permit to be kept, used, or sold, in or about
the premises any article that may be prohibited by the standard form of fire
insurance policies. Tenant shall, at tenant's sole cost and expense, comply
with any and all requirements, pertaining to the premises, of any insurance
organization or company necessary for the maintenance of reasonable fire and
public liability insurance covering the building and appurtenances.
Tenant shall not do or permit anything to be done in or about the
premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the building or injure or annoy them, or use or allow
the premises to be used for any immoral, unlawful, or objectionable purposes. No
loudspeakers or other similar device, system, or apparatus which can be heard
outside the premises shall, without the prior written approval of landlord, be
used in or at the premises. Tenant shall not commit, or suffer to be committed,
any waste upon the premises, or any nuisance (public or private) or other act or
thing of any kind whatsoever that may disturb the quiet enjoyment or cause
unreasonable annoyance of any other tenant in the building.
Section Nine
Compliance with Law
Tenant shall, at its sole cost and expense, comply with all laws
pertaining to tenant's use of the premises, and shall faithfully observe all
laws in the use of the premises. The judgment of any court of competent
jurisdiction, or the admission of tenant in any action or proceeding against
tenant, whether landlord be a party to it or not, that tenant has violated any
law in the use of the premises shall be conclusive of that fact as between
landlord and tenant. Without limiting the generality of the foregoing, the
duties of tenant under this provision shall include the making of all such
alterations of the premises as may be required by law by reason of the
particular manner or mode of use of the premises by tenant, or occasioned by
reason of the failure of tenant to maintain or repair the premises as required
under this lease.
Page 8
<PAGE>
Section Ten
Indemnity and Exculpations; Insurance
1. Exculpation and Indemnity of Landlord. Landlord shall not be liable
to tenant for any damage to tenant or tenant's property, and tenant waives all
claims against landlord for damage to person or property from any cause. Tenant
shall hold landlord harmless from all damages arising out of any damage to any
person or property occurring in, on, or about the premises and the building. A
party's obligation under this section to indemnify and hold the other party
harmless shall be limited to the sum that exceeds the amount of insurance
proceeds, if any, received by the party being indemnified.
2. Public Liability and Property Damage Insurance. Tenant at its cost
shall maintain public liability and property damage insurance with liability
limits of not less than One Million Dollars and One Million Dollars per
occurrence, and property limits of not less than One Million Dollars per
occurrence insuring against all liability of tenant and its authorized
representatives arising out of and in connection with tenant's use or occupancy
of the premises.
All public liability insurance and property damage insurance shall
insure performance by tenant of the indemnity provisions of this lease. Both
parties shall be named as additional insureds, the policy shall contain
cross-liability endorsements, and shall be primary insurance as far as landlord
is concerned.
3. Increase in Amount of Public Liability and Property Damage
Insurance. Not more frequently than every three years, if, in the opinion of
landlord's lender or of the insurance broker retained by landlord, the amount of
public liability and property damage insurance coverage at that time is not
adequate, tenant shall increase the insurance coverage as reasonably required by
either landlord's lender or landlord's insurance broker.
4. Waiver of Subrogation. The parties release each other, and their
respective authorized representatives, from any claims for damage to any person,
on the property or on or within the premises and other improvements including
the building to be constructed hereunder, and to or from the fixtures, personal
property, tenant's improvements, and alterations of either landlord or tenant in
or on the premises and the buildings and other improvements in which the
premises are located that are caused by or result from risks insured against
under any fire and extended coverage insurance policies carried by the parties
and in force at the time of any such damage. Tenant shall cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against landlord in connection with any damage
covered by any policy.
Page 9
<PAGE>
5. Other Insurance Matters. All the insurance required under this
lease shall:
a. Be issued by insurance companies authorized to do business in the
State of Georgia, with a financial rating of at least an A + 3A status as rated
in the most recent edition of Best's Insurance Reports.
b. Be issued as a primary policy.
c. Contain an endorsement requiring 30 days' written notice from the
insurance company to both parties and landlord's lender before cancellation or
change in the coverage, scope, or amount of any policy.
d. Be renewed not less than 20 days before expiration of the term of
the policy.
A Certificate of Insurance shall be provided to the landlord at the
commencement of the term and on each renewal of the policy.
Section Eleven
Rules and Regulations
Tenant shall faithfully observe and comply with the rules and
regulations of the industrial complex as they now exist or as they be later
developed and all reasonable modifications of and additions to it from time to
time put into effect by landlord. Landlord shall not be responsible to tenant
for the nonperformance by any other tenant or occupant of the building of any of
such rules and regulations.
Section Twelve
Utilities
Landlord shall furnish no utilities to the premises. Tenant shall pay
for all services and utilities.
Section Thirteen
Personal Property Taxes
All property taxes assessed by any governmental body upon tenant's
personal property and tenant's improvements shall be paid by tenant and, should
these taxes be applied in any manner to the real property taxes, tenant, upon
demand, will pay such personal property taxes to landlord, who in turn will pay
them to the proper tax collector.
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<PAGE>
Section Fourteen
Repair
By taking possession of the buildings leased under this lease, tenant
accepts the total premises as being in good sanitary order, condition, and
repair. Tenant, at tenant's sole cost and expense, shall keep the premises and
every part of it in good condition and repair, damage to it by fire, earthquake,
act of God or the elements excepted. Tenant waives all rights to make repairs at
the expense of landlord as provided in any law, statute, or ordinance now or
subsequently in effect. Upon the expiration or earlier termination of the term,
tenant shall surrender the premises to landlord in the same condition as when
received, ordinary wear and tear and damage by fire, earthquake, act of God or
the elements excepted. No representations respecting the conditions of the
premises or the building have been made by landlord to tenant except as
specifically stated in this lease. Tenant waives all rights under, and the
benefits of, any homestead exemption, and under any similar law, statute, or
ordinance now or hereafter in effect.
Section Fifteen
Restoration of Premises
Tenant agrees that prior to the expiration of the term of the lease,
or upon the earlier termination of the lease, or upon tenant's unlawful
abandonment of the premises, whichever occurs first, tenant will leave the
premises in the same condition as when received, reasonable wear and tear, loss
by fire or other casualty, and acts of God excepted, and if tenant made any
alteration or improvement of the premises, with or without landlord's consent as
required by the terms of this lease, tenant will in all cases restore the
premises substantially to their original condition as of the inception of the
term of the lease (wear and tear, loss by fire or other casualty, and acts of
God excepted) unless landlord has expressly set forth in writing that a
particular alteration or improvement shall not be removed.
Section Sixteen
Entry by Owner
Tenant shall permit landlord and its authorized representatives to
enter the premises at all reasonable times for purposes of inspection,
maintenance, or making repairs or additions to, or alterations of, any other
portion of the building, including the erection and maintenance of such
scaffolding, canopies, fences, and props as may be required, or for the purpose
of posting notices of nonliability for alterations or repairs, or for the
purpose of placing upon the premises any usual or ordinary "for sale" or "for
rent" signs, without any liability to tenant for any loss of occupation or quiet
enjoyment of the premises occasioned by such
Page 11
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acts, and tenant shall permit landlord, at any time within 90 days prior to the
expiration of this lease, to place upon such premises any usual or ordinary "for
rent" or "to lease" signs.
Section Seventeen
Estoppel Certificates
Tenant shall at any time and from time to time, upon not less than 20
days prior written, request by landlord, execute, acknowledge, and deliver to
such party a statement in writing certifying that this lease is unmodified and
in full force and effect (or if there has been any modification of this lease
that it is in full force and effect as modified and stating the modification or
modifications) and that there are no defaults existing (or if there is any
claimed default, stating its nature and extent) and stating the dates to which
the rent and other charges have been paid in advance. It is expressly understood
and agreed that any such statement delivered pursuant to this section may be
relied upon by any prospective purchaser of the estate of landlord, or any
lender or prospective assignee of any lender on the security of the premises or
the property of which it is a part, or any part of it, and by any third person.
Section Eighteen
Abandonment of Premises
Tenant shall not vacate or abandon the premises at any time during the
term. If tenant abandons, vacates, or no work is done at or upon the premises
for a period in excess of one month, or if tenant surrenders the premises, or is
dispossessed by process of law, or otherwise, any personal property belonging to
tenant and left on the premises shall be deemed to be abandoned, and, at the
option of landlord, such property may either be removed, and stored in any
public warehouse or elsewhere at the cost of and for the account of tenant.
Section Nineteen
Removal of Trade Fixtures of Tenant at End of Term
If tenant shall fully and faithfully perform all of tenant's
obligations under this lease, then tenant may, and upon the request of landlord
shall, remove all trade fixtures installed in the premises by tenant at the
expiration or termination of the term of this lease, or any renewal of this
lease, provided that such removal may be effected without damage to the
premises.
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Section Twenty
Surrender of Lease
The voluntary or other surrender of this lease by tenant, accepted by
landlord, or the mutual cancellation of this lease, shall not work a merger and
shall, at the option of landlord, terminate all or any existing subleases or
subtenancies or operate as an assignment to landlord of any or all of such
subleases or subtenancies.
Section Twenty-One
Holding Over
Any holding over after the expiration of the term of this lease
without the consent of landlord shall be construed to be a tenancy from month to
month at a rent equal to one and one-half the rent payable if this lease were
still in force and effect.
Section Twenty-Two
Grace Period
1. No default or breach of any of the covenants and conditions shall
exist on the part of landlord or tenant until the party claiming default or
breach shall serve upon the other a written notice, as provided in this lease,
specifying with particularity where such default or breach is alleged to exist,
and the other party shall fail to perform or observe such covenant or condition,
as the case may be, within 30 days after the serving of such notice on it.
2. In the event, however, that any penalty be incurred or created, or
interest be charged by reason of lapse of time due to the failure or omission of
such party to have performed or observed such covenant or condition, then such
party shall bear and pay such penalty or discharge such interest as additional
rental under this lease.
3. The foregoing period of grace shall not apply to rent payments or
other payments required of tenant under this lease, the time of such payments
being of the essence of this lease.
4. If either party shall be delayed or prevented from the performance
of any act required by this lease by reason of acts of God, strikes, lockouts,
labor troubles, inability to procure materials, restrictive laws, or other
cause, without fault and beyond the reasonable control of the party obligated
(financial inability excepted), performance of such act shall be extended for a
period equivalent to the period of such delay, provided, however, that nothing
in this section shall excuse tenant from the prompt payment of any rent or other
charge required of tenant except as may be expressly provided elsewhere in this
lease.
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Section Twenty-Three
Landlord's Remedies Upon Default
Landlord shall have the following remedies if tenant commits a
default. These remedies are not exclusive but are in addition to any remedies
now or later allowed by law.
1. Landlord shall have the right to terminate this lease or to have
this lease continue in full force and effect with tenant at all times having the
right to possession of the premises. Upon such termination, landlord, in
addition to any other rights and remedies, including rights and remedies under
the Official Code of Georgia or any amendment to it, shall be entitled to
recover from tenant the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that the tenant professes could be reasonably
avoided. The worth at the time of award of the amount referred to in this
section shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank, Atlanta Georgia, at the time of the award plus one
percent. Prior to such award, landlord may relet the premises, if vacated, for
the purpose of mitigating damages suffered by landlord because of tenant's
failure to perform tenant's obligations under this lease.
2. Any proof of tenant of the amount of rent loss that could be
reasonably avoided shall be made in the following manner: Landlord and tenant
shall each select a licensed real estate broker in the business of renting
property of the same type and use as the premises, and in the same geographic
vicinity; such two real estate brokers shall select a third licensed real estate
broker; and the three licensed real estate brokers so selected shall determine
the amount of rent loss that could be reasonably avoided for the balance of the
term of this lease after the time of award. The decision of the majority of such
licensed real estate brokers shall be final and binding upon the parties to this
agreement.
3. As used in this lease, the term "time of award" shall mean either
the date upon which tenant pays to landlord the amount recoverable by landlord
as set forth in this lease or the date of entry of any determination, order, or
judgment of any court or other legally constituted body, or of any arbitrators,
determining the amount recoverable, whichever occurs first.
4. Should landlord, following any breach or default of this lease by
tenant, elect to keep this lease in full force and effect, for so long as
landlord does not terminate tenant's right to possession of the premises
(notwithstanding the fact that tenant may have abandoned the premises), then
landlord, in addition to all other rights and remedies which landlord may have
at law or in equity, shall have the right to enforce all of landlord's rights
and remedies under this lease. Notwithstanding any such election to have this
lease remain in full force and effect, landlord may at any time thereafter elect
to terminate this lease for any previous
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breach or default which remains uncured, or for any subsequent breach or
default. For the purposes of landlord's right to continue this lease in effect
upon tenant's breach or default, act of maintenance or preservation, or efforts
of landlord to relet the property, or the appointment of a receiver on
initiative of landlord to protect its interest under this lease, do not
constitute a termination of tenant's right to possession.
5. In the event landlord elects, upon breach or default of this lease
by tenant, to keep this lease in full force and effect, landlord may, as
attorney-in-fact of tenant, from time to time sublet the premises or any part of
it for any term and at any rent and upon any other terms as landlord in
landlord's sole discretion may deem advisable, with the right to make
alterations, restoration, and maintenance to the premises. Upon each such
subletting:
(a) The tenant shall be immediately liable to pay to landlord, in
addition to indebtedness other than rent due under this lease, the cost of such
subletting and of such alterations and repairs incurred by landlord, and the
amount by which the rent under this lease for the period of such subletting (to
the extent such period does not exceed the term of this lease) exceeds the
amount agreed to be paid as rent for the premises for such period of such
subletting; or
(b) At the option of landlord, rents received from such subletting
shall be applied: first, to payment of indebtedness other than rent due under
this lease from tenant to landlord; second, to the payment of costs of such
subletting and of such alterations and repairs; third, to payment of rent due
and unpaid under this lease; and the residue, if any, shall be held by landlord
and applied in payment of future rents as they become due under this lease. If
tenant has been credited with any rent to be received by such subletting under
option (1) and such rent shall not be promptly paid to landlord by the
subtenant, or if such rent received from such subletting under option (2) during
any month be less than that to be paid during that month by tenant under this
lease, tenant shall pay any such deficiency to landlord. The deficiency shall be
calculated and paid monthly. No taking possession of the premises by landlord,
as attorney-in-fact for tenant, shall be construed as an election on its part to
terminate this lease unless a written notice of such an intention be given to
tenant. Notwithstanding any such subletting without termination, landlord may at
any time thereafter elect to terminate this lease for such a previous breach. At
landlord's option and application, a receiver for tenant shall be appointed to
take possession of the premises and to exercise landlord's right to sublet the
premises as attorney-in-fact for tenant and to apply any rent collected from the
premises as provided in this lease.
6. Nothing in this section affects the right of the landlord to
indemnification for liability arising prior to the termination of the lease for
personal injuries or property damage where the
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lease provides for such indemnification.
7. If tenant shall be in default in the performance of any covenant to
be performed by it under this lease, then, after notice and without waiving or
releasing tenant from the performance of such covenant, landlord may, but shall
not be obligated to, perform any such covenant, and in exercising any such right
pay necessary and incidental costs and expenses in connection with it. All sums
so paid by landlord, together with interest on it at the maximum rate of
interest per year allowed by law, shall be deemed additional rental and shall be
payable to landlord on the next rent-paying day.
8. Rent not paid when due shall bear interest at the rate of one and
one-half percent interest per month or such other rate as allowed by law from
the date due until paid.
Section Twenty-Four
Attorney's Fees on Default
If either landlord or tenant shall obtain legal counsel or bring an
action against the other by reason of the breach of any covenant, warranty, or
condition of this lease, or otherwise arising out of this lease, the
unsuccessful party shall pay to the prevailing party reasonable attorneys' fees,
which shall be payable whether or not such an action is prosecuted to judgment.
The term "prevailing party" shall include, without limitations, a party who
obtains legal counsel or brings an action against the other by reason of the
other's breach or default and obtains substantially the relief sought whether by
compromise, settlement or judgment.
Section Twenty-Five
Insolvency
The occurrence of any of the following events shall constitute a
breach of this lease by tenant and a default under this agreement:
1. The appointment of a receiver to take possession of all or
substantially all of the assets of tenant;
2. A general assignment by tenant for the benefit of creditors; or
3. Any action taken or suffered by tenant under any insolvency or
bankruptcy act.
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Section Twenty-Six
Assignment or Subletting
1. Tenant shall not assign this lease or any interest in it, and shall
not sublet the premises or any part of it or any right or privilege appurtenant
to this agreement or permit any other person (the agents and servants of tenant
excepted) to occupy or use the premises or any portion of it without first
receiving the written consent of landlord. Landlord agrees not to unreasonably
withhold such consent but may, in lieu of granting such consent, terminate this
lease. A consent to one assignment, subletting, or occupation and use by another
person shall not be deemed to be a consent to any other or further assignment,
subletting, or occupation, nor a waiver of the provisions of this section,
except as to the specific instance covered by it. Any such assignment,
subletting, or occupation without consent shall be void and shall at the option
of landlord terminate this lease. This lease and any interest in it shall not be
assignable as to the interest of tenant by operation of law without the written
consent of landlord.
2. In the event tenant contemplates an action under Section
Twenty-Seven, tenant shall give landlord 90 days' written notice of tenant's
intention to sublease or assign this lease, and such notice shall constitute an
offer by tenant to landlord to terminate this lease and the future rights and
obligations of the parties under this lease. Landlord may accept such an offer
by giving written notice of acceptance to tenant within 30 days of landlord's
receipt of tenant's notice of intention to sublet or assign. Upon acceptance,
this lease shall terminate as of the end of the calendar month in which notice
of acceptance is given to tenant. Tenant shall then surrender the premises to
landlord and the provisions of this lease applicable to termination upon
expiration of the term shall apply. Such termination shall not relieve either
party from liability from any breach or default occurring prior to termination.
3. Tenant shall have the right, in the event of a merger,
consolidation, reorganization, or recapitalization, whether or not tenant
survives as the surviving corporation, to assign or transfer this lease to the
surviving corporation. Such right of assignment or transfer shall, however, be
limited to an assignee whose book value is equal to or greater than the book
value of tenant at the time of such assignment or transfer. In the event tenant
contemplates making an assignment or transfer as provided in this section,
Paragraph 3 tenant shall give 30 days' notice to landlord of its intent to make
such assignment or transfer, and shall furnish to landlord all pertinent
information as to the book value of the proposed assignee. Upon assignment or
transfer, as provided in this section, the liability of tenant shall terminate
and landlord shall look to the assignee for performance under this lease,
provided such assignee agrees in writing to be bound by the terms and conditions
of this lease as though an original signatory to this agreement.
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4. Any transfer of shares by tenant by reason of which the present
shareholders own less than 51 percent of the outstanding stock of tenant or a
surviving corporation shall constitute an assignment of this lease subject to
the provisions limiting assignment.
5. Except as otherwise expressly provided in this lease, tenant shall
remain fully liable on this lease and shall not be released from performing any
of the terms, covenants, and conditions of this lease unless landlord consents.
6. Tenant immediately and irrevocably assigns to landlord, as security
for tenant's obligations under this lease, all rent from any subletting of all
or a part of the premises as permitted by this lease, and landlord, as assignee
and as attorney-in-fact for tenant, or a receiver for tenant appointed on
landlord's application, may collect such rent and apply it toward tenant's
obligations under this lease, except that, until the occurrence of an act of
default by tenant, tenant shall have the right to collect such rent.
7. In no event shall tenant assign this lease or sublet the premises,
or any portion of it, to any then-existing or prospective tenant of the
building.
8. Tenant agrees to pay to landlord the sum of One thousand Dollars
($1,000.00) to reimburse landlord for all expenses, including attorneys' fees,
incurred by landlord in connection with any requested and permitted assignment
or subleasing. Such a sum shall be in addition to the attorneys' fees and costs
allowed under this lease.
Section Twenty-Seven
Transfer by Landlord; Release From Liability
In the event landlord shall sell or transfer the building or any part
of it, and as a part of such transaction shall assign its interest as landlord
in and to this lease, then from the effective date of such sale, assignment, or
transfer landlord shall have no further liability under this lease to tenant
except as to any matters of liability that have accrued and are unsatisfied as
of such date, it being intended that the covenants and obligations contained in
this lease on the part of landlord shall be binding upon landlord and its
successors and assigns only during their respective periods of ownership of the
fee or leasehold estate, as the case may be.
Section Twenty-Eight
Damage to or Destruction of Premises
In the event of a partial destruction of the premises from any cause
covered by landlord's standard fire and extended coverage
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insurance, landlord shall immediately repair such destruction, provided the cost
of repair does not exceed the insurance proceeds and such repairs can be made
within 60 days, but partial destruction shall in no way annul or void this
lease, and tenant shall not be entitled to a proportionate reduction of rent
while such repairs are being made. If partial destruction was caused by any risk
not covered by landlord's insurance, or if the cost of repair exceeds the
insurance proceeds payable, landlord may, at its option, make such repairs,
provided the repairs can be made within 60 days, and the lease shall remain in
full force and effect. If the landlord does not elect to make repairs it is not
obligated to make, or if such repairs cannot be made within 60 days, or if such
repairs cannot be made under law, this lease may be terminated at the option of
either party. In the event the building is destroyed to the extent of not less
than thirty-three and one-third percent of the replacement cost of it, landlord
may elect to terminate this lease, whether the premises are injured or not and
without liability to tenant. A total destruction of the premises, or of the
building, shall terminate this lease. In the event of any dispute between
landlord and tenant relative to the provisions of this section, they shall
submit their dispute to arbitration in accordance with the rules of the American
Arbitration Association, and the arbitration shall be final and binding upon
both landlord and tenant, and the cost of such arbitration shall be borne
equally between them.
Section Twenty-Nine
Eminent Domain
If all or any part of the premises shall be taken or appropriated by
any public or quasi-public authority under the power of eminent domain, either
party to this agreement shall have the right, at its option, to terminate this
lease upon notice given within 90 days after the date of such taking or
appropriation. If all or any part of the building shall be taken or appropriated
by any public or quasi-public authority under any power of eminent domain,
landlord may terminate this lease upon notice given within 90 days after the
date of such taking or appropriation. In either of such events, landlord shall
be entitled to, and tenant upon demand of landlord shall assign to landlord, any
rights of tenant to any and all income, rent, award, or any interest whatsoever
which may be paid or made in connection with such public or quasi-public use or
purpose, and tenant shall have no claim against landlord for the value of any
unexpired term of this lease. If a part of the premises shall be so taken or
appropriated and neither party to this agreement shall elect to terminate the
lease, the rent subsequently to be paid shall be equitably reduced.
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Section Thirty
Subordination to Security Deeds
This lease shall be subject and subordinate at all times to all ground
and underlying leases which may now, exist or subsequently be executed affecting
the building and/or the land, and to the lien of any encumbrance in any amount
or amounts whatsoever now or subsequently placed on or against the building
and/or land or on or against any ground or underlying lease without the
necessity of having further instruments on the part of tenant to effectuate such
subordination. Notwithstanding the foregoing, tenant covenants and agrees to
execute and deliver upon demand such further instruments evidencing such
subordination of this lease to such ground or underlying leases and to the lien
of any such encumbrance as may be required by landlord. Tenant irrevocably
appoints landlord the attorney-in-fact of tenant to execute and deliver any such
instrument or instruments for or in the name of tenant. In the event of
termination of any ground or underlying lease, or in the event of foreclosure or
exercise of any power of sale under any encumbrance superior to this lease or to
which this lease is subject or subordinate, tenant shall upon demand attorn to
the lessor under such ground or underlying lease or to the purchaser at any
foreclosure sale or sale pursuant to the exercise of any power of sale under any
encumbrance, in which event this lease shall not terminate and tenant shall
automatically be and become the tenant of such Lessor under such ground or
underlying lease or such purchaser, whichever shall make demand for it.
Section Thirty-One
Effect of Exercise of or Failure To Exercise
Rights by Landlord
Neither the exercise of nor failure to exercise any right, option, or
privilege under this lease by landlord shall exclude landlord from exercising
any and all other rights, options, or privileges under this lease, nor shall
such exercise or nonexercise relieve tenant from tenant's obligation to perform
each and every covenant and condition to be performed by tenant under this
lease, or from damages or other remedy for failure to perform or meet the
obligations of this lease.
Section Thirty-Two
Waiver
The waiver by landlord of any breach of any term, covenant, or
condition contained in this lease shall not be deemed to be a waiver of such
term, covenant, or condition, or of any subsequent breach of such term,
covenant, or condition, or of any other term, covenant, or condition in this
lease. The acceptance of rent under this lease by landlord shall not be deemed
to be a waiver of any preceding breach by tenant of any term, covenant, or
condition of
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this lease other than tenant's breach in failing to pay the particular rent so
accepted regardless of landlord's knowledge of such additional preceding breach
at the time of the acceptance of such rent.
Section Thirty-Three
Notices
All notices to be given to tenant may be given in writing personally
or by depositing the notices in the United States mail, postage prepaid, and
addressed: if to tenant, at tenant's notice address as set forth in Section One,
Paragraph 1, subparagraph 9, or at such other place or places as tenant may from
time to time designate in writing; if to landlord, at the building office, or at
such other place or places as landlord may from time to time designate in
writing.
Section Thirty-Four
Representations
This lease represents the entire agreement of the parties with respect
to the parties' rights and duties under this lease. Tenant acknowledges that
neither landlord nor any agent, servant, or representative of landlord, or any
person purporting to act on landlord's behalf, has made any representation,
warranty, or statement with respect to the amount of taxes that may or will be
assessed against the premises or about the cost of any insurance required to be
secured by tenant under this lease or any other matter relating to this lease
that is not expressly covered in this lease. With respect to such matters,
tenant is relying upon tenant's own independent investigation and sources of
information, and tenant expressly waives any right tenant might otherwise have
under the law to rescind this lease or to claim damages by reason of the fact
that such taxes or assessments or costs of insurance may be in excess of any sum
deemed reasonable by tenant, or in excess of any amount tenant anticipated
paying under this lease.
Section Thirty-Five
Notice of Surrender or Termination
At least 90 days before the last day of the term, tenant shall give to
landlord a written notice of intention to surrender the premises on that date,
but nothing contained in this lease shall be construed as an extension of the
term or as consent of landlord to any holding over by tenant.
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Section Thirty-Six
Light and Air
Tenant covenants and agrees that no diminution of light, air, or view
by any structure which may subsequently be erected (whether or not by landlord)
shall entitle tenant to any reduction of rent under this lease, result in any
liability of landlord to tenant, or in any other way affect this lease.
Section Thirty-Seven
Execution
Submission of this instrument for examination or signature by tenant
does not constitute a reservation of or option for lease, and it is not
effective as a lease or otherwise until execution and delivery by both landlord
and tenant.
Section Thirty-Eight
Time Is of the Essence
Time is of the essence of this lease and each and all of its
provisions.
Section Thirty-Nine
Name
Tenant shall not use the name of the building for any purpose other
than as the address of the business conducted by tenant in the premises without
the written consent of landlord.
Section Forty
Entire Agreement; Amendment
This lease contains all the agreements of the parties with respect to
the subject matter and cannot be amended or modified except by a written
agreement.
Section Forty-One
Negation of Partnership
Landlord shall not become or be deemed a partner or a joint venturer
with tenant by reason of the provisions of this lease.
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Section Forty-Two
Provisions Are Covenants and Conditions
All provisions, whether stated as covenants or conditions, on the part
of tenant shall be deemed to be both covenants and conditions.
Section Forty-Three
Use of Definitions
The definitions contained at the beginning of and in the text of this
lease shall be used to interpret this lease.
Section Forty-Four
Severability
The invalidity, illegality, or unenforceability of any provision of
this lease shall not render the other provisions invalid, illegal, or
unenforceable.
Section Forty-Five
Captions
The table of contents and headings of the sections of this lease are
descriptive and for convenience only, are not a part of this lease, and shall
have no effect on the construction or interpretation of this lease.
Section Forty-Six
Binding Effect on Successors
The provisions of this lease shall, subject to the provisions as to
assignment, apply to and bind the heirs, successors, administrators, and
executors, of the parties.
Section Forty-Seven
Applicable Law
This lease shall be construed and interpreted in accordance with the
laws of the State of Georgia.
Section Forty-Eight
Singular and Plural
The plural shall be substituted for the singular or vice-versa, and
the female for male or neuter in any place where the context may require such
substitution.
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Section Forty-Nine
Additional Provisions
The attached four (4) pages, Exhibit "A" and Exhibit "B" are
incorporated in this lease and made a part of it.
In witness of this agreement, the parties have executed this agreement
at the place and on the date first above written.
Tenant:
AMERICAN WEAVERS, L.L.C. d/b/a AMERICAN WEAVERS
BY:
SEAL /s/ Robert J. Livingston
-------------------------------
ROBERT J. LIVINGSTON
CHIEF FINANCIAL OFFICER
LANDLORD:
/s/ Hugh Hoodenpyle
-------------------------------
UGH HOODENPYLE
Certification by Tenant
Tenant certifies that tenant has carefully read and understood every
word in this lease and by signing this lease agrees to faithfully comply with
its provisions.
Tenant:
AMERICAN WEAVERS, L.L.C. d/b/a AMERICAN WEAVERS
BY:
SEAL /s/ Robert J. Livingston
-------------------------------
ROBERT J. LIVINGSTON
CHIEF FINANCIAL OFFICER
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EXHIBIT 10.20
LEASE AGREEMENT
GEORGIA, WHITFIELD COUNTY.
THIS LEASE AGREEMENT (this "Lease") made and entered into this the 14th
day of September 1993 by and between WBP PROPERTIES, a Georgia General
Partnership, hereinafter referred to as "Lessor", and NEWMARK JAMES, INC., a
Georgia Corporation, hereinafter referred to as "Lessee".
W I T N E S S E T H:
WHEREAS, Lessor is the owner of a certain tract or parcel of land as more
particularly described in Exhibit "A" hereto, (hereinafter referred to as the
"Property"); and
WHEREAS, Lessor intends to construct on the Property a building containing
74,800 square feet of warehouse and office space; and
WHEREAS, Lessee desires to lease from Lessor the 74,800 square feet of
said warehouse and office space (the "Leased Premises") pursuant to the terms
and conditions hereof; and
WHEREAS, Lessor has heretofore constructed a building containing 56,100
square feet of warehouse and office space on the Property; and
WHEREAS, Lessee desires to lease from Lessor the 56,100 square feet of
said warehouse and office space (the "Temporary Premises") until construction of
the Leased Premises has been completed by Lessor, pursuant to the terms and
conditions hereof;
NOW, THEREFORE, for and in consideration of the premises and the acts to
be performed by the parties hereto, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the parties
hereto, the parties do hereby agree each with the other as follows:
1. AGREEMENT TO MAKE IMPROVEMENTS. Lessor shall, at its sole expense,
construct a building containing 74,800 square feet of warehouse and attendant
office space on the Property in accordance with such plans and specifications as
Lessor, in its sole discretion, shall deem appropriate. The Lessor shall
undertake such construction as soon as is practical after the execution of this
Lease, and shall pursue such construction diligently until completion thereof.
2. LEASED PREMISES.
(a) Lessor does hereby agree to lease to Lessee, and Lessee does hereby
agree to hire from Lessor, at the rent and upon the terms and conditions
hereinafter set forth, the Leased Premises during the term hereof and any
extended term.
(b) Lessor does further grant to Lessee a non-exclusive easement over and
along all other portions of the Property for purposes of ingress and egress to
and from the Leased Premises.
3. TEMPORARY PREMISES.
(a) Lessor does hereby agree to lease to Lessee, and Lessee does hereby
agree to hire from Lessor, at the rent and upon the terms and conditions
hereinafter set forth, the Temporary Premises during the term set forth in
Section 5(a).
(b) Lessor does further grant to Lessee a non-exclusive easement over and
along all other portions of the Property for purposes of ingress and egress to
and from the Temporary Premises.
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<PAGE>
4. PURPOSE. The Leased Premises and the Temporary Premises shall be used
and occupied by Lessee solely in connection with its business of the manufacture
and sale of rugs, and for no other purposes without Lessor's consent.
5. TERM.
(a) The term of this Lease as to the Temporary Premises shall begin on the
____ day of ________________, 1993, and shall terminate on the first day of the
first month after completion of the construction of the Leased Premises when the
initial term of this Lease as to the Leased Premises begins.
(b) The initial term of this Lease as to the Leased Premises shall be for
five (5) years to commence on the first day of the first month after the
completion of the construction of the improvements as more particularly set
forth in Section 1 hereof and to terminate on the last day of the 60th month
thereafter, unless extended as hereinafter provided, or unless sooner terminated
by a breach of the terms and conditions of this Lease by Lessee, or by
abandonment of the Leased Premises by Lessee. Lessee shall surrender the Leased
Premises to Lessor immediately upon the termination of the lease term.
Completion of construction shall be deemed to be the date of the certificate of
occupancy.
(c) Lessee is hereby given an option to extend its leasehold interest in
the Leased Premises for an additional term of five (5) years at the expiration
of the initial term of this Lease, provided that Lessee shall not then be in
default under any of the terms of this Lease, and provided further that Lessee
shall give Lessor, prior to the expiration of the initial term of this Lease, at
least ninety (90) days notice, in writing, of Lessee's desire to extend the term
of this Lease as herein provided. A new lease agreement for the term of such
extension shall be unnecessary on such extension, this Lease constituting a
present demise for both the original and any extended term.
6. RENT.
(a) Lessee agrees to pay Lessor as rental for the use of the Leased
Premises the following:
(i) A sum equal to sixteen cents ($.16) per square foot of floor
space multiplied by the aggregate square feet of floor space rented
pursuant to the terms of this Lease for the initial term of the Lease; and
(ii) A sum equal to seventeen cents ($.17) per square foot of floor
space multiplied by the aggregate square feet of floor space pursuant to
this Lease for the extended term.
(b) Lessee agrees to pay Lessor as rental for the use of the Temporary
Premises a sum equal to sixteen cents ($.16) per square foot of floor space
multiplied by the aggregate square feet of floor space rented pursuant to the
terms of this Lease for the Temporary Period set forth in Section 5(a) hereof.
(c) The rental payment shall be in advance on the first day of each month
during the term hereof, and any extended term. Rental for any partial month as
to either the Leased Premises or the Temporary Premises shall be prorated as of
the date of occupancy by Lessee.
(d) Lessee shall also pay to Lessor a late charge of Four cents ($0.04)
for each One Dollar ($1.00) of any payment due under this Lease which is not
paid within five (5) days of its due date. In addition, any payment not made
within thirty (30) days following its due date shall bear interest at the rate
of Eighteen percent (18%) per annum, or the maximum allowed by law, whichever is
less, and such interest shall be paid by Lessee to Lessor. It is provided,
however, that nothing contained in this Paragraph (d) shall impair the rights of
Lessor to pursue any and all rights and remedies available to it upon the
occurrence of an Event of Default as herein defined.
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<PAGE>
7. ADDITIONAL RENT. Lessee agrees to pay as rent, in addition to the
minimum rental reserved in Paragraph 6 hereinabove, the following:
(a) Any and all reasonable sums which may become due by reason of the
failure of Lessee to comply with any or all covenants of this Lease, Lessee
agreeing to pay any and all damages, costs or expenses which Lessor may suffer
or incur by reason of (i) any default of Lessee or failure on its part to comply
with the covenants of this Lease; and (ii) any and all damages to the Leased
Premises or the Temporary Premises caused by any intentional or negligent act of
neglect of Lessee or Lessee's agents or invitees; and
(b) All charges for water, electricity, gas and any other utility services
consumed upon the Leased Premises and the Temporary Premises, and all charges
for repairs to the meter or meters on premises, whether such repairs are made
necessary by ordinary wear and tear, freezing, hot water, accident or other
causes, immediately when the same become due; Lessee shall indemnify and hold
Lessor harmless from any liability for payment of such services. Any utilities
furnished to the Lessee by Lessor shall be paid by the Lessee on either a flat
charge or metered basis, as Lessor may determine; and
(c) All ad valorem property taxes and other assessments levied against the
Leased Premises for any year during the term of this Lease, or any extended
term; provided, however, that in the event the term of this Lease begins in the
middle of any year during which taxes or other assessments are made, taxes for
such year will be prorated as of the date of the beginning of the term of this
Lease. In the event such taxes are levied in combination with other improvements
in the Property, such taxes and assessments shall be provided based on the
number of square feet of the Leased Premises.
8. LIMITATION ON LESSEE'S RIGHT TO ALTER AND IMPROVE. Lessee shall not
have the right to improve or alter the Leased Premises or the Temporary
Premises, or any portion thereof without the prior written consent of Lessor,
which shall not be unreasonably withheld. Any improvements to which Lessor
consents shall be made in a good and workmanlike manner, and upon termination of
this Lease, such improvements shall be the property of Lessor. Lessee shall
indemnify and hold Lessor harmless from any liability for the costs of said
improvements and shall immediately discharge any and all liens placed against
the Leased Premises or the Temporary Premises as a consequence of such
improvements.
9. GOOD TITLE. Lessor warrants that it has fee simple title to the Leased
Premises and that the Leased Premises shall be delivered to the Lessee free and
clear of all claims, obligations, tax assessments, liens and encumbrances
whatsoever, except any and all mortgages, deeds to secure debt, deeds of trust
or other instruments in the nature thereof which may now or hereafter affect or
encumber Lessor's title to the Leased Premises and all modifications, renewals,
consolidations, extensions or replacements thereof, herein referred to as
"Lessor's Mortgage". Lessor also warrants that, as long as Lessee is in
compliance with the terms of this Agreement, Lessee shall be entitled to the
quiet enjoyment of the Leased Premises, undisturbed by Lessor, its agents or
invitees.
10. INSURANCE.
(a) Lessee shall procure and maintain during the term hereof, and any
renewal term, insurance against liability for bodily injury and property damage
in an amount not less than $1,000,000 in the aggregate as to any one accident or
disaster, and not less than $500,000 in respect to injuries to any one person.
(b) All insurance provided by Lessee as required by this section shall be
carried in favor of Lessor and Lessee as their respective interests may appear.
All insurance shall be written with responsible companies acceptable to Lessor,
and Lessee shall provide appropriate certificates of insurance to Lessor. All
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<PAGE>
policies shall require ten (10) days notice by registered mail to Lessor of any
cancellation change affecting any interest of Lessor.
11. AFFIRMATIVE COVENANTS AND RESPONSIBILITIES OF LESSEE. Lessee covenants
and agrees that Lessee will, without demand:
(a) Keep the Leased Premises and the Temporary Premises reasonably clean
and free from all rubbish, ashes, dirt and other matter;
(b) Except as provided to the contrary hereinbelow, at Lessee's own
expense maintain the Leased Premises and the Temporary Premises in good repair,
and in at least as good condition as that in which they were delivered, allowing
for ordinary wear and tear;
(c) Make all necessary repairs, interior and exterior, including repairs
to the air conditioning and plumbing system in and about the Leased Premises and
the Temporary Premises at its own expense, provided, however, that Lessee shall
not be required to make any repairs to the walls or roof of the Leased Premises
and the Temporary Premises, except for such repairs as are necessitated by the
actions of Lessee and/or its agents, employees, licensees or invitees;
(d) Comply with any requirements of any of the constituted public
authorities, and with the terms of any State or Federal Statutes or Local
Ordinances or Regulations applicable to Lessee to or for Lessee's use of the
Leased Premises and the Temporary Premises and save Lessor harmless from
penalties, fines, costs or damages resulting from the failure to do so;
(e) Give to Lessor prompt written notice of any accident involving persons
other than agents or employees of Lessee, fire or damage occurring on or to the
Leased Premises or the Temporary Premises;
(f) At the termination of this Lease as to either the Leased Premises or
the Temporary Premises, remove any signs, improvements of a non-permanent
nature, projections or devices placed upon the premises at or prior to the
expiration of this Lease. In case of breach of this covenant, in addition to all
other remedies given to Lessor in case of breach of any condition or covenant of
this Lease, Lessor shall have the privilege of removing said improvements,
signs, projections, or devices and Lessee, at Lessor's option, shall be liable
to Lessor for any and all reasonable expenses so incurred by Lessor;
(g) Indemnify Lessor against all expenses, liabilities and claims of any
kind, including reasonable attorney's fees, by or on behalf of any person or
entity arising out of either (i) a failure by Lessee to perform any of the terms
or conditions of this Lease, (ii) any injury or damage happening on or about the
Leased Premises or the Temporary Premises, except to the extent caused or
contributed to by the willful misconduct or gross negligence of Lessor, its
agents, employees or representatives; (iii) failure to comply with any law of
any governmental authority, arising out of or attributable solely to Lessee's
use and/or occupancy of the Leased Premises or the Temporary Premises; (iv) any
mechanic's lien or security interest filed against the Leased Premises or the
Temporary Premises; and (v) all claims, damages, expenses, liabilities, actions,
or causes of action of any kind or nature arising from breaches of Lessee's
representations, warranties or covenants hereunder or from acts or failures to
act occurring, or conditions existing, during Lessee's occupancy of the Leased
Premises, except to the extent caused or contributed to by the willful
misconduct or gross negligence of Lessor, its agents, employees or
representatives;
(h) Secure any and all permits for such use as Lessee intends to make of
the Leased Premises and the Temporary Premises prior to the effective date of
this Lease, and upon such obtaining such
4
<PAGE>
permit Lessee shall not use the Leased Premises or the Temporary Premises in
any manner not inconsistent with or in violation of such permit; and
(i) Cause any automobiles or other vehicles parked on the Property by it
agents, employees, licensees or invitees to be parked in such a manner as to not
block or otherwise interfere with the access to the Leased Premises or the
Temporary Premises by Lessor or any other Lessee of any portion of the Property.
11. NEGATIVE COVENANTS OF LESSEE. Lessee covenants and agrees that it will
do none of the following things without the consent in writing of Lessor first
had and obtained, which consent shall not be unreasonably withheld:
(a) Occupy the Leased Premises or the Temporary Premises in any other
manner or for any other purpose than as set forth herein; or
(b) Assign, mortgage or pledge, or sublease this Lease; nor shall any
assignee assign, mortgage, pledge or subLease this Lease without the written
consent by the Lessor and without such consent no such assignment, mortgage,
pledge or sublease shall be valid, provided Lessor will not unreasonably
withhold such consent; or
(c) Use the Leased Premises or the Temporary Premises for the "treatment",
"storage", or "disposal" of any "hazardous waste", as such terms are defined in
the Resource Conservation and Recovery Act, as amended 42 U.S.C. 6901 et seq.;
or
(d) Release on the Leased Premises a "hazardous substance", as such terms
are defined in the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq.; or
(e) Install or maintain on the Leased Premises or the Temporary Premises
an underground storage tank, as such term is defined in RCRA; or
(f) Do or permit any of its permitted sublessees or other persons to do
anything on the Leased Premises or the Temporary Premises, or any part thereof,
or bring or permit anything to be brought on or kept in the Leased Premises or
the Temporary Premises, or permit the use of the Leased Premises or the
Temporary Premises for any business or purpose that would:
(i) cause an increase in the rate of any insurance on the Leased
Premises or the Temporary Premises; or
(ii) cause a violation of any requirements of any of the constituted
public authorities, and with the terms of any State or Federal
Statutes or Local Ordinances or Regulations applicable to Lessee to
or for Lessee's use of the Leased Premises or the Temporary
Premises.
13. NO REPRESENTATIONS BY LESSOR. Neither Lessor or Lessor's agents have
made any representations or promises with respect to the Leased Premises or the
Temporary Premises, except as expressly set forth herein. The taking of
possession of the Leased Premises or the Temporary Premises by Lessee shall be
conclusive evidence against Lessee, and Lessee accepts the Leased Premises and
the Temporary Premises as is, and that the Leased Premises and the Temporary
Premises, and any portion thereof occupied by Lessee, were in good and
satisfactory condition at the time possession of the same was so taken.
14. ADDITIONAL COVENANTS.
(a) If the Leased Premises are totally destroyed by storm, fire,
lightening, earthquake or other casualty, this Lease, and all rights and
obligations arising hereunder, shall terminate as of the date of such
destruction, and rental shall be accounted for as between Lessor and Lessee as
of that date. If the Leased Premises are damaged but not totally destroyed by
any of such casualty, rent
5
<PAGE>
shall abate in such proportion as use of the Leased Premises has been destroyed,
and Lessor shall restore the Leased Premises to substantially the same condition
as before such damage, whereupon full rental shall resume. For purposes of this
section, damage to the Leased Premises to the extent that the Leased Premises
are wholly untenantable, or damage to the extent that full repairs cannot be
made solely from the proceeds of insurance maintained on the Leased Premises as
provided in this Lease, shall be deemed to be a total destruction of the Leased
Premises.
(b) Lessor shall not be liable for any damage, compensation or claim by
reason of inconvenience or annoyance arising from the necessity of repairing any
portion of the building, the interruption of the use of the premises, or the
termination of this Lease by reason of the destruction of the Leased Premises.
(c) It is understood and agreed that the Lessor hereof does not warrant or
undertake that the Lessee shall be able to obtain a permit under any zoning
ordinance or regulation for such use as Lessee intends to make of the Leased
Premises or the Temporary Premises, and nothing in this Lease contained shall
obligate Lessor to assist Lessee in obtaining said permit.
(d) It is hereby covenanted and agreed by and between the parties that any
law, usage or custom to the contrary notwithstanding, Lessor shall have the
right at all times to enforce the covenants and provisions of this Lease in
strict accordance with the terms hereof, notwithstanding any conduct or custom
on the part of Lessor in refraining from so doing at any time or times, and
further, that the failure of Lessor at any time or times to enforce her right
under said covenants and provisions strictly in accordance with the same shall
not be construed as having created a custom in any way or manner contrary to the
specific terms, provisions or covenants of this Lease, or as having in any way
or manner modified the same.
(e) Lessor will maintain the roof, the outside walls and the structural
soundness of the Leased Premises and the Temporary Premises. Water leaks through
the roof will be repaired by Lessor without undue delay after Lessor receives
notice thereof.
(f) Lessee agrees to grant to the Lessor full and free access to the
Leased Premises and the Temporary Premises during reasonable business hours to
examine or exhibit the same or to make any necessary repairs or alterations to
the Leased Premises.
15. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" hereunder:
(a) Any part, portion or component of the rent, or any other sums payable
under this Lease are not paid within five (5) days after receipt of Lessor's
notice that same is past due;
(b) Any petition is filed by or against Lessee under any section or
chapter of the Federal Bankruptcy Code, and, in the case of a petition filed
against Lessee, such petition is not dismissed within thirty (30) days after the
date of such filing;
(c) Lessee becomes insolvent or transfers property in fraud of creditors;
(d) Lessee makes an assignment for the benefit of creditors;
(e) A receiver is appointed for any of the Lessee's assets; or
(f) Lessee breaches or fails to comply with any term, provision, condition
or covenant of this Lease, other than the payment of rent, which breach is not
cured within thirty (30) days after written notice by Lessor of such default is
received by Lessee.
6
<PAGE>
16. REMEDIES. Upon the occurrence of an Event of Default, Lessor may do or
perform any one or more of the following in addition to, and not in limitation
of, any other remedy or right permitted it by law or by this Lease:
(a) Lessor may terminate this Lease, in which event Lessee shall
immediately surrender the Leased Premises to Lessor. If Lessee fails to do so,
Lessor may, without prejudice to any other remedy Lessor may have either by law
or by this Lease, enter upon the Leased Premises and expel or remove Lessee and
Lessor's personal property with or without force and without being liable to
Lessee in any manner whatsoever for damages therefor. Lessee shall be liable to
Lessor for and shall indemnify and hold Lessor harmless from and against all
cost, loss, or damage which Lessor may suffer by reason of such termination of
this Lease, whether through inability to relet the Leased Premises, through a
decrease in rent received, by damage to the Leased Premises or otherwise; or
(b) Lessor may enter the Leased Premises or the Temporary Premises and
remove the Lessee and its personal property and may relet the Leased Premises or
the Temporary Premises as the agent and receive such rent therefor. In such
event Lessee shall be liable to Lessor for any deficiency which may arise by
reason of such reletting during the remainder of the Lease Term. Lessor may
include, without limitation, brokerage commissions and attorney's fees incurred
in reletting the premises and any and all costs and expenses incurred in
renovating or altering space to make it suitable for reletting in computing
Lessor's costs, losses or damages for which Lessee is liable as set forth above,
and the proceeds of such reletting shall be first applied to such costs and
expense, then to the payment of Rent and all other indebtedness of Lessee to
Lessor hereunder, with the balance, if any, to be held by Lessor to be applied
in payment of future Rent and all other such indebtedness as same becomes due
and payable throughout the Lease Term.
17. REMEDIES-CUMULATIVE. All of the remedies hereinbefore given to Lessor
and all rights and remedies given by law or in equity to Lessor shall be
cumulative and concurrent. No termination of this Lease or the taking or
recovering of the premises shall deprive Lessor of any of its remedies or
actions against the Lessee for rent due at the time of which under the terms
hereof would in the future become due as if there had been no termination, or
for any and all sums due at the time, or which under the terms hereof would in
the future become due as if there had been no termination, nor shall bringing of
any action for rent or breach of covenant, or the resort to any other remedy
herein provided for the recovery of rent be construed as a waiver of Lessor's
right to obtain possession of the premises.
18. LEASE CONTAINS ALL AGREEMENTS. It is expressly understood and agreed
by and between any parties hereto that this Lease and the Exhibits attached
hereto and forming a part hereof, set forth all of the promises, agreements,
conditions and understandings between Lessor, or Lessor's agents, and Lessee
relative to the demised premises, and that there are no promises, agreements,
conditions or understandings, either oral or written, between them other than as
set forth herein. It is further understood and agreed that, except as herein
otherwise provided, no subsequent alteration, amendment, change or addition to
this Lease shall be binding upon Lessor or Lessee unless reduced to writing and
signed by them.
19. PARTIES BOUND. All rights and liabilities herein given to, or imposed
upon, the respective parties hereto shall extend to and bind the several and
respective heirs, executors, administrators, successors and assigns of said
parties, and if there shall be more than one Lessee, they shall all be bound
jointly and severally by the terms, covenants and agreements herein, and the
word "Lessee" shall be deemed to and taken to mean each and every person or
party mentioned as a Lessee herein, be the same one or more; and if there shall
be more than one Lessee, any notice required or permitted by the terms of this
Lease shall be given by or to anyone thereof, and shall ever have the same force
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<PAGE>
and effect as if given by or all thereof. The word "his" and "him" and "her",
wherever stated herein shall be deemed to refer to the "Lessor" and "Lessee"
whether such Lessor and Lessee be singular or plural and irrespective of gender.
No rights, however, shall inure to the benefit of any assignee of Lessee unless
the assignment to such assignee has been approved by Lessor in writing as herein
provided.
20.SUBORDINATION. This Lease and all rights of Lessee hereunder shall be
subject and subordinate the lien of any mortgage of Lessor, provided that such
subordination shall be upon the express condition that this Lease shall be
recognized by the mortgagee and that the rights of Tenant shall remain in full
force and effect during the term of this Lease so long as Tenant shall continue
to perform all of the covenants of this Lease. While this Paragraph is
self-operative, and no further instrument of subordination shall be necessary,
Lessee shall, in confirmation of such subordination, upon demand at any time or
times, execute, acknowledge and deliver to Lessor or any Mortgage of Lessor any
and all instruments requested by either of them to evidence such subordination.
Lessee shall execute, acknowledge and deliver to Lessor or any mortgage of
Lessor, without expense, any and all instruments that may be necessary to make
this Lease superior to the lien of any mortgage of Lessor. If a holder of any
mortgage of Lessor shall hereafter succeed to the rights of Lessor under this
Lease, Lessee shall, at the option of such holder, attorn to and recognize such
successor as Lessee's landlord under this Lease and shall promptly execute and
deliver any instrument that may be necessary to evidence such attornment. Upon
such attornment, this Lease shall continue in full force and effect as a direct
Lease between each successor Lessor and Lessee, subject to all of the terms,
covenants and conditions of this Lease. If Lessee fails at any time to execute,
acknowledge and deliver any of the instruments provided for by this Paragraph
within fifteen (15) days after receipt of Lessor's notice so to do, Lessor, in
addition to the remedies allowed by this Lease may execute, acknowledge and
deliver any and all of such instruments as the attorney-in-fact of Lessee and in
its name, place and stead, and Lessee hereby irrevocably appoints Lessor, its
successors and assigns as such attorney-in-fact.
21. CONDEMNATION. If the whole of the Leased Premises or the Temporary
Premises, or such portion thereof as will make premises unusable for the
purposes herein Leased, be condemned by any legally constituted authority for
any public use or purpose, then in either of said events the term hereby granted
shall cease from the time when possession thereof is taken by public
authorities, and rental shall be accounted for as between Lessor and Lessee as
of that date. Such termination, however, shall be without prejudice to the
rights of either Lessor or Lessee to recover compensation and damage caused by
condemnation from the condemner. It is further understood and agreed that
neither the Lessee nor Lessor shall have any rights in any award made to the
other by any condemnation authority.
22. NOTICES. Except for legal process which may also be served as by law
provided, all notices required or desired to be given with respect to this Lease
shall be in writing and shall be deemed to have been given when hand delivered
or three (3) days after deposited, postage prepaid, with the United States
Postal Service (or its official successor), certified, return receipt requested,
properly addressed as follows:
To Lessor:
WBP PROPERTIES
P.0. Box 188
Dalton, GA 30722-0188
8
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To Lessee:
Newmark James, Inc.
______________________________________
______________________________________
Such addresses may be changed from time to time by either party by notice
to the other.
23. HOLDING OVER. In no event shall there be any renewal of this Lease by
operation of law, and if Lessee remains in possession of the Leased Premises
after the termination of this Lease and without the execution of a new Lease,
Lessee shall be deemed to be occupying the Leased premises as a tenant at will
at an amount equal to one hundred fifty percent (150%) of the Rent and otherwise
subject to all the covenants and provisions of this Lease insofar as the same
are applicable to a month-to-month tenancy.
24. BROKERS. Lessor and Lessee each represents and warrants to the other
that no broker, agent, commission salesman or other person has represented the
warranting party in the negotiations for and procurement of this Lease and of
the Leased Premises and the Temporary premises, that no commissions, fees or
compensation of any kind are due and payable in connection herewith to any such
person or entity. Each party further warrants that any compensation arrangement
with the parties excepted from the foregoing warranty has been reduced to
writing in its entirety in a separate agreement signed simultaneously with or
before this Lease by the party against whom the commission or compensation is
charged.
25. ATTORNEYS' FEES AND EXEMPTION. Lessee hereby waives and renounces all
homestead or exemption rights which Lessee may have under or by virtue of the
Constitution and Laws of the United States, Georgia, or any other State as
against any debt Lessee may owe Lessor under this Lease, and hereby transfers,
conveys, and assigns to Lessor all homestead or exemption rights which may be
allowed or set apart to Lessee, including such as may be set apart in any
bankruptcy proceeding, to pay any debt owing by Lessee to lessor hereunder. If
any rent or other debt owing by Lessee to Lessor hereunder is collected by or
through an attorney at law, Lessee agrees to pay an additional amount equal to
fifteen percent (15%) of such sum as attorneys' fees.
26. NO ESTATE IN LAND. This Lease creates the relationship of landlord and
tenant between Lessor and Lessee. No estate shall pass out of Lessor, and Lessee
has only a usufruct which is not subject to levy and sale.
27. ESTOPPEL CERTIFICATE. At any time and from time to time, Lessee, on or
before the date specified in a request therefor made by Lessor, which date shall
not be earlier than fifteen (15) days from the receipt of such request, shall
execute, acknowledge and deliver to Lessor a certificate evidencing (a) whether
or not this Lease is in full force and effect, (b) whether or not this Lease has
been amended in any way, (c) whether or nor there are any existing defaults on
the part of Lessor hereunder to the knowledge of Lessee and specifying the
nature of such defaults, if any, and (d) the date to which rent, and other
amounts due hereunder, if any, have been paid. Each certificate delivered
pursuant to this Paragraph may be relied on by any prospective purchaser or
transferee of Lessor's interest hereunder or of any part of Lessor's property or
by any holder or prospective holder of any mortgage of Lessor, or a mortgage or
prospective mortgage of any part of Lessor's other property.
28. SEVERABILITY. If any clause or provision of this Lease is or becomes
illegal, invalid, or unenforceable because of present or future laws or any rule
or regulation of any governmental body or entity, effective during its term, the
intention of the parties hereto is that the remaining parts of this Lease shall
not be affected thereby, unless the amount of Rent payable hereunder is thereby
decreased, in which event Lessor may terminate this Lease.
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<PAGE>
29. CAPTIONS. The captions used in this Lease are for convenience only and
do not in any way limit or amplify the terms and provisions hereof.
30. SUCCESSORS AND ASSIGNS. The provisions of this Lease shall inure to
the benefit of and be binding upon Lessor and Lessee, and their respective
permitted successors, heirs, legal representatives and assigns.
31. STATE LAW. The laws of the State of Georgia shall govern the
interpretation, validity, performance and enforcement of this Lease.
32. TIME IS OF THE ESSENCE. Except as otherwise specifically provided
herein, time is of the essence of this Lease.
33. EXECUTION. This Lease may be executed in any number of counterparts,
each of which shall be deemed an original and any of which shall be deemed to be
complete in itself and be admissible into evidence or used for any purpose
without the production of the other counterparts.
34. FORCE MAJEURE. Either party hereto shall be excused from the
performance of any of its obligations for the period of any delay resulting from
any cause beyond its control, including, without limitation, all labor disputes,
governmental regulations or controls, fires or other casualties, inability to
obtain any material or services, or acts of God.
35. PEACEFUL POSSESSION. So long as Lessee observes and performs the
covenants and agreements contained herein, it shall at all times during the
Lease Term peacefully and quietly have and enjoy possession of the Leased
Premises, but always subject to the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed these presents the
day and year first above written.
LESSOR:
WBP PROPERTIES
BY: /s/ [ILLEGIBLE]
-------------------------------------
PARTNER
LESSEE:
NEWMARK JAMES, INC.
BY: /s/ James Keith
-------------------------------------
JAMES KEITH, PRESIDENT
(CORPORATE SEAL)
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<PAGE>
LEASE EXTENSION AND MODIFICATION AGREEMENT
THIS LEASE EXTENSION AND MODIFICATION AGREEMENT is made and entered into
this 27 day of August, 1997 by and between WBP Properties, a Georgia general
partnership (hereinafter referred to as "Lessor"), and Newmark James, Inc., a
Georgia corporation (hereinafter referred to as "Lessee").
WHEREAS Lessor and Lessee entered into a lease dated September 14, 1993
(the "Lease") for premises located in Dalton, Georgia as more particularly
described in the Lease; and
WHEREAS Lessor and Lessee mutually desire to provide for certain additions
and modifications to the terms and provisions of the Lease.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree that the
Lease is modified as follows:
-1-
The Term of the Lease is hereby extended to and through August 31, 2002.
-2-
Paragraphs 6(a) and 6(b) arc stricken in their entirety and the following
is substituted in lieu thereof:
"6(a) Commencing September 1, 1997 Lessee shall pay Lessor as rental
for the use of the leased premises the sum of $14,112.00 per
month."
-3-
Except as herein amended and modified, all other terms, conditions,
covenants, and agreements of the Lease are hereby incorporated by reference and
shall control and govern.
-4-
In the event there is a conflict between the terms and provisions of this
Lease Extension and Modification Agreement and the original Lease or any
subsequent extension and/or modification prior to the date of this Lease
Extension and Modification Agreement, the terms and provisions of this Lease
Extension and Modification Agreement shall control.
-5-
This Lease Extension and Modification Agreement shall bind and inure to
the benefit of the successors and assigns of Lessor and the successors and
assigns of Lessee.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Extension and
Modification Agreement to be executed as of the date first written.
LESSOR:
WBP PROPERTIES, a Georgia partnership
BY: /s/ [ILLEGIBLE]
---------------------------------
Partner
LESSEE:
NEWMARK JAMES, INC.
BY: /s/ James M. Keith
---------------------------------
President
The above and foregoing Lease Extension and Modification Agreement is
acknowledged and approved by James Keith, Guarantor of the original Lease
Agreement. The undersigned herein restates and reaffirms his guaranty to Lessee
given September 14, 1993.
GUARANTOR:
/s/ James Keith
- ------------------------------------
James Keith
<PAGE>
EXHIBIT 10.21
- --------------------------------------------------------------------------------
GEORGIA, FLOYD COUNTY:
THIS AGREEMENT, made this the 17 day of July, 1988 between Milford Morgan Trust
Properties, herein referred to as Landlord, and Image Industries, Inc. having an
address of P.O. Box 5555, Armuchee, GA 30105, herein referred to as Tenant.
WITNESSETH: That Tenant has this day rented and leased from Landlord the
following described premises to wit:
PREMISES: That certain warehouse located on Highway 114, Lyerly,
Chattooga County, Georgia.
TERM: For the term of five (5) years commencing on the date the new
addition is approved for occupancy. The existing building will
be leased on an interim basis until the new building is
approved for occupancy and at that time the existing building
will be leased along with the new building according to the
conditions listed under the SPECIAL STIPULATIONS SECTION.
The dates will be filled in with a mutually agreed time when
the new building is approved for occupancy.
Commencing date _____________ and ending on ________________
Initialed ____________________ ____________________________
RENTAL: in advance to Landlord a monthly rental of (see Special
Stipulation A)
DEFAULT: (1) It is mutually agreed that in the event the Tenant shall
default in the payment of rent herein reserved, when due, and
fails to cure said default within ten (10) days after written
notice thereof from Landlord; or if Tenant shall be in default
in performing any of the terms or provisions of the lease
other than the provision requiring the payment of rent, and
fails to cure such default within thirty (30) days after the
written notice of default from Landlord; or if Tenant is
adjudicated bankrupt or if a permanent receiver is appointed
for Tenant's property and such receiver is not removed within
sixty (60) days after written notice from Landlord to Tenant
to obtain such removal: or if, whether voluntarily or
involuntarily, Tenant takes advantage of debtor relief
proceedings under any present of future law, whereby the rent
or any part thereof is, or is proposed to be, reduced or
payment thereof deferred; or if Tenant makes an assignment for
benefit of creditors; or if Tenant's property or any part
thereof should be levied upon or attached under process
against Tenant and not satisfied or dissolved within thirty
(30) days after written notice from Landlord to Tenant to
obtain satisfaction thereof; then, and in any said events,
Landlord, at his option, may at once, or within six (6)
months thereafter (but only during continuance of such default
or condition), terminate this lease by written notice to
Tenant: whereupon this lease shall end. After an authorized
assignment or subletting of the entire premises covered by
this lease, the occurring of any of the foregoing defaults or
events shall affect this lease only if caused by , or
happening to the assignee or subtenant. Any notice provided in
this paragraph may be given by Landlord, or Agent herein
named. Upon such termination by Landlord, Tenant will at once
surrender possession of the premises to Landlord and remove
all of Tenant's property therefrom; and Landlord may forthwith
re-enter the premises and repossess himself hereof, and remove
all persons and property therefrom, using such force as may be
necessary without being guilty of trespass, forcible entry to
detainer or other tort, or the violation of any of the terms
of this lease.
1
<PAGE>
RELETTING BY
LANDLORD: (2) Landlord as Tenant's agent, without termination of this
lease, upon Tenant's breaching any of the terms of this
contract, may at Landlord's option, enter upon and rent said
premises at the best price obtainable by reasonable effort
without advertisement and by private negotiations and for any
term Landlord deems proper. Tenant shall be liable to Landlord
for the deficiency, if any, between Tenant's rent hereunder
and the price obtained by Landlord in re-letting.
COLLECTION
BY ATTORNEY: (3) If any rent owing under this lease is collected by or
through an attorney at law, Tenant agrees to pay ten (10%)
percent thereof as attorney's fees. Tenant waives all right to
homestead and exemptions which he or any member of his family
or other person may have under any law as against any
obligating arising under this lease, and Tenant hereby assigns
to Landlord his homestead and exemption.
SUBLETTING
BY TENANT: (4) Tenant may sublease portions of the leased premises to
others provided such operation is a part of the general
operation of Tenant and under the supervision and control of
Tenant, and provided such operation is within the purposes for
which said premises shall be used. Except as provided in
preceding sentence, Tenant shall not without the prior written
consent of Landlord, assign this lease or any interest
hereunder, or sublet premises or any part thereof, or permit
the use of premises by any party other than Tenant, any
assignee of Tenant, at option of Landlord, shall become
directly liable to Landlord for all obligations of Tenant
hereunder, but no sublease or assignment by Tenant shall
relieve Tenant of any liability hereunder.
SIGNS: (5) Tenant shall paint no signs upon the outside walls or
place any signs on the roof of the leased premises except with
the written consent of the Landlord. Any and all signs placed
on the within leased premises by Tenant shall be maintained in
compliance with the rules and regulations governing such signs
and the Tenant shall be responsible to Landlord for any damage
caused by installation, use or maintenance of said signs, and
Tenant agrees, upon removal of said signs, to repair all
damage incident to such removal.
CONTROL &
RESPONSIBILITY: (6) Landlord gives to Tenant exclusive control of the
premises, and shall be under no obligation to inspect said
premises, Tenant shall at once report in writing to Landlord
any defective condition known to him which Landlord is
required to repair, and failure to so report such defect shall
make Tenant responsible to Landlord for any liability incurred
by Landlord by reason of such defect. If such defect shall
result in a leak or other condition needing attention in the
roof, Landlord upon receipt of written notice from Tenant
shall with reasonable promptness have made the necessary
repairs. Should Landlord fail to make such repairs with
reasonable promptness, Tenant is authorized to have the
necessary repairs made and deduct the cost from the next
rental payment due hereunder. Landlord shall nor be liable,
under any circumstances, for damage by water, or otherwise, by
reason of the failure of the building to protect persons or
property, nor shall Landlord be liable for damages by reason
of flood water in the basement, or otherwise.
2
<PAGE>
DELIVERY AT
EXPIRATION: (7) Tenant shall deliver said premises at the expiration of
this lease in as good order and repair as when first received,
natural wear and tear and fire and other casualty loss
excepted. Tenant shall have the right, within the term of this
lease, if not in default thereunder, to remove all furniture
or trade fixtures that have been installed by Tenant, but
Tenant will repair, at or before the end of the term, all
injury done by the installation or removal of furniture and
property.
CHANGES IN
PREMISES: (8) Tenant is to make no change of any substantial or
permanent nature in the above named premises, including
painting of outside walls without first obtaining written
consent from said Landlord.
IMPROVEMENTS
BY TENANT: (9) Any improvements, repairs, betterments, or additions
placed on the premises by Tenant shall be paid for by Tenant,
and shall not be a charge against Landlord or the property.
VACANCY &
UTILITIES: (10) Tenant agrees not to leave the premised herein leased
unoccupied, nor to do or permit any act which would vitiate
the insurance upon this property, or increase the insurance
rates. Tenant agrees to pay all electric light, water, heat,
gas, and power bills accruing against said property during the
term of this contract. If by reason of any act or failure on
the part of Tenant there shall be an increase in the insurance
rates on the leased premises, or the building of which same is
a part, the Tenant agrees to pay such increase to the Landlord
upon demand, and on failure of Tenant to pay such increased
insurance cost, or bills for electric lights, water, heat, gas
or power, the Landlord may pay the same, but is not required
to do so, and the amount so paid shall become a part of the
rental of said premises and may be collected as such.
ORDINANCES: (11) Tenant agrees to comply with all rules, orders,
ordinances and regulations of the City, County and State in
which the property is located, in any and all of their
departments.
CARDING: (12) Landlord has the privilege of carding the premised for
rent or for sale at any time within ninety (90) days previous
to the expiration of this lease, and may at any time exhibit
said premises during reasonable hours.
USE OF
PREMISES: (13) The within premises shall not be used for any purpose
except the purpose herein designated, without the written
consent of Landlord. No wines, beer, whiskeys, liquors or
intoxicating beverages of any kind shall be kept on, sold or
delivered from said premises.
HOLD OVER: (14) This lease, under no circumstances, shall extend beyond
the time herein provided; and in the event Tenant remains in
the property after the expiration date of the term herein,
with or without payment of rent, this shall not automatically
extend the lease but he shall be as a tenant at will, and
subject to the terms of the original lease.
3
<PAGE>
LIGHT &
AIR EASEMENT: (15) Nothing herein contained shall be construed to confer
upon Tenant any easement to light or air.
RIGHT OF
USE ONLY: (16) This contract shall create the relationship of Landlord
and Tenant between the parties hereto. No estate shall pass
out of Landlord. Tenant has only a usufruct, not subject to
levy and sale, and not assignable by Tenant except by
Landlord's consent.
(17) All rights, powers and privileges conferred hereunder
upon parties hereto shall be cumulative but not restrictive to
those given by law.
NON-WAIVER
OF RIGHTS: (18) No failure of Landlord to exercise any power given
Landlord hereunder, or to insist upon strict compliance by
Tenant with his obligations hereunder, and no custom or
practice of the parties at variance with the terms hereof
shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof.
(19) Time is of the essence of this agreement.
DEFINITION
OF PARTIES: (20) "Landlord," as used in this lease, shall include also his
heirs, representatives, assigns and successors in title to
premises. "Tenant" includes also his heirs and
representatives, and if this lease shall be validly assigned
or said premises sub-let shall include also Tenant's assignees
or sub-tenants as to premises covered by such assignment or
sub-lease. "Agent" shall include its successors, assigns, and
representatives. "Landlord" and "Tenant" include male and
female, singular and plural, corporation, partnership or
individual, as may fit the particular parties.
NOTICES: (21) The depositing in the United States Post Office, directed
to Tenant at Tenant's address shown above of any notice
required or permitted under this lease to be given by the
Landlord to the Tenant, shall be conclusive of delivery
thereof to the Tenant.
4
<PAGE>
SPECIAL STIPULATIONS:
Insofar as the following stipulations conflict with any of the foregoing
provisions, the following shall control.
A. The Tenant agrees to pay Landlord a rental fee for a newly constructed
building attached to the existing building according to the following
rates and terms:
o The lease on the current facility, known as the Lyerly building,
will remain in place until the Tenant has been granted occupancy of
the building. The existing lease will be terminated upon occupancy
of the new building.
o The acceptance date of occupancy in the new building will be the
effective date of this lease. The term as specified on page one of
the lease is 5 years.
o The rental rate schedule shall be as follows:
Monthly Monthly Monthly
Year New Bldg. Old Buld. Total Annual
---- --------- --------- ----- ------
1 $ 8,910.00 $ 5,039.00 $ 13,949.00 $167,388.00
2 $ 9,281.00 $ 5,165.00 $ 14,446.00 $173,352.00
3 $ 9,653.00 $ 5,294.00 $ 14,947.00 $179,364.00
4 $ 10,024.00 $ 5,294.00 $ 15,318.00 $183,816.00
5 $ 10,395.00 $ 5,294.00 $ 15,689.00 $188,268.00
The rate for the new building is based upon 74,250 square feet
The rate schedule above will be amended to reflect the actual
size of the facility. The per square foot rates are: Year 1 --
$0.12/sq. ft., Year 2 -- $0.125/sq. ft., Year 3 -- $0.13/sq.
ft., Year 4 -- $0.135/sq. ft., Year 5 -- $0.14/sq. ft.
5. Payment will be paid in advance by the 10th, day of each month, c/o
Charles Milford Morgan, JR. d/b/a Morgan Trust Properties, 107 N Commerce
St [ILLEGIBLE], Summerville, Georgia 30747.
B. As a condition to the effectiveness of this lease Landlord herein shall
perform the following work on the demised premises:
1. Replace or cover the roof with a membrane type roof.
C. At the end of the primary lease term, Tenant shall have 1 one-year option
to renew this lease under the same terms and conditions of the original
lease provided Tenant gives Landlord notice of his intent to exercise said
option ninety (90) days prior to the end of the then present lease term.
SPECIAL STIPULATIONS continue on pages 6 through 10 and are incorporated
herein by this reference.
5
<PAGE>
This lease contains the entire agreement of the parties hereto, and no
representations, inducements or promises by, or agreements, oral or otherwise,
between the parties, not embodied herein, shall be of any force or effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals
and executed this instrument in triplicate the day and year above written.
Signed, sealed and delivered as to
Landlord, in the presence of:
/s/ Lisa L. Keen
- ------------------------------- [ILLEGIBLE] Morgan Trust Properties
Witness
/s/ Kay Bishop By: /s/ [ILLEGIBLE] (SEAL)
- ------------------------------- -------------------------------------
Notary Public
Signed, sealed and delivered as to
Tenant, in the presence of:
/s/ Lisa L. Keen
- ------------------------------- Image Industries. Inc.
Witness
/s/ Kay Bishop By: /s/ [ILLEGIBLE] (SEAL)
- ------------------------------- ---------------------------------------
Notary Public
SPECIAL STIPULATIONS
(Continued)
D. Maintenance and Repairs:
1. Landlord's Repairs: Landlord shall maintain in good repair all
items for which Tenant is not responsible pursuant to the following paragraph,
including the walls, foundations, roof, gutters, downspouts, exterior and all
structural portions of the premises. In addition, Landlord shall be obligated to
make those repairs which are occasioned by its negligence or the negligence of
its employees, agents, servants or contractors.
2. Tenant shall be responsible for all interior, non-structural
repairs to the building, including sash and frames, window glass and plate
glass, doors, closures and frames which are not structural parts of the wall,
and shall maintain in good repair all plumbing, electrical, sewage and heating,
ventilation and air conditioning systems. In addition, unless required to be
insured by Landlord hereunder, Tenant shall be responsible for any damage to the
demised premises resulting
6
<PAGE>
from its negligence or the negligence of its employees, agents, servants, or
contractors.
E. Insurance: Landlord shall, at its cost and expense, provide and keep in
force the following insurance coverage without lapse at any time and for any
reason during the term of this Lease:
(i) Insurance covering the premises against loss or damage by fire and
lightning and such risks as are included in "Special Form" or All
Risk coverage endorsements to policies covering property similar to
the premises in an amount equal to 100% of the full replacement
value thereof (excluding foundations and excavation costs), which
names Tenant as an additional insured and which includes an
endorsement waiving the right of subrogation. Notwithstanding
anything contained in this lease to the contrary, regardless of
whether or not Landlord provides and keeps in force the required
insurance covering losses of such causes and regardless of whether
or not Tenant, its agents, employees, contractors or others under
the control of Tenant cause such damages, Landlord shall be
responsible for repairing all damages to the premises caused by fire
and lightning and such risks as are customarily included in "Special
Form" or All Risk coverage endorsements to policies covering
property similar to the premises.
(ii) Commercial General Liability coverage on an "Occurrence Form" basis
with limits of at least $1,000,000 Each Occurrence. and $2,000,000
General Aggregate for all claims arising out of Bodily Injury,
Personal Injury, and Property Damage Liability, including
Contractual Liability.
(iii) Business Auto Liability coverage for all vehicles owned by Landlord
including Non-Owned and Hired Autos, with limits of at least
$1,000,000 Each Occurrence for Bodily Injury and Property Damage
Liability.
(iv) Workers Compensation coverage covering all employees, contractors
and subcontractors of Landlord, as applicable, working in the State
of Georgia under the statutory provisions of the Georgia Workers
Compensation Act.
Landlord and Tenant expressly agree that either Landlord's failure to provide
Tenant a certificate of insurance as temporary evidence of the insurance
coverage required by this lease within ten (10) days from the effective date of
this lease, or Landlord's failure to provide Tenant a final policy or policies
of insurance evidencing the insurance coverage required by this lease within
sixty (60) days from the effective date of this lease, shall render Landlord in
default under the lease and shall entitle Tenant to exercise any applicable
remedies upon default provided in the Lease or allowed by law. The policies
required under this section shall not be cancelled without thirty (30) days
prior written notice
7
<PAGE>
to Tenant.
F. Waiver of Subrogation. Landlord and Tenant hereby waive any right each
may have against the other on account of any loss or damage occasioned to
Landlord or to Tenant, as the case may be, their respective property the
premises or its contents, arising from any risk generally covered by "Special
Form" or All Risk insurance coverage, and Landlord and Tenant, each on behalf of
their respective insurance companies insuring the foregoing against any such
loss or damage, waive any right of subrogation that it may have against the
other.
G. Damage or Destruction: In the event that the demised premises are
totally destroyed by fire, casualty or other disaster, Landlord shall have no
obligation to repair or rebuild the demised premises and shall retain all funds
paid by any insurer as a result of such casualty and this lease shall be null
and void as of the date of such destruction. In the event that the building on
the demised premises is partially damaged by fire, casualty or other disaster,
and such damage cannot reasonably be repaired within thirty (30) days of the
date of such damage so as to cause the same to be restored to its prior existing
condition, this lease shall terminate and Landlord shall retain all funds paid
by any insurer as a result of such casualty. In the event that the building on
the demised premises is partially damaged by fire, casualty or other disaster,
and such damage can reasonably be repaired within thirty (30) days of the date
of such damage so as to cause the same to be restored to its prior existing
condition, the Landlord shall proceed to restore said demised premises and
during the period of time of restoration, the rent shall be reduced
proportionately according to the percentage of square feet of usable area
remaining in the portion of the building leased to Tenant. In the event the
demised premises are untenable as a result of such damage, rent shall abate
during the period of time of restoration.
Tenant agrees, upon notice from the Landlord, to remove such fixtures and
other property from the demised premises as shall be required by Landlord for
such restoration work and agrees to permit Landlord, its agents, servants,
employees and contractors to enter upon the demised premises and remain thereon
without molestation for the purpose of restoring the demised premises. Should
Tenant have paid any rent upon the demised premises beyond the date of
termination, as in this item
8
<PAGE>
provided. Tenant shall be entitled to a proportionate refund.
H. Environmental Compliance. To the best of Landlord's knowledge and
belief, there are not existing violations of any federal, state and local
environmental laws and regulations and any amendments thereto including, but not
limited to, the Comprehensive Environmental Response Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, and the
Resource Conservation Recovery Act of 1976. Landlord shall indemnify and hold
Tenant harmless from and against any and all damages, penalties, fines, claims,
liens, suits, liabilities, cost (including cleaning-up costs), judgments and
expenses (including, but not limited to, attorneys', consultants' and experts'
fees and expenses) of any kind and nature suffered by or asserted against Tenant
as a direct or indirect result of any preexisting condition prior to the
occupancy of said premises by Tenant or as a direct or indirect result of any
condition or violation taking place after the termination of the lease term or
Tenant's occupancy of the property. The foregoing indemnification shall survive
the expiration or termination of the lease term.
I. Increased Insurance Rates. Notwithstanding anything contained herein to
the contrary, Tenant shall not be liable for any increase in insurance rates on
the leased premises due to Tenant's initial occupancy thereof for the uses
specified herein. Additionally, Landlord acknowledges and agrees that the
proposed use does not require the physical presence of employees of Tenant at
the leased premises during normal working hours, since Tenant's use as a
warehouse facility will require the physical presence of Tenant's employees only
during times of deliveries to or from the facility. Landlord represents and
warrants that the demised premises are designed for and adequate for the use by
Tenant as a warehouse for materials used in the production of carpet.
J. Taxes. Landlord agrees to pay ad valorem property taxes assessed.
K. Consents. Each party agrees that to the extent any acquiescence,
consent or agreement herein is permitted or required, such acquiescence, consent
or agreement should not be unreasonably withheld, delayed or denied.
9
<PAGE>
EXHIBIT 10.22
Page 1 Lease for Image Industries
J2/J8
60,000 sq.ft.
Summary
Lessor: James S. Owens Residual Trust, Diana O. Layson, Trustee
Lessee: Image Industries, Inc.
Term: Two Year
Rent: $ 9,600.00 month - ($.16 sq. Ft.)
Begin: November 1, 1997
End: October 31, 1999
Option: Yes, two year
Index
Term Section # 2 Page 2
Rent Section # 3 Page 2
Utilities Section # 6 Page 3
Taxes Section # 7 Page 3
Repairs Section # 8 Page 3
Destruction of Premises Section # 9 Page 3
Right of Recovery Section # 11 Page 4
Default Section # 13 Page 5
Address of Notice Section # 17 Page 7
Date of Notice Section # 21 Page 8
Renewal Option Section # 21 Page 8
Insurance Section # 23 Page 9
Environmental Section # 24 Page 10
Signatures Page 11
Notes:
November rent shall be pro-rated to move in date and shall be due immediately.
Actual move-in date is November 19, 1997, Butch Layson met with Johnny Human at
the building this day and agreed for Image to rent the building. Inventory had
already started moving in to building.
Rent Checks to be Payable to JSO, Inc.
<PAGE>
Page 2 Lease for Image Industries
GEORGIA, GORDON COUNTY:
This LEASE, made this 19 day of Nov., 1997, by and between James S. Owens
Residual Trust, Diana O. Layson, Trustee ("lessor"), and Image Industries, Inc..
("lessee").
W I T N E S S E T H:
The Lessor, for and in consideration of the rents, covenants, agreements
and stipulations hereinafter mentioned, reserved and contained, to be kept and
performed by the Lessee, have leased and rented and by these present do lease
and rent unto the said Lessee and the said Lessee hereby agrees to lease and
take upon terms and conditions which hereinafter appear, the following described
property, along with all improvements thereon ("Premises"):
That certain Warehouse containing approximately 60,000 square feet, and
being part of the "Harbinger" complex known as J-2 & J-8, located at 713 South
River Street, Calhoun Georgia. In addition to the foregoing (which constitutes
the Premises), Lessee shall have access with all other tenants of Lessor to
those areas and parts of the property upon which the Harbinger Complex is
located which are intended for the common use and/or benefit of all occupants of
said Complex.
(1)
Lessors represent and covenant that they have good and marketable title to
the Premises and that they have full right, title and authority to enter into
this lease.
(2)
TO HAVE AND TO HOLD the Premises, commencing the later of (i) the date
Tenant takes occupancy of the Premises or (ii) November 1, 1997 and continuing
thereafter for a period of two (2), years.
(3)
Lessee agrees to pay Lessor rental of Nine Thousand, Six Hundred Dollars
($9,600.00) in advance on the first day of each month for the two (2) year term.
(4)
It is intended that the Premises shall be used for manufacturing or
storage, but no strict limitation us hereby imposed. The Premises shall not be
used for any illegal purposes nor in any manner so as to increase the rate of
insurance thereon. The Lessee agrees to pay any increase caused in the Lessor's
insurance rates by virtue of a change in the type of business that Lessee is
conducting.
<PAGE>
Page 3 Lease for Image Industries
(5)
Lessee agrees not to abandon or vacate the Premises during the term
hereof.
(6)
Lessee shall pay water, gas, electricity, fuel, light, heat and power
bills for the Premises, or used by the Lessee in connection therewith. If Lessee
does not pay the same, Lessor may at their option pay the same and such payments
shall be added to the rental.
(7)
Lessor shall pay state, county and municipal ad valorem taxes assessed
against the Premises during the term of this lease. However, it is further
provided between the parties hereto that the Lessee will pay to the Lessor as
additional rental any increase in ad valorem taxes, city and county, charged
against the lease premises over and above the amount of ad valorem taxes for the
year of 1997 with said payment to be made by the Lessee to Lessor within 30 days
upon written notice by the Lessor to the Lessee of said increase in taxes, if
any. All tax bills delivered to Lessor by the taxing authority shall be
sufficient evidence of the tax established for each year during the term. Lessee
reserves the right to reasonably contest any proposed increase in assessments or
taxes and for this purpose Lessor agrees to give Lessee prompt notice of any
proposed increase in assessments by the taxing authority and to cooperate with
Lessee in formally protesting unreasonable increases in assessments.
(8)
Lessor shall make all structural element and exterior wall repairs, and
shall maintain the roof exterior and repair roof leaks. Lessee shall keep and
maintain the Premises and appurtenances and every part thereof in good order and
repair, except for the structural elements exterior roof and exterior wall of
the building. Lessee agrees to keep all systems and fixtures pertaining to
heating, air conditioning, water, sewer, electrical and sprinkler systems, if
any, in good order and repair. Notwithstanding the foregoing or any other
provision contained in this Lease to the contrary, Lessor acknowledges and
agrees that (i) Lessee's obligation to maintain the utility systems and fixtures
(including, but not limited to the heating and air conditioning system) shall be
limited to such repairs and/or replacements as are necessitated due to Lessee's
negligence or misuse of such systems and (ii) Lessor shall be liable for the
repair and replacement of such systems if not due to such Lessee negligence or
misuse. Lessee agrees to be liable for any damage to the Premises and its
fixtures, appurtenances and systems, if such damage is due to the negligence of
Lessee, but only in the event such damage is a casualty not covered by a policy
of hazard insurance required to be carried by Lessor under this Lease Agreement.
(9)
If the Premises are totally destroyed by storm, fire, lightning,
earthquake or other casualty, this lease shall terminate as of the date of such
destruction, and Lessee shall
<PAGE>
Page 4 Lease for Image Industries
not be liable for any rent beyond that date and rental shall be accounted for as
between Lessor and Lessee as of that date. If the Premises are damaged but not
wholly destroyed by and of such casualties, rental shall abate in such
proportion as use of Premises has been destroyed and Lessor shall restore
Premises to substantially the same condition as before the damage as speedily as
practicable, whereupon full rental shall commence.
If the Premises cannot be restored to substantially the same condition
they were in prior to the casualty within a period of One Hundred Twenty (120)
days from the occurrence of the damage, then Lessee shall have an option to
terminate this lease upon the giving of notice of termination to Lessor within
seven (7) days after Lessor notifies Lessee of their inability to repair the
Premises within the required time (which notice Lessor agrees to provide to
Lessee within ten (10) days of the subject casualty event), or within seven (7)
days after Lessor's inability to do so has been apparent, and this Lease shall
terminate upon the giving of such notices.
(10)
Lessee agrees to indemnify and save harmless the Lessor against all claim
for damage to persons or property by reason of Lessee's use or occupancy of the
Premises and all expenses reasonably incurred by Lessor as a result thereof,
including attorney's fees and court costs. Lessee agrees to maintain throughout
the term, at its sole expense, liability insurance adequate to protect Lessor
and Lessee against any claims arising by the use and occupancy of the Premises
by Lessee.
Lessor agrees to maintain fire and extended coverage insurance policies
upon the building located upon the Premises during the term in amounts adequate
to afford the restoration of said building in the event of damage by fire and
other similar insurance casualty. Lessee agrees to maintain adequate fire and
extended coverage policies upon its contents located upon said Premises during
the term thereof. Parties agree to afford the other evidence that proper
insurance is maintained at all times.
(11)
Lessor and Lessee each hereby waive any and all rights of recovery against
the other, or against the officer, employees, agents and representatives of the
other, for loss of or damage to such waiving party or its or their property of
the property of others under its or their control to the extent that such loss
or damage is insured against under any insurance policy in force at the time of
such loss or damage, and each shall upon obtaining the policy of insurance
required by the term of this lease, give notice to the respective insurance
carriers that the foregoing mutual waiver of subrogation is contained in this
lease.
<PAGE>
Page 5 Lease for Image Industries
(12)
Lessee shall not, without the consent of Lessor, endorsed hereon, assign
this lease or any interest herein, or sublet the Premises by any party other
than Lessee. However, upon express written consent of Lessor, which consent
shall not be unreasonably withheld, Lessee shall have the right to sublet or
assign the premises, the Parties determining at that time whether Lessee shall
be released from the terms hereof entirely, and assignee or sublessee to become
fully liable. The use or occupancy of the Premises by an affiliate or a wholly
owned subsidiary of Lessee shall not constitute assignment and subletting, which
shall require the consent of Lessor.
(13)
Part 1.
The occurrence of any one or more of the following events shall constitute
a default of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, when such condition
continues for ten (10) days after receipt of written notice from Lessor to make
such payment.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of the Lease to be observed or performed by Lessee,
other than described in Part 1.(b) above, where such failure shall continue for
a period of thirty (30) days after written notice thereof from Lessor to Lessee,
unless the failure cannot be reasonably corrected within such thirty (30) day
period, if Lessee commences in good faith to cure such failure diligently.
(d) (i) The making by Lessee of any general assignment, or general
arrangement for the benefit of creditors:
(ii) The filing by or against Lessee of a petition to have Lessee
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless in the case of a petition filed against
Lessee the same is dismissed within sixty (60) days);
(iii) The appointment of a trustee or received to take possession of
substantially all of the Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or,
<PAGE>
Page 6 Lease for Image Industries
(iv) The attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this lease, where such seizure is not discharged within thirty (30)
days.
Part 2.
In the event of any such default of Lessee, Lessor may at any time
thereafter, with or without further notice of further demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default or breach:
(a) terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor. In such event, Lessor shall be
entitled to recover from Lessee all damages incurred by Lessor by reason of
Lessee's default including, but not limited to: any deficiency between Lessee's
rent hereunder and the price obtained by Lessor of reletting, the cost of
recovering possession of the Premises, expense of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, and any
real estate commission actually paid; the worth, at the time of award by the
court having jurisdiction thereof, of the amount by which the unpaid rent for
the balance of the term exceeds the amount of such rental loss for the same
period that Lessee proves could be reasonable avoided; and any leasing
commission paid by Lessor applicable to the unexpired term of this lease.
Unpaid installments of rent and other sums shall bear interest from ten
(10) days after the due date at the rate of twelve percent (12%) per annum, but
in no case shall said interest exceed the lawful maximum. In the event Lessee
shall have abandoned the Premises, Lessor shall have the option of (1) retaking
possession of the premises and recovering from Lessee the amount specified in
this Part 2.(a), or (ii) proceeding under Part 2.(b).
(b) maintain Lessee's right to possession in which case this lease shall
continue in effect whether or not Lessee shall have abandoned the Premises. In
such event Lessor shall be entitled to enforce all of Lessor's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due hereunder.
(c) pursue any other remedy now or hereinafter available to Lessor under
the laws or judicial decisions of the State of Georgia.
(14)
Lessee shall give prompt notice to Lessor of any condition or requirement
to be met or fulfilled by Lessor under the terms of this Lease, and Lessor shall
within thirty
<PAGE>
Page 7 Lease for Image Industries
(30) days after written notice cure such default, provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
required for performance, then Lessor shall not be in default if Lessor
commences performance within such thirty (30) day period and thereafter
diligently prosecute same to completion. In relation to the above, Lessor
acknowledges and agrees that in the event Lessor fails to commence and
thereafter diligently pursue the repair and/or replacement of any items for
which it is responsible hereunder within said thirty (30) day period, Lessee
shall thereafter have the right to make such repairs and/or replacements and
charge Lessor the cost therefor. In addition, Tenant shall have the right to
make emergency repairs to elements for which Lessor is responsible under
circumstances where Lessor has failed to timely repair such elements following
notice from Lessee and the continuance of such disrepair would likely result in
damage to materials stored by Lessee at the Premises.
(15)
Time is of the essence in the performance of any obligation under this
Lease agreement.
(16)
This Lease contains all agreements of the parties with respect to the
subject matter of this Lease. No prior agreement or understanding pertaining to
any such matter shall be effective. This Lease may be modified in writing only,
signed by the parties in interest at the time of the modification.
(17)
Any notice provided for in this Lease shall be in writing and shall be
sent by Certified Mail, addressed as follows:
To Lessor: Diana O. Layson, Trustee
320 Trammell Street
Calhoun, GA 30701
To Lessee: Image Industries, Inc.
Attn.: Mr. Steve Coburn
P.O. Box 5555
Armuchee, Georgia 30105
(18)
If Lessee remains in possession of the Premises or any part thereof after
the expiration of the term hereof without the express written consent of Lessor,
such occupancy shall be a tenancy from month to month at a rental in the amount
of the last monthly rental plus all other charges payable hereunder and upon all
terms hereof applicable to a month to month tenancy. Nothing contained herein
shall be construed to constitute permission by the Lessor to the Lessee to
remain in possession after the expiration of the term hereof.
<PAGE>
Page 8 Lease for Image Industries
(19)
If either party bring an action to enforce the terms hereof or declare
rights hereunder, the prevailing party in such action, on trial or appeal, shall
be entitled to his attorney's fees to be paid by the losing party as fixed by
the court.
(20)
Lessor shall have the right to enter the Premises at reasonable times for
the purpose of inspecting same and showing same to prospective purchasers or
lenders, and making such alterations, repairs, improvements or additions to the
Premises or to the building of which they are a part as Lessors may deem
necessary or desirable. During the last sixty (60) days of the term hereof
Lessor may place on or about the Premises any ordinary "for lease" or "for sale"
sign.
(21)
Lessor hereby grants unto Lessee the option to extend the term of this
Lease for an additional two (2) year period commencing November 1, 1999, and
terminating October 31, 2001, at midnight. Said option shall be exercised by
Lessee giving Lessor written notice of exercise, which notice must be sent by
Lessee not less than ninety (90) days before the end of the initial term, which
notice date shall be as follows:
Last day for lessee's notice of renewal of lease: July 31,1999.
All terms of this lease shall remain the same for the renewal term, save
the rental amount, which shall be established by agreement of Lessor and Lessee,
they renegotiating the rental amount in good faith, taking into consideration
general business conditions.
If parties hereto shall be unable to agree between themselves as to what a
proper rental shall be for the option period, then the amount of such rental
shall be determined by arbitrators, Lessor and Lessee each selecting one person,
said arbitrators to be qualified real estate agents or persons known to have
knowledge of local real estate values, the two arbitrators to establish a proper
rental thereafter and if the two arbitrators are unable to agree upon a rental,
they shall choose a third arbitrator, likewise qualified as to real estate
values, and the third person so chosen, or any two of them, shall forthwith
proceed to appraise and establish the fair rental value of the Lease on the
Premises for the aforesaid renewal term, which shall be final and binding.
Notwithstanding the above, Lessor agrees that the monthly rental sum for the
renewal term shall not exceed fifteen percent (15%) increase per month.
<PAGE>
Page 9 Lease for Image Industries
(22)
This contract shall create the relationship of landlord and tenant between
Lessor and Lessee; no estate shall pass out of Lessor, Lessee has only a
usufruct, not subject to levy and sale, and not assignable by Lessee except as
provided in paragraph (12) above.
(23)
Insurance. Lessor shall, at its cost and expense, provide and keep in
force the following insurance coverage without lapse at any time and for any
reason during the term of this Lease:
(i) Insurance covering the premises against loss or damage by fire and
lighting and such risks as are included in "Special Form" or All Risk coverage
endorsements to policies covering property similar to the premises in an amount
equal to 100% of the full replacement value thereof (excluding foundations and
excavation costs), which names Lessee as an additional insured and which
includes an endorsement waiving the right of subrogation. Notwithstanding
anything contained in this lease to the contrary, regardless of whether or not
Lessor provides and keeps in force the required insurance covering losses for
such causes and regardless of whether or not its agents, employees, contractors
or others under the control of Lessee cause such damages, Lessor shall be
responsible for repairing all damages to the premises caused by fire and
lightning and such risks as are customarily included in "Special Form" or All
Risk coverage endorsements to policies covering property similar to the
premises.
(ii) Commercial General Liability coverage on an "Occurrence Form" basis
with limits of at least $1,000,000, Each Occurrence, and $2,000,000 General
Aggregate for all claims. In the event the demised
<PAGE>
Page 10 Lease for Image Industries
(24)
Environmental Compliance; To the best of the lessor's knowledge and belief,
there are no existing violations of any federal, state or local environmental
laws and regulations and any amendments thereto including, but not limited to,
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, and the Resource
Conservation Recovery Act of 1976. Lessor shall indemnify and hold tenant
harmless from and against any and all damages, penalties, fines, claims liens,
suits liabilities, cost (including clean-up cost), judgments and expenses
(including, but not limited to, attorneys', consultants' and experts' fees and
expenses) of any kind and nature suffered or asserted against Lessee as a direct
or indirect result of any preexisting condition prior to the occupancy of said
premises by lessee or as a direct or indirect result of any condition or
violation taking place after the termination of the lease term or lessee's
occupancy of the property. The foregoing indemnification shall survive the
expiration or termination of the lease term. The Lessee in the same manner as
described above agrees to hold lessor harmless should any violation as described
above be caused or allowed to be caused by the lessee or it's agents, servants,
employees, contractors or vendors.
This Lease contains the entire agreement of the parties hereto and no
representation, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein shall be of any force or effect.
In the event of a condemnation or taking by eminent domain which renders the
Premises unusable for their intended use, this Lease shall terminate as of the
date of such taking. Lessor warrants that Lessee, upon payment of the required
rents and performing the terms, conditions, covenants and agreements contained
in this Lease, shall peaceably and quietly have, hold and enjoy the Premises
during the full term of this Lease as well as any extension thereof.
<PAGE>
Page 11 Lease for Image Industries
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
affixed their seals in duplicate, each copy being considered an original, and
day and year first above written.
Signed, sealed and delivered as to:
"LESSEE"
- ----------------------------------- Image Industries, Inc.
/s/ Linda Rodin BY: /s/ Stephen P. Coburn
- ----------------------------------- ------------------------------------
Notary Public, My commission Expires By: Treasurer
01-26-99 ------------------------------------
Signed, sealed and delivered as to:
"LESSOR"
- -----------------------------------
/s/ Diana O. Layson
- ----------------------------------- ----------------------------------------
Notary Public My commission Expires James S. Owens Residual Trust
__________ Diana O. Layson, Trustee
<PAGE>
Inserts to James S. Owens Residual Trust/Image Industries, Inc. Lease:
1. In addition to the foregoing (which constitutes the Premises), Lessee
shall have access with all other tenants of Lessor to those areas and parts of
the property upon which the Harbinger Complex is located which are intended for
the common use and/or benefit of all occupants of said Complex.
2. the later of (i) the date Tenant takes occupancy of the Premises or
(ii)
3. element
4. structural elements
5. Notwithstanding the foregoing or any other provision contained in this
Lease to the contrary, Lessor acknowledges and agrees that (i) Lessee's
obligation to maintain the utility systems and fixtures (including, but not
limited to the heating and air conditioning system) shall be limited to such
repairs and/or replacements as are necessitated due to Lessee's negligence or
misuse of such systems and (ii) Lessor shall be liable for the repair and
replacement of such systems if not due to such Lessee negligence or misuse.
6. (which notice Lessor agrees to provide to Lessee within ten (10) days
of the subject casualty event).
7. In relation to the above, Lessor acknowledges and agrees that in the
event Lessor fails to commence and thereafter diligently pursue the repair
and/or replacement of any items for which it is responsible hereunder within
said thirty (30) day period, Lessee shall thereafter have the right to make such
repairs and/or replacements and charge Lessor the cost therefor. In addition,
Tenant shall have the right to make emergency repairs to elements for which
Lessor is responsible under circumstances where Lessor has failed to timely
repair such elements following notice from Lessee and the continuance of such
disrepair would likely result in damage to materials stored by Lessee at the
Premises.
9. Lessor
10. Lessee
11. Lessor
12. In the event of a condemnation or taking by eminent domain which
renders the Premises unusable for their intended use, this Lease shall terminate
as of the date of such taking. Lessor warrants that Lessee, upon payment of the
required rents and performing the terms, conditions, covenants and agreements
contained in this Lease, shall peaceably and quietly have, hold and enjoy the
Premises during the full term of this Lease as well as any extension thereof.
<PAGE>
EXHIBIT 10.23
Page 1 Lease for Image Industries
J-6
Summary
Lessor: Kay D. Owens Estate, Diana O. Layson, Executrix
Lessee: Image Industries, Inc.
Term: One year
Rent: $10,994.00 month - ( $.16 sq. ft.)
Begin: September 1,1997
End: August 31, 1998
Option: Yes, One year
Index
Term Section # 2 Page 2
Rent Section # 3 Page 2
Utilities Section # 6 Page 3
Taxes Section # 7 Page 3
Repairs Section # 8 Page 3
Destruction of Premises Section # 9 Page 3
Right of Recovery Section # 11 Page 4
Default Section # 13 Page 5
Address of Notice Section # 17 Page 7
Date of Notice Section # 21 Page 8
Renewal Option Section # 21 Page 8
Insurance Section # 23 Page 9
Environmental Section # 24 Page 10
Signatures Page 11
Notes:
September Rent to be pro-rated from move in date and shall be due immediately.
Rent Checks to be Payable to JSO, Inc.
<PAGE>
Page 2 Lease for Image Industries
GEORGIA, GORDON COUNTY:
This LEASE, made this 12th day of Dec, 1997, by and between Kay D. Owens
Estate, Diana O. Layson, Executrix ("Lessor"), and Image Industries, Inc.
("Lessee").
W I T N E S S E T H:
The Lessor, for and in consideration of the rents, covenants, agreements
and stipulations hereinafter mentioned, reserved and contained, to be kept and
performed by the Lessee, have leased and rented and by these present do lease
and rent unto the said Lessee and the said Lessee hereby agrees to lease and
take upon terms and conditions which hereinafter appear, the following described
property, along with all improvements thereon ("Premises"):
That certain Warehouse containing approximately 68,715 square feet, and
being part of the "Harbinger" complex known as J-6, located at 713 South River
Street, Calhoun Georgia. In addition to the foregoing (which constitutes the
Premises), Lessee shall have access with all other tenants of Lessor to those
areas and parts of the property upon which the Harbinger Complex is located
which are intended for the common use and/or benefit of all occupants of said
Complex, including all parking areas, sidewalks, driveways, service areas and
loading docks.
(1)
Lessors represent and covenant that they have good and marketable title to
the Premises and that they have full right, title and authority to enter into
this lease.
(2)
TO HAVE AND TO HOLD the Premises, commencing the later of (i) the date
Tenant takes occupancy of the Premises or (ii) September 1, 1997 and continuing
thereafter for a period of one (1), year, ending August 31, 1998.
(3)
Lessee agrees to pay Lessor rental of Ten Thousand, Nine Hundred
Ninety-four Dollars ($10,994.00) in advance on the first day of each month for
the one (1) year term.
(4)
It is intended that the Premises shall be used for manufacturing or
storage, but no strict limitation is hereby imposed. The Premises shall not be
used for any illegal purposes nor in any manner so as to increase the rate of
insurance thereon. The Lessee agrees to pay any increase caused in the Lessors
insurance rates by virtue of a change in the type of business that Lessee is
conducting.
<PAGE>
Page 3 Lease for Image Industries
(5)
Lessee agrees not to abandon or vacate the Premises during the term
hereof.
(6)
Lessee shall pay water, gas, electricity, fuel, light, heat and power
bills for the Premises, or used by the Lessee in connection therewith. If Lessee
does not pay the same, Lessor may at their option pay the same and such payments
shall be added to the rental.
(7)
Lessor shall pay state, county and municipal ad valorem taxes assessed
against the Premises during the term of this lease. However, it is further
provided between the parties hereto that the Lessee will pay to the Lessor as
additional rental any increase in ad valorem taxes, city and county, charged
against the lease premises over and above the amount of ad valorem taxes for the
year of 1997 with said payment to be made by the Lessee to Lessor within 30 days
upon written notice by the Lessor to the Lessee of said increase in taxes, if
any. All tax bills delivered to Lessor by the taxing authority shall be
sufficient evidence of the tax established for each year during the term. Lessee
reserves the right to reasonably contest any proposed increase in assessments or
taxes and for this purpose Lessor agrees to give Lessee prompt notice of any
proposed increase in assessments by the taxing authority and to cooperate with
Lessee in formally protesting unreasonable increases in assessments.
(8)
Lessor shall make all structural element and exterior wall repairs, and
shall maintain the roof exterior and repair roof leaks. Lessee shall keep and
maintain the Premises and appurtenances and every part thereof in good order and
repair, except for the structural elements, exterior roof and exterior wall of
the building. Lessee agrees to keep all systems and fixtures pertaining to
heating, air conditioning, water, sewer, electrical and sprinkler systems, if
any, in good order and repair. Notwithstanding the foregoing or any other
provision contained in this Lease to the contrary, Lessor acknowledges and
agrees that (i) Lessee's obligation to maintain the utility systems and fixtures
(including, but not limited to the heating and air conditioning system) shall be
limited to such repairs and/or replacements as are necessitated due to Lessee's
negligence or misuse of such systems and (ii) Lessor shall be liable for the
repair and replacement of such systems if not due to such Lessee negligence or
misuse. Lessee agrees to be liable for any damage to the Premises and its
fixtures, appurtenances and systems, if such damage is due to the negligence of
Lessee, but only in the event such damage is a casualty not covered by a policy
of hazard insurance required to be carried by Lessor under this Lease Agreement.
(9)
If the Premises are totally destroyed by storm, fire, lightning,
earthquake or other casualty, this lease shall terminate as of the date of such
destruction, and Lessee shall
<PAGE>
Page 4 Lease for Image Industries
not be liable for any rent beyond that date and rental shall be accounted for as
between Lessor and Lessee as of that date. If the Premises are damaged but not
wholly destroyed by and of such casualties, rental shall abate in such
proportion as use of Premises has been destroyed and Lessor shall restore
Premises to substantially the same condition as before the damage as speedily as
practicable, whereupon full rental shall commence.
If the Premises cannot be restored to substantially the same condition
they were in prior to the casualty within a period of One Hundred Twenty (120)
days from the occurrence of the damage, then Lessee shall have an option to
terminate this lease upon the giving of notice of termination to Lessor within
seven (7) days after Lessor notifies Lessee of their inability to repair the
Premises within the required time (which notice Lessor agrees to provide to
Lessee within ten (10) days of the subject casualty event), or within seven (7)
days after Lessors inability to do so has been apparent, and this Lease shall
terminate upon the giving of such notices.
(10)
Lessee agrees to indemnify and save harmless the Lessor against all claim
for damage to persons or property by reason of Lessee's use or occupancy of the
Premises and all expenses reasonably incurred by Lessor as a result thereof,
including attorney's fees and court costs. Lessee agrees to maintain throughout
the term, at its sole expense, liability insurance adequate to protect Lessor
and Lessee against any claims arising by the use and occupancy of the Premises
by Lessee.
Lessor agrees to maintain fire and extended coverage insurance policies
upon the building located upon the Premises during the term in amounts adequate
to afford the restoration of said building in the event of damage by fire and
other similar insurance casualty. Lessee agrees to maintain adequate fire and
extended coverage policies upon its contents located upon said Premises during
the term thereof. Parties agree to afford the other evidence that proper
insurance is maintained at all times.
(11)
Lessor and Lessee each hereby waive any and all rights of recovery against
the other, or against the officer, employees, agents and representatives of the
other, for loss of or damage to such waiving party or its or their property of
the property of others under its or their control to the extent that such loss
or damage is insured against under any insurance policy in force at the time of
such loss or damage, and each shall upon obtaining the policy of insurance
required by the term of this lease, give notice to the respective insurance
carriers that the foregoing mutual waiver of subrogation is contained in this
lease.
<PAGE>
Page 5 Lease for Image Industries
(12)
Lessee shall not, without the consent of Lessor, endorsed hereon, assign
this lease or any interest herein, or sublet the Premises by any party other
than Lessee. However, upon express written consent of Lessor, which consent
shall not be unreasonably withheld, Lessee shall have the right to sublet or
assign the premises, the Parties determining at that time whether Lessee shall
be released from the terms hereof entirely, and assignee or sublessee to become
fully liable. The use or occupancy of the Premises by an affiliate or a wholly
owned subsidiary of Lessee shall not constitute assignment and subletting, which
shall require the consent of Lessor.
(13)
Part 1.
The occurrence of any one or more of the following events shall constitute
a default of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, when such condition
continues for ten (10) days after receipt of written notice from Lessor to make
such payment.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of the Lease to be observed or performed by Lessee,
other than described in Part 1.(b) above, where such failure shall continue for
a period of thirty (30) days after written notice thereof from Lessor to Lessee,
unless the failure cannot be reasonably corrected within such thirty (30) day
period, if Lessee commences in good faith to cure such failure diligently.
(d) (i) The making by Lessee of any general assignment, or general
arrangement for the benefit of creditors;
(ii) The filing by or against Lessee of a petition to have Lessee
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless in the case of a petition filed against
Lessee the same is dismissed within sixty (60) days);
(iii) The appointment of a trustee or received to take possession of
substantially all of the Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or,
<PAGE>
Page 6 Lease for Image Industries
(iv) The attachment, execution or other judicial seizure of substantially
all of Lessee's assets located at the Premises or of Lessee's interest in this
lease, where such seizure is not discharged within thirty (30) days.
Part 2.
In the event of any such default of Lessee, Lessor may at any time
thereafter, with or without further notice of further demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default or breach:
(a) terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor. In such event, Lessor shall be
entitled to recover from Lessee all damages incurred by Lessor by reason of
Lessee's default including, but not limited to: any deficiency between Lessee's
rent hereunder and the price obtained by Lessor of reletting, the cost of
recovering possession of the Premises, expense of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, and any
real estate commission actually paid; the worth, at the time of award by the
court having jurisdiction thereof, of the amount by which the unpaid rent for
the balance of the term exceeds the amount of such rental loss for the same
period that Lessee proves could be reasonable avoided; and any leasing
commission paid by Lessor applicable to the unexpired term of this lease.
Unpaid installments of rent and other sums shall bear interest from ten
(10) days after the due date at the rate of twelve percent (12%) per annum, but
in no case shall said interest exceed the lawful maximum. In the event Lessee
shall have abandoned the Premises, Lessor shall have the option of (1) retaking
possession of the premises and recovering from Lessee the amount specified in
this Part 2.(a), or (ii) proceeding under Part 2.(b).
(b) maintain Lessee's right to possession in which case this lease shall
continue in effect whether or not Lessee shall have abandoned the Premises. In
such event Lessor shall be entitled to enforce all of Lessor's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due hereunder.
(c) pursue any other remedy now or hereinafter available to Lessor under
the laws or judicial decisions of the State of Georgia.
(14)
Lessee shall give prompt notice to Lessor of any condition or requirement
to be met or fulfilled by Lessor under the terms of this Lease, and Lessor shall
within thirty
<PAGE>
Page 7 Lease for Image Industries
(30) days after written notice cure such default, provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
required for performance, then Lessor shall not be in default if Lessor
commences performance within such thirty (30) day period and thereafter
diligently prosecute same to completion. In relation to the above, Lessor
acknowledges and agrees that in the event Lessor fails to commence and
thereafter diligently pursue the repair and/or replacement of any items for
which it is responsible hereunder within said thirty (30) day period, Lessee
shall thereafter have the right to make such repairs and/or replacements and
charge Lessor the cost therefor. In addition, Tenant shall have the right to
make emergency repairs to elements for which Lessor is responsible under
circumstances where Lessor has failed to timely repair such elements following
notice from Lessee and the continuance of such disrepair would likely result in
damage to materials stored by Lessee at the Premises.
(15)
Time is of the essence in the performance of any obligation under this
Lease agreement.
(16)
This Lease contains all agreements of the parties with respect to the
subject matter of this Lease. No prior agreement or understanding pertaining to
any such matter shall be effective. This Lease may be modified in writing only,
signed by the parties in interest at the time of the modification.
(17)
Any notice provided for in this Lease shall be in writing and shall be
sent by Certified Mail, addressed as follows:
To Lessor: Diana O. Layson, Executrix
320 Trammell Street
Calhoun, GA 30701
To Lessee: Image Industries, Inc.
Attn.: Mr. Steve Coburn
P.O. Box 5555
Armuchee, Georgia 30105
(18)
If Lessee remains in possession of the Premises or any part thereof after
the expiration of the term hereof without the express written consent of Lessor,
such occupancy shall be a tenancy from month to month at a rental in the amount
of the last monthly rental plus all other charges payable hereunder and upon all
terms hereof applicable to a month to month tenancy. Nothing contained herein
shall be construed to constitute permission by the Lessor to the Lessee to
remain in possession after the expiration of the term hereof.
<PAGE>
Page 8 Lease for Image Industries
(19)
If either party bring an action to enforce the terms hereof or declare
rights hereunder, the prevailing party in such action, on trial or appeal, shall
be entitled to his attorney's fees to be paid by the losing party as fixed by
the court.
(20)
Lessor shall have the right to enter the Premises at reasonable times for
the purpose of inspecting same and showing same to prospective purchasers or
lenders, and making such alterations, repairs, Improvements or additions to the
Premises or to the building of which they are part as Lessors may deem necessary
or desirable. During the last sixty (60) days of the term hereof Lessor may
place on or about the Premises any ordinary "for lease" or "for sale" sign.
Lessor shall provide Lessee at least 24 hours written notice of its intention to
enter the Premises; provided, however, no such notice shall be necessary in the
event of an emergency.
(21)
Lessor hereby grants unto Lessee the option to extend the term of this
Lease for an additional one (1) year period commencing September 1, 1998, and
terminating August 31, 1999, at midnight. Said option shall be exercised by
Lessee giving Lessor written notice of exercise, which notice must be sent by
Lessee not less than ninety (90) days before the end of the initial term, which
notice date shall be as follows:
Last day for lessee's notice of renewal of lease: May 31, 1998.
All terms of this lease shall remain the same for the renewal term, save
the rental amount, which shall be established by agreement of Lessor and Lessee,
they renegotiating the rental amount in good faith, taking into consideration
general business conditions.
If parties hereto shall be unable to agree between themselves as to what a
proper rental shall be for the option period, then the amount of such rental
shall be determined by arbitrators, Lessor and Lessee each selecting one person,
said arbitrators to be qualified real estate agents or persons known to have
knowledge of local real estate values, the two arbitrators to establish a proper
rental thereafter and if the two arbitrators are unable to agree upon a rental,
they shall choose a third arbitrator, likewise qualified as to real estate
values, and the third person so chosen, or any two of them, shall forthwith
proceed to appraise and establish the fair rental value of the Lease on the
Premises for the aforesaid renewal term, which shall be final and binding.
Notwithstanding the above, Lessor agrees that the monthly rental sum for the
renewal term shall not exceed fifteen percent (15%) increase per month.
<PAGE>
Page 9 Lease for Image Industries
(22)
This contract shall create the relationship of landlord and tenant between
Lessor and Lessee; no estate shall pass out of Lessor, Lessee has only a
usufruct, not subject to levy and sale, and not assignable by Lessee except as
provided in paragraph (12) above.
(23)
Insurance, Lessor shall, at its cost and expense, provide and keep in
force the following insurance coverage without lapse at any time and for any
reason during the term of this Lease:
(i) Insurance covering the premises against loss or damage by fire and
lighting and such risks as are included in "Special Form" or All Risk coverage
endorsements to policies covering property similar to the premises in an amount
equal to 100% of the full replacement value thereof (excluding foundations and
excavation costs), which names Lessee as an additional insured and which
includes an endorsement waiving the right of subrogation. Notwithstanding
anything contained in this lease to the contrary, regardless of whether or not
Lessor provides and keeps in force the required insurance covering losses for
such causes and regardless of whether or not Lessee its agents, employees,
contractors or others under the control of Lessee cause such damages Lessor
shall be responsible for repairing all damages to the premises caused by fire
and lightning and such risks as are customarily included in "Special Form" or
All Risk coverage endorsements to policies covering property similar to the
premises.
(ii) Commercial General Liability coverage on an "Occurrence Form" basis
with limits of at least $1,000,000. Each Occurrence, and $2,000,000 General
Aggregate for all claims
<PAGE>
Page 10 Lease for Image Industries
(24)
Environmental Compliance; To the best of the lessors knowledge and belief, there
are no existing violations of any federal, state or local environmental laws and
regulations and any amendments thereto including, but not limited to, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, and the Resource
Conservation Recovery Act of 1976. Lessor shall indemnify and hold tenant
harmless from and against any and all damages, penalties, fines, claims liens,
suits liabilities, cost (including clean-up cost), judgments and expenses
(including, but not limited to, attorneys', consultants' and experts' fees and
expenses) of any kind and nature suffered or asserted against Lessee as a direct
or indirect result of any preexisting condition prior to the occupancy of said
premises by lessee or as a direct or indirect result of any condition or
violation taking place after the termination of the lease term or lessee's
occupancy of the property. The foregoing indemnification shall survive the
expiration or termination of the lease term. The Lessee in the same manner as
described above agrees to hold lessor harmless should any violation as described
above be caused or allowed to be caused by the lessee or it's agents, servants,
employees, contractors or vendors.
This Lease contains the entire agreement of the parties hereto and no
representation, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein shall be of any force or effect.
In the event of a condemnation or taking by eminent domain which renders
the Premises unusable for their intended use, this Lease shall terminate as of
the date of such taking. Lessor warrants that Lessee, upon payment of the
required rents and performing the terms, conditions, covenants and agreements
contained in this Lease, shall peaceably and quietly have, hold and enjoy the
Premises during the full term of this Lease as well as any extension thereof.
<PAGE>
Page 11 Lease for Image Industries
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
affixed their seals in duplicate, each copy being considered an original, and
day and year first above written.
Signed, sealed and delivered as to: "LESSEE"
Image Industries, Inc.
- -----------------------------------
/s/ Linda Rodin BY: /s/ [ILLEGIBLE]
- ----------------------------------- ------------------------------------
Notary Public, My commission Expires By: Treasurer
01-26-99 ------------------------------------
Signed, sealed and delivered as to:
"LESSOR"
- -----------------------------------
/s/ Janet [Illegible] /s/ Diana O. Layson
- ----------------------------------- ----------------------------------------
Notary Public, My commission Expires Kay D. Owens Estate
2-12-00 Diana O. Layson, Executrix 9-5-97
<PAGE>
Inserts to Kay D. Owens Estate/Image Industries, Inc. Lease:
1. In addition to the foregoing (which constitutes the Premises), Lessee
shall have access with all other tenants of Lessor to those areas and parts of
the property upon which the Harbinger Complex is located which are intended for
the common use and/or benefit of all occupants of said Complex, including all
parking areas, sidewalks, driveways, service areas and loading docks.
2. the later of (i) the date Tenant takes occupancy of the Premises or
(ii)
3. element
4. structural elements
5. Notwithstanding the foregoing or any other provision contained in this
Lease to the contrary, Lessor acknowledges and agrees that (i) Lessee's
obligation to maintain the utility systems and fixtures (including, but not
limited to the heating and air conditioning system) shall be limited to such
repairs and/or replacements as are necessitated due to Lessee's negligence or
misuse of such systems and (ii) Lessor shall be liable for the repair and
replacement of such systems if not due to such Lessee negligence or misuse.
6. (which notice Lessor agrees to provide to Lessee within ten (10) days
of the subject casualty event).
7. In relation to the above, Lessor acknowledges and agrees that in the
event Lessor fails to commence and thereafter diligently pursue the repair
and/or replacement of any items for which it is responsible hereunder within
said thirty (30) day period, Lessee shall thereafter have the right to make such
repairs and/or replacements and charge Lessor the cost therefor. In addition,
Tenant shall have the right to make emergency repairs to elements for which
Lessor is responsible under circumstances where Lessor has failed to timely
repair such elements following notice from Lessee and the continuance of such
disrepair would likely result in damage to materials stored by Lessee at the
Premises.
8. Lessor shall provide Lessee at least 24 hours written notice of its
intention to enter the Premises; provided, however, no such notice shall be
necessary in the event of an emergency.
9. Lessor
10. Lessee
11. Lessor shall be responsible for repairing all damages
12. Lessor
13. In the event of a condemnation or taking by eminent domain which
renders the Premises unusable for their intended use, this Lease shall terminate
as of the date of such taking. Lessor warrants that Lessee, upon payment of the
required rents and performing the terms, conditions, covenants and agreements
contained in this Lease, shall peaceably and quietly have, hold and enjoy the
Premises during the frill term of this Lease as well as any extension thereof.
<PAGE>
EXHIBIT 10.24
LEASE MODIFICATION AND
----------------------
EXTENSION AGREEMENT
-------------------
STATE OF GEORGIA
COUNTY OF FLOYD
WHEREAS, on December 14, 1992, First Union National Bank of Georgia, as Trustee
under item 8 u/w of James E. Minge; First Union National Bank of Georgia, as
Trustee u/a W/B. Minge dated September 15, 1987; First Union National Bank of
Georgia and Jerry L. Minge co-executors u/w/o C.A. Minge, as Landlord and Image
Carpets, Inc. as Tenant, did enter into a lease agreement covering certain
premises described as 15 Old Airport Road, Rome, Georgia, for a period of two
years beginning February 1, 1993 and ending on January 31, 1995; and
WHEREAS, said lease has been extended through January 31, 1996; and
WHEREAS, the J.E. Minge Estate Charitable Trust, is now the owner/landlord of
the promises described in the original lease of December 14, 1992; and
WHEREAS, Image Carpets, Inc. (Tenant) is now Image Industries, Inc. (Tenant);
and
WHEREAS, it is the wish of Landlord and Tenant to extend and to modify said
lease;
NOW THEREFORE, in consideration of the premises and the mutual covenants and
premises herein contained, the parties agree as follows:
(1) The said lease is hereby extended for the period of one year beginning
February 1, 1996 and ending January 31, 1997 with a monthly rent of $13,533.33.
(2) Landlord grants Tenant three (3) one (1) year options to extend this
lease. Monthly rent for these option periods shall be:
February 1, 1997 through January 31, 1999 - $13,533.33
February 1, 1999 through January 31, 2000 - $14,000.00
These options may be exercised by Tenant by providing written notice to the
Landlord one hundred twenty (120) days prior to the end of each term.
(3) Landlord has the right to cancel this lease at any time after August 1,
1996 by providing Tenant with notice six (6) months prior to the date of
cancellation.
All other terms and conditions of the original lease shall remain in full force
and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have hereunto set their hands and
affixed their seals and executed this agreement of July 29, 1995
Signed, sealed, and delivered First Union National Bank of Georgia,
In the presence of: as Trustee of the J.E. Minge Estate
Charitable Trust
/s/ Susan Harrell By: /s/ [SIGNATURE ILLEGIBLE]
- --------------------------- ----------------------------
[NOTARY PUBLIC] Landlord
[ILLEGIBLE]
Signed, sealed, and delivered Image Industries, Inc.
In the presence of:
/s/ Linda Roder By: /s/ [SIGNATURE ILLEGIBLE]
- --------------------------- ----------------------------
Notary Public 01/26/99 Tenant
(signed 6/22/95)
<PAGE>
ALSO EXCEPTED: All that tract or parcel of land situated, lying and being
in Land Lot 129 and/or 160 in the 4th District and 4th Section of Floyd
County, Georgia, and being in the 3rd Ward of the City of Rome and being
more particularly described as follows:
Beginning at an iron pin which marks the intersection of the north line of
Shorter Avenue with the west line of Old Airport Road and running thence
north 85 degrees 29 minutes west, 201.16 feet to an iron pin; running
thence north 01 degree 05 minutes west, 208.52 feet to an iron pin; running
thence south 85 degrees 32 minutes east 201.82 feet to an iron pin on the
west line of Old Airport Road; running thence southerly along the westerly
line of Old Airport Road, 205 feet, more or less, to an iron pin and the
point of beginning. This property is bounded on the south by Shorter
Avenue, on the east by Old Airport Road, on the west by West Rome Animal
Clinic, and the north by property leased by Integrated Products.
TRACT XII (Tax Map 566-3):
---------
To find the true point of beginning start at an iron pin on the west right
of way line of Black Bluff Road 200 feet southwest of the point where the
north line of Land Lot 359 intersects the west right of way of the Black
Bluff Road as measured along said Black Bluff Road, and running thence
south 40 degrees 11 minutes west 139.72 feet to a point; thence south 41
degrees 59 minutes west 187.33 feet to an iron pin; thence north 49 degrees
55 minutes west 192.6 feet to an iron pin; thence north 34 degrees 3
minutes east 132.23 feet to an iron pin; thence north 79 degrees 02 minutes
west 311.72 feet TO THE POINT OF BEGINNING; thence north 79 degrees 02
minutes west 114.28 feet to an iron pin; thence south 36 degrees 57 minutes
west 113.22 feet to a point; thence north 86 degrees 30 minutes east 146.95
feet to a point; thence north 29 degrees 12 minutes east 68.79 feet to the
point of beginning.
TO HAVE AND TO HOLD, the said land, together with all and singular
the rights, members, and appurtenances thereto belonging, or in any wise
appertaining, to the only proper use, benefit and behoof of the said party of
the second part, its successors and assigns, in as ample a manner as said James
E. Minge held the same.
The will of the said James E. Minge is on file in the office of the
Probate Judge of Floyd County, Georgia having been probated in solemn form with
Letters Testamentary granted to parties of the first part on July 20, 1988.
<PAGE>
IN WITNESS WHEREOF, First Union National Bank and Jerry L. Minge,
Co-Executors have hereunto set their hands and affixed their seals the day and
year first above written.
Sworn to and subscribed
before me this ____ day FIRST UNION NATIONAL BANK
of February, 1990.
_______________________ BY: /s/ [SIGNATURE ILLEGIBLE]
WITNESS -------------------------
TITLE: Vice President and
Trust Officer
________________________ ATTEST:_______________________
NOTARY PUBLIC TITLE:
My Commission Expires: [SEAL]
________________________
Sworn to and subscribed
before me this ____ day
of February, 1990.
________________________ _________________________(L.S.)
WITNESS JERRY L. MINGE
________________________
NOTARY PUBLIC
My Commission Expires:
________________________
<PAGE>
LESS AND EXCEPT THE FOLLOWING TRACTS OF LAND: All that tract of land situated
and lying in Land Lot No. 160 in the 4th District and 4th Section of Floyd
County, Georgia, and more particularly described as commencing at a point on the
Alabama Road at the southwest corner of the above tract and running thence
northerly along the westerly line of said tract a distance of 230.84 feet;
thence easterly parallel with the present Alabama Public Road, 190 feet; thence
southerly parallel with said first described line, 230.84 feet to the Alabama
Public Road; thence westerly along said Alabama Public Road 190 feet to the
beginning point on the northerly side of said road. Said described tract
contains one (1) acre and is further described in a deed from Fred Addington to
H. A. Burns, recorded in Deed Book 163, Page 475, Floyd County Deed Records.
ALSO EXCEPTED: All that tract of land located in Land Lot No. 160 in said
District and Section of Floyd County, more particularly described as commencing
at a point on the northerly side of the present Alabama Road 305 feet easterly
from the southwest corner of the first tract above mentioned, said beginning
point also being 20 feet easterly from the southeast corner of the tract of land
conveyed by said first party to H. A. Burns; and running thence northerly,
parallel with the line of said tract conveyed to H. A. Burns, 226 feet, thence
easterly, parallel with the said Alabama Road 95 feet; thence southerly,
parallel with said line on the east side of said H. A. Burns tract, 226 feet to
the Alabama Road; thence westerly along the northerly side of said Alabama Road
95 feet to the beginning point. Said tract was conveyed by Fred Addington to
Mrs. Tom J. Denman, recorded in Deed Book 378, Page 54.
ALSO EXCEPTED: All that tract of parcel of land situated in original Land Lot
No. 160 in the 4th District and 4th Section of Floyd County, Georgia, beginning
at a point on the northerly line of the right of way of the New Alabama Road 305
feet easterly from the southwest corner of a tract sold to H. A. Burns by Fred
Addington, said beginning point also being the southeast corner of a tract sold
by Fred Addington to Mrs. Tom J. Denman, and running thence easterly along the
line of said right of way 137.63 feet; thence north 1 degree and 5 minutes west
213.56 feet; thence north 81 degrees and 33 minutes west 135 feet to the
northeast corner of the said Mrs. Tom J. Denman tract; thence southerly along
the line of the said Mrs. Tom J. Denman lot 226 feet to the beginning point.
Said tract contains .69 acres, more or less. Said tract was conveyed by Fred
Addington to Alvin S. Ayers, et. al., and recorded in Deed Book 249, Page 590,
Floyd County Deed Records.
<PAGE>
in Plat Book 3, page 99 in the Office of the Clerk of the Superior Court of
Floyd County, Georgia. Reference to said plat is hereby made for a more
particular description of said property.
TRACT X (Tax Map 122-004B):
- -------
A one-half undivided interest in and to:
All that tract or parcel of land situated, lying and being in Land Lots 148
and 149 in the 23rd District and 3rd Section of Floyd County, Georgia, being
part of Tract 27 of the property of Dellinger, Inc. as shown on a plat recorded
in the Office of the Clerk of the Superior Court of Floyd County, Georgia in
Plat Book 6, page 227 and being more particularly described as follows:
BEGINNING 1976 feet North of the southwest corner of Tract No. 27, thence 290
feet East, thence North 550 feet, thence West 292 feet to the West line of Tract
No. 27, thence back along the West line of Tract No. 27, 550 feet to the point
of beginning; this property formerly owned by Dellinger, Inc., according to plat
prepared by Kieffer Lindsey, dated August 1, 1961, and recorded in Book 6, Page
227, of the Deed Records of Floyd County, Georgia.
All mineral rights are reserved by previous owners. Building restrictions are as
recorded in Book 8, Page 9, in the office of the Clerk of Floyd Superior Court.
TRACT XI (Tax Map 452-13-10A):
- --------
A one-third undivided interest in and to:
All that tract or parcel of land situated, lying and being in the County of
Floyd and described as follows:
Being in the 4th District and 4th Section of Floyd County and being a part of
Land Lots Nos. 160 and 129, more particularly described as beginning at the
northwest corner of the intersection of the Alabama Road and the Old Airport
Road and running thence northerly along the west side of the said Old Airport
Road a distance of 520 feet, more or less, to the right of way of the Southern
Railway Company; thence westerly along the said right of way of said Railway a
distance of 710 feet, more or less, to the northwest corner of this tract;
thence in a generally southerly direction to the Old Alabama Road; thence in a
generally southeast by east direction along said Old Alabama Road to the
present Alabama Road, and thence east to the point of beginning. Said tract is
recorded in Deed Book 163, Page 459, in the Floyd County Deed Records.
<PAGE>
BEGINNING at the point on the southwesterly line of East Seventh Street
(formerly Division Street) where the same intersects the southeasterly line of
Southern Railway Company right of way; and from said beginning point running
southeasterly, along the southwesterly line of East Seventh Street 180 feet,
more or less, to the northwest corner of tract formerly owned by Hugh B. Parks;
thence southwesterly, along the northwest line of said tract formerly owned by
Hugh B. Parks, 270 feet, more or less, to corner of lot formerly known as the
Weller lot (part later owned by Miss Geraldine Barton and Mrs. Nell B. Perryman
and part later owned by W. E. Wiggins, Sr.); thence northwesterly, along the
northerly line of said tract formerly known as the Weller Lot, 125 feet, more or
less, to the southeasterly line of Southern Railway Company right of way; and
thence northeasterly, along the southeasterly line of Southern Railway Company
right of way, 180 feet, more or less, to the beginning point.
TRACT VII (Tax Map 432-28-9):
- ---------
All that tract or parcel of land situated, lying and being in the City of Rome,
Floyd County, Georgia, and being all of Lots Numbers Thirteen (13), Fourteen
(14) and Fifteen (15) of the City Land Company's Alto View Addition to West
Rome, as shown on a plat of said addition recorded in Plat Book 1, page 29 in
the Office of the Clerk of the Superior Court of Floyd County, Georgia.
TRACK VIII (Tax Map 432-3-2):
- ----------
All that tract of parcel of land situated, lying and being in Land Lot 202 in
the 23rd District and 3rd Section of Floyd County, Georgia, and being the
easterly 1/2 of Lot 31 and all of Lot 32 in the City Land Company's Fourth
Addition to Summerville Park, a plat of which is recorded in Plat Book 3, page
99 in the Office which is recorded in Plat Book 3, page 99 in the Office of the
Clerk of the Superior Court of Floyd County, Georgia. Said property has situated
thereon a house known as NO. 40 Battey Drive, Rome, Georgia, and is the same
property as that described in a warranty deed recorded in Book 475, page 321 of
the Floyd County Deed Records. Reference to said deed being made for a more
particular description of said property.
TRACT IX (Tax Map 432-3-1):
- --------
All that tract or parcel of land situated, lying and being in Land Lot 202 in
the 23rd District and 3rd Section of Floyd County, Georgia, in the City of Rome,
and being Lot 33 in the City Land Company's Fourth Addition to Summerville Park,
a plat of which is recorded
<PAGE>
No. 2 in Block "F" of said Subdivision; thence southerly along the easterly line
of said Lot No. 2 a distance of 100 feet to the southeasterly corner of said Lot
No. 2; thence easterly along the northerly line of Lot No. 26 in Block
"F" of said Subdivision a distance of 140 feet, more or less, to a point on the
westerly side of Callier Springs Road; thence northerly along the westerly side
of Callier Springs Road a distance of 100 feet to the point of beginning.
TRACT IV (Tax Map 432-1-64):
- --------
All that tract or parcel of land situated, lying and being in Land Lot 202 in
the 23rd District and 3rd Section of Floyd County, Georgia, in the City of Rome,
and being more particularly described as follows:
BEGINNING at an iron pin which marks the northerwesterly corner of the
intersection of Clark Avenue and the northeasterly side of the right of way of
the Central of Georgia Railroad; running thence northerly 720 feet, more or
less, along the westerly side of Clark Avenue to a point marked by an iron pin;
running thence east a distance of 125 feet, more or less, to the westerly right
of way now or formerly owned by the Rome and Northern Railroad Company; going
thence northwesterly along the westerly right of way line of said railroad 390
feet, more or less, to a stake; going thence south 42 3/4 degrees west, 314
feet, more or less, to a stake; thence southerly and approximately parallel with
Clark Avenue 646 feet, more or less, to the northeasterly side of the right of
way of Central of Georgia Railroad; thence southeasterly and along the Central
of Georgia right of way, 356.6 feet, more or less, to the point of beginning.
TRACT V (Tax Map 323-8-1 and 323-8-2):
- -------
All that tract or parcel of land situated, lying and being in the First Ward of
the City of Rome, Floyd County, Georgia, and being further described as Parcel
1, Block 13, according to a plat of Block Nos. 12, 13, and Lot 5, Block 7, of
East First Street Urban Renewal Project Ga. R-89, recorded in Plat Book 10, Page
141, in the office of the Clerk of the Superior Court of Floyd County, Georgia,
reference to which plat is hereby made for a more particular description.
TRACT VI (Tax Map 334-28-22):
- --------
All that tract or parcel of land situated, lying and being in Block C of East
Rome in the City of Rome in Land Lots 276 and 285 in the 23rd District and 3rd
Section of Floyd County, Georgia, described as follows:
<PAGE>
point of beginning. This conveyance is expressly made subject to the "Property
Restrictions Requirements" relating to Callier Springs Heights Subdivision
recorded in Deed Book 487, Page 410, and Deed Book 508, Page 489, Floyd County
Deed Records.
Tract II (Tax Map 328-14-26):
- --------
All that tract or parcel of land situated, lying and being in Land Lot No. 328
in the 23rd District and 3rd Section of Floyd County, Georgia, and being Lot No.
26 in Block "F" of Callier Springs Heights, according to a revised plat thereof
recorded in Plat Book 9, Page 132, in the office of the Clerk of the Superior
Court of FLoyd County, Georgia, said Lot No. 26 being more particularly
described as follows:
BEGINNING at a point on the westerly side of Callier Springs Road, which point
is southerly 196 feet from the interception of the southerly side of Cross View
Boulevard with the westerly side of Callier Springs Road; running thence
southerly along the westerly side of Callier Springs Road a distance of 100 feet
to a point marking the northeast corner of Lot No. 25; thence westerly along the
northerly side of Lot No. 25 a distance of 135 feet, more or less, to the
southeast corner of Lot No. 3; thence northerly along the easterly side of said
Lot No. 3 a distance of 100 feet to the southwest corner of Lot No. 27; thence
easterly along the southerly side of said Lot No. 27 a distance of 140 feet,
more or less, to the point of beginning. This conveyance is expressly made
subject to the "Property Restrictions and Requirements" relating to Callier
Springs Heights Subdivision recorded in Deed Book 487, Page 410, and Deed Book
508, Page 489, Floyd County Deed Records.
TRACT III (Tax Map 328-14-27):
- ---------
All that tract or parcel of land situated, lying and being Lot No. 328 in the
23rd District and 3rd Section of Floyd County, Georgia, and being Lot No. 27,
Block "F" of Callier Spring Heights, according to a revised plat thereof
recorded in Plat Book 9, Page 132, in the office of the Clerk of Superior Court
of Floyd County, Georgia. The lot hereby conveyed begin more particularly
described as follows:
BEGINNING at a point on the westerly side of Callier Springs Road, which point
is southerly 96 feet from the intersection of the southerly side of Cross View
Boulevard with the westerly side of Callier Springs Road; thence running
westerly along the southerly line of Lot No. 28 in Block "F" of said Subdivision
a distance of 140 feet, more or less, to the northeasterly corner of Lot
<PAGE>
DEED OF ASSENT
--------------
STATE OF GEORGIA, FLOYD COUNTY:
THIS INDENTURE, made this the ____ day of February, in the year of our
Lord One Thousand Nine Hundred and Ninety between First Union National Bank and
Jerry L. Minge, Co-Executors of the Estate of James E. Minge of the County of
Floyd and State of Georgia of the first part and First Union National Bank,
Trustee under Trust created by will of James E. Minge, Deceased of the County of
Floyd and State of Georgia of the Second part:
W I T N E S S E T H:
-------------------
That the said parties of the first part for the purpose of carrying
out the provisions of the will of James E. Minge, and evidencing the assent of
said parties of the first part to the devise thereby made, there being ample
property and assets in the estate of said deceased to satisfy all of the debts
of that estate, have delivered and conveyed, and by these presents deliver and
convey unto the said party of the second part, its heirs, successors and assigns
the following described property:
TRACT I (Tax Map 328-14-25):
-------
All that tract or parcel of land situated, lying and being in the 23rd
District and 3rd Section of Floyd County, Georgia, and being Lot No. 25 in
Block "F" of Callier Springs Heights, according to a revised plat thereof
recorded in Plat Book 9, Page 132, in the office of the Clerk of the
Superior Court of Floyd County, Georgia. Said Lot No. 25 being more
particularly described as follows:
BEGINNING at a point on the westerly side of Callier Springs Road, which
point is southerly 296 feet from the intersection of the southerly side of
Cross View Boulevard with the westerly side of Callier Springs Road thence
running South along the westerly side of Callier Springs Road a distance of
100 feet to a point marking the northeast corner of Lot No. 24; thence
westerly along the northerly side of said Lot No. 24 a distance of 125
feet, more or less to the southeast corner of Lot No. 4; thence northerly
along the easterly side of said Lot No. 4 a distance of 100 feet to the
southwest corner of Lot No. 26; thence easterly along the southerly side of
said Lot No. 26 a distance of 135 feet, more or less, to the
<PAGE>
of the County of Floyd and State of Georgia Deputy Clerk of Superior Court
of the first part, and FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee under
the Minge Family Trust Agreement dated of the County of Floyd and State of
Georgia of the second part.
WITNESSETH: That the said party of the first part, for and in
consideration of the sum of TEN and NO/100 ($10.00) and other good and valuable
consideration __________________ Dollars in hand paid, the receipt whereof is
hereby acknowledged, has sold and conveyed, and by these presents does sell and
convey unto the said party of the second part, its heirs, administrators,
executors, representatives, successors and assigns, all that land and real
estate described as follows:
All that tract or parcel of land situated, lying and being in Land Lot 129
and/or Land Lots 128, 160 and 161 in the 4th District and 4th Section of
Floyd County, Georgia, and being in the Third Ward of the City of Rome,
Georgia, and being more particularly described as follows: BEGINNING at a
concrete monument on the northerly right of way of Shorter Avenue, south 52
degree 01 minutes 13 seconds west a distance of 41.34 feet from the
westerly right of way of the Old Airport Road, and from said concrete
monument running thence north 52 degrees 01 minutes 13 second east a
distance of 41.34 feet to a concrete monument on the west side of the Old
Airport Road, thence north 00 degrees 52 minutes 07 seconds west along the
westerly right of way of the Old Airport Road a distance of 182.54 feet to
a point, which is the POINT OF BEGINNING; from said point of beginning,
running thence north 84 degrees 04 minutes 42 seconds west a distance of
202.99 feet to a point, thence north 81 degrees 52 minutes 00 seconds west
a distance of 135.00 feet to a point, thence north 82 degrees 17
minutes 00 seconds west a distance of 95.06 feet to a concrete monument;
thence south 00 degrees 01 minutes 00 seconds west a distance of 226.17
feet to a point located on the northerly right of way of Shorter Avenue;
thence north 76 degrees 24 minutes 00 seconds west a distance of 20.03 feet
to a concrete monument; thence north 00 degree 01 minutes 00 seconds east a
distance of 230.84 feet to a point; thence north 76 degrees 20 minutes 52
seconds west a distance 192.35 feet to a point; thence running north 00
degrees 04 minutes 02 seconds east a distance of 453.85 feet to a point
located on the southerly right of way of the Southern Railroad; thence
running south 68 degrees 02 minutes 50 seconds east a distance of 696.67
feet to a point located on the westerly right of way of the Old Airport
Road; thence running south 02 degrees 27 minutes 12 seconds west a distance
of 140.80 feet to a point; thence south 01 degrees 37 minutes 21 seconds
west a distance of 160.38 feet to a point, which is the POINT OF BEGINNING.
The above described property is in accordance with a survey of said
property prepared by Horne Associates dates March 6, 1992, reference to
which is hereby made for a more particular description.
The interest herein conveyed by the Grantor in this deed is as follows:
16.25% of an undivided 1/3 interest in the above described property.
TO HAVE AND TO HOLD, The said bargained premises, together with all and
singular the rights, members and appurtenances thereunto belonging, or in any
wise appertaining, to the only proper use, benefit and behoof of the said party
of the second part, its heirs, administrators, executors, representatives,
successors and assigns, forever, in FEE SIMPLE.
And the said party of the first part, binding his heirs, administrators,
executors, representatives, successors and assigns, hereby warrants the title to
said bargained premises and members and appurtenances thereunto belonging, unto
said party of the second part, its heirs, administrators, executors,
representatives, successors and assigns, against the lawful claims of any and
all persons whomsoever.
IN WITNESS WHEREOF, The said party of the first part has hereunto set his hand
_____ and affixed his seal ____ the day and year first above written.
Signed, sealed and delivered in the presence of:
/s/ [SIGNATURE ILLEGIBLE] /s/ Jerry L. Minge (SEAL)
- ------------------------------- -----------------------------
/s/ [SIGNATURE ILLEGIBLE] JERRY L. MINGE (SEAL)
- ------------------------------- -----------------------------
NOTARY PUBLIC FLOYD (SEAL)
----------------- _____________________________
COUNTY GEORGIA (SEAL)
----------------------- _____________________________
<PAGE>
STATE OF GEORGIA, FLOYD COUNTY
Office of The Probate Judge
I Myra B. Hunt, Clerk of the Probate Court of said County, do hereby certify
that I have compared the foregoing copy of Letters Testamentary issued to James
Bruce Minge, Janie May Watson and First Union National Bank, Executors of the
Last Will and Testament of Walter B. Minge, deceased with the original record
thereof, now remaining in this office, and the same is a correct transcript
therefrom and of the whole of such original record.
In testimony whereof I have hereunto set my hand and affixed the seal of
the Probate Court. This the 2nd day of August 1994
/s/ Myra B. Hunt
---------------------------------
Clerk of the Probate Court
<PAGE>
COUNTY OF Floyd
LETTERS TESTAMENTARY
(Relieved of Filing Returns)
By Jean P. Duncan, Judge of the Probate Court of said County.
KNOW ALL WHOM IT MAY CONCERN:
That on the 28th day of July, 1994 at a regular term of the Probate Court,
the last Will and Testament dated January 27, 1989, of Walter R. Minge deceased,
at the time of his death a resident of said County, was legally proven in solemn
form and was admitted to record by order, and it was further ordered that James
Bruce Minge, Janie May Watson and First Union National Bank name as Executor(s)
in said Will, be allowed to qualify, and that upon so doing, Letters
Testamentary be issued to such Executor(s).
NOW, THEREFORE, the said James Bruce Minge, Janie May Watson and First
Union National Bank, having taken the oath of office and complied with all the
necessary prerequisites of the law are legally authorized to discharge all the
duties and exercise all the powers of Executor(s) under the Will of said
deceased, according to the Will and the law.
Given under my hand and official seal, the 28th day of July, 1994.
/s/ Jean P. Duncan
----------------------------------
Judge of the Probate Court
NOTE: The following must be signed if the judge does not
sign the original of this document:
Issued by: (Seal)
___________________________________
Clerk, Probate Court
<PAGE>
pin; running thence south 85 degrees 32 minutes east 201.82 feet to an iron pin
on the west line of Old Airport Road; running thence southerly along the
westerly line of Old Airport Road, 205 feet, more or less, to an iron pin and
the point of beginning. This property is bounded on the south by Shorter Avenue,
on the east by Old Airport Road, on the west by West Rome Animal Clinic, and the
north by property leased by Integrated Products.
TRACT X (Tax Map 566-3):
- -------
To find the true point of beginning start at an iron pin on the west right of
way line of Black Bluff Road 200 feet southwest of the point where the north
line of Land Lot 359 intersects the west right of way of the Black Bluff Road as
measured along said Black Bluff Road, and running thence south 40 degrees 11
minutes west 139.72 feet to a point; thence south 41 degrees 59 minutes west
187.33 feet to an iron pin; thence north 49 degrees 55 minutes west 192.6 feet
to an iron pin; thence north 34 degrees 3 minutes east 132.23 feet to an iron
pin; thence north 79 degrees 02 minutes west 311.72 feet TO THE POINT OF
BEGINNING; thence north 79 degrees 02 minutes west 114.28 feet to an iron pin;
thence south 36 degrees 57 minutes west 113.22 feet to a point; thence north 86
degrees 30 minutes east 146.95 feet to a point; thence north 29 degrees 12
minutes east 68.79 feet to the point of beginning.
<PAGE>
to the beginning point on the northerly side of said road. Said described tract
contains one (1) acre and is further described in a deed from Fred Addington to
H. A. Burns, recorded in Deed Book 163, Page 475, Floyd County Deed Records.
ALSO EXCEPTED: All that tract of land located in Land Lot No. 160 in said
District and Section of Floyd County, more particularly described as commencing
at a point on the northerly side of the present Alabama Road 305 feet easterly
from the southwest corner of the first tract above mentioned, said beginning
point also being 20 feet easterly from the southeast corner of the tract of land
conveyed by said first party to H. A. Burns; and running thence northerly,
parallel with the line of said tract conveyed to H. A. Burns, 226 feet, thence
easterly, parallel with the said Alabama Road 95 feet; thence southerly,
parallel with said line on the east side of said H. A. Burns ?????, 226 feet to
the Alabama Road; thence westerly along the northerly side of said Alabama Road
95 feet to the beginning point. Said tract was conveyed by Fred Addington to
Mrs. Tom J. Denman, recorded in Deed Book 378, Page 54.
ALSO EXCEPTED: All that tract or parcel of land situated in original Land Lot
No. 160 in the 4th District and 4th Section of Floyd County, Georgia, beginning
at a point on the northerly line of the right of way of the New Alabama Road 305
feet easterly from the southwest corner of a tract sold to H. A. Burns by Fred
Addington, said beginning point also being the southeast corner of a tract sold
Addington to Mrs. Tom J. Denman, and running thence easterly along the line of
said right of way 137.63 feet; thence north 1 degree and 5 minutes west 213.56
feet; thence north 81 degrees and 33 minutes west 135 feet to the northeast
corner of the said Mrs. Tom J. Denman tract; thence southerly along the line of
the said Mrs. Tom J. Denman lot 226 feet to the beginning point. Said tract
contains .69 acres, more or less. Said tract was conveyed by Fred Addington to
Alvin S. Ayers, et. al., and recorded in Deed Book 249, Page 590, Floyd County
Deed Records.
ALSO EXCEPTED: All that tract or parcel of land situated, lying and being in
Land Lot 129 and/or 160 in the 4th District and 4th Section of FLoyd County,
Georgia, and being in the 3rd Ward of the City of Rome and being more
particularly described as follows:
Beginning at an iron pin which marks the intersection of the north line of
Shorter Avenue with the west line of Old Airport Road and running thence north
85 degrees 29 minutes west, 201.16 feet to an iron pin; running thence north 01
degree 05 minutes west, 208.52 feet to an iron
<PAGE>
Georgia. Said property has situated thereon, a house known as No. 40 Battey
Drive, Rome, Georgia, and is the same property as that described in a warranty
deed recorded in Book 475, page 321 of the Floyd County Deed Records. Reference
to said deed being made for a more particular description of said property.
TRACT VIII (Tax Map 432-3-1)
- ----------
All that tract or parcel of land situated, lying and being in Land Lot 202 in
the 23rd District and 3rd Section of Floyd County, Georgia, in the City of Rome,
and being Lot 33 in the City Land Company's Fourth Addition to Summerville Park,
a plat of which is recorded in Plat Book 3, page 99 in the Office of the Clerk
of the Superior Court of Floyd County, Georgia. Reference to said plat is hereby
made for a more particular description of said property.
TRACT IX (Tax Map 452-13-10A)
- --------
A one-third undivided interest in and to:
All that tract or parcel of land situated, lying and being in the County of
Floyd and described as follows:
Being in the 4th District and 4th Section of FLoyd County and being a part of
Land Lots Nos. 160 and 129, more particularly described as beginning at the
northwest corner of the intersection of the Alabama Road and the Old Airport
Road and running thence northerly along the west side of the said Old Airport
Road a distance of 520 feet, more or less, to the right of way of the Southern
Railway Company; thence westerly along the said right of way of said Railway a
distance of 710 feet, more or less, to the northwest corner of this tract;
thence in a generally southerly direction to the Old Alabama Road; thence in a
generally southeast by east direction along said Old Alabama Road to the
present Alabama Road, and thence east to the point of beginning. Said tract is
recorded in Deed Book 163, Page 459, in the Floyd County Deed Records.
LESS AND EXCEPT THE FOLLOWING TRACTS OF LAND: All that tract of land situated
and lying in Land Lot No. 160 in the 4th District and 4th Section of FLoyd
County, Georgia, and more particularly described as commencing at a point on the
Alabama Road at the southwest corner of the above tract and running thence
northerly along the westerly line of said tract a distance of 230.84 feet;
thence easterly parallel with the present Alabama Public Road, 190 feet; thence
southerly parallel with said first described line, 230.84 feet to the Alabama
Public Road; thence westerly along said Alabama Public Road 190 feet
<PAGE>
more or less, to a stake; going thence south 42 3/4 degrees west, 314 feet, more
or less, to a stake; thence southerly and approximately parallel with Clark
Avenue 646 feet, more or less, to the northeasterly side of the right of way of
Central of Georgia Railroad; thence southeasterly and along the Cental of
Georgia right of way, 356.6 feet, more or less, to the point of beginning.
TRACT V (Tax Map 334-28-22):
- -------
All that tract or parcel of land situated, lying and being in Block C of East
Rome in the City of Rome in Land Lots 276 and 285 in the 23rd District and 3rd
Section of Floyd County, Georgia, described as follows:
BEGINNING at the point on the southwesterly line of East Seventh Street
(formerly Division Street) where the same intersects the southeasterly line of
Southern Railway Company right of way; and from said beginning point running
southeasterly, along the southwesterly line of East Seventh Street 180 feet,
more or less, to the northwest corner of tract formerly owned by Hugh B. Parks;
thence southwesterly, along the northwest line of said tract formerly owned by
Hugh B. Parks, 270 feet, more or less, to corner of lot formerly known as the
Weller lot (part later owned by Miss Geraldine Barton and Mrs. Nell B. Perryman
and part later owned by W. E. Wiggins, Sr.); thence northwesterly, along the
northerly line of said tract formerly known as the Weller Lot, 125 feet, more or
less, to the southeasterly line of Southern Railway Company right of way; and
thence northeasterly, along the southeasterly line of Southern Railway Company
right of way, 180 feet, more or less, to the beginning point.
TRACT VI (Tax Map 432-28-9):
- --------
All that tract or parcel of land situated, lying and being in the City of Rome,
Floyd County, Georgia, and being all of Lots Numbers Thirteen (13), Fourteen
(14) and Fifteen (15) of the City Land Company's Alto View Addition to West
Rome, as shown on a plat of said addition recorded in Plat Book 1, page 29 in
the Office of the Clerk of the Superior Court of Floyd County, Georgia.
TRACT VII (Tax Map 432-3-2):
- ---------
All that tract or parcel of land situated, lying and being in Land Lot 202 in
the 23rd District and 3rd Section of Floyd County, Georgia, and being the
easterly 1/2 of Lot 31 and all of Lot 32 in the City Land, Company's Fourth
Addition to Summerville Park, a plat of which is recorded in Plat Book 3, Page
99 in the Office of the Clerk of the Superior Court of Floyd County,
<PAGE>
corner of Lot No. 3; thence northerly along the easterly side of said Lot No. 3
a distance of 100 feet to the southwest corner of Lot No. 27; thence easterly
along the southerly side of said Lot No. 27 a distance of 140 feet, more or
less, to the point of beginning. This conveyance is expressly made subject to
the "Property Restrictions and Requirements" relating to Callier Springs Heights
Subdivision recorded in Deed Book 487, Page 410, and Deed Book 508, Page 489,
Floyd County Deed Records.
TRACT III (Tax Map 328-14-27)
- ---------
All that tract or parcel of land situated, lying and being Lot No. 328 in the
23rd District and 3rd Section of Floyd County, Georgia, and being Lot No. 27,
Block "F" of Callier Springs Heights, according to a revised plat thereof
recorded in Plat Book 9, Page 132, in the office of the Clerk of Superior Court
of Floyd County, Georgia. The lot hereby conveyed being more particularly
described as follows:
BEGINNING at a point on the westerly side of Callier Springs Road, which point
is southerly 96 feet from the intersection of the southerly side of Cross View
Boulevard with the westerly side of Callier Springs Road; thence running
westerly along the southerly line of Lot No. 28 in Block "F" of said Subdivision
a distance of 140 feet, more or less, to the northeasterly corner of Lot No. 2
in Block "F" of said Subdivision; thence southerly along the easterly line of
said Lot No. 2 a distance of 100 feet to the southeasterly corner of said Lot
No. 2; thence easterly along the northerly line of Lot No. 26 in Block "F" of
said Subdivision a distance of 140 feet, more or less, to a point on the
westerly side of Callier Springs Road; thence northerly along the westerly side
of Callier Springs Road a distance of 100 feet to the point of beginning.
TRACT IV (Tax Map 432-1-64)
- --------
All that tract or parcel of land situated, lying and being in Land Lot 202
in the 23rd District and 3rd Section of Floyd County, Georgia, in the City of
Rome, and being more particularly described as follows:
BEGINNING at an iron pin which marks the northwesterly corner of the
intersection of Clark Avenue and the northeasterly side of the right of way of
the Central of Georgia Railroad; running thence northerly 720 feet, more or
less, along the westerly side of Clark Avenue to a point marked by an iron pin;
running thence east a distance of 125 feet, more or less, to the westerly right
of way now or formerly owned by the Rome and Northern Railroad Company; going
thence northwesterly along the westerly right of way line of said railroad 390
feet,
<PAGE>
EXHIBIT "A"
TRACT I (Tax Map 328-14-25):
- -------
All that tract or parcel of land situated, lying and being in the 23rd District
and 3rd Section of Floyd County, Georgia, and being Lot No. 25 in Block "F" of
Callier Springs Heights, according to a revised plat thereof recorded in Plat
Book 9, Page 132, in the office of the Clerk of the Superior Court of Floyd
County, Georgia. Said Lot No. 25 being more particularly described as follows:
BEGINNING at a point on the westerly side of Callier Springs Road, which point
is southerly 296 feet from the intersection of the southerly side of Cross View
Boulevard with the westerly side of Callier Springs Road thence running South
along the westerly side of Callier Springs Road a distance of 100 feet to a
point marking the northeast corner of Lot No. 24; thence westerly along the
northerly side of said Lot No. 24 a distance of 125 feet, more or less to the
southeast corner of Lot No. 4; thence northerly along the easterly side of said
Lot No. 4 a distance of 100 feet to the southwest corner of Lot No. 26; thence
easterly along the southerly side of said Lot No. 26 a distance of 135 feet,
more or less, to the point of beginning. This conveyance is expressly made
subject to the "Property Restrictions Requirements" relating to Callier Springs
Heights Subdivision recorded in Deed Book 487, Page 410, and Deed Book 508, Page
489, Floyd County Deed Records.
TRACT II (Tax Map 328-14-26):
- --------
All that tract or parcel of land situated, lying and being in Land Lot No. 328
in the 23rd District and 3rd Section of Floyd County, Georgia, and being Lot No.
26 in Block "F" of Callier Springs Heights, according to a revised plat thereof
recorded in Plat Book 9, Page 132, in the office of the Clerk of the Superior
Court of Floyd County, Georgia, said Lot No. 26 being more particularly
described as follows:
BEGINNING at a point on the westerly side of Callier Springs Road, which point
is southerly 196 feet from the intersection of the southerly side of Cross View
Boulevard with the westerly side of Callier Springs Road; running thence
southerly along the westerly side of Callier Springs Road a distance of 100 feet
to a point marking the northeast corner of Lot No. 25; thence westerly along the
northerly side of Lot No. 25 a distance of 135 feet, more or less, to the
southeast
<PAGE>
The will of the said James E. Minge is on file in the Office of the
Probate Court of Floyd County, Georgia, having been probated in solemn from with
Letters Testamentary granted to parties of the first part on July 20, 1988.
In Witness whereof, First Union National Bank and Jerry L. Minge,
Co-Executors, have hereunto set their hands and affixed their seals the day and
year first above written.
Sworn to and subscribed before FIRST UNION NATIONAL BANK
me this 8/th/ day of July, 1992.
/s/ Louise D. Adams BY: /s/ [SIGNATURE ILLEGIBLE]
- ---------------------------------- -------------------------------
WITNESS TITLE: Vice President
-------------------------
/s/ [SIGNATURE ILLEGIBLE] ATTEST: /s/ [SIGNATURE ILLEGIBLE]
- ---------------------------------- ---------------------------
NOTARY PUBLIC TITLE: VICE PRESIDENT
------------------------
My Commission expires:
3/5/94 [SEAL]
- ------------------------------
Sworn to and subscribed before
me this 8th day of July, 1992.
/s/ Louise D. Adams /s/ Jerry L. Minge (SEAL)
- ---------------------------------- ----------------------------
WITNESS JERRY L. MINGE
/S/ [SIGNATURE ILLEGIBLE]
- ----------------------------------
NOTARY PUBLIC
My Commission expires:
3/5/94
- ------------------------------
<PAGE>
[STAMP APPEARS HERE]
DEED OF ASSENT
STATE OF GEORGIA
COUNTY OF FLOYD.
THIS INDENTURE made this 10th day of July, 1992 between First Union
National Bank and Jerry L. Minge, Co-Executors of the Estate of James E. Minge
of the County of Floyd and State of Georgia of the first part and First Union
National Bank, Trustee under Trust created under Item Eight of the will of James
E. Minge, Deceased, of the County of Floyd and State of Georgia of the second
part:
W I T N E S S E T H:
- - - - - - - - - -
That the said parties of the first part for the purpose of carrying
out the provisions of the will of James E. Minge, and evidencing the assent of
said parties of the first part to the devise thereby made, there being ample
property and assets in the estate of said deceased to satisfy all of the debts
of that estate, have delivered and conveyed and by these presents delivers and
conveys unto the said party of the second part, its heirs, successors and
assigns the following described property:
See Exhibit "A" attached hereto and made a part hereof by reference.
TO HAVE AND TO HOLD, the said land, together with all and singular the rights,
members and appurtenances thereto belonging, or in any wise appertaining, to the
only proper use, benefit and behoof of the said party of the second part, its
successors and assigns, in as ample a manner as said James E. Minge held the
same.
Floyd County, Georgia
Real Estate Transfer Tax
Paid $ None
----------------------------
7-16-92
Date ----------------------------
/s/ Vicki Powers
----------------------------
Deputy Clerk of Superior Court
<PAGE>
EXHIBIT 10.25
STATE OF GEORGIA
COUNTY OF WALKER
THIS AGREEMENT made as of the 1st day of June, 1998, by and between
INTERMARK USA, INC., as Landlord (hereinafter referred to as "Landlord"), and
IMAGE INDUSTRIES, INC., having an address of P.O. Box 5555, Armuchee, Georgia
30105, as Tenant (hereinafter referred to as "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant heretofore entered into a Commercial Lease
Contract (the "Lease") respecting certain premises together with the building
thereon located in Kensington, Walker County, Georgia, and being more
particularly described in the Lease; and
Paragraph 1 Leased property
1. The Landlord, for and in consideration of the rents, covenants,
agreements and stipulations hereinafter mentioned, provided for and
contained, to be paid, kept and performed by the Tenant, has leased and
rented, and by these presents leases and rents, unto the said Tenant, and
said Tenant hereby leases and takes upon the terms and conditions which
hereinafter appear, the following described property (hereinafter called
"Premises"), to wit:
(a) From the period of June 1, 1998 through May
31, 1999, 136,020 square feet located in the old Archer plant,
(known as Sections A-4, A-5 and A-6)); and
(b) On a month to month basis after June 1, 1998,
141,464 square feet located in the old Archer plant (known as
Sections B-4)
and being known as Highway 341, Kensington, Georgia. No easement for light
or air is included in the Premises.
Paragraph 2 Rental and Period of Lease
Tenant agrees to pay Landlord an annual rental in the amount of $225,000,
which shall be paid, commencing promptly on June 1, 1998, and on the first
day of each month thereafter in advance during the term of this Lease, in
equal monthly installments of $18,750. Rent shall be on a pro rata basis
for square footage described in paragraph 1.
Paragraph 3 Default
It is mutually agreed that in the event the Tenant shall default in the
payment of rent herein reserved, when due, and fails to cure said default
within ten (10) days after written notice hereof from the Landlord; or if
the Tenant shall be in default in performing any of the terms or
provisions of the lease other than the provision requiring the payment of
rent, and fails to cure such default within thirty (30) days after the
written notice of default from the landlord; or if the Tenant is
<PAGE>
adjudicated bankrupt or if a permanent receiver is appointed for the
Tenant's property and such receiver is not removed within sixty (60) days
after written notice from the Landlord to Tenant to obtain such removal;
or if, whether voluntary or involuntary, Tenant takes advantage of any
debtor relief proceedings under any present or future law, whereby the
rent or any part thereof is, is proposed to be, reduced or payment thereof
deferred; or if the Tenant makes an assignment for benefit of creditors;
or if the Tenant's property or any part thereof should be levied upon or
attached under process against Tenant and not satisfied or dissolved
within thirty (30) days after written notice from Landlord to Tenant to
obtain satisfaction thereof; then, in any said events, Landlord at his
option, may at once, or within six (6) months thereafter (but only during
continuance of such default or condition), terminate this lease by
written notification to the Tenant; where upon this lease shall end. After
an authorized assignment or subletting of the entire premises covered by
this lease, the occurring of any of the foregoing defaults or events shall
affect this lease only if caused by, or happening to the assignee or
sub-tenant. Any notice provide ion this paragraph may be given by
Landlord, or Agent herein named. Upon such termination by Landlord, Tenant
will at once surrender possession of the premises to Landlord and remove
all Tenant's property therefrom; and Landlord may forewith re-enter the
premises and repossess himself hereof, and remove all property therefrom,
using such force as may be necessary without being guilty of trespass,
forcible entry to detainer or other tort, or the violation or any of the
terms of this lease.
Paragraph 4 Reletting by Landlord
Landlord as Tenant's agent, without termination of this lease, upon
Tenant's breaching any of the terms of this contract, may at the
Landlord's option, enter upon and rent said premises at the best price
obtainable by reasonable effort without advertisement or private
negotiations and for any term Landlord deems proper. Tenant shall be
liable to Landlord for the deficiency, if any, between Tenant's rent
hereunder and the price obtained by Landlord on re-letting.
Paragraph 5 Collection by an attorney
If any rent owing under this lease is collected by or through an attorney
at law, Tenant agrees to pay ten (10%) percent thereof as attorney's fees.
Tenant waives all right to homestead and exemptions which he or any member
of his family or other person may have under any law as against any
obligations arising under this lease, and Tenant hereby assigns to
Landlord his homestead and exemption.
Paragraph 6 Subletting by Tenant
Tenant may sublease portions of the leased premises to others provided
that such operation is in part of the general operation of the Tenant and
under the supervision and control of the Tenant, and provided that such
operation is within the purposes for which said premises shall be used.
Except as provided in the preceding sentence, Tenant shall not, without
the written consent of the Landlord, assign the lease or any interest
hereunder, or sublet premises or any part thereof, or permit the use of
premises by any party other than the Tenant, any assignee of the Tenant,
at option of Landlord, shall become directly liable to Landlord for all
obligations of Tenant hereunder, but no sublease or assignment by Tenant
shall relieve Tenant of any liability hereunder.
Paragraph 6 Signs
<PAGE>
Tenant shall paint no signs on the outside walls or place any signs on the
roof of the leased premises except with the written consent of Landlord.
Any and all signs placed on or within the leased premises by the Tenant
shall be maintained in compliance with the rules and regulations governing
such signs and the Tenant shall be responsible to Landlord for any damage
caused by installation, use or maintenance of said signs, and Tenant
agrees, upon removal of said signs, to repair damage incident to such
removal.
Paragraph 7 Control & responsibility
Landlord gives Tenant exclusive control of the premises, and shall be
under no obligation to inspect said premises. Tenant shall at once report
in writing to landlord any defective condition known to him which Landlord
is required to repair, and failure to so report such defect shall make the
Tenant responsibility to the Landlord for any liability incurred by
Landlord by reason of such defect. If such defect shall result in a leak
or other condition needing attention in the roof, Landlord upon receipt of
written notice from Tenant shall with reasonable promptness have made the
necessary repairs. Should Landlord fail to make such repairs with
reasonable promptness, Tenant is authorized to have the necessary repairs
made and deduct the costs from the next rental payment due hereunder.
Landlord shall not be liable, under any circumstances, for damage by
water, or otherwise, by reason of the failure of the building to protect
persons property, nor shall Landlord be liable for damages by reason of
flood water I the basement, or otherwise.
Paragraph 8 Delivery at expiration
Tenant will deliver said premises at the expiration of this lease in as
good order and repair as when first received, natural wear and tear and
fire and other casualty loss excepted. Tenant shall have the right, within
the term of the lease, if not in default thereunder, to remove all
furniture or trade fixtures that have been installed by Tenant, but Tenant
will repair, at or before the end of the term, all injury done by the
installation or removal of furniture and property.
Paragraph 9 Changes in premises
Tenant is to make no change of any substantial or permanent nature in the
above named premises, including painting of outside walls without first
obtaining written consent from said Landlord.
Paragraph 10 Improvements by Tenant
Any improvements, repairs, betterment's or additions placed on the
premises by the Tenant, shall not be a charge against the Landlord or the
property.
Paragraph 11 Ordinances
Tenant agrees to comply with all rules, orders, ordinances and regulations
of the City, County and State in which the property is located, in any and
all of their departments.
Paragraph 12 Carding
Landlord has the privilege of carding the premises for rent or for sale at
any time within ninety (90) days previous to the expiration of this lease,
and may at any time exhibit said premises during reasonable hours with
notification in writing to Tenant.
Paragraph 13 Use of Premises
Premises shall be used as general warehouse. No wines, beer, whiskeys,
liquors or intoxicating beverages of any kind shall be kept on, sold or
delivered on said premises.
<PAGE>
Paragraph 14 Hold over
This lease, under no circumstances, shall extend beyond the timer herein
provided; and in the event that Tenant remains in the property after the
expiration date of the term herein, with or without payment of rent, this
shall not automatically extend the lease but he shall be as a tenant at
will, and subject to the terms and conditions of the original lease.
Paragraph 15 Light & easement
Nothing herein contained shall be construed to confer upon Tenant easement
to light or air.
Paragraph 16 Right of use only
This contract shall create the relationship of Landlord and Tenant between
the parties hereto. No estate shall pass out of Landlord. Tenant has only
a usufruct, not subject to levy and sale, and not assignable by Tenant
except by Landlord's consent.
Paragraph 17
All rights, powers and privileges conferred hereunder upon parties hereto
shall be cumulative but not restrictive to those given by law.
Paragraph 18 Non waiver of rights
No failure of Landlord to exercise any power given landlord hereunder, or
to insist upon strict compliance by Tenant with his obligations hereunder,
and no custom or practice of the parties at variance with the terms hereof
shall construe a waiver of Landlord's right to demand exact compliance
with terms hereof.
Paragraph 19
Time is of the essence of this agreement.
Paragraph 20 Definition of Parties
"Landlord" as used in this lease, shall also include his heirs,
representatives, assigns and successors in title to premises. "Tenant"
includes also representatives, and if this lease shall be validly assigned
or said premises sub-let, shall include also Tenant's assignees or
sub-tenants as to premises covered by such assignment or sub-lease.
"Agent" shall include its successors, assigns and representatives.
"Landlord" and "Tenant" include male and female, singular and plural,
corporation, partnership or individual, as may fit particular parties.
Paragraph 21 Notices
The depositing in the United States Post Office, directed to Tenant at
Tenant's address shown above of any notice required or permitted under
this lease to be given by Landlord to Tenant, shall be conclusive of
delivery thereof to Tenant.
<PAGE>
SPECIAL STIPULATIONS
Insofar as the following stipulations conflict with any of the foregoing
provisions, the following shall control.
A. Insurance. Landlord shall, at its cost and expense, cause the following
insurance coverage to be provided and kept in force without lapse at any time
and for any reason during the term of this Lease:
(i) Insurance covering the premises against loss or damage by fire and
lightning and such risks as are included in "Special Form" or All
Risk coverage endorsements to policies covering property similar to
the premises in an amount equal to 100% of the full replacement
value thereof (excluding foundations and excavation costs), which
names Tenant as an additional insured and which includes an
endorsement waiving the right of subrogation. Notwithstanding
anything contained in this lease to the contrary, regardless of
whether or not Landlord causes the required insurance covering
losses for such causes to be provided and kept in force and
regardless of whether or not Tenant, its agents, employees,
contractors or others under the control of Tenant cause such
damages, Landlord shall be responsible for repairing all damages to
the premises caused by fire and lightning and such risks as are
customarily included in "Special Form" or All Risk coverage
endorsements to policies covering property similar to the premises.
(ii) Commercial General Liability coverage on an "Occurrence Form" basis
with limits of at least $1,000,000 Each Occurrence, and $2,000,000
General Aggregate for all claims arising out of Bodily Injury,
Personal Injury, and Property Damage Liability, including
Contractual Liability.
(iii) Business Auto Liability coverage for all vehicles owned by Landlord,
including Non-Owned and Hired Autos, with limits of at least
$1,000,000 Each Occurrence for Bodily Injury and Property Damage
Liability.
(iv) Workers Compensation coverage covering all employees, contractors
and subcontractors of Landlord, as applicable, working in the State
of Georgia under the statutory provisions of the Georgia Workers
Compensation Act.
Landlord and Tenant expressly agree that either Landlord's failure to provide
Tenant a certificate of insurance as temporary evidence of the insurance
coverage required by this lease within ten (10) days from the effective date of
this lease, or Landlord's failure to provide Tenant a final policy or policies
of insurance evidencing the insurance coverage required by this lease within
sixty (60) days from the effective date of this lease, shall render Landlord in
default
<PAGE>
under the lease and shall entitle Tenant to exercise any applicable remedies
upon default provided in the lease or allowed by law. The policies required
under this section shall not be canceled without thirty (30) days' prior written
notice to Tenant.
B. Damage or Destruction. Should said premises, or the building of which
same are a part, be damaged by fire or any act of Providence, the Landlord shall
cause the damaged part to be restored as soon as reasonably practicable and hold
the lease in full force and effect. From the date of such damage until the
damage is restored, the rental shall abate to the proportionate extent that the
damaged part bears to the whole premises. Should the damage be so great as to
amount substantially to total destruction, then either Landlord or Tenant shall
have the right to terminate the lease, provided that either party shall within
twenty (20) days after such damage notify the other party in writing of the
election to terminate this lease.
C. Environmental Compliance. To the best of Landlord's knowledge and
belief, there are no existing violations of any federal, state and local
environmental laws and regulations and any amendments thereto including, but not
limited to, the Comprehensive Environmental Response Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, and the
Resource Conservation Recovery Act of 1976. Landlord shall indemnify and hold
Tenant harmless from and against any and all damages, penalties, fines, claims,
liens, suits, liabilities, costs (including cleaning-up costs), judgments and
expenses (including, but not limited to, attorneys', consultants' and experts'
fees and expenses) of any kind and nature suffered by or asserted against Tenant
as a direct or indirect result of any preexisting condition prior to the
occupancy of said premises by Tenant or as a direct or indirect result of any
condition or violation taking place after the termination of the lease term or
Tenant's occupancy of the property. The foregoing indemnification shall survive
the expiration or termination of the lease term.
D. Increased Insurance Rates. Notwithstanding anything contained herein to
the contrary, Tenant shall not be liable for any increase in insurance rates on
the leased premises due to Tenant's initial occupancy thereof for the uses
specified herein. Additionally, Landlord acknowledges and agrees that the
proposed use does not require the physical presence of employees of Tenant at
the leased premises during normal working hours, since Tenant's use as a
warehouse facility will require the physical presence of Tenant's employees only
<PAGE>
during times of deliveries to or from the facility. Landlord represents and
warrants that the demised premises are designed for and adequate for the use by
Tenant as a warehouse for materials used in the production of carpet.
E. Taxes. Tenant shall not be responsible for the payment of ad valorem
property taxes assessed against the premises.
F. Consents. Each party agrees that to the extent any acquiescence,
consent or agreement herein is permitted or required, such acquiescence, consent
or agreement should not be unreasonably withheld, delayed or denied.
G. Quiet Enjoyment/Authority. Landlord covenants and warrants to Tenant
that Landlord has full right and lawful authority to enter into and perform
Landlord's obligations under this lease, that Landlord has a leasehold interest
in the property pursuant to the Prior Lease, free and clear of all other
contracts, leases, tenancy agreements, restrictions, violations, encumbrances or
defects in title of any nature whatsoever that would restrict the use or
enjoyment of Tenant of the premises.
H. Brokerage Commission. Tenant shall have no responsibility for any
commission payable to any broker in connection with the execution of this lease.
I. Mutual Indemnification. Tenant hereby indemnifies Landlord for any
bodily injury or property damage of any third parties by reason of Tenant's
negligence, and the negligence of its employees, agents, servants or
contractors, in its use or occupancy of the leased premises. Landlord hereby
indemnifies Tenant for any bodily injury or property damage of any third parties
by reason of Landlord's negligence and the negligence of its employees, agents,
servants or contractors, in its maintenance, use or occupancy of the leased
premises.
J. Sprinkler system. As a precondition to the effectiveness of this lease
Landlord agrees to keep the sprinkler system in working order as required by
Tenants insurance carrier, and to not turn of the water supply to the sprinkler
system other than for routine maintenance.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
to Lease as of the day and year first above written.
LANDLORD:
INTERMARK USA, INC.
Signed, sealed and delivered
in the presence of:
BY: /s/ [ILLEGIBLE]
- ----------------------------------- ---------------------------------
Witness
/s/ Mary Beth Smith ATTEST: /s/ [ILLEGIBLE]
- ----------------------------------- -----------------------------
Notary
NOTARY PUBLIC
[SEAL] MARY BETH SMITH
WHITFIELD COUNTY, GEORGIA
MY COMMISSION EXPIRES FEB. 18, 2000
TENANT:
IMAGE INDUSTRIES, INC.
Signed, sealed and delivered
in the presence of:
BY: /s/ Stephen P. Coburn - Treasurer
- ----------------------------------- ---------------------------------
Witness
/s/ Linda Rodin ATTEST: /s/ [ILLEGIBLE]
- ----------------------------------- -----------------------------
Notary Public
My commission expires 01-26-99
<PAGE>
EXHIBIT 10.26
LEASE AGREEMENT
BY AND BETWEEN
HAYWARD INDUSTRIAL PARK ASSOCIATES,
A CALIFORNIA GENERAL PARTNERSHIP
AS LANDLORD
AND
MOHAWK INDUSTRIES, INC.
A GEORGIA CORPORATION
AS TENANT
DATED NOVEMBER 10, 1997
<PAGE>
TABLE OF CONTENTS
Page
Basic Lease Information .....................................................iii
1. Demise ................................................................... 1
2. Premises ................................................................. 1
3. Term ..................................................................... 2
4. Rent ..................................................................... 2
5. Utility Expenses ......................................................... 6
6. Late Charge .............................................................. 6
7. Security Deposit ......................................................... 7
8. Possession ............................................................... 7
9. Use of Premises .......................................................... 7
10. Acceptance of Premises .................................................. 8
11. Surrender ............................................................... 9
12. Alterations And Additions ............................................... 9
13. Maintenance and Repairs Of Premises ..................................... 11
14. Landlord's Insurance .................................................... 11
15. Tenant's Insurance ...................................................... 12
16. Indemnification ......................................................... 13
17. Subrogation ............................................................. 13
18. Signs ................................................................... 13
19. Free From Liens ......................................................... 14
20. Entry By Landlord ....................................................... 14
21. Destruction and Damage .................................................. 14
22. Condemnation ............................................................ 16
23. Assignment And Subleasing ............................................... 17
24. Tenant's Default ........................................................ 19
25. Landlord's Remedies ..................................................... 21
26. Landlord's Right to Perform Tenant's Obligations ........................ 23
27. Attorney's Fees ......................................................... 23
28. Taxes ................................................................... 24
29. Effect Of Conveyance .................................................... 24
30. Tenant's Estoppel Certificate ........................................... 24
31. Subordination ........................................................... 25
32. Environmental Covenants ................................................ 25
i
<PAGE>
33. Notices ................................................................. 28
34. Waiver .................................................................. 28
35. Holding Over ............................................................ 28
36. Successors And Assigns .................................................. 28
37. Time .................................................................... 29
38. Brokers ................................................................. 29
39. Limitation Of Liability ................................................. 29
40. Financial Statements .................................................... 29
41. Rules and Regulations ................................................... 29
42. Mortgagee Protection .................................................... 30
43. Entire Agreement ........................................................ 30
44. Interest ................................................................ 30
45. Construction ............................................................ 30
46. Representations And Warranties Of Tenant ................................ 30
47. Relocation .............................................................. 31
48. Security ................................................................ 31
49. Jury Trial Waiver ....................................................... 31
Exhibit
A Diagram of the Premises
B Tenant Improvements
B-1 Initial Floor Plan
C Commencement and Expiration Date Memorandum
D Rules and Regulations
E Sign Criteria
F Hazardous Materials Disclosure Certificate
G N/A
Addendum 1 Option to Extend Lease
Addendum 2 Early Occupancy Agreement
ii
<PAGE>
LEASE AGREEMENT
BASIC LEASE INFORMATION
Lease Date: November 10, 1997
Landlord: HAYWARD INDUSTRIAL PARK ASSOCIATES,
A California General Partnership
Landlord's Address: c/o Allegis Realty Investors LLC
455 Market Street, Suite 1540
San Francisco, California 94105
All notices sent to Landlord under this Lease
shall be sent to the above address, with copies
to:
Lincoln Property Company Management Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Tenant: Mohawk Industries, Inc.
a Georgia corporation
Tenant's Contact Person: __________________________________________________
Tenant's Address and 2001 Antiock Road
Telephone Number: P.O. Box 2208,
Dalton, GA 30721
Premises Square Footage: Approximately thirty thousand two hundred forty
(30,240) rentable square feet
Premises Address: 3624 Munster Avenue, Unit A, B and C
Hayward, California
Project: Hayward Industrial Park, consisting of four (4)
phases ("Phases") containing an aggregate of
approximately 1,108,424 rentable square feet,
together with the land on which the Project is
situated and all Common Areas
Phase: Phase V, consisting of an aggregate of
approximately 310,688 rentable square feet
Building: Four (4), Hayward, California
Tenant's Proportionate
Share of Phase: 9.73% of Phase V
Length of Term: Sixty (60) months
Estimated Commencement
Date: December 15, 1997
Estimated Expiration Date: December 14, 2002
Monthly Base Rent: Monthly Monthly
Months Sq. Ft. Base Rent Base Rent
1-30 30,240 x $0.36 = $10,886.40
31-60 30,240 x $0.37 = $11,188.80
iii
<PAGE>
Escalations: N/A
Prepaid Rent: Ten thousand eight hundred eighty six and 40/100
($10,886.40)
Prepaid Additional Rent: Two thousand two hundred twenty eight and 69/100
($2,228.69)
Month to which Prepaid
Base Rent and Additional
Rent will be Applied: (1st) month of the Term
Security Deposit: Not required
Permitted Use: Warehouse and distribution of carpet products and
related office use, but only to the extent
permitted by the City of Hayward and any and all
entities having jurisdiction.
Unreserved Parking Thirty (30) nonexclusive and undesignated parking
Spaces: spaces
Broker(s): Chris Coyte and Brett Holden - Lee & Associates
(for Tenant) Joe Fabian and Jay Hagglund - BT
Commercial (for Landlord)
Tenant Improvements N/A
Allowance:
Tenant Improvements N/A
Loan:
Architect: N/A
iv
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between Landlord and
Tenant on the Lease Date. The defined terms used in this Lease which are
defined in the Basic Lease Information attached to this Lease Agreement ("Basic
Lease Information") shall have the meaning and definition given them in the
Basic Lease Information. The Basic Lease Information, the exhibits, the addendum
or addenda described in the Basic Lease Information, and this Lease Agreement
are and shall be construed as a single instrument and are referred to herein as
the "Lease".
1. DEMISE
In consideration for the rents and all other charges and payments payable
by Tenant, and for the agreements, terms and conditions to be performed by
Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND TENANT DOES
HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below (the
"Premises"), upon the agreements, terms and conditions of this Lease for the
Term hereinafter stated.
2. PREMISES
The Premises demised by this Lease is located in that certain building
(the "Building") specified in the Basic Lease Information, which Building is
located in that certain real estate development (the "Project") specified in the
Basic Lease Information. The Premises has the address and contains the square
footage specified in the Basic Lease Information. The location and dimensions of
the Premises are depicted on Exhibit A, which is attached hereto and
incorporated herein by this reference. Tenant shall have the non-exclusive right
(in common with the other tenants, Landlord and any other person granted use by
Landlord) to use the Common Areas (as hereinafter defined), except that, with
respect to parking, Tenant shall have only a license to use the number of
non-exclusive and undesignated parking spaces set forth in the Basic Lease
Information in the Project's parking areas (the "Parking Areas"); provided,
however, that Landlord shall not be required to enforce Tenant's right to use
such parking spaces; and, provided further, that the number of parking spaces
allocated to Tenant hereunder shall be reduced on a proportionate basis in the
event any of the parking spaces in the Parking Areas are taken or otherwise
eliminated as a result of any Condemnation (as hereinafter defined) or casualty
event affecting such Parking Areas. Tenant acknowledges that the overuse by
Tenant or Tenant's Agents of the number of parking spaces allocated to Tenant
hereunder shall constitute a breach of this Lease by Tenant and, without
limiting Landlord's rights and remedies hereunder as a result of such breach,
Landlord shall have the right to assess a parking surcharge of one hundred
dollars ($100.00) per day per vehicle for each vehicle parked in the Parking
Areas by Tenant or Tenant's Agents in excess of the number of parking spaces
allocated to Tenant hereunder as specified in the Basic Lease Information. No
easement for light or air is incorporated in the Premises. For purposes of this
Lease, the term "Common Areas" shall mean all areas and facilities outside the
Premises and within the exterior boundary line of the Project that are provided
and designated by Landlord for the non-exclusive use of Landlord, Tenant and
other tenants of the Project and their respective employees, guests and
invitees.
Tenant understands and agrees that the Premises shall be leased by Tenant
in its as-is condition without any improvements or alterations by Landlord
unless Landlord has expressly agreed to make such improvements or alterations in
a tenant improvement work agreement attached hereto, if at all, as Exhibit B. If
Landlord has agreed to make any such improvements or alterations, then the
Premises demised by this Lease shall include any Tenant Improvements (as that
term is defined in the aforesaid tenant improvement work agreement) to be
constructed by Landlord within the interior of the Premises. Landlord shall
construct any Tenant Improvements on the terms and conditions set forth in
Exhibit B, if attached hereto. Landlord and Tenant agree to and shall be bound
by the terms and conditions of Exhibit B, if any.
1
<PAGE>
Landlord has the right, in its sole discretion, from time to time, to: (a)
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, ingress, egress, direction of driveways, entrances, corridors and
walkways; (b) close temporarily any of the Common Areas for maintenance purposes
so long as reasonable access to the Premises remains available; (c) add
additional buildings and improvements to the Common Areas or remove existing
buildings or improvements therefrom; (d) use the Common Areas while engaged in
making additional improvements, repairs or alterations to the Project or any
portion thereof; and (e) do and perform any other acts or make any other changes
in, to or with respect to the Common Areas and the Project as Landlord may, in
its sole discretion, deem to be appropriate.
3. TERM
The term of this Lease (the "Term") shall be for the period of months
specified in the Basic Lease Information, commencing on December 1, 1997 (the
"Commencement Date"). Tenant further acknowledges and agrees that the Tenant
Improvements described in Exhibit B attached hereto may be installed and
constructed by Landlord in the Premises during the period of Tenant's occupancy
of the Premises, however the completion of such Tenant Improvements therein
shall not affect Tenant's obligation to pay Rent and to perform all of Tenant's
covenants and obligations under the Lease. Tenant hereby expressly (i) agrees
that Tenant shall have no right or claim to any abatement, offset or other
deduction of the amount of Rent payable by Tenant for the Premises due to the
installation and construction of any of the Tenant Improvements, (ii) grants
Landlord access to any and all of the Premises to perform the Tenant
Improvements, (iii) waives any rights or claims Tenant may have at law or in
equity with respect to any interference with Tenant's conduct of its operations
in and about the Premises during the pendency of the work associated with the
Tenant Improvements, (iv) agrees to use commercially reasonable efforts not to
interfere, and not to allow any of Tenant's Representative to interfere, with
Landlord and its contractors, representatives and consultants in the performance
of the work associated with the completion of the Tenant Improvements, and (v)
agrees that Tenant's employees, agents, contractors, consultants, workmen,
mechanics, suppliers and invitees shall fully cooperate, work in harmony and
not, in any manner, unreasonably interfere with Landlord or Landlord's agents or
representatives in performing any of the aforementioned work and any additional
work related thereto, Landlord's work in other areas of the Building or the
Park, or the general operation of the Building.
In the event the actual Commencement Date, as determined pursuant to the
foregoing, is a date other than the Estimated Commencement Date, then Landlord
and Tenant shall promptly execute a Commencement and Expiration Date Memorandum
in the form attached hereto as Exhibit C, wherein the parties shall specify the
Commencement Date, the date on which the Term expires (the "Expiration Date")
and the date on which Tenant is to commence paying Rent.
4. RENT
(a) Base Rent. Tenant shall pay to Landlord, in advance on the first day
of each month, without further notice or demand and without offset or deduction,
the monthly installments of rent specified in the Basic Lease Information (the
"Base Rent").
Upon execution of this Lease, Tenant shall pay to Landlord the
Prepaid Rent and first monthly installment of estimated Additional Rent (as
hereinafter defined) specified in the Basic Lease Information to be applied
toward Base Rent and Additional Rent for the month of the Term specified in the
Basic Lease Information.
(b) Additional Rent. This Lease is intended to be a triple-net Lease with
respect to Landlord; and subject to Paragraph 13(b) below, the Base Rent owing
hereunder is (1) to be paid by Tenant absolutely net of all costs and expenses
relating to Landlord's
2
<PAGE>
ownership and operation of the Project and the Building, and (2) not to be
reduced, offset to diminished, directly or indirectly, by any cost, charge or
expense payable hereunder by Tenant or by others in connection with the
Premises, the Building and/or the Project or any part thereof. The provisions of
this Paragraph 4(b) for the payment of Tenant's Proportionate Share(s) of
Expenses (as hereinafter defined) are intended to pass on to Tenant its share of
all such costs and expenses. In addition to the Base Rent, Tenant shall pay to
Landlord, in accordance with this Paragraph 4, Tenant's Proportionate Share(s)
of all costs and expenses paid or incurred by Landlord in connection with the
ownership, operation, maintenance, management and repair of the Premises, the
Building and/or the Project or any part thereof (collectively, the "Expenses"),
including, without limitation, all the following items (the "Additional Rent"):
(1) Taxes and Assessments. All real estate taxes and assessments, which
shall include any form of tax, assessment, fee, license fee, business license
fee, levy, penalty (if a result of Tenant's delinquency), or tax (other than net
income, estate, succession, inheritance, transfer or franchise taxes), imposed
by any authority having the direct or indirect power to tax, or by any city,
county, state or federal government or any improvement or other district or
division thereof, whether such tax is (i) determined by the area of the
Premises, the Building and/or the Project or any part thereof, or the Rent and
other sums payable hereunder by Tenant or by other tenants, including, but not
limited to, any gross income or excise tax levied by any of the foregoing
authorities with respect to receipt of Rent and/or other sums due under this
Lease; (ii) upon any legal or equitable interest of Landlord in the Premises,
the Building and/or the Project or any part thereof; (iii) upon this transaction
or any document to which Tenant is a party creating or transferring any interest
in the Premises, the Building and/or the Project; (iv) levied or assessed in
lieu of, in substitution for, or in addition to, existing or additional taxes
against the Premises, the Building and/or the Project, whether or not now
customary or within the contemplation of the parties; or (v) surcharged against
the parking area. Tenant and Landlord acknowledge that Proposition 13 was
adopted by the voters of the State of California in the June, 1978 election and
that assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such purposes as fire protection, street, sidewalk, road, utility
construction and maintenance, refuse removal and for other governmental services
which may formerly have been provided without charge to property owners or
occupants. It is the intention of the parties that all new and increased
assessments, taxes, fees, levies and charges due to any cause whatsoever are to
be included within the definition of real property taxes for purposes of this
Lease. "Taxes and assessments" shall also include legal and consultants' fees,
costs and disbursements incurred in connection with proceedings to contest,
determine or reduce taxes, Landlord specifically reserving the right, but not
the obligation, to contest by appropriate legal proceedings the amount or
validity of any taxes.
(2) Insurance. All insurance for the Building and/or the Project or any
part thereof, including premiums for "all risk" fire and extended coverage
insurance, commercial general liability insurance, rent loss or abatement
insurance, earthquake insurance, flood or surface water coverage, and other
insurance as Landlord deems necessary in its sole discretion, and any
deductibles paid under policies of any such insurance.
(3) Utilities. The cost of all Utilities (as hereinafter defined) serving
the Premises, the Building and the Project or any part thereof that are not
separately metered to Tenant, any assessments or charges for Utilities or
similar purposes included within any tax bill for the Building or the Project or
any part thereof, including without limitation, entitlement fees, allocation
unit fees, and/or any similar fees or charges and any penalties (if a result of
Tenant's delinquency) related thereto, and any amounts, taxes, charges,
surcharges, assessments or impositions levied, assessed or imposed upon the
Premises, the Building or the Project or any part thereof, or upon the Tenant's
use and occupancy thereof, as a result of any rationing of Utility services or
restriction on Utility
3
<PAGE>
use affecting the Premises, the Building and/or the Project, as contemplated in
Paragraph 5 below (collectively, "Utility Expenses").
(4) Common Area Expenses. All costs to operate, maintain, repair, replace,
supervise, insure and administer the Common Areas, including supplies,
materials, labor and equipment used in or related to the operation and
maintenance of the Common Areas, including parking areas (including, without
limitation, all costs of resurfacing and restriping parking areas), signs and
directories on the Building and/or the Project, landscaping (including
maintenance contracts and fees payable to landscaping consultants), amenities,
sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and
security services, if any, provided by Landlord for the Common Areas, and any
charges, assessments, costs or fees levied by any association or entity of which
the Project or any part thereof is a member or to which the Project or any part
thereof is subject.
(5) Parking Charges. Any parking charges or other costs levied, assessed
or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any governmental
authority or insurer in connection with the use or occupancy of the Building or
the Project.
(6) Maintenance and Repair Costs. Except for costs which are the
responsibility of Landlord pursuant to Paragraph 13(b) below, all costs to
maintain, repair, and replace the Premises, the Building and/or the Project or
any part thereof, including without limitation, (i) all costs paid under
maintenance, management and service agreements such as contracts for Common Area
janitorial and refuse removal and security (if provided by Landlord), (ii) all
costs to maintain, repair and replace the roof coverings of the Building or the
Project or any part thereof, (iii) subject to Paragraph 13(a) below, all costs
to maintain, repair and replace the heating, ventilating, air conditioning,
plumbing, sewer, drainage, electrical, fire protection, life safety and security
systems and other mechanical and electrical systems and equipment serving the
Premises, the Building and/or the Project or any part thereof (collectively, the
"Systems").
(7) Life Safety Costs. All costs to install, maintain, repair and replace
all life safety systems, including, without limitation, all fire alarm systems,
serving the Premises, the Building and/or the Project or any part thereof
(including all maintenance contracts and fees payable to life safety
consultants) whether such systems are or shall be required by Landlord's
insurance carriers, Laws (as hereinafter defined) or otherwise.
(8) Management and Administration. All costs for management and
administration of the Premises, the Building and/or the Project or any part
thereof, including, without limitation, a property management fee, accounting,
auditing, billing, postage, salaries and benefits for clerical and supervisory
employees, whether located on the Project or off-site, payroll taxes and legal
and accounting costs and fees for licenses and permits related to the ownership
and operation of the Project.
Notwithstanding anything in this Section 4(b) to the contrary, with
respect to all sums payable by Tenant as Additional Rent under this Section 4(b)
for the repair or replacement of any item or the construction of any new item in
connection with the physical operation of the Premises, the Building or the
Project or any part thereof (i.e., HVAC, roof membrane or coverings and parking
area) which is a capital item the repair or replacement of which property would
be capitalized under generally accepted accounting principles. Tenant shall be
required to pay only the pro rata share of the cost of the item falling due
within the Term (including any Renewal Term) based upon the amortization of the
same over the useful life of such item as reasonably determined by Landlord.
4
<PAGE>
(c) Payment of Additional Rent.
(1) Upon commencement of this Lease, Landlord shall submit to Tenant
an estimate of monthly Additional Rent for the period between the Commencement
Date and the following December 31 and Tenant shall pay such estimated
Additional Rent on a monthly basis, in advance, on the first day of each month.
Tenant shall continue to make said monthly payments until notified by Landlord
of a change therein. By April 1 of each calendar year, Landlord shall endeavor
to provide to Tenant a statement showing the actual Additional Rent due to
Landlord for the prior calendar year, to be prorated during the first year from
the Commencement Date. If the total of the monthly payments of Additional Rent
that Tenant has made for the prior calendar year is less than the actual
Additional Rent chargeable to Tenant for such prior calendar year, then Tenant
shall pay the difference in a lump sum within ten (10) days after receipt of
such statement from Landlord. Any overpayment by Tenant of Additional Rent for
the prior calendar year shall be credited towards the Additional Rent next due.
(2) Landlord's then-current annual operating and capital budgets for
the Building and Project or the pertinent part thereof shall be used for
purposes of calculating Tenant's monthly payment of estimated Additional Rent
for the current year, subject to adjustment as provided above. Landlord shall
make the final determination of Additional Rent for the year in which this Lease
terminates as soon as possible after termination of such year. Even though the
Term has expired and Tenant has vacated the Premises, Tenant shall remain liable
for payment of any amount due to Landlord in excess of the estimated Additional
Rent previously paid by Tenant, and, conversely, Landlord shall promptly return
to Tenant any overpayment. Failure of Landlord to submit statements as called
for herein shall not be deemed a waiver of Tenant's obligation to pay Additional
Rent as herein provided.
(3) Tenant understands that, in allocating Expenses of the Project
to tenants for purposes of Paragraph 4(b), Landlord generally allocates such
Expenses to the Phases within the Project, and then to the tenants within each
such Phase based upon the tenants' respective proportionate shares of the
aggregate rentable square footage within such Phase. Tenant's "Proportionate
Share" of the Phase in which the Premises are located shall be the percentage
set forth in the Basic Lease Information as Tenant's Proportionate Share of the
Phase, as adjusted by Landlord from time to time for a remeasurement of or
changes in the physical size of the Premises or the improvements within the
Phase, whether such changes in size are due to an addition to or a sale or
conveyance of a portion of the Phase or otherwise. Notwithstanding the
foregoing, Landlord may revise its method of allocating Expenses among tenants
at any time and from time to time, and, in the event of such a revision,
Tenant's "Proportionate Share" shall be a percentage calculated by Landlord from
time to time in its sole discretion and furnished to Tenant in writing.
Notwithstanding anything in this Agreement to the contrary, Landlord may
equitably adjust Tenant's Proportionate Share(s) for all or part of any item of
expense or cost reimbursable by Tenant that relates to a repair, replacement,
or service that benefits only the Premises or only a portion of the Building
and/or the Project or that varies with the occupancy of the Building and/or the
Project. Without limiting the generality of the foregoing, Tenant understands
and agrees that Landlord shall have the right to adjust Tenant's Proportionate
Share(s) of any Utility Expenses based upon Tenant's use of the Utilities or
similar services as reasonably estimated and determined by Landlord based upon
factors such as size of the Premises and intensity of use of such Utilities by
Tenant such that Tenant shall pay the portion of such charges reasonably
consistent with Tenant's use of such Utilities and similar services. If Tenant
disputes any such estimate or determination of Utility Expenses, then Tenant
shall either pay the estimated amount or cause the Premises to be separately
metered at Tenant's sole expense.
(d) General Payment Terms. The Base Rent, Additional Rent and all other
sums payable by Tenant to Landlord hereunder, including, without limitation,
payments of principal and interest on the Tenant Improvements Loan (as defined
in Exhibit B hereto), if any, late charges assessed pursuant to Paragraph 6
below and any interest assessed
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pursuant to Paragraph 45 below, are referred to as the "Rent". All Rent shall be
paid without deduction, offset or abatement in lawful money of the United States
of America. Checks are to be made payable to Hayward Industrial Park Associates
and shall be mailed to: Lincoln Property Company Management Services, Inc., 101
Lincoln Centre Drive, Fourth Floor, Foster City, California 94404, or to such
other person or place as Landlord may, from time to time, designate to Tenant in
writing. The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated amount of the
Rent for a full calendar month based upon a thirty (30) day month.
5. UTILITY EXPENSES
(a) Tenant shall pay the cost of all water, sewer use, sewer discharge
fees and permit costs and sewer connection fees, gas, heat, electricity, refuse
pick-up, janitorial service, telephone and all materials and services or other
utilities (collectively, "Utilities") billed or metered separately to the
Premises and/or Tenant, together with all taxes, assessments, charges and
penalties added to or included within such cost. Tenant acknowledges that the
Premises, the Building and/or the Project may become subject to the rationing of
Utility services or restrictions on Utility use as required by a public utility
company, governmental agency or other similar entity having jurisdiction
thereof. Tenant acknowledges and agrees that its tenancy and occupancy
hereunder shall be subject to such rationing or restrictions as may be imposed
upon Landlord, Tenant, the Premises, the Building and/or the Project, and Tenant
shall in no event be excused or relieved from any covenant or obligation to be
kept or performed by Tenant by reason of any such rationing or restrictions.
Tenant agrees to comply with energy conservation programs implemented by
Landlord by reason of rationing restrictions or Laws.
(b) Landlord shall not be liable for any loss, injury or damage to
property caused by or resulting from any variation, interruption, or failure of
Utilities due to any cause whatsoever, or from failure to make any repairs or
perform any maintenance. No temporary interruption or failure of such services
incident to the making of repairs, alterations, improvements, or due to
accident, strike, or conditions or other events shall be deemed an eviction of
Tenant or relieve Tenant from any of its obligations hereunder. In no event
shall Landlord be liable to Tenant for any damage to the Premises or for any
loss, damage or injury to any property therein or thereon occasioned by
bursting, rupture, leakage or overflow of any plumbing or other pipes
(including, without limitation, water, steam, and/or refrigerant lines),
sprinklers, tanks, drains, drinking fountains or washstands, or other similar
cause in, above, upon or about the Premises, the Building, or the Project.
6. LATE CHARGE
Notwithstanding any other provision of this Lease, Tenant hereby
acknowledges that late payment to Landlord of Rent, or other amounts due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. If any Rent or
other sums due from Tenant are not received by Landlord or by Landlord's
designated agent within five (5) days after their due date, then Tenant shall
pay to Landlord a late charge equal to ten percent (10%) of such overdue amount,
plus any costs and attorneys' fees incurred by Landlord by reason of Tenant's
failure to pay Rent and/or other charges when due hereunder. Landlord and Tenant
hereby agree that such late charges represent a fair and reasonable estimate of
the cost that Landlord will incur by reason of Tenant's late payment and shall
not be construed as a penalty. Landlord's acceptance of such late charges shall
not constitute a waiver of Tenant's default with respect to such overdue amount
or estop Landlord from exercising any of the other rights and remedies granted
under this Lease.
Initials: Landlord _____ Tenant _____
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7. SECURITY DEPOSIT
Intentionally omitted.
8. POSSESSION
(a) Tenant's Right of Possession. Subject to Paragraph 8(b). Tenant shall
be entitled to possession of the Premises upon commencement of the Term.
(b) Delay in Delivering Possession. If for any reason whatsoever, Landlord
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date, this Lease shall not be void or avoidable, nor shall
Landlord, or Landlord's agents, advisors, employees, partners, shareholders,
directors, invitees, or independent contractors (collectively, "Landlord's
Agents"), be liable to Tenant for any loss or damage resulting therefrom. Tenant
shall not be liable for Rent until Landlord delivers possession of the Premises
to Tenant. The Expiration Date shall be extended by the same number of days that
Tenant's possession of the Premises was delayed beyond the Estimated
Commencement Date.
9. USE OF PREMISES
(a) Permitted Use. The use of the Premises by Tenant and Tenant's agents,
advisors, employees, partners, shareholders, directors, invitees, or independent
contractors (collectively, "Tenant's Agents"), shall be solely for the Permitted
Use specified in the Basic Lease Information and for no other use. Tenant shall
not permit any objectionable or unpleasant odor, smoke, dust, gas, noise or
vibration to emanate from or near the Premises. The Premises shall not be used
to create any nuisance or trespass, for any illegal purpose, for any purpose not
permitted by Laws, for any purpose that would invalidate the insurance or
increase the premiums for insurance on the Premises, the Building or the Project
or for any purpose or in any manner that would interfere with other tenants' use
or occupancy of the Project. Tenant agrees to pay to Landlord, as Additional
Rent, any increases in premiums on policies resulting from Tenant's Permitted
Use or any other use or action by Tenant or Tenant's Agents which increases
Landlord's premiums or requires additional coverages by Landlord to insure the
Premises. Tenant agrees not to overload the floor(s) of the Building.
(b) Compliance with Governmental Regulations and Private Restrictions.
Tenant and Tenant's Agents shall, at Tenant's expense, faithfully observe and
comply with (1) all municipal, state and federal laws, statutes, codes, rules,
regulations, ordinances, requirements, and orders (collectively, "Laws"), now in
force or which may hereafter be in force pertaining to the Premises or Tenant's
use of the Premises, the Building or the Project, including without limitation,
any Laws requiring installation of fire sprinkler systems, seismic reinforcement
and related alterations, and removal of asbestos, whether substantial in cost or
otherwise, provided, however, that except as provided in Paragraph 9(c) below,
Tenant shall not be required to make or, except as provided in Paragraph 4
above, pay for, structural changes to the Premises or the Building not related
to Tenant's specific use of the Premises unless the requirement for such changes
is imposed as a result of any improvements or additions made or proposed to be
made at Tenant's request; (2) all recorded covenants, conditions, and
restrictions affecting the Project ("Private Restrictions") now in force or
which may hereafter be in force, including, without limitation the Declaration
of Covenants, Conditions and Restrictions described as Lots 1 to 15 inclusive,
Tract 4454, filed August 25, 1980, in Book 120 of Maps Page 69, in the Official
Records of Alameda County; and (3) any and all rules and regulations set forth
in Exhibit D and any other rules and regulations now or hereafter promulgated by
Landlord related to parking or the operation of the Premises, the Building
and/or the Project (collectively, the "Rules and Regulations"). The judgement of
any court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any such
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Laws or Private Restrictions, shall be conclusive of that fact as between
Landlord and Tenant.
(c) Compliance with Americans with Disabilities Act. Landlord and Tenant
hereby agree and acknowledge that the Premises, the Building and/or the Project
may be subject to, among other Laws, the requirements of the Americans with
Disabilities Act, a federal law codified at 42 U.S.C 12101 et seq. including,
but not limited to Title III thereof, and all regulations and guidelines related
thereto, together with all laws, rules, regulations, ordinances, codes and
statutes now or hereafter enacted by local or state agencies having jurisdiction
thereof, including all requirements of Title 24 of the State of California, as
the same may be in effect on the date of this Lease and may be hereafter
modified, amended or supplemented (collectively, the "ADA"). Any Tenant
Improvements to be constructed hereunder shall be in compliance with the
requirements of the ADA, and all costs incurred for purposes of compliance
therewith shall be a part of and included in the costs of the Tenant
Improvements. Tenant shall be solely responsible for conducting its own
independent investigation of this matter and for ensuring that the design of all
Tenant Improvements strictly complies with all requirements of the ADA. Subject
to reimbursement pursuant to Paragraph 4 above, if any barrier removal work or
other work is required to the Building, the Common Areas or the Project under
the ADA, then such work shall be the responsibility of Landlord; provided, if
such work is required under the ADA as a result of Tenant's use of the Premises
or any work or Alteration (as hereinafter defined) made to the Premises by or on
behalf of Tenant, then such work shall be performed by Landlord at the sole cost
and expense of Tenant. Except as otherwise expressly provided in this provision,
Tenant shall be responsible at its sole cost and expense for fully and
faithfully complying with all applicable requirements of the ADA, including,
without limitation, not discriminating against any disabled persons in the
operation of Tenant's business in our about the Premises, and offering or
otherwise providing auxiliary aids and services as, and when, required by the
ADA. Within ten (10) days after receipt, Tenant shall advise Landlord in
writing, and provide Landlord with copies of (as applicable), any notices
alleging violation of the ADA relating to any portion of the Premises, the
Building or the Project; any claims made or threatened orally or in writing
regarding noncompliance with ADA and relating to any portion of the Premises,
the Building, or the Project; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises, the Building or the Project. Tenant
shall and hereby agrees to protect, defend (with counsel acceptable to Landlord)
and hold Landlord and Landlord's Agents harmless and indemnify Landlord and
Landlord's Agents from and against all liabilities, damages, claims, losses,
penalties, judgments, charges and expenses (including attorney's fees, costs of
court and expenses necessary in the prosecution or defense of any litigation
including the enforcement of this provision) arising from or in any way related
to, directly or indirectly, Tenant's or Tenant's Agents' violation or alleged
violation of the ADA. Tenant agrees that the obligation of Tenant herein shall
survive the expiration or earlier termination of this Lease.
10. ACCEPTANCE OF PREMISES
By entry hereunder, Tenant accepts the Premises as suitable for Tenant's
intended use and as being in good and sanitary operating order, condition and
repair, AS IS, and without representation or warranty by Landlord as to the
condition, use or occupancy which may be made thereof. Any exceptions to the
foregoing must be by written agreement executed by Landlord and Tenant.
Notwithstanding the foregoing, Landlord shall deliver the Premises to Tenant
with all mechanical systems in good working condition. Tenant shall not be
responsible for any repairs of such systems during the first sixty (60) days of
the initial Lease Term. After such sixty (60) day period Tenant shall maintain
such systems as stated in Paragraph 13 of this Lease.
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11. SURRENDER
Tenant agrees that on the last day of the Term, or on the sooner
termination of this Lease, Tenant shall surrender the Premises to Landlord (a)
in good condition and repair (damage by acts of God, fire, and normal wear and
tear excepted), but with all interior walls painted or cleaned so they appear
painted, any carpets cleaned, all floors cleaned and waxed, all non-working
light bulbs and ballasts replaced and all roll-up doors and plumbing fixtures in
good condition and working order, and (b) otherwise in accordance with Paragraph
32(h). Normal wear and tear shall not include any damage or deterioration to the
floors of the Premises arising from the use of forklifts in, on or about the
Premises (including, without limitation, any marks or stains on any portion of
the floors), and any damage or deterioration that would have been prevented by
proper maintenance by Tenant, or Tenant otherwise performing all of its
obligations under this Lease. On or before the expiration or sooner termination
of this Lease, (i) Tenant shall remove all of Tenant's Property (as hereinafter
defined) and Tenant's signage from the Premises, the Building and the Project
and repair any damage caused by such removal, and (ii) Landlord may, by notice
to Tenant given not later than ninety (90) days prior to the Expiration Date
(except in the event of a termination of this Lease prior to the scheduled
Expiration Date, in which event no advance notice shall be required), require
Tenant at Tenant's expense to remove any or all Alterations and/or the initial
Tenant Improvements constructed and installed pursuant to Exhibit B hereto, and
to repair any damage caused by such removal. Any of Tenant's property not so
removed by Tenant as required herein shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant's expense, and Tenant
waives all claims against Landlord for any damages resulting from Landlord's
retention and disposition of such property; provided, however, that Tenant shall
remain liable to Landlord for all costs incurred in storing and disposing of
such abandoned property of Tenant. All Tenant Improvements and Alterations
except those which Landlord requires Tenant to remove shall remain in the
Premises as the property of Landlord. If the Premises are not surrendered at the
end of the Term or sooner termination of this Lease, and in accordance with the
provisions of this Paragraph 11 and Paragraph 32(b) below, Tenant shall continue
to be responsible for the payment of Rent (as the same may be increased pursuant
to Paragraph 35 below) until the Premises are so surrendered in accordance with
said Paragraphs, and Tenant shall indemnify, defend, and hold Landlord harmless
from and against any and all loss or liability resulting from delay by Tenant in
so surrendering the Premises including, without limitation, any loss or
liability resulting from any claim against Landlord made by any succeeding
tenant or prospective tenant founded on or resulting from such delay and losses
to Landlord due to lost opportunities to lease any portion of the Premises to
any such succeeding tenant or prospective tenant, together with, in each case,
actual attorneys' fees and costs.
12. ALTERATIONS AND ADDITIONS
(a) Tenant shall not make, or permit to be made, any alteration, addition
or improvement (hereinafter referred to individually as an "Alteration" and
collectively as the "Alterations") to the Premises or any part thereof without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld; provided, however, that Landlord shall have the right in its sole and
absolute discretion to consent or to withhold its consent to any Alteration
which affects the structural portions of the Premises, the Building or the
Project or the Systems serving the Premises, the Building and/or the Project or
any portion thereof.
(b) Any Alteration to the Premises shall be at Tenant's sole cost and
expense, in compliance with all applicable Laws and all requirements requested
by Landlord, including, without limitation, the requirements of any insurer
providing coverage for the Premises or the Project or any part thereof, and in
accordance with plans and specifications approved in writing by Landlord, and
shall be constructed and installed by a contractor approved in writing by
Landlord. As further condition to giving consent,
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Landlord may require Tenant to provide Landlord, at Tenant's sole cost and
expense, a payment and performance bond in form acceptable to Landlord, in a
principal amount not less than one and one half times the estimated costs of
such Alterations, to ensure Landlord against any liability for mechanic's and
materialmen's liens and to ensure completion of work. Before Alterations may
begin, valid building permits or other permits or licenses required must be
furnished to Landlord, and, once the Alterations begin, Tenant will diligently
and continuously pursue their completion. Landlord may monitor construction of
the Alterations and Tenant shall reimburse Landlord from its costs (including,
without limitation, the costs of any construction manager retained by Landlord)
in reviewing plans and documents and in monitoring construction. Tenant shall
maintain during the course of construction, at its sole cost and expense,
builders' risk insurance for the amount of the completed value of the
Alterations on an all-risk non-reporting form covering all improvements under
construction, including building materials, and other insurance in amounts and
against such risks as Landlord shall reasonably require in connection with the
Alterations. In addition to and without limitation on the generality of the
foregoing, Tenant shall ensure that its contractor(s) procure and maintain in
full force and effect during the course of construction a "broad form"
commercial general liability and property damage policy of insurance naming
Landlord, Tenant and Landlord's lenders as additional insureds. The minimum
limit of coverage of the aforesaid policy shall be in the amount of not less
than Three Million Dollars ($3,000,000.00) for injury or death of one person in
any one accident or occurrence and in the amount of not less than Three Million
dollars ($3,000,000.00) for injury or death of one more than one person in any
one accident or occurrence, and shall contain a severability of interest clause
or a cross liability endorsement. Such insurance shall further insure Landlord
and Tenant against liability for property damage of at least One Million Dollars
($1,000,000.00).
(c) All Alterations, including, but not limited to, heating, lighting,
electrical, air conditioning, fixed partitioning, drapery, wall covering and
panelling, built-in cabinet work and carpeting installations made by Tenant,
together with all property that has become an integral part of the Premises or
the Building, shall at once be and become the property of Landlord, and shall
not be deemed trade fixtures or Tenant's Property. If requested by Landlord,
Tenant will pay, prior to the commencement of construction, an amount determined
by Landlord necessary to cover the costs of demolishing such Alterations and/or
the cost of returning the Premises and the Building to its condition prior to
such Alterations.
(d) No private telephone systems and/or other related computer or
telecommunications equipment or lines may be installed without Landlord's prior
written consent. If Landlord gives such consent, all equipment must be installed
within the Premises and, at the request of Landlord made at any time prior to
the expiration of the Term, removed upon the expiration or sooner termination of
this Lease and the Premises restored to the same condition as before such
installation.
(e) Notwithstanding anything herein to the contrary, before installing any
equipment or lights which generate an undue amount of heat in the Premises, or
if Tenant plans to use any high power usage equipment in the Premises, Tenant
shall obtain the written permission of Landlord. Landlord may refuse to grant
such permission unless Tenant agrees to pay the costs to Landlord for
installation of supplementary air conditioning capacity or electrical systems
necessitated by such equipment.
(f) Tenant agrees not to proceed to make any Alterations, notwithstanding
consent from Landlord to do so, until Tenant notifies Landlord in writing of the
date Tenant desires to commence construction or installation of such Alterations
and Landlord has approved such date in writing, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work.
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13. MAINTENANCE AND REPAIRS OF PREMISES
(a) Maintenance by Tenant. Throughout the Term, Tenant shall, at its sole
expense, (1) keep and maintain in good order and condition the Premises, and
repair and replace every part thereof, including glass, windows, window frames,
window casements, skylights, interior and exterior doors, door frames and door
closers, interior lighting (including, without limitation, light bulbs and
ballasts), the plumbing and electrical systems exclusively serving the Premises,
all communications systems serving the Premises, Tenant's signage, interior
demising walls and partitions, equipment, interior painting and interior walls
and floors, and the roll-up doors, ramps and dock equipment, including, without
limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights
located in or on the Premises (excepting only those portions of the Building or
the Project to be maintained by Landlord, as provided in Paragraph 13(b) below),
(2) furnish all expendables, including light bulbs, paper goods and soaps, used
in the Premises, and (3) keep and maintain in good order and condition, repair
and replace all of Tenant's security systems in or about or serving the
Premises. Tenant shall not do nor shall Tenant allow Tenant's Agents to do
anything to cause damage, deterioration or unsightliness to the Premises, the
Building or the Project.
(b) Maintenance by Landlord. Subject to the provisions of Paragraphs
13(a), 22 and 23, and further subject to Tenant's obligation under Paragraph 4
to reimburse Landlord, in the form of Additional Rent, for Tenant's
Proportionate Share(s) of the cost and expense of the following items, Landlord
agrees to repair and maintain the following items: the roof coverings (provided
that Tenant installs no additional air conditioning or other equipment on the
roof that damages the roof covering, in which event Tenant shall pay all costs
resulting from the presence of such additional equipment); the Systems serving
the Premises and the Building, excluding the plumbing and electrical systems
exclusively serving the Premises; and the Parking Areas, pavement, landscaping,
sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the
Common Areas. Subject to the provisions of Paragraphs 13(a), 22 and 23,
Landlord, at its own cost and expense, agrees to repair and maintain the
following items: the structural portions of the roof (specifically excluding the
roof coverings), the foundation, the footings, the floor slab, and the load
bearing walls and exterior walls of the Building (excluding any glass and any
routine maintenance, including, without limitation, any painting, sealing,
patching and waterproofing of such walls). Notwithstanding anything in this
Paragraph 13 to the contrary, Landlord shall have the right to either repair or
to require Tenant to repair any damage to any portion of the Premises, the
Building and/or the Project caused by or created due to any act, omission,
negligence or willful misconduct of Tenant or Tenant's Agents and to restore the
Premises, the Building and/or the Project, as applicable, to the condition
existing prior to the occurrence of such damage; provided, however, that in the
event Landlord elects to perform such repair and restoration work, Tenant shall
reimburse Landlord upon demand for all costs and expenses incurred by Landlord
in connection therewith. Landlord's obligation hereunder to repair and maintain
is subject to the condition precedent that Landlord shall have received written
notice of the need for such repairs and maintenance and a reasonable time to
perform such repair and maintenance. Tenant shall promptly report in writing to
Landlord any defective condition known to it which Landlord is required to
repair, and failure to so report such defects shall make Tenant responsible to
Landlord for any liability incurred by Landlord by reason of such condition.
(c) Tenant's Waiver of Rights. Tenant hereby expressly waives all rights
to make repairs at the expense of Landlord or to terminate this Lease, as
provided for in California Civil Code Sections 1941 and 1942, and 1932(1),
respectively, and any similar or successor statute or law in effect or any
amendment thereof during the Term.
14. LANDLORD'S INSURANCE
Landlord shall purchase and keep in force fire, extended coverage and "all
risk" insurance covering the Building and the Project. Tenant shall, at its sole
cost and
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expense, comply with any and all reasonable requirements pertaining to the
Premises, the Building and the Project of any insurer necessary for the
maintenance of reasonable fire and commercial general liability insurance,
covering the Building and the Project. Landlord, at Tenant's cost, may maintain
"Loss of Rents" insurance, insuring that the Rent will be paid in a timely
manner to Landlord for a period of a least twelve (12) months if the Premises,
the Building or the Project or any portion there of are destroyed or rendered
unusable or inaccessible by any cause insured against under this Lease.
15. TENANT'S INSURANCE
(a) Commercial General Liability Insurance. Tenant shall, at Tenant's
expense, secure and keep in force a "broad form" commercial general liability
insurance and property damage policy covering the Premises, insuring Tenant, and
naming Landlord and its lenders as additional insureds, against any liability
arising out of the ownership, use, occupancy or maintenance of the Premises. The
minimum limit of coverage of such policy shall be in the amount of not less than
Three Million Dollars ($3,000,000.00) for injury or death of one person in any
one accident or occurrence and in the amount of not less than Three Million
dollars ($3,000,000.00) for injury or death of more than one person in any one
accident or occurrence, shall include an extended liability endorsement
providing contractual liability coverage (which shall include coverage for
Tenant's indemnification obligations in this Lease), and shall contain a
severability of interest clause or a cross liability endorsement. Such insurance
shall further insure Landlord and Tenant against liability for property damage
of at least Three Million Dollars ($3,000,000.00). Landlord may from time to
time require reasonable increases in any such limits if Landlord believes that
additional coverage is necessary or desirable. The limit of any insurance shall
not limit the liability of Tenant hereunder. No policy maintained by Tenant
under this Paragraph 15(a) shall contain a deductible greater than two thousand
five hundred dollars ($2,500.00). No policy shall be cancelable or subject to
reduction of coverage without thirty (30) days prior written notice to Landlord,
and loss payable clauses shall be subject to Landlord's approval. Such policies
of insurance shall be issued as primary policies and not contributing with or in
excess of coverage that Landlord may carry, by an insurance company authorized
to do business in the State of California for the issuance of such type of
insurance coverage and rated A:XIII or better in Best's Key Rating Guide.
(b) Personal Property Insurance. Tenant shall maintain in full force and
effect on all of its personal property, furniture, furnishings, trade or
business fixtures and equipment (collectively, "Tenant's Property") on the
Premises, a policy or policies of fire and extended coverage insurance with
standard coverage endorsement to the extent of the full replacement cost
thereof. No such policy shall contain a deductible greater than two thousand
five hundred dollars ($2,500.00). During the term of the Lease the proceeds from
any such policy or policies of insurance shall be used for the repair or
replacement of the fixtures and equipment so insured. Landlord shall have no
interest in the insurance upon Tenant's equipment and fixtures and will sign all
documents reasonably necessary in connection with the settlement of any claim or
loss by Tenant. Landlord will not carry insurance on Tenant's possessions.
(c) Worker's Compensation Insurance; Employer's Liability Insurance.
Tenant shall, at Tenant's expense, maintain in full force and effect worker's
compensation insurance with not less than the minimum limits required by law,
and employer's liability insurance with a minimum limit of coverage of One
Million Dollars ($1,000,000).
(d) Evidence of Coverage. Tenant shall deliver to Landlord certificates of
insurance and true and complete copies of any and all endorsements required
herein for all insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. Tenant shall, at least thirty (30)
days prior to expiration of each policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after thirty (30) days prior written notice to Landlord and
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the other parties named as additional insureds as required in this Lease (except
for cancellation for nonpayment of premium, in which event cancellation shall
not take effect until at least ten (10) days notice has been given to Landlord).
16. INDEMNIFICATION
(a) Of Landlord. Tenant shall indemnify and hold harmless Landlord,
Landlord's investment advisor and agent, Allegis Realty Investors LLC, and
Landlord's Agents against and from any and all claims, liabilities, judgments,
costs, demands, causes of action and expenses (including, without limitation,
reasonable attorney's fees) arising from (1) the use of the Premises, the
Building or the Project by Tenant or Tenant's Agents, or from any activity done,
permitted or suffered by Tenant or Tenant's Agents in or about the Premises, the
Building or the Project, and (2) any act, neglect, fault, willful misconduct or
omission of Tenant or Tenant's Agents, or from any breach or default in the
terms of this Lease by Tenant or Tenant's Agents, and (3) any action or
proceeding brought on account of any matter items (1) or (2). If any action or
proceeding is brought against Landlord by reason of any such claim, upon notice
from Landlord, Tenant shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord. As a material part of the consideration to
Landlord, Tenant hereby releases Landlord and Landlord's Agents from
responsibility for, waives it entire claim of recovery for and assumes all risk
of (i) damage to property or injury to persons in or about the Premises, the
Building or the Project from any cause whatsoever (except that which is caused
by the sole active gross negligence or willful misconduct of Landlord or
Landlord's Agents or by the failure of Landlord to observe any of the terms and
conditions of this Lease, if such failure has persisted for an unreasonable
period of time after written notice of such failure), or (ii) loss resulting
from business interruption or loss of income at the Premises. The obligations of
Tenant under this Paragraph 16 shall survive any termination of this Lease.
(b) No Impairment of Insurance. The foregoing indemnity shall not relieve
any insurance carrier of its obligations under any policies required to be
carried by either party pursuant to this Lease, to the extent that such policies
cover the peril or occurrence that results in the claim that is subject to the
foregoing indemnity.
17. SUBROGATION
Landlord and Tenant hereby mutually waive any claim against the other and
its Agents for any loss or damage to any of their property located on or about
the Premises, the Building or the Project that is caused by or results from
perils covered by property insurance carried by the respective parties, to the
extent of the proceeds of such insurance actually received with respect to such
loss or damage, whether or not due to the negligence of the other party or its
Agents. Because the foregoing waivers will preclude the assignment of any claim
by way of subrogation to an insurance company or any other person, each party
now agrees to immediately give to its insurer written notice of the terms of
these mutual waivers and shall have their insurance policies endorsed to prevent
the invalidation of the insurance coverage because of these waivers. Nothing in
this Paragraph 17 shall relieve a party of liability to the other for failure to
carry insurance required by this Lease.
18. SIGNS
Tenant shall not place or permit to be placed in, upon, or about the
Premises, the Building or the Project any exterior lights, decorations,
balloons, flags, pennants, banners, advertisements or notices, or erect or
install any signs, windows or door lettering, placards, decorations, or
advertising media of any type which can be viewed from the exterior the Premises
without obtaining Landlord's prior written consent or without complying with
Landlord's signage criteria specified on Exhibit E hereto, as the same may be
modified by Landlord from time to time, and with all applicable Laws and will
not conduct, or permit to be conducted, any sale by auction on the Premises or
otherwise
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on the Project. Tenant shall remove any sign, advertisement or notice placed on
the Premises, the Building or the project by Tenant upon the expiration of the
term or sooner termination of this Lease, and Tenant shall repair any damage or
injury to the Premises, the Building or the Project caused thereby, all at
Tenant's expense. If any signs are not removed, or necessary repairs not made,
Landlord shall have the right to remove the signs and repair any damage or
injury to the Premises, the Building or the Project at Tenant's sole cost and
expense.
19. FREE FROM LIENS
Tenant shall keep the Premises, the Building and the Project free from any
liens arising out of any work performed, material furnished or obligations
incurred by or for Tenant. In the event that Tenant shall not, within ten (10)
days following the imposition of any such lien, cause the lien to be released of
record by payment or posting of a proper bond, Landlord shall have in addition
to all other remedies provided herein and by law the right but not the
obligation to cause same to be released by such means as it shall deem proper,
including payment of the claim giving rise to such lien. All such sums paid by
Landlord and all expenses incurred by it in connection therewith (including,
without limitation, attorneys' fees) shall be payable to Landlord by tenant upon
demand. Landlord shall have the right at all times to post and keep posted on
the Premises any notices permitted or required by law or that Landlord shall
deem proper for the protection of Landlord, the Premises, the Building and the
Project, from mechanics' and materialmens' liens. Tenant shall give to Landlord
at least five (5) business days' prior written notice of commencement of any
repair or construction on the Premises.
20. ENTRY BY LANDLORD
Tenant shall permit Landlord and Landlord's agents to enter into and upon
the Premises at all reasonable times, upon reasonable notice (except in the case
of an emergency, for which no notice shall be required), and subject to Tenant's
reasonable security arrangements, for the purpose of inspecting the same or
showing the Premises to prospective purchasers, lenders or tenants to alter,
improve, maintain and repair the Premises or the Building as required or
permitted of Landlord under the terms hereof, or for any other business purpose,
without any rebate of rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned (except for
actual damages resulting from the sole active gross negligence or willful
misconduct of Landlord); and Tenant shall permit Landlord to post notices of
non-responsibility and ordinary "for sale" or "for lease" signs. No such entry
shall be construed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an eviction of Tenant from the Premises. Landlord may
temporarily close entrances, doors, corridors, elevators or other facilities
without liability to Tenant by reason of such closure in the case of an
emergency and when Landlord otherwise deems such closure necessary.
21. DESTRUCTION AND DAMAGE
(a) If the Premises are damaged by fire or other perils covered by
extended coverage insurance, Landlord shall, at Landlord's option:
(1) In the event of total destruction (which shall mean destruction
or damage in excess of twenty-five (25%) percent of the full insurable value
thereof) of the Premises, elect either to commence promptly to repair and
restore the Premises and prosecute the same diligently to completion, in which
event this Lease shall remain in full force and effect; or not to repair or
restore the Premises, in which event this Lease shall terminate. Landlord shall
give Tenant written notice of its intention within sixty (60) days after the
date (the "Casualty Discovery Date") Landlord obtains actual knowledge of such
destruction. If Landlord elects not to restore the Premises, this Lease shall be
deemed to have terminated as of the date of such total destruction.
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(2) In the event of a partial destruction (which shall mean
destruction or damage to an extent not exceeding twenty-five percent (25%) of
the full insurable value thereof) of the Premises for which Landlord will
receive insurance proceeds sufficient to cover the cost to repair and restore
such partial destruction and, if the damage thereto is such that the Premises
may be substantially repaired or restored to its condition existing immediately
prior to such damage or destruction within one hundred eighty (180) days from
the Casualty Discovery Date, Landlord shall commence and proceed diligently with
the work of repair and restoration, in which event the Lease shall continue in
full force and effect. If such repair and restoration requires longer than one
hundred eighty (180) days or if the insurance proceeds therefor (plus any
amounts Tenant may elect or is obligated to contribute) are not sufficient to
cover the cost of such repair and restoration, Landlord may elect either to so
repair and restore, in which event the Lease shall continue in full force and
effect, or not to repair and restore, in which event the Lease shall terminate.
In either case, Landlord shall give written notice to Tenant of its intention
within sixty (60) days after the Casualty Discovery Date. If Landlord elects not
to restore the Premises, this Lease shall be deemed to have terminated as of the
date of such partial destruction.
(3) Notwithstanding anything to the contrary contained in this
Paragraph, in the event of damage to the Premises occurring during the last
twelve (12) months of the Term, Landlord may elect to terminate this Lease by
written notice of such election given to Tenant within thirty (30) days after
the Casualty Discovery Date.
(b) If the Premises are damaged by any peril not covered by extended
coverage insurance, and the cost to repair such damage exceeds any amount Tenant
may agree to contribute, Landlord may elect either to commence promptly to
repair and restore the Premises and prosecute the same diligently to completion,
in which event this Lease shall remain in full force and effect, or not to
repair or restore the Premises, in which event this Lease shall terminate.
Landlord shall give Tenant written notice of its intention within sixty (60)
days after the Casualty Discovery Date. If Landlord elects not to restore the
Premises, this Lease shall be deemed to have terminated as of the date on which
Tenant surrenders possession of the Premises to Landlord, except that if the
damage to the Premises materially impairs Tenant's ability to continue its
business operation in the Premises, then this Lease shall be deemed to have
terminated as of the date such damage occurred.
(c) Notwithstanding anything to the contrary in this Paragraph 22,
Landlord shall have the option to terminate this Lease, exercisable by notice to
Tenant within sixty (60) days after the Casualty Discovery Date, in each of the
following instances:
(1) If more than twenty five percent (25%) of the full insurable
value of the Building or the Project is destroyed, regardless of whether or not
the Premises are destroyed.
(2) If the Building or the Project or any portion thereof is damaged
or destroyed and the repair and restoration of such damage requires longer than
one hundred eighty (180) days from the Casualty Discovery Date.
(3) If the Building or the Project or any portion thereof is damaged
or destroyed and the insurance proceeds therefor are not sufficient to cover the
costs of repair and restoration.
(4) If the Building or the Project or any portion thereof is damaged
or destroyed during the last twelve (12) months of the Term.
(d) In the event of repair and restoration as herein provided, the monthly
installments of Base Rent shall be abated proportionately in the ratio which
Tenant's use of the Premises is impaired during the period of such repair or
restoration, but only to the extent of rental abatement insurance proceeds
received by Landlord; provided, however,
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that Tenant shall not be entitled to such abatement to the extent that such
damage or destruction resulted from the acts or inaction of Tenant or Tenant's
Agents. Except as expressly provided in the immediately preceding sentence with
respect to abatement of Base Rent, Tenant shall have no claim against Landlord
for, and hereby releases Landlord and Landlord's Agents from responsibility for
and waives its entire claim of recovery for any cost, loss or expense suffered
or incurred by Tenant as a result of any damage to or destruction of the
Premises, the Building or the Project or the repair or restoration thereof,
including, without limitation, any cost, loss or expense resulting from any loss
of use of the whole or any part of the Premises, the Building or the Project
and/or any inconvenience or annoyance occasioned by such damage, repair or
restoration.
(e) If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall repair or restore only the initial tenant improvements,
if any, constructed by landlord in the Premises pursuant to the terms of this
Lease, substantially to their condition existing immediately prior to the
occurrence of the damage or destruction; and Tenant shall promptly repair and
restore, at Tenant's expense, Tenant's Alterations which were not constructed by
Landlord.
(f) Tenant hereby waives the provisions of California Civil Code Section
1932(2) and Section 1933(4) which permit termination of a lease upon destruction
of the leased premises, and the provisions of any similar law now or hereinafter
in effect, and the provisions of Paragraph 22 shall govern exclusively in case
of such destruction.
22. CONDEMNATION
(a) If twenty-five percent (25%) or more of either the Premises, the
Building or the Project or the parking areas for the Building or the Project is
taken for any public or quasi-public purpose by any lawful governmental power or
authority, by exercise of the right of appropriation, inverse condemnation,
condemnation or eminent domain, or sold to prevent such taking (each such event
being referred to as a "Condemnation"), Landlord may, at its option, terminate
this Lease as of the date title vests in the condemning party. If twenty-five
percent (25%) or more of the Premises is taken and if the Premises remaining
after such Condemnation and any repairs by Landlord would be untenantable for
the conduct of Tenant's business operations, Tenant shall have the right to
terminate this Lease as of the date title vests in the condemning party. If
either party elects to terminate this Lease as provided herein, such election
shall be made by written notice to the other party given within thirty (30) days
after the nature and extent of such Condemnation have been finally determined.
If neither Landlord nor Tenant elects to terminate this Lease to the extent
permitted above, Landlord shall promptly proceed to restore the premises, to the
extent of any Condemnation award received by Landlord, to substantially the same
condition as existed prior to such Condemnation, allowing for the reasonable
effects of such Condemnation, and a proportionate abatement shall be made to the
Base Rent corresponding to the time during which, and to the portion of the
floor area of the Premises (adjusted for any increase thereto resulting from any
reconstruction) of which Tenant is deprived on account of such Condemnation and
restoration, as reasonably determined by Landlord. Except as expressly provided
in the immediately preceding sentence with respect to abatement of Base Rent,
Tenant shall have no claim against Landlord for, and hereby releases Landlord
and Landlord's Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by Tenant as a
result of any Condemnation or the repair or restoration of the Premises, the
Building or the Project or the parking areas for the Building or the Project
following such Condemnation, including, without limitation, any cost, loss or
expense resulting from any loss of use of the whole or any part of the Premises,
the Building, the Project or the parking areas and/or any inconvenience or
annoyance occasioned by such Condemnation, repair or restoration. The provisions
of California Code of Civil Procedure Section 1265.130, which allows either
party to petition the Superior Court to terminate the lease in the event of a
partial taking of the
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Premises, the Building or the Project or the parking areas for the Building or
the Project, and any other applicable law now or hereafter enacted, are hereby
waived by Tenant.
(b) Landlord shall be entitled to any and all compensation, damages,
income, rent, awards, or any interest therein whatsoever which may be paid or
made in connection with any Condemnation, and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease or otherwise;
provided, however, that Tenant shall be entitled to receive any award separately
allocated by the condemning authority to Tenant for Tenant's relocation expenses
or the value of Tenant's Property (specifically excluding fixtures, Alterations
and other components of the Premises which under this Lease or by law are or at
the expiration of the Term will become the property of Landlord), provided that
such award does not reduce any award otherwise allocable or payable to Landlord.
23. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not voluntarily or by operation of law, (1) mortgage,
pledge, hypothecate or encumber this Lease or any interest herein, (2) assign or
transfer this Lease or any interest herein, sublease the Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees and invitees of Tenant excepted) to occupy or use the
Premises, or any portion thereof, without first obtaining the written consent of
Landlord, which consent shall not be withheld unreasonably provided that (i)
Tenant is not then in Default under this Lease nor is any event then occurring
which with the giving of notice or the passage of time, or both, would
constitute a Default hereunder, and (ii) Tenant has not previously assigned or
transferred this Lease or any interest herein or subleased the Premises or any
part thereof. When Tenant requests Landlord's consent to such assignment or
subletting, it shall notify Landlord in writing of the name and address of the
proposed assignee or subtenant and the nature and character of the business of
the proposed assignee or subtenant and shall provide current and prior financial
statements for the proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles. Tenant shall also provide landlord
with a copy of the proposed sublease or assignment agreement, including all
material terms and conditions thereof. Landlord shall have the option, to be
exercised within thirty (30) days of receipt of the foregoing, to (1) terminate
this Lease as of the commencement date stated in the proposed sublease or
assignment, (2) sublease or take and assignment, as the case may be, from Tenant
of the interest, or any portion thereof, in this Lease and/or the Premises that
Tenant proposes to assign or sublease, on the same terms and conditions as
stated in the proposed sublet or assignment agreement, (3) consent to the
proposed assignment or sublease, or (4) refuse to consent to the proposed
assignment or sublease, providing that such consent shall not be unreasonably
withheld so long as Tenant is not then in Default under this Lease nor is any
event then occurring which with the giving of notice or the passage of time, or
both, would constitute a default hereunder. In the event Landlord elects to
terminate this Lease or sublease or take an assignment from Tenant of the
interest, or portion thereof, in the Lease and/or the Premises that Tenant
proposes to assign or sublease as provided in the foregoing clauses (1) and (2),
respectively, then Landlord shall have the additional right to negotiate
directly with Tenant's proposed assignee or subtenant and to enter into a direct
lease or occupancy agreement with such party on such terms as shall be
acceptable to Landlord in its sole and absolute discretion, and Tenant hereby
waives any claims against Landlord related thereto, including, without
limitation, any claims for any compensation or profit related to such lease or
occupancy agreement.
(b) Without otherwise limiting the criteria upon which Landlord may
withhold its consent, Landlord shall be entitled to consider all reasonable
criteria including, but not limited to, the following: (1) whether or not the
proposed subtenant or assignee is engaged in a business which, and the use of
the Premises will be in a manner which, is in keeping with the then character
and nature of all other tenancies in the Project, (2) whether the use to be made
of the Premises by the proposed subtenant or assignee will conflict with any
so-called "exclusive" use then in favor of any other tenant of the
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Building or the Project, and whether such use would be prohibited by any other
portion of this Lease, including, but not limited to, any rules and regulations
then in effect, or under applicable Laws, and whether such use imposes a greater
load upon the Premises and the Building and Project services then imposed by
Tenant, (3) the business reputation of the proposed individuals who will be
managing and operating the business operations of the assignee or subtenant, and
the long-term financial and competitive business prospects of the proposed
assignee or subtenant, and (4) the creditworthiness and financial stability of
the proposed assignee or subtenant in light of the responsibilities involved. In
any event, Landlord may withhold its consent to any assignment or sublease, if
(i) the actual use proposed to be conducted in the Premises or portion thereof
conflicts with the provisions of Paragraph 8(a) or (b) above or with any other
lease which restricts the use to which any space in the Building or the Project
may be put, or (ii) the proposed assignment or sublease requires alterations,
improvements or additions to the Premises or portions thereof.
(c) If Landlord approves an assignment or subletting as herein provided,
Tenant shall pay to Landlord, as additional rent 75% of the difference, if any
between (1) the Base Rent plus Additional Rent allocable to that part of the
Premises affected by such assignment or sublease pursuant to the provisions of
this Lease, and (2) the rent and any additional rent payable by the assignee or
sublessee to Tenant, less reasonable and customary market-based leasing
commissions, if any, incurred by Tenant in connection with such assignment or
sublease. The assignment or sublease agreement, as the case may be, after
approval by Landlord, shall not be amended without Landlord's prior written
consent, and shall contain a provision directing the assignee or subtenant to
pay the rent and other sums due thereunder directly to Landlord upon receiving
written notice from Landlord that Tenant is in default under this Lease with
respect to the payment of Rent. In the event that, notwithstanding the giving of
such notice, Tenant collects any rent or other sums from assignee or subtenant,
then Tenant shall hold such sums in trust for the benefit of Landlord and shall
immediately forward the same to Landlord. Landlord's collection of such rent and
other sums shall not constitute an acceptance by Landlord of attornment by such
assignee or subtenant. A consent to one assignment, subletting, occupation or
use shall not be deemed to be a consent to any other or subsequent assignment,
subletting, occupation or use, and consent to any assignment or subletting shall
in no way relieve Tenant of any liability under this Lease. Any assignment or
subletting without Landlord's consent shall be void, and shall, at the option of
Landlord, constitute a Default under this Lease.
(d) Notwithstanding any assignment or subletting, Tenant and any guarantor
or surety of Tenant's obligations under this Lease shall at all times remain
fully responsible and liable for the payment of the Rent and for compliance with
all of Tenant's other obligations under this Lease (regardless of whether
Landlord's approval has been obtained for any such assignment or subletting).
(e) Tenant shall pay Landlord's reasonable fees (including, without
limitation, the fees of Landlord's counsel), incurred in connection with
Landlord's review and processing of documents regarding any proposed assignment
or sublease.
(f) Notwithstanding anything in this Lease to the contrary, in the event
Landlord consents to an assignment or subletting by Tenant in accordance with
the terms of this Paragraph 24, Tenant's assignee or subtenant shall have no
right to further assign this Lease or any interest therein or thereunder or to
further sublease all or any portion of the Premises. In furtherance of the
foregoing, Tenant acknowledges and agrees on behalf of itself and any assignee
or subtenant claiming under it (and any such assignee or subtenant by accepting
such assignment or sublease shall be deemed to acknowledge and agree) that no
sub-subleases or further assignments of this Lease shall be permitted at any
time.
(g) Tenant acknowledges and agrees that the restrictions, conditions and
limitations imposed by this Paragraph 24 on Tenant's ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or any part
thereof, to transfer or assign any right or
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privilege appurtenant to the Premises, or to allow any other person to occupy or
use the Premises or any portion thereof, are, for the purposes of California
Civil Code Section 1951.4, as amended from time to time, and for all other
purposes, reasonable at the time that the Lease was entered into, and shall be
deemed to be reasonable at the time that Tenant seeks to assign or transfer this
Lease or any interest herein, to sublet the Premises or any part thereof, to
transfer or assign any right or privilege appurtenant to the Premises, or to
allow any other person to occupy or use the Premises or any portion thereof.
So long as Tenant delivers to Landlord (1) at least thirty (30) days prior
written notice of its intention to assign or sublease the Premises to any
Related Entity, which notice shall set forth the name of the Related Entity, (2)
a copy of the proposed agreement pursuant to which such assignment or sublease
shall be effectuated, and (3) such other information concerning the Related
Entity as Landlord may reasonably require, including without limitation,
information regarding any change in the proposed use of any portion of the
Premises and any financial information with respect to such Related Entity, and
so long as (i) Landlord approves, in writing of any change in the proposed use
of the subject portion of the Premises and such financial information and (ii)
such Related Entity expressly assumes all of the obligations, duties and
provisions under the Lease and no such assignment shall act as a release of the
originally named Tenant from such obligations, duties and provisions, then
tenant may assign this Lease or sublease any portion of the premises (X) to any
Related Entity, or (Y) in connection with any merger, consolidation or sale of
substantially all of the assets of Tenant, without having to obtain the prior
written consent of Landlord thereto. For purposes of this Lease the term
"Related Entity" shall mean and refer to any corporation or entity which
controls, is controlled by or is under common control with Tenant, as all of
such terms are customarily used in the industry, and with an equal or greater
net worth as Tenant has as of the proposed transfer date.
24. TENANT'S DEFAULT
The occurrence of any one of the following events shall constitute an
event of default on the part of Tenant ("Default"):
(a) The vacation or abandonment of the Premises by Tenant for a period of
ten (10) consecutive days or any vacation or abandonment of the Premises by
Tenant which would cause any insurance policy to be invalidated or otherwise
lapse, or the failure of Tenant to continuously operate Tenant's business in the
Premises, in each of the foregoing cases irrespective of whether or not Tenant
is then in monetary default under this Lease. Tenant agrees to notice and
service of notice as provided for in this Lease and waives any right to any
other or further notice or service of notice which Tenant may have under any
statute or law now or hereafter in effect;
(b) Failure to pay any installment of Rent or any other monies due and
payable hereunder, said failure continuing for a period of three (3) days after
the same is due;
(c) A general assignment by Tenant or any guarantor or surety of Tenant's
obligations hereunder (collectively, "Guarantor") for the benefit of creditors;
(d) The filing of a voluntary petition in bankruptcy by Tenant or any
Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an
arrangement, the filing by or against Tenant or any Guarantor of a petition,
voluntary or involuntary, for reorganization, or the filing of an involuntary
petition by the creditors of Tenant or any Guarantor, said involuntary petition
remaining undischarged for a period of sixty (60) days;
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(e) Receivership, attachment, or other judicial seizure of substantially
all of Tenant's assets on the Premises, such attachment or other seizure
remaining undismissed or undischarged for a period of sixty (60) days after the
levy thereof;
(f) Death or disability of Tenant or any Guarantor, if Tenant or such
Guarantor is a natural person or the failure by Tenant or any Guarantor to
maintain its legal existence, if Tenant or such Guarantor is a corporation,
partnership, limited liability company, trust or other legal entity;
(g) Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment within the time periods
and in the manner required Paragraphs 30 or 31 or 42;
(h) An assignment or sublease, or attempted assignment or sublease, of
this Lease or the Premises by Tenant contrary to the provision of Paragraph 24,
unless such assignment or sublease is expressly conditioned upon Tenant having
received Landlord's consent thereto;
(i) Failure of Tenant to restore the Security Deposit to the amount and
within the time period provided in Paragraph 7 above;
(j) Failure in the performance of any of Tenant's covenants, agreements or
obligations hereunder (except those failures specified as events of Default in
subparagraphs (b), (l) or (m) above or any other subparagraphs of this Paragraph
25, which shall be governed by such other Paragraphs), which failure continues
for ten (10) days after written notice thereof from Landlord to Tenant, provided
that, if Tenant has exercised reasonable diligence to cure such failure and such
failure cannot be cured within such ten (10) day period despite reasonable
diligence, Tenant shall not be in default under this subparagraph so long as
Tenant thereafter diligently and continuously prosecutes the cure to completion
and actually completes such cure within thirty (30) days after the giving of the
aforesaid written notice;
(k) Chronic delinquency by Tenant in the payment of Rent, or any other
periodic payments required to be paid by Tenant under this Lease. "Chronic
delinquency" shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease within three (3) days after
written notice thereof for any three (3) months (consecutive or nonconsecutive)
during any period of twelve (12) months. In the event of a Chronic Delinquency,
in addition to Landlord's other remedies for Default provided in this Lease, at
Landlord's option, Landlord shall have the right to require that Rent be paid by
Tenant quarterly, in advance;
(l) Chronic overuse by Tenant or Tenant's Agents of the number of
undesignated parking spaces set forth in the Basic Lease Information. "Chronic
Overuse" shall mean use by Tenant or Tenant's Agents of a number of parking
spaces greater than the number of parking spaces set forth in the Basic Lease
Information more than three (3) times during the Term after written notice by
Landlord;
(m) Any insurance required to be maintained by Tenant pursuant to this
Lease shall be canceled or terminated or shall expire or be reduced or
materially changed, except as permitted in this Lease; and
(n) Any failure by Tenant to discharge any lien or encumbrance placed on
the Project or any part thereof in violation of this Lease within ten (10) days
after the date such lien or encumbrance is filed or recorded against the Project
or any part thereof.
Tenant agrees that any notice given by Landlord pursuant to Paragraph
25(j), (k) or (l) above shall satisfy the requirements for notice under
California Code of Civil Procedure Section 1161, and Landlord shall not be
required to give any additional notice in order to be entitled to commence an
unlawful detainer proceeding.
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(o) Any default by any Guarantor under any guaranty of this Lease
("Guaranty"), or any Guaranty, shall, at any time after its respective execution
and delivery and for any reason, cease to be in full force and effect or be
declared null and void, or the validity or enforceability thereof shall be
contested by any Guarantor or any stockholder, partner or member of any
Guarantor, or any Guarantor shall deny that it has any or further liability or
obligation under any Guaranty to which it is a party.
25. LANDLORD'S REMEDIES
(a) Termination. In the event of any Default by Tenant, then in addition
to any other remedies available to Landlord at law or in equity and under this
Lease, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so terminate this Lease
then Landlord may recover from Tenant:
(1) the worth at the time of award of any unpaid Rent and any other
sums due and payable which have been earned at the time of such termination;
plus
(2) the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable which would have been earned after
termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable for the balance of the term of this
Lease after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligation under
this Lease or which in the ordinary course would be likely to result therefrom,
including, without limitation, (A) any costs or expenses incurred by Landlord
(1) in retaking possession of the Premises; (2) in maintaining, repairing,
preserving, restoring, replacing, cleaning, altering, remodeling or
rehabilitating the Premises or any affected portions of the Building or the
Project, including such actions undertaken in connection with the reletting or
attempted reletting of the Premises to a new tenant or tenants; (3) for leasing
commissions, advertising costs and other expenses of reletting the Premises; or
(4) in carrying the Premises, including taxes, insurance premiums, utilities and
security precautions; (B) any unearned brokerage commissions paid in connection
with this Lease; (C) reimbursement of any previously waived or abated Base Rent
or Additional Rent or any free rent or reduced rental rate granted hereunder;
and (D) any concession made or paid by Landlord to the benefit of Tenant in
consideration of this Lease including, but not limited to, any moving
allowances, contributions, payments or loans by Landlord for tenant improvements
or build-out allowances (including without limitation, any unamortized portion
of the Tenant Improvement Allowance (such Tenant Improvement Allowance to be
amortized over the Term in the manner reasonably determined by Landlord), if
any, and any outstanding balance (principal and accrued interest) of the Tenant
Improvement Loan, if any), or assumptions by Landlord of any of Tenant's
previous lease obligations; plus
(5) such reasonable attorneys' fees incurred by Landlord as a result
of a Default, and costs in the event suit is filed by Landlord to enforce such
remedy; and plus
(6) at Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable law.
As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above,
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the "worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award,
plus one percent (1%). Tenant waives redemption or relief from forfeiture under
California Code of Civil Procedure Sections 1174 and 1179, or under any other
pertinent present or future Law, in the event Tenant is evicted or Landlord
takes possession of the Premises by reason of any Default of Tenant hereunder.
(b) Continuation of Lease. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's
Default and abandonment and recover Rent as it becomes due, provided Tenant has
the right to sublet or assign, subject only to reasonable limitations). In
addition, Landlord shall not be liable in any way whatsoever for its failure or
refusal to relet the Premises. For purposes of this Paragraph 26(b), the
following acts by Landlord will not constitute the termination of Tenant's right
to possession of the Premises:
(1) Acts of maintenance or preservation or efforts to relet the
Premises, including but not limited to, alterations, remodeling, redecorating,
repairs, replacements and/or painting as Landlord shall consider advisable for
the purpose of reletting the Premises or any part thereof; or
(2) The appointment of a receiver upon the initiative of Landlord to
protect Landlord's interest under this Lease or in the Premises.
(c) Re-entry. the event of any Default by Tenant, Landlord shall also have
the right, with or without terminating this Lease, in compliance with applicable
law, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the coat of and for the account of Tenant.
(d) Reletting. In the event of the abandonment of the Premises by Tenant
or in the event that Landlord shall elect to re-enter as provided in Paragraph
26(c) or shall take possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease as provided in Paragraph 26(a), Landlord may from time to
time, without terminating this Lease, relet the Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises in Landlord's sole discretion.
In the event that Landlord shall elect to so relet, then rentals received by
Landlord from such reletting shall be applied in the following order: (1) to
reasonable attorneys' fees incurred by Landlord as a result of a Default and
costs in the event suit is filed by Landlord to enforce such remedies; (2) to
the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; (3) to the payment of any costs of such reletting; (4) to the payment
of the costs of any alterations and repairs to the Premises; (5) to the payment
of Rent due and unpaid hereunder; and (6) the residue, if any, shall be held by
Landlord and applied in payment of future Rent and other sums payable by Tenant
hereunder as the same may become due and payable hereunder. Should that portion
of such rentals received from such reletting during any month, which is applied
to the payment of Rent hereunder, be less than the Rent payable during the month
by Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
(e) Termination. No re-entry or taking of possession of the Premises by
Landlord pursuant this Paragraph 26 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless to termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting
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without termination by Landlord because of any Default by Tenant, Landlord may
at any time after such reletting elect to terminate this Lease for any such
Default.
(f) Cumulative Remedies. The remedies herein provided are not exclusive
and Landlord shall have any and all other remedies provided herein or by law or
in equity.
(g) No Surrender. No act or conduct of Landlord, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be or
constitute an acceptance of the surrender of the Premises by Tenant prior to the
expiration of the Term, and such acceptance by Landlord of surrender by Tenant
shall only flow from and must be evidenced by a written acknowledgement of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant's estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within five (5) days after
such surrender.
26. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
(a) Without limiting the rights and remedies of Landlord contained in
Paragraph 26 above, if Tenant shall be in Default in the performance of any of
the terms, provisions, covenants or conditions to be performed or complied with
by Tenant pursuant to this Lease, Landlord may at Landlord's option, without any
obligation to do so, and without notice to Tenant perform any such term,
provision, covenant, or condition, or make any such payment and Landlord by
reason of so doing shall not be liable or responsible for any loss or damage
thereby sustained by Tenant or anyone holding under or through Tenant or any of
Tenant's Agents.
(b) Without limiting the rights of Landlord under Paragraph 26(a) above,
Landlord shall have the right at Landlord's option, without any obligation to do
so, to perform any of Tenant's covenants or obligations under this Lease without
notice to Tenant in the case of an emergency, as determined by Landlord in its
sole and absolute judgment, or if Landlord otherwise determines in its sole
discretion that such performance is necessary or desirable for the proper
management and operation of the Building or the Project or for the preservation
of the rights and interests or safety of other tenants of the Building or the
Project.
(c) If Landlord performs any of Tenant's obligations hereunder in
accordance with this Paragraph 26, the full amount of the cost and expense
incurred or the payment so made or the amount of the loss so sustained shall
immediately be owing by Tenant to Landlord, and Tenant shall promptly pay to
Landlord upon demand, as Additional Rent, the full amount thereof with interest
thereon from the date of payment by Landlord at the lower of (1) ten percent
(10%) per annum, or (2) the highest rate permitted by applicable law.
27. ATTORNEY'S FEES
(a) If either party hereto fails to perform any of its obligations under
this Lease or if any dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Lease, then the defaulting
party or the party not prevailing in such dispute, as the case may be, shall pay
any and all costs and expenses incurred by the other party on account of such
default and/or in enforcing or establishing its rights hereunder, including,
without limitation, court costs and reasonable attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Lease shall be recoverable
separately from and in addition to any other amount included in such judgment,
and such attorneys' fees
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obligation is intended to be severable from the other provisions of this Lease
and to survive and not be merged into any such judgment.
(b) Without limiting the generality of Paragraph 27(a) above, if Landlord
utilizes the services of an attorney for the purpose of collecting any Rent due
and unpaid by Tenant of in connection with any other breach of this Lease by
Tenant, Tenant agrees to pay Landlord actual attorneys' fees as determined by
Landlord for such services, regardless of the fact that no legal action may be
commenced or filed by Landlord.
28. TAXES
Tenant shall be liable for and shall pay, prior to delinquency, all taxes
levied against Tenant's Property. If any Alteration installed by Tenant pursuant
to Paragraph 11 or any of Tenant's Property is assessed and taxed with the
Project or Building, Tenant shall pay such taxes to Landlord within (10) days
after delivery to Tenant of a statement therefor.
29. EFFECT OF CONVEYANCE
The term "Landlord" as used in this Lease means, from time to time, the
then current owner of the Building or the Project containing the Premises, so
that, in the event of any sale of the Building or the Project, Landlord shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Landlord hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale, that the
purchaser of the Building or the Project has assumed and agreed to carry out any
and all covenants and obligations of Landlord hereunder.
30. TENANT'S ESTOPPEL CERTIFICATE
From time to time, upon written request of Landlord, Tenant shall execute,
acknowledge and deliver to Landlord or its designee, a written certificate
stating (a) the date this Lease was executed, the Commencement Date of the Term
and the date the Term expires; (b) the date Tenant entered into occupancy of the
Premises; (c) the amount of Rent and the date to which such Rent has been paid;
(d) that this Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way (or, if assigned, modified,
supplemented or amended, specifying the date and terms of any agreement so
affecting this Lease); (e) that this Lease represents the entire agreement
between the parties with respect to Tenant's right to use and occupy the
Premises (or such other agreements, if any); (f) that all obligations under this
Lease to be performed by Landlord as of the date of such certificate have been
satisfied (or specifying those as to which Tenant claims that Landlord has yet
to perform); (g) that all required contributions by Landlord to Tenant on
account of Tenant's improvements have been received (or stating exceptions
thereto); (h) that on such date there exist no defenses or offsets that Tenant
has against the enforcement of this Lease by Landlord (or stating exceptions
thereto); (i) that no Rent or other sum payable by Tenant hereunder has been
paid more than one (1) month in advance (or stating exception thereto); (j) that
security has been deposited with Landlord, stating the original amount thereof
and any increases thereto; and (k) any other matters evidencing the status of
this Lease that may be required either by a lender making a loan to Landlord to
be secured by a deed of trust covering the Building or the Project or by a
purchaser of the Building or the Project. Any such certificate delivered
pursuant to this Paragraph 30 may be relied upon by a prospective purchaser of
Landlord's interest or a mortgagee of Landlord's interest or assignee of any
mortgage upon Landlord's interest in the Premises. If Tenant shall fail to
provide such certificate within ten (l0) days of receipt by Tenant of a written
request by Landlord as herein provided, such failure shall, at Landlord's
election, constitute a Default under this Lease, and Tenant shall be deemed to
have given such certificates as above provided without modification and shall be
deemed to have admitted the accuracy of any information supplied by Landlord to
a prospective purchaser or mortgagee.
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31. SUBORDINATION
Landlord shall have the right to cause this Lease to be and remain subject
and subordinate to any and all mortgages, deeds of trust and ground leases, if
any ("Encumbrances") that are now or may hereafter be executed covering the
Premises, or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided only, that in the event of termination of any such ground
lease or upon foreclosure of any such mortgage or deed of trust, so long as
Tenant is not in default, the holder thereof ("Holder") shall agree to recognize
Tenant's rights under this Lease as long as Tenant shall pay the Rent and
observe and perform all the provisions of this Lease to be observed and
performed by Tenant. Within ten (10) days after Landlord's written request,
Tenant shall execute, acknowledge and deliver any and all reasonable documents
required by Landlord or the Holder to effectuate such subordination. If Tenant
fails to do so, such failure shall constitute a Default by Tenant under this
Lease. Notwithstanding anything to the contrary set forth in this Paragraph 31,
Tenant hereby attorns and agrees to attorn to any person or entity purchasing or
otherwise acquiring the Premises at any sale or other proceeding or pursuant to
the exercise of any other rights, powers or remedies under such Encumbrance.
32. ENVIRONMENTAL COVENANTS
(a) Prior to executing this Lease, Tenant has completed. executed and
delivered to Landlord a Hazardous Materials Disclosure Certificate ("Initial
Disclosure Certificate"), a fully completed copy of which is attached hereto as
Exhibit F and incorporated herein by this reference. Tenant covenants,
represents and warrants to Landlord that the information on the Initial
Disclosure Certificate is true and correct and accurately describes the
Hazardous Materials which will be manufactured, treated, used or stored on or
about the Premises by Tenant or Tenant's Agents. Tenant shall, on each
anniversary of the Commencement Date and at such other times as Tenant desires
to manufacture, treat, use or store on or about the Premises new or additional
Hazardous Materials which were not listed on the Initial Disclosure Certificate,
complete, execute and deliver to Landlord an updated Disclosure Certificate
(each, an "Updated Disclosure Certificate") describing Tenant's then current and
proposed future uses of Hazardous Materials on or about the Premises, which
Updated Disclosure Certificates shall be in the same format as that which is set
forth in Exhibit F or in such updated format as Landlord may require from time
to time. Tenant shall deliver an Updated Disclosure Certificate to Landlord not
less than thirty (30) days prior to the date Tenant intends to commence the
manufacture, treatment, use or storage of new or additional Hazardous Materials
on or about the Premises, and Landlord shall have the right to approve or
disapprove such new or additional Hazardous Materials in its sole and absolute
discretion. Tenant shall make no use of Hazardous Materials on or about the
Premises except as described in the Initial Disclosure Certificate or as
otherwise approved by Landlord in writing in accordance with this Paragraph
32(a).
(b) As used in this Lease, the term "Hazardous Materials" shall mean and
include any substance that is or contains (1) any "hazardous substance" as now
or hereafter defined in (S)(S) 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA")(42
U.S.C. (S)(S) 9601 et seq.) or any regulations promulgated under CERCLA; (2) any
"hazardous waste" as now or hereafter defined in the Resource Conservation and
Recovery Act, as amended ("RCRA") (42 U.S.C. (S)(S) 6901 et seq.) or any
regulations promulgated under RCRA; (3) any substance now or hereafter regulated
by the Toxic Substance Control Act, as amended ("TSCA") (15 U.S.C. (S)(S) 2601
et seq.) or any regulations promulgated under TSCA; (4) petroleum, petroleum by-
products, gasoline, diesel fuel, or other petroleum hydrocarbons; (5) asbestos
and asbestos-containing material, in any form, whether friable or non-friable;
(6) polychlorinated biphenyls; (7) lead and lead-containing materials or
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(8) any additional substance, material or waste (A) the presence of which on or
about the Premises (i) requires reporting, investigation or remediation under
any Environmental Laws (as hereinafter defined), (ii) causes or threatens to
cause a nuisance on the Premises or any adjacent area or property or poses or
threatens to pose a hazard to the health or safety of persons on the Premises or
any adjacent area or property, or (iii) which, if it emanated or migrated from
the Premises, could constitute a trespass, or (B) which is now or is hereafter
classified or considered to be hazardous or toxic under any Environmental Laws.
(c) As used in this Lease, the term "Environmental Laws" shall mean and
include (1) CERCLA, RCRA and TSCA; and (2) any other federal, state or local
laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to (A) pollution, (B) the protection or
regulation of human health, natural resources or the environment, (C) the
treatment, storage or disposal of Hazardous Materials, or (D) the emission,
discharge, release or threatened release of Hazardous Materials into the
environment.
(d) Tenant agrees that during its use and occupancy of the Premises it
will (1) not (A) permit Hazardous Materials to be present on or about the
Premises except in a manner and quantity necessary for the ordinary performance
of Tenant's business or (B) release, discharge or dispose of any Hazardous
Materials on, in, at, under, or emanating from, the Premises, the Building or
the Project; (2) comply with all Environmental Laws relating to the Premises and
the use of Hazardous Materials on or about the Premises and not engage in or
permit others to engage in any activity at the Premises in violation of any
Environmental Laws; and (3) immediately notify Landlord of (A) an inquiry, test,
investigation or enforcement proceeding by any governmental agency or authority
against Tenant, Landlord or the Premises, Building or Project relating to any
Hazardous Materials or under any Environmental Laws or (B) the occurrence of any
event or existence of any condition that would cause a breach of any of the
covenants set forth this Paragraph 32.
(e) If Tenant's use of Hazardous Materials on or about the Premises
results in a release, discharge or disposal of Hazardous Materials on, in, at,
under, or emanating from, the Premises, the Building or the Project, Tenant
agrees to investigate, clean up, remove or remediate such Hazardous Materials in
full compliance with (1) the requirements of (A) all Environmental Laws and (B)
any governmental agency or authority responsible for the enforcement of any
Environmental Laws; and (2) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises, the Building or the
Project.
(f) Upon reasonable notice to Tenant Landlord may inspect the Premises and
surrounding areas for the purpose of determining whether there exists on or
about the Premises any Hazardous Material or other condition or activity that is
in violation of the requirements of this Lease or of any Environmental Laws.
Such inspections may include, but are not limited to, entering the Premises or
adjacent property with drill rigs or other machinery for the purpose of
obtaining laboratory samples. Landlord shall not be limited in the number of
such inspections during the Term of this Lease. In the event (1) such
inspections reveal the presence of any such Hazardous Material or other
condition or activity in violation of the requirements of this Lease or of any
Environmental Laws, or (2) Tenet or its Agents contribute or knowingly consent
to the presence of any Hazardous Materials in, on, under, through or about the
Premises, the Building or the Project or exacerbate the condition of or the
conditions caused by any Hazardous Materials in, on, under, through or about the
Premises, the Building or the Project, Tenant shall reimburse Landlord for the
cost of such inspections within ten (10) days of receipt of a written statement
therefor. Tenant will supply to Landlord such historical and operational
information regarding the Premises and surrounding areas as may be reasonably
requested to facilitate any such inspection and will make available for meetings
appropriate personnel having knowledge of such matters. Tenant agrees to give
Landlord at least sixty (60) days' prior notice of its intentions to vacate the
Premises so
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that Landlord will have an opportunity to perform such an inspection prior to
such vacation. The right granted to Landlord herein to perform inspections shall
not create a duty on Landlord's part to inspect the Premises, or liability on
the part of Landlord for Tenant's use, storage, treatment or disposal of
Hazardous Materials, it being understood that Tenant shall be solely responsible
for all liability in connection therewith.
(g) Landlord shall have the right, but not the obligation, prior or
subsequent to a Default, without in any way limiting Landlord's other rights and
remedies under this Lease, to enter upon the Premises, or to take such other
actions as it deems necessary or advisable, to investigate, clean up, remove or
remediate any Hazardous Materials or contamination by Hazardous Materials
present on, in, at, under, or emanating from, the Premises, the Building or the
Project in violation of Tenant's obligations under this Lease or under any
Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
shall also have the right, at its election, in it own name or as Tenant's agent,
to negotiate, defend, approve and appeal, at Tenant's expense, any action taken
or order issued by any governmental agency or authority with regard to any such
Hazardous Materials or contamination by Hazardous Materials. All costs and
expenses paid or incurred by Landlord in the exercise of the rights set forth in
this Paragraph 32 shall be payable by Tenant upon demand.
(h) Tenant shall surrender the Premises to Landlord upon the expiration or
earlier termination of this Lease free of debris, waste or Hazardous Materials
placed on, about or near the Premises by Tenant or Tenant's Agents, and in a
condition which complies with all Environmental Laws and any additional
requirements of Landlord that are reasonably necessary to protect the value of
the Premises, the Building or the Project, including, without limitation, the
obtaining of any closure permits or other governmental permits or approvals
related to Tenant's use of Hazardous Materials in or about the Premises.
Tenant's obligations and liabilities pursuant to the provisions of this
Paragraph 32 shall survive the expiration or earlier termination of this Lease.
If it is determined by Landlord that the condition of all or any portion of the
Premises, the Building, and/or the Project is not in compliance with the
provisions of this Lease with respect to Hazardous Materials, including, without
limitation, all Environmental Laws, at the expiration or earlier termination of
this Lease, then at the Landlord's sole option, Landlord may require Tenant to
hold over possession of the Premises until Tenant can surrender the Premises to
Landlord in the condition in which the Premises existed as of the Commencement
Date and prior to the appearance of such Hazardous Materials except for normal
wear and tear, including, without limitation, the conduct or performance of any
closure as required by any Environmental Laws. The burden of proof hereunder
shall be upon Tenant. For purposes hereof, the term "normal wear and tear" shall
not include any deterioration in the condition or diminution of the value of any
portion of the Premises, the Building, and/or the Project in any manner
whatsoever related to directly, or indirectly, Hazardous Materials. Any such
holdover by Tenant will be with Landlord's consent, will not be terminable by
Tenant in any event or circumstance and will otherwise be subject to the
provisions of Paragraph 35 of this Lease.
(i) As between Landlord and Tenant, Tenant shall not be required to pay
for the clean up of any contamination caused by the acts or omissions of a prior
tenant of the Premises, if Tenant can demonstrate to Landlord's reasonable
satisfaction that Tenant: (1) did not introduce, spill, release or deposit any
Hazardous materials, in or about the Premises, the Building or the Outside
areas; and (2) has not contributed to, exacerbated or permitted, directly or
indirectly, the presence, migration or release of any Hazardous Materials or
contamination in, on or about the Premises, the Building or the Outside Areas.
(j) Tenant agrees to indemnify and hold harmless Landlord from and against
any and all claims, losses (including, without limitation, loss in value of the
Premises, the Building or the Project, liabilities and expenses (including
attorney's fees)) sustained by Landlord attributable to (1) any Hazardous
Materials placed on or about the Premises, the
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Building or the Project by Tenant or Tenant's Agents, or (2) Tenant's breach of
any provisions of this Paragraph 32.
(k) The provision of this Paragraph 32 shall survive the expiration or
earlier termination of this Lease.
33. NOTICES
All notices and demands which are required or may be permitted to be given
to either party by the other hereunder shall be in writing and shall be sent by
United States mail, postage prepaid, certified, or by personal delivery or
overnight courier, addressed to the addressee at Tenant's Address or Landlord's
Address as specified in the Basic Lease Information, or to such other place as
either party may form time to time designate in a notice to the other party
given as provided herein. Copies of all notices and demands given to Landlord
shall additionally be sent to Landlord's property manager at the address
specified in the Basic Lease Information or at such other address as Landlord
may specify in writing from time to time. Notice shall be deemed gives upon
actual receipt (or attempted delivery if delivery is refused), if personally
delivered, or one (1) business day following deposit with a reputable overnight
courier that provides a receipt, or on the third (3rd) day following deposit in
the United States mail in the manner described above.
34. WAIVER
The waiver of any breach of any term, covenant or condition of this Lease
shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition herein
contained. The subsequent acceptance of Rent by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such Rent. No delay or
omission in the exercise of any right or remedy of Landlord in regard to any
Default by Tenant shall impair such a right or remedy or be construed as a
waiver. Any waiver by Landlord of any Default must be in writing and shall not
be a waiver of any other Default concerning the same or any other provision of
this Lease.
35. HOLDING OVER
Any holding over after the expiration of the Term, without the express
written consent of Landlord, shall constitute a Default and, without limiting
Landlord's remedies provided in this lease, such holding over shall be construed
to be a tenancy at sufferance, at a rental rate of one hundred fifty percent
(150%) of the Base Rent last due in this Lease, plus Additional Rent, and shall
otherwise be on the terms and conditions herein specified, so far as applicable;
provided however, in no event shall any renewal or expansion option or other
similar right or option contained in this Lease be deemed applicable to any such
tenancy at sufferance. If the Premises are not surrendered at the end of the
Term or sooner termination of this Lease, and in accordance with the provisions
of Paragraphs 11 and 32(h). Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all loss or liability resulting from delay by
Tenant in so surrendering the Premises including, without limitation, any loss
or liability resulting from any claim against Landlord made by any succeeding
tenant or prospective tenant founded on or resulting from such delay and losses
to Landlord due to lost opportunities to lease any portion of the Premises to
any such succeeding tenant or prospective tenant, together with, in each case,
actual attorney's fees and costs.
36. SUCCESSORS AND ASSIGNS
The terms, covenants and conditions of this Lease shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and
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<PAGE>
assigns of all of the parties hereto. If Tenant shall consist of more than one
entity or person, the obligations of Tenant under this Lease shall be joint and
several.
37. TIME
Time is of the essence of this Lease and each and every term, conditions
and provision herein.
38. Brokers
Landlord and Tenant each represents and warrant so the other that neither
it nor its officers or agents nor anyone acting on its behalf has dealt with any
real estate broker except the Broker(s) specified in the Basic Lease Information
in the negotiating or making of this Lease, and each party agrees to indemnify
and hold harmless the other from any claim or claims, and costs and expenses,
including attorney's fees, incurred by the indemnified party in conjunction with
any such claim or claims of any other broker or brokers to a commission in
connection with this Lease as a result of the actions of the indemnifying party.
39. LIMITATION OF LIABILITY
Tenant agrees that, in the event of any default or breach by Landlord with
respect to any of the terms of the Lease to be observed and performed by
Landlord (1) Tenant shall look solely to the then-current landlord's interest in
the Building for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord;
(2) no other property or assets of Landlord, its partner, shareholder, officers,
directors or any successor in interest shall be subject to levy, execution or
other enforcement procedure for the satisfaction of Tenant's remedies; (3) no
personal liability shall at any time be asserted or enforceable against
Landlord's partners or successors in interest (except to the extent permitted in
(1) above), or against Landlord's shareholders, officers or directors, or their
respective partners, shareholders, officers, directors, or successors in
interest; and (4) no judgment will be taken against any partner, shareholder,
officer or director of Landlord. The provisions of this section shall apply only
to the Landlord and the parties herein described, and shall not be for the
benefit of any insurer nor any other third party.
40. FINANCIAL STATEMENTS
Within ten (10) days after Landlord's request, Tenant shall deliver to
Landlord the then current financial statements of Tenant (including interim
periods following the end of the last fiscal year for which annual statements
are available), prepared or compiled by a certified public accountant, including
a balance sheet and profit and loss statement for the most recent prior year,
all prepared in accordance with generally accepted accounting principles
consistently applied.
41. RULES AND REGULATIONS
Tenant agrees to comply with such reasonable rules and regulations as
Landlord may adopt from time to time for the orderly and proper operation of the
Building and the Project. Such rules may included but shall not be limited to
the following: (a) restriction of employee parking to a limited, designated area
or areas; and (b) regulation of the removal, storage and disposal of Tenant's
refuse and other rubbish at the sole cost and expense of Tenant. The then
current rules and regulations shall be binding upon Tenant upon delivery of a
copy of them to Tenant. Landlord shall not be responsible to Tenant for the
failure of any other person to observe and abide by any of said rules and
regulations. Landlord's current rules and regulations are attached to this Lease
as Exhibit D.
29
<PAGE>
42. MORTGAGE PROTECTION
(a) Modifications for Lender. If, in connection with obtaining financing
for the Project or any portion thereof, Landlord's lender shall request
reasonable modifications to this Lease as a condition to such financing, Tenant
shall not unreasonably withhold, delay or defer its contents to such
modifications, provided such modifications do not materially adversely affect
Tenant's right or increase Tenant's obligation under this Lease.
(b) Rights to Cure. Tenant agrees to give to any trust deed or mortgage
holder ("Holder"), by registered mail, at the same time as it is given to
Landlord, a copy of any notice of default given to Landlord, provided that prior
to such notice Tenant has been notified, in writing, (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Holder shall have an
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
Paragraph 42(b)), whichever shall last occur within which to cure such default
or if such default cannot be cured within that time, then such additional time
as may be necessary if within such twenty (20) days, any Holder has commenced
and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated.
43. ENTIRE AGREEMENT
This Lease, including the Exhibits and any Addenda attached hereto, which
are hereby incorporated herein by this reference, contains the entire agreement
of the parties hereto, and no representations, inducements, promises or
agreements, oral or otherwise, between the parties, not embodied herein or
therein, shall be of any force and effect.
44. INTEREST
Any installment of Rent and any other sum due from Tenant under this Lease
which is not received by Landlord within ten (10) days from under when the same
is due shall bear interest from the date such payment was originally due under
this Lease until paid at an annual rate equal to the maximum rate of interest
permitted by Law. Payment of such interest shall not excuse or cure any Default
by Tenant. In addition, Tenant shall pay all costs and attorneys' fees incurred
by Landlord in collection of such amounts.
45. CONSTRUCTION
This Lease shall be construed and interpreted in accordance with the laws
of the State of California. The parties acknowledge and agree that no rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall be employed in the interpretation of this Lease, including
the Exhibits and any Addenda attached hereto. All captions in this Lease are for
reference only and shall not be used in the interpretation of this Lease.
Whenever required by the context of this Lease, the singular shall include the
plural, the masculine shall include the feminine, and vice versa. If any
provision of this Lease shall be determined to be illegal or unenforceable, such
determination shall not affect any other provision of this Lease and all such
other provisions shall remain in full force and effect.
46. REPRESENTATIONS AND WARRANTIES OF TENANT
Tenant hereby makes the following representations and warranties, each of
which is material and being relied upon by Landlord, is true in all respects as
of the date of this Lease, and shall survive the expiration or termination of
the Lease.
(a) If Tenant is an entity, Tenant is duly organized, validly existing and
in good standing under the laws of the state of its organization and the persons
executing this
30
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Lease on behalf of Tenant have the full right and authority to execute this
Lease on behalf of Tenant and to bind Tenant without the consent or approval of
any other persons or entity. Tenant has full power, capacity, authority and
legal right to execute and deliver this Lease and to perform all of its
obligations hereunder. This lease is a legal, valid and binding obligation of
Tenant, enforceable in accordance with its terms.
(b) Tenant has not (1) made a general assignment for the benefit of
creditors, (2) filed any voluntary petition in bankruptcy or suffered the filing
of an involuntary petition by any creditors, (3) suffered the appointment of a
receiver to take possession of all or substantially all of its assets, (4)
suffered the attachment or other judicial seizure of all or substantially all of
its assets, (5) admitted in writing its inability to pay its debts as they come
due, or (6) made an offer of settlement, extension or composition to its
creditors generally.
47. RELOCATION
Intentionally omitted.
48. SECURITY
(a) Tenant acknowledges and agrees that, while Landlord may engage
security personnel to patrol the Building or the Project, Landlord is not
providing any security services with respect to the Premises, the Building or
the Project and that Landlord shall not be liable to Tenant for, and Tenant
waives any claim against Landlord with respect to, any loss by theft or any
other damage suffered or incurred by Tenant in connection with any unauthorized
entry into the Premises or any other breach of security with respect to the
Premises, the Building or the Project.
(b) Tenant hereby agrees to the exercise by Landlord and Landlord's
Agents, within their sole discretion, of such security measure as, but not
limited to, the evacuation of the Premises, the Building or the Project for
cause, suspected cause or for drill purposes, the denial of any access to the
Premises, the Building or the Project and other similarly related actions that
it deems necessary to prevent any threat of property damage or bodily injury.
The exercise of such security measures by Landlord and Landlord's Agents, and
the resulting interruption of service and cessation of Tenant's business, if
any, shall not be deemed an eviction or disturbance of Tenant's use and
possession of the Premises, or any part thereof, or render Landlord or
Landlord's Agents liable to Tenant for any resulting damages or relieve Tenant
from Tenant's obligations under this Lease.
49. JURY TRIAL WAIVER
Intentionally omitted.
Landlord and Tenant have executed and delivered this Lease as of the Lease
Date specified in the Basic Lease Information
Landlord Tenant
HAYWARD INDUSTRIAL PARK ASSOCIATES, Mohawk Industries, Inc.
A California General Partnership A Georgia Corporation
By: Lincoln Property Company By: /s/ S. H. Sharpe
Management Services, Inc ---------------------------------
As Manager and Agent for Landlord Print Name: S. H. Sharpe
-------------------------
By: /s/ [ILLEGIBLE] Its: Executive Vice President
----------------------------- --------------------------------
Senior Vice President
31
<PAGE>
EXHIBIT A
DIAGRAM OF THE PREMISES
[GRAPHIC OMITTED] HAYWARD INDUSTRIAL PARK
Hayward, California
[GRAPHIC OMITTED]
Leased Premises:
3624 Munster Avenue
Units A, B, and C
Hayward, CA 94545
Approximately 30,240
rentable square feet.
<PAGE>
EXHIBIT B - TENANT IMPROVEMENTS
Lease dated November 11, 1997
This exhibit, entitled "Tenant Improvements", is and shall constitute
Exhibit B to the Lease Agreement, dated November 10, 1997, by and between
Landlord and Tenant for the leasing of the Premises ( the "Lease"). The terms
and conditions of this Exhibit B are hereby incorporated into and are made a
part of the Lease. Any capitalized terms used herein, but not otherwise defined
herein, shall have the meanings ascribed to such terms in the Lease.
1. Tenant agrees to, and shall, accept the Premises on an "as-is" basis,
except that Landlord will install and complete those certain tenant improvement
described in Paragraph 2 below ("Tenant Improvements").
2. Landlord, at Landlord's sole cost and expense, will install and
construct, or cause the installation and construction of, the following
described Tenant Improvements to the Premises:
(a) Demolish and remove office areas and convert two windows to
dock-high roll-up doors as shown in Exhibit B-1, attached hereto and
made part thereof;
(b) Refurbish existing restrooms:
(c) Paint existing office area: and
(d) Remove debris from warehouse.
3. Landlord will not be obligated to pay for the cost of, nor shall
Landlord be required to undertake nor perform, any improvements to the Premises
not specifically set forth in Paragraph 2 above.
4. Tenant and Landlord acknowledge and agree that the Tenant Improvements
will not be completed prior to the Commencement Date. Tenant agrees to work in
harmony with Landlord's contractors and to not interfere in any manner with the
Tenant Improvements work.
Initials:
Tenant: /s/ [ILLEGIBLE]
-----------------------
Landlord: /s/ [ILLEGIBLE]
----------------------
<PAGE>
EXHIBIT B-1
INITIAL FLOOR PLAN
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT C
COMMENCEMENT AND EXPIRATION DATE MEMORANDUM
LANDLORD: HAYWARD INDUSTRIAL PARK ASSOCIATES,
A CALIFORNIA GENERAL PARTNERSHIP
TENANT: Mohawk Industries, Inc.
LEASE DATE: November 10, 1997
PREMISES: Located at 3624 Munster Avenue, Hayward, California
Tenant hereby accepts the Premises as being in the condition required
under the Lease, with all Tenant Improvements completed (except for the minor
punchlist items which Landlord agrees to complete).
The Commencement Date of the Lease is hereby established as _____________,
1997 and the Expiration Date is _____________, _____.
TENANT: Mohawk Industries, Inc.
a Georgia corporation
By: __________________________________
Print Name: __________________________
Its: _________________________________
Approved and Agreed:
LANDLORD:
HAYWARD INDUSTRIAL PARK ASSOCIATES,
A CALIFORNIA GENERAL PARTNERSHIP
By: Lincoln Property Company
Management Services, Inc.,
As Manager and Agent for Landlord
By: __________________________________
Senior Vice President
C-1
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
This exhibit, entitled "Rules and Regulations," is and shall constitute
Exhibit D to the Lease Agreement, dated as of the Lease Date, by and between
landlord and Tenant for the Premises. The terms and conditions of this Exhibit D
are hereby incorporated into and are made a part of the Lease. Capitalized terms
used, but not otherwise defined, in this Exhibit D have the meanings ascribed to
such terms in the Lease.
1. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord without the consent of Landlord.
2. All window coverings installed by Tenant and visible form the outside
of the building require the prior written approval of Landlord.
3. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance or any flammable or combustible materials on or around
the Premises, except to the extent that Tenant is permitted to use the same
under the terms of Paragraph 32 of the Lease.
4. Tenant shall not alter any lock or install any new locks or belts on
any door at the Premises without the prior consent of Landlord.
5. Tenant shall not make any duplicate keys without prior consent of
Landlord.
6. Tenant shall park motor vehicles designated by Landlord except for
loading and unloading. During those periods of loading and unloading, Tenant
shall not unreasonably interfere with traffic flow around the Building or the
Project and loading and unloading areas of other tenants. Tenant shall not park
motor vehicles in designated parking area after the conclusion of normal
business activity.
7. Tenant shall not disturb, solicit or canvas any tenant or other
occupant of the Building or Project and shall cooperate to prevent the same.
8. No person shall go on the roof without Landlord's permission.
9. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted so the structure of the
Building, to such a degree as to be objectionable to Landlord or other tenants,
shall be placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or in noise dampening housing or other devices sufficient to
eliminate noise or vibration.
10. All goods, including material used to store goods, delivered to the
Premises of Tenant shall be immediately moved into the Premises and shall not be
left in parking or receiving areas overnight.
11. Tractor trailers which must be unhooked or parked with dolly wheels
beyond the concrete loading areas must use steel plates or wood blocks under the
dolly wheels to prevent damage to the asphalt paving surfaces. No parking or
storing of such trailers will be permitted in the auto parking areas of the
Project or on streets adjacent thereto.
12. Forklifts which operate on asphalt paving areas shall not have solid
rubber tires and shall only use tires that do not damage the asphalt.
13. Tenant is responsible for the storage and removal of all trash and
refuse. All such trash and refuse shall be contained in suitable receptacles
stored behind screened enclosures at locations approved by Landlord.
D-1
<PAGE>
14. Tenant shall not store or permit the storage or placement of goods or
merchandise in or around the common areas surrounding the Premises. No displays
or sales or merchandise shall be allowed in the parking lots or other common
areas.
15. Tenant shall not permit any animals, including but not limited to, any
household pets, to be brought or kept in or about the Premises, the Building,
the Project or any other common areas.
Initials:
Tenant: /s/ [ILLEGIBLE]
-----------------------
Landlord: /s/ [ILLEGIBLE]
----------------------
D-2
<PAGE>
EXHIBIT E
SIGN CRITERIA
In an effort to maintain a professional and uniform appearance throughout
Hayward Industrial Park, the following sign criteria have been established:
[BODY ILLEGIBLE]
<PAGE>
EXHIBIT F
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord to evaluate your proposed uses of the premises ( the
"Premises") and to determine whether to enter into a lease agreement with you as
a tenant. If a lease agreement is signed by you and the Landlord (the "Lease
Agreement"), on an annual basis in accordance with the provisions of Paragraph
32 of the Lease Agreement, you are to provide an update to the information
initially provided by you in this certificate. Any questions regarding this
certificate should be directed to, and when completed, the certificate should be
delivered to:
Landlord: c/o Lincoln Property Company Management
Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Name of (Prospective) Tenant: _____________________________________________
Mailing Address: __________________________________________________________
__________________________________________________________________________
Contact Person, Title and Telephone Number(s): ____________________________
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s): ______________________________________________________
__________________________________________________________________________
Address of (Prospective) Premises: ________________________________________
Length of (Prospective) initial Term: _____________________________________
__________________________________________________________________________
1. GENERAL INFORMATION
Describe the proposed operations to take place in, on, or about the
Premises, including, without limitation, principal products processed,
manufactured or assembled, and services and activities to be provided or
otherwise conducted. Existing tenants should describe any proposed changes
to on-going operations.
__________________________________________________________________________
__________________________________________________________________________
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials (as hereinafter defined) be used,
generated, treated, stored, or disposed of in, on or about the
Premises? Existing tenants should describe any Hazardous Materials
which continue to be used, generated, treated, stored or disposed of
in, on or about the Premises.
Wastes Yes |_| No |_|
Chemical Products Yes |_| No |_|
Other Yes |_| No |_|
If Yes is marked, please explain: __________________________________
____________________________________________________________________
____________________________________________________________________
F-1
<PAGE>
2.2 If Yes is marked in Section 2.1, attach a list of any Hazardous
Materials to be used, generated, treated, stored or disposed of in,
on or about the Premises, including the applicable hazard class and
an estimate of the quantities of such Hazardous Materials to be
present on or about the Premises at any given time; estimated
annual throughput; the proposed location(s) and method of storage
(excluding nominal amounts of ordinary household cleaners and
janitorial applies which are not regulated by any Environmental
Laws, as hereinafter defined); and the proposed location(s) and
method(s) of treatment or disposal for each Hazardous Material,
including, the estimated frequency, and the proposed contractors or
subcontractors. Existing tenants should attach a list setting forth
the information requested above and such list should include actual
data from on-going operations and the identification of any
variations in such information from the prior year's certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage or treatment of gasoline,
diesel, petroleum, or other Hazardous Materials in tanks or sumps
proposed in, on or about the Premises? Existing tenants should
describe any such actual or proposes activities.
Yes No
If yes, please explain:_____________________________________________
____________________________________________________________________
____________________________________________________________________
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator I.D.
Number? Existing tenants should describe any additional
identification numbers issued since the previous certificate.
Yes No
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing tenants should describe
any new reports filed.
Yes No
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
____ storm drain? ____ sewer?
____ surface water? ____ no wastewater or other wastes discharged.
Existing tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
____________________________________________________________________
____________________________________________________________________
F-2
<PAGE>
5.2 Will any such wastewater or waste be treated before discharge?
Yes No
If yes, describe the type of treatment proposed to be conducted.
Existing tenants should describe the actual treatment conducted.
____________________________________________________________________
____________________________________________________________________
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to be used in
your company's operations in, on or about the Premises that will
discharge into the air, and will such air emissions be monitored?
Existing tenants should indicate whether or not there are any such
air filtration systems or stacks in use in, on or about the Premises
which discharge into the air and whether such air emissions are
being monitored.
Yes No
If yes, please describe:____________________________________________
____________________________________________________________________
____________________________________________________________________
6.2 Do you propose to operate any of the following types of equipment,
or any other equipment requiring an air emissions permit? Existing
tenants should specify any such equipment being operated in, on or
about the Premises.
____ Spray booth(s) ____ Incinerator(s)
____ Dip tank(s) ____ Other (Please describe)
____ Drying oven (s) ____ No Equipment Requiring Air Permits
If yes, please describe:____________________________________________
____________________________________________________________________
____________________________________________________________________
6.3 Please describe (and submit copies of with this Hazardous Materials
Disclosure Certificate) any reports you have filed in the past
[thirty-six] months any governmental or quasi-governmental agencies
or authorities related to air discharges or clean air requirements
and any such reports which have been issued during such period by
any such agencies or authorities with respect to you or your
business operations.
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company proposed or will it be required to prepare a
Hazardous Materials management plan ("Management Plan") or Hazardous
Materials Business Plan and Inventory ("Business Plan") pursuant to
Fire Department or other governmental or regulatory agencies'
requirements? Existing tenants should indicate whether or not a
Management Plan is required and has been prepared.
Yes No
If yes, attach a copy of the Management Plan or Business Plan.
Existing tenants should attach a copy of any required updates to the
Management Plan or Business Plan.
F-3
<PAGE>
7.2 Are any of the Hazardous Materials, and in particular chemicals,
proposed to be used in your operations in, on or about the Premises
listed or regulated under Proposition 65? Existing tenants should
indicate whether or not there are any new Hazardous Materials being
so used which are listed or regulated under Proposition 65.
Yes No
If yes, please explain: ____________________________________________
____________________________________________________________________
____________________________________________________________________
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has your
company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees or has your company
received requests for information, notice or demand letters, or any
other inquiries regarding its operations? Existing tenants should
indicate whether or not any such actions, orders or decrees have
been, or are in the process of being, undertaken or if any such
requests have been received.
Yes No
If yes, describe the actions, orders or decrees and any continuing
compliance obligations imposed as a result of these actions, orders
or decrees and also describe any requests, notices or demands, and
attach a copy of all such documents. Existing tenants should
describe and attach a copy of any new actions, orders, decrees,
requests, notices or demands not already delivered to Landlord
pursuant to the provisions of Paragraph 32 of the Lease Agreement.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
8.2 Have there ever been, or are there now pending, any lawsuits against
your company regarding any environmental or health and safety
concerns?
Yes No
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and other documents
related thereto as requested by Landlord. Existing tenants should
describe and attach a copy of any new complaint(s),
cross-complaints, pleadings and other related documents not already
delivered to Landlord pursuant to the provisions of Paragraph 32 of
the Lease Agreement.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
F-4
<PAGE>
8.3 Have there been any problems of complaints from adjacent tenants,
owners or other neighbors at your company's current facility with
regard to environmental or health and safety concerns? Existing
tenants should indicate whether or not there have been any such
problems or complaints from adjacent tenants, owners or other
neighbors at, about or near the Premises and the current status of
any such problems or complaints.
Yes No
If yes, please describe. Existing tenants should describe any such
problems or complaints not already disclosed to Landlord under the
provisions of the signed Lease Agreement and the current status of
any such problems or complaints.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
9. PERMITS AND LICENSES
9.1 Attach copies of all permits and licenses issued to your company
with respect to its proposed operations in, on or about the
Premises, including, without limitation, any Hazardous Materials
permits, wastewater discharge permits, air emissions permits, and
use permits or approvals. Existing tenants should attach copies of
any new permits and licenses as well as any renewals of permits or
licenses previously issued.
As used herein, "Hazardous Materials" shall mean and include any substance
that is or contains (a) any "hazardous substance" as now or hereafter defined in
(S)(S) 101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. (S)(S) 9601 et seq.) or
any regulations promulgated under CERCLA; (b) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery Act, as amended
("RCRA") (S)(S) (43 U.S.C. (S)(S) 6901 et seq.) or any regulations promulgated
under RCRA; (c) any substance now or hereafter regulated by the Toxic Substances
Control Act, as amended ("TSCA") (15 U.S.C. (S)(S) 2601 et seq.) or any
regulations promulgated under TSCA; (d) petroleum, petroleum by-products,
gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and
asbestos-containing material, in any form, whether friable or non-friable; (f)
polychlorinated biphenyls; (g) lead and lead-containing materials; or (h) any
additional substance, material or waste (A) the presence of which on or about
the Premises (i) requires reporting, investigation or remediation under any
Environmental Laws (as hereinafter defined), (ii) causes or threatens to cause a
nuisance on the Premises or any adjacent property or poses or threatens to pose
a hazard to the health or safety of persons on the Premises or any adjacent
property, or (iii) which, if it emanated or migrated from the Premises, could
constitute a trespass, or (B) which is now or is hereafter classified or
considered to be hazardous or toxic under any Environmental Laws; and
"Environmental Laws" shall mean and include (a) CERCLA, RCRA and TSCA; and (b)
any other federal, state or local laws, ordinances, statutes, codes, rules,
regulations, orders or decrees now or hereinafter in effect relating to (i)
pollution, (ii) the protection or regulation of human health, natural resources
or the environment, (iii) the treatment, storage or disposal of Hazardous
Materials, or (iv) the emission, discharge, release or threatened release of
Hazardous Materials into the environment.
The undersigned hereby acknowledges and agrees that this Hazardous
Materials Disclosure Certificate is being delivered to Landlord in connection
with the evaluation of a Lease Agreement and, if such Lease Agreement is
executed, will be attached thereto as an exhibit. The undersigned further
acknowledges and agrees that if such Lease Agreement is executed, this Hazardous
Materials Disclosure Certificate will be updated from time to time in accordance
with Paragraph 32 of the Lease Agreement. The undersigned further acknowledges
and agrees that the Landlord and its partners, lenders
F-5
<PAGE>
and representatives may, and will, rely upon the statements, representations,
warranties, and certifications made herein and the truthfulness thereof in
entering into the Lease Agreement and the continuance thereof throughout the
term, and any renewals thereof, of the Lease Agreement. I [print name]
_________________, acting with full authority to bind the (proposed) Tenant and
on behalf of the (proposed) Tenant, certify, represent and warrant that the
information contained in this certificate is true and correct.
(PROSPECTIVE) TENANT:
By: [ILLEGIBLE]
----------------------
Title: Exec. V.P.
----------------------
Date: 12-10-97
----------------------
INITIALS:
TENANT: [ILLEGIBLE]
---------------------
LANDLORD: [ILLEGIBLE]
---------------------
F-6
<PAGE>
ADDENDUM 1
OPTION TO EXTEND THE LEASE
This Addendum 1 is incorporated as a part of that certain Lease Agreement dated
November 10, 1997 (the "Lease"), by and between Mohawk Industries, Inc., a
Georgia corporation ("Tenant"), and Hayward Industrial Park Associates, a
California general partnership ("Landlord"), for the leasing of those certain
premises located at 3624 Munster Avenue, Hayward, California, as more
particularly described in Exhibit A to the Lease (the "Premises"). Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease.
1. Grant of Extension Option. Subject to the provisions, limitations and
conditions set forth in Paragraph 5 below, Tenant shall have an Option
("Option") to extend the term of the Lease for five (5) years (the "Extended
Term").
2. Tenant's Option Notice. If Landlord does not receive written notice from
Tenant of its exercise of this Option on a date which is not more than two
hundred forty (240) days nor less than one hundred eighty (180) days prior to
the end of the initial term of the Lease (the "Option Notice"), all rights under
this Option shall automatically terminate and shall be of no further force or
effect.
3. Establishing the Initial Monthly Base Rent for the Extended Term. The initial
monthly Base Rent for the Extended Term shall be the then current market rent
for the highest and best use for similar space within the competitive market
area of the Premises (the "Fair Rental Value"). "Fair Rental Value" of the
Premises means the fair market rental value of the Premises as of the
commencement of the Extended Term, taking into consideration all relevant
factors, including length of term, the uses permitted under the Lease, the
quality, size, design and location of the Premises, including the condition and
value of existing tenant improvements, and the monthly base rent paid by tenants
for premises comparable to the Premises, and located within the competitive
market area of the Premises as reasonably determined by Landlord.
Neither Landlord nor Tenant shall have the right to have a court or any other
third party entity establish the Fair Rental Value. If Landlord and Tenant are
unable to agree on the Fair Rental Value for the Extended Term within ten (10)
days of receipt by Landlord of the Option Notice, Landlord and Tenant being
obligated only to act in good faith, this Option shall automatically terminate
and the Lease shall terminate at the end of its initial term.
In no event shall the monthly Base Rent for any period of the Extended Term be
less than the highest monthly Base Rent charged during the initial term of the
Lease. Upon determination of the initial monthly Base Rent for the Extended Term
in accordance with the terms outlined above, Landlord and Tenant shall
immediately execute, at Landlord's sole option, either the standard lease
agreement then in use by Landlord, or an Amendment to this Lease. Such new lease
agreement or amendment, as the case may be, shall set forth among other things,
the initial monthly Base Rent for the Extended Term and the actual commencement
date and expiration date of the Extended Term. Tenant shall have no other right
to extend the term of the Lease under this Addendum 1 unless Landlord and Tenant
otherwise agree in writing.
<PAGE>
4. Condition of Premises and Brokerage Commissions for the Extended Term. If
Tenant timely and properly exercises this Option, in strict accordance with the
terms contained herein: (1) Tenant shall accept the Premises in its then "As-Is"
condition and, accordingly, Landlord shall not be required to perform any
additional improvements to the Premises; and (2) Tenant hereby agrees that it
will be solely responsible for any and all brokerage commissions and finder's
fees payable to any broker now or hereafter procured or hired by Tenant or who
otherwise claims a commission based on any act or statement of Tenant ("Tenant's
Broker") in connection with the Option; and Tenant hereby further agrees that
Landlord shall in no event or circumstance be responsible for the payment of any
such commissions and fees to Tenant's Broker.
5. Limitations On, and Conditions To, Extension Option. This Option is personal
to Tenant and may not be assigned, voluntarily or involuntarily, separate from
or as part of the Lease. At Landlord's option, all rights of Tenant under this
Option shall terminate and be of no force or effect if any of the following
individual events occur or any combination thereof occur: (1) Tenant has been in
default at any time during the initial term of the Lease, or is currently in
default of any provision of the Lease; and/or (2) Tenant has assigned its rights
and obligations under all or part of the Lease or Tenant has subleased all or
part of the Premises; and/or (3) Tenant's financial condition is unacceptable to
Landlord at the time the Option Notice is delivered to Landlord; and/or (4)
Tenant has failed to properly exercise this Option in a timely manner in strict
accordance with the provisions of this Addendum 1; and/or (5) Tenant no longer
has possession of all or any part of the Premises under the Lease, or if the
Lease has been terminated earlier, pursuant to the terms of the Lease.
6. Time is of the Essence. Time is of the essence with respect to each and every
time period described in this Addendum.
INITIALS:
TENANT: [ILLEGIBLE]
---------------------
LANDLORD: [ILLEGIBLE]
---------------------
<PAGE>
ADDENDUM 2
EARLY OCCUPANCY AGREEMENT
Page 1 of 1
This Addendum No. 2 is incorporated as a part of that certain Lease Agreement
dated November 10, 1997 (the "Lease"), by and between Mohawk Industries, Inc., a
Georgia Corporation ("Tenant"), and HAYWARD INDUSTRIAL PARK ASSOCIATES, A
CALIFORNIA GENERAL PARTNERSHIP ("Landlord"), of the premises located at 3624
Munster Avenue, Unit A, B, and C, Hayward, California, (the "Premises").
Notwithstanding anything in the Lease to the contrary, Tenant shall have the
right to enter the Premises after the Lease has been fully executed and prior to
the Commencement Date, of December 15, 1997 ("Occupancy Date"). In this event,
Tenant shall have the right to occupy the Premises free of Base Rent from the
Occupancy Date until the Commencement Date ("Early Occupancy Period"). During
the Early Occupancy Period Tenant shall be obligated to pay the utilities and
the Additional Rent, defined in Section 6 of the Lease, which is attributable to
the Early Occupancy Period.
Tenant's early occupancy shall be subject to the conditions detailed
hereinbelow:
1. Landlord shall receive from Tenant a certificate of general
liability insurance as specified in the Lease, naming Landlord as
additional insured.
2. All the terms and conditions of the Lease, except the payment of
Base Rent, shall be in full force and effect as of the Occupancy
Date and possession of the Premises.
3. By entry, Tenant accepts the Premises as being in good order,
condition and repair as of the Occupancy Date.
Unless otherwise defined in this Addendum, all terms not defined in this
Addendum shall have the meaning set forth in the Lease.
INITIALS:
TENANT: [ILLEGIBLE]
---------------------
LANDLORD: [ILLEGIBLE]
---------------------
<PAGE>
EXHIBIT 10.70
WORLD CARPETS, INC.
------------------
SAVINGS AND RETIREMENT PLAN
---------------------------
(AS AMENDED AND RESTATED JANUARY 1, 1989)
---------------------------------------
<PAGE>
WORLD CARPETS, INC.
------------------
SAVINGS AND RETIREMENT PLAN
---------------------------
(AS AMENDED AND RESTATED JANUARY 1, 1989)
---------------------------------------
CONTENTS
--------
<TABLE>
ARTICLE 1 BASIC PROVISIONS
<S> <C>
1.1 Names of the Plan and Trust 1
1.2 Dates 1
1.3 Appointment of Administrator 2
1.4 Designated Agent for Service of Process 2
1.5 Eligibility Requirements to Participate in the Plan 2
1.6 Employer Contributions 3
1.7 Definition of Compensation 4
1.8 Amount of Compensation Considered in
Allocating Employer Contributions for Year
Participant Enters or Reenters the Plan 4
1.09 Salary Reduction Contributions 4
1.10 Formula for Allocation of Employer Contributions 5
1.11 Participants to Whom Matching Employer Contributions and
Forfeitures will be Allocated 5
1.12 Normal Retirement Date 5
1.13 Requirements for Delayed Retirement 5
1.14 Requirements for Early Retirement 5
1.15 Vesting of Benefits 5
1.16 Date Used for Valuing the Accounts of a Retired, Deceased,
or Terminated Participant 6
1.17 Purchase of Life Insurance 6
1.18 Pre-Termination Distributions 6
1.19 Loans to Participants 6
1.20 Direction of Investments by Participants 6
1.21 Direction of Investments by Employer 6
1.22 Effect of Membership in Another Plan
Requiring Contributions from Employer 6
1.23 Related Organization 6
1.24 Method of Determining Hours of Service 6
1.25 Top-Heavy - Vesting Schedule 6
1.26 Top-Heavy - Minimum Benefit 7
1.27 Top-Heavy - Additional Minimum Benefit 7
1.28 Top-Heavy - Coordination of Minimum Benefits
If Employer Maintains Other Top-Heavy Plans 7
</TABLE>
<PAGE>
<TABLE>
ARTICLE 2 DEFINITIONS
<S> <C>
2.1 Administrator 8
2.2 Beneficiary 8
2.3 Code 8
2.4 Compensation 8
2.5 Contract 9
2.6 Deferred Compensation 9
2.7 Delayed Retirement Date 9
2.8 Disabled 9
2.9 Disability Retirement Date 9
2.10 Employer's Elective Contribution 9
2.11 Employer's Non-Elective Contribution 9
2.12 ERISA 9
2.13 Early Retirement Date 9
2.14 Employee 9
2.15 Excess Deferred Compensation 10
2.16 Employer 10
2.17 50% Joint and Survivor Annuity 10
2.18 Fiscal Year 10
2.19 Fund 10
2.20 Highly Compensated Employee 10
2.21 Insurer 12
2.22 Investment Manager 12
2.23 Key Employee 13
2.24 Normal Retirement Date 14
2.25 Owner-Employee 14
2.26 Participant 14
2.27 Party In Interest 14
2.28 Plan 14
2.29 Plan Year 14
2.30 Self-Employed Individual 14
2.31 Shareholder-Employee 14
2.32 Spouse's Annuity 15
2.33 Top Paid Group 15
2.34 Transfer Account 16
2.35 Trust 16
2.36 Trustee 16
</TABLE>
<PAGE>
CONTENTS CONTINUED
------------------
<TABLE>
ARTICLE 3 PARTICIPATION, SERVICE, ETC.
<S> <C>
3.1 Participation 17
3.2 Service 18
3.3 Leave of Absence 23
3.4 Transfers Between Employer and Related Organizations 24
3.5 Membership in Another Plan Requiring Contributions from Employer 25
3.6 Leased Employees 26
3.7 Omissions of Eligible Employee 26
ARTICLE 4 CONTRIBUTIONS
4.1 Contributions by Employer 27
4.2 Determination of Contributions by Employer 27
4.3 Non-Reversion of Employer Contributions 27
4.4 Salary Reduction Contributions 27
4.5 Special Adjustments to Satisfy Certain Coverage Tests 36
4.6 Actual Contribution Percentage Tests 36
4.7 Adjustment to Actual Contribution Percentage Tests 40
4.8 Transfer of Assets from Another Qualified Plan (Other than
HR-10 Plan) 43
4.9 Limitations on Distribution 43
ARTICLE 5 ALLOCATION OF CONTRIBUTIONS
5.1 Accounts 45
5.2 Allocation Dates 45
5.3 Allocation Procedure 45
5.4 Charging of Payments and Distributions 46
5.5 Allocation and Crediting of Forfeitures 46
5.6 Allocation and Crediting of Employer Contributions 47
5.7 Participants to Whom Employer Contributions and Forfeitures
will be Allocated 48
5.8 Crediting of Participant Contributions 48
5.9 Section 415 Limitations 48
ARTICLE 6 FUNDING MEDIUM AND INVESTMENTS
6.1 Funding Medium 57
6.2 Direction of Investments by Investment Manager 57
6.3 Direction of Investments by Participants 57
6.4 Direction of Investments by Employer 57
</TABLE>
<PAGE>
CONTENTS CONTINUED
------------------
<TABLE>
<S> <C>
6.5 Purchase of Contracts 57
6.6 Limitations on the Payment of Premiums
for Contracts 58
6.7 Cancellation of Contracts 59
6.8 Status of Insurer 59
ARTICLE 7 RETIREMENT DATES
7.1 Normal Retirement Date 60
7.2 Delayed Retirement Date 60
7.3 Early Retirement Date 60
7.4 Disability Retirement Date 60
ARTICLE 8 DISTRIBUTIONS AND LOANS
8.1 Distributions - Normal Retirement 62
8.2 Distributions - Delayed Retirement 62
8.3 Distributions - Early Retirement 62
8.4 Distributions - Disability Retirement 63
8.5 Distributions - Death 63
8.6 Distributions - Termination of Employment 65
8.7 Valuation of Accounts 68
8.8 Distribution of Contracts 69
8.9 Pre-Termination Distributions 69
8.10 Loans to Participants 71
ARTICLE 9 METHODS AND MEDIUMS OF DISTRIBUTION, LIMITATIONS, ETC.
9.1 Claim Forms 74
9.2 Restrictions on Distributions 74
9.3 Method of Distribution to Participants 74
9.4 Date Distribution of Accounts Must Begin
and Must be Completed 75
9.5 Distributions upon Death of Participant 76
9.6 Distributions to Incompetents 76
9.7 Duty of Administrator to Inform Participants
of Right to Distribution 76
9.8 Duty of Participants to Inform Administrator
of Address 77
9.9 Right to Make Partial Distributions 77
9.10 Transfer to Plan of New Employer 78
</TABLE>
<PAGE>
CONTENTS CONTINUED
------------------
<TABLE>
<S> <C>
9.11 Date Employer Contribution Account Must Be 100% Vested 78
9.12 Right to Repay Distribution Received on
Termination of Participation in the Plan 78
ARTICLE 10 AMENDMENT AND TERMINATION OF THE PLAN
10.1 Right of Employer to Amend the Plan 81
10.2 Limitations on Right of Employer to Amend the Plan 81
10.3 Partial Termination of the Plan by Employer 81
10.4 Termination of the Plan by Employer 81
10.5 Procedure for Termination of the Plan 82
10.6 Merger and Consolidation of the Plan -
Transfer of Plan Assets 82
10.7 Amendment of Vesting Schedule - Right to
Elect Former Vesting Schedule 82
10.8 Exclusive Benefit of Fund 83
10.9 Return of Employer Contributions Because of
Failure of the Plan to Qualify, Mistake of
Fact, or Disallowance of Deduction 84
ARTICLE 11 ADMINISTRATION OF THE PLAN
11.1 Employer to be Administrator of the Plan 85
11.2 Delegation of Powers and Duties and
Allocation of Fiduciary Responsibilities 85
11.3 Powers of Administrator 85
11.4 Rules for Operation of Committee 87
11.5 Records 88
11.6 Roster of Parties in Interest 88
11.7 Good Faith Reliance on Records and Reports 88
11.8 Standard of Conduct 88
11.9 Indemnification by Employer 88
11.10 Fiduciary Liability Insurance 88
11.11 Bonding 89
11.12 Claims Procedure 89
11.13 Procedure for Establishing Funding Policy 90
</TABLE>
<PAGE>
CONTENTS CONTINUED
------------------
<TABLE>
<S> <C>
ARTICLE 12 GENERAL PROVISIONS
12.1 Construction 91
12.2 Prohibition Against Assignment, Etc. 91
12.3 Discrimination 92
12.4 Benefits Supported Only by Plan Assets 92
12.5 Notification of Employees and Participants
Regarding Applications for Determination
and Declaratory Judgments 92
12.6 Legal Actions 92
12.7 Payment of Claims 93
ARTICLE 13 TOP-HEAVY PLAN REQUIREMENTS
13.1 General Limitation 94
13.2 Limitation on Annual Compensation 94
13.3 Vesting 94
13.4 Minimum Benefit 95
13.5 Additional Minimum Benefit 96
13.6 Modification of Section 415 Limitations 96
13.7 Coordination of Minimum Benefits If
Employer Maintains Other Top-Heavy Plans 97
13.8 Determination of Top-Heaviness 97
13.9 Determination of Super Top-Heaviness 98
13.10 Determination of Accrued Benefit and
Account Balance 99
13.11 Aggregation of Plans 100
13.12 Affiliated Employers 100
13.13 Definitions That Relate to Top-Heavy Plans 101
ARTICLE 14 ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS
14.1 Adoption of the Plan by Participating Employers 104
14.2 Construction of the Plan with Respect to
Participating Employers 104
14.3 Employer Appointed Agent of Participating Employers 104
14.4 Decisions and Directions of Employer and
Administrator Binding Upon Participating Employers 104
14.5 Participating Employer's Contribution 104
14.6 Trust for Participating-Employer 105
14.7 Termination of Participation by Participating Employers 105
ARTICLE 15 ELIGIBLE ROLLOVERS 106
</TABLE>
<PAGE>
WORLD CARPETS, INC.
-------------------
SAVINGS AND RETIREMENT PLAN
---------------------------
(AS AMENDED AND RESTATED JANUARY 1, 1989)
-----------------------------------------
WHEREAS, the Employer established a Savings and Retirement Plan,
effective as of January 1, 1989, for the sole and exclusive benefit of its
Employees; and
WHEREAS, the Employer desires to amend and restate the Plan to
incorporate changes required by regulations issued by the Internal Revenue
Service; and
WHEREAS, the Employer has approved and authorized the amendment and
restatement of the Plan as set forth in this instrument;
NOW, THEREFORE, the Employer amends and restates the Plan as follows:
ARTICLE I
BASIC PROVISIONS
This Article 1 contains the basic provisions of the Employer's Plan.
---------
These basic provisions are amplified by and are subject to the limitations and
conditions contained in the remaining provisions of the Plan. The numbers in
brackets following the name of certain paragraphs of this Article I refer to the
other paragraphs of the Plan dealing with the subject matter of the paragraph.
1.1 Names of the Plan and Trust. The name of the Plan is the "World
---------------------------
Carpets, Inc. Savings and Retirement Plan" and the name of the Trust is the
"World Carpets, Inc. Savings and Retirement Trust."
1.2 Dates.
-----
(a) Effective Date. The Plan was originally effective as of
--------------
January 1, 1989, and this amended and restated Plan shall be effective as of
January 1, 1989.
(b) Plan Year [2.29]. The first Plan Year was a short Plan Year
----------------
beginning on January 1, 1989 and ending on the payroll date nearest December 31,
1989. Each subsequent Plan Year shall be the 52-53 week period ending on the
payroll date nearest each December 31.
(c) Allocation Dates [5.2]. The Allocation Dates shall be the
----------------------
last day of the sixth month of the Plan Year and the last day of the Plan Year.
<PAGE>
1.3 Appointment of Administrator [ 11.1]. World Carpets, Inc. shall
------------------------------------
be the Administrator of the Plan.
1.4 Designated Agent for Service of Process of [12.6]. The
-------------------------------------------------
Administrator shall be the designated agent for service of process.
1.5 Eligibility Requirements to Participate in the Plan.
---------------------------------------------------
(a) Age and Service Requirements [3.1(a)].
-------------------------------------
(i) An Employee shall become a Participant in the Plan on
January 1, 1989, if, on such date
(A) he is employed by the Employer and is in the class
of Employees eligible to participate in the Plan,
(B) he has completed one (1) Year of Service, and
(C) he has agreed in writing to make a salary
reduction contribution to the Plan.
(ii) An Employee who is not eligible to become a Participant
in the Plan on January 1, 1989, or an Employee who is hired after January 1,
1989, shall become a Participant in the Plan on the Entry Date coinciding with
or next following the date he satisfies each of the following requirements:
(A) he is employed by the Employer and is in the class
of Employees eligible to participate in the Plan,
(B) he has completed one (1) Year of Service, and
(C) he has agreed in writing to make a salary
reduction contribution to the Plan.
(b) Entry Date. The term "Entry Date" shall mean each January 1
----------
and each July 1.
(c) Class of Eligible Employees. The class of Employees eligible
---------------------------
to participate in the Plan is all Employees except leased employees and except
those Employees who are included in a collective bargaining unit that has
bargained in good faith with the Employer regarding retirement benefits.
(d) Application Forms. A written application form on which the
-----------------
Employee specifies the amount of his initial
2
<PAGE>
salary reduction contribution shall be required of Employees in order to
participate in the Plan.
1.6 Employer Contributions [4.1].
----------------------------
(a) Salary Reduction Contributions. Subject to the limitations
------------------------------
of Subparagraph (b) of Paragraph 4.4 (Salary Reduction Contributions), the
----------------- -------------
Employer shall contribute to the Plan for each Plan Year an amount that is equal
to the sum of the contributions required by the salary reduction agreements
entered into between the Employer and the Participants for the Plan Year.
(b) Matching Employer Contributions. The Employer shall
-------------------------------
determine each year the amount which it shall contribute to the Plan as a
matching contribution. Any matching contributions shall be allocated to those
Participants who contribute to the Plan under Paragraph 1.6 during the six
-------------
months period for which such matching contribution is made to the Plan for each
Participant. Each Participant's share of any matching contribution will be
determined from the appropriate table below as a percentage of the Participant's
salary reduction contribution for the Plan Year.
For Participants who enter the Plan on January 1, 1989, or, if the Employee was
on an approved leave of absence on January 1, 1989, the first Entry Date on
which the Employee was eligible to join the Plan
Matching
Years of Service Percentage
---------------- ----------
one 25%
two 50%
three 75%
four or more 100%
For all other Participants -- Matching
Years of Participation in the Plan Percentage
----------
one 25%
two 50%
three 75%
four or more 100%
For purposes of this Paragraph, a Year of Participation is any Plan Year during
which the Participant had an account in the Plan, regardless of whether a
Participant made a salary reduction contribution during that Year.
In no event, however, shall the Employer's matching contribution pursuant to
this Subparagraph (b) for the benefit of a
----------------
3
<PAGE>
Participant exceed Four percent (4%) of the Participant's Salary as defined in
Paragraph 4.4 (Salary Reduction Contributions) for the Plan Year.
- -------------
(c) Limitation. Notwithstanding the foregoing provisions of this
----------
Paragraph 1.6, the total amount the Employer may contribute to the Plan for each
- -------------
Plan Year for the benefit of all Participants shall not exceed the maximum
amount deductible under Section 404 of the Code from the Employer's income for
the Fiscal Year coinciding with or ending with the Plan Year.
1.7 Definition of Compensation [2.4]. The term "Compensation" shall
--------------------------------
mean the total amount paid to a Participant by the Employer during a Plan Year
including any amount the Employer contributed to the Plan for the Plan Year
pursuant to Subparagraph (a) (Salary Reduction Contributions) of Paragraph 1.6
------------ --- -------------
(Employer Contributions) for the benefit: of the Participant.)
1.8 Amount of Compensation Considered in Allocating Employer
--------------------------------------------------------
Contributions for Year Participant Enters or Reenters the Plan [5.6(b)]. For the
- -----------------------------------------------------------------------
Plan Year that a Participant enters or reenters the Plan, the amount of his
Compensation that shall be considered in determining his share of Employer
contributions for the Plan Year shall be his Compensation for the portion of the
Plan Year during which he was a Participant in the Plan.
1.9 Salary Reduction Contributions [4.4].
------------------------------------
(a) Salary reduction contributions shall be permitted. During
the election period for each Plan Year, a Participant may elect to enter into a
written salary reduction agreement with the Employer for the Plan Year. Under
the agreement, the Participant shall accept a reduction in Salary, and the
Employer shall contribute to the Plan for the benefit of the Participant the
amount by which the Participant's Salary is reduced.
(b) The percentage of his Salary, as defined in Paragraph 4.4
-------------
(Salary Reduction Contributions), that a Participant may elect to have the
Employer contribute to the Plan for a Plan Year shall not be less than one
percent (1%) or more than fifteen percent (15%), in multiples of one percent
(1%). In no event may a Participant's salary reduction contribution for a Plan
Year exceed $7,000 or such larger amount as may be designated by the Secretary
of the Treasury.
(c) A Participant may enter into a salary reduction agreement
with the Employer at any time during the thirty-day period immediately preceding
the Participant's Entry Date, and thereafter, on January 1 and July 1.
4
<PAGE>
1.10 Formula for Allocation of Employer Contributions [5.6(a)].
---------------------------------------------------------
(a) Salary Reduction Contributions. The Employer contributions
------------------------------
for a Plan Year that are made for the benefit of a Participant pursuant to
Subparagraph (a) (Salary Reduction Contributions) of Paragraph 1.6 (Employer
- ---------------- -------------
Contributions) shall be allocated and credited to the Participant's Salary
Reduction Contribution Account.
(b) Matching Employer Contributions. The Employer contributions
-------------------------------
for a Plan Year that are made for the benefit of a Participant pursuant to
Subparagraph (b) (Matching Employer Contributions) of Paragraph 1.6 (Employer
- ---------------- -------------
Contributions) shall be allocated and credited to the Participant's Employer
Contribution Account.
1.11 Participants to Whom Matching Employer Contributions Will Be
------------------------------------------------------------
Allocated [5.6(a)]. The Employer contributions for a Plan Year that are made
- ------------------
pursuant to Subparagraph (b) (Matching Employer Contributions) of Paragraph 1.6
---------------- -------------
(Employer Contributions) shall be allocated on each Allocation Date to the
Employer Contribution Account.
(a) of each Participant who has retired or has died during the
Plan Year, and
(b) of each Participant who satisfies either of the following
requirements:
(i) he is employed by the Employer on the Allocation Date,
or
(ii) his active employment was terminated since the last
Allocation Date as a result of the elimination or closing of his division or
plant or his layoff.
1.12 Normal Retirement Date [7.1]. A Participant's Normal Retirement
----------------------------
Date shall be the first day of the month following his sixty-fifth (65th)
birthday .
1.13 Requirements for Delayed Retirement [7.2]. Delayed retirement
-----------------------------------------
beyond Normal Retirement Date shall be permitted.
1.14 Requirements for Early Retirement [7.3]. Early retirement shall
---------------------------------------
be permitted. A Participant who has completed five (5) Years of Service and who
has attained his fifty-fifth (55th) birthday may retire before his Normal
Retirement Date.
1.15 Vesting of Benefits [8.6(b)]. A Participant will be 100% vested
----------------------------
in all his Salary Reduction Contribution Account,
5
<PAGE>
his Employer Contribution Account and any other Accounts in the Plan at all
times.
1.16 Date Used for Valuing the Accounts of a Retired, Deceased, or
-------------------------------------------------------------
Terminated Participant [8.7]. The date used for valuing the accounts of a
- ----------------------------
retired, deceased, or terminated Participant, except accounts whose investment
the Participant is directing, shall be the Allocation Date that coincides with,
or next follows the date of his retirement (regardless of whether normal, early,
or delayed), death, or other termination of employment.
1.17 Purchase of Life Insurance [6.5(a)]. The purchase of life
-----------------------------------
insurance on the lives of the Participants with the funds in their Employer
Contribution Accounts shall not be permitted.
1.18 Pre-Termination Distributions [8.9]. Pre-termination
-----------------------------------
distributions to Participants from their Salary Reduction Contribution Accounts
shall be permitted in the case of hardship, as provided in Paragraph 8.9.
--------------
1.19 Loans to Participants [8.10]. Loans to Participants shall not be
----------------------------
permitted.
1.20 Direction of Investments by Participants [6.3]. Participants
----------------------------------------------
shall be permitted to direct the investment of their accounts among funds
approved by the Administrator.
1.21 Direction of Investments by Employer [6.4]. The Employer shall
------------------------------------------
not be permitted to manage the investment of all or any portion of the Fund.
1.22 Effect of Membership in Another Plan Requiring Contributions from
-----------------------------------------------------------------
Employer [3.5]. If a Participant becomes a participant in another retirement or
- --------------
profit-sharing plan that requires contributions from the Employer but that is
not sponsored by the Employer, the Participant shall cease to participate in
Employer contributions as provided in Paragraph 3.5 (Membership in Another Plan
-------------
Requiring Contributions from Employer).
1.23 Related Organizations [3.4]. There are no organizations
---------------------------
designated by the Employer as "related organizations" for purposes of
determining a Participant's eligibility, Years of Service, and certain other
matters.
1.24 Method of Determining Hours of Service [3.2(e)]. The Hours of
-----------------------------------------------
Service of an Employee or Participant shall be determined in the manner
specified in Subparagraph (e) of Paragraph 3.2 (Service).
---------------- -------------
1.25 Top-Heavy - Vesting Schedule [13.3(a)]. A
---------------------------------------
6
<PAGE>
Participating Employee shall have a 100% vested interest in his Employer
Contribution Account at all times.
1.26 Top-Heavy - Minimum Benefit [13.4]. For each Plan Year in which
----------------------------------
this Plan is a Top-Heavy Plan, the Employer shall contribute to the Plan from
its current or accumulated earnings or profits, for each Participating Employee,
an amount that, when added to any other Employer contributions for the Plan Year
and to any forfeitures to be reallocated for the Plan Year, will equal the
smaller of the following percentages of the Participating Employee's Annual
Compensation for the Plan Year:
(i) three percent (3%), or
(ii) the largest percentage of Annual Compensation received by
any Key Employee for the Plan Year.
1.27 Top-Heavy - Additional Minimum Benefit [13.5]. No Employee who
---------------------------------------------
is a Participating Employee under this plan is participating under a defined
benefit Top-Heavy Plan maintained by the Employer, therefore Paragraph 13.5
--------------
(Additional Minimum Benefit) does not apply to this Plan.
1.28 Top-Heavy - Coordination of Minimum Benefits If Employer
--------------------------------------------------------
Maintains Other Top-Heavy Plans [13.7]. In addition to this Plan, the Employer
- --------------------------------------
maintained until June 30, 1991, the following qualified plan:
World Carpets, Inc. Profit-Sharing Retirement Plan.
The minimum benefit requirement that applies to Top-Heavy Plans shall be
satisfied in the following manner:
(i) A Participating Employee who is not a Key Employee for the
Plan Year and who is participating under this Plan, but not under the qualified
plan named above, shall receive any required minimum benefit under this Plan, as
provided in Paragraph 1.26 (Top-Heavy - Minimum Benefit).
--------------
(ii) A Participating Employee who is not a Key Employee for the
Plan Year and who is participating under this Plan and under the qualified plan
named above shall receive any required minimum benefit under this Plan, as
provided in Paragraph 1.26 (Top-Heavy - Minimum Benefit) and in Paragraph 1.27
-------------- --------------
(Top-Heavy - Additional Minimum Benefit) but no minimum benefit under the
qualified plan named above.
(iii) An Employee who is not a Key Employee for the Plan Year and
who is participating under the qualified plan named above but is not a
Participating Employee under this Plan shall receive any required minimum
benefit under the qualified plan named above.
7
<PAGE>
ARTICLE 2
---------
DEFINITIONS
-----------
When used in this Plan, each term defined in this Article 2 shall have
---------
the following meaning unless a different meaning is clearly required by the
context. Additional definitions are contained in Paragraph 3.2 (Service),
-------------
Paragraph 4.4 (Salary Reduction Contributions), Paragraph 5.9 (Section 415
- ------------- -------------
Limitations), and Paragraph 13.13 (Definitions That Relate to Top-Heavy Plans).
---------------
2.1 Administrator - shall mean either the Employer or the person, or
-------------
persons, or organization named in Article 1 to whom the Employer has delegated
---------
the responsibility of administering the Plan and complying with the reporting
and disclosure requirements of ERISA.
2.2 Beneficiary - shall mean the recipient or recipients designated,
-----------
as provided in Paragraph 8.5 (Distributions - Death), by the Plan, by a
-------------
Participant, or by the Administrator to receive any benefits payable under the
Plan in the event of a Participant's death.
2.3 Code - shall mean the Internal Revenue Code of 1986, as amended.
----
Reference to a section of the Code shall include (a) that section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes that section, and (b) regulations promulgated
thereunder.
2.4 Compensation - shall have the meaning specified in Article 1,
------------ ---------
except as hereinafter provided. "Compensation" shall not include amounts
contributed by the Employer under this Plan. For purposes of this Plan, a
Participant's "Compensation" in excess of $200,000 (as indexed by the Secretary
of the Treasury) shall be disregarded. In the case of a Self-Employed
Individual, "Compensation" shall mean his "earned income," as defined in Section
401(c) (2) of the Code, from personal services rendered to the Employer in the
trade or business with respect to which this Plan is adopted. For any Plan Year
in which this Plan is a Top-Heavy Plan, "Compensation" shall not exceed the
amount specified in Paragraph 13.2 (Limitation on Annual Compensation). In
--------------
determining the Compensation of a Participant for purposes of the Plan, the
rules of Section 414(q) of the Code shall apply, except that in applying such
rules, the family unit of a Participant shall be treated as a single employee
(including the Participant) with one Compensation. The term "family unit" shall
include (in addition to the Participant) only the spouse of the Participant and
any lineal descendants of the Participant who have not attained age 19 before
the close of the Plan Year. If, as a result of the application of these rules,
the adjusted $200,000 limitation is exceeded, then the $200,000 limitation shall
be
8
<PAGE>
prorated among the affected individuals in the family unit in proportion to each
such individual's Compensation as determined under this Paragraph prior to the
application of this limitation.
2.5 Contract - shall mean any contract issued by an Insurer under the
--------
Plan, whether with or without an insurance element and whether an individual or
a group contract.
2.6 Deferred Compensation - shall mean the portion of a Participant's
---------------------
Compensation that is contributed to the Plan for a Plan Year as a salary
reduction contribution pursuant to a Participant's deferral election under
Paragraph 1.9 (a).
- -----------------
2.7 Delayed Retirement Date - shall mean the date on which a
-----------------------
Participant who retires after his Normal Retirement Date pursuant to the
provisions of Paragraph 7.2 (Delayed Retirement Date) actually retires from the
-------------
Employer's service.
2.8 Disabled - shall have the meaning, if any, specified in Article
-------- -------
1.
- -
2.9 Disability Retirement Date - shall mean the date on which a
--------------------------
Participant who retires before his Normal Retirement Date pursuant to the
provisions of Paragraph 7.4 (Disability Retirement Date) actually retires from
-------------
the Employer's service.
2.10 Employer's Elective Contribution - shall mean the amount of the
--------------------------------
total salary reduction contributions made during a Plan Year pursuant to
Paragraph 1.6(a).
- ----------------
2.11 Employer's Non-Elective Contribution - shall mean the sum of any
------------------------------------
matching contributions made by the Employer during a Plan Year pursuant to
Paragraph 1.6 (b) of the Plan.
- -----------------
2.12 ERISA - shall mean the Employee Retirement Income Security Act of
-----
1974. Reference to a section of ERISA shall include (a) that section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes that section, and (b) regulations promulgated
thereunder.
2.13 Early Retirement Date - shall mean the date on which a
---------------------
Participant who retires before his Normal Retirement Date pursuant to the
provisions of Paragraph 7.3 (Early Retirement Date) actually retires from the
-------------
Employer's service.
2.14 Employee - shall mean an individual who is employed by Employer
--------
during a Plan Year, other than an independent contractor. "Employee" shall also
mean an individual who is a Self-Employed Individual, an Owner-Employee, or a
leased employee as described in Paragraph 3.6 (Leased Employees).
-------------
9
<PAGE>
2.15 Excess Deferred Compensation - shall mean, with respect to any
----------------------------
taxable year of a Participant, the excess of the aggregate amount of such
Participant's Deferred Compensation and the elective deferrals pursuant to
Paragraph 1.6(a) actually made on behalf of such Participant for such taxable
- ----------------
year, over the dollar limitation provided for in Code Section 402(g), which is
incorporated herein by reference.
2.16 Employer - shall mean an individual, a partnership, an employee
--------
organization, or a corporation (including an S Corporation as defined in Section
1361(a) of the Code) that adopts this Plan and executes this instrument.
"Employer" shall also mean a successor to the Employer that adopts the
Employer's Plan. An individual who is sole proprietor shall be considered to be
his own Employer, and a partnership shall be considered to be the Employer of
each partner.
2.17 50% Joint and Survivor Annuity - shall mean an annuity that can
------------------------------
be purchased with the value of a Participant's accounts and that is payable for
the life of the Participant with a survivor annuity for the life of his spouse
equal to fifty percent (50%) of the amount of the annuity payable during the
joint lives of the Participant and his spouse.
2.18 Fiscal Year - shall mean the taxable year of the Employer for
-----------
Federal income tax purposes.
2.19 Fund - shall mean the trust fund maintained, invested, and
----
administered by the Trustee under the Trust and from which Plan benefits and any
other distributions and expenses of the Plan are paid or provided.
2.20 Highly Compensated Employee - shall mean an Employee or former
---------------------------
Employee who is considered a highly compensated employee under Section 414(g) of
the Code and any regulations thereunder and generally means an Employee who
performed services for the Employer during the "determination year" and is in
one or more of the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Paragraph
---------
2.23.
----
(b) Employees who received "415 Compensation" during the "look-
back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the "look-
back year" from the Employer in excess of $50,000 and were in the Top
Paid Group of Employees for the Plan Year.
10
<PAGE>
(d) Employees who during the "look-back year" were officers of
the Employer (as that term is defined within the meaning of the
Regulations under Code Section 416) and received "415 Compensation"
during the "look-back year" from the Employer greater than 50 percent
of the limit in effect under Code Section 415(b)(1)(A) for any such
Plan Year. The number of officers shall be limited to the lesser of
(i) 50 employees; or (ii) the greater of 3 employees or 10 percent of
all employees. If the Employer does not have at least one officer
whose annual "415 Compensation" is in excess of 50 percent of the Code
Section 415(b)(l) (A) limit, then the highest paid officer of the
Employer will be treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100
Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d) above
when these paragraphs are modified to substitute "determination year"
for "look-back year".
The "determination year" shall be the Plan Year for which testing is
being performed, and the "look-back year" shall be the immediately preceding
twelve-month period. However, if the Plan Year is a calendar year, or if another
Plan of the Employer so provides, then the "look-back year" shall be the
calendar year ending with or within the Plan Year for which testing is being
performed, and the "determination year" (if applicable) shall be the period of
time, if any, which extends beyond the "look-back year" and ends on the last day
of the Plan Year for which testing is being performed (the "lag period"). With
respect to this election, it shall be applied on a uniform and consistent basis
to all plans, entities, and arrangements of the Employer. For purposes of this
Section, the determination of "415 Compensation" shall be made by including
amounts that would otherwise be excluded from a Participant's gross income by
reason of the application of Code Sections 125, 402(a)(8), 402(h)(1) (B) and, in
the case of Employer contributions made pursuant to a salary reduction
agreement, Code Section 403(b). Additionally, the dollar threshold amounts
specified in (b) and (c) above shall be adjusted at such time and in such manner
as is provided in Regulations. In the case of such an adjustment, the dollar
limits which shall be applied are those for the calendar year in which the
"determination year" or "look back year" begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)) from the Employer constituting United States source income
within the meaning of Code Section 861(a)(3) shall not be treated as
11
<PAGE>
Employees and Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o) (2) shall be considered Employees unless such Leased Employees are
covered by a plan described in Code Section 414(n) (5) and are not covered in
any qualified plan maintained by the Employer. The exclusion of Leased Employees
for this purpose shall be applied on a uniform and consistent basis for all of
the Employer's retirement plans. In addition, Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year".
If an Employee is, during a determination year or look-back year, a family
member of a Highly Compensated Employee who is either a five percent owner or
one of the ten most highly compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the family member and
the Highly Compensated Employee shall be aggregated in accordance with the
requirements of Section 414(q) of the Code. In such case, the family member and
the Highly Compensated Employee shall be treated as a single Employee receiving
Compensation and Plan contributions or benefits equal to the sum of such
Compensation and contributions or benefits of the family member and the Highly
Compensated Employee. For purposes of this Paragraph, "family member" includes
the spouse and the lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants.
For purposes of this Paragraph, "415 Compensation" shall have the meaning
prescribed in Paragraph 5.9(c)(ii).
--------------------
2.21 Insurer - shall mean the insurance company or companies
-------
currently designated by the Employer for the purchase of Contracts by the
Trustee or any insurance company from which Contracts have been purchased in the
past, if provision for the purchase of Contracts is made in Article 1 or was
---------
included in the Plan at some prior time.
2.22 Investment Manager - shall mean any person (individual,
------------------
corporation, or other entity) other than the Trustee, Employer, or Administrator
who has been designated as an Investment Manager by the Employer pursuant to
Article 1 and who
- ---------
(i) has the power to manage, acquire, or dispose of all or
any portion of the Fund;
(ii) is registered as an investment adviser under the
Investment Advisers Act of 1940; is a bank as defined in that Act; or is an
insurance company qualified to perform investment management services under the
laws of more than one state; and
12
<PAGE>
(iii) has acknowledged in writing that he or it is a
fiduciary with respect to the Plan.
2.23 Key Employee - shall mean an employee as defined in Code Section
------------
416(i) and the Regulations thereunder. Generally, any Employee or former
Employee (as well as each of his Beneficiaries) is considered a Key Employee if
he, at any time during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in one of the
following categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(l)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation
in effect under Code Section 415(c)(l) (A) for the calendar year in
which such Plan Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner
means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be
13
<PAGE>
aggregated under Code Sections 414(b), (c), (m) and (o) shall be
treated as separate employers. However, in determining whether an
individual has "415 Compensation" of more than $150,000, "415
Compensation" from each employer required to be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be taken into account.
For purposes of this Paragraph; the term, "415 Compensation" shall
have the meaning prescribed for the term "Annual Compensation" in Paragraph
---------
5.9(c)(ii) and amounts that would otherwise be excluded from a Participant's
- ----------
gross income by reason of the application of Code Sections 125, 402(a) (8),
402(h)(l) (B) and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b).
2.24 Normal Retirement Date - shall mean the date specified in Article
---------------------- -------
1.
- -
2.25 Owner-Employee - shall mean an individual who owns the entire
--------------
interest in the Employer or a partner who owns more than ten percent (10%) of
either the capital interest or the profits interest in the Employer and who has
income from personal services rendered to the Employer.
2.26 Participant - shall mean an Employee of the Employer who becomes
-----------
a Participant in accordance with the provisions of Paragraph 3.1
-------------
(Participation), and a former Employee who is receiving or is entitled to
receive benefits under the Plan.
2.27 Party in Interest - shall mean any person described by Section
-----------------
3(14) of ERISA and any regulations issued thereunder.
2.28 Plan - shall mean the Profit-Sharing Plan of the Employer as
----
contained in this instrument, and all amendments to this instrument.
2.29 Plan Year - shall mean the period of time, normally twelve (12)
---------
months, beginning and ending on the dates specified in Article 1.
2.30 Self-Employed Individual - shall mean an individual described in
------------------------
Section 401(c)(i) of the Code who has income from personal services rendered to
the Employer.
2.31 Shareholder-Employee - shall mean an individual who is employed
--------------------
by the Employer and who owns, directly or indirectly, more than five percent
(5%) of the Employer's
14
<PAGE>
outstanding capital stock during any Fiscal Year of the Employer in which the
Employer elected to be taxed as an S Corporation, as defined in Section 1361(a)
of the Code.
2.32 Spouse's Annuity - shall mean an annuity that is payable for the
----------------
life of the spouse of a deceased Participant and that is equal to the amount the
spouse would have received as an annuity if, on the date of death, one half of
the deceased Participant's vested interest in his Employer Contribution Account
and in any other accounts established to hold assets transferred from other
qualified plans had been used to purchase a life annuity for his spouse and the
spouse had begun receiving benefits immediately.
2.33 Top Paid Group - shall mean the group of employees determined
--------------
pursuant to Code Section 414(q) and the Regulations thereunder and generally
means the top 20 percent of Employees who performed services for the Employer
during the applicable year, ranked according to the amount of "415 Compensation"
(as determined pursuant to Paragraph 5.9) received from the Employer during such
--------------
year. All Affiliated Employers shall be taken into account as a single employer,
and Leased Employees shall be treated as Employees pursuant to Code Section
414(n) or (c). Employees who are non-resident aliens who received no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded, however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during
a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer
are covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
15
<PAGE>
The foregoing exclusions set forth in this Paragraph shall be applied
on a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
2.34 Transfer Account - shall mean the account maintained for a
----------------
Participant to reflect his benefits attributable to a transfer to the Trustee of
such Participant's interest in the assets of another qualified plan transferred
to this Plan Pursuant to Paragraph 4.8. A Participant shall always be one
-------------
hundred percent (100%) vested in his Transfer Account. Distributions of Transfer
Accounts shall be in the manner set forth in Articles 8 and 9.
---------- -
2.35 Trust - shall mean the trust created to serve as a funding medium
-----
for the Plan by the trust agreement between the Employer and the Trustee.
2.36 Trustee - shall mean the person (individual, corporation, or
-------
other entity) that executes the trust agreement as Trustee and any successor or
successors thereto.
16
<PAGE>
ARTICLE 3
---------
PARTICIPATION, SERVICE, ETC.
---------------------------
3.1 Participation.
-------------
(a) Except as provided in Subparagraph (b) of this Paragraph
---------------- ---------
3.1, an Employee shall become a Participant in the Plan on the Entry Date
- ---
coinciding with or next following his satisfaction of the eligibility
requirements specified in Article 1.
---------
(b) Notwithstanding any other provision of this Plan, an
Employee or Participant who satisfies any one of the following requirements
shall become a Participant in the Plan on the date he satisfies such
requirement:
(i) A former Participant whose employment with the
Employer was terminated when he had a vested interest in his Employer
Contribution Account and who is reemployed by the Employer shall become a
Participant in the Plan on the date of his reemployment.
(ii) A former Participant whose employment with the
Employer was terminated when he did not have a vested interest in his Employer
Contribution Account and who is reemployed by the Employer before he incurs a
period of five (5) consecutive One-Year Breaks in Service shall become a
Participant in the Plan on the date of his reemployment.
(iii) A former Participant whose employment with the
Employer was terminated when he did not have a vested interest in his Employer
Contribution Account and who is reemployed by the Employer after he incurs a
period of five (5) consecutive One-Year Breaks in Service, but whose aggregate
number of consecutive One-Year Breaks in Service is less than his aggregate
number of Years of Service before such five-year period, shall become a
Participant in the Plan on the date of his reemployment.
(iv) A former Participant who became ineligible to
participate in the Plan because he ceased to be a member of the class of
eligible Employees and who has not incurred a period of five (5) consecutive
One-Year Breaks in Service shall become a Participant in the Plan on the date he
again becomes a member of the class of eligible Employees.
(v) An Employee who becomes a member of the class of
eligible Employees after he has satisfied the other eligibility requirements
specified in Article 1 shall become a Participant in the Plan on the date he
---------
becomes a member of the class of eligible Employees.
17
<PAGE>
(c) If a former Participant is reemployed by the Employer --
(i) the Participant shall become a Participant in the
Plan on the date specified in Subparagraph (b) of this Paragraph 3.1;
---------------- -------------
(ii) the Participant may repay any distribution received
on termination of employment (see Paragraph 9.12 (Right to Repay Distribution
--------------
Received on Termination of Participation in the Plan)), provided he has not
incurred a period of five (5) consecutive One-Year Breaks in Service;
(iii) the Administrator shall establish and maintain for
the Participant a new Employer Contribution Account to which all future Employer
contributions and forfeitures shall be allocated and credited, even if the
Participant has an Employer Contribution Account established at an earlier time;
and
(d) If Article 1 requires an Employee to file a written
---------
application with the Administrator in order to participate in the Plan, the
Administrator shall furnish each eligible Employee an application form no later
than thirty (30) days prior to the earliest Entry Date on which the Employee may
become a Participant. An Employee who does not apply for participation when he
first becomes eligible may apply for participation as of any succeeding Entry
Date if, at that time, he meets the eligibility requirements specified in
Article 1. In such event, his participation shall commence as of the Entry Date
- ---------
coinciding with or next following the filing of his application with the
Administrator. Such Employee shall have the same Normal Retirement Date as would
have been the case if he had applied for participation when first eligible.
(e) Participation in the Plan shall not give any Employee the
right to be retained in the employ of the Employer, or, upon termination of
employment, any right or interest in the Fund other than as provided in this
instrument.
3.2 Service.
-------
(a) Basic Rule. Except as otherwise specifically provided in
----------
this Paragraph 3.2, all Years of Service with the Employer of an Employee or
-------------
Participant shall be counted for all purposes of the Plan and shall include --
(i) Years of Service with each predecessor employer, as
defined in regulations under Section 414(a) of the Code, of the Employer, if the
predecessor employer maintained the Plan;
18
<PAGE>
(ii) Years of Service with each member of a group that
constitutes a controlled group of corporations, as defined in Section 414(b) of
the Code, if the Employer is a member of the group;
(iii) Years of Service with each member of a group that
conducts a trade or business, whether or not incorporated, that is under common
control, as defined in Section 414(c) of the Code, if the Employer is a member
of the group; and
(iv) Years of Service with each member of a group that
constitutes an affiliated service group, as defined in Section 414(m) of the
Code, if the Employer is a member of the group.
(b) Exceptions to Basic Rule - Eligibi1ity. For purposes of
---------------------------------------
determining the eligibility of an Employee or Participant to participate in the
Plan, his Years of Service shall be subject to the following conditions and
exceptions:
(i) In the case of an Employee or Participant who incurs a
One-Year Break in Service, Years of Service performed by him before such One-
Year Break in Service shall be disregarded until he has completed one (1) Year
of Service after such One-Year Break in Service.
(ii) In the case of an Employee or Participant whose
employment with the Employer was terminated when he did not have a vested
interest in his Employer Contribution Account and when he had five (5) or fewer
Years of Service, such Years of Service shall be disregarded if the Participant
subsequently incurs a period of five (5) consecutive One-Year Breaks in Service.
If, however, the Participant had more than five (5) Years of Service when his
employment was terminated, such Years of Service shall be disregarded only if
the Participant subsequently incurs a period of consecutive One-Year Breaks in
Service that equals or exceeds the number of such Years of Service.
(c) Exceptions to Basic Rule - Vesting. For purposes of
-----------------------------------
determining the vested interest of an Employee or Participant in his Employer
Contribution Account, his Years of Service shall be subject to the following
conditions and exceptions:
(i) If Article 1 so provides, Years of Service performed
---------
by an Employee or Participant during any period for which he declined to make
any part of the required contributions to the Plan shall be disregarded.
(ii) In the case of an Employee or Participant who incurs a
One-Year Break in Service, Years of Service performed by him before such One-
Year Break in Service shall be
19
<PAGE>
disregarded until he has completed one (1) Year of Service after such One-Year
Break in Service.
(iii) In the case of an Employee or Participant whose
employment was terminated when he did not have a vested interest in his Employer
Contribution Account and when he had five (5) or fewer Years of Service, such
Years of Service shall be disregarded if the Participant subsequently incurs a
period of five (5) consecutive One-Year Breaks in Service. If, however, the
Participant had more than five (5) Years of Service when his employment was
terminated, such Years of Service shall be disregarded only if the Participant
subsequently incurs a period of consecutive One-Year Breaks in Service that
equals or exceeds the number of such Years of Service.
(iv) In the case of an Employee or Participant who incurs
a period of five (5) consecutive One-Year Breaks in Service, Years of Service
performed by him after such five-year period shall be disregarded for purposes
of determining his vested interest in the portion of his Employer Contribution
Account that accrued before such five-year period.
(d) Twelve-Month Period Used to Determine Years of Service and
----------------------------------------------------------
One-Year Breaks in Service. The twelve-month period used to determine Years of
- ---------------------------
Service and One-Year Breaks in Service shall be computed as follows:
(i) For purposes of determining the eligibility of an
Employee or Participant to participate in the Plan --
(A) Except as provided in Subparagraph (B) of this
----------------
Subparagraph (d), the initial twelve-month period shall begin on the employment
- ----------------
date of the Employee or Participant. The computation period beginning after a
one-year Break in Service shall be measured from the date on which an Employee
again performs an Hour of Service. For the succeeding computation periods after
the initial eligibility computation period, the eligibility computation period
shall shift to the current Plan Year which includes the anniversary of the date
on which the Employee first performed an Hour of Service. An Employee who is
credited with 1,000 Hours of Service in both the initial, eligibility
computation period and the first Plan Year which commences prior to the first
anniversary of the Employee's initial eligibility computation period will be
credited with two Years of Service for purposes of eligibility to participate.
(ii) For purposes of determining the vested interest of an
Employee or Participant in his Employer Contribution Account, the initial
twelve-month period shall be the Plan Year in which his employment date occurs.
Each subsequent twelve-month period shall be the Plan Year. The term
20
<PAGE>
"employment date" shall mean the date on which an Employee or Participant first
performs an Hour of Service for the Employer.
(iii) For purposes of determining the eligibility of an
Employee or Participant to share in the Employer's contributions for a Plan
Year, the twelve-month period shall be the Plan Year.
(e) Method of Determining Hours of Service. The Hours of Service
--------------------------------------
of an Employee or Participant shall be determined as follows:
(i) In the case of an Employee or Participant who is paid
on an hourly basis, his Hours of Service shall be determined on the basis of
records of the number of hours for which he is paid or entitled to payment.
(ii) In the case of an Employee or Participant who is paid
on a daily basis, he shall be credited with ten (10) Hours of Service for each
day that he would have been credited with one (1) or more Hours of Service if
the determination were being made on the basis of records of the number of hours
for which he is paid or entitled to payment.
(iii) In the case of an Employee or Participant who is paid
on a weekly basis, he shall be credited with forty-five (45) Hours of Service
for each week that he would have been credited with one (1) or more Hours of
Service if the determination were being made on the basis of records of the
number of hours for which he is paid or entitled to payment.
(iv) In the case of an Employee or Participant who is paid
on a semi-monthly basis, he shall be credited with ninety-five (95) Hours of
Service for each semi-monthly payroll period that he would have been credited
with one (1) or more Hours of Service if the determination were being made on
the basis of record of the number of hours for which he is paid or entitled to
payment.
(v) In the case of an Employee or Participant who is paid
on a monthly basis, the Employee or Participant shall be credited with one
hundred ninety (190) Hours of Service for each month that he would have been
credited with one (1) or more Hours of Service if the determination were being
made on the basis of records of the number of hours for which he is paid or
entitled to payment.
(f) Maternity or Paternity Leave. An Employee or Participant who
----------------------------
is absent from work for Maternity or Paternity Leave shall be credited with the
number of Hours of Service that would have been credited to the Employee or
Participant but for such absence. The Hours of Service to be credited under this
21
<PAGE>
Subparagraph (f) shall be subject to the following conditions and exceptions:
- ----------------
(i) In any case in which the Hours of Service that would
have been credited cannot be determined, eight (8) Hours of Service shall be
credited for each day of Maternity or Paternity Leave.
(ii) No more than five hundred and one (501) Hours of
Service shall be credited for Maternity or Paternity Leave.
(iii) Hours of Service for Maternity or Paternity Leave
shall be credited solely to determine if an Employee or Participant has incurred
a One-Year Break in Service for eligibility or vesting purposes.
(iv) Hours of Service credited for Maternity or Paternity
Leave shall be credited --
(A) in the "twelve-month period" in which the
absence begins if the crediting is necessary to prevent a One-Year Break in
Service in that period, or
(B) in all other cases, in the following "twelve-
month period."
For purposes of this Subparagraph (iv), "twelve-month period" shall mean the
-----------------
period specified in Subparagraph (d) of this Paragraph 3.2 for determining Years
---------------- -------------
of Service and One-Year Breaks in Service for eligibility or vesting purposes,
as the case may be.
(g) Definitions That Relate to Service. When used in this
----------------------------------
Paragraph 3.2, each term defined in this Subparagraph (g) shall have the
- ------------- ----------------
following meaning unless a different meaning is clearly required by the context.
(i) Year of Service - shall mean a period of twelve (12)
---------------
consecutive months during which an Employee or Participant is credited with one
thousand (1,000) or more Hours of Service.
(ii) One Year Break in Service - shall mean a period of
-------------------------
twelve (12) consecutive months during which an Employee or Participant is
credited with less than five hundred one (501) Hours of Service.
(iii) Hours of Service - shall mean the sum of each hour
----------------
credited to an Employee or Participant, under Subparagraphs (A), (B), and (C)
----------------- --- ---
below --
22
<PAGE>
(A) Each hour for which an Employee or Participant is
directly or indirectly paid or entitled to payment by the Employer for the
performance of duties. Each hour under this Subparagraph (A) shall be credited
----------------
to the twelve-month period in which the duties were performed.
(B) Each hour for which back pay is either awarded or
agreed to by the Employer, computed without regard to any mitigation of damages.
Credit shall not be given under this Subparagraph (B) for any hour that is
----------------
credited under either Subparagraph (A) or Subparagraph (C). Each hour under this
---------------- ----------------
Subparagraph (B) shall be credited to the twelve-month period to which the back
- ----------------
pay award or agreement pertains, rather than the twelve-month period in which
the award, agreement, or payment is made.
(C) Each hour for which an Employee or Participant is
directly or indirectly paid or entitled to payment by the Employer for reasons
other than the performance of duties, such as vacation, regular holidays, and
temporary illness. No more than five hundred and one (501) hours shall be
credited under this Subparagraph (C) for any single continuous period during
----------------
which no duties were performed. Payments made or due under a plan maintained by
the Employer solely for the purpose of complying with applicable workers'
compensation, unemployment compensation, or disability insurance laws, or to
reimburse an Employee or Participant for medical or medically related expenses
shall not be considered as payments by the Employer for purposes of this
Subparagraph (C). Each hour under this Subparagraph (C) shall be calculated and
- ---------------- ----------------
credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations,
which is incorporated herein by reference.
(iv) Maternity or Paternity Leave - shall mean an absence
----------------------------
from work --
(A) by reason of the pregnancy of an individual,
(B) by reason of the birth of a child of an
individual,
(C) by reason of the placement of a child with an
individual in connection with the adoption of such child by such individual, or
(D) to permit an individual to care for any such child
for a period beginning immediately following the birth or placement of such
child.
3.3 Leave of Absence. A leave of absence shall be granted by the
----------------
Employer for jury duty. A leave of absence may be
23
<PAGE>
granted by the Employer for sickness, accident, vacation, disability, service in
the Armed Forces of the United States, or other similar reasons in accordance
with a uniform nondiscriminatory policy established it.
3.4 Transfers Between Employer and Related Organizations.
----------------------------------------------------
(a) The organizations that the Employer has designated as
related organizations for purposes of this Plan are specified in Article 1. The
---------
Employer may designate additional organizations as related organizations and may
revoke any such designation from time to time.
(b) If an employee of a related organization is transferred to
the Employer with no intervening break in employment, such employee shall be
eligible to enter this Plan on the date of his transfer, provided he meets the
eligibility requirements specified in Article 1 at such time.
---------
(c) If a Participant under this Plan is transferred to a related
organization with no intervening break in employment, he shall share in Employer
contributions and in any forfeitures until the end of the Plan Year in which his
transfer occurs but not thereafter.
(d) The accounts of a transferred Participant shall be
distributed or forfeited, as the case may be, as follows:
(i) If the Participant continues in the employ of any one
or more of such related organizations or of the Employer until his retirement or
death, his accounts shall be distributed in accordance with the provisions of
Article 8 (Distributions and Loans).
- ---------
(ii) If the Participant's employment with such related
organizations or with the Employer is terminated prior to his retirement or
death, his vested interest, if any, in his Employer Contribution Account shall
be calculated as of the date his employment is terminated. The calculation shall
be based on the Participant's Years of Service on the date his employment is
terminated in accordance with the provisions of Paragraph 8.6 (Distributions -
-------------
Termination of Employment). The Participant's vested interest, if any, shall be
distributed in accordance with the provisions of Article 8 (Distributions and
---------
Loans).
(e) For purposes of computing the Years of Service of an
Employee who is transferred to the Employer from a related organization with no
intervening break in employment,
24
<PAGE>
credit shall be given for his service with such related organization adopted
this Plan.
3.5 Membership in Another Plan Requiring Contributions from Employer.
----------------------------------------------------------------
(a) If a Participant in this Plan becomes a participant in
another retirement or profit-sharing plan that is not sponsored by the Employer
but that requires contributions from the Employer, the Participant shall,
depending on the provisions of Article 1, either continue as a Participant in
---------
this Plan or shall cease to participate in Employer contributions and
forfeitures.
(b) If Article 1 provides that the Participant shall continue as
------------
a Participant in this Plan, the Participant shall continue to share in Employer
contributions and in forfeitures just as any other Participant.
(c) If Article 1 provides that the Participant shall cease to
---------
participate in Employer contributions, and in forfeitures, the Participant shall
share in Employer contributions and in forfeitures until the date he becomes a
participant in such other plan, but not thereafter.
(d) The Participant's accounts shall be distributed or
forfeited, as the case may be, as follows:
(i) If the Participant continues in the employ of the
Employer until his retirement or death, his accounts shall be distributed in
accordance with the provisions of Article 8 (Distributions and Loans).
---------
(ii) If the Participant's employment with the Employer is
terminated prior to his retirement or death, his vested interest, if any, in his
Employer Contribution Account shall be calculated as of the date his employment
is terminated. The calculation shall be based on the Participant's Years of
Service on the date his employment is terminated in accordance with the
provisions of Paragraph 8.6 (Distributions - Termination of Employment). The
-------------
Participant's vested interest, if any, shall be distributed in accordance with
the provisions of Article 8 (Distributions and Loans).
---------
3.6 Leased Employees.
----------------
(a) An individual who is performing services for the Employer
but who is not an Employee shall be treated as an Employee if Section 414(n) of
the Code so requires. Such individual shall be termed a "leased employee."
25
<PAGE>
(b) If a leased employee is in the class of Employees eligible
to participate in this Plan, any contributions or benefits that must be provided
such leased employee under this Plan shall be reduced by any contributions or
benefits provided such leased employee under a safe-harbor plan, as defined in
Section 4l4(n)(5) of the Code, to the extent that the contributions or benefits
provided under such safe--harbor plan are attributable to service performed for
the Employer.
3.7 Omissions of Eligible Employee. If any Employee who should be
------------------------------
included as a Participant in the Plan is erroneously omitted in any Plan Year,
and discovery of such omission is not made until after a contribution by the
Employer has been made for the year, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount which the
Employer would have contributed with respect to him had he not been omitted.
Such contribution shall be made regardless of whether or not it is deductible in
whole or in part in any taxable year under applicable provisions of the Code.
26
<PAGE>
ARTICLE 4
---------
CONTRIBUTIONS
-------------
4.1 Contributions by Employer.
-------------------------
(a) The Employer shall contribute to the Plan each Plan Year
from its current or accumulated earnings or profits an amount determined in
accordance with the contribution formula specified in Article 1.
---------
(b) The Employer's contributions to the Plan are contingent upon
receiving a favorable determination letter from the Internal Revenue Service
stating that the Plan qualifies initially as meeting the requirements of the
Internal Revenue Code of 1986 as amended and the regulations issued thereunder
so as to permit the Employer to deduct for income tax purposes all money and
property contributed under the Plan.
4.2 Determination of Contributions by Employer. The Employer's
------------------------------------------
determination of the amount of its contributions to the Plan for each Plan Year
shall be binding upon all Participants.
4.3 Non-Reversion of Employer Contributions. Except as provided in
---------------------------------------
Paragraph 5.9 (Section 415 Limitations) and Paragraph 10.9 (Return of Employer
- ------------- --------------
Contributions Because of Failure of the Plan to qualify, Mistake of Fact, or
Disallowance of Deduction), the Employer shall have no beneficial interest in
any contribution made by it to the Plan and no such contribution shall revert to
it or be diverted to any purpose other than the exclusive benefit of the
Participants or their Beneficiaries.
4.4 Salary Reduction Contributions.
------------------------------
(a) If Article 1 so provides, a Participant may elect to enter
---------
into a written salary reduction agreement with the Employer for each Plan Year.
Under the agreement, the Participant shall accept a reduction in Salary, and the
Employer shall contribute to the Trust for the benefit of the Participant the
amount by which the Participant's Salary is reduced. Each such salary reduction
agreement shall be subject to the limitations of Subparagraphs (h) and (j) of
----------------- ---
this Paragraph 4.4.
-------------
(b) In any Plan Year, the Actual Deferral Percentage for Highly
Compensated Employees shall not exceed the greater of:
(i) the Actual Deferral Percentage for all Other Employees
multiplied by 1.25, or
(ii) the smaller of (A) or (B) as follows:
27
<PAGE>
(A) the Actual Deferral Percentage for all Other
Employees multiplied by two (2.0), or
(B) the Actual Deferral Percentage for all Other
Employees plus two (2) percentage points.
The limit specified in this Subparagraph (b)(ii) shall be adjusted in accordance
--------------------
with regulations issued under Section 401(m) of the Code to avoid duplicate use
of the limit for any Highly Compensated Employee in violation of Section
401(m)(9).
(c) The Employer contributions for a Plan Year that are made
pursuant to Subparagraph (a) (Salary Reduction Contributions) of Paragraph 1.6
---------------- -------------
(Employer Contributions) shall be one hundred percent (100%) vested and shall
not be subject to forfeiture for any reason.
(d) The Employer contributions for a Plan Year that are made
pursuant to Subparagraph (a) (Salary Reduction Contributions) of Paragraph 1.6
---------------- -------------
(Employer Contributions) shall be paid to the Trustee by the Employer
periodically, but no later than thirty (30) days after the end of the Plan Year.
(e) Notwithstanding any other provision of this Plan except
Article 10 (Amendment and Termination of the Plan) and Paragraph 8.9 (Pre-
- ---------- -------------
Termination Distributions), no distribution shall be made from a Participant's
Salary Reduction Contribution Account --
(i) to a Beneficiary of the Participant prior to the death
of the Participant, or
(ii) to the Participant prior to the termination of the
Participant's employment with the Employer unless the Participant has attained
age fifty-nine and one-half (59-1/2). The limitations of this Subparagraph (e)
----------------
shall not prevent pre-termination distributions made pursuant to Paragraph 8.9
-------------
(Pre-Termination Distributions).
(f) A Participant's Salary Reduction Contribution Account is a
part of his Employer Contribution Account and the term "Employer Contribution
Account" shall be so construed. This construction is consistent with Paragraph
---------
5.1 (Accounts), and is required since all contributions allocated and credited
- ---
to a Participant's Salary Reduction Contribution Account are Employer
contributions.
(g) The election provided for under this Paragraph 4.4 shall be
-------------
subject to the following conditions and restrictions:
(i) An election or the revocation of an
28
<PAGE>
election shall be made in writing on a form prescribed by the Administrator.
(ii) An election may be made at any time during the
election period specified in Article 1.
---------
(iii) An election, if timely made, shall be effective as of
the date the prescribed form is filed with the Administrator.
(iv) An election may be revoked and a new election may be
made at any time during the same election period if the new election otherwise
complies with this Paragraph 4.4. The revocation of an election, if timely made,
-------------
shall be effective as of the date the prescribed form is filed with the
Administrator.
(v) An election shall be irrevocable after the expiration
of the election period.
(h) If the Actual Deferral Percentage of the Highly Compensated
Employees exceeds the limits in Subparagraph (b), the Administrator shall reduce
----------------
the contributions for the Highly Compensated Employees to come within the
limits, as follows:
On or before the fifteenth day of the third month following the end of
each Plan Year, the Highly Compensated Participant having the highest actual
deferral ratio (as determined for such Participant in calculating the Actual
Deferral Percentage of the Highly Compensated Employees) shall have his portion
of Excess Contributions distributed to him until one of the tests set forth in
Subparagraph (b) of this Paragraph 4.4 is satisfied, or until his actual
- ---------------- -------------
deferral ratio equals the actual deferral ratio of the Highly Compensated
Participant having the second highest actual deferral ratio. This process shall
continue until one of the tests set forth in Subparagraph (b) of this Paragraph
---------------- ---------
4.4 is satisfied. For each Highly Compensated Participant, the amount of Excess
- ---
Contributions is equal to the Employer's Elective Contributions made on behalf
of such Highly Compensated Participant (determined prior to the application of
this paragraph) minus the amount determined by multiplying the Highly
Compensated Participant's actual deferral ratio (determined after application of
this paragraph) by his "414(s) Compensation" as defined in Paragraph 4.4(b)(2).
-------------------
However, in determining the amount of Excess Contributions to be distributed
with respect to an affected Highly Compensated Participant as determined herein,
such amount shall be reduced by any Excess Deferred Compensation previously
distributed to such affected Highly Compensated Participant for his taxable year
ending with or within such Plan Year. Any distribution of Excess Contributions
shall be made in accordance with the following:
29
<PAGE>
The distribution of Excess Contributions -
(i) may be postponed but not later than the close of the Plan
Year following the Plan Year to which they are allocable;
(ii) shall be made first from unmatched Deferred Compensation
and, thereafter, simultaneously from Deferred Compensation which
is matched and matching contributions which relate to such
Deferred Compensation. However, any such matching contributions
which are not vested shall be forfeited in lieu of being
distributed;
(iii) shall be adjusted for Income; and
(iv) shall be designated by the Employer as a distribution of
Excess Contributions (and Income)
Any distribution of less than the entire amount of Excess Contributions shall be
treated as a pro rata distribution of Excess Contributions and Income.
The determination and correction of Excess Contributions of a Highly Compensated
Participant whose actual deferral ratio is determined under the family
aggregation rules shall be accomplished as follows:
(i) If the actual deferral ratio for the Highly Compensated
Participant is determined in accordance with Paragraph
---------
4.4(o)(l)(ii), then the actual deferral ratio shall be reduced as
-------------
required herein and the Excess Contributions for the family unit
shall be allocated among the Family Members in proportion to the
Elective Contributions of each Family Member that were combined
to determine the group actual deferral ratio.
(ii) If the actual deferral ratio for the Highly Compensated
Participant is determined under Paragraph 4.4(o)(l)(i), then the
----------------------
actual deferral ratio shall first be reduced as required herein,
but not below the actual deferral ratio of the group of Family
Members who are not Highly Compensated Participants without
regard to family aggregation. The Excess Contributions resulting
from this initial reduction shall be allocated (in proportion to
Elective Contributions) among the Highly Compensated Participants
whose Elective
30
<PAGE>
Contributions were combined to determine the actual deferral
ratio. If further reduction is still required, then Excess
Contributions resulting from this further reduction shall be
determined by taking into account the contributions of all Family
Members and shall be allocated among them in proportion to their
respective Elective Contributions. For purposes of this Article
4, the term Family Members means a Participant, his spouse, his
lineal descendants and ascendants, and their spouses, as
determined by Section 414(q)(6)(B) of the Code.
(i) For purposes of this Paragraph, "Income" means the income or loss
allocable to Excess Contributions which shall equal the sum of the allocable
gain or loss for the Plan Year. The income or loss allocable to Excess
Contributions for the Plan Year is calculated separately and is determined by
multiplying the income or loss for the Plan Year by a fraction. The numerator of
the fraction is the Excess Contributions for the Plan Year. The denominator of
the fraction is attributable to Elective Contributions and the Participant's
Qualified Non-Elective Account as of the end of the Plan Year, reduced by the
gain allocable to such total amount for the Plan Year and increased by the loss
allocable to such total amount for the Plan Year.
(j) A Participants' Deferred Compensation shall not exceed in any
Plan Year the limitation imposed by Section 402(g) of the Code, for the Plan
Year as adjusted for any cost-of-living adjustments authorized by any
applicable regulations. Any direction for such an excess deferral shall be
invalid and the directed deferral shall not be made.
If a Participant's Deferred Compensation under this Plan together with any
elective deferrals (as defined in Regulation l.402(g)-1(b)) under another
qualified cash or deferred arrangement (as defined in Code Section 401(k)), a
simplified employee pension (as defined in Code Section 408(k)), a salary
reduction arrangement (within the meaning of Code Section 3121(a)(5)(D)), a
deferred compensation plan under Code Section 457, or a trust described in Code
Section 501(c) (18) cumulatively exceed the limitation imposed by Code Section
402(g) (as adjusted annually in accordance with the method provided in Code
Section 415(d) pursuant to Regulations) for such participant's taxable year, the
Participant may, not later than March 1st following the close of his taxable
year, notify the Administrator in writing of such excess and request that his
Deferred Compensation under this Plan be reduced by an amount specified by the
Participant. In such event, the Administrator shall direct the Trustee to
distribute such excess amount (and any Income allocable to such excess amount)
to the Participant
31
<PAGE>
not later than the first April 15th following the close of the participant's
taxable year. Distributions in accordance with this paragraph may be made for
any taxable year of the participant which begins after December 31, 1986. Any
distribution of less than the entire amount of Excess Deferred Compensation and
Income shall be treated as a pro rata distribution of Excess Deferred
Compensation and Income. The amount distributed shall not exceed the
participant's Deferred Compensation under the Plan for the taxable year. Any
distribution on or before the last day of the participant's taxable year must
satisfy each of the following conditions:
(1) the participant shall designate the distribution as Excess
Deferred Compensation;
(2) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution
of Excess Deferred Compensation.
For the purpose of this Paragraph, "Income" means the amount
of income or loss allocable to a Participant's Excess Deferred Compensation and
shall be equal to the sum of the allocable gain or loss for the taxable year of
the Participant. The income or loss allocable to each such period is calculated
separately and is determined by multiplying the income or loss allocable to the
Participant's Deferred Compensation for the respective period by a fraction. The
numerator of the fraction is the Participant's Excess Deferred Compensation for
the taxable year of the Participant. The denominator is the balance, as of the
last day of the respective period, of the Participant's Elective Account that is
attributable to the Participant's Deferred Compensation reduced by the gain
allocable to such total amount for the respective period and increased by the
loss allocable to such total amount for the respective period.
Income or loss allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the Participant
shall be calculated from the first day of the taxable year of the Participant to
the date on which the distribution is made pursuant to either the "fractional
method" or the "safe harbor method".
(k) When used in this Paragraph 4.4 or in Paragraph 4.6 below, each
------------- -------------
term defined in this Subparagraph (k) shall have the following meaning unless a
----------------
different meaning is clearly required by the context.
32
<PAGE>
(i) Contribution Percentage
-----------------------
(A) Contribution Percentage - shall mean for a Plan Year,
with respect to both the group of Highly Compensated Employees and the group of
Other Employees, the average (calculated to the nearest one hundredth of one
percent) of the ratios of (A) to (B), calculated separately for each Employee in
such group:
(1) the sum of the Employer contributions for the Plan
Year that are made for the benefit of each Employee in each group pursuant to
Subparagraph (b) of Paragraph 1.6 and such other Employer contributions under
- ---------------- -------------
the Plan or any other plan of the Employer as the Employer may elect, under
regulations issued by the Secretary of the Treasury. Contributions shall be
taken into account if allocated as of the end of the Plan Year and made within
twelve (12) months thereafter.
(2) the amount of Salary for the Plan Year of each
Employee in each group.
(ii) Actual Deferral Percentage - shall mean for a Plan Year,
--------------------------
with respect to both the group of Highly Compensated Employees and the group of
Other Employees, the average (calculated to the nearest one hundredth of one
percent) of the ratios of (A) to (B), calculated separately (to the nearest
one-hundredth of one percent) for each Employee in each group:
(A) the sum of the following amounts: (1) the Employer
contributions for the Plan Year that are made for the benefit of each Employee
in each group pursuant to Subparagraph (a) (Salary Reduction Contributions) of
----------------
Paragraph 1.6 (Employer Contributions) and (2) any other Employer contributions
- -------------
for the Plan Year specified in Article 1 that are made for the benefit of each
---------
Employee in each group.
(B) the amount of Salary for the Plan Year of each Employee
in each group.
(iii) Highly Compensated Participant - shall mean a Participant
------------------------------
who is a Highly Compensated Employee.
(iv) Income - means the income or loss allocable to Excess
------
Contributions which shall equal the sum of the allocable gain or loss for the
Plan Year. The income or loss allocable to Excess Contributions for the Plan
Year and the "gap period" is calculated separately and is determined by
multiplying the income or loss for the Plan Year by a fraction. The numerator of
the fraction is the Excess Contributions for the Plan Year. The denominator of
the fraction is the total of the Participant's Elective Account attributable to
Elective
33
<PAGE>
Contributions and the Participant's Qualified Non-Elective Account as of the end
of the Plan Year, reduced by the gain allocable to such total amount for the
Plan Year and increased by the loss allocable to such total amount for the Plan
Year.
(v) Other Employees - shall mean all Employees who are eligible
---------------
to participate in the Plan for a Plan Year (regardless of whether or not the
Employees are actually participating in the Plan) except Highly Compensated
Employees.
(vi) Salary - shall mean, for an Employee who is eligible to
------
participate in the Plan for a Plan Year (regardless of whether or not the
Employee is actually participating in the Plan), the sum of the following:
(A) the Employee's Compensation for the Plan Year as
determined in accordance with Section 415 of the Code, and
(B) the Employer contributions for the Plan Year that are
made for the benefit of the Employee pursuant to Subparagraph (a) (Salary
----------------
Reduction Contributions) of Paragraph 1.6 (Employer Contributions).
-------------
(m) The provisions of code Section 401(k)(3) and Regulation l.401(k)-
l(b) are incorporated herein by reference.
(n) For Plan Years beginning after December 31, 1988, to prevent the
multiple use of the alternative method described in Paragraph 4.4(b), Paragraph
---------------- ---------
4.6(a) and Code Section 401(m)(9)(A), any Highly Compensated Participant
- -----
eligible to make elective deferrals pursuant to Paragraph 1.9 and to make
-------------
Employee contributions or to receive matching contributions under this Plan or
under any other plan maintained by the Employer or an Affiliated Employer shall
have his actual contribution ratio reduced in accordance with Regulation Section
l.401(m)-2, the provisions of which are incorporated herein by reference.
(o) For the purpose of determining the actual deferral ratio of a
Highly Compensated Participant who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Participant is either a "five
percent owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year, the following
shall apply:
(1) The combined actual deferral ratio for the family group
(which shall be treated as one Highly Compensated Participant) shall be the
greater of: (i) the ratio determined by aggregating Employer Elective
Contributions and "414(s) Compensation" of all eligible Family Members who are
Highly Compensated Participants without regard to family aggregation; and (ii)
the ratio determined by aggregating Employer Elective Contributions and "414(s)
Compensation" of all eligible Family Members (including Highly Compensated
Participants). However, in
34
<PAGE>
applying the $200,000 limit to "414(s) Compensation" for Plan Years beginning
after December 31, 1988, Family Members shall include only the affected
Employee's spouse and any lineal descendants who have not attained age 19 before
the close of the Plan Year.
(2) The Employer Elective Contributions and "414(s)
Compensation" of all Family Members shall be disregarded for purposes of
determining the "Actual Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into account in paragraph (1)
above.
(3) If a Participant is required to be aggregated as a member of
more than one family group in a plan, all participants who are members of those
family groups that include the Participant are aggregated as one family group in
accordance with paragraphs (1) and (2) above.
(p) For the purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), if two or more plans which include cash or deferred
arrangements are considered one plan for the purposes of Code Section 401(a)(4)
or 410(b) (other than Code Section 401(b)(2)(A)(ii) as in effect for Plan Years
beginning after December 31, 1988), the cash or deferred arrangements included
in such plans shall be treated as one arrangement. In addition, two or more cash
or deferred arrangements may be considered as a single arrangement for purposes
of determining whether or not such arrangements satisfy Code Sections 401(a)
(4), 410(b) and 401(k). In such a case, the cash or deferred arrangements
included in such plans and the plans including such arrangements shall be
treated as one arrangement and as one plan for purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k). For plan years beginning after December
31, 1989, plans may be aggregated under this paragraph (e) only if they have the
same plan year.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section 4975(e)(7) may
not be combined with this Plan for purposes of determining whether the employee
stock ownership plan or this Plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(k).
(q) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two (2) or more cash or deferred arrangements
(other than a cash or deferred-arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e) (7) for Plan Years beginning
after December 31, 1988) of the Employer or an Affiliated Employer, all such
cash or deferred arrangements shall be treated as one cash or deferred
arrangement for the purpose of determining the actual deferral ratio with
respect to such Highly
35
<PAGE>
Compensated Participant. However, if the cash or deferred arrangements have
different Plan Years, this paragraph shall be applied by treating all cash or
deferred arrangements ending with or within the same calendar year as a single
arrangement.
4.5 Special Adjustments to Satisfy Certain Coverage Tests.
-----------------------------------------------------
Notwithstanding any other provision of the Plan if for any Plan Year, the Plan
fails to meet the requirements of Code Sections 401(a)(26), 410(b)(1) or
410(b)(2)(A)(i) and the Regulations thereunder because Employer Matching
Contributions made pursuant to Paragraph 1.6(b) or Discretionary Employer
----------------
contributions have not been allocated to a sufficient number or percentage of
Participants for a Plan Year, then the following rules shall apply:
(1) The group of Participants eligible to share in the
respective contributions for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified above. The specific
participants who shall be come eligible under the terms of this paragraph shall
be those who are actively employed on the last day of the Plan Year and, when
compared to similarly situated Participants, have completed the greatest number
of Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the applicable
test is still not satisfied, then the group of Participants eligible to share
for the Plan Year shall be further expanded to include the minimum number of
Participants who are not actively employed on the last day of the Plan Year as
are necessary to satisfy the applicable test. The specific Participants who
shall become eligible to share shall be those Participants, when compared to
similarly situated Participants, who have completed the greatest number of Hours
of Service in the Plan Year before terminating employment.
4.6 Actual Contribution Percentage Tests.
------------------------------------
(a) The "Actual Contribution Percentage" for the Highly
Compensated Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated Participant group; or
(2) the lesser of 200 percent of such percentage for the
Non-Highly Compensated Participant group, or such percentage for the Non-Highly
Compensated Participant group plus 2 percentage points. However, to prevent the
multiple use of the alternative method described in this paragraph and Code
Section 401(m)(9)(A), any Highly Compensated Participant eligible
36
<PAGE>
to make elective deferrals pursuant to Paragraph 1.9 or any other cash or
-------------
deferred arrangement maintained by the Employer or an affiliated employer and to
make Employee contributions or to receive matching contributions under any plan
maintained by the Employer or an affiliated employer shall have his actual
contribution ratio reduced pursuant to Regulation l.401(m)-2. The provisions of
Code Section 401(m) and Regulations l.401(m)-l(b) and 1.401(m)-2 are
incorporated herein by reference.
(b) For the purposes of this Paragraph and Paragraph 4.4,
-------------
"Actual Contribution Percentage" for a Plan Year means, with respect to the
Highly Compensated Participant group and Non-Highly Compensated Participant
group, the average of the ratios (calculated separately for each Participant in
each group) of:
(1) the sum of Employer matching contributions made
pursuant to Paragraph 1.6(b) (to the extent such matching contributions are not
----------------
used to satisfy the tests set forth in Paragraph 4.4 on behalf of each such
-------------
Participant for such Plan Year) and any Employee contributions required under
Article I; to
(2) the Participant's "414(s) Compensation" for such Plan
Year. For purposes of this Paragraph 4.6 and for Paragraph 4.4, a Participant's
------------- -------------
414(s) Compensation shall be the total amount of compensation paid to the
Participant by the Employer as determined under Section 414(s) of the Code.
For purposes of computing the Actual Contribution Percentage for a
Plan Year with respect to Highly Compensated Participants and Non-Highly
Compensated Participants, the calculation shall include any Employee who is
directly or indirectly eligible to receive an allocation of matching
contributions or to make Employee contributions, including (i) an Employee would
be a Participant but for the failure to make required contributions, (ii) an
Employee whose right to make contributions or receive matching contributions has
been suspended because of an election not to participate; and (iii) an Employee
who cannot make a contribution or receive matching contributions because the
limitations of Section 415(c)(l) or Section 415(e) of the Internal Revenue Code
prevents the Employee from making or receiving annual additions. In the case of
an eligible Employee who makes no Employee contributions and who receives no
matching contributions, the contribution ratio that is to be included in
determining the Actual Contribution Percentage is zero.
(c) For purposes of determining the "Actual Contribution
Percentage" and the amount of Excess Aggregate Contributions pursuant to
Paragraph 4.7 only Employer matching contributions contributed to the Plan prior
- -------------
to the end of the
37
<PAGE>
succeeding Plan Year shall be considered. In addition, the Administrator may
elect to take into account, with respect to Employees eligible to have Employer
matching contributions made pursuant to Paragraph 1.6(b), elective deferrals (as
----------------
defined in Regulation 1.402(g)-1(b)) and qualified non-elective contributions
(as defined in Code Section 401(m)(4)(C)) contributed to any plan maintained by
the Employer. Such elective deferrals and qualified non-elective contributions
shall be treated as Employer matching contributions subject to Regulation
l.401(m)-l(b)(2) which is incorporated herein by reference. However, the Plan
Year must be the same as the plan year of the plan to which the elective
deferrals and the qualified non-elective contributions are made.
(d) For the purpose of determining the actual contribution ratio
of a Highly Compensated Employee who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Employee is either a "five percent
owner" of the Employer or one of the ten (10) Highly Compensated Employees paid
the greatest "415 Compensation" during the year, the following shall apply:
(1) The combined actual contribution ratio for the family
group (which shall be treated as one Highly Compensated Participant) shall be
the greater of: (i) the ratio determined by aggregating Employer matching
contributions made pursuant to Paragraph 1.7(b) (to the extent such matching
----------------
contributions are not used to satisfy the tests set forth in Paragraph 4.4) and
--------------
"414(s) Compensation" of all eligible Family Members who are Highly Compensated
Participants without regard to family aggregation; and (ii) the ratio determined
by aggregating Employer matching contributions made pursuant to Paragraph
---------
1.11(b) (to the extent such matching contributions are not used to satisfy the
- -------
tests set forth in Paragraph 4.4) and "414(s) Compensation" of all eligible
-------------
Family Members (including Highly Compensated Participants). However, in applying
the $200,000 limit to "414(s) Compensation" Family Members shall include only
the affected Employee's spouse and any lineal descendants who have not attained
age 19 before the close of the Plan Year.
(2) The Employer matching contributions made pursuant to
Paragraph 1.6 (to the extent such matching contributions are not used to satisfy
- -------------
the tests set forth in Paragraph 4.4, and "414(s) Compensation" of all Family
-------------
Members shall be disregarded for purposes of determining the "Actual
Contribution Percentage" of the Non-Highly Compensated Participant group except
to the extent taken into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a
member of more than one family group in a plan, all Participants who are members
of those family groups that
38
<PAGE>
include the Participant are aggregated as one family group in accordance with
paragraphs (1) and (2) above.
(e) For purposes of this Paragraph and Code Sections 401(a)(4),
410(b) and 401(m), if two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made are treated as one plan
for purposes of Code Sections 401(a)(4) or 410(b) (other than the average
benefits test under Code Section 410(b)(2)(A)(ii) as in effect for Plan Years
beginning after December 31, 1988), such plans shall be treated as one plan. In
addition, two or more plans of the Employer to which matching contributions,
Employee contributions, or both, are made may be considered as a single plan for
purposes of determining whether or not such plans satisfy Code Sections
401(a)(4), 410(b) and 401(m). In such a case, the aggregated plans must satisfy
this Section and Code Sections 401(a)(4), 410(b) and 401(m) as though such
aggregated plans were a single plan. For plan years beginning after December 31,
1989, plans may be aggregated under this paragraph only if they have the same
plan year.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section 4975(e)(7) may
not be aggregated with this Plan for purposes of determining whether the
employee stock ownership plan or this Plan satisfies this Section and Code
Sections 401(a)(4), 410(b) and 401(m).
(f) If a Highly Compensated Participant is a Participant under
two or more plans (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7) for Plan Years beginning after December 31, 1988) which
are maintained by the Employer or an Affiliated Employer to which matching
contributions, Employee contributions, or both, are made, all such contributions
on behalf of such Highly Compensated Participant shall be aggregated for
purposes of determining such Highly Compensated Participant's actual
contribution ratio. However, for Plan Years beginning after December 31, 1988,
if the plans have different plan years, this paragraph shall be applied by
treating all plans ending with or within the same calendar year as a single
plan.
(g) For purposes of Paragraph 4.6, a Highly Compensated
-------------
Participant and a Non-Highly Compensated Participant shall include any Employee
eligible to have matching contributions made pursuant to Paragraph 1.6(b)
----------------
(whether or not a deferral election was made or suspended) allocated to his
account for the Plan Year or to make salary deferrals pursuant to Paragraph 4.4
-------------
(if the Employer uses salary deferrals to satisfy the provisions of this
Section).
(h) For purposes of this Paragraph, "Matching
39
<PAGE>
Contribution" shall mean an Employer contribution made to the Plan, or to a
contract described in Code Section 403(b), on behalf of a Participant on account
of an Employee contribution made by such Participant, or on account of a
participant's deferred compensation, under a plan maintained by the Employer.
(i) If one or more Highly Compensated Employees participates in
the Plan and the sum of the Actual Deferral Percentages, as calculated under
Paragraph 4.4 above, or the Actual Contribution Percentages, as determined under
- -------------
Subparagraph (a) of this Paragraph, of those Highly Compensated Employees
- ----------------
exceeds the aggregate limit provided in Paragraph 4.6 (a), then the Actual
-----------------
Contribution Percentage of those Highly Compensated Employees will be reduced
(beginning with the Highly Compensated Employee whose Actual Contribution
Percentage is the highest) so that the limit provided in Subparagraph (a) of
this Paragraph 4.6 is not exceeded. The amount by which the matching
-------------
contributions each Highly Compensated Employee is reduced shall be treated as an
Excess Aggregate Contribution and shall be forfeited, if forfeitable, or
distributed to the Highly Compensated Employee (including income allocable to
such contributions) on or before the 15th day of the third month after the end
of the Plan Year. The Actual Deferral Percentage and the Actual Contribution
Percentage of each such Highly Compensated Employee is determined after any
corrections required to meet the Actual Deferral Percentage and the Actual
Contribution Percentage Test. Multiple use does not occur if either the Actual
Deferral Percentage or the Actual Contribution Percentage of the Highly
Compensated Employees does not exceed 1.25 multiplied by the Actual Deferral
Percentage and Actual Contribution Percentage of the Non-highly Compensated
Employees.
4.7 Adjustment to Actual Contribution Percentage Tests.
--------------------------------------------------
(a) In the event that the "Actual Compensation Percentage" for
the Highly Compensated Participant group exceeds the "Actual Contribution
Percentage" for the non-Highly Compensated Participant group pursuant to
Paragraph 4.6, the Administrator (on or before the fifteenth day of the third
- -------------
month following the end of the Plan Year, but in no event later than the close
of the following Plan Year) shall direct the Trustee to distribute to the Highly
Compensated participant having the highest actual contribution ratio, his
portion of Excess Aggregate Contributions (and Income allocable to such
contributions) or, if forfeitable, forfeit such non-Vested Excess Aggregate
Contributions attributable to Employer matching contributions (and Income
allocable to such Forfeitures) until either one of the tests set forth in
Paragraph 4.6(a) is satisfied, or until his actual contribution ratio equals the
- ----------------
actual contribution ratio of the Highly Compensated Participant having the
second highest actual contribution ration. This process shall continue until one
of the tests set forth in
40
<PAGE>
Paragraph 4.6 (a) is satisfied. The distribution and/or Forfeiture of Excess
- -----------------
Aggregate Contributions shall be made in the following order:
(1) Employer matching contributions distributed and/or
forfeited pursuant to Paragraph 4.4 (h).
-----------------
(2) Voluntary Employee contributions, if permitted under
the Plan.
(3) Remaining Employer matching contributions.
(b) Any distribution or Forfeiture of less than the entire amount of
Excess Aggregate Contributions (and Income) shall be treated as a pro rata
distribution of Excess Aggregate Contributions shall be designated by the
Employer as a distribution of Excess Aggregate Contributions (and Income).
Forfeitures of Excess Aggregate Contributions shall be treated in accordance
with Article 5. However, no such Forfeiture may be allocated to a Highly
---------
Compensated Participant whose contributions are reduced pursuant to this
Section.
(c) Excess Aggregate Contributions attributable to amounts other than
voluntary Employee contributions, including forfeited matching contributions,
shall be treated as Employer contributions for purposes of Code Sections 404 and
415 even if distributed from the Plan.
(d) For the purposes of this Paragraph and Paragraph 4.6, "Excess
-------------
Aggregate Contributions" means, with respect to any Plan year, the excess of:
(1) the aggregate amount of Employer matching contributions
made pursuant to Paragraph 1.6 (to the extent such contributions are taken into
-------------
account pursuant to Paragraph 4.6 and any qualified non-elective contributions
-------------
or elective deferrals taken into account pursuant to Paragraph 4.6 actually made
-------------
on behalf of the Highly Compensated Participant group of such Plan Year,
(2) the maximum amount of such contributions permitted
under the limitations of Paragraph 4.6(a).
----------------
(e) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the total Employer matching contributions
made pursuant to Paragraph 1.7 (to the extent taken into account pursuant to
-------------
Paragraph 4.6 and any Qualified Non-Elective Contributions or elective deferrals
- -------------
taken into account pursuant to Paragraph 4.6 on behalf of the Highly Compensated
-------------
Participant (determined prior to the application of this paragraph) minus the
amount determined by
41
<PAGE>
multiplying the Highly Compensated Participant's actual contributions ratio
(determined after application of this paragraph) by his "414(s) Compensation".
The actual contribution ratio must be rounded to the nearest one-hundredth of
one percent for Plan Years beginning after December 31, 1988. In no case shall
the amount of Excess Aggregate Contribution with respect to any Highly
Compensated Participant exceed the amount of Employer matching contributions
made pursuant to Paragraph 1.7 (to the extent taken into account pursuant to
-------------
Paragraph 4.6(a), and any Qualified Non-Elective Contributions or elective
- ----------------
deferrals taken into account pursuant to Paragraph 4.6 on behalf of such Highly
-------------
Compensated Participant for such Plan Year.
(f) The determination of the amount of Excess Aggregate Contributions
with respect to any Plan Year shall be made after first determining the Excess
Contributions, if any, to be treated as voluntary Employee contributions due to
recharacterization for the Plan Year of any other qualified cash or deferred
arrangement (as defined in Code Section 401(k)) maintained by the Employer that
ends with or within the Plan Year.
(g) The determination and correction of Excess Aggregate
Contributions of a Highly Compensated Participant whose actual contribution
ratio is determined under the family aggregation rules shall be accomplished as
follows:
(1) If the actual contribution ratio for the Highly
Compensated Participant is determined in accordance with Paragraph 4.6 , then
-------------
the actual contribution ratio shall be reduced and the Excess Aggregate
Contributions for the family unit shall be allocated among the family members in
proportion to the sum of Employer matching contributions made pursuant to
Paragraph 1.11 (to the extent taken into account pursuant to Paragraph 4.6, and
- -------------- -------------
any qualified non-elective contributions or elective deferrals taken into
account pursuant to Paragraph 4.6 of each Family Member that were combined to
-------------
determine the group actual contribution ratio.
(2) If the actual contribution ratio for the Highly
Compensated Participant is determined under Paragraph 4.6, then the actual
-------------
contribution ratio shall first be reduced, as required herein, but not below the
actual contribution ratio of the group of Family Members who are not Highly
Compensated Participants without regard to family aggregation. The Excess
Aggregate Contributions resulting from this initial reduction shall be allocated
among the Highly Compensated Participants whose Employer matching contributions
made pursuant to Paragraph 1.11 (to the extent taken into account pursuant to
--------------
Paragraph 4.6, and any qualified non-elective contributions or elective
- -------------
deferrals taken into account pursuant to Paragraph 4.6.
-------------
42
<PAGE>
(h) Notwithstanding the above, within twelve (12) months after the
end of the Plan Year, the Employer may make a special qualified non-elective
contribution on behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy one of the tests set forth in Paragraph 4.6. Such
-------------
contribution shall be allocated to the Participant's Qualified Non-Elective
Account of each Non-Highly Compensated Participant in the same proportion that
each Non-Highly Compensated Participant's Compensation for the year bears to the
total Compensation of all Non-Highly Compensated participants. A Separate
accounting shall be maintained for the purpose of excluding such contributions
from the "Actual Deferral Percentage" tests pursuant to Paragraph 4.4.
-------------
(i) For purposes of this Section, "Income" means the income or loss
allocable to Excess Aggregate Contributions which shall equal the sum of the
allocable gain or loss for the Plan Year. The income or loss allocable to Excess
Aggregate Contributions for the Plan Year is calculated separately and is
determined by multiplying the income or loss for the Plan year or the "gap
Period" by a fraction. The numerator for the fraction is the Excess Aggregate
Contributions for the Plan Year. The denominator for the fraction is the total
Participant's Account attributable to Employer matching contributions subject to
Paragraph 4.6 and any elective deferrals taken into account pursuant to
- -------------
Paragraph 4.6 as of the end of the Plan year, reduced by the gain allocable to
- -------------
such total amount for the Plan year and increased by the loss allocable to such
total amount for the Plan Year.
The income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contribution shall be determined and distributed
as if such recharacterized Elective Contributions had been distributed as Excess
Contributions.
4.8 Transfer of Assets from Another Qualified Plan (Other Than HR-10
----------------------------------------------------------------
Plan). The Administrator, pursuant to a uniform nondiscriminatory policy
- -----
established by it, may direct the Trustee to accept assets from another
qualified plan if the trustee of such other qualified plan is authorized to
transfer such assets to this Plan. Any assets transferred to this Plan from
another qualified plan for an Employee shall be one hundred percent (100%)
vested and shall be maintained in a separate account for the Employee. No
transfer of assets from another qualified plan shall affect in any way the
Employer's obligations under this Plan. The distribution of any assets
transferred to this Plan from another qualified Plan for an Employee shall be
made in accordance with the provisions of Article 8 (Distributions and Loans)
---------
and the other provisions of this Plan.
4.9 Limitations on Distributions. Amounts held in the Participant's
----------------------------
Elective Salary Reduction Account may be
43
<PAGE>
distributable as permitted under the Plan, but in no event prior to the earlier
of:
(1) a Participant's termination of employment, total and
permanent disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the proven financial hardship of a Participant, subject to
the limitations of Paragraph 8.9;
-------------
(4) the termination of the Plan without the existence at the
time of Plan termination of another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7)) or the
establishment of a successor defined contribution plan (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)) by the employer or
an affiliated employer within the period ending twelve months after distribution
of all assets from the Plan maintained by the employer;
(5) the date of the sale by the Employer to an entity that is
not an Affiliated Employer of substantially all of the assets (within the
meaning of Code Section 409(d) (2)) with respect to a Participant who continues
employment with the corporation acquiring such assets; or
(6) the date of the sale by the employer or an affiliated
employer of its interest in a subsidiary (within the meaning of Code Section
409(d)(3)) to an entity that is not an affiliated employer with respect to a
Participant who continues employment with such subsidiary.
44
<PAGE>
ARTICLE 5
---------
ALLOCATION OF CONTRIBUTIONS
---------------------------
5.1 Accounts. The Administrator shall establish and maintain for each
--------
Participant an account to be known as his "Employer Contribution Account" that
will reflect his share of the Employer's contributions and forfeitures and the
share of the income, losses, appreciation, and depreciation of the commingled
portion of the Fund attributable to the account. If Article I permits salary
reduction contributions, the Administrator shall also establish and maintain for
each Participant a Salary Reduction Contribution Account and such other accounts
as the Administrator deems necessary or appropriate to reflect the Participant's
interest in the Plan. Each such account shall share in the income, losses,
appreciation, and depreciation of the commingled portion of the Fund, to the
extent attributable thereto.
5.2 Allocation Dates.
----------------
(a) The regular Allocation Dates for the Plan shall be those
specified in Article 1.
---------
(b) The Administrator shall have the right and power at any time
and from time to time to designate additional dates (other than the dates
specified in Article 1) as Allocation Dates. On each designated Allocation Date,
---------
the Administrator shall perform the allocation procedures outlined in Paragraph
---------
5.3 (Allocation Procedure), except those for the allocation and crediting of
- ---
Employer contributions and forfeitures. The allocation and crediting of Employer
contributions shall be performed only on regular Allocation Dates.
5.3 Allocation Procedure. As of each Allocation Date, the
--------------------
Administrator shall --
(i) First, charge to the proper accounts all payments,
distributions, or transfers made since the last preceding Allocation Date that
have not been charged previously, as provided in Paragraph 5.4 (Charging of
-------------
Payments and Distributions);
(ii) Next, if a regular Allocation Date, adjust any
deficiencies in the Employer Contribution Accounts of Participants who during
the Plan year repaid a distribution described in Paragraph 9.12 (Right to Repay
--------------
Distribution Received on Termination of Participation in the Plan) and who are
therefore entitled to have their accounts restored to their pre-distribution
levels;
45
<PAGE>
(iii) Next, adjust the net credit balances in the accounts,
exclusive of Participant Directed Investment Accounts, upward or downward, pro
rata, so that the total of such balances will equal the net value of the
commingled portion of the Fund on such date, excluding the value of any
Contracts purchased for the benefit of a particular Participant;
(iv) Next, if a regular Allocation Date, allocate and
credit forfeitures, if any, that are to be allocated and credited as of such
date in accordance with Paragraph 5.5 (Allocation and Crediting of Forfeitures);
-------------
(v) Next, if a regular Allocation Date, allocate and
credit Employer contributions, if any, that are to be allocated as of such date
in accordance with Paragraph 5.6 (Allocation and Crediting of Employer
-------------
Contributions);
(vi) Next, credit Participant contributions, if any, that
are to be credited as of such date in accordance with Paragraph 5.8 (Crediting
-------------
of Participant Contributions); and
(vii) Finally, adjust the balance of each Participant
Directed Investment Account to reflect its current value.
5.4 Charging of Payments and Distributions. As of each Allocation
--------------------------------------
Date, all payments, distributions, and transfers made under the Plan since the
last preceding Allocation Date to or for the benefit of a Participant or his
Beneficiary shall be charged to the proper account of the Participant.
5.5 Allocation and Crediting of Forfeitures. Subject to the
---------------------------------------
conditions and limitations of Paragraph 5.7 (Participants to Whom Employer
-------------
Contributions and Forfeitures Will Be Allocated.) and Paragraph 5.9 (Section 415
-------------
Limitations), as of each regular Allocation Date, any unallocated forfeitures
that remain after making up any deficiencies shall be allocated and credited to
the Employer Contribution Accounts of Participants who are entitled to share in
Employer contributions for the Plan Year (as provided in Paragraph 5.7
-------------
(Participants to Whom Employer Contributions and Forfeitures Will Be Allocated))
in accordance with the formula for the allocation of forfeitures specified in
Article 1; provided, however, that if this Plan is integrated with Social
- ---------
Security the maximum amount that shall be allocated to the Employer Contribution
Account of a Participant for a Plan Year under the combined provisions of
Paragraph 5.6 (Allocation and Crediting of Employer Contributions) and this
- -------------
Paragraph 5.5 with respect to the Participant's excess compensation (as defined
- -------------
in Article 1) shall be determined by multiplying the Participant's compensation
---------
by the integration percentage specified in Article 1. For purposes of the
---------
preceding sentence,
46
<PAGE>
"deficiencies" shall mean deficiencies in the Employer Contribution Accounts of
Participants who during the Plan Year repaid a distribution described in
Paragraph 9.12 (Right to Repay Distribution Received on Termination of
- --------------
Participation in the Plan) and who are therefore entitled to have their accounts
restored to their pre-distribution levels.
5.6 Allocation and Crediting of Employer Contributions.
--------------------------------------------------
(a) Subject to the conditions and limitations of Paragraph 5.7
-------------
(Participants to Whom Employer Contributions and Forfeitures Will Be Allocated)
and Paragraph 5.9 (Section 415 Limitations), as of each regular Allocation Date,
-------------
any unallocated Employer contributions that remain after making up any
deficiencies shall be allocated and credited to the Employer Contribution
Accounts of Participants who are entitled to share in Employer contributions for
the Plan Year (as provided in Paragraph 5.7 (Participants to Whom Employer
-------------
Contributions and Forfeitures Will Be Allocated)) in accordance with the formula
for the allocation of Employer contributions specified in Article 1. For
---------
purposes of the preceding sentence, "deficiencies" shall mean deficiencies in
the Employer Contribution Accounts of Participants who during the Plan Year
repaid a distribution described in Paragraph 9.12 (Right to Repay Distribution
--------------
Received on Termination of Participation in the Plan) and who are therefore
entitled to have their accounts restored to their pre-distribution levels.
(b) The amount of Compensation considered in determining a
Participant's share of Employer contributions for the Plan Year in which he
enters or reenters the Plan shall be determined in accordance with Article 1.
---------
(c) If the Employer makes any portion of its contributions for
a Plan Year in advance, that is, before the last day of the Plan Year, for
allocation purposes, the dollar amount of such advance contributions shall be
deemed to be their fair market value determined as of the date of contribution.
(d) If the Employer makes any portion of its contributions for a
Plan Year in advance, that is, before the last day of the Plan Year, and if such
advance contributions are allocated before the last day of the Plan Year, the
allocation of such advance contributions shall be made on a basis that is
consistent with the allocation formula specified in Article 1 and with the
---------
allocation procedure contained in this Article 5, with any adjustments that are
---------
necessary in order to fully comply with such formula and allocation procedure
being made as of the last day of the Plan Year.
47
<PAGE>
(e) For purposes of this Article 5, all contributions made to
the Plan by the Employer for a Plan Year that are not actually paid to the
Trustee during the Plan Year shall be deemed to have been paid to the Trustee on
the last day of the Plan Year.
5.7 Participants to Whom Employer Contributions and Forfeitures Will
----------------------------------------------------------------
Be Allocated.
- ------------
(a) The Employer contributions for each Plan Year, plus any
amounts forfeited during the Plan Year, shall be allocated and credited to the
Employer Contribution Accounts of the Participants described in Article 1.
---------
(b) Notwithstanding the provisions of Subparagraph (a) of this
----------------
Paragraph 5.7, no portion of any forfeiture that is attributable to
- -------------
contributions made by the Employer for Fiscal Years beginning after December 31,
1970, shall be allocated to the Employer contribution Account of any Participant
who is a Shareholder-Employee. The portion of any forfeiture that would be
allocated to the account of a Participant who is a Shareholder-Employee if it
were not for this Subparagraph (b), shall be allocated to the Employer
----------------
Contribution Accounts of Participants who are not Shareholder-Employees in
accordance with the formula for the allocation of forfeitures specified in
Article 1. The restrictions of this Subparagraph (b) shall only apply to
- --------- ----------------
forfeitures that are attributable to contributions made by the Employer for
Fiscal Years for which the Employer is an electing small business corporation
under the provisions of Subchapter S of the Code.
5.8 Crediting of Participant Contributions. All voluntary
--------------------------------------
contributions made by a Participant for a Plan Year shall be credited to his
Participant Voluntary Contribution Account not less often than quarterly. All
required contributions made by a Participant for a Plan Year shall be credited
to his Participant Required Contribution Account not less often than quarterly.
5.9 Section 415 Limitations. The rules of interpretation contained in
-----------------------
Subparagraph (b) and the definitions contained in Subparagraph (d) of this
- ---------------- ----------------
Paragraph 5.9 shall apply for purposes of the limitations of this Paragraph 5.9.
- ------------- -------------
(a) Limitation on Annual Additions.
------------------------------
(i) Notwithstanding any other provision of this Plan, the
amount of Annual Additions allocated under this Plan to a Participant for a
Limitation Year shall not exceed the Maximum Permissible Defined Contribution
Amount reduced by the sum of any Annual Additions allocated under all other
defined contribution plans, defined benefit plans, and welfare benefit
48
<PAGE>
funds, as defined in Section 419(e) of the Code, or an individual medical
account (as defined in Section 415(1) (2) of the Code) maintained by the
Employer to the Participant for the Limitation Year. For purposes of the
preceding sentence, "Annual Additions allocated under this Plan" shall mean the
amounts allocated to a Participant under Paragraph 5.3 (Allocation Procedure) of
-------------
this Plan.
(ii) If the Annual Additions allocated under all other
defined contribution plans, defined benefit plans, and welfare benefit funds and
individual medical accounts maintained by the Employer to a Participant under
this Plan for a Limitation Year are less than the Maximum Permissible Defined
Contribution Amount, and if the Annual Additions that would otherwise be
allocated under this Plan to the Participant would cause the Annual Additions
for the Limitation Year to exceed the Maximum Permissible Defined Contribution
Amount, the Annual Additions to be allocated under this Plan to the Participant
for the Limitation Year shall be reduced, so that the aggregate Annual Additions
allocated under all such plans to the Participant for the Limitation Year shall
not exceed the Maximum Permissible Defined Contribution Amount.
(iii) If the Annual Additions allocated under all other
defined contribution plans, defined benefit plans, and welfare benefit funds and
individual medical accounts maintained by the Employer to a Participant under
this Plan for the Limitation Year are equal to or greater than the Maximum
Permissible Defined Contribution Amount, no Annual Additions shall be allocated
under this Plan to the Participant for the Limitation Year.
(iv) Prior to determining a Participant's actual Annual
Compensation for a Limitation Year, the Administrator may determine the Maximum
Permissible Defined Contribution Account for a Participant on the basis of a
reasonable estimate of the Participant's Annual Compensation for the Limitation
Year.
(v) As soon as administratively feasible after the end of
a Limitation Year, the Administrator shall determine the Maximum Permissible
Defined Contribution Amount for a Participant on the basis of the Participant's
actual Annual Compensation for the Limitation Year.
(vi) If, as a result of either an error in estimating a
Participant's Annual Compensation for a Limitation Year or the allocation of
forfeitures, there is an Excess Amount for a Participant for a Limitation Year,
such Excess Amount shall be deemed to consist of the Annual Additions last
allocated, except that Annual Additions attributable to a
49
<PAGE>
welfare benefit fund shall be deemed to have been allocated first regardless of
the actual Allocation Date.
(vii) If an Excess Amount is allocated to a Participant as
of an Allocation Date of this Plan that coincides with an allocation date of
another plan, the portion of such Excess Amount to be attributed to this Plan
shall be the product of (A) and (B) where
(A) is the total Excess Amount allocated to the
Participant as of such Allocation Date, and
(B) is a fraction, the numerator of which is the
Annual Additions allocated under this Plan to the Participant as of such
Allocation Date, and the denominator of which is the total Annual Additions
allocated to the Participant under this Plan and under all other defined
contribution plans, defined benefit plans, and welfare benefit funds maintained
by the Employer as of such Allocation Date.
(viii) The portion of such Excess Amount attributable to
this Plan shall be disposed of as follows:
(A) Any voluntary nondeductible employee
contributions, and any increment attributable thereto, to the extent they would
reduce such Excess Amount, shall be distributed to the Participant as soon as
administratively feasible.
(B) Any remainder of such Excess Amount shall be
allocated to a suspense account and held therein until the next Limitation Year.
(C) If the Participant is a Participant under this
Plan as of the close of the next Limitation Year, such suspense account shall be
used to reduce Employer contributions and forfeitures allocated to the
Participant under this Plan for such Limitation Year and for succeeding
Limitation Years, as necessary.
(D) If the Participant is not a Participant under
this Plan as of the close of the next Limitation Year, such suspense account
shall be used to reduce Employer contributions and forfeitures allocated to each
other remaining Participant under this Plan for such Limitation Year and for
succeeding Limitation Years, as necessary.
(E) Except as provided in Subparagraph (A) of this
----------------
Subparagraph (viii), no part of such Excess Amount shall be distributed to any
- -------------------
Participant or former Participant.
50
<PAGE>
(F) Such suspense account shall share in the income,
losses, appreciation, and depreciation of the commingled portion of the Fund to
the extent attributable thereto.
(G) If this Plan is terminated while a suspense
account is in existence, any amount in the suspense account that cannot be
reallocated to any Participant, because of the limitations of this Paragraph
---------
5.9, shall revert to the Employer.
- ---
(ix) Notwithstanding any other provision of this Plan, the
Employer shall not contribute any amount to this Plan for a Participant for a
Limitation Year that cannot be allocated to the Participant for the Limitation
Year.
(b) Rules of Interpretation. The following rules of
-----------------------
interpretation shall apply for purposes of the limitations of this Paragraph
---------
5.9:
- ---
(i) Affiliated Employers. All employees of each member of a
--------------------
group described below shall be treated as if employed by the Employer:
(A) a group that constitutes a controlled group of
corporations, as defined in Section 414(b) of the Code as modified by Section
415(h) of the Code, if the Employer is a member of the group;
(B) a group that conducts a trade or business, whether
or not incorporated, that is under common control, as defined in Section 414(c)
of the Code as modified by Section 415(h) of the Code, if the Employer is a
member of the group; or
(C) a group that constitutes an affiliated service
group, as defined in Section 414(m) of the Code, if the Employer is a member of
the group.
(ii) Aggregation of Plans. All defined benefit plans
--------------------
(whether or not terminated) ever maintained by the Employer shall be treated as
one defined benefit plan, and all defined contribution plans (whether or not
terminated) ever maintained by the Employer shall be treated as one defined
contribution plan.
(c) Definitions. When used in this Paragraph 5.9, each term
----------- -------------
defined in this Subparagraph (c) shall have the following meaning unless a
----------------
different meaning is clearly required by the context.
(i) Annual Addition - shall mean, with
---------------
51
<PAGE>
respect to a Participant for any Limitation Year, the sum of the amounts
described below that are allocated to the Participant --
(A) under a defined contribution plan maintained by
the Employer --
(1) all Employer contributions,
(2) all forfeitures, and
(3) all employee contributions;
(B) under a defined benefit plan maintained by the
Employer --
(1) all amounts allocated to an individual
medical account, as defined in Section 415(l)(1) of the Code, after March 31,
1984, and
(2) the Participant's employee contributions; and
(C) under a welfare benefit fund, as defined in
Section 419(e) of the Code, maintained by the Employer --
(D) under an individual medical account plan --
all amounts allocated to the separate account of a
key employee, as defined in Section 419A(d)(3) of the Code, that are
attributable to post-retirement medical benefits and that are derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date.
For purposes of the preceding sentence, "Employer contributions" and
"forfeitures" shall include amounts reapplied to reduce Employer contributions
and forfeitures under Subparagraph (b) of this Paragraph 5.9.
---------------- -------------
(ii) Annual Compensation - shall mean, with respect to a
-------------------
Participant for any Limitation Year, except a Participant described in
Subparagraph (C) of this Subparagraph (ii), only those amounts described in
- ---------------- -----------------
Subparagraph (A) of this Subparagraph (ii) that were actually paid or made
- ---------------- -----------------
available to the Participant within the Limitation Year, and shall be limited to
$200,000 (unless adjusted as permitted under Section 415(d) of the Code). Annual
Compensation shall not include those amounts described in Subparagraph (B) of
----------------
this Subparagraph (ii).
-----------------
52
<PAGE>
(A) Annual Compensation shall include:
(1) the wages, salaries, fees for professional
services, and other amounts received by the Participant for personal services
actually rendered in the course of employment with the Employer including, but
not limited to, commissions paid to salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips, and
bonuses;
(2) in the case of a Participant who is an
employee within the meaning of Section 401(c)(1) of the Code, the earned income
(as described in Section 401(c) (2) of the Code) of the Participant;
(3) for purposes of Subparagraphs (1) and (2) of
----------------- ---
this Subparagraph (A), the earned income from sources outside the United States
----------------
(as defined in Section 911(b) of the Code) of the Participant, whether or not
excludable from gross income under Section 911 of the Code or deductible under
Section 913 of the Code;
(4) the amounts described in Sections 104(a)(3),
105(a), and 105(h) of the Code of the Participant, but only to the extent such
amounts are includable in the gross income of the Participant;
(5) the amounts paid to the Participant or
reimbursed by the Employer for moving expenses incurred by the Participant, but
only to the extent such amounts are not deductible by the Participant under
Section 217 of the Code;
(6) the value of a non-qualified stock option
granted to the Participant by the Employer, but only to the extent that the
value of the option is includable in the gross income of the Participant for the
taxable year in which granted; and
(7) the amounts includable in the gross income of
the Participant upon making the election described in Section 83(b) of the Code.
(B) Annual Compensation shall not include:
(1) amounts contributed by the Employer to a plan
of deferred compensation on behalf of a Participant that are not includable in
the Participant's gross income for the taxable year in which contributed, or
amounts contributed by the Employer under a simplified employee pension plan on
behalf of a Participant to the extent such amounts are
53
<PAGE>
deductible by the Participant under Section 219(b)(2) of the Code, or amounts
distributed to a Participant from a plan of deferred compensation regardless of
whether or not such amounts are includable in the Participant's gross income
when distributed;
(2) amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property) held by a
Participant either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(3) amounts realized from the sale, exchange, or
other disposition of stock acquired under a qualified stock option; and
(4) other amounts that receive special tax
benefits, such as premiums for group term life insurance (but only to the extent
that the premiums are not includable in the gross income of the Participant) and
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in Section
403(b) of the Code (whether or not the contributions are excludable from the
gross income of the Participant).
Annual Compensation, in the case of a Participant who is permanently and totally
- -------------------
disabled, as defined in Section 22(e)(3) of the Code, and who is not a highly
compensated employee, within the meaning of Section 414(q) of the Code, is the
amount of compensation the disabled Participant would have received for the
Limitation Year if the Participant had been paid at the rate paid immediately
before becoming permanently and totally disabled. Contributions made with
respect to amounts treated as Annual Compensation of a disabled Participant
shall be nonforfeitable when made.
(iii) Excess Amount - shall mean, with respect to a Participant
-------------
for any Limitation Year, the excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Defined Contribution Amount,
less loading and other administrative charges allocable to such excess.
(iv) Limitation Year - shall mean a period of twelve (12)
---------------
consecutive months adopted by the Employer pursuant to a written resolution.
(v) Maximum Permissible Defined Contribution Amount - shall
-----------------------------------------------
mean, with respect to a Participant for any Limitation Year, the lesser of the
amounts determined under Subparagraphs (A) and (B) of this Subparagraph (v),
----------------- --- ----------------
subject to
54
<PAGE>
the rules of Subparagraphs (C) and (D) of this Subparagraph (v), where --
----------------- --- ----------------
(A) is Thirty Thousand Dollars ($30,000.00) or, if
greater, one-fourth of the dollar limitation in effect under Code Section 415(b)
(1) (A) as automatically adjusted in accordance with regulations prescribed by
the Secretary of Treasury, and
(B) is twenty-five percent (25%) of the Participant's
Annual Compensation for the Limitation Year.
(C) As of January 1 of each calendar year, beginning
with the calendar year 1988, the dollar limitation in Subparagraph (A) of this
----------------
Subparagraph (v) shall be automatically adjusted to equal the dollar limitation
- ----------------
prescribed for the calendar year by the Secretary of the Treasury. The adjusted
dollar limitation shall apply for the Limitation Year ending within the calendar
year.
(D) If a short Limitation Year is created because of
an amendment changing the Limitation Year to a different twelve-consecutive-
month period, the Maximum Permissible Defined Contribution Amount for the short
Limitation Year shall be the dollar limitation in Subparagraph (A) of this
----------------
Subparagraph (v) multiplied by a fraction, the numerator of which is the number
- ----------------
of months in the short Limitation Year and the denominator of which is twelve
(12), and the dollar limitation in Subparagraph B above shall be 25% of the
--------------
Participant's Annual Compensation for such short Plan Year.
(E) Special Rule For Participants Who Also Participate
--------------------------------------------------
In A Defined Benefit Plan Maintained By The Employer. For any participant in the
- ----------------------------------------------------
Plan who is also a participant in one or more defined benefit plans (as defined
in Section 414(j) of the Code) maintained by the Employer, the Annual Addition
with respect to such Participant under this Plan during a Plan Year shall be
further limited (in addition to the limitation under Subparagraph (a) of this
Paragraph 5.9) to the extent necessary to prevent the sum of the fractions in
(i) and (ii) below, computed as of the close of the Plan Year, from exceeding
1.0:
(i) The Projected Annual Benefit (as defined in
Treasury Regulation (S)1.415-7(b)(3)) of the Participant, divided by the
lesser of:
(A) the product of $90,000 (as such amount
shall be adjusted automatically in accordance with regulations promulgated
by the Secretary of the Treasury) multiplied by 1.25, or
55
<PAGE>
(B) the product of 100% of the Participant's
average Annual Compensation for the period of three (3) consecutive Plan
Years (or, if less, the actual number of consecutive years of employment
with the Employer) during which the Participant had the greatest aggregate
Annual Compensation, multiplied by 1.4; plus
(ii) The sum of the Participant's Annual Additions
under this Plan and all other defined contribution plans (as defined in
Section 414(i) of the Code) maintained by the Employer for such Plan Year
and for all prior Plan Years divided by the sum of the lesser of the
following amounts determined for such Plan Year and all prior Plan Years:
(A) the product of $30,000 (or, if greater, 1/4
of the dollar limitation in effect under Section 415(b)(l) (A) of the Code)
multiplied by 1.25, or
(B) the product of 25% of the Participant's
Annual Compensation for the clan Year multiplied by 1.4.
56
<PAGE>
ARTICLE 6
---------
FUNDING MEDIUM AND INVESTMENTS
------------------------------
6.1 Funding Medium. For a new Plan the Employer will enter into a
--------------
trust agreement with the Trustee to create a Trust that will serve as the
funding medium for the Plan. For an existing Plan the Employer will continue the
existing Trust. All contributions made to the Plan shall be deposited into the
Fund maintained under the Trust. The Trust shall be deemed a part of the Plan
and all rights that accrue to any Participant, Beneficiary or other person under
the Plan shall be subject to the terms of the Trust.
6.2 Direction of Investments by Investment Manager. The Employer
----------------------------------------------
shall have the right and power at any time and from time to time to appoint one
or more Investment Managers having the power to manage (including the power to
acquire and dispose of) the investment of all or any portion of the Fund.
6.3 Direction of Investments by Participants. If Article 1 so
---------------------------------------- ---------
provides, each Participant shall have the right and power at any time and from
time to time to manage (including the power to acquire and dispose of) the
investment of his account or accounts, or such portion thereof, as the
Administrator may specify. In such event, the Administrator shall from time to
time establish such rules with respect to Participant directed investments as
deemed appropriate and shall advise the Trustee of such rules.
6.4 Direction of Investments by Employer. If Article 1 so provides,
------------------------------------ ---------
the Employer shall have the right and power at any time and from time to time to
manage (including the power to acquire and dispose of) the investment of all or
any portion of the Fund.
6.5 Purchase of Contracts.
---------------------
(a) The purchase of Contracts on the lives of the Participants
with the funds in their Employer Contribution Accounts shall be subject to the
provisions of Article 1. Upon direction from the Administrator, the Trustee
---------
shall purchase Contracts on the life of a Participant from an Insurer with the
funds in the Participant's Employer Contribution Account within the limits, if
any, specified in Article 1 and in Paragraph 6.6 (Limitations on the Payment of
--------- -------------
Premiums for Contracts). With respect to any Contract providing ordinary life
insurance that is purchased upon a Participant's life and held for his benefit,
the Administrator shall direct the Trustee on or before the Participant's actual
retirement date (i) to convert the entire value of any such Contract into cash,
(ii) to convert any such Contract so as to provide periodic income for the
Participant, or
57
<PAGE>
(iii) to distribute any such Contract to the Participant at his retirement date.
(b) The Trustee shall be the sole owner of and shall be named
beneficiary of all Contracts purchased under the Plan, and the Trustee shall be
so designated in each Contract. Each application for a Contract may be signed by
either the Administrator or the Trustee.
(c) All premiums and other sums due to an Insurer with respect
to any Contract on the life of a Participant that is held for his benefit shall
be paid by the Trustee. Such premiums and other sums shall be charged against
the Participant's Employer Contribution Account. If at any time there are not
sufficient funds in a Participant's Employer Contribution Account to permit the
payment by the Trustee of the premiums and other sums then due, or if the
limitations of Paragraph 6.6 (Limitations on the Payment of Premiums for
-------------
Contracts) would not permit the payment of the premiums and other sums then due
from such account, such premiums and other sums may be paid by the Trustee with
funds advanced by the Participant or may be paid from and charged against his
Participant Voluntary Contribution Account, if any, or his Participant Required
Contribution Account, if any. If the Trustee is unable to pay the premiums, the
Trustee shall surrender the Contract for its cash value, if any, and deposit the
cash value in the Participant's Employer Contribution Account or use the cash
value to purchase paid-up insurance or take such other action with respect to
the Contract as the Trustee deems appropriate.
(d) All Contracts purchased by the Trustee for the benefit of a
Participant with funds from a Participant's account shall constitute a directed
investment of that Account and shall be considered to be a part thereof for all
purposes. Any dividend paid on a Contract that is a part of an account shall
also be considered to be a part of the account.
(e) In the event of a conflict between the provisions of the
Plan and the terms of a Contract purchased under the Plan, the provisions of the
Plan shall control for purposes of the operation of the Plan.
6.6 Limitations on the Payment of Premiums for Contracts.
----------------------------------------------------
(a) If one or more Contracts providing ordinary life insurance
coverage are purchased upon a Participant's life and held for his benefit, the
aggregate premiums paid from his Employer Contribution Account shall at all
times be less than fifty percent (50%) of the aggregate Employer contributions
and forfeitures allocated to such Participant.
(b) If one or more Contracts providing term,
58
<PAGE>
accident or health insurance coverage, or any or all such coverages, are
purchased upon a Participant's life and held for his benefit, the aggregate
premiums paid from his Employer Contribution Account shall at all times be less
than twenty-five percent (25%) of the aggregate Employer contributions and
forfeitures allocated to such Participant.
(c) If one or more Contracts providing both ordinary life
insurance coverage and term, accident or health insurance coverage, or any or
all such coverages, are purchased upon a Participant's life and held for his
benefit, the aggregate premiums paid from his Employer Contribution Account for
term, accident or health insurance coverage plus one-half of the premiums paid
for ordinary life insurance coverage shall at all times be less than twenty-five
percent (25%) of the aggregate Employer contributions and forfeitures allocated
to such Participant.
(d) The limitations of this Paragraph 6.6 shall be of no effect
-------------
if such premiums are paid from contributions of the Employer that have been
accumulated by the Trustee for two (2) or more years.
6.7 Cancellation of Contracts. The Administrator may at any time
-------------------------
direct the Trustee to cancel any Contract purchased by the Trustee for the
benefit of a Participant, except any Contract purchased at the direction of a
Participant who is still entitled to share in Employer contributions. However,
before directing the cancellation of any such Contract, the Administrator shall
direct the Trustee to offer such Contract to the Participant in the manner
specified in Paragraph 8.8 (Distribution of Contracts).
-------------
6.8 Status of Insurer. No Insurer that issues any Contract under the
-----------------
Plan shall be required to take or permit any action contrary to the provisions
of such Contract; be bound to allow any benefit or privilege to any person
interested in any Contract it has issued that is not provided in such Contract;
be deemed to be a party to the Plan; or be responsible for the validity of the
Plan. Any such Insurer shall be fully discharged from all liability for any
amount paid to the Trustee or paid in accordance with the direction of the
Trustee and no Insurer shall be obligated to see to the distribution or
application of any monies so paid by it. Any such Insurer shall not be liable
for taking or permitting any action directed by the Trustee. However, if any
such Insurer is also serving as an Investment Manager or as a custodian of Plan
assets, or as a fiduciary with respect to the Plan, such Insurer shall be liable
for its actions in accordance with the provisions of the Plan governing such
activities. Furthermore, if an Insurer is providing administrative services to
the Plan, it shall be liable to the same extent as any other person providing
such services.
59
<PAGE>
ARTICLE 7
---------
RETIREMENT DATES
----------------
7.1 Normal Retirement Date. A Participant may retire on his Normal
----------------------
Retirement Date.
7.2 Delayed Retirement Date.
-----------------------
(a) If Article 1 so provides, a Participant who has attained his
---------
Normal Retirement Date may delay his retirement, but not beyond age sixty-nine
(69) unless the Employer so requests. A Participant who delays his retirement
may, however, retire on the last day of any calendar month.
(b) If Article 1 so provides, a Participant who has attained age
---------
seventy (70) may, at the request of the Employer, delay his retirement and
remain in the active employ of the Employer for such period or periods as shall
be agreed upon by the Participant and the Employer, but not beyond the
attainment of any maximum age specified in Article 1. Any such request of the
---------
Employer and the Participant's consent to such request shall be made in writing.
At the request of the Administrator, the Employer shall provide the
Administrator with copies of the request and the consent. The Participant shall
retire on whichever of the following dates shall first occur: (i) the last day
of the last agreed period or (ii) the last day of the calendar month in which
the Participant attains any maximum age specified in Article 1.
---------
(c) The date on which a Participant retires pursuant to this
Paragraph 7.2 shall be his Delayed Retirement Date.
- -------------
7.3 Early Retirement Date. If Article 1 provides for early
--------------------- ---------
retirement, a Participant who satisfies the requirements specified in Article 1
---------
may retire on the last day of any calendar month prior to his Normal Retirement
Date. Such date shall be the Early Retirement Date of the Participant.
7.4 Disability Retirement Date.
--------------------------
(a) If Article 1 provides for disability retirement, a
---------
Participant who satisfies the requirements, if any, specified in Article 1, who
---------
is Disabled, and whose disability the Administrator has determined is likely to
be permanent or of indefinite duration shall retire on the last day of the
calendar month in which the Administrator determines that he is Disabled, which
date shall be the Disability Retirement Date of the Participant.
60
<PAGE>
(b) The Administrator shall have the exclusive authority to
determine whether a Participant is Disabled and whether the such disability is
likely to be permanent or of indefinite duration for purposes of the plan. The
Administrator may secure such medical and other evidence as deemed necessary and
appropriate. The determination of the Administrator shall be made in accordance
with a uniform nondiscriminatory policy established by it.
61
<PAGE>
ARTICLE 8
---------
DISTRIBUTIONS AND LOANS
-----------------------
8.1 Distributions - Normal Retirement. A Participant who has attained
---------------------------------
his Normal Retirement Date and who has retired shall have a one hundred percent
(100%) vested interest in his Employer Contribution Account on his Normal
Retirement Date. He shall be entitled to have the value of his accounts
distributed to him in a lump sum payment as of the Allocation Date coinciding
with or next following his Normal Retirement Date, but in no event later than
sixty (60) days after the end of the Plan Year in which his Normal Retirement
Date occurs. The value of his accounts shall be determined in accordance with
Paragraph 8.7 (Valuation of Accounts). He shall share in Employer contributions
- -------------
and in forfeitures for the Plan Year in which his Normal Retirement Date occurs,
but not thereafter. Any distribution shall be made in accordance with the
Provisions of Paragraph 9.2 (Restrictions on Distributions) and Paragraph 9.3
------------- -------------
(Date Distribution of Accounts Must Begin).
8.2 Distributions - Delayed Retirement. If Article 1 provides for
---------------------------------- ---------
delayed retirement, a Participant who has attained his Normal Retirement Date
and whose retirement is delayed shall have a one hundred percent (100%) vested
interest in his Employer Contribution Account on his Normal Retirement Date. He
shall be entitled to have the value of his accounts distributed to him in a lump
sum payment as of the Allocation Date coinciding with or next following his
Delayed Retirement Date, but in no event later than sixty (60) days after the
end of the Plan Year in which his Delayed Retirement Date occurs. The value of
his accounts shall be determined in accordance with Paragraph 8.7 (Valuation of
-------------
Accounts). He shall share in Employer contributions and in forfeitures for the
Plan Year in which his Delayed Retirement Date occurs, but not thereafter. In
lieu of deferring the distribution of his accounts until his Delayed Retirement
Date, the value of his accounts shall, at the request of the Participant be
distributed to him as of his Normal Retirement Date, just as if he had retired
on his Normal Retirement Date. If distribution is made as of his Normal
Retirement Date, the value of his accounts shall be determined as of his Normal
Retirement Date in accordance with Paragraph 8.7 (Valuation of Accounts). Any
-------------
distribution shall be made in accordance with the Provisions of Paragraph 9.2
-------------
(Restrictions on Distributions) and Paragraph 9.3 (Date Distribution of Accounts
-------------
Must Begin).
8.3 Distributions - Early Retirement. If Article 1 provides for early
-------------------------------- ---------
retirement, a Participant who has attained his Early Retirement Date and who has
retired shall have a one hundred percent (100%) vested interest in his Employer
Contribution Account on his Early Retirement Date. He shall be
62
<PAGE>
entitled to have the value of his accounts distributed to him in a lump sum
payment as of the Allocation Date coinciding with or next following his Normal
Retirement Date, but in no event later than sixty (60) days after the end of the
Plan Year in which his Normal Retirement Date occurs. The value of his accounts
shall be determined in accordance with Paragraph 8.7 (Valuation of Accounts). He
-------------
shall share in Employer contributions and in forfeitures for the Plan Year in
which his Early Retirement Date occurs, but not thereafter. Any distribution
shall be made in accordance with the Provisions of Paragraph 9.2 (Restrictions
-------------
on Distributions) and Paragraph 9.3 (Date Distribution of Accounts Must Begin).
-------------
8.4 Distributions - Disability Retirement. If Article 1 provides for
------------------------------------- ---------
disability retirement, a Participant who is Disabled and who has retired shall
have a one hundred percent (100%) vested interest in his Employer Contribution
Account on his Disability Retirement Date. He shall be entitled to have the
value of his accounts distributed to him in a lump sum payment as of the
Allocation Date coinciding with or next following his Disability Retirement
Date, but in no event later than sixty (60) days after the end of the Plan Year
in which his Disability Retirement Date occurs. The value of his accounts shall
be determined in accordance with Paragraph 8.7 (Valuation of Accounts). He shall
-------------
share in Employer contributions and in forfeitures until the end of the Plan
Year in which his Disability Retirement Date occurs, but not thereafter. Any
distribution shall be made in accordance with the Provisions of Paragraph 9.2
-------------
(Restrictions of Distributions) and Paragraph 9.3 (Date Distribution of Accounts
-------------
Must Begin).
8.5 Distributions - Death.
---------------------
(a) The Beneficiary of a deceased Participant shall have a one
hundred percent (100%) vested interest in the Employer Contribution Account of
the deceased Participant on the date of the Participant's death. The Beneficiary
shall be entitled to have the value of the deceased Participant's accounts
distributed to him in a lump sum payment as of the Allocation Date coinciding
with or next following the date of the Participant's death, but in no event
later than sixty (60) days after the end of the Plan Year in which the
Participant's death occurs. The value of the accounts of the deceased
Participant shall be determined in accordance with Paragraph 8.7 (Valuation of
-------------
Accounts). The deceased Participant shall share in Employer contributions and in
forfeitures for the Plan Year in which death occurs, but not thereafter.
(b) Notwithstanding any other provision of this Plan, if the
deceased Participant is survived by a spouse, the spouse shall be the
Participant's Beneficiary, unless the Participant designated a Beneficiary other
than his spouse and
63
<PAGE>
the spouse consented to the specific designation of another Beneficiary in
accordance with the provisions of this Paragraph 8.5. For purposes of this
-------------
Subparagraph (b), "spouse" shall mean the wife or husband to whom a deceased
- ----------------
Participant is married on the date of death, except that a former spouse of a
deceased Participant shall be treated as the Participant's spouse to the extent
required under a qualified domestic relations order described in Section 414(p)
of the Code.
(i) A married Participant may designate a Beneficiary other than
his spouse by completion and filing with the Administrator of a beneficiary
designation on a form presented by the Administrator if the spouse has consented
to the specific designation of another Beneficiary.
(ii) Notwithstanding the requirements of Subparagraph (i)
----------------
of this Subparagraph (b), a written consent of the spouse of a deceased
----------------
Participant shall not be required if, before his death, the Participant had
established to the satisfaction of the Administrator that he did not have a
spouse or that his spouse could not be located.
(iii) The consent of the spouse to the designation by the
participant of another Beneficiary shall be valid only if --
(A) it is in writing,
(B) it is witnessed by either a notary public or the
Administrator, and
(C) it acknowledges the effect of the Participant's
election not to have his accounts paid the Spouse.
(c) Subject to the conditions and restrictions of Subparagraph
------------
(b) a Participant may designate a Beneficiary subject to the following
- ---
conditions and restrictions:
(i) A designation or the revocation of a designation shall
be made in writing on a form prescribed by the Administrator.
(ii) A designation may be made by a Participant at any
time.
(iii) A designation shall be effective as of the date the
prescribed form is filed with the Administrator regardless of whether or not the
Participant is living at the time the form is filed with the Administrator.
(iv) A designation may be revoked and a new designation may
be made at any time if the new designation
64
<PAGE>
otherwise complies with this Subparagraph (c). The revocation of a designation
----------------
shall be effective as of the date the prescribed form is filed with the
Administrator.
(d) If a Participant dies without a spouse or other designated
Beneficiary, whether designated by the Plan or by the Participant, or if no
designated Beneficiary survives a Participant or survives long enough to receive
complete distribution of the Participant's accounts, the Account of the deceased
Participant shall be said by the Administrator to one or more of the following:
children or other descendants, adopted children or descendants of adopted
children, next of kin of the deceased Participant, or the executor or
administrator of the deceased Participant's estate; and the Participant's
accounts may be distributed entirely to any one of them or in such shares to any
two or more of them as the Administrator in its discretion may direct.
(e) If the Trustee has applied to an Insurer for a Contract on a
Participant's life and has remitted the initial premium, then the amount of the
death benefit payable under such contract shall be whatever amount is payable by
the Insurer in accordance with the terms of the application, and the rules and
regulations of the Insurer.
8.6 Distributions - Termination of Employment.
-----------------------------------------
(a) A Participant whose employment with the Employer is
terminated for any reason other than retirement or death before his Normal
Retirement Date shall have on the date his employment is terminated such vested
interest in his Employer Contribution Account as is provided by the Plan vesting
schedule or schedules. The Plan vesting schedule or schedules and the
Participant's vested interest shall be determined in accordance with the
provisions of Subparagraph (b) and the other provisions of this Paragraph 8.6.
---------------- -------------
If Paragraph 5.7 (Participants to Whom Employer Contributions and Forfeitures
-------------
Will Be Allocated) and Article 1 so provide, the Participant shall share in
---------
Employer contributions and in forfeitures for the Plan Year in which his
employment is terminated. The Participant shall not share in Employer
contributions nor in forfeitures for any Plan Year thereafter. The Administrator
shall distribute the Participant's vested interest in the value of his Accounts
to the Participant as of the Allocation Date coinciding with or next following
the date his employment is terminated; provided, however, that if the value of
the participant's Employer Contribution Account exceeds Three Thousand Five
Hundred Dollars ($3,500.00), no distribution shall be made to a Participant from
his Employer Contribution Account unless the Participant consents to the
distribution. The value of the Participant's accounts shall be determined in
accordance with Paragraph 8.7 (Valuation of Accounts). The
-------------
65
<PAGE>
value of the Participant's accounts shall be determined in accordance with
Paragraph 8.7 (Valuation of Accounts). The distribution of the Participant's
- -------------
vested interest in his accounts shall be made in a lump sum payment.
(b) The vested interest of a Participant whose employment with
the Employer is terminated for any reason other than retirement or death before
his Normal Retirement Date in the value of his Employer Contribution Account
shall be determined in accordance with the vesting schedule or schedules
specified in Article 1. If Article 1 provides a special vesting schedule for
life insurance and annuity contracts and a special vesting schedule for benefits
under a predecessor plan, or a special vesting schedule for either, a
Participant's vested interest in the portion of his Employer Contribution
Account attributable to either or both of such items, shall be determined in
accordance with such special vesting schedules.
(c) A Participant whose employment with the Employer is
terminated for any reason other than retirement or death before his Normal
Retirement Date shall forfeit the portion of his Employer Contribution Account
that is not vested under Subparagraph (b) of this Paragraph 8.6 on the earlier
---------------- -------------
of the following dates: the date he incurs a period of five (5) consecutive One-
Year Breaks in service or the date specified in Subparagraph (e) of this
----------------
Paragraph 8.6. The forfeited portion of the Participant's Employer Contribution
- -------------
Account shall be reallocated as of the last day of the Plan Year in which such
forfeiture occurs to the Participants who are entitled to share in forfeitures
for such Plan Year. The value of the forfeited portion of the Participant's
Employer Contribution Account shall be determined as of the date of
reallocation.
(d) In lieu of distributing the vested interest of a Participant
whose employment with the Employer is terminated as of the Allocation Date
coinciding with or next following the date his employment with the Employer is
terminated, the Administrator at the request of a Participant whose Employer
Contribution Account exceeds Three Thousand Five Hundred Dollars ($3,500.00) may
delay the distribution of the Participant's vested interest in the value of his
Employer Contribution Account to the Participant until the Allocation Date
coinciding with or next following his Normal Retirement Date or such earlier
Allocation Date as the Participant may specify. The value of the Participant's
accounts shall be determined in accordance with Paragraph 8.7 (Valuation of
-------------
Accounts).
(e) If a distribution described in Subparagraph (d) of this
Paragraph 8.6 is made before a Participant incurs a period of five (5)
consecutive One-Year Breaks in Service and--
66
<PAGE>
Contribution Account, the Participant shall forfeit the non-vested portion of
his Employer Contribution Account on the date of the distribution, or
(ii) if the distribution represents less than the entire
vested interest of the Participant in his Employer Contribution Account, the
Participant shall forfeit an amount of the non-vested portion of his Employer
Contribution Account on the date of the distribution, such amount to be
determined by first multiplying the pre-distribution amount of the Participant's
Employer Contribution Account (the vested portion plus the non-vested portion)
by a fraction, the numerator of which is the amount of the distribution and the
denominator of which is the pre-distribution amount of the vested portion of the
Participant's Employer Contribution Account and then reducing the product of
step one by the amount of the distribution. The remainder of the Participant's
Employer Contribution Account shall be subject to the following rules:
(A) If the Participant is not reemployed by the
Employer or if he is reemployed after he incurs a period of five (5) consecutive
One-Year Breaks in Service, the Participant shall forfeit the non-vested portion
of such Employer Contribution Account on the date he incurs a period of five (5)
consecutive One-Year Breaks in Service.
(B) If the Participant is reemployed by the Employer
before he incurs a period of five (5) consecutive One-Year Breaks in Service,
the Participant's vested interest in such Employer Contribution Account shall
continue to increase in accordance with the Plan vesting schedule.
(C) Such Employer Contribution Account shall continue
to share in the income, losses, appreciation, and depreciation of the commingled
portion of the Fund, to the extent attributable thereto.
(D) No Employer contributions or forfeitures shall be
allocated or credited to such Employer Contribution Account; the participant's
share, if any, of future Employer contributions and forfeitures shall be
allocated and credited to a new Employer Contribution Account established for
the Participant pursuant to Subparagraph (c) of Paragraph 3.1 (Participation).
---------------- -------------
(E) If the Participant repays a distribution described
in Subparagraph (d) of this Paragraph 8.6 before he incurs a period of five (5)
---------------- -------------
consecutive One-Year Breaks in Service, and if the distribution qualified as
either an involuntary cash-out or a voluntary cash-out, and if the value of
such Employer Contribution Account immediately after the
67
<PAGE>
repayment (the repayment value) is less than the value immediately preceding the
distribution (the pre-distribution value), such Employer Contribution Account
shall be restored to its predistribution value in the manner specified in
Subparagraph (c) of Paragraph 9.12 (Right to Repay Distribution Received on
- ---------------- --------------
Termination of Participation in the Plan).
(f) Notwithstanding any other provision of the Plan, if Article
-------
1 provides for early retirement and if the eligibility requirements for early
- -
retirement provide that a Participant must satisfy both a service requirement
and an age requirement, a Participant who satisfied the service requirement but
not the age requirement at the time his employment was terminated may elect to
have the distribution of his accounts begin not later than sixty (60) days after
the close of the Plan Year in which he satisfies the age requirement. The
election provided for under Subparagraph (g) shall be made in the manner
----------------
specified in, and shall be subject to the conditions and restriction in,
Subparagraph (d) of Paragraph 9.3 , ( Date Distribution of Accounts Must Begin)
- ---------------- -------------
and Paragraph 9.4, (Date Distribution of Accounts Must be Completed).
-------------
(g) Notwithstanding any other provision of this Plan, if Article
-------
1 provides for early retirement and if the eligibility requirements for early
- -
retirement provide that a Participant must satisfy both a service requirement
and an age requirement, a Participant who satisfied the service requirement but
not the age requirement at the time his employment was terminated may elect to
have the distribution of his accounts begin not later than sixty (60) days after
the close of the Plan Year in which he satisfies the age requirement. The
election provided for under this Subparagraph (g) shall be made in the manner
----------------
specified in, and shall be subject to the conditions and restrictions in,
Subparagraph (d) of Paragraph 9.5 (Date Distribution of Accounts Must Begin).
- ---------------- -------------
(h) If the vesting schedule or any other provision of this Plan
that directly or indirectly affects the computation of a Participant's vested
interest is amended, Paragraph 10.7 (Amendment of Vesting Schedule - Right to
--------------
Elect Former Vesting Schedule) provides that a Participant who has completed
three (3) or more Years of Service may elect to have his vested interest in his
Employer Contribution Account determined without regard to the Plan amendment.
8.7 Valuation of Accounts. The accounts of a retired, deceased or
---------------------
terminated Participant, except his Participant Directed Investment Accounts,
shall be valued as of the date specified in Article 1. His Participant Directed
---------
Investment Accounts shall be valued as of the date of distribution.
68
<PAGE>
8.8 Distribution of Contracts.
-------------------------
(a) The Administrator shall offer to distribute to a Participant
who has retired all Contracts, if any, on his life that are held for his
benefit. If the Participant elects in writing to receive his Contracts in kind,
the Administrator shall direct the Trustee to distribute the Participant's
Contracts to him. If the Participant elects not to receive his Contracts in
kind, or fails to make an election within thirty (30) days after notice from the
Administrator, the Administrator shall direct the Trustee to dispose of the
Participant's Contracts in any one or more of the methods specified in Article 9
---------
(Methods and Mediums of Distribution, Limitations, Etc.).
(b) If a Participant ceases to participate in the Plan for any
reason other than retirement or death, the offer to sell all or any one or more
of such Contracts to the Participant at a price equal to their cash value, if
the Participant does not elect to purchase such Contracts, the Trustee shall
dispose of all or any ore or more of such Contracts in any one or more of the
methods specified in Article 9 (Methods and Mediums of Distribution,
---------
Limitations, Etc.).
8.9 Pre-Termination Distributions.
-----------------------------
(a) If Article 1 provides for pre-termination distributions, the
---------
Administrator, upon the request of a Participant, shall direct the Trustee to
make a distribution to the Participant from his accounts listed in, and for the
purposes authorized in, Article 1, each request for a pre-termination
---------
distribution shall be made by filing a written application with the
Administrator. The application shall be supported by such evidence as the
Administrator may require.
(b) The Administrator may authorize pre-termination
distributions to be made to a Participant by the Trustee where the distribution
is necessary to satisfy an immediate and heavy financial need of the Participant
on account of:
(i) medical expenses described in Section 213(d) of the
Code incurred by (or necessary to obtain care for) the Participant, his spouse,
or any of his dependents;
(ii) payment of tuition and related educational fees for
the next 12 months of post-secondary education of a Participant, his spouse,
children or any of his dependents;
(iii) the purchase (excluding mortgage payments) of a
principal residence for the Participant; or
69
<PAGE>
(iv) the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the Participant's
principal residence.
(v) funeral expenses for the spouse or a dependent of the
Participant.
(c) Notwithstanding any other provision of this Plan, the amount
of a pre-termination distribution made to a Participant from an account listed
in Article 1 shall not exceed the value (determined as of the Allocation Date
---------
coinciding with or next preceding the date of such distribution) of the
Participant's vested interest in the account, except that
(i) if the Employer's Plan is integrated with Social
Security, then in the case of a pre-termination distribution made from a
Participant's Employer Contribution Account, the amount of the distribution
shall not exceed the value (determined as of the Allocation Date coinciding with
or next preceding the date of such distribution) of the Participant's vested
interest in the portion of the account that is not attributable to allocations
based on Compensation in excess of the integration level specified in Article 1;
---------
(ii) in the case of a pre-termination distribution made from
a Participant's Salary Reduction Contribution Account,
(A) the purpose of the distribution shall be to enable
the Participant to meet immediate and heavy financial needs,
(B) the amount required to meet such financial needs
shall not be reasonably available from the resources of the Participant, and
(C) the amount of the distribution shall not exceed
the amount required to meet such financial needs.
(d) A distribution will be deemed to be necessary to
satisfy an immediate and heavy financial need of an Employee if the Participant
provides the Administrator reasonable representation that the need cannot be
relieved--
(i) Through reimbursement or compensation by insurance or
otherwise,
70
<PAGE>
(ii) By reasonable liquidation of the employee's
assets, to the extent such liquidation would not itself cause an immediate heavy
financial need,
(iii) By cessation of elective contributions or
employee contributions under the Plan, or
(iv) By other distributions or non-taxable at the time
of the loan(s) from the Plan by the employer or by any other employer, or by
borrowing from commercial sources on reasonable commercial terms.
If a Participant receives a distribution pursuant to this Paragraph 8.9, the
-------------
Participant's Salary Reduction Contributions shall be suspended for twelve (12)
months after receipt of the distribution.
For purposes of this Subparagraph (d), the Participant's resources shall be
----------------
deemed to include those assets of his spouse and minor children that are
reasonably available to the Participant but which do not include assets held for
a child of the Participant under any revocable trusts or under the Uniform Gift
to Minors Act. Any distribution under this Paragraph 8.9 shall not exceed the
-------------
amount of the immediate financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from such distribution).
8.10 Loans to Participants.
---------------------
(a) If Article 1 provides for loans to Participants, the
---------
Administrator, upon the request of a Participant, may direct the Trustee to make
a loan or loans to the Participant. In no event shall the total amount of any
loan or loans, plus unpaid interest, to a Participant exceed the lesser of the
following amounts:
(i) Fifty Thousand Dollars ($50,000.00) reduced by the
excess (if any) of -
(A) the highest outstanding balance of loans from the
Plan during the one-year period ending on the day before the date on which such
loan was made, or
(B) the outstanding balance of loans from the Plan on
the date on which such loan was made;
(ii) fifty percent (50%) of the value of the Participant's
vested interest in his accounts; or
71
<PAGE>
(iii) the value (determined as of the Allocation Date
coinciding with or next preceding the date of such loan) of the Participant's
accounts.
Further, if the Employer's Plan is integrated with Social Security, in no event
shall the total amount of any loan or loans, plus unpaid interest, from a
Participant's Employer contribution Account exceed the value (determined as of
the Allocation Date coinciding with or next preceding the date of such loan) of
the portion of the Participant's Employer contribution Account that is not
attributable to allocations based on Compensation in excess of the integration
level specified in Article 1.
---------
(b) In no event shall the term of any loan exceed five (5)
years unless the proceeds of the loan are used to acquire the principal
residence of the Participant.
(c) The Administrator shall establish the interest rate and
the repayment schedule for each loan, including the term of the loan and the
maturity date, all of which shall be acceptable to the Trustee and shall be
subject to the provisions of this Paragraph 8.10.
--------------
(d) Each loan shall --
(i) be evidenced by a note;
(ii) have a fixed maturity date;
(iii) require substantially level amortization of the
loan with payments not less frequently than quarterly over the term of the loan;
(iv) bear interest at a reasonable rate, but in no
event at a rate that is less than the rate currently being charged by
institutional lenders in the area of the Employer's principal place of business
for loans of the same type; and
(v) be secured by adequate collateral. The collateral
shall include the assignment of the participant's entire interest in his
accounts and the Participant, by accepting the loan, automatically assigns as
security for the loan his entire interest in his accounts.
(e) If Article 1 provides that a loan to a Participant shall
---------
be considered an investment of the Participant's accounts, the loan shall be
charged to the account or accounts from which the loan was made and all payments
on the loan, both principal and interest, shall be credited to the account or
accounts from which the loan was made.
72
<PAGE>
(f) If the Participant defaults on his payment obligations
under the loan, the Administrator shall direct the Trustee to take such action
as shall be necessary or appropriate under the circumstances to realize upon the
Trust's security interest in the collateral or to deduct from the Participant's
accounts the amount required to cure the default.
(g) The Administrator shall provide each loan applicant with
a clear statement of the charges involved in each loan transaction. Such
statement shall include the dollar amount and the annual interest rate of the
finance charge.
(h) Loans shall be made available to all Participants in
accordance with a uniform non-discriminatory policy established by the
Administrator, except that no loans shall be made to Owner-Employees or to
Shareholder-Employees.
(i) No loan shall be made to a Participant who is married on
the date the loan is made unless the spouse of the Participant consents to the
loan. The consent of the spouse to a loan described in this Paragraph 8.10 shall
--------------
be valid only if -
(i) it is made within the ninety (90) day period
before the date the loan is made to the Participant, and
(ii) it is witnessed by either a Notary Public or the
Administrator or a designated agent of the Administrator, and
(iii) it acknowledges that the right of the
Administrator to reduce the Participant's Employer Contribution Account balance
in the event of default by the Participant of the terms of the loan may defeat
the rights of the spouse to the Participant's Employer Contribution Account.
73
<PAGE>
ARTICLE 9
---------
METHODS AND MEDIUMS OF DISTRIBUTION, LIMITATIONS, ETC.
-----------------------------------------------------
9.1 Claim Forms. In order to receive any distribution under
-----------
this Plan, a Participant or Beneficiary must file a written claim with the
Administrator. Each claim shall be made on forms acceptable to the Administrator
and Trustee and shall be filed in such manner as the Administrator may specify.
The Administrator may require a Participant or Beneficiary filing a claim to
furnish such information as the Administrator deems pertinent to the
determination of the amount of the claim. The Administrator may also require a
Participant or Beneficiary filing a claim to furnish such proof of death and
such evidence of the right to receive payment of the accounts of a deceased
Participant as the Administrator deems appropriate.
9.2 Restrictions on Distributions. Distributions from a
-----------------------------
Participant's accounts shall be made to or for the benefit of the Participant
or, in the event of his death, to or for the benefit of his Beneficiary in
accordance with the other provisions of the Article 9 and shall comply with the
---------
requirements of Section 401(a)(9) of the Code and the regulations thereunder,
including Regulation Section 1.401(a)(9)-2 which is incorporated herein by
reference.
Notwithstanding any other provision of the Plan, however, no distribution of a
Participant's accounts will be made under any form of payment unless the present
value of the payments projected to be made to the Participant during his life
exceeds the present value of the total payments to be made to the Participant
and the Participant's Beneficiary.
9.3 Date Distribution of Accounts Must Begin.
----------------------------------------
(a) Notwithstanding any other provision of this Plan,
unless a Participant elects otherwise, the distribution of his accounts shall
begin no later than sixty (60) days after the end of the Plan Year in which the
latest of the following events occurs:
(i) the Participant attains his sixty-fifth (65th)
birthday, or, if earlier, reaches his Normal Retirement Date;
(ii) the tenth (10th anniversary of the Plan Year
in which the Participant began to participate in the Plan; or
(iii) the termination of the Participant's
employment with the Employer.
74
<PAGE>
(b) A Participant may elect, prior to the date the distribution
of his accounts is to be made, to have the distribution of his accounts begin on
a later date than that specified in Subparagraph (a) of this Paragraph 9.3 if
---------------- -------------
that date is no later than the latest date specified in Paragraph 9.4 (Date
-------------
Distribution of Accounts Must Be Completed).
(c) If the distribution of a Participant's accounts cannot begin
on the date specified in Subparagraph (a) of this Paragraph 9.3 because the
---------------- -------------
Administrator either cannot ascertain the amount of the Participant's accounts
or cannot locate the Participant after making reasonable efforts to do so, the
distribution of the Participant's accounts shall begin no later than sixty (60)
days after the date on which the amount can be ascertained or the Participant is
located, whichever is applicable. Any such distribution shall be made
retroactive to a date that is no earlier than the date on which distribution of
the Participant's accounts was scheduled to begin but no later than the date
specified in Subparagraph (a) of this Paragraph 9.3.
---------------- -------------
(d) The election provided for under this Paragraph 9.3 shall be
-------------
subject to the following conditions and restrictions:
(i) An election or the revocation of an election shall be
made in writing on a form prescribed by the Administrator and shall specify the
date on which the distribution of the Participant's accounts shall begin.
(ii) An election may be made at any time during the six (6)
month period preceding the date the distribution of the Participant's accounts
is scheduled to begin.
(iii) An election, if timely made, shall be effective as of
the date the prescribed form is filed with the Administrator.
(iv) An election may be revoked and a new election may be
made at any time during the same election period if the new election otherwise
complies with this Paragraph 9.3. The revocation of an election, if timely made,
-------------
shall be effective as of the date the prescribed form is filed with the
Administrator.
9.4 Date Distribution of Accounts Must be Completed.
-----------------------------------------------
(a) Notwithstanding any other provision of this Plan, a
Participant's accounts shall be distributed to the Participant no later than the
"Required Distribution Date," which
75
<PAGE>
shall mean April 1 of the calendar year following the calendar year in which a
Participant attains age seventy and one-half (70 1/2).
9.5 Distributions Upon Death of Participant. Notwithstanding any
---------------------------------------
provision of the Plan to the contrary, distributions upon the death of a
Participant shall be made in accordance with the following requirements and
shall otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder.
(a) If it is determined, pursuant to Regulations, that the
distribution of a Participant's interest has begun and the Participant dies
before his entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the method of
distribution selected pursuant to Paragraph 9.3 as of his date of death.
-------------
(b) If a Participant dies before he has begun to receive any
distributions of his interest in the Plan or before distributions are deemed to
have begun pursuant to Regulations, then, subject to the provisions of Paragraph
---------
8.5 regarding distributions to the spouse of a married Participant, the deceased
- ---
Participant's accounts shall be distributed to his Beneficiary in a lump sum
payment as soon as practical; provided, however, that the accounts shall be
distributed to the Participant's Beneficiaries by December 31st of the calendar
year in which the fifth anniversary of the Participant's death occurs.
9.6 Distributions to Incompetents. In the event that a distribution is
-----------------------------
payable to a minor or other legally incompetent person or to any person who in
the judgment of the Administrator is unable to handle funds paid directly to
such person, the Administrator may direct that such distribution be made in any
one or more of the following ways: (i) directly to such minor or other person;
(ii) to the legal representative of such minor or other person; (iii) to any
relative of such minor or other person who shall have custody and care of such
person; (iv) directly in payment of the support, maintenance, or education of
such minor or other person; or (v) to a trust created for the benefit of such
minor or other person. The Administrator shall not be required to see to the
proper application of any distribution so made and the receipt of the payee
shall be a complete discharge of any liability under the Plan for such
distribution.
9.7 Duty of Administrator to Inform Participants of Right to
--------------------------------------------------------
Distribution. The Administrator shall notify a Participant or Beneficiary who is
- ------------
or may become entitled to a distribution of his right to receive the
distribution. Such notice shall be given no later than six (6) months after the
Participant's termination of employment with the Employer and
76
<PAGE>
again six (6) months before the Participant or Beneficiary becomes entitled to
the distribution. Such notice shall inform the Participant or Beneficiary of his
duty to file his address with the Administrator from time to time, as provided
in Paragraph 9.8 (Duty of Participants to Inform Administrator of Address). If
-------------
the address of the Participant or Beneficiary is unknown, the Administrator
shall send such notice to the Participant or Beneficiary by registered mail
directed to his last known address.
9.8 Duty of Participants to Inform Administrator of Address. Each
-------------------------------------------------------
Participant and each Beneficiary designated by a Participant must file with the
Administrator from time to time in writing his address and each change of
address. Any communication, statement or notice addressed to a Participant or
Beneficiary at his last address filed with the Administrator (or if no address
is filed with the Administrator, then at his last address as shown on the
Administrator's records) shall be binding on the Participant and his Beneficiary
for all purposes of the Plan. Neither the Administrator nor the Trustee shall be
required to search for or locate a Participant or Beneficiary. If the
Administrator notifies a Participant or Beneficiary that he is or may become
entitled to a distribution in accordance with the provisions of Paragraph 9.7
-------------
(Duty of Administrator to Inform Participants of Right to Distribution), and
also notifies him of the provisions of this Paragraph 9.8, and the Participant
-------------
or Beneficiary fails to claim the distribution or to make his address known to
the Administrator within three (3) years after he has become entitled to the
distribution, the distribution shall be disposed of as follows:
(i) If the address of the Participant is unknown but the
address of the Beneficiary designated by the Participant is known to the
Administrator, distribution shall be made to such Beneficiary.
(ii) If the address of neither the Participant nor the
Beneficiary designated by the Participant is known to the Administrator, but the
address of one or more relatives by adoption, blood, or marriage of the
Participant is known to the Administrator, distribution shall be made to any one
or more of such relatives in such proportions as the Administrator determines.
9.9 Right to Make Partial Distributions. Since it may not be
-----------------------------------
possible to determine the value of a Participant's accounts until the Allocation
Date next following his retirement, death, or termination, the Administrator in
its discretion may direct the Trustee to make a partial distribution to the
Participant or to his Beneficiary from his accounts prior to such Allocation
Date so long as the amount of such partial distribution does not jeopardize the
interests of the other
77
<PAGE>
Participants by exceeding the value of the Participant's accounts on such
Allocation Date.
9.10 Transfer to Plan of New Employer. Upon the request of a
--------------------------------
Participant who has retired or otherwise terminated his employment with the
Employer, the Administrator, pursuant to the provisions of Article 15, may
----------
direct the Trustee to transfer, as of the Allocation Date coinciding with or
next following the date of the Participant's request, the value of the
Participant's accounts, to the extent that they are vested, in the form of cash
or other property, to the plan of the Participant's new employer, provided the
trustee or other funding agent of such plan is authorized to accept such assets,
such assets are maintained in a separate account under such plan, such assets
are nonforfeitable, and such assets do not in any way reduce the obligation of
the Participant's new employer under such plan.
9.11 Date Employer Contribution Account Must Be 100% Vested.
------------------------------------------------------
Notwithstanding any other provision of this Plan, a Participant shall have a one
hundred percent (100%) vested interest in his Employer Contribution Account on
the earlier of the following dates:
(i) his Normal Retirement Date, or
(ii) the later of --
(A) the date on which he attains his sixty-fifth
(65th) birthday, or
(B) the tenth (10th) anniversary of his Entry Date.
9.12 Right to Repay Distribution Received on Termination of
------------------------------------------------------
Participation in the Plan.
- -------------------------
(a) If a Participant is reemployed by the Employer before
incurring a period of five (5) consecutive One-Year Breaks in Service, and such
Participant received a distribution that qualified as either an involuntary
cash-out or a voluntary cash-out (as defined in Subparagraphs (d) and (e) of
----------------- ---
this Paragraph 9.12) while less than one hundred percent (100%) vested in his
--------------
Employer Contribution Account, the Participant may repay the full amount of the
distribution to the Trustee. Such repayment shall be made not later than the
earlier of (i) five (5) years after the date such Participant was reemployed, or
(ii) the date he incurs five (5) consecutive One-Year Breaks in Service
following the payment of the vested portion of his Employer Contribution
Account.
78
<PAGE>
(b) The Administrator shall provide each Participant who is
eligible to repay a distribution that qualified as either an involuntary cash-
out or a voluntary cash-out with a written general explanation of the
Participant's right to make such repayment and the consequences of making or
failing to make such repayment. Such written explanation shall be provided
within six (6) months of the Participant's reemployment.
(c) If a Participant, before he incurs a period of five (5)
consecutive One-Year Breaks in Service, repays a distribution that qualified as
either an involuntary cash-out or a voluntary cash-out, the repayment shall be
credited to the Participant's Employer Contribution Account. If the value of the
Participant's Employer Contribution Account immediately after the repayment (the
repayment value) is less than the value immediately preceding the distribution
(the pre-distribution value), such account shall be restored to its pre-
distribution value. The repayment value of such account shall be determined as
of the next Allocation Date before any amount is credited to such account under
the allocation procedure specified in Paragraph 5.3 (Allocation Procedure). Such
-------------
restoration shall be made from forfeitures occurring during the current Plan
Year, that is, the Plan Year in which such repayment is made; provided however,
that if such forfeitures are not sufficient, such restoration shall be made
either from Employer contributions for the current Plan Year or from the income
and appreciation of the Fund for the current Plan Year.
(d) An involuntary cash-out is a distribution to a Participant
that meets each of the following requirements:
(i) the value of the Participant's Employer Contribution
Account and Participant Voluntary Contribution Account does not exceed Three
Thousand Five Hundred Dollars ($3,500.00);
(ii) the distribution constitutes one hundred percent
(100%) of the value of the Participant's vested interest in his Employer
Contribution Account and one hundred percent (100%) of the value of any other
accounts that are held for his benefit; and
(iii) the distribution is made because the Participant's
participation in the Plan has ended.
(e) A voluntary cash-out is a distribution to a Participant that
meets each of the following requirements:
(i) the value of the Participant's Employer Contribution
Account and Participant Voluntary Contribution Account exceeds Three Thousand
Five Hundred Dollars ($3,500.00);
79
<PAGE>
(ii) the distribution constitutes one hundred percent
(100%) of the value of the Participant's vested interest in his Employer
Contribution Account and one hundred percent (100%) of the value of any other
accounts that are held for his benefit;
(iii) the distribution is made pursuant to the Participant's
written consent; and
(iv) the distribution is made because the Participant's
participation in the Plan has ended.
(f) For purposes of determining whether a distribution qualifies
as either an involuntary cash-out or a voluntary cash-out, any service of a
Participant after the distribution shall be disregarded.
80
<PAGE>
ARTICLE 10
----------
AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
10.1 Right of Employer to Amend the Plan. The Employer shall
-----------------------------------
have the right at any time and from time to time to amend the Plan in whole or
in part.
10.2 Limitations on Right of Employer to Amend the Plan.
--------------------------------------------------
Notwithstanding any other provision of this Plan, no amendment to the Plan
shall --
(i) cause any reduction in the amount of a Participant's
accounts,
(ii) cause any reduction in a Participant's vested interest
in his accounts,
(iii) eliminate a method of distribution contained in
Paragraph 9.2 (Restrictions on Distribution), or
- -------------
(iv) authorize or permit any part of the Fund to revert to
the Employer or to be diverted to any purpose other than the exclusive benefit
of the Participants or their Beneficiaries, except for any part that is required
to pay taxes and administration expenses or any part that may revert to the
Employer under the provisions of Paragraph 5.9 (Section 415 Limitations) and
-------------
Paragraph 10.9 (Return of Employer Contributions Because of Failure of the Plan
- --------------
to Qualify, Mistake of Fact, or Disallowance of Deduction).
10.3 Partial Termination of the Plan by Employer.
-------------------------------------------
(a) The Employer shall have the right at any time to
terminate the Plan with respect to a group of Participants (which shall
constitute a partial termination of the Plan) by delivering to the Administrator
and the Trustee written notice of such partial termination.
(b) Upon the partial termination of the Plan by the
Employer with respect to a group of Participants or upon any other partial
termination of the Plan, the Employer Contribution Account of each affected
Participant shall become one hundred percent (100%) vested and shall not
thereafter be subject to forfeiture.
10.4 Termination of the Plan by Employer. The Employer shall
-----------------------------------
have the right at any time to terminate the Plan or its contributions to the
Plan (which shall be deemed a termination) by delivering to the Administrator
and the Trustee written notice of such termination or of permanent
discontinuance of its contributions. Upon termination of the Plan or upon the
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<PAGE>
permanent discontinuance of contributions, the Employer Contribution Account of
each Participant shall become one hundred percent (100%) vested and shall not
thereafter be subject to forfeiture.
10.5 Procedure for Termination of the Plan. In the event of full or
-------------------------------------
partial termination of the Plan or of permanent discontinuance of contributions,
the Administrator shall instruct the Trustee to determine the value of the Fund
(after payment of any expenses properly chargeable against the Fund) and to
adjust each Participant's accounts in the manner provided in Article 5
---------
(Allocation of Contributions). The Administrator shall also furnish instructions
to the Trustee concerning the distribution to the affected Participants of their
accounts. In either event, the distribution to the affected Participants of
their accounts may be accomplished by (i) the continuance of the Trust and the
Fund (despite the termination of the Plan) until such time as the Administrator
in its discretion deems appropriate, or (ii) distribution, whether immediate or
deferred, in any one or more of the methods specified in Article 9 (Methods and
---------
Mediums of Distribution, Limitations, Etc.).
10.6 Merger and Consolidation of the Plan - Transfer of Plan Assets.
--------------------------------------------------------------
This Plan shall not be merged or consolidated with, nor shall any assets or
liabilities be transferred to, any other plan, unless the benefits payable to
each Participant if the other plan were to terminate after such merger,
consolidation, or transfer would be equal to or greater than the benefits to
which such Participant would have been entitled had this Plan been terminated
immediately before such merger, consolidation, or transfer. The Trustee shall
not transfer any assets or liabilities of this Plan until it has received
written assurance from the Administrator that the provisions of this Paragraph
---------
10.6 have been complied with.
- ----
10.7 Amendment of Vesting Schedule - Right to Elect Former Vesting
-------------------------------------------------------------
Schedule.
- --------
(a) If the vesting schedule or any other provision of the Plan
that directly or indirectly affects the computation of a Participant's vested
interest is amended, a Participant who has completed three (3) or more Years of
Service may elect, during the election period specified in Subparagraph (d) of
----------------
this Paragraph 10.7, to have his vested interest in his Employer Contribution
--------------
Account determined without regard to the Plan amendment.
(b) Years of Service that are disregarded under the provisions
of Subparagraph (c) of Paragraph 3.2 (Service) shall not be disregarded for
---------------- -------------
purposes of this Paragraph 10.7. A Participant shall be considered to have
--------------
completed three (3) Years of Service if he has completed three
82
<PAGE>
completed three (3) Years of Service if he has completed three (3) Years of
Service before the end of the election period specified in Subparagraph (d) of
----------------
this Paragraph 10.7.
--------------
(c) The Administrator shall provide each Participant who is
entitled to make an election under this paragraph 10.7 with a written general
--------------
explanation of (i) the Plan amendment and (ii) the Participant's right to elect
to have his vested interest determined without regard to the Plan amendment.
(d) The election provided for under this Paragraph 10.7 shall be
--------------
subject to the following conditions and restrictions:
(i) An election shall be made in writing on a form
prescribed by the Administrator.
(ii) An election may be made at any time during the period
beginning on the date the Plan amendment is adopted and ending sixty (60) days
after the latest of the following dates:
(A) the date the Plan amendment is adopted;
(B) the date the Plan amendment becomes effective; or
(C) the date the Participant is provided written notice
of the Plan amendment.
(iii) An election, if timely made, shall be effective as of
the date the prescribed form is filed with the Administrator.
(iv) An election, once made, shall be irrevocable.
10.8 Exclusive Benefit of Fund. No part of the Fund shall
-------------------------
revert to the Employer or be diverted to any purpose other than the exclusive
benefit of the Participants or their Beneficiaries, except for any part that is
required to pay taxes or administrative expenses or any part that may revert to
the Employer under the provisions of Paragraph 5.9 (Section 415 Limitations) and
-------------
Paragraph 10.9 (Return of Employer Contributions Because of Failure of the Plan
- --------------
to Qualify, Mistake of Fact, or Disallowance of Deduction).
83
<PAGE>
10.9 Return of Employer Contributions Because of Failure of the Plan
---------------------------------------------------------------
to Qualify, Mistake of Fact, or Disallowance of Deduction. Notwithstanding any
- ---------------------------------------------------------
other provision of this Plan --
(i) if the Internal Revenue Service determines that
the Plan fails to qualify initially, the Administrator in its discretion may
direct the Trustee to return to the Employer the portion of the Fund contributed
by the Employer, less any expenses of the Trustee, and to return to each
Participant the portion of the Fund contributed by the Participant, provided
that the Fund be returned within one (1) year after the denial of qualification;
(ii) if a contribution is made to the Plan by the
Employer under a mistake of fact, the Administrator in its discretion may direct
the Trustee to return to the Employer the contribution (or the portion of the
contribution that is attributable to the mistake), reduced by any loss
attributable to the contribution (or the portion that is attributable to the
mistake), provided that the contribution (or the portion that is attributable to
the mistake) be returned within one (1) year after its payment; or
(iii) if a contribution made to the Plan by the
Employer is disallowed in whole or in part as a deduction under Section 404 of
the Code, the Administrator in its discretion may direct the Trustee to return
to the Employer the contribution (or the portion of the contribution that was
disallowed), reduced by any loss attributable to the contribution (or the
portion that was disallowed), provided that the contribution (or the portion
that was disallowed) be returned within one (1) year after the disallowance.
84
<PAGE>
ARTICLE 11
----------
ADMINISTRATION OF THE PLAN
--------------------------
11.1 Employer to be Administrator of the Plan. The Employer shall be
----------------------------------------
the Administrator of the Plan, unless the Employer has designated a person or
committee as Administrator of the Plan in Article 1 and has delegated
---------
appropriate powers and duties and allocated appropriate responsibilities to such
Administrator in accordance with Paragraph 11.2 (Delegation of Powers and Duties
--------------
and Allocation of Fiduciary Responsibilities). The Employer, Trustee, and
Administrator shall be "named fiduciaries" of the Plan within the meaning of
Section 402 of ERISA.
11.2 Delegation of Powers and Duties and Allocation of Fiduciary
-----------------------------------------------------------
Responsibilities. The Employer shall have the power to delegate any of its
- ----------------
powers or duties and to allocate fiduciary responsibilities, other than Trustee
responsibilities relating to the control of Plan assets, to the Administrator
and to such other fiduciaries and agents as it deems proper. The Employer shall
make such delegations or allocations by means of a signed written document and
shall deliver a copy of said document to the Trustee and to any other affected
fiduciaries and agents. The Employer may revoke any such delegation or
allocation by delivering a signed written document evidencing such revocation to
the Trustee and to any other affected fiduciaries and agents. Any fiduciary or
agent to whom powers or duties have been delegated or to whom responsibilities
have been allocated by the Employer may resign by delivering a written
resignation to the Employer and to any other affected fiduciaries and agents. If
the Employer revokes any delegation of powers and duties or any allocation of
fiduciary responsibilities that it has previously made, or if any fiduciary or
agent appointed by the Employer shall resign, the Employer may re-delegate such
powers and duties or reallocate such responsibilities as it deems appropriate.
11.3 Powers of Administrator. The Administrator shall have the sole
-----------------------
power, duty, and responsibility to direct the administration of the Plan in
accordance with the provisions of Article 11, except for any powers, duties, or
----------
responsibilities allocated to other persons pursuant to Paragraph 11.2
--------------
(Delegation of Powers and Duties and Allocation of Fiduciary Responsibilities),
and except for those powers and rights reserved to the Trustee that are
necessary to enable it to properly administer the Trust. The Administrator shall
administer the Plan for the best interests of the Participants and Beneficiaries
and shall have among its powers, duties, and responsibilities the following:
85
<PAGE>
(i) to construe and interpret any provision of the Plan and
Trust and to supply any omission or reconcile any inconsistency in such manner
as it deems proper and to decide all questions that shall arise under the Plan;
(ii) to decide all questions relating to the eligibility of
Employees to participate in the Plan and to determine the amount, manner, and
time of payment of any benefit to which any Participant or Beneficiary may be
entitled;
(iii) to make a determination as to the right of any Employee,
Participant, or Beneficiary to any benefit under the Plan and to afford any
person dissatisfied with such determination the right to a hearing thereon;
(iv) to establish uniform rules and procedures to be followed
by Participants and Beneficiaries in filing claims for benefits;
(v) to receive from Employees and Participants such
information as shall be necessary for the proper administration of the Plan;
(vi) to prepare and distribute, in such manner as it
determines to be appropriate, information explaining the Plan;
(vii) to furnish Employees and Participants, upon request, such
reports with respect to the administration of the Plan as are reasonable and
appropriate;
(viii) to file such reports and statements with the Secretary of
Labor and the Secretary of the Treasury as are required by law;
(ix) to receive and review the Trustee's reports of the
financial condition and of the receipts and disbursements of the Fund;
(x) to adopt such rules and actuarial tables as it deems
necessary or desirable;
(xi) to maintain and preserve a record for each Employee and
Participant that shows all items of data and account balances required for the
administration of the Plan; and
(xii) to appoint such agents, whether ministerial or
discretionary, as it deems necessary or desirable and to fix their compensation,
within such limits as the Employer may have set.
86
<PAGE>
All directions by the Administrator shall be conclusive on all parties
concerned, including the Trustee, and all decisions of the Administrator as to
the facts of any claim and the meaning, intent, or proper construction of any
provision of the Plan, or as to the application of any rule or regulation to any
claim shall be final and conclusive if no request for a review of such decision
is filed pursuant to the provisions of Paragraph 11.12 (Claims Procedure).
---------------
11.4 Rules for Operation of Committee.
--------------------------------
(a) If the Employer has designated a committee to serve as
Administrator of the Plan, or if the Employer has delegated any of its powers or
duties or allocated any of its fiduciary responsibilities to a committee that is
not the Administrator, the operation of such committee shall be governed by the
rules specified in this Paragraph 11.4. The members of the committee shall serve
--------------
at the pleasure of the Employer. The Employer may remove any member of the
committee at any time and may appoint a successor by notifying all committee
members in writing of such action. In addition, a member may resign at any time
by delivering a written resignation to the Employer. The Employer shall notify
the Trustee and any other affected fiduciaries and agents in writing of the
membership of the committee if one is appointed, and of any changes therein as
they occur from time to time. The Trustee and any other affected fiduciaries and
agents shall be entitled to rely on the last such notification received until
written notification to the contrary has been received from the Employer. The
Employer shall also furnish the Trustee and any other affected fiduciaries and
agents a certified copy of the signatures of the secretary and other members of
the committee and the Trustee and any other affected fiduciaries and agents
shall be entitled to rely upon such certified signatures.
(b) The committee shall elect a chairman and a secretary from
among its members. The committee shall act by majority vote. The members of the
committee shall serve as such without compensation if they are Employees of the
Employer. The committee may authorize one or more of its members to execute any
document or documents on behalf of the committee, in which event the committee
shall notify the Trustee and any other affected fiduciaries and agents in
writing of the name or names of the person or persons so designated.
(c) All acts and determinations of the committee shall be duly
recorded by the secretary of the committee, or under his supervision, and all
such records, together with such other documents as may be necessary for the
administration of the Plan, shall be preserved in the custody of the secretary.
87
<PAGE>
(d) When making a determination or calculation, the committee
shall be entitled to rely upon all information furnished by the Employer,
Trustee, or any other fiduciary or agent and shall be fully protected by the
Employer in respect of any action taken by the committee in good faith in
reliance upon such information.
(e) No member of the committee who is a Participant shall take
any part in any action in connection with his participation as an individual.
Such action shall be voted or decided by the remaining members of the committee.
11.5 Records. All acts and determinations of the Employer and
-------
Administrator shall be duly recorded and all such records, together with such
other documents as may be necessary for the administration of the Plan, shall be
preserved in the custody of the Administrator. Copies of the Plan, Trust
Agreement, and all forms and procedures shall be available to Employees,
Participants, and Beneficiaries for examination at all reasonable times.
11.6 Roster of Parties in Interest. If requested by the Trustee, the
-----------------------------
Administrator shall assist the Trustee with the preparation of a roster of
parties in interest with respect to the Plan.
11.7 Good Faith Reliance on Records and Reports. The Employer,
------------------------------------------
Administrator, Trustee, Investment Manager, and any other fiduciaries or agents
shall be entitled to rely in good faith upon all certificates and reports
furnished by any consultant, actuary or other person or organization hired to
render services in connection with the administration of the Plan.
11.8 Standard of Conduct. The Employer, Administrator, Trustee, and
-------------------
any other fiduciary appointed pursuant to the provisions of Paragraph 11.2
--------------
(Delegation of Powers and Duties and Allocation of Fiduciary Responsibilities),
shall act with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of like character and
with like aims.
11.9 Indemnification by Employer. The Employer shall indemnify all
---------------------------
persons to whom the Employer has delegated fiduciary duties, except the Trustee
and any Investment Manager, consultant, actuary, or other person or organization
hired to render services in connection with the administration of the Plan
against any and all claims, loss, damages, expense, and liability
88
<PAGE>
arising from their responsibilities in connection with the Plan, unless the same
is determined to be due to a breach of fiduciary obligation.
11.10 Fiduciary Liability Insurance. The Employer may purchase
-----------------------------
fiduciary liability insurance from its own funds covering itself and any
fiduciary to whom it has delegated powers or duties or allocated fiduciary
responsibilities, to cover any expense, loss, or liability resulting from any
act or omission of such fiduciary or resulting from good faith reliance on
advice rendered by any agent, including any consultant, actuary, or other person
or organization hired to render services in connection with the administration
of the Plan. If the Employer does not purchase such fiduciary liability
insurance, the Administrator may purchase such insurance from the assets of the
Plan for the benefit of itself and any other fiduciary, provided that such
insurance permits recourse by the insurance carrier against the fiduciary in the
case of a breach of fiduciary obligation, and provided, further, that such
insurance shall not be purchased with assets of the Plan for the benefit of any
fiduciary who is hired to render services to the Plan.
11.11 Bonding. Any person serving in a fiduciary capacity under the
-------
Plan shall be bonded unless specifically exempted from this requirement under
ERISA. The amount of such bond shall be the greater of One Thousand Dollars
($1,000.00) or ten percent (10%) of the funds handled by that fiduciary, not
exceeding Five Hundred Thousand Dollars ($500,000.00). Any person required to be
bonded under this Paragraph 11.11 shall furnish the Administrator with evidence
---------------
that an appropriate bond has been obtained.
11.12 Claims Procedure. If the claim of an Employee, Participant, or
----------------
Beneficiary is wholly or partially denied, the Administrator, pursuant to
procedures established by the Administrator, shall furnish the Employee,
Participant, or Beneficiary whose claim for benefits has been denied written
notice of such denial within a reasonable period of time after the date the
original claim was filed. Such denial notice shall be written in language
calculated to be understood by the average Participant and shall contain (i) the
reason for denial, (ii) specific reference to pertinent Plan provisions on which
the denial is based, (iii) a description of any additional information needed to
perfect the claim and an explanation of why such information is needed, and (iv)
an explanation of the Plan's claim procedure. Such denial notice shall also
advise the Employee, Participant, or Beneficiary of his right to make written
application for review of his claim within a reasonable time (not less than
sixty (60) days after his receipt of the denial notice) and of his right to
request that the review be in the nature of a hearing. The Employee,
Participant, or Beneficiary shall have the right to (i) be represented by
89
<PAGE>
counsel, (ii) review pertinent documents, and (iii) submit comments in writing.
A decision on any such review shall be rendered promptly but not later than
sixty (60) days after receipt of the Employee's, Participant's, or Beneficiary's
application for review unless circumstances beyond the control of the
Administrator require an extension of time for processing, in which case a
decision shall be rendered as soon as possible but not later than one hundred
twenty (120) days after receipt of the application for review.
11.13 Procedure for Establishing Funding Policy. As of the last day
-----------------------------------------
of each Plan Year, the Administrator shall compile a list of the Participants,
their ages, and such other information as the Employer may request. After
reviewing this information, the Employer shall determine the financial needs of
the Plan and adopt an appropriate funding policy. The funding policy, together
with the reasons for its adoption, shall be reduced to writing and a copy shall
be furnished to the Administrator, the Trustee, and any other affected
fiduciaries and agents.
90
<PAGE>
ARTICLE 12
----------
GENERAL PROVISIONS
------------------
12.1 Construction. The Employer's intent and purpose in executing
------------
this instrument is to establish or to continue a qualified plan to which its
contributions will be deductible. All questions arising in the construction and
administration of the Plan shall be resolved accordingly. In the construction of
the Plan the masculine shall include the feminine and the singular the plural in
all cases where such meanings would be appropriate. The Plan shall be construed
in accordance with ERISA. To the extent that ERISA shall be held not to have
preempted local law, the Plan shall be construed in accordance with the laws of
the State of Tennessee. The headings and subheadings in the Plan have been
inserted for convenience of reference only and are to be ignored in any
construction of its provisions.
12.2 Prohibition Against Assignment, Etc.
-----------------------------------
(a) No Participant or Beneficiary shall have the right to
assign, mortgage, pledge, hypothecate, alienate, commute, or anticipate any
benefit, payment, or distribution under this Plan.
(b) Except as provided in Subparagraphs (c) and (d) of this
----------------- ---
Paragraph 12.2, neither the Administrator nor the Trustee shall recognize any
- --------------
assignment, mortgage, pledge, hypothecation, alienation, or other transfer by a
Participant or Beneficiary of all or any part of his interest under this Plan,
and such interest shall not be subject to transfer by operation of law, and
shall be exempt from any claim of any creditor of a Participant or Beneficiary
or from any order, decree, levy, garnishment, execution, or other legal or
equitable process against a Participant or Beneficiary, to the fullest extent
permitted by law.
(c) Subparagraph (b) of this Paragraph 12.2 shall not apply to
---------------- --------------
any claim that the Trustee may have against a Participant or Beneficiary for any
debt owed to this Plan. Whenever any benefit, payment, or distribution is to be
made to or for the benefit of a Participant or Beneficiary, the Trustee shall
retain from such benefit, payment, or distribution an amount equal to such debt,
which amount shall be applied by the Trustee against such debt. Prior to
retaining any such amount, the Administrator shall notify the Participant or
Beneficiary, in writing, that such debt is to be paid, in whole or in part, from
such benefit, payment, or distribution. If the Participant or Beneficiary does
not agree that such debt is a valid claim, the Participant or Beneficiary shall
be entitled to review the
91
<PAGE>
validity of the claim in accordance with the procedure established in Paragraph
---------
11.12 (Claims Procedure).
- -----
(d) Subparagraph (b) of this Paragraph 12.2 shall not apply
---------------- --------------
to a domestic relations order that the Administrator determines to be a
"qualified domestic relations order" as described in Section 414(p) of the Code
or to any other domestic relations order permitted to be treated as a qualified
domestic relations order under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to determine if a
domestic relations order is a qualified domestic relations order and to
administer distributions under qualified domestic relations orders.
(e) Notwithstanding any other provision of this Plan, a former
spouse of a Participant shall be treated as the Participant's spouse to the
extent required under a qualified domestic relations order.
12.3 Discrimination. The Administrator shall administer the Plan in a
--------------
uniform and consistent manner with respect to all Participants and shall not
permit discrimination in favor of officers, stockholders, or highly-paid
Employees.
12.4 Benefits Supported Only by Plan Assets. Any person having any
--------------------------------------
claim under the Plan shall look solely to the assets of the Plan for
satisfaction.
12.5 Notification of Employees and Participants Regarding Applications
-----------------------------------------------------------------
for Determination and Declaratory Judgments. The Administrator shall notify each
- -------------------------------------------
Employee and Participant of --
(i) any application to the Internal Revenue Service for a
determination as to the qualified status of the Plan and Trust under Sections
401 and 501 of the Code and shall inform him of his rights to comment upon the
application and to request the Department of Labor also to comment upon the
application; and
(ii) his right to file an action for a declaratory judgment
in the United States Tax Court if he disagrees with the determination made by
the Internal Revenue Service, provided he has first exhausted all of his
administrative remedies.
12.6 Legal Actions. The Administrator, Employer, and Trustee shall be
-------------
the only necessary parties to any action or proceeding involving the Plan or its
administration. Process may be served upon the agent designated in Article 1,
---------
and no Participant, Beneficiary, or any other person having or claiming an
interest in the Plan shall be entitled to any notice or
92
<PAGE>
process. Any final judgment that is not appealed or appealable that may be
entered in any such action or proceeding shall be binding and conclusive on the
Administrator, Employer, Trustee, and all persons having or claiming an interest
in the Plan.
12.7 Payment of Claims. Any payment to a Participant or Beneficiary,
-----------------
or to the legal representatives of either, in accordance with the provisions of
the Plan, shall, to the extent of such payment, be in full satisfaction of all
claims against the Trustee, Administrator, and Employer. The Trustee,
Administrator, and Employer may require such Participant, Beneficiary, or legal
representative, as a condition precedent to such payment, to execute a receipt
and release therefor in such form as shall be determined by the Trustee,
Administrator, and Employer.
93
<PAGE>
ARTICLE 13
----------
TOP-HEAVY PLAN REQUIREMENTS
---------------------------
13.1 General Limitation.
------------------
(a) For any Plan Year beginning after December 31, 1983, in
which this Plan is a Top-Heavy Plan or a Super Top-Heavy Plan, the provisions of
this Article 13 shall supersede any conflicting provisions of this Plan.
----------
(b) Notwithstanding any other provision of this Article 13, the
----------
provisions of the following paragraphs of this Article 13 shall not apply to any
----------
person included in a unit of Employees covered by an agreement that the
Secretary of Labor finds to be a collective bargaining agreement between
Employee representatives and the Employer, if there is evidence that retirement
benefits were the subject of good faith bargaining between Employee
representatives and the Employer:
Paragraph 13.2 (Limitation on Annual Compensation)
--------------
Paragraph 13.3 (Vesting)
--------------
Paragraph 13.4 (Minimum Benefit)
--------------
Paragraph 13.5 (Additional Minimum Benefit)
--------------
13.2 Limitation on Annual Compensation. For any Plan Year in which
---------------------------------
this Plan is a Top-Heavy Plan, only the first Two Hundred Thousand Dollars
($200,000.00) of the Annual Compensation of a Participating Employee shall be
taken into account for purposes of determining the minimum benefit of the
Participating Employee under Paragraph 13.4 (Minimum Benefit) and Paragraph 13.5
-------------- --------------
(Additional Minimum Benefit). The dollar amount in the preceding sentence shall
be automatically adjusted each year, beginning with the calendar year 1988, for
cost-of-living increases under Section 415(d) of the Code.
13.3 Vesting.
-------
(a) For any Plan Year in which this Plan is a Top-Heavy Plan,
the vested interest of a Participating Employee, except a Participating Employee
described in Subparagraph (b) of this Paragraph 13.3, in his Employer
---------------- --------------
Contribution Account shall be determined in accordance with the top-heavy
vesting schedule specified in Article 1.
---------
(b) If this Plan becomes a Top-Heavy Plan, the top-heavy
vesting schedule specified in Article 1 shall not apply
---------
94
<PAGE>
to a Participating Employee who is not credited with an Hour of Service after
this Plan becomes top-heavy.
(c) If this Plan becomes a Top-Heavy Plan and later ceases to
be top-heavy --
(i) the vesting schedule that shall apply for Plan Years
after the Plan ceases to be top-heavy shall be determined in accordance with
Article 1,
- ---------
(ii) the portion of a Participating Employee's Employer
Contribution Account that was vested when the Plan ceased to be top-heavy shall
remain vested,
(iii) a Participating Employee with three (3) or more Years
of Service when the Plan ceases to be top-heavy may elect to remain under the
top-heavy vesting schedule specified in Article 1 in accordance with Paragraph
--------- ---------
10.7 (Amendment of Vesting Schedule - Right to Elect Former Vesting Schedule),
- ---
and
(iv) the vested interest of a Participating Employee in
his Employer Contribution Account shall not be forfeited under any other
provision of this Plan relating to --
(A) a forfeiture upon withdrawal of mandatory
employee contributions, or
(B) a suspension of benefits upon reemployment.
13.4 Minimum Benefit.
---------------
(a) Except as provided in Subparagraphs (d) and (e) of this
----------------- ---
Paragraph 13.4, for any Plan Year in which this Plan is a Top-Heavy Plan, each
- --------------
Participating Employee, as defined in Subparagraph (b) of this Paragraph 13.4,
---------------- --------------
shall be entitled to receive a minimum benefit (consisting of Employer
contributions or forfeitures, or both) for the Plan Year as specified in Article
-------
1. Such minimum benefit shall not be less than the smaller of the following
- -
percentages of the Participating Employee's Annual Compensation for the Plan
Year:
(i) three percent (3%), or
(ii) the largest percentage of Annual Compensation
received by any Key Employee for the Plan Year.
(b) "Participating Employee" shall mean either a Participant or
an Employee, but not a Key Employee, who satisfies the eligibility requirements
specified in Article 1 and who is employed by the Employer on the last day of
---------
the Plan Year.
95
<PAGE>
(c) A Participating Employee shall be entitled to receive a
minimum benefit for a Plan Year even though --
(i) he fails to make mandatory employee contributions to
the Plan,
(ii) he has Compensation of less than a stated dollar
amount, or
(iii) he is credited with less than one thousand (1,000)
Hours of Service for the Plan Year.
(d) If the amount of Employer contributions and forfeitures
allocated to a Participating Employee under Article 5 (Allocation of
---------
Contributions) for a Plan Year is equal to or greater than the minimum benefit
and, if applicable, the additional minimum benefit to which the Participating
Employee is entitled under this Article 13, no additional Employer contributions
----------
and forfeitures shall be allocated to the Participating Employee under this
Article 13 for the Plan Year.
- ----------
(e) The minimum benefit requirements of this Article 13 shall
----------
not apply to a Participating Employee who is participating under another Top-
Heavy Plan maintained by the Employer, to the extent that the Employer has
provided that the minimum benefit requirement that applies to Top-Heavy Plans
will be satisfied in such other plan.
13.5 Additional Minimum Benefit. If, for any Plan Year in which this
--------------------------
Plan is a Top-Heavy Plan, a Participating Employee is also participating under a
defined benefit Top-Heavy Plan maintained by the Employer, such Participating
Employee shall be entitled to receive an additional minimum benefit (consisting
of Employer contributions or forfeitures, or both) for the Plan Year as
specified in Article 1.
---------
13.6 Modification of Section 415 Limitations.
---------------------------------------
(a) Except as provided in Subparagraph (b) of this Paragraph
---------------- ---------
13.6, if, for any Plan Year in which this Plan is a Top-Heavy Plan, a
- ----
Participating Employee is also participating under a defined benefit Top-Heavy
Plan maintained by the Employer
(i) the dollar limitations in Subparagraphs (d)(i)(A) and
-----------------------
(d)(ii)(A) of Paragraph 5.9 (Section 415 Limitations) shall be multiplied by 1.0
- ---------- -------------
instead of 1.25; and
(ii) the transition fraction for defined contribution
plans contained in Subparagraph (e)(v) of Paragraph 5.9 (Section 415
------------------- -------------
Limitations) and in Section 415(e)(6) of the Code shall be applied by
substituting "$41,500.00" for "$51,875.00."
96
<PAGE>
(b) Subparagraph (a) of this Paragraph 13.6 shall not apply for
---------------- --------------
any Plan Year in which this Plan satisfies both of the following conditions:
(i) this Plan is not a Super Top-Heavy Plan, and
(ii) this Plan would satisfy the minimum benefit
requirements of Paragraph 13.4 (Minimum Benefit) if the percentage of Annual
--------------
Compensation contained in Subparagraph (a)(i) of Paragraph 13.4 (Minimum
------------------- --------------
Benefit) was increased to four percent (4%). No increase would be made in "the
largest percentage of Annual Compensation received by any Key Employee for the
Plan Year."
(c) If the provisions of Subparagraph (a) of this Paragraph
---------------- ---------
13.6 would cause the combined Section 415 limitations on benefits and
- ----
contributions contained in Subparagraph (c) of Paragraph 5.9 (Section 415
---------------- -------------
Limitations) to be exceeded for a Participating Employee, the provisions of
Subparagraph (a) of this Paragraph 13.6 shall be suspended as to the
- ---------------- --------------
Participating Employee until such time as he no longer exceeds the combined
Section 415 limitations on benefits and contributions as modified by
Subparagraph (a) of this Paragraph 13.6. During the period of such suspension,
- ---------------- --------------
no Employer contributions, forfeitures, or voluntary nondeductible employee
contributions shall be allocated to such Participating Employee under this Plan
or under any other defined contribution plan maintained by the Employer, and no
additional benefit accruals shall be provided such Participating Employee under
any defined benefit plan maintained by the Employer.
13.7 Coordination of Minimum Benefits If Employer Maintains Other
------------------------------------------------------------
Top-Heavy Plans. If, for any Plan Year in which this Plan is a Top-Heavy Plan,
- ---------------
the Employer maintains other Top-Heavy Plans, and if a Participating Employee is
also participating under another Top-Heavy Plan maintained by the Employer, the
minimum benefit requirement that applies to Top-Heavy Plans shall be satisfied
in the manner specified in Article 1.
---------
13.8 Determination of Top-Heaviness.
------------------------------
(a) For any Plan Year beginning after December 31, 1983, a plan
shall be a Top-Heavy Plan and an aggregation group shall be a Top-Heavy Group if
any one of the conditions in the following subparagraphs of this Subparagraph
------------
(a) exists:
- ---
(i) A defined benefit plan shall be a Top-Heavy Plan if,
as of the Determination Date --
97
<PAGE>
(A) the sum of the present values of the Accrued
Benefits of all Key Employees exceeds sixty percent (60%) of the sum of the
present values of the Accrued Benefits of all Participating Employees, and
(B) the plan is not part of a Required Aggregation
Group or a Permissive Aggregation Group.
(ii) A defined contribution plan shall be a Top--Heavy
Plan if, as of the Determination Date --
(A) the sum of the Account Balances of all Key
Employees exceeds sixty percent (60%) of the sum of the Account Balances of all
Participating Employees, and
(B) the plan is not part of a Required Aggregation
Group or a Permissive Aggregation Group.
(iii) A Required Aggregation Group or a Permissive
Aggregation Group shall be a Top-Heavy Group if, as of the Determination Date,
the sum of --
(A) the present values of the Accrued Benefits of
all Key Employees under all defined benefit plans included in the aggregation
group and
(B) the Account Balances of all Key Employees under
all defined contribution plans included in the aggregation group exceeds sixty
percent (60%) of a similar sum determined for all Participating Employees under
all plans included in the aggregation group.
(iv) A plan that, when considered by itself, is not a
Top-Heavy Plan, but that is part of a Required Aggregation Group but is not part
of a Permissive Aggregation Group, shall be a Top-Heavy Plan if, as of the
Determination Date, the Required Aggregation Group is a Top-Heavy Group.
(v) A plan that, when considered by itself, is not a
Top-Heavy Plan, but that is part of a Required Aggregation Group and of a
Permissive Aggregation Group, shall be a Top-Heavy Plan if, as of the
Determination Date, the Permissive Aggregation Group is a Top-Heavy Group.
(b) A plan that, when considered by itself, is not a Top-Heavy
Plan, and that is not part of a Required Aggregation Group, but that is part of
a Permissive Aggregation Group, shall not be a Top-Heavy Plan although, as of
the Determination Date, the Permissive Aggregation Group is a Top-Heavy Group.
98
<PAGE>
13.9 Determination of Super Top-Heaviness. For any Plan Year
------------------------------------
beginning after December 31, 1983, a Top-Heavy Plan shall be a Super Top-Heavy
Plan if any one of the conditions in Paragraph 13.8 (Determination of Top-
--------------
Heaviness) would exist if "ninety percent (90%)" were substituted for "sixty
percent (60%)" at each place "sixty percent (60%)" appears in Paragraph 13.8
--------------
(Determination of Top-Heaviness).
13.10 Determination of Accrued Benefit and Account Balance.
----------------------------------------------------
(a) The Accrued Benefit of a Participating Employee shall be
determined as follows:
(i) In the case of a Participating Employee under an
unaggregated defined benefit plan, "Accrued Benefit" shall mean the present
value of the Participating Employee's accrued benefit under the defined benefit
plan, and, in the case of a Participating Employee under an aggregated defined
benefit plan, shall mean the sum of the present values of the Participating
Employee's accrued benefits under all defined benefit plans included in the
aggregation group, determined, in both cases, as of the most recent valuation
date that falls within or ends with the twelve-month period ending on a
Determination Date.
(ii) For the first Plan Year only, the Accrued Benefit
of an active Participating Employee shall be determined either --
(A) as if the Participating Employee terminated
service on the last day of the Plan Year, or
(B) as if the Participating Employee terminated
service as of the valuation date, but taking into account the Participating
Employee's estimated Accrued Benefit as of the Determination Date. For
succeeding Plan Years, the Accrued Benefit of an active Participating Employee
shall be determined as if the Participating Employee terminated service as of
the most recent valuation date that falls within or ends with the twelve-month
period ending on the Determination Date.
(iii) The actuarial assumptions used to determine present
value shall be reasonable. They shall include an interest assumption and a post-
retirement mortality assumption. They may include a pre-retirement mortality
assumption and an assumption as to future increases in the cost of living. They
shall not include assumptions as to future withdrawals or future salary
increases. In the case of a plan for which the qualified joint and survivor
annuity is the normal form, the spouse of a Participating Employee may be
assumed to be the same age as the Participating Employee.
99
<PAGE>
(b) The Account Balance of a Participating Employee shall be
determined as follows:
(i) In the case of a Participating Employee under an
unaggregated defined contribution plan, "Account Balance" shall mean the sum of
a Participating Employee's accounts under the defined contribution plan, and, in
the case of a Participating Employee under an aggregated defined contribution
plan, shall mean the sum of the Participating Employee's accounts under all
defined contribution plans included in the aggregation group, determined, in
both cases, as of the most recent valuation date that falls within or ends with
the twelve-month period ending on a Determination Date.
(ii) In the case of a simplified employee pension plan,
at the election of the Administrator, the sum of the Employer's contributions to
the plan may be considered to be the Account Balance of a Participating
Employee.
(c) The Accrued Benefit and the Account Balance of a
Participating Employee shall include any Employer contributions and employee
contributions, except voluntary deductible employee contributions, that may be
due but are unpaid as of a Determination Date.
(d) The Accrued Benefit and the Account Balance of a
Participating Employee shall include any distributions that were made to (or
with respect to) the Participating Employee from a plan during the five-year
period ending on a Determination Date, or from a terminated plan that, if it had
not been terminated, would have been required to be included in an aggregation
group.
(e) The Accrued Benefit and the Account Balance of a
Participating Employee shall include or shall not include rollover distributions
and direct plan-to-plan transfers in accordance with the following rules:
(i) If the transfer is an unrelated transfer (a transfer
that is initiated by the Participating Employee and that is made from a plan
maintained by the Employer to a plan maintained by an unrelated employer), the
transferring plan shall include the amount transferred. The receiving plan shall
also include the amount transferred if it was accepted prior to December 31,
1983, but shall not include it if it was accepted after December 31, 1983.
(ii) If the transfer is a related transfer (a transfer
that is not initiated by the Participating Employee or that is made between
plans maintained by the Employer), the transferring plan shall not include the
amount transferred, but the receiving plan shall include the amount transferred.
100
<PAGE>
For purposes of this Subparagraph (e), all employers aggregated under the rules
----------------
of Sections 414(b), (c), and (m) of the Code shall be considered to be a single
employer.
(f) The Accrued Benefit and the Account Balance of a
Participating Employee who has been, but no longer is, a Key Employee shall be
disregarded.
(g) The Accrued Benefit and the Account Balance of a
Participating Employee who has not performed any service for the Employer during
the five-year period ending on a Determination Date shall be disregarded.
(h) For an aggregated plan, the value of the Accrued Benefit
and the Account Balance of a Participating Employee shall be calculated with
reference to the Determination Date that falls within the same calendar year.
13.11 Aggregation of Plans. For purposes of determining whether a
--------------------
plan is part of a Top-Heavy Group, the following rules shall apply:
(i) All qualified plans maintained by the Employer in
which a Key Employee participates shall be aggregated with each other. Each
other qualified plan maintained by the Employer that enables a plan in which a
Key Employee participates to meet the requirements of Section 401(a) (4) or
Section 410 of the Code shall also be aggregated. Such plans shall comprise a
"Required Aggregation Group."
(ii) One or more other qualified plans maintained by the
Employer that are not required to be aggregated, may be aggregated either with
each other or with a Required Aggregation Group, if such Required Aggregation
Group would continue to meet the requirements of Section 410(a) (4) and Section
410 of the Code with such other plan or plans being taken into account. Such
plans shall comprise a "Permissive Aggregation Group."
(iii) Collectively-bargained plans that include a Key
Employee shall be aggregated with any Required Aggregation Group of plans
maintained by the Employer. Collectively-bargained plans that do not include a
Key Employee may be aggregated with a Permissive Aggregation Group of plans
maintained by the Employer.
13.12 Affiliated Employers. The purposes of this Article 13, all
-------------------- ----------
employees of each member of a group described below shall be treated as if
employed by the Employer:
101
<PAGE>
(i) a group that constitutes a controlled group of
corporations, as defined in Section 414(b) of the Code as modified by Section
415(h) of the Code, if the Employer is a member of the group;
(ii) a group that conducts a trade or business, whether
or not incorporated, that is under common control, as defined in Section 414(c)
of the Code as modified by Section 415(h) of the Code, if the Employer is a
member of the group; or
(iii) a group that constitutes an affiliated service
group, as defined in Section 414(m) of the Code, if the Employer is a member of
the group.
13.13 Definitions That Relate to Top-Heavy Plans. When used in this
------------------------------------------
Article 13, each term defined in this Paragraph 13.13 shall have the following
- ---------- ---------------
meaning unless a different meaning is clearly required by the context. Each such
defined term shall be construed in accordance with the provisions of Section 416
of the Code and the regulations thereunder.
(a) Account Balance - shall have the meaning specified in
---------------
Paragraph 13.10 (Determination of Accrued Benefit and Account Balance).
- ---------------
(b) Accrued Benefit - shall have the meaning specified in
---------------
Paragraph 13.10 (Determination of Accrued Benefit and Account Balance).
- ---------------
(c) Annual Compensation - shall have the meaning specified in
-------------------
Subparagraph (c)(ii) of Paragraph 5.9 (Section 415 Limitations).
- -------------------- -------------
(d) Determination Date - shall mean, with respect to any Plan
------------------
Year --
(i) the last day of the preceding Plan Year, or
(ii) in the case of the first Plan Year of a plan, the
last day of such Plan Year.
(e) Employee - shall mean an individual who is employed by the
--------
Employer and the beneficiary of such individual.
(f) Participating Employee - shall mean an Employee who
----------------------
becomes a Participant in accordance with the provisions of Article 3
---------
(Participation, Service, Etc.) and any other Employee who is entitled to a
minimum benefit under Paragraph 13.4 (Minimum Benefit).
--------------
102
<PAGE>
(g) Permissive Aggregation Group - shall have the meaning
----------------------------
specified in Paragraph 13.11 (Aggregation of Plans).
---------------
(h) Required Aggregation Group - shall have the meaning
--------------------------
specified in Paragraph 13.11 (Aggregation of Plans).
---------------
(i) Super Top-Heavy Plan - shall have the meaning specified in
--------------------
Paragraph 13.9 (Determination of Super Top-Heaviness).
- --------------
(j) Top-heavy Group - shall have the meaning specified in
---------------
Paragraph 13.8 (Determination of Top-Heaviness).
- ---------------
(k) Top-Heavy Plan - shall have the meaning specified in
--------------
Paragraph 13.8 (Determination of Top-Heaviness).
- --------------
103
<PAGE>
ARTICLE 14
----------
ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS
-------------------------------------------
14.1 Adoption of the Plan by Participating Employers. Notwithstanding
-----------------------------------------------
any other provision of this Plan, the Employer may authorize any corporation or
other business organization, whether or not an affiliate or subsidiary of the
Employer, to adopt this Plan for the benefit of its employees and to participate
herein and to be known as a Participating Employer. Any such adoption by a
Participating Employer and the Employer's authorization of such adoption shall
be made in writing by execution of this document or by execution of a separate
adoption agreement.
14.2 Construction of the Plan with Respect to Participating
------------------------------------------------------
Employers. Except as provided in Paragraph 14.3 (Employer Appointed Agent of
- --------- --------------
Participating Employers) and in Paragraph 14.4 (Decisions and Directions of
--------------
Employer and Administrator Binding Upon Participating Employers), whenever
Articles 1 through 13 of the Plan are to be construed with respect to a matter
- ---------- --
involving a Participating Employer and its Employees, then, in all cases where
such meanings would be appropriate, "Employer" shall mean the Participating
Employer, "Employee" shall mean an individual who is employed by the
Participating Employer, and "Participant" shall mean an employee of the
Participating Employer who becomes a Participant.
14.3 Employer Appointed Agent of Participating Employers. Each
---------------------------------------------------
Participating Employer shall appoint the Employer as its agent to exercise on
its behalf all of the powers and authority conferred upon the Employer and the
Administrator by the Plan and the Trust, including, with limitation, the power
to amend and to terminate the Plan and the Trust. The authority of the Employer
to act as the agent of a Participating Employer shall terminate only if the
Participating Employer ceases to participate in the Plan as provided in
Paragraph 14.7 (Termination of Participation by Participating Employers).
- --------------
14.4 Decisions and Directions of Employer and Administrator Binding
--------------------------------------------------------------
Upon Participating Employers. All decisions and Directions of the Employer and
- ----------------------------
the Administrator shall be binding upon a Participating Employer and upon its
Employees who are Participants.
14.5 Participating Employer's Contribution. All contributions made by
-------------------------------------
a Participating Employer to this plan shall be determined separately on the
basis of its Net Profit and shall be paid to and held by the Trustee for the
exclusive benefit of the employees of such Participating Employer and the
beneficiaries of such employees, subject to all the terms and conditions of this
Plan. Any forfeiture by an employee of a
104
<PAGE>
Participating Employer which is to be allocated during a Plan Year shall be
allocated only for the exclusive benefit of the employees of such Participating
Employer in accordance with the provisions of this Plan. On the basis of this
information furnished by the Administrator, the Trustee shall keep separate
books and records concerning the affairs of each Participating Employer and the
Accounts of the employees of each Participating Employer.
14.6 Trust for Participating Employer. Each Participating Employer
--------------------------------
shall be required to use the Trustee designed by the Employer for this plan. The
Trustee may, but shall not be required to, commingle, hold and invest as one
Trust Fund all contributions made by the Employer and all Participating
Employers, as well as all earnings thereon. The Trustee shall maintain records
showing the respective interests of the Employer and each Participating
Employer. Any expenses of the Trust shall be paid by the Employer or by the
Trust Fund of each Participating Employer in the same proportion that the total
value of the Accounts of Participants employed by such Participating Employer
bears to the total value of the Accounts of all Participants.
14.7 Termination of Participation by Participating Employers. A
-------------------------------------------------------
Participating Employer shall have the right at any time to terminate its
participation in the Plan, and the Employer shall have the right at any time to
terminate the participation in the Plan or any Participating Employer, by
delivering to both the Administrator and the Trustee a written notice of such
termination. Upon the termination of participation by a Participating Employer,
the Administrator shall direct the Trustee to transfer the Accounts of the
employees (including former employees and beneficiaries of such employees) of
the Participating Employer to the successor trustee or other funding agent
designated by the terminating Participating Employer. If the terminating
Participating Employer does not establish a separate plan for its Employees, the
assets allocated by the affected Participants shall be used by the Trustee
solely to provide benefits to or on behalf of the affected Participants.
105
<PAGE>
ARTICLE 15
----------
ELIGIBLE ROLLOVERS
------------------
15.1 This Article applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article, a distributee may
elect, at any time and in the manner prescribed by the Plan Administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
15.2 Definitions.
-----------
(i) Eligible rollover distribution: An eligible rollover
------------------------------
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life) expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401 (a) (9) of the Code; and the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(ii) Eligible retirement plan: An eligible retirement plan is
------------------------
an individual retirement account described in Section 48(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(iii) Distributee: A distributee includes an Employee or former
-----------
Employee. In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(iv) Direct rollover: A direct rollover is a payment by the
---------------
Plan to the eligible retirement plan specified by the distributee.
106
<PAGE>
IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has
executed this Amended and Restated Plan as of the 21st day of October, 1993.
WORLD CARPETS, INC.
/s/ Martha A. McCorkle
By Vice President of Financial Services
---------------------------------------
(Title)
107
<PAGE>
EXHIBIT 11
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE: Earnings per share presented in the first table is in accordance with
Regulation S-K, Item 601(b)(11), while earnings per share on the
Company's consolidated statements of earnings presented in the second
table is in accordance with FAS No. 128.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
REGULATION S-K:
Net earnings................................................................ $ 107,612 73,424 53,378
========== ========== ==========
Weighted-average common and dilutive potential common shares outstanding:
Weighted-average common shares outstanding............................... 57,243 56,812 56,160
Add weighted-average dilutive potential common shares - options to
purchase common shares, net............................................ 741 491 589
---------- ---------- ----------
Weighted-average common and dilutive potential common shares outstanding.... 57,984 57,303 56,749
========== ========== ==========
Basic earnings per share.................................................... $ 1.88 1.29 0.95
========== ========== ==========
Diluted earnings per share.................................................. $ 1.86 1.28 0.94
========== ========== ==========
FAS NO. 128 :
Net earnings................................................................ $ 107,612 73,424 53,378
========== ========== ==========
Weighted-average common and dilutive potential common shares outstanding:
Weighted-average common shares outstanding............................... 57,243 56,812 56,160
Add weighted-average dilutive potential common shares - options to
purchase common shares, net............................................ 741 491 589
---------- ---------- ----------
Weighted-average common and dilutive potential common shares outstanding.... 57,984 57,303 56,749
========== ========== ==========
Basic earnings per share.................................................... $ 1.88 1.29 0.95
========== ========== ==========
Diluted earnings per share.................................................. $ 1.86 1.28 0.94
========== ========== ==========
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Mohawk Carpet Corporation........................................... Delaware
Aladdin Manufacturing Corporation................................... Delaware
American Weavers, LLC............................................... Tennessee
Durkan Patterned Carpets, Inc....................................... Georgia
Mohawk Commercial, Inc.............................................. Delaware
Mohawk Factoring, Inc............................................... Delaware
Mohawk Servicing, Inc............................................... Delaware
Newmark & James, Inc................................................ Georgia
World Carpets, Inc.................................................. Georgia
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Mohawk Industries, Inc.:
We consent to incorporation by reference in the registration statements (No.
33-52070, No. 33-52544, No. 33-67282, No. 33-87998 and No. 333-23577) on Form S-
8 and the registration statement (No. 333-66061) on Form S-3 of Mohawk
Industries, Inc. and subsidiaries of our report dated February 5, 1999, except
for the seventh paragraph of note 2 as to which the date is March 9, 1999,
relating to the consolidated balance sheets of Mohawk Industries, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, and all related
schedules, which report appears in the December 31, 1998, annual report on Form
10-K of Mohawk Industries, Inc.
KPMG LLP
Atlanta, Georgia
March 4, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use, in the Form 10-K, of our report dated September
21, 1998 relating to the financial statements of World Carpets, Inc. and
Subsidiary as of June 28, 1998 and for the years ended June 28, 1998 and June
29, 1997 which appears in Form 10-K.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 4, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOHAWK
INDUSTIRES, INC.'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 378,367
<ALLOWANCES> 57,241
<INVENTORY> 412,194
<CURRENT-ASSETS> 806,907
<PP&E> 825,227
<DEPRECIATION> 402,305
<TOTAL-ASSETS> 1,331,406
<CURRENT-LIABILITIES> 387,690
<BONDS> 321,792
0
0
<COMMON> 574
<OTHER-SE> 586,135
<TOTAL-LIABILITY-AND-EQUITY> 1,331,406
<SALES> 2,639,200
<TOTAL-REVENUES> 2,639,200
<CGS> 1,998,903
<TOTAL-COSTS> 1,998,903
<OTHER-EXPENSES> 2,900
<LOSS-PROVISION> 13,173
<INTEREST-EXPENSE> 29,290
<INCOME-PRETAX> 182,388
<INCOME-TAX> 74,776
<INCOME-CONTINUING> 107,612
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,612
<EPS-PRIMARY> 1.88
<EPS-DILUTED> 1.86
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOHAWK
INDUSTRIES, INC.'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 145
<SECURITIES> 0
<RECEIVABLES> 338,476
<ALLOWANCES> 51,605
<INVENTORY> 367,076
<CURRENT-ASSETS> 708,721
<PP&E> 735,962
<DEPRECIATION> 344,861
<TOTAL-ASSETS> 1,176,557
<CURRENT-LIABILITIES> 326,613
<BONDS> 336,209
0
0
<COMMON> 571
<OTHER-SE> 476,562
<TOTAL-LIABILITY-AND-EQUITY> 1,176,557
<SALES> 2,327,341
<TOTAL-REVENUES> 2,327,341
<CGS> 1,808,137
<TOTAL-COSTS> 1,808,137
<OTHER-EXPENSES> 8,100
<LOSS-PROVISION> 8,434
<INTEREST-EXPENSE> 34,551
<INCOME-PRETAX> 121,578
<INCOME-TAX> 48,154
<INCOME-CONTINUING> 73,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,424
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.28
<FN>
<F1>Amounts have been restated to reflect the acquisition of World Carpets, Inc.
which has been accounted for under the pooling-of-interests basis of accounting.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOHAWK
INDUSTRIES INC.'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED,
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 898
<SECURITIES> 0
<RECEIVABLES> 309,241
<ALLOWANCES> 40,000
<INVENTORY> 380,828
<CURRENT-ASSETS> 700,415
<PP&E> 674,779
<DEPRECIATION> 281,509
<TOTAL-ASSETS> 1,177,510
<CURRENT-LIABILITIES> 313,348
<BONDS> 432,852
0
0
<COMMON> 566
<OTHER-SE> 398,481
<TOTAL-LIABILITY-AND-EQUITY> 1,177,510
<SALES> 2,153,016
<TOTAL-REVENUES> 2,153,016
<CGS> 1,675,221
<TOTAL-COSTS> 1,675,221
<OTHER-EXPENSES> 3,760
<LOSS-PROVISION> 13,213
<INTEREST-EXPENSE> 37,522
<INCOME-PRETAX> 91,663
<INCOME-TAX> 38,285
<INCOME-CONTINUING> 53,378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,378
<EPS-PRIMARY> .95
<EPS-DILUTED> .94
<FN>
<F1>Amounts have been restated to reflect the acquisition of World Carpets, Inc.
which has been accounted for under the pooling-of-interests basis of accounting.
</FN>
</TABLE>
