<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of Earliest Event Reported) February 2, 1998
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
(Exact name of Registrant as specified in charter)
MARYLAND 33-99994 13-3726306
(State of (Commission File No.) (IRS Employer
organization) Identification No.)
50 Rockefeller Plaza, 2nd Floor New York, New York 10020
(Address of principal executive offices)
(212) 492-1100
(Registrant's telephone number)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
PROPERTY LEASED TO WESTELL, INC.
General
On September 30, 1997, Corporate Property Associates 12 Incorporated
(the "Company") purchased from Westell-Meridian, LLC an office, light
manufacturing, warehouse, engineering and product development facility (the
"Westell Facility"). The Westell Facility, containing approximately 210,877
square feet, is located in Aurora, Illinois. The Company formed a subsidiary
(the "Westell Subsidiary") to take title to the Westell Facility. The Westell
Facility is suitable and adequate for use as an office, light manufacturing,
warehouse, engineering and product development facility. The cost of the Westell
Facility will be depreciated for tax purposes over a 40-year period on a
straight line basis.
Concurrently with the acquisition of the Westell Facility by the
Company, the Company entered into a net lease (the "Westell Lease") with
Westell, Inc. ("Westell") for the Westell Facility. The obligations of Westell
under the Westell Lease are guaranteed by Westell Technologies, Inc., the sole
shareholder of Westell. Material terms of the Westell Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Westell Facility, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $17,434,555, an
amount less than the leased fee Appraised Value of the Westell Facility. The
Company paid an Acquisition Fee of $435,863.89 to an Affiliate of the Advisor.
W.P. Carey & Co. will receive a Subordinated Acquisition Fee of $348,691.11,
payable over an eight year period, but only if the Company satisfies the
Preferred Return.
DESCRIPTION OF THE LEASE
General
The Westell Lease is absolutely net and bondable and in normal
financeable form. Westell will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Westell Facility,
except for the Westell Subsidiary's debt service and income taxes. In the
opinion of management of the Company, the Westell Facility is adequately covered
by insurance.
Term
The initial term (the "Initial Term") of the Westell Lease is 20
years, followed by two five-year renewal terms (each, an "Extended Term") at the
option of Westell.
Rent
The initial annual rent ("Basic Rent") under the Westell Lease is
$1,748,250, payable quarterly in advance in equal installments of $437,062.50.
The Westell Lease provides that at the end of the second year of the
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Initial Term and at the end of each second year thereafter during the term, the
annual rent for the next two years of the term will be increased by two percent.
DESCRIPTION OF FINANCING
The Company is currently seeking mortgage financing for the Westell
Facility.
DESCRIPTION OF WESTELL
Westell develops telecommunication products that address the needs
of telephone companies to upgrade their existing network infrastructures
continually in order to deliver advanced data and voice services to their
customers. Westell is a worldwide innovator and developer of broadband
telecommunications access systems using an emerging technology known as
Asymmetric Digital Subscriber Line.
Financial Statements of Westell Technologies, Inc. are on file
with the Securities and Exchange Commission. The following is a summary of
Selected financial data for Westell for the last three years:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, AS OF DECEMBER 31,
1995 1996 1997 1997
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
(Unaudited)
Statement of Operations Data:
Revenues $ 74,029 $ 83,236 $ 79,385 $ 62,650
Cost of goods sold 44,494 50,799 57,832 42,939
Gross margin 29,535 32,457 21,553 19,711
Total operating expenses 29,713 34,711 47,965 45,775
Operating income (178) (2,254) (26,412) (26,064)
Net income $ (508) $ (2,075) $(14,706) $ (7,604)
</TABLE>
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CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF DECEMBER 31,
1995 1996 1997 1997
------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
(Unaudited)
Balance Sheet Data:
Total assets 40,276 64,448 108,049 101,932
Long-term debt 4,129 4,427 6,487 3,212
Total Stockholders' equity 7,558 38,985 86,188 79,192
</TABLE>
PROPERTY LEASED TO RANDALL INTERNATIONAL
General
On November 26, 1997, the Company purchased from Propco, L.P.
("Propco") certain property containing approximately 248,292 square feet of land
situated in San Diego, California (the "Randall Land"). The Company will
construct a manufacturing, distribution and warehouse facility containing
approximately 88,329 square feet (the "Randall Warehouse" and together with the
Randall Land, the "Randall Facility") on the Randall Land. The Company formed a
subsidiary (the "Randall Subsidiary") to take title to the Randall Facility.
Material terms of the Randall Lease are described below.
Concurrently with the acquisition of the Randall Facility by the
Company, the Company entered into a net lease (the "Randall Lease") with Randall
International ("Randall") for the Randall Facility and a Construction Agency
Agreement with Kelly Capital Corp. ("Kelly"). Under the Construction Agency
Agreement, Kelly, as agent for the Company, will construct the Randall Facility.
Randall will supervise and manage the construction, installation, and completion
of the Randall Facility. After completion of construction, the Randall Facility
is expected to be suitable and adequate for the uses for which it was intended.
The cost of the Randall Facility will be depreciated for tax purposes over a
40-year period on a straight line basis.
PURCHASE TERMS
The cost to the Company of acquiring and constructing the Randall
Facility, including the Acquisition Fee payable to an Affiliate of the Advisor,
shall be a maximum of $7,494,739, including a change order contingency of
$250,000 (the "Contingency"). W.P. Carey & Co. will receive a Subordinated
Acquisition Fee of $142,041, payable over eight years, but only if the Company
satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
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The Randall Lease is absolutely net and bondable and in normal
financeable form. Randall will pay maintenance, insurance, taxes, and all other
expenses associated with the operation and maintenance of the Randall Facility,
except for the Randall Subsidiary's debt service and income taxes. In the
opinion of the Company, the Randall Facility will be adequately covered by
insurance.
Term
The primary term (the "Primary Term") of the Randall Lease commenced
on November 26, 1997 and shall continue until the date on which immediate
occupancy of the Randall Facility is permitted by the local authorities. The
initial term (the "Initial Term") of the Randall Lease is 15 years commencing
upon the expiration of the Primary Term, followed by two five year renewal
terms.
Rent
From December 1, 1997, on and continuing until the end of the month
in which the Primary Term ends, Basic Rent is payable monthly in an amount equal
to .00708333 multiplied by the weighted average of the amount advance by or on
behalf of the Randall Subsidiary for Project Costs (exclusive of the Acquisition
Fee and amounts advanced from the Contingency) and .0089166 of amounts advanced
form the Contingency, in each case based on the number of days each advance is
outstanding during the month prior to each Basic Rent payment date. Upon the
commencement of the Initial Term and monthly thereafter, initial annual rent
("Basic Rent") under the Randall Lease shall be an amount equal to the sum of
(i) the lesser of (x) $60,477 (reduced by one-twelfth of the product of
0.0089166 multiplied by one-half (1/2) of Project Cost savings not disbursed to
Randall) or (y) 0.0089166 multiplied by the Project Costs (including the sum of
one-half (1/2) of Project Cost savings paid to the Developer and the amount of
Project Cost savings (if any) disbursed to Randall but excluding the Acquisition
Fee and amounts advanced from the Contingency), plus (ii) one-twelfth of 10.70 %
of amounts advanced from the Contingency, all payable monthly in advance in
equal installments.
Additionally, the Randall Lease provides that on the third
anniversary of the end of the Primary Term and on each third anniversary
thereafter, the annual Basic Rent for the next three years of the term will be
increased by adding to the annual Basic Rent then in effect an amount equal to
the product of the annual Basic Rent in effect immediately prior to the
adjustment date multiplied by 9%.
Right of First Refusal
The Randall Lease provides Randall with a right of first refusal to
purchase the Randall Facilities. In the event that the Randall Facility are
contracted for sale by the Company to a third party, the Company shall give
written notice to Randall of such sale or provide Randall with a copy of the
executed contract of sale. Randall has the option to elect to purchase the
Randall Facilities for the period of 30 days following receipt of such notice,
at a price equal to the contract price agreed to between the Company and the
third party. Randall may exercise this right upon each proposed sale of the
Randall Facility.
DESCRIPTION OF FINANCING
The Company is currently seeking mortgage financing for the Randall
Facility.
DESCRIPTION OF RANDALL
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Randall manufactures custom personal care and suncare products
for hotels, spas, and retail outlets.
PROPERTY LEASED TO THE SANDWICH CO-OPERATIVE BANK
General
On December 31, 1997, the Company, through a wholly owned subsidiary
(the "Sandwich Subsidiary"), purchased from the Sandwich Co-operative Bank, a
Massachusetts corporation ("Sandwich"), a banking office building and banking
facility ("Sandwich Facilities"). The Sandwich Facilities, containing
approximately 22,210 square feet of space, are located in three separate parcels
of land in Bourne, Massachusetts, Sandwich, Massachusetts and Wareham,
Massachusetts. The Sandwich Facilities are suitable and adequate for use as
banking offices and banking facilities. The cost of the Sandwich Facilities will
be depreciated for tax purposes over a 40-year period on a straight line basis.
Concurrently with the acquisition of the Sandwich Facilities by the
Company, the Company entered into a net lease (the "Sandwich Lease") with
Sandwich for the Sandwich Facilities. The obligations of Sandwich under the
Sandwich Lease are guaranteed by Sandwich Bancorp, Inc., the sole shareholder of
Sandwich. Material terms of the Sandwich Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Sandwich Facilities,
including the Acquisition Fee payable to an Affiliate of the Advisor, was
$1,820,000, an amount less than the leased fee Appraised Value of the Sandwich
Facilities. The Company paid an Acquisition Fee of $45,555.56 to an Affiliate of
the Advisor. W.P. Carey & Co. will receive a Subordinated Acquisition Fee of
$36,444.44, payable over an eight year period, but only if the Company satisfies
the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Sandwich Lease is absolutely net and bondable and in normal
financeable form. Sandwich will pay maintenance, insurance, taxes, and all other
expenses associated with the operation and maintenance of the Sandwich
Facilities, except for the Sandwich Subsidiary's debt service and income taxes.
In the opinion of the management of the Company, the Sandwich Facilities are
adequately covered by insurance.
Term
The initial term of the Sandwich Lease (the "Initial Term") is 20
years, followed by four five-year renewal terms (each, an "Extended Term") at
the option of Sandwich.
Rent
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The initial annual rent ("Basic Rent") under the Sandwich Lease is
$182,490, payable monthly in advance in equal installments of $15,207.50.
Additionally, the Sandwich Lease provides that at the end of the first year of
the Initial Term and at the end of each additional year of the Initial Term the
annual rent for the next year of the term will be adjusted by a formula that
would increase the annual rent by the cumulative increase in the Consumer Price
Index over the immediately preceding year. During each Extended Term, the annual
rent for the Sandwich Facilities will increase as provided in the foregoing
sentence.
Option to Purchase
The Sandwich Lease provides Sandwich with three options to purchase
the Sandwich Facilities at the greater of the fair market value of the Sandwich
Facilities and the sum of the acquisition cost. Sandwich has the option to elect
to purchase the Sandwich Facilities during a 30 day period immediately following
the expiration of the eighth lease year of the Sandwich Lease, during a 30 day
period immediately following the expiration of the fifteenth lease year of the
Sandwich Lease and during a 30 day period immediately following the expiration
of the twentieth lease year of the Sandwich Lease. In the event Sandwich decides
to exercise its option to purchase the premises, Sandwich shall give written
notice to Company not earlier than twelve months nor later than six months prior
to the end of the year in which Sandwich may exercise its purchase option.
DESCRIPTION OF SANDWICH
The Sandwich Co-operative Bank primarily attracts deposits from the
general public for both constructing and making permanent loans on one-to-four
family homes. The Bank also makes consumer loans, home equity and commercial
loans, and mortgages. The Bank invests a portion of its funds in money market
instruments, federal government and agency obligations, various types of
corporate securities, and other authorized instruments. Financial Statements of
Sandwich are on file with the Securities and Exchange Commission. The following
is a summary of selected financial data for Sandwich:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, AS OF SEPTEMBER 30,
1996 1997
-------- --------
(In thousands)
<S> <C> <C>
Cash and due from banks $ 11,543 $ 6,099
total cash and cash equivalents 11,718 9,710
total investment securities 112,960 114,805
Net loans 317,103 363,160
total assets 464,555 511,765
total liabilities 425,922 471,161
total shareholders' equity 38,633 40,604
</TABLE>
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PROPERTY LEASED TO BROWN INSTITUTE, LTD.
General
On November 12, 1997, the Company, through a wholly owned subsidiary
(the "Brown Subsidiary"), purchased from Mortenson Properties, Inc., a Texas
corporation ("Mortenson") an education and classroom facility (the "Brown
Facility"). The Brown Facility, containing approximately 118,000 square feet, is
located in Mendota Heights, Minnesota. The Brown Facility is suitable and
adequate for use as an education and classroom facility and uses ancillary
thereto. The cost of the Brown Facility will be depreciated for tax purposes
over a 40-year period on a straight line basis.
Concurrently with the acquisition of the Brown Facility by the Brown
Subsidiary, Mortenson assigned to the Brown Subsidiary all its rights title to
and interest in the Lease (the "Brown Lease"), dated June 2, 1997, as amended by
a First Amendment to Lease, dated September 24, 1997, by and between Mortenson,
as landlord, and Brown Institute, Ltd. ("Brown"), as tenant for the Brown
Facility. The obligations of Brown under the Brown Lease are guaranteed by
Career Education Corporation, the sole shareholder of Brown. Material terms of
the Brown Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Brown Facility, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $9,985,799.15,
an amount less than the leased fee Appraised Value of the Brown Facility. The
Company paid an Acquisition Fee of $259,162.30 to an Affiliate of the Advisor.
W.P. Carey & Co. will receive a Subordinated Acquisition Fee of $207,329.84,
payable in eight years, but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Brown Lease is a absolutely net and bondable and in normal
financeable form. Brown will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Brown Facilities,
except for certain limited repairs which are the obligation of the landlord, the
Brown Subsidiary's debt service, and income taxes. In the opinion of the
management of the Company, the Brown Facility is adequately covered by
insurance.
Term
The initial term of the Brown Lease (the "Initial Term") is eleven
years and five months, followed by two five-year renewal terms (each, an
"Extended Term") at the option of Brown.
Rent
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The initial annual rent ("Basic Rent") under the Brown Lease for a
period of three years, beginning March 16, 1998, and ending March 15, 2001, is
$1,115,100, payable monthly in advance in equal installments of $92,925.
Additionally, the Brown Lease provides that at the end of the first three-year
period the annual rent for the next three years shall be $1,218,940, payable
monthly in advance in equal installments of $101,578.33, and at the end of the
second three-year period the annual rent for the next three years shall be
$1,331,040, payable monthly in advance in equal installments of $110,920.
Thereafter, the annual rent for the last two years of the Initial Term shall be
$1,454,845, payable monthly in advance in equal installments of $121,237. During
each Extended Term, the annual base rent for the Brown Facility shall be an
amount which is equivalent to existing market rates for comparable premises, but
shall in no event be less than the annual Basic Rent in effect in the last year
of the Initial Term.
DESCRIPTION OF THE FINANCING
The Company is currently seeking mortgage financing for the Brown
Facility.
DESCRIPTION OF BROWN
The Brown Institute, Ltd. was formed in 1946 as the American
Institute of the Air, and originally served to train students in broadcasting.
Currently, Brown offers both certificates and degrees in allied health, visual
communications, business administration, information systems management,
computer programming, electronics technology, and radio television broadcasting.
PROPERTY LEASED TO GDE SYSTEMS, INC.
General
On September 25, 1997, the Company purchased from FS Realty
Partners, Ltd. I., a Texas limited partnership ("FS Realty") a one-story office,
research, development, and light manufacturing facility (the "GDE facility").
The GDE Facility, containing approximately 119,000 square feet, is located in
San Diego, California. The GDE facility is suitable and adequate for uses for
which it was intended. The cost of the GDE Facility will be depreciated for tax
purposes over a 40 year-period on a straight line basis.
Concurrently with the acquisition of the GDE Facility by the
Company, FS Realty assigned to the Company all its rights title to and interest
in the Industrial Real Estate Lease (the "GDE Lease"), dated January 31, 1992,
by and between FS Realty, as landlord, and General Dynamics Corporation, as
tenant, as assigned by General Dynamics Corporation to GDE Systems, Inc. ("GDE
Systems") pursuant to an Assignment of Lease, dated November 20, 1992, and as
subsequently renewed and modified by a Renewal and Modification of Lease
Agreement, dated as of August 16, 1996, by and between FS Realty and GDE Systems
for the GDE Facility to the GDE Subsidiary. The Company formed a subsidiary (the
"GDE Subsidiary") to take title to the Facility. Material terms of the GDE Lease
are described below.
PURCHASE TERMS
The cost to the Company of acquiring the GDE Facility, including the
Acquisition Fee payable to an Affiliate of the Advisor, was $12,670,157, an
amount less than the leased fee Appraised Value of the GDE Facility. The Company
paid an Acquisition Fee of $316,754 to an Affiliate of the Advisor. W.P. Carey &
Co. will receive a
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Subordinated Acquisition Fee of $253,403, payable over an eight year period, but
only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The GDE Lease is absolutely net and bondable an in normal
financeable form. GDE Systems will pay maintenance, insurance, taxes, and all
other expenses associated with the operation and maintenance of the GDE
Facilities, except for certain limited repairs which are the obligation of the
landlord, the GDE Subsidiary's debt service and income taxes. In the opinion of
the management of the Company, the GDE Facility is adequately covered by
insurance.
Term
The term of the GDE Lease began on February 1, 1992 and ends on
January 31, 2007.
Rent
For the period beginning February 1, 1997, and ending January 31,
1998, the annual rent under the GDE Lease is $1,125,000 ("Base Rent"), and an
additional $28,546, representing GDE's share associated with the HVAC repair of
the Facility. The GDE Lease provides that beginning on February 1, 1998, and on
February 1st of each year thereafter (each such adjustment date, a "Adjustment
Date"), the Base Rent will be adjusted throughout the lease term as extended.
The basis for computing the adjustment is the Consumer Price Index for All Urban
Consumers (1982-84 =100) for the Los Angeles -Anaheim Riverside Area (the
"Index"). The Index published for the month of November preceding each
Adjustment Date will be compared with the Index published for November 1996, and
the annual rent will be increased in accordance with the percentage increase (if
any) between such Indexes. In no event will the annual rental increase be less
than the Minimum Base Rent nor more than the Maximum Base Rent for the
applicable Lease Year.
The additional rent for GDE's share associated with the HVAC repair
of the Facility will not be taken into consideration in making the adjustment to
Base Rent and will be made and added to Base Rent only after the adjustment to
Base Rent has been made pursuant to the above formula.
DESCRIPTION OF FINANCING
The company is currently seeking mortgage financing for the GDE
Facility.
DESCRIPTION OF GDE
GDE is a leading Department of Defense contractor, specializing in
the production of advanced technology products for imagery information systems,
mission planning, and automatic ground test equipment.
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PROPERTY LEASED TO PAGG CORPORATION
General
On July 8, 1997, the Company purchased from PAGG Corporation
("PAGG") an office, manufacturing, research and development facility (the "PAGG
Facility"). The PAGG Facility, containing approximately 108,125 square feet, is
located in Milford, Massachusetts. The Company formed a subsidiary (the "PAGG
Subsidiary") to take title to the PAGG Facility. The PAGG Facility is suitable
and adequate for use as office, manufacturing, research and development
facility. The PAGG Facility will be depreciated for tax purposes over a 40- year
period on a straight line basis.
Concurrently with the acquisition of the PAGG Facility by the
Company, the Company entered into a net lease (the "PAGG Lease") with PAGG for
the PAGG Facility. Material terms of the PAGG Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the PAGG Facility, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $5,549,738, an
amount less than the leased fee Appraised Value of the PAGG Facility. The
Company paid an Acquisition Fee of $138,743 to an Affiliate of the Advisor. W.P.
Carey & Co. will receive a Subordinated Acquisition Fee of $110,995, payable
over eight years, but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The PAGG Lease is absolutely net and bondable and in normal
financeable form. PAGG will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the PAGG Facility,
except for the PAGG Subsidiary's debt service and income taxes. In the opinion
of management of the Company, the PAGG Facility is adequately covered by
insurance.
Term
The initial term (the "Initial Term") of the PAGG Lease is twelve
years, followed by two five-year renewal terms (each, an "Extended Term") at the
option of PAGG.
Rent
The initial annual rent ("Basic Rent") under the PAGG Lease is
$590,000, payable quarterly in advance in equal installments of $147,500. The
PAGG Lease provides that at the end of the fourth year of the initial term and
at the end of each fourth year thereafter during the term, the annual rent for
the next four years of the term will be adjusted by a formula that will increase
the annual rent by the cumulative increase in the Consumer Price Index over the
immediately preceding four years, but not in excess of 12.55% for each such
four-year period.
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DESCRIPTION OF FINANCING
On November 25, 1997, the Company has obtained financing from First
Allmerica Financial Life Company for a ten year $3,200,000 mortgage loan (the
"Loan") at an interest rate of 7.70% per annum. The Loan shall require the
payment of principal and interest based upon an amortization schedule of 20
years with monthly payments of principal and interest in the amount of
$26,171.73.
DESCRIPTION OF PAGG
PAGG provides engineering, turnkey electronic manufacturing, and
assembly services. PAGG grants credit to companies in technology based
industries, substantiality all of whom are located throughout the United States.
Financial Statements of PAGG are on file with the Securities and Exchange
Commission. The following is a summary of selected financial data for PAGG for
the last three years:
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1995 1996 1997
<S> <C> <C> <C>
Sales, net $52,238,873 $36,899,157 $ 12,849,342
Cost of sales 43,886,921 33,008,092 12,096,273
Gross profit 8,351,952 3,891,065 753,069
Net income $ 70,057 $ 2,572,476 (891,949)
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF OCTOBER 31, AS OF MAY 31,
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
(Unaudited)
Balance Sheet Data:
Total current assets $12,317,503 $ 8,237,612 $ 11,454,934
Long-term debt 9,077,493 5,680,233 10,496,909
Stockholders' equity 5,588,308 5,658,365 4,766,416
</TABLE>
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PROPERTY LEASED TO TEXAS FREEZER COMPANY, INC.
GENERAL
On September 23, 1997, the Company purchased from Texas Freezer
Company, Inc. ("Texas Freezer") certain property containing approximately
155,107 square feet or 3.5608 acres of land situated in Dallas, Texas (the
"Freezer Land"). The Company will construct a refrigerated warehouse facility
containing approximately 90,000 square feet (the "Freezer Warehouse") on the
Freezer Land. Additionally, the Company will construct a parking lot on an
easement granted to a subsidiary of the Company (the Freezer Subsidiary") on a
parcel of land adjacent to the Freezer Land (the "Freezer Parking Lot" and,
together with the Freezer Land and the Freezer Warehouse, the "Freezer
Facility"). The Freezer Subsidiary took title to the Freezer Facility. Material
terms of the Freezer Lease are described below.
Concurrently with the acquisition of the Freezer Facility by the
Company, the Company entered into a net lease (the "Freezer Lease") with Texas
Freezer for the Freezer Facility and a Construction Agency Agreement with Texas
Freezer. Under the Construction Agency Agreement, Texas Freezer will supervise
and manage the construction, installation, and completion of the Freezer
Facility. After completion of construction, the Freezer Facilities are expected
to be suitable and adequate for the uses for which they were intended. The cost
of the Freezer Facility will be depreciated for tax purposes over a 40-year
period on a straight line basis.
PURCHASE TERMS
The cost to the Company of acquiring and constructing the Freezer
Facility, including the Acquisition Fee payable to an Affiliate of the
Advisor, shall be a maximum of $8,900,523.56, an amount less than the leased
fee Appraised Value of the Freezer Facility. W.P. Carey & Co., Inc. received
an Acquisition Fee of $222,513.09 to an affiliate of the Advisor. W.P Carey
& Co., Inc. will receive a Subordinated Acquisition Fee of $178,010.47,
payable over eight years, but only if the Company satisfies the Preferred
Return.
WARRANTS
The Freezer Subsidiary was issued a Warrant to purchase 30,390
shares of common stock of Texas Freezer at the $5.3 per share for a period
commencing on September 26, 1997, and ending on September 30, 2007.
DESCRIPTION OF THE LEASE
General
The Freezer Lease is absolutely net and bondable and in normal
financeable form. Texas Freezer will pay maintenance, insurance, taxes and all
other expenses associated with the operation and maintenance of the Freezer
Facility, except for the Freezer Subsidiary's debt service and income taxes. In
the opinion of the management of the Company, the Freezer Facility will be
adequately covered by insurance.
Term
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The primary term of the Freezer Lease commenced on September 23,
1997 and shall continue through December 31, 1998 (the "Primary Term"). The
initial term of the Freezer Lease is 20 years and one month, commencing upon the
expiration of the Primary Term, followed by four ten-year renewal terms.
Rent
Prior to January 1, 1999, Basic Rent is payable monthly in an amount
equal to .8% multiplied by the average of the amount advance by or on behalf of
the Freezer Subsidiary for Project Costs (exclusive of the Acquisition Fee)
based on the number of days each advance is outstanding during the month prior
to each Basic Rent Payment Date. Commencing on January 1, 1999 and quarterly
thereafter, Basic Rent shall be payable in an amount equal to the product of
one-quarter of 10.95% multiplied by Project Costs (exclusive of the Acquisition
Fee).
Right of First Refusal
The Freezer Lease provides Texas Freezer with a right of first
refusal to purchase the Texas Freezer Facilities. In the event the leased
premises are contracted for sale by the Company to a third party, the Company
shall give written notice to Texas Freezer of such sale or provide Texas Freezer
with a copy of the executed contract of sale. Texas Freezer has the option to
elect to purchase the Texas Freezer Facilities for the period of 30 days
following receipt of such notice, at a price equal to the contract price agreed
to between the Company and the third party. Texas Freezer may exercise this
right upon each proposed sale of the Texas Freezer Facility.
DESCRIPTION OF FINANCING
The Company is currently seeking mortgage financing for the Freezer
Facility.
DESCRIPTION OF TEXAS FREEZER
Texas Freezer is a public refrigerated warehouser, often referred to
as "PRW" within the industry. The Company generates revenue through the storage,
handling, and sorting of customers' frozen and refrigerated food products.
PROPERTY LEASED TO ETEC SYSTEMS, INC.
General
On February 3, 1998, a limited liability company (the "LLC"), in
which Corporate Property Associates 12 Incorporated ("the Company") and
Corporate Property Associates 14 Incorporated (the "CPA:14") are the sole
members, purchased form Etec Systems, Inc. ("Etec") a parcel of land upon which
certain facilities are to be constructed ("Etec Facilities"). The Etec
Facilities, containing 129,000 square feet, are to be located in Hayward,
California.
Concurrently with the acquisition of the Etec Facilities by the
Company, the Company entered into a net lease (the "Etec Lease") and
Construction Agency Agreement with Etec for the Etec Facility.
Under the Construction Agency Agreement, Etec will supervise and
manage the construction, installation, and completion of the Etec Facilities.
After completion of the construction, the Etec Facility is expected to
-14-
<PAGE> 15
be suitable and adequate for the uses for which it was intended. The cost of the
Etec Facility will be depreciated for tax purposes over a 40-year period on a
straight line basis.
PURCHASE TERMS
The cost to the Company of constructing the Etec Facility,
including the Acquisition Fee payable to an Affiliate of the Advisor, will
not exceed $52,356,021, an amount less than the leased fee Appraised Value of
the Etec Facility. W.P. Carey & Co. received an Acquisition Fee of
$1,408,900.56 to an Affiliate of the Advisor. W.P. Carey & Co., Inc. will
receive a Subordinated Acquisition Fee of $1,047,120.42, payable over an
eight year period, but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Etec Lease is absolutely net and bondable and in normal
financeable form. Etec will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Etec Facility,
except for the Etec Subsidiary's debt service and income taxes. In the opinion
of management of the Company, the Etec Facility will be adequately covered by
insurance.
Term
The remaining initial term of the Etec Lease expires on May 31,
2004, followed by three five-year renewal terms and one eighth-month renewal
term (each, an "Extended Term") which may be exercised at the option of Etec.
Rent
The initial annual rent ("Basic Rent") for the Etec Facility is (a)
to and including June 1, 1999, an amount equal to the product of (a) the LIBOR
then in effect stated on an annual basis divided by 12 plus 150 basis points,
and (b) commencing on July 1, 1999, monthly payments equal to the equal monthly
amortization payment required to pay the cost of the Etec Facility (exclusive of
the Acquisition Fee) in full over the remainder of the initial term assuming an
interest rate of 7.98% per annum. Additionally, the Etec Lease provides that on
March 1, 2001, March 1, 2004, March 1, 2007, March 1, 2010 and March 1, 2013 the
Basic Rent then in effect will be increased to reflect percentage increases in
the Consumer Price Index over the prior 3 years capped at 12% for each such 3
year period.
Right of First Refusal
The Etec Lease provides Etec with certain rights of first refusal to
purchase the Etec Facility together with the Additional Facilities. If the
Company receives an offer between June 1, 2007 and May 31, 2008 for a price
equal to the greater of Fair Market Value of the Etec Facility and the CPA:12
Facilities or the final cost of the Etec Facility and the CPA:12 Facilities plus
the applicable Prepayment Premium reduced by principal payments on the Note,
Etec shall have the right to match such offer.
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<PAGE> 16
DESCRIPTION OF FINANCING
The Company is seeking financing from Teachers Insurance and Annuity
Association of America for a 15 year $30,000,000 mortgage loan (the "Loan") at
an initial rate of interest of 6.96% per annum. The Loan shall require the
payment of principal and interest based upon an amortization schedule of not
less than 20 years.
DESCRIPTION OF ETEC SYSTEMS
Etec is a leading producer of electron beam and laser lithography
equipment. These systems are used in the manufacturing of masks for
semiconductor manufacturing industry. Etec's shareholders include DuPont, IBM,
Perkin Elmer Grumman, and Micron Technology. Financial Statements of Etec System
are on file with the Securities and Exchange Commission. The following is a
summary of selected financial data for Etec System for the last three years:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, AS OF OCTOBER 31,
1995 1996 1997
----------- ----------- ------------
(In thousands)
<S> <C> <C> <C>
(Unaudited)
Statement of Operations Data:
Revenue $ 51,395 $ 112,940 $ 68,365
Cost of revenue 47,619 80,042 27,747
Gross profit 35,297 65,603 33,534
Operating expenses 23,894 44,940 20,054
Net income 3,092 1,078 9,228
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF JULY 31, AS OF OCTOBER 31,
1995 1996 1997
----------- ----------- ------------
(In thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Total assets $ 85,984 $ 208,871 $ 307,816
Mandatory redeemable 76,397 -- --
convertible preferred stock
</TABLE>
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<PAGE> 17
PROPERTY LEASE TO PERRY GRAPHIC COMMUNICATIONS, INC.
General
On December 16, 1997, the Company, through a wholly-owned
subsidiary, Print (WI) QRS 12-40, Inc. (the "Print Subsidiary"), purchased from
Perry Graphic Communications Inc. ("Perry") six manufacturing, warehouse and
office facilities (the "Perry Facilities"). The Perry Facilities, containing
approximately 897476 square feet, are located in Baraboo, Wisconsin and
Waterloo, Wisconsin. The Perry Facilities are suitable and adequate for use as
manufacturing, warehouse and office Facilities. The Cost of the Perry Facilities
will be depreciated for tax purposes over a 40-year period on a straight line
basis.
Concurrently with the acquisition of the Perry Facilities by the
Print Subsidiary, the Print Subsidiary entered into a net lease (the "Perry
Lease") with Perry and Judd's Incorporated, as tenants in common, for the Perry
Facilities. Material terms of the Perry Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Perry Facilities, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $19,109,948.00,
an amount less than the leased fee Appraised Value of the Perry Facilities. The
Company paid an Acquisition Fee of $477,749 to an Affiliate of the Advisor. W.P.
Carey & Co. will receive a Subordinated Acquisition Fee of $382,199.00, payable
over an eight year period, but only if the Company satisfies the Preferred
Return.
DESCRIPTION OF THE LEASE
General
The Perry Lease is absolutely net and bondable and in normal
financeable form. Perry will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Perry Facilities,
except for the Perry Subsidiary's debt service and income taxes. In the opinion
of management of the Company, the Perry Facilities are adequately covered by
insurance.
Term
The initial term of the Perry Lease (the "Initial Term") is 20
years, followed by three five-year renewal terms (each, an "Extended Term") at
the option of Perry.
Rent
The initial annual rent ("Basic Rent") under the Perry Lease is
$1,888,875.00, payable quarterly in advance, in equal installments of
$472,218.75. Additionally, the Perry Lease provides that at the end of the fifth
year of the Initial Term and at the end of each additional fifth year of the
Initial Term and Extended Term the annual rent for
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<PAGE> 18
each of the next five years of the term will be adjusted by a formula that would
increase the annual rent by 10% over the immediately preceding five years.
Right of First Refusal
The Perry Lease provides Perry with a right of first refusal to
purchase the Perry Facilities. In the event the leased premises are contracted
for sale by the Company to a third party, the Company shall give written notice
to Perry of such sale. Perry has the option to elect to purchase the Perry
Facilities for the period of 30 days following receipt of such notice at a price
equal to the contract price agreed to between the Company and the third party.
Perry may exercise this right upon each proposed sale of the Perry Facilities at
any time during the term of the Perry Lease.
DESCRIPTION OF PERRY GRAPHICS
Perry Graphics is a full service long run heatset web offering
printer of magazines and catalogs. Perry serves a national domestic market in
printing of weekly and monthly magazine publications, business-to-business and
consumer catalogs, and a variety of other direct advertising products
-18-
<PAGE> 19
(B) PRO FORMA FINANCIAL INFORMATION
The pro forma financial information is currently unavailable and will be
filed by amendment within 60 days from the date hereof.
(C) EXHIBITS
The following exhibits are filed as part of this Current Report on Form 8-K:
EXHIBIT INDEX
Exhibit No. Exhibit
Page No.
10.1 Lease Agreement dated September 30, 1997 by and between CPA:12,
Inc., as Landlord, and Westell, Inc., as Tenants.
10.2 Lease Agreement dated November 26, 1997 by and between CPA:12, Inc.,
as Landlord, and Randall International, as Tenants.
10.3 Lease Agreement dated December 31, 1997 by and between CPA:12, Inc.,
as Landlord, and Sandwich Co-operative Bank, as Tenants.
10.4 Lease Agreement dated November 12, 1997 by and between CPA:12, Inc.,
as Landlord, and Brown Institute, Ltd., as Tenants.
10.5 Lease Agreement dated September 25, 1997 by and between CPA:12,
Inc., as Landlord, and GDE Systems, Inc., as Tenants.
10.6 Lease Agreement dated July 8, 1997 by and between CPA:12, Inc., as
Landlord, and PAGG Corporation, as Tenants.
10.7 Lease Agreement dated September 23, 1997 by and between CPA:12,
Inc., as Landlord, and Texas Freezer Company, Inc., as Tenants.
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<PAGE> 20
10.8 Lease Agreement dated February 2, 1998 by and between CPA:12, Inc.
and CPA:14, Inc., as Landlords and Etec Systems, Inc., as Tenants.
10.9 Lease Agreement dated December 16, 1997 by and between CPA:12, Inc.,
as Landlord, and Perry Graphic Communications, Inc., as Tenants.
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<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 12
INCORPORATED
By: /s/Claude Fernandez
------------------------------
Claude Fernandez
Dated: March __, 1998
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<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT TO LEASE AGREEMENT
Made as of this day of November, 1997
by and between
SOAP (CA) QRS 12-37, INC. ("Landlord") and RANDALL INTERNATIONAL ("Tenant")
W I T N E S S E T H:
WHEREAS, the Landlord and Tenant entered into a certain Lease
Agreement dated as of October 17, 1997 (the "Lease"); and
WHEREAS, Landlord and Tenant desire to amend the Lease and
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt of
sufficiency of which is hereby acknowledge, Landlord and Tenant covenant and
agree as follows:
1. The definition of "Completion Date" is hereby deleted
in its entirety and the following is inserted in lieu thereof:
"Completion Date" shall mean the date on which all of
the following events have occurred with respect to the Improvements:
(a) construction of the Improvements and installation of the
Equipment have been substantially completed (within the meaning of
the term "Substantial Completion") to the reasonable satisfaction of
Landlord, Tenant and Developer, and (b) an inspection card signed by
all necessary governmental officials of the City of Carlsbad
(including the Fire Marshall and the Building Inspector) has been
issued which (A) is unconditional and irrevocable and (B) permits
immediate occupancy of the Improvements.
2. The definition of "Indirect Costs" is hereby deleted
in its entirety and the following is inserted in lieu thereof:
"Indirect Costs" shall mean costs and expenses, other
than Direct Costs, incurred or to be incurred by Landlord through
the Completion Date in connection with or incidental to the
acquisition of the Land and the construction of the Improvements or
installation of the Equipment, including without limitation, costs
of title examination and insurance required under Paragraph
16(a)(ii) and (vi) of the Lease until the Completion Date , costs of
surveys, environmental assessments, the development fee of
Developer, water and sewer rents, Basic Rent, Additional Rent and
Impositions (as such terms are defined in the Lease) in each case
through the end of the calendar month in which the Completion Date
occurs or if the Completion Date occurs prior to the eighth (8th)
day before the end of a calendar month, the eighth (8th) day after
the Completion Date, fees of the architect, reasonable fees of
counsel to Landlord and Lender, engineers' fees, appraisal fees and
the Acquisition Fee.
3 The following definitions shall be added to Paragraph 2
Definitions:
<PAGE> 2
"Project Cost Savings" shall mean the positive
difference, if any, between $6,782,476 and final Project Costs.
"Substantial Completion" shall mean that the Project is
sufficiently complete in accordance with the Plans and any Change
Orders (as defined in the Construction Agency Agreement) such that
it can be occupied for its intended use and that the only remaining
work is minor in nature and of a type which does not and will not
interfere with in any material respect or otherwise diminish the use
of in any material respect the Project by Tenant or Tenant's ability
to occupy the Project. Substantial Completion shall not be achieved
unless and until the general contractor for the Improvements
certifies to Landlord and Tenant in writing that all remaining work
will be completed within thirty (30) calendar days after the date of
Substantial Completion.
4. The following subparagraph is hereby added at the end
of Paragraph 4:
"(c) Tenant shall take possession of the Leased
Premises no later than thirty (30) days after Substantial
Completion".
5. After the words "$50,000 per occurrence" in the last
line of Subparagraph 16(a)(i) the following is hereby added, except that:
"except that with respect to earthquake insurance, such
insurance may contain a deductible equal to 5% of replacement cost
of the Improvements (which, with Landlord's prior consent to be
based on Landlord's review of the creditworthiness of Tenant, may be
increased to 10%)."
6. Subparagraph 16(a)(iv) is hereby deleted in its
entirety and the following is inserted in lieu thereof:
"(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the Leased
Premises (which may be carried under the "umbrella" policy
referenced in clause (ii) above), in an amount not less than
$5,000,000 per accident for damage to property. Such policies shall
include sublimits of at least $100,000 per accident for Off-Premises
Service Interruption, Expediting Expenses, Ammonia Contamination and
Hazardous Materials Clean-Up Expense and may contain a deductible
not to exceed $50,000."
7. Subparagraph (a) of Paragraph 34, Construction of
Improvements is hereby amended by deleting the amount of $6,462,040 and
inserting in lieu thereof the amount of $6,782,476, and Subparagraph (h) of
Paragraph 34 is hereby amended by deleting the date October 1, 1998 and
inserting in lieu thereof the date December 1, 1998.
8. The following is hereby inserted as Paragraph 34(i) to
the Lease:
"(i) Tenant may elect to use up to one-half (1/2) of
Project Cost Savings for additional tenant improvements, provided,
that Tenant makes such election within thirty (30) days following
notice from Landlord of the amount of Project Cost Savings available
to Tenant for additional tenant improvements and spends such sums
within sixty (60) days following such election. Landlord shall,
within ten (10) days after Tenant's written request therefore
(accompanied by evidence of the amount and nature of such
expenditure), reimburse Tenant for any amounts paid for such
additional tenant improvements."
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<PAGE> 3
9. The following is hereby added as Paragraph 34(j) to
the Lease:
"(j) Tenant covenants and agrees to comply with the
provisions of the Construction Agency Agreement applicable to it."
10. Section A. of Paragraph 1 Basic Rent of Exhibit "D",
BASIC RENT PAYMENTS is hereby amended by deleting the phrase "November 1, 1997"
and inserting in lieu thereof the phrase "December 1, 1997" and by adding the
phrase "as provided in the Budget" after the phrase "Project Costs" in the fifth
line and in the fifteenth line of Section A.
11. Section B. of Paragraph 1 Basic Rent of Exhibit "D",
BASIC RENT PAYMENTS is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"B. Commencing on the first day of the first calendar
month immediately following the Completion Date and continuing on
the first day of each month thereafter until the expiration of the
Term (each such date, also a "Basic Rent Payment Date"), Basic Rent
shall be payable in an amount equal to the sum of (i) the lesser of
(x) $60,477 (reduced by one-twelfth of the product of .0089166
multiplied by one-half (1/2) of Project Cost Savings not disbursed
to Tenant under Paragraph 34(i)) or (y) .0089166 multiplied by the
Project Costs (including the sum of the one-half (1/2) of Project
Cost Savings paid to Developer and the amount of Project Cost
Savings (if any) disbursed to Tenant under Paragraph 34(i) but
excluding the Acquisition Fee and amounts advanced from the Change
Order Contingency) plus (ii) one-twelfth of 10.70% of amounts
advanced from the Change Order Contingency. Notwithstanding the
above, if the Completion Date shall occur prior to the eighth day
before the end of a calendar month then Basic Rent shall commence on
the eighth day following the Completion Date and the first monthly
installment of Basic Rent shall include the pro rata portion of
Basic Rent payable from such eighth day through the end of the month
in which the Completion Date occurred."
12. The Budget attached as Exhibit "F" to the Lease is
hereby deleted in its entirety and the Budget attached hereto as Exhibit "F" is
incorporated herein as if fully set forth.
13. Except as specifically amended hereby, the terms and
conditions of the Lease shall remain in full force and effect.
14. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
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<PAGE> 4
15. This Amendment shall be binding on the parties hereof
and their respective successors and assigns.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
SOAP (CA) QRS 12-37, INC.,
a California corporation
By:________________________________
Title:_____________________________
TENANT:
RANDALL INTERNATIONAL
a California corporation
By:________________________________
Title:_____________________________
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<PAGE> 1
EXHIBIT 10.3
LEASE AGREEMENT
by and between
CASH (MA) QRS 12-41, INC.,
a Massachusetts corporation
as LANDLORD
and
THE SANDWICH CO-OPERATIVE BANK,
a Massachusetts co-operative bank,
as TENANT
Premises: Bourne (Buzzards Bay), MA
Sandwich, MA
Wareham, MA
Dated as of: December 30, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
Parties............................................................. 1
1. Demise of Premises.................................................. 1
2. Certain Definitions................................................. 1
3. Title and Condition................................................. 7
4. Use of Leased Premises; Quiet Enjoyment............................. 8
5. Term ............................................................... 9
6. Basic Rent.......................................................... 9
7. Additional Rent..................................................... 10
8. Net Lease; Non-Terminability........................................ 11
9. Payment of Impositions ............................................. 11
10. Compliance with Law; Environmental Matters.......................... 12
11. Liens; Recording and Title.......................................... 14
12. Maintenance and Repair.............................................. 14
13. Alterations and Improvements........................................ 14
14. Permitted Contests.................................................. 15
15. Indemnification..................................................... 15
16. Insurance........................................................... 16
17. Casualty and Condemnation........................................... 19
18. Termination Events.................................................. 20
19. Restoration......................................................... 21
20. Procedures Upon Purchase............................................ 22
21. Assignment and Subletting; Prohibition against Leasehold Financing.. 23
22. Events of Default................................................... 24
23. Remedies and Damages Upon Default................................... 26
24. Notices............................................................. 28
25. Estoppel Certificate................................................ 28
26. Surrender........................................................... 29
27. No Merger of Title.................................................. 29
28. Books and Records................................................... 29
29. Determination of Value.............................................. 30
30. Non-Recourse as to Landlord......................................... 31
31. Financing........................................................... 32
32. Subordination....................................................... 32
33. Tax Treatment; Reporting............................................ 32
35. Option to Purchase.................................................. 32
36. Miscellaneous....................................................... 33
<PAGE> 3
EXHIBITS
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Acquisition Costs
Exhibit "F" - Percentage Allocation of Basic Rent
<PAGE> 4
LEASE AGREEMENT, made as of this 30th day of December, 1997, between
CASH (MA) QRS 12-41, INC., a Massachusetts corporation ("Landlord"), with an
address c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor, New York,
New York 10020, and THE SANDWICH CO-OPERATIVE BANK, a Massachusetts co-operative
bank ("Tenant"), with an address at 100 Old Kings Highway, Sandwich,
Massachusetts 02563.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon
the provisions hereinafter specified, the following described property
(hereinafter referred to collectively as the "Leased Premises" and individually
as the "Bourne Premises" "Sandwich Premises" and "Wareham Premises" each of
which premises is more particularly described in the applicable description in
Exhibit "A" attached hereto and made a part hereof and shall include the
portions of items (a), (b) and (c) of this Paragraph 1 located thereon or
therein and appertaining thereto): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (collectively, the "Land"); (b) the
buildings, structures and other improvements now or hereafter constructed on the
Land (collectively, the "Improvements"); and (c) the fixtures, machinery,
equipment and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
2. Certain Definitions.
"Acquisition Cost" of each of the Related Premises shall mean
the amount set forth opposite such premises on Exhibit "E" hereto.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.
"Adjoining Property" shall mean all sidewalks, driveways,
curbs, gores and vault spaces adjoining any of the Leased Premises.
"Affected Premises" shall mean the Affected Premises as
defined in Paragraph 18.
"Alterations" shall mean all changes, additions, improvements
or repairs to, all alterations, reconstructions, renewals, replacements or
removals of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary and shall include any Major Alterations.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
<PAGE> 5
"Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6.
"Casualty" shall mean any injury to or death of any person or
any loss of or damage to any property (including the Leased Premises) included
within or related to the Leased Premises or arising from the Adjoining Property.
"Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"CPI" shall mean CPI as defined in Exhibit "D" hereto.
"Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).
"Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23(a)(iii).
"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect any Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous Condition
or Hazardous Activity, in each case as amended and as now or hereafter in
effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations or
injuries or damages due to or threatened as a result of the presence of,
exposure to, or ingestion of, any Hazardous Substance. The term Environmental
Law includes, without limitation, the federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act, the federal Clean
Air Act, the federal Clean Water Act, the federal Resources Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to
RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control
Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal
Occupational Safety and Health Act of 1970, the federal National Environmental
Policy Act and the federal Hazardous Materials
<PAGE> 6
Transportation Act, each as amended and as now or hereafter in effect and any
similar state or local Law.
"Environmental Violation" shall mean (a) any direct or
indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (b) any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which extends to any
Adjoining Property in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or which could
result in any liability to any Federal, state or local government or to any
other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which could result in any liability, cost or expense to
Landlord or Lender or any other owner or occupier of the Leased Premises, or
which could result in a creation of a lien on any Related Premises under any
Environmental Law or (e) any violation of or noncompliance with any
Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph
1.
"Event of Default" shall mean an Event of Default as defined
in Paragraph 22(a).
"Fair Market Value" of either the Leased Premises or any
Related Premises, as the case may be, and the context may require, shall mean
the higher of (a) the fair market value of the Leased Premises or any Related
Premises, as the case may be, as of the Relevant Date as if unaffected and
unencumbered by this Lease or (b) the fair market value of the Leased Premises
or Related Premises, as the case may be, as of the Relevant Date as affected and
encumbered by this Lease and assuming that the Term has been extended for all
extension periods provided for herein. For all purposes of this Lease, Fair
Market Value shall be determined in accordance with the procedure specified in
Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Guarantor" shall mean Sandwich Bancorp, Inc., a Massachusetts
corporation.
"Guaranty" shall mean the Guaranty and Suretyship Agreement of
even date from Guarantor to Landlord.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of
<PAGE> 7
any Hazardous Substance; or (iv) would cause any of the Leased Premises or any
portion thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition which would support
any claim or liability under any Environmental Law, including the presence of
underground storage tanks.
"Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead,
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph
15.
"Insurance Requirements" shall mean the requirements of all
insurance policies maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Commencement Date and ending at midnight on the
last day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean the requirements of all
present and future Laws (including but not limited to Environmental Laws) and
all covenants, restrictions and conditions now or hereafter of record which may
be applicable to Tenant or to any of the Leased Premises or Related Premises, or
to the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or restoration of any of the Leased Premises or Related
Premises, even if compliance therewith necessitates structural changes or
improvements or results in interference with the use or enjoyment of any of the
Leased Premises or Related Premises.
<PAGE> 8
"Lender" shall mean any person or entity (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by
a Note.
"Major Alterations" shall mean Major Alterations as defined in
Paragraph 35.
"Monetary Obligations" shall mean Rent and all other sums
payable by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable to
Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or
by agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred by
Landlord and Lender in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Offer Amount" shall mean the greater of (a) the Fair Market
Value of the Leased Premises as of the Relevant Date as Fair Market Value is
defined in clause (b) of the definition of Fair Market Value and (b) the sum of
the Acquisition Cost and the applicable Prepayment Premium which Landlord will
be required to pay in prepaying any Loan with proceeds of any such Offer Amount.
"Option Notice" shall mean Option Notice as defined in
Paragraph 36.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does
not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prepayment Premium" shall mean any payment (other than a
payment of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) by reason of any prepayment by Landlord of any principal due
under a Note or Mortgage, and which may be (in lieu of such prepayment premium
or prepayment penalty) a "make whole"
<PAGE> 9
clause requiring a prepayment premium in an amount sufficient to compensate the
Lender for the loss of the benefit of the Loan due to prepayment.
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) six percent (6%) per annum.
"Prime Rate" shall mean the interest rate per annum as
published, from time to time, in The Wall Street Journal as the "Prime Rate" in
its column entitled "Money Rate". The Prime Rate may not be the lowest rate of
interest charged by any "large U.S. money center commercial banks" and Landlord
makes no representations or warranties to that effect. In the event The Wall
Street Journal ceases publication or ceases to publish the "Prime Rate" as
described above, the Prime Rate shall be the average per annum discount rate
(the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued
from time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.
"Related Premises" shall mean any one of the Bourne Premises,
Sandwich Premises and Wareham Premises.
"Relevant Amount" shall mean the Termination Amount, the
Default Termination Amount or the Offer Amount, as the case may be.
"Relevant Date" shall mean (a) the date immediately prior to
the date on which the applicable Condemnation Notice is received, in the event
of a Termination Notice under Paragraph 18 which is occasioned by a Taking, (b)
the date immediately prior to the date on which the applicable Casualty occurs,
in the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a Termination Offer under Paragraph
23(a)(iii) or (e) the date immediately prior to the date on which Tenant
exercises its option to purchase the Leased Premises pursuant to Paragraph 34.
"Remaining Premises" shall mean the Related Premises which are
not Affected Premises under Paragraph 18.
"Rent" shall mean, collectively, Basic Rent and Additional
Rent.
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of the Remaining Sum is finally determined or the date on which
Landlord's right to the Remaining Sum is finally determined.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of Massachusetts.
<PAGE> 10
"Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a
portion of any of the Leased Premises (i) in or by condemnation or other eminent
domain proceedings pursuant to any Law, general or special, or (ii) by reason of
any agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Related Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a) Fair Market
Value or (b) the sum of the Acquisition Cost and any Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of the
Termination Amount.
"Termination Date" shall mean the Termination Date as defined
in Paragraph 18.
"Termination Event" shall mean a Termination Event as defined
in Paragraph 18.
"Termination Notice" shall mean Termination Notice as defined
in Paragraph 18(a).
"Third Party Purchaser" shall mean the Third Party Purchaser
as defined in Paragraph 21(f).
3. Title and Condition.
(a) The Leased Premises are demised and let subject to
(i) the Mortgage and Assignment presently in effect, (ii) the rights of any
Persons in possession of the Leased Premises, (iii) the existing state of title
of any of the Leased Premises, including any Permitted Encumbrances, (iv) any
state of facts which an accurate survey or physical inspection of the Leased
Premises might show, (v) all Legal Requirements, including any existing
violation of any thereof, and (vi) the condition of the Leased Premises as of
the commencement of the Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises are in
good condition and repair at the inception of this Lease. LANDLORD LEASES AND
WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF
THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii)
<PAGE> 11
DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.
TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS
SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND
ARE SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE
LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE
ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE.
(c) Tenant represents to Landlord that Tenant has
examined the title to the Leased Premises prior to the execution and delivery of
this Lease and has found the same to be satisfactory for the purposes
contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal
and equitable) to the Leased Premises is in Landlord and except, as provided in
Paragraph 36 hereof with respect to certain options to purchase the Leased
Premises that Tenant has only the leasehold right of possession and use of the
Leased Premises as provided herein, (ii) this Lease is a single Lease for
multiple properties and shall not be terminable with respect to less than all of
the Leased Premises or severable with respect to any one or more Related
Premises except as specifically provided herein, (iii) the Improvements conform
to all material Legal Requirements and all Insurance Requirements, (iv) all
easements necessary or appropriate for the use or operation of the Leased
Premises have been obtained, (v) all contractors and subcontractors who have
performed work on or supplied materials to the Leased Premises have been fully
paid, and all materials and supplies have been fully paid for, (vi) the
Improvements have been fully completed in all material respects in a workmanlike
manner of first class quality, and (vii) all Equipment necessary or appropriate
for the use or operation of the Leased Premises has been installed and is
presently fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse
or warranty whatsoever, all assignable warranties, guaranties, indemnities and
similar rights which Landlord may have against any manufacturer, seller,
engineer, contractor or builder in respect of any of the Leased Premises. Such
assignment shall remain in effect until an Event of Default occurs or until the
expiration or earlier termination of this Lease, whereupon such assignment shall
cease and all of said warranties, guaranties, indemnities and other rights shall
automatically revert to Landlord.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for
banking offices and banking facilities and for no other purpose. Tenant shall
not use or occupy or permit any of the Leased Premises to be used or occupied,
nor do or permit anything to be done in or on any of the Leased Premises, in a
manner which would or might (i) violate any Law or Legal Requirement, (ii) make
void or voidable or cause any insurer to cancel any insurance required by this
Lease, or make it difficult or impossible to obtain any such insurance at
commercially reasonable rates, (iii) cause structural injury to any of the
Improvements or (iv) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event
of Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises
<PAGE> 12
throughout the Term, without any hindrance, ejection or molestation by Landlord
with respect to matters that arise after the date hereof, provided that Landlord
or its agents may enter upon and examine any of the Leased Premises at such
reasonable times as Landlord may select and upon reasonable notice to Tenant
(except in the case of any emergency, in which event no notice shall be
required) for the purpose of inspecting the Leased Premises, verifying
compliance or non-compliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have
and hold the Leased Premises for an initial term (such term, as extended or
renewed in accordance with the provisions hereof, being called the "Term")
commencing on the date hereof (the "Commencement Date") and ending on the last
day of the two hundred fortieth (240th) calendar month next following the date
hereof (the "Expiration Date"). If all Rent and all other sums due hereunder
shall not have been fully paid by the end of the Term, Landlord may, at its
option, extend the Term until all said sums shall have been fully paid.
(b) Provided that if, on or prior to the Expiration Date
or any other Renewal Date (as hereinafter defined) this Lease shall not have
been terminated pursuant to any provision hereof, then on the Expiration Date
and on the fifth (5th), tenth (10th) and fifteenth (15th) anniversaries of the
Expiration Date (the Expiration Date and each such anniversary being a "Renewal
Date"), the Term shall be deemed to have been automatically extended for an
additional period of five (5) years, unless Tenant shall notify Landlord in
writing in recordable form at least two (2) years prior to the next Renewal Date
that Tenant is terminating this Lease as of the next Renewal Date. Any such
extension of the Term shall be subject to all of the provisions of this Lease,
as the same may be amended, supplemented or modified.
(c) If Tenant exercises its option pursuant to Paragraph
5(b) not to have the Term automatically extended, or if an Event of Default
occurs, then Landlord shall have the right during the remainder of the Term then
in effect and, in any event, Landlord shall have the right during the last year
of the Term, to (i) advertise the availability of any of the Leased Premises for
sale or reletting and to erect upon any of the Leased Premises signs indicating
such availability and (ii) show any of the Leased Premises to prospective
purchasers or tenants or their agents at such reasonable times as Landlord may
select.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for
the Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent"), commencing on the first day of the first
month following the date hereof and continuing on the same day of each month
thereafter during the Term (each such day being a "Basic Rent Payment Date").
Each such rental payment shall be made, at Landlord's sole discretion, (a) to
Landlord at its address set forth above and/or to such one or more other
Persons, at such addresses and in such proportions as Landlord may direct by
fifteen (15) days' prior written notice to Tenant (in which event Tenant shall
give Landlord notice of each such payment concurrent with the making thereof),
and (b) by a check hand delivered at least five (5) business days before or
mailed at least ten (10) days before the applicable Basic Rent Payment Date, or
in Federal Funds. Pro rata Basic Rent for the period from the date hereof
through the last day of the month hereof shall be paid on the date hereof.
<PAGE> 13
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of Tenant's obligations under this
Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant
under this Lease, (D) any Condemnation proceedings, (E) the adjustment,
settlement or compromise of any insurance claims involving or arising from any
of the Leased Premises, (F) the prosecution, defense or settlement of any
litigation involving or arising from any of the Leased Premises, this Lease, or
the sale of the Leased Premises to Landlord, (G) the exercise or enforcement by
Landlord, its successors and assigns, of any of its rights under this Lease, (H)
any amendment to or modification or termination of this Lease made at the
request of Tenant, (I) Costs of Landlord's counsel and reasonable internal Costs
of Landlord incurred in connection with the preparation, negotiation and
execution of this Lease, or incurred in connection with any act undertaken by
Landlord (or its counsel) at the request of Tenant, or incurred in connection
with any act of Landlord performed on behalf of Tenant, and (J) the reasonable
internal Costs of Landlord incurred in connection with any act undertaken by
Landlord at the request of Tenant or Tenant's failure to act promptly in an
emergency situation, and (K) any other items specifically required to be paid by
Tenant under this Lease;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to five percent
(5%) of the amount of such unpaid installment or portion thereof, provided,
however, that with respect to the first late payment of all or any portion of
any installment of Basic Rent in any consecutive twelve (12) month period, the
Late Charge shall not be due and payable unless the Basic Rent has not been paid
within five (5) days' following the due date thereof;
(iii) a sum equal to any additional sums (including
any late charge, default penalties, interest and fees of Lender's counsel) which
are payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate (the "Default Rate") of
five percent (5%) over the Prime Rate per annum on the following sums until paid
in full: (A) all overdue installments of Basic Rent from the respective due
dates thereof, (B) all overdue amounts of Additional Rent relating to
obligations which Landlord shall have paid on behalf of Tenant, from the date of
payment thereof by Landlord, and (C) all other overdue amounts of Additional
Rent, from the date when any such amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional
Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided
that amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within five (5) days after Landlord's demand for payment thereof,
and (ii) any other Additional Rent, within five (5) days after Landlord's demand
for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
<PAGE> 14
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations
shall be paid without notice or demand and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction, reduction
or defense (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this
Lease and the rights of Landlord and the obligations of Tenant hereunder shall
not be affected by any event or for any reason, including the following: (i) any
damage to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased
Premises other than pursuant to an express provision of this Lease, (iv) any
default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (v) any latent or other defect in any of the
Leased Premises, (vi) the breach of any warranty of any seller or manufacturer
of any of the Equipment, (vii) any violation of Paragraph 4(b) or any other
provision of this Lease by Landlord, (viii) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up of, or other proceeding affecting Landlord, (ix) the exercise of any
remedy, including foreclosure, under any Mortgage or Assignment, (x) any action
with respect to this Lease (including the disaffirmance hereof) which may be
taken by Landlord, any trustee, receiver or liquidator of Landlord or any court
under the Federal Bankruptcy Code or otherwise, (xi) any interference with
Tenant's use of the Leased Premises, (xii) market or economic changes or (xiii)
any other cause, whether similar or dissimilar to the foregoing, any present or
future Law to the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be separate
and independent covenants and agreements, all Monetary Obligations shall
continue to be payable in all events (or, in lieu thereof, Tenant shall pay
amounts equal thereto), and the obligations of Tenant hereunder shall continue
unaffected unless the requirement to pay or perform the same shall have been
terminated pursuant to an express provision of this Lease. The obligation to pay
Rent or amounts equal thereto shall not be affected by any collection of rents
by any governmental body pursuant to a tax lien or otherwise, even though such
obligation results in a double payment of Rent. All Rent payable by Tenant
hereunder shall constitute "rent" for all purposes (including Section 502(b)(6)
of the Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales, gross receipts and rent taxes), all charges for any easement
or agreement maintained for the benefit of any of the Leased Premises, all
assessments and levies, all permit, inspection and license fees, all rents and
charges for water, sewer, utility and communication services relating to any of
the Leased Premises, all ground rents and all other public charges whether of a
like or different nature, even if unforeseen or extraordinary, imposed upon or
assessed against (i) Tenant, (ii) Tenant's possessory interest in the Leased
Premises, (iii) any of the Leased Premises, (iv) Landlord as a result of or
arising in respect of the acquisition, ownership, occupancy, leasing, use,
possession or sale of any of the Leased Premises, any activity conducted on any
of the Leased Premises, or the Rent, or (v) any Lender by reason of any Note,
Mortgage, Assignment or other document evidencing or securing a Loan and which
(as to this clause (v)) Landlord has agreed to pay (collectively, the
"Impositions"); provided, that nothing herein shall obligate Tenant to pay (A)
income, excess profits or other taxes of Landlord (or Lender) which are
determined on the basis of Landlord's (or
<PAGE> 15
Lender's) net income or net worth (unless such taxes are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
the Leased Premises which, if it were in effect, would be payable by Tenant
under the provisions hereof or by the terms of such tax, assessment or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed on
Landlord or (C) any capital gains tax imposed on Landlord in connection with the
sale of the Leased Premises to any Person. If any Imposition may be paid in
installments without interest or penalty, Tenant shall have the option to pay
such Imposition in installments; in such event, Tenant shall be liable only for
those installments which accrue or become due and payable during the Term.
Tenant shall prepare and file all tax reports required by governmental
authorities which relate to the Impositions. Tenant shall deliver to Landlord
(1) copies of all settlements and notices pertaining to the Impositions which
may be issued by any governmental authority within ten (10) days after Tenant's
receipt thereof, (2) receipts for payment of all taxes required to be paid by
Tenant hereunder within thirty (30) days after the due date thereof and (3)
receipts for payment of all other Impositions within ten (10) days after
Landlord's request therefor.
(b) Landlord shall have the right at any time to require
Tenant to pay to Landlord an additional monthly sum (each an "Escrow Payment")
sufficient to pay the Escrow Charges (as hereinafter defined) as they become
due. As used herein, "Escrow Charges" shall mean real estate taxes on the Leased
Premises or payments in lieu thereof and premiums on any insurance required by
this Lease. Landlord shall determine the amount of the Escrow Charges and of
each Escrow Payment. The Escrow Payments may be commingled with other funds of
Landlord or other Persons and no interest thereon shall be due or payable to
Tenant. Landlord shall apply the Escrow Payments to the payment of the Escrow
Charges in such order or priority as Landlord shall determine or as required by
law. If at any time the Escrow Payments theretofore paid to Landlord shall be
insufficient for the payment of the Escrow Charges, Tenant, within ten (10) days
after Landlord's demand therefor, shall pay the amount of the deficiency to
Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and conform
to, and cause any other Person occupying any part of the Leased Premises to
comply with and conform to, all Insurance Requirements and Legal Requirements
(including all applicable Environmental Laws). Tenant shall not at any time (i)
cause, permit or suffer to occur any Environmental Violation or (ii) permit any
sublessee, assignee or other Person occupying the Leased Premises under or
through Tenant to cause, permit or suffer to occur any Environmental Violation.
(b) Tenant, at its sole cost and expense, will at all
times promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement on the
part of Landlord or the occupier to be kept and performed thereunder. Tenant
will not alter, modify, amend or terminate any Easement Agreement, give any
consent or approval thereunder, or enter into any new Easement Agreement
without, in each case, prior written consent of Landlord.
(c) Upon prior written notice from Landlord, Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises and perform, as agents of Tenant, environmental site
investigations and assessments ("Site Assessments") on the Leased Premises for
the purpose of determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in any Environmental
Violation. Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be necessary,
in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant
shall supply to the Site Reviewers such
<PAGE> 16
historical and operational information regarding the Leased Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site Assessments,
and shall make available for meetings with the Site Reviewers appropriate
personnel having knowledge of such matters. The cost of performing and reporting
Site Assessments shall be paid by Tenant.
(d) If an Environmental Violation occurs or is found to
exist and, in Landlord's reasonable judgment, the cost of remediation of the
same is likely to exceed $50,000, Tenant shall provide to Landlord, within ten
(10) days after Landlord's request therefor, adequate financial assurances that
Tenant will effect such remediation in accordance with applicable Environmental
Laws. Such financial assurances shall be a bond or letter of credit satisfactory
to Landlord in form and substance and in an amount equal to or greater than
Landlord's reasonable estimate, based upon a Site Assessment performed pursuant
to Paragraph 10(c), of the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if
an Environmental Violation occurs or is found to exist and the Term would
otherwise terminate or expire, then, at the option of Landlord, the Term shall
be automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any Environmental Violation which occurs or
is found to exist, Landlord shall have the right (but no obligation) to take any
and all actions as Landlord shall deem necessary or advisable in order to cure
such Environmental Violation.
(g) Tenant shall notify Landlord immediately after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord immediately upon receipt thereof
copies of all orders, reports, notices, permits, applications or other
communications relating to any such violation or noncompliance.
(h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party thereto which are identical to the covenants contained in
this Paragraph 10.
<PAGE> 17
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or
permit to be created or to remain and shall promptly discharge or remove any
lien, levy or encumbrance on any of the Leased Premises or on any Rent or any
other sums payable by Tenant under this Lease, other than any Mortgage or
Assignment, the Permitted Encumbrances and any mortgage, lien, encumbrance or
other charge created by or resulting solely from any act or omission of
Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND
THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES
REGARDING SUCH NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or
register (collectively, "record") all such instruments as may be required or
permitted by any present or future Law in order to evidence the respective
interests of Landlord and Tenant in any of the Leased Premises, and shall cause
a memorandum of this Lease (or, if such a memorandum cannot be recorded, this
Lease), and any supplement hereto or thereto, to be recorded in such manner and
in such places as may be required or permitted by any present or future Law in
order to protect the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain each Related
Premises and the Adjoining Property in as good repair and appearance as each is
in on the date hereof and fit to be used for their intended use in accordance
with the better of the practices generally recognized as then acceptable by
other companies in its industry or observed by Tenant with respect to the other
real properties owned or operated by it, and, in the case of the Equipment, in
as good mechanical condition as it was on the later of the date hereof or the
date of its installation, except for ordinary wear and tear. Tenant shall take
every other action necessary or appropriate for the preservation and safety of
each Related Premises. Tenant shall promptly make all Alterations of every kind
and nature, whether foreseen or unforeseen, which may be required to comply with
the foregoing requirements of this Paragraph 12(a). Landlord shall not be
required to make any Alteration, whether foreseen or unforeseen, or to maintain
any of the Related Premises or Adjoining Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or hereafter
in effect to make Alterations at the expense of Landlord or to require Landlord
to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12
shall be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed,
shall (i) encroach upon any setback or any property, street or right-of-way
adjoining any of the Leased Premises, (ii) violate the provisions of any
restrictive covenant affecting any of the Leased Premises, (iii) hinder or
obstruct any easement or right-of-way to which any of the Leased Premises is
subject or (iv) impair the rights of others in, to or under any of the
foregoing, Tenant shall, promptly after receiving notice or otherwise acquiring
knowledge thereof, either (A) obtain from all necessary parties waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, hindrance, obstruction or impairment, whether the same
shall affect Landlord, Tenant or both, or (B) take such action as shall be
necessary to remove all such encroachments, hindrances or obstructions and to
end all such violations or impairments, including, if necessary, making
Alterations.
<PAGE> 18
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained
the prior written consent of Landlord and Lender, to make (i) Alterations or a
series of related Alterations that, as to any such Alterations or series of
related Alterations, do not cost in excess of $50,000 with respect to any
Related Premises and (ii) to install Equipment in the Improvements or accessions
to the Equipment that, as to such Equipment or accessions, do not cost in excess
of $50,000, so long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value and utility of
the Leased Premises is not diminished thereby. If the cost of any Alterations,
series of related Alterations, Equipment or accessions thereto is in excess of
$50,000, the prior written approval of Landlord and Lender shall be required,
such approval not to be unreasonably withheld, delayed or conditioned. Tenant
shall not construct upon the Land any additional buildings without having first
obtained the prior written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this
Paragraph 13 or as required by Paragraph 12 or 17 (such Alterations and actions
being hereinafter collectively referred to as "Work"), then (i) the market value
of the Leased Premises shall not be lessened by any such Work or its usefulness
impaired, (ii) all such Work shall be performed by Tenant in a good and
workmanlike manner, (iii) all such Work shall be expeditiously completed in
compliance with all Legal Requirements, (iv) all such Work shall comply with the
requirements of all insurance policies required to be maintained by Tenant
hereunder, (v) if any such Work involves the replacement of Equipment or parts
thereto, all replacement Equipment or parts shall have a value and useful life
equal to the greater of (A) the value and useful life on the date hereof of the
Equipment being replaced or (B) the value and useful life of the Equipment being
replaced immediately prior to the occurrence of the event which required its
replacement (assuming such Replaced Equipment was then in the condition required
by this Lease), (vi) Tenant shall promptly discharge or remove all liens filed
against any of the Leased Premises arising out of such Work, (vii) Tenant shall
procure and pay for all permits and licenses required in connection with any
such Work, (viii) all such Work shall be the property of Landlord and shall be
subject to this Lease, and Tenant shall execute and deliver to Landlord any
document requested by Landlord evidencing the assignment to Landlord of all
estate, right, title and interest (other than the leasehold estate created
hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall
comply, to the extent requested by Landlord or required by this Lease, with the
provisions of Paragraphs 12(a) and 19(a), whether or not such Work involves
restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
this Lease, Tenant shall not be required to (a) pay any Imposition, (b)
discharge or remove any lien referred to in Paragraph 11 or 13 or (c) take any
action with respect to any encroachment, violation, hindrance, obstruction or
impairment referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as "Permitted Violations"), so
long as at the time of such non-compliance no Event of Default exists and so
long as Tenant shall contest, in good faith, the existence, amount or validity
thereof, the amount of the damages caused thereby, or the extent of its or
Landlord's liability therefor by appropriate proceedings which shall operate
during the pendency thereof to prevent or stay (i) the collection of, or other
realization upon, the Permitted Violation so contested, (ii) the sale,
forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to
pay any damages caused by any Permitted Violation, (iii) any interference with
the use or occupancy of any of the Leased Premises, (iv) any interference with
the payment of any Rent, (v) the cancellation or increase in the rate of any
insurance policy or a statement by the carrier that coverage will be denied.
Tenant shall provide Landlord security which is satisfactory, in Landlord's
reasonable judgment, to assure that such Permitted Violation is corrected,
including all Costs, interest and penalties that may be incurred or become due
in connection therewith. While any proceedings which comply with the
<PAGE> 19
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend, save
and hold harmless Landlord, Lender and all other Persons described in Paragraph
30 (each an "Indemnitee") from and against any and all liabilities, losses,
damages (including punitive damages), penalties, Costs (including attorneys'
fees and costs), causes of action, suits, claims, demands or judgments of any
nature whatsoever, howsoever caused, without regard to the form of action and
whether based on strict liability, gross negligence, negligence or any other
theory of recovery at law or in equity, arising from (i) any matter pertaining
to the acquisition (or the negotiations leading thereto), ownership, leasing,
use, non-use, occupancy, operation, management, condition, design, construction,
maintenance, repair or restoration of any of the Leased Premises or Adjoining
Property, (ii) any casualty in any manner arising from any of the Leased
Premises or Adjoining Property, whether or not Indemnitee has or should have
knowledge or notice of any defect or condition causing or contributing to said
casualty, (iii) any violation by Tenant of any provision of this Lease, any
contract or agreement to which Tenant is a party, any Legal Requirement or any
Permitted Encumbrance or any encumbrance Tenant consented to or the Mortgage or
Assignment or (iv) any alleged, threatened or actual Environmental Violation,
including (A) liability for response costs and for costs of removal and remedial
action incurred by the United States Government, any state or local governmental
unit or any other Person, or damages from injury to or destruction or loss of
natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to Section 107 of CERCLA, or any
successor section or act or provision of any similar state or local Law, (B)
liability for costs and expenses of abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or property
damage arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of a dangerous activity.
(b) In case any action or proceeding is brought against
any Indemnitee by reason of any such claim, (i) Tenant may, except in the event
of a conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may employ counsel of its choice
to monitor the defense of any such action) and (ii) such Indemnitee shall notify
Tenant to resist or defend such action or proceeding by retaining counsel
reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate
and assist in the defense of such action or proceeding if reasonably requested
to do so by Tenant. In the event of a conflict of interest or dispute or during
the continuance of an Event of Default, Landlord shall have the right to select
counsel, and the cost of such counsel shall be paid by Tenant.
<PAGE> 20
(c) The obligations of Tenant under this Paragraph 15
shall survive any termination, expiration or rejection in bankruptcy of this
Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or
in connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (to the extent that a Related Premises
is in a flood zone) and earthquake coverage in amounts not less than the actual
replacement cost of the Improvements and Equipment. Such policies shall contain
Replacement Cost and Agreed Amount Endorsements and shall contain deductibles
not more than $25,000 per occurrence.
(ii) Commercial General Liability Insurance
(including but not limited to Incidental Medical Malpractice and Host Liquor
Liability) and Business Automobile Liability Insurance (including Non-Owned and
Hired Automobile Liability) against claims for personal and bodily injury, death
or property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $2,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and type.
(iii) Worker's compensation insurance covering all
persons employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Worker's Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State
or States in which the Leased Premises are located.
(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the Leased Premises in an
amount not less than $5,000,000 per accident for damage to property. Such
policies shall include at least $5,000,000 per incidence for Off-Premises
Service Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous
Materials Clean-up Expense and may contain a deductible not to exceed $25,000.
(v) Business Interruption and Extra Expense Insurance
at limits to cover 100% of losses and/or expenses incurred over the period of
indemnity not less than one year from time of loss. Such insurance shall name
Landlord as loss payee solely with respect to Rent payable to or for the benefit
of the Landlord under this Lease.
(vi) During any period in which substantial
Alterations at any Related Premises are being undertaken, builder's risk
insurance covering the total completed value including any "soft costs" with
respect to the Improvements being altered or repaired (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction or repair of
Improvements or Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general liability,
worker's compensation and automobile liability insurance with respect to the
Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of
<PAGE> 21
coverage, deductibles, form of mortgagee clause) on or in connection with any of
the Leased Premises as Landlord or Lender may reasonably require, which at the
time is usual and commonly obtained in connection with properties similar in
type of building size, use and location to the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be
written by companies which have a Best's rating of A:X or above and are admitted
in, and approved to write insurance policies by, the State Insurance Department
for the states in which the Leased Premises are located. The insurance policies
(i) shall be for such terms as Landlord may reasonably approve and (ii) shall be
in amounts sufficient at all times to satisfy any coinsurance requirements
thereof. The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and
16(a)(vi) shall name Landlord as Owner and Lender as loss payee and Tenant as
its interest may appear. The insurance referred to in Paragraph 16(a)(ii) shall
name Landlord and Lender as additional insureds, and the insurance referred to
in Paragraph 16(a)(v) shall name Landlord as insured and Lender and Landlord as
loss payee. If said insurance or any part thereof shall expire, be withdrawn,
become void, voidable, unreliable or unsafe for any reason, including a breach
of any condition thereof by Tenant or the failure or impairment of the capital
of any insurer, or if for any other reason whatsoever said insurance shall
become reasonably unsatisfactory to Landlord, Tenant shall immediately obtain
new or additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i),
(iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be cancelled except after sixty (60) days' prior notice to
Landlord and Lender. Each such policy shall also provide that any loss otherwise
payable thereunder shall be payable notwithstanding (i) any act or omission of
Landlord or Tenant which might, absent such provision, result in a forfeiture of
all or a part of such insurance payment, (ii) the occupation or use of any of
the Leased Premises for purposes more hazardous than those permitted by the
provisions of such policy, (iii) any foreclosure or other action or proceeding
taken by Lender pursuant to any provision of the Mortgage, Note, Assignment or
other document evidencing or securing the Loan upon the happening of an event of
default therein or (iv) any change in title to or ownership of any of the Leased
Premises.
(d) Tenant shall pay as they become due all premiums for
the insurance required by Paragraph 16(a), shall renew or replace each policy
and deliver to Landlord evidence of the payment of the full premium therefor or
installment then due at least thirty (30) days prior to the expiration date of
such policy, and shall promptly deliver to Landlord all original certificates of
insurance.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to Landlord a
Statement of Values which shall be reviewed annually and amended as necessary
based on Replacement Cost Valuations. The original or a certified copy of each
such "blanket" or umbrella policy shall promptly be delivered to Landlord.
(f) Tenant shall have the replacement cost and insurable
value of the Improvements and Equipment determined from time to time as required
by the replacement cost and agreed amount endorsements and shall deliver to
Landlord the new replacement cost and agreed amount endorsement or certificate
evidencing such endorsement promptly upon Tenant's receipt thereof.
<PAGE> 22
(g) Tenant shall promptly comply with and conform to (i)
all provisions of each insurance policy required by this Paragraph 16 and (ii)
all requirements of the insurers thereunder applicable to Landlord, Tenant or
any of the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates Alterations or results in interference with the
use or enjoyment of any of the Leased Premises.
(h) Tenant shall not carry separate insurance concurrent
in form or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as named
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance and shall deliver to
Landlord the original policies or certified copies therefor.
(i) All policies shall contain effective waivers by the
carrier against all claims for insurance premiums against Landlord and shall
contain full waivers of subrogation against the Landlord.
(j) All proceeds of any insurance required under
Paragraph 16(a) shall be payable as follows:
(i) Except for proceeds payable to a Person other
than Landlord, Tenant or Lender, all proceeds of insurance required under
clauses (ii), (iii), (iv), (v) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of Builder's Risk
insurance under clause (vi) of Paragraph 16(a) shall be payable to Landlord or,
if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required under clause (i)
of Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16(a) shall be payable by Landlord (or Lender) and applied as set forth in
Paragraph 17. Tenant shall apply the Net Award to restoration of the Leased
Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty occurs to any of the Related
Premises, Tenant shall give Landlord and Lender immediate notice thereof.
Landlord and Lender are hereby authorized to adjust, collect and compromise, in
their discretion and upon notice to Tenant (except that no notice to Tenant
shall be required if an Event of Default has occurred and is continuing), all
claims under any of the insurance policies required by Paragraph 16(a) (except
public liability insurance claims payable to a Person other than Tenant,
Landlord or Lender) and to execute and deliver on behalf of Tenant all necessary
proofs of loss, receipts, vouchers and releases required by the insurers.
Provided that no Event of Default has occurred and is continuing, Tenant shall
be entitled to participate with Landlord and Lender in any adjustment,
collection and compromise of the Net Award payable in connection with a
Casualty. Tenant agrees to sign, upon the request of Landlord or Lender, all
such proofs of loss, receipts, vouchers and releases. Each insurer is hereby
authorized and directed to make payment under said policies, including return of
unearned premiums, directly to Landlord or, if required by the Mortgage, to
Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints
each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft
therefor. The rights of Landlord under this Paragraph 17(a) shall be extended to
Lender if and to the extent that any Mortgage so provides.
<PAGE> 23
(b) Tenant, immediately upon receiving a Condemnation
Notice, shall notify Landlord and Lender thereof. Landlord and Lender are
authorized to collect, settle and compromise, in their discretion (and, if no
Event of Default exists, upon notice to Tenant), the amount of any Net Award.
Provided that no Event of Default has occurred and is continuing, Tenant shall
be entitled to participate with Landlord and Lender in any Condemnation
proceeding or negotiations under threat thereof and to contest the Condemnation
or the amount of the Net Award therefor. No agreement with any condemnor in
settlement or under threat of any Condemnation shall be made by Tenant without
the written consent of Landlord and Lender. Subject to the provisions of this
Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or
payment to which Tenant is or may be entitled by reason of any Condemnation,
whether the same shall be paid or payable for Tenant's leasehold interest
hereunder or otherwise; but nothing in this Lease shall impair Tenant's right to
any award or payment on account of Tenant's trade fixtures, equipment or other
tangible property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.
(c) If any Partial Casualty (whether or not insured
against) or Partial Condemnation shall occur to any Related Premises, this Lease
shall continue, notwithstanding such event, and there shall be no abatement or
reduction of any Monetary Obligations. Promptly after such Partial Casualty or
Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and
diligently continue to restore the Leased Premises as nearly as possible to
their value, condition and character immediately prior to such event (assuming
the Leased Premises to have been in the condition required by this Lease). Upon
the receipt by Landlord of the entire Net Award of such Partial Casualty or
Partial Condemnation, Landlord shall make such Net Award available to Tenant for
restoration in accordance with and subject to the provisions of Paragraph 19(a).
If any Casualty or Condemnation which is not a Partial Casualty or Partial
Condemnation shall occur, Tenant shall comply with the terms and conditions of
Paragraph 18.
(d) In the event of a Requisition of any of the Leased
Premises, if any Net Award payable by reason of such Requisition is (i) retained
by Landlord, each installment of Basic Rent payable on or after the date on
which the Net Award is paid to Landlord shall be reduced by a fraction, the
denominator of which shall be the total amount of all Basic Rent due from such
date to and including the last Basic Rent Payment Date for the then existing
Term and the numerator of which shall be the amount of such Net Award retained
by Landlord, or (ii) paid to Lender, then each installment of Basic Rent
thereafter payable shall be reduced in the same amount and for the same period
as payments are reduced under the Note until such Net Award has been applied in
full or until the Term has expired, whichever occurs first. Upon the expiration
of the Term, any portion of such Net Award which shall not have been previously
credited to Tenant shall be retained by Landlord.
18. Termination Events.
(a) If (i) all of any Related Premises shall be taken by
a Taking or (ii) any substantial portion of any Related Premises shall be taken
by a Taking or all or any substantial portion of any Related Premises shall be
totally damaged or destroyed by a Casualty and, in any such case, Tenant
certifies and covenants to Landlord that it will forever abandon operations at
the Related Premises, (any one or all of the Related Premises described in the
above clauses (i) and (ii) above being hereinafter referred to as the "Affected
Premises" and each of the events described in the above clauses (i) and (ii)
shall hereinafter be referred to as a "Termination
<PAGE> 24
Event"), then (x) in the case of (i) above, Tenant shall be obligated, within
thirty (30) days after Tenant receives a Condemnation Notice and (y) in the case
of (ii) above, Tenant shall have the option, within thirty (30) days after
Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as
the case may be, to give to Landlord written notice (a "Termination Notice") of
the Tenant's option (A) to terminate this Lease as to the Affected Premises in
the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of
Tenant's intention to terminate this Lease as to the Affected Premises on the
first Basic Rent Payment Date which occurs at least ninety (90) days after the
Fair Market Value Date (the "Termination Date"), (ii) a binding and irrevocable
offer of Tenant to pay the Termination Amount and (iii) if the Termination Event
is an event described in Paragraph 18(a)(ii), the certification and covenant
described therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine Fair Market Value.
(c) If Landlord shall reject such offer to terminate this
Lease as to the Affected Premises by written notice to Tenant (a "Rejection"),
which Rejection shall contain the written consent of Lender, not later than
thirty (30) days following the Fair Market Value Date, then this Lease shall
terminate as to the Affected Premises on the Termination Date; provided that, if
Tenant has not satisfied all Monetary Obligations and all other obligations and
liabilities under this Lease which have arisen as to the Affected Premises
(collectively, "Remaining Obligations") on or prior to the Termination Date,
then Landlord may, at its option, extend the date on which this Lease may
terminate as to the Affected Premises to a date which is no later than the first
Basic Rent Payment Date after the Termination Date on which Tenant has satisfied
all Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder as to the Affected Premises shall terminate except for any Surviving
Obligations, (ii) Tenant shall immediately vacate and shall have no further
right, title or interest in or to any of the Affected Premises and (iii) the Net
Award shall be retained by Landlord. Notwithstanding anything to the contrary
hereinabove contained, if Tenant shall have received a Rejection and, on the
date when this Lease would otherwise terminate as provided above, Landlord shall
not have received the full amount of the Net Award payable by reason of the
applicable Termination Event, then the date on which this Lease is to terminate
automatically shall be extended to the first Basic Rent Payment Date after the
receipt by Landlord of the full amount of the Net Award provided that, if Tenant
has not satisfied all Remaining Obligations on such date, then Landlord may, at
its option, extend the date on which this Lease may terminate to a date which is
no later than the first Basic Rent Payment Date after such date on which Tenant
has satisfied all such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not
later than the thirtieth (30th) day following the Fair Market Value Date,
Landlord shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord then, on the Termination Date, Tenant shall pay to
Landlord the Termination Amount and all Remaining Obligations and, if requested
by Tenant, Landlord shall convey to Tenant or its designee the Affected Premises
or the remaining portion thereof, if any, all in accordance with Paragraph 20.
(e) In the event of the termination of this Lease as to
the Affected Premises as hereinabove provided, this Lease shall remain in full
force and effect as to the Remaining Premises; provided, that the Basic Rent for
the Remaining Premises to be paid after such termination shall be the Basic Rent
otherwise payable hereunder with respect to the Leased Premises multiplied by a
percentage equal to the sum of the percentages set forth on Exhibit "F" for the
Remaining Premises.
<PAGE> 25
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage)
shall hold any Net Award in excess of $50,000 in a fund (the "Restoration Fund")
and disburse amounts from the Restoration Fund only in accordance with the
following conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord, (B) Landlord and Lender shall be provided
with mechanics' lien insurance (if available) and acceptable performance and
payment bonds which insure satisfactory completion of and payment for the
restoration, are in an amount and form and have a surety acceptable to Landlord,
and name Landlord and Lender as additional dual obligees, and (C) appropriate
waivers of mechanics' and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Landlord and
Lender can verify that the amounts disbursed from time to time are represented
by work that is completed, in place and free and clear of mechanics' and
materialmen's lien claims;
(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is requested, stating
the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies with the applicable
requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
Restoration Fund until the restoration is fully completed;
(vi) the Restoration Fund shall not be commingled
with Landlord's other funds and shall bear interest at a rate agreed to by
Landlord and Tenant; and
(vii) such other reasonable conditions as Landlord or
Lender may impose.
(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord, exceeds the amount of
the Net Award available for such restoration, the amount of such excess shall,
upon demand by Landlord, be paid by Tenant to Landlord to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.
<PAGE> 26
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum shall be retained by Landlord or, if required by a Note or
Mortgage, paid by Landlord to a Lender.
20. Procedures Upon Purchase.
(a) If the Leased Premises or any of the Related Premises
are purchased by Tenant pursuant to any provision of this Lease, Landlord need
not convey any better title thereto than that which was conveyed to Landlord,
and Tenant or its designee shall accept such title, subject, however, to the
Permitted Encumbrances and to all other liens, exceptions and restrictions on,
against or relating to any of the Leased Premises or the applicable Related
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises or the applicable
Related Premises which have been created by or resulted solely from acts of
Landlord after the date of this Lease, unless the same are Permitted
Encumbrances or customary utility easements benefiting the Leased Premises or
were created with the concurrence of Tenant or as a result of a default by
Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the
Leased Premises or any of the Related Premises pursuant to any provision of this
Lease (any such date the "Purchase Date"), Tenant shall pay to Landlord, or to
any Person to whom Landlord directs payment, the Relevant Amount therefor
specified herein, in Federal Funds, less any credit of the Net Award received
and retained by Landlord or a Lender allowed against the Relevant Amount, and
Landlord shall deliver to Tenant (i) a special warranty deed which describes the
premises being conveyed and conveys the title thereto as provided in Paragraph
20(a), (ii) such other instruments as shall be necessary to transfer to Tenant
or its designee any other property (or rights to any Net Award not yet received
by Landlord or a Lender) then required to be sold by Landlord to Tenant pursuant
to this Lease and (iii) any Net Award received by Landlord, not credited to
Tenant against the Relevant Amount and required to be delivered by Landlord to
Tenant pursuant to this Lease; provided, that if any Monetary Obligations remain
outstanding on such date, then Landlord may deduct from the Net Award the amount
of such Monetary Obligations; and further provided, that if any event has
occurred which, in Landlord's reasonable judgment, is likely to subject any
Indemnitee to any liability which Tenant is required to indemnify against
pursuant to Paragraph 15, then an amount shall be deducted from the Net Award
which, in Landlord's reasonable judgment, is sufficient to satisfy such
liability, which amount shall be deposited in an escrow account with a financial
institution reasonably satisfactory to Landlord and Tenant pending resolution of
such matter. If on the Purchase Date any Monetary Obligations remain outstanding
and no Net Award is payable to Tenant by Landlord or the amount of such Net
Award is less than the amount of the Monetary Obligations, then Tenant shall pay
to Landlord on the Purchase Date the amount of such Monetary Obligations. Upon
the completion of such purchase, this Lease and all obligations and liabilities
of Tenant hereunder with respect to the applicable Related Premises (but not
with respect to the Remaining Premises) shall terminate, except any Surviving
Obligations.
(c) If the completion of such purchase shall be delayed
after (i) the Termination Date, in the event of a purchase pursuant to Paragraph
18 or, (ii) the date scheduled for such purchase, in the event of a purchase
under any other provision of this Lease then (x) Rent shall continue to be due
and payable until completion of such purchase and (y) at Landlord's sole option,
Fair Market Value shall be redetermined and the Relevant Amount payable by
Tenant pursuant to the applicable provision of this Lease shall be adjusted to
reflect such redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord
shall be prorated as of the Purchase Date, and the prorated unapplied balance
shall be deducted from the
<PAGE> 27
Relevant Amount due to Landlord; provided, that no apportionment of any
Impositions shall be made upon any such purchase.
21. Assignment and Subletting; Prohibition against Leasehold
Financing.
(a) Tenant may not assign this Lease, voluntarily or
involuntarily, whether by operation of law or otherwise, or sublet any of the
Related Premises at any time to any other Person without the prior written
consent of Landlord, which consent, in the event of an assignment, may be
withheld by Landlord for any or no reason, and any such purported assignment or
sublease shall be null and void.
(b) If Tenant assigns all its rights and interest under
this Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including obligations of
Tenant which may have arisen on or prior to the date of such assignment, by a
written instrument delivered to Landlord at the time of such assignment. Each
sublease of any of the Related Premises shall be subject and subordinate to the
provisions of this Lease. No assignment or sublease shall affect or reduce any
of the obligations of Tenant hereunder, and all such obligations shall continue
in full force and effect as obligations of a principal and not as obligations of
a guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.
(c) Tenant shall, within ten (10) days after the
execution and delivery of any assignment or sublease consented to by Landlord,
deliver a duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(d) As security for performance of its obligations under
this Lease, Tenant hereby grants, conveys and assigns to Landlord all right,
title and interest of Tenant in and to all subleases now in existence or
hereafter entered into for any or all of the Leased Premises, any and all
extensions, modifications and renewals thereof and all rents, issues and profits
therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all
rents and other sums of money payable under any sublease of any of the Leased
Premises, provided, however, that Landlord shall have the absolute right at any
time upon notice to Tenant and any subtenants to revoke said license and to
collect such rents and sums of money and to retain the same. Tenant shall not
consent to, cause or allow any modification or alteration of any of the terms,
conditions or covenants of any of the subleases or the termination thereof,
without the prior written approval of Landlord which consent shall not be
unreasonably withheld nor shall Tenant accept any rents more than thirty (30)
days in advance of the accrual thereof nor do nor permit anything to be done,
the doing of which, nor omit or refrain from doing anything, the omission of
which, will or could be a breach of or default in the terms of any of the
subleases.
(e) Tenant shall not have the power to mortgage, pledge
or otherwise encumber its interest under this Lease or any sublease of any of
the Related Premises, and any such mortgage, pledge or encumbrance made in
violation of this Paragraph 21 shall be void and of no force and effect.
(f) Subject to the provisions of Paragraph 36 hereof,
Landlord may sell or transfer the Leased Premises at any time without Tenant's
consent to any third party (each a "Third Party Purchaser"). In the event of any
such transfer, Tenant shall attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer. At the request of Landlord, Tenant will execute such documents
confirming the agreement referred to above and such other agreements as Landlord
may reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder.
<PAGE> 28
22. Events of Default.
(a) The occurrence of any one or more of the following
(after expiration of any applicable cure period as provided in Paragraph 22(b))
shall, at the sole option of Landlord, constitute an "Event of Default" under
this Lease:
(i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe,
or a violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant
herein or in any certificate, demand or request made pursuant hereto proves to
be incorrect, now or hereafter, in any material respect;
(iv) a final, non-appealable judgment or judgments
for the payment of money in excess of $1,000,000 in the aggregate shall be
rendered against Tenant and the same shall remain undischarged for a period of
sixty (60) consecutive days;
(v) Tenant shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for any of the Related Premises, (C) file a petition
seeking relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
(vi) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant, a receiver or trustee for it or for
any of the Related Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;
(vii) any of the Related Premises shall have been
vacated or abandoned;
(viii) Tenant shall be liquidated or dissolved or
shall begin proceedings towards its liquidation or dissolution;
(ix) the estate or interest of Tenant in any of the
Related Premises shall be levied upon or attached in any proceeding and such
estate or interest is about to be sold or transferred or such process shall not
be vacated or discharged within sixty (60) days after it is made;
(x) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under, any provision of
any Assignment or any other document between Tenant and Lender, if such failure,
violation, breach or misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan;
(xi) a failure by Tenant to maintain in effect any
license or permit necessary for the use, occupancy or operation of any of the
Related Premises;
(xii) Tenant shall sell or transfer or enter into an
agreement to sell or transfer all or substantially all of its assets; or
<PAGE> 29
(xiii) an Event of Default under the Guaranty shall
exist.
(b) No notice or cure period shall be required in any one
or more of the following events: (A) the occurrence of an Event of Default under
clause (i) (except as otherwise set forth below), (iii), (iv), (v), (vi), (vii),
(viii), (ix), (x), (xi), (xii) or (xiii) of Paragraph 22(a); (B) the default
consists of a failure to pay Basic Rent, a failure to provide any insurance
required by Paragraph 16 or an assignment or sublease entered into in violation
of Paragraph 21; or (C) the default is such that any delay in the exercise of a
remedy by Landlord could reasonably be expected to cause irreparable harm to
Landlord. If the default consists of the failure to pay any Monetary Obligation
under clause (i) of Paragraph 22(a) the applicable cure period shall be three
(3) days from the date on which notice is given, but Landlord shall not be
obligated to give notice of, or allow any cure period for, any such default more
than two times within any consecutive twelve (12) month period. If the default
consists of a default under clause (ii) of Paragraph 22(a), other than the
events specified in clauses (B) and (C) of the first sentence of this Paragraph
22(b), the applicable cure period shall be twenty (20) days from the date on
which notice is given or, if the default cannot be cured within such twenty (20)
day period and delay in the exercise of a remedy would not (in Landlord's
reasonable judgment) cause any material adverse harm to Landlord or any of the
Leased Premises, the cure period shall be extended for the period required to
cure the default (but such cure period, including any extension, shall not in
the aggregate exceed sixty (60) days), provided that Tenant shall commence to
cure the default within the said twenty-day period and shall actively,
diligently and in good faith proceed with and continue the curing of the default
until it shall be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon such
date, this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of all of the Leased Premises, Landlord may re-enter and repossess
any of the Leased Premises not surrendered, with or without legal process, by
peaceably entering any of the Leased Premises and changing locks or by summary
proceedings, ejectment or any other lawful means or procedure. Upon or at any
time after taking possession of any of the Leased Premises, Landlord may, by
peaceable means or legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any such entry,
repossession or removal. Notwithstanding such entry or repossession, Landlord
may (A) exercise the remedy set forth in and collect the damages permitted by
Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(i)
or 23(b)(ii).
(ii) After repossession of any of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right to relet any of the
Leased Premises to such tenant or tenants, for such term or terms, for such
rent, on such conditions and for such uses as Landlord in its sole discretion
may determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
<PAGE> 30
(iii) Landlord may, upon notice to Tenant, require
Tenant to make an irrevocable offer to terminate this Lease in its entirety for
an amount (the "Default Termination Amount") specified in the next sentence. The
"Default Termination Amount" shall be the greatest of (A) the Fair Market Value
of the Leased Premises or (B) the sum of the Acquisition Cost and Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Default Termination Amount or (C) an amount equal to the Present
Value of the entire Basic Rent from the date of such purchase to the date on
which the then Term would expire, assuming that the Term has been extended for
all extension periods, if any, provided for in this Lease. Upon such notice to
Tenant, Tenant shall be deemed to have made such offer and shall, if requested
by Landlord, within ten (10) days following such request, deposit with Landlord
as payment against the Default Termination Amount the amount described in (B)
above, Landlord and Tenant shall promptly commence to determine Fair Market
Value. Within thirty (30) days after the Fair Market Value Date, Landlord shall
accept or reject such offer. If Landlord accepts such offer then, on the tenth
(10th) business day after such acceptance, Tenant shall pay to Landlord the
Default Termination Amount and, at the request of Tenant, Landlord will convey
the Leased Premises to Tenant or its designee in accordance with Paragraph 20.
Any rejection by Landlord of such offer shall have no effect on any other remedy
Landlord may have under this Lease.
(iv) Landlord may declare by notice to Tenant the
entire Basic Rent (in the amount of Basic Rent then in effect) for the remainder
of the then current Term to be immediately due and payable. Tenant shall
immediately pay to Landlord all such Basic Rent discounted to its Present Value,
all accrued Rent then due and unpaid, all other Monetary Obligations which are
then due and unpaid and all Monetary Obligations which arise or become due by
reason of such Event of Default (including any Costs of Landlord). Upon receipt
by Landlord of all such accelerated Basic Rent and Monetary Obligations, this
Lease shall remain in full force and effect and Tenant shall have the right to
possession of the Leased Premises from the date of such receipt by Landlord to
the end of the Term, and subject to all the provisions of this Lease, including
the obligation to pay all increases in Basic Rent and all Monetary Obligations
that subsequently become due, except that (A) no Basic Rent which has been
prepaid hereunder shall be due thereafter during the said Term, (B) Tenant shall
have no option to extend or renew the Term.
(b) The following constitute damages to which Landlord
shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):
(i) If Landlord exercises its remedy under Paragraph
23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise
such remedy and is unsuccessful in reletting the Leased Premises) then, upon
written demand from Landlord, Tenant shall pay to Landlord, as liquidated and
agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, re-entry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses, reasonable attorneys' fees,
employees' expenses, costs of Alterations and expenses and preparation for
reletting.
(ii) If Landlord exercises its remedy under Paragraph
23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant
shall, until the end of what would have been the Term in the absence of the
termination of the Lease, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for, and shall pay to Landlord,
<PAGE> 31
as liquidated and agreed current damages on the date on which the same are due
and payable under the terms of this Lease all Monetary Obligations which would
be payable under this Lease by Tenant in the absence of such termination less
the net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii),
after deducting from such proceeds all of Landlord's Costs (including the items
listed in the last sentence of Paragraph 23(b)(i) hereof) incurred in connection
with such repossessing and reletting; provided, that if Landlord has not relet
the Leased Premises, such Costs of Landlord shall be considered to be Monetary
Obligations payable by Tenant. Tenant shall be and remain liable for all sums
aforesaid, and Landlord may recover such damages from Tenant and institute and
maintain successive actions or legal proceedings against Tenant for the recovery
of such damages. Nothing herein contained shall be deemed to require Landlord to
wait to begin such action or other legal proceedings until the date when the
Term would have expired by its own terms had there been no such Event of
Default.
(c) Notwithstanding anything to the contrary herein
contained, in lieu of or in addition to any of the foregoing remedies and
damages, Landlord may exercise any remedies and collect any damages available to
it at law or in equity. If Landlord is unable to obtain full satisfaction
pursuant to the exercise of any remedy, it may pursue any other remedy which it
has hereunder or at law or in equity.
(d) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.
(e) No termination of this Lease, repossession or
reletting of any of the Leased Premises, exercise of any remedy or collection of
any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving
Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES THE SERVICE OF NOTICE WHICH MAY BE REQUIRED BY ANY
APPLICABLE LAW AND ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time upon
the strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and
all those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.
(j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised
<PAGE> 32
at any time an Event of Default has occurred and is continuing and may be
exercised from time to time. No remedy shall be exhausted by any exercise
thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place,
Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For the
purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days' notice of the new address to the other party, in the manner provided
above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the "Responding Party"), the Responding Party shall
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by an court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchaser or mortgagee of any
of the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The cost
of removing and disposing of such property and repairing any damage to any of
the Leased Premises caused by such removal shall be paid by Tenant to Landlord
upon demand. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate
<PAGE> 33
created hereby or any part thereof or interest therein and (b) the fee estate in
any of the Leased Premises or any part thereof or interest therein, unless and
until all Persons having any interest in the interests described in (a) and (b)
above which are sought to be merged shall join in a written instrument effecting
such merger and shall duly record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of
account with respect to the finances and business of Tenant generally and with
respect to the Leased Premises, in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and shall permit Landlord and Lender
by their respective agents, accountants and attorneys, upon reasonable notice to
Tenant, to visit and inspect the Leased Premises and examine (and make copies
of) the records and books of account and to discuss the finances and business
with the officers of Tenant, at such reasonable times as may be requested by
Landlord. Upon the request of Lender or Landlord (either telephonically or in
writing), Tenant shall provide the requesting party with copies of any
information to which such party would be entitled in the course of a personal
visit.
(b) Tenant shall deliver to Landlord and to Lender within
ninety (90) days of the close of each fiscal year, annual audited financial
statements of Tenant prepared by nationally recognized independent certified
public accountants. Tenant shall also furnish to Landlord within forty-five (45)
days after the end of each of the three remaining quarters unaudited financial
statements and all other quarterly reports of Tenant, certified by Tenant's
chief financial officer, and all filings, if any, of Form 10-K, Form 10-Q and
other required filings with the Securities and Exchange Commission pursuant to
the provisions of the Securities Exchange Act of 1934, as amended, or any other
Law. All financial statements of Tenant shall be prepared in accordance with
GAAP consistently applied. All financial statements of Tenant shall be prepared
in accordance with GAAP consistently applied. All annual financial statements
shall be accompanied (i) by an opinion of said accountants stating that (A)
there are no qualifications as to the scope of the audit and (B) the audit was
performed in accordance with GAAP and (ii) by the affidavit of the president or
a vice president of Tenant, dated within five (5) days of the delivery of such
statement, stating that (C) the affiant knows of no Event of Default, or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (D) except as otherwise specified in such affidavit, that Tenant has
fulfilled all of its obligations under this Lease which are required to be
fulfilled on or prior to the date of such affidavit.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is
required pursuant to any provision of this Lease, such Fair Market Value shall
be determined in accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the date (the "Applicable
Initial Date") on which (A) Tenant provides Landlord with notice of its
intention to terminate this Lease and purchase the Affected Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c), (C) Landlord provides
Tenant with notice of Landlord's intention to require Tenant to make an offer to
purchase the Leased Premises pursuant to Paragraph 23(a)(iii) or (D) Landlord
receives Tenant's Option Notice. Upon reaching such agreement, the parties shall
execute an agreement setting forth the amount of such Fair Market Value.
<PAGE> 34
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable Initial Date, Tenant
shall within fifty (50) days after the Applicable Initial Date select an
appraiser and notify Landlord in writing of the name, address and qualifications
of such appraiser. Within twenty (20) days following Landlord's receipt of
Tenant's notice of the appraiser selected by Tenant, Landlord shall select an
appraiser and notify Tenant of the name, address and qualifications of such
appraiser. Such two appraisers shall endeavor to agree upon Fair Market Value
based on a written appraisal made by each of them as of the Relevant Date (and
given to Landlord by Tenant). If such two appraisers shall agree upon a Fair
Market Value, the amount of such Fair Market Value as so agreed shall be binding
and conclusive upon Landlord and Tenant.
(iii) If such two appraisers shall be unable to agree
upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The selection of the
third appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree
upon the designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value
within twenty (20) days after his selection, then such third appraiser or a
substituted third appraiser, as applicable, shall, at the request of either
party hereto (with respect to the other party), be appointed by the President or
Chairman of the American Arbitration Association in New York, New York. The
determination of Fair Market Value made by the third appraiser appointed
pursuant hereto shall be made within twenty (20) days after such appointment.
(v) If a third appraiser is selected, Fair Market
Value shall be the average of the determination of Fair Market Value made by the
third appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Value is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have
no right, power or authority to alter or modify the provisions of this Lease,
(C) utilize the definition of Fair Market Value hereinabove set forth above, and
(D) be registered in the State if the State provides for or requires such
registration.
(vii) The Cost of the procedure described in this
Paragraph 29(a) above shall be borne entirely by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended
with respect to the Leased Premises or the Affected Premises, as applicable, to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made.
(c) In determining Fair Market Value as defined in clause
(b) of the definition of Fair Market Value, the appraisers shall add (a) the
present value of the Rent for the remaining Term, assuming the Term has been
extended for all extension periods provided herein (with assumed increases in
the CPI to be determined by the appraisers) using a discount rate (which may be
determined by an investment banker retained by each appraiser) based on the
creditworthiness of Tenant and (b) the present value of the Leased Premises as
of the end of such
<PAGE> 35
Term (having assumed the Term has been extended for all extension periods
provided herein). The appraisers shall further assume that no default then
exists under the Lease, that Tenant has complied (and will comply) with all
provisions of the Lease, and that Tenant has not violated (and will not violate)
any of the Covenants.
30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord, or any general partner of Landlord, any of its general partners or
shareholders (or any legal representative, heir, estate, successor or assign of
any thereof), (c) any predecessor or successor partnership or corporation (or
other entity) of Landlord, or any of its general partners, either directly or
through Landlord or its general partners or any predecessor or successor
partnership or corporation or their shareholders, officers, directors, employees
or agents (or other entity), or (d) any other Person (including Carey Property
Advisors, Carey Fiduciary Advisors, Inc., W.P. Carey & Co., Inc., W.P. Carey
Incorporated and any Person affiliated with any of the foregoing, or any
director, officer, employee or agent of any thereof).
31. Financing.
(a) Tenant agrees to pay, within three (3) business days
of written demand thereof, any cost, charge or expense (other than the principal
of the Note and interest thereon at the contract rate of interest specified
therein) imposed upon Landlord by Lender pursuant to the Note, the Mortgage or
the Assignment which is not caused solely by the gross negligence or willful
misconduct of Landlord and which is not otherwise reimbursed by Tenant to
Landlord pursuant to any other provision of this Lease.
(b) If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this Lease or
materially increase Tenant's obligations under this Lease. Such subordination,
nondisturbance and attornment agreement may require Tenant to confirm that (a)
Lender and its assigns will not be liable for any misrepresentation, act or
omission of Landlord and (b) Lender and its assigns will not be subject to any
counterclaim, demand or offsets which Tenant may have against Landlord.
32. Subordination, Non-Disturbance and Attornment. This Lease and
Tenant's interest hereunder shall be subordinate to any Mortgage or other
security instrument hereafter placed upon the Leased Premises by Landlord, and
to any and all advances made or to be made thereunder, to the interest thereon,
and all renewals, replacements and extensions thereof, provided that any such
Mortgage or other security instrument (or a separate instrument in recordable
form duly executed by the holder of any such Mortgage or other security
instrument and delivered to Tenant) shall provide for the recognition of this
Lease and all Tenant's rights hereunder unless and until an Event of Default
exists or Landlord shall have the right to terminate this Lease pursuant to any
applicable provision hereof.
<PAGE> 36
33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge
that each shall treat this transaction as a true lease for state law purposes
and shall report this transaction as a Lease for Federal income tax purposes.
For Federal income tax purposes each shall report this Lease as a true lease
with Landlord as the owner of the Leased Premises and Equipment and Tenant as
the lessee of such Leased Premises and Equipment including: (1) treating
Landlord as the owner of the property eligible to claim depreciation deductions
under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
34. Option to Purchase. Landlord does hereby give and grant to
Tenant the following options upon written notice to Landlord (any such notice,
an "Option Notice") to purchase the Leased Premises on the terms and conditions
set forth in this Paragraph 34:
(a) Tenant shall have an option (the "First Option") to
purchase the Leased Premises (i) for a purchase price equal to the Offer Amount
and (ii) on any date (the "First Option Purchase Date") during the later to
occur of (A) the thirty (30) day period immediately following the expiration of
the eighth (8th) Lease Year or (B) if Fair Market Value is not determined by the
expiration of such thirty (30) day period, the thirty (30) days after the Fair
Market Value Date. If Tenant intends to exercise the First Option, Tenant shall
an Option Notice to Landlord not earlier than twelve (12) months nor later than
six (6) months prior to the end of the eighth (8th) Lease Year. Promptly upon
receipt of the Option Notice by Landlord, the parties shall commence to
determine Fair Market Value.
(b) If Tenant shall not have purchased the Leased
Premises in accordance with the provisions of Paragraph 34(a) above or
otherwise, Tenant shall have an option to purchase (the "Second Option") to
purchase the Leased Premises (i) for a purchase price equal to the Offer Amount
and (ii) on any date (the "Second Option Purchase Date") during the later to
occur of (A) the thirty (30) day period immediately following the expiration of
the fifteenth (15th) Lease Year, or (B) if Fair Market Value is not determined
by the expiration of such thirty (30) day period, the first business day
occurring thirty (30) days after the Fair Market Value Date. If Tenant intends
to exercise the Second Option, Tenant shall give an Option Notice to Landlord
not earlier than twelve (12) months nor later than six (6) months prior to the
expiration of the fifteenth (15th) Lease Year. Promptly upon receipt of the
Option Notice by Landlord, the parties shall commence to determine Fair Market
Value.
(c) If Tenant shall not have purchased the Leased
Premises in accordance with the provisions of Paragraph 34(a) or 34(b) above or
otherwise, Tenant shall have an option to purchase (the "Third Option") to
purchase the Leased Premises (i) for a purchase price equal to the Offer Amount
and (ii) on any date (the "Third Option Purchase Date") occurring during the
later to occur of (A) the thirty (30) day period immediately following the
expiration of the twentieth (20th) Lease Year or (B) if Fair Market Value is not
determined by the expiration of such thirty (30) day period, the first business
day occurring thirty (30) days after the Fair Market Value Date. If Tenant
intends to exercise the Third Option, Tenant shall give written notice to
Landlord not earlier than twelve (12) months nor later than six (6) months prior
to the expiration of the twentieth (20th) Lease Year. Promptly upon receipt of
such notice by Landlord, the parties shall commence to determine Fair Market
Value.
(d) If Tenant shall exercise any of the foregoing options
to purchase the Leased Premises, on the later to occur of (i) the First Option
Purchase Date, the Second Option Purchase Date or the Third Option Purchase
Date, as applicable or (ii) the date when Tenant has paid the Offer Amount
(including assumption of the Assumable Loan with respect to the First Option)
and has satisfied all other Monetary Obligations, Landlord shall convey the
Leased Premises to Tenant in accordance with Paragraph 20 hereof and Tenant
shall, if requested
<PAGE> 37
by Landlord and if reasonably feasible, cooperate with Landlord with respect to
documentation required in order to effect a "like-kind" exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended; provided, that if
an Event of Default has occurred and is continuing on the First Option Purchase
Date, Second Option Purchase Date or Third Option Purchase Date, as applicable,
Landlord, at its sole option, may terminate Tenant's option to purchase
hereunder.
IF THIS LEASE SHALL TERMINATE FOR ANY REASON PRIOR TO THE DATE
ORIGINALLY FIXED HEREIN FOR THE EXPIRATION OF THE TERM, THE FIRST OPTION, THE
SECOND OPTION AND THE THIRD OPTION AND ANY EXERCISE THEREOF BY TENANT SHALL
CEASE AND TERMINATE AND SHALL BE NULL AND VOID. TIME IS OF THE ESSENCE WITH
RESPECT TO TENANT'S OBLIGATIONS UNDER THIS PARAGRAPH 34.
35. Miscellaneous.
(a) The paragraph headings in this Lease are used only
for convenience in finding the subject matters and are not part of this Lease or
to be used in determining the intent of the parties or otherwise interpreting
this Lease.
(b) As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to perform under
this Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall have
the right, at its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason or no reason. Time is of the
essence with respect to the performance by Tenant of its obligations under this
Lease.
(d) Landlord shall in no event be construed for any
purpose to be a partner, joint venturer or associate of Tenant or of any
subtenant, operator, concessionaire or licensee of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by
Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein. Landlord and
Tenant are business entities having substantial experience with the subject
matter of this Lease and have each fully participated in the negotiation and
drafting of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed against
the drafter.
<PAGE> 38
(f) This Lease may be modified, amended, discharged or
waived only by an agreement in writing signed by the party against whom
enforcement of any such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land
and bind Tenant, its successors and assigns and all present and subsequent
encumbrancers and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.
(h) Notwithstanding any provision in this Lease to the
contrary, all Surviving Obligations of Tenant shall survive the expiration or
termination of this Lease with respect to any Related Premises.
(i) If any one or more of the provisions contained in
this Lease shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(j) All exhibits attached hereto are incorporated herein
as if fully set forth.
(k) This Lease shall be governed by and construed and
enforced in accordance with the Laws of the State.
<PAGE> 39
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
CASH (MA) QRS 12-41, INC.,
a Massachusetts corporation
By:_____________________________________
Edward V. LaPuma
Vice President
TENANT:
THE SANDWICH CO-OPERATIVE BANK,
a Massachusetts co-operative bank
By:_____________________________________
Frederic D. Legate
President
[Corporate Seal]
<PAGE> 40
EXHIBIT A
PREMISES
<PAGE> 41
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation,
as buildings, of the buildings which constitute part of the Leased Premises.
<PAGE> 42
EXHIBIT C
PERMITTED ENCUMBRANCES
Leased Premises
- Real Estate Taxes and Assessments
- Mechanics' or materialmen's liens
- Matters disclosed on current lien certificates
- Rights of parties in possession
Bourne Premises
- Order of Taking and Award for Damages recorded in Book 743, Page
538, affected by Amended Order of Taking and Award of Damages
recorded in Book 747, Page 476
Sandwich Premises
- Taking of the County Commissioners dated November 21, 1947 and
recorded in Book 695, Page 405
- Notices of Variances dated February 22, 1973 and recorded in Book
1813, Page 257 and in Book 1872, Page 90
<PAGE> 43
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in
Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Term shall be
$182,490 per annum, payable monthly, in advance on each Basic Rent Payment Date,
in equal installments of $15,207.50 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject
to adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the one (1) year period immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be
adjusted to reflect changes in the CPI until the first (1st) anniversary of the
Basic Rent Payment Date on which the first full monthly installment of Basic
Rent shall be due and payable (the "First Full Basic Rent Payment Date"). As of
the first (1st) anniversary of the First Full Basic Rent Payment Date and
thereafter on each annuity of the First Full Basic Rent Payment Date occurring
during the Term, including any extensions thereof, Basic Rent shall be adjusted
to reflect increases in the CPI during the most recent one (1) year period
immediately preceding each of the foregoing dates (each such date being
hereinafter referred to as the "Basic Rent Adjustment Date").
4. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the
average CPI determined in clause (i) below exceeds the Beginning CPI (as defined
in this Paragraph 4(a)), the Basic Rent in effect immediately prior to the
applicable Basic Rent Adjustment Date shall be multiplied by a fraction, the
numerator of which shall be the difference between (i) the average CPI for the
three (3) most recent calendar months (the "Prior Months") ending prior to such
Basic Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. As used herein, "Beginning
CPI" shall mean the average CPI for the three (3) calendar months corresponding
to the Prior Months, but occurring one (1) year earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing one (1) year period.
(b) Effective as of a given Basic Rent Adjustment Date,
Basic Rent payable under this Lease until the next succeeding Basic Rent
Adjustment Date shall be the Basic Rent in effect after the adjustment provided
for as of such Basic Rent Adjustment Date.
<PAGE> 44
(c) Notice of the new annual Basic Rent shall be
delivered to Tenant on or before the tenth (10th) day preceding each Basic Rent
Adjustment Date, but any failure to do so by Landlord shall not be or be deemed
to be a waiver by Landlord of Landlord's rights to collect such sums. Tenant
shall pay to Landlord, within ten (10) days after a notice of the new annual
Basic Rent is delivered to Tenant, all amounts due from Tenant, but unpaid,
because the stated amount as set forth above was not delivered to Tenant at
least ten (10) days preceding the Basic Rent Adjustment Date in question.
<PAGE> 45
EXHIBIT E
ACQUISITION COST
Bourne Premises $ 314,510.00
Sandwich Premises $1,127,890.00
Wareham Premises $ 377,600.00
-------------
$1,820,000.00
<PAGE> 46
EXHIBIT F
PERCENTAGE ALLOCATION OF BASIC RENT
Bourne Premises 17.28%
Sandwich Premises 61.97%
Wareham Premises 20.75%
------
100%
If any of the Related Premises ceases to be subject to this Lease, the
percentage shown on this Exhibit F for each of the Related Premises which
remains subject to this Lease shall be adjusted proportionately so that the
total of such percentages shall be 100%.
<PAGE> 1
EXHIBIT 10.4
LEASE
THIS LEASE is made as of June 2, 1997, by and between MORTENSON
PROPERTIES, INC., a Minnesota corporation ("Landlord") and BROWN INSTITUTE, LTD,
a Delaware corporation ("Tenant"). The full and complete payment and performance
of Tenant's obligations under this Lease is secured by the Guaranty from CAREER
EDUCATION CORPORATION ("Guarantor") pursuant to Section 32 of this Lease.
1. DEMISE OF PREMISES. Landlord, in consideration of the rents,
covenants and agreements to be paid and performed by Tenant, leases to Tenant
and Tenant leases from Landlord that certain real estate located at 1440
Northland Drive, Mendota Heights, Dakota County, Minnesota, legally described on
Exhibit A attached hereto (the "Land"), the building (which for purposes of this
Lease is deemed to contain 118,000 square feet of gross building area) and all
improvements located on the Land (the "Building"), and the fixtures and
equipment located in the Building as described on Exhibit B (the "Equipment").
The Building and Equipment are collectively referred to in this Lease as the
"Improvements". The Land, Building and Equipment are collectively referred to in
this Lease as the "Leased Premises".
1.2 ADDITIONAL IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD.
1.2.1 CONSTRUCTION OF ADDITIONAL IMPROVEMENTS. Landlord shall,
at Landlord's cost and expense, construct the additional improvements
(the "Additional Improvements") to the Leased Premises pursuant to the
final plans and specifications (the "Plans") prepared by Architectural
Alliance ( the "Architect"), which Plans are summarized (the "Summary")
on Exhibit C attached hereto and incorporated herein by reference.
Landlord shall, within three (3) weeks from the date hereof, cause the
Plans for the Additional Improvements to be completed, conforming in
all material respects to the Summary. Thereupon, Exhibit C shall be
amended to replace the Summary with the Plans. The Additional
Improvements, when constructed, will comply all Laws, as such term as
defined below, applicable to the Leased Premises, including the ADA, as
defined below.
1.2.2 COMPLETION OF CONSTRUCTION OF ADDITIONAL IMPROVEMENTS.
Landlord shall use reasonable efforts to achieve substantial completion
of the Additional Improvements on or before October 15, 1997, subject
to force majeure delays and delays caused by the actions of Tenant (the
"Projected Completion Date"). For purposes of this Lease, the date the
Additional Improvements are "substantially complete" shall mean the
date when the Architect certifies that the Additional Improvements are
substantially complete and are ready for occupancy and that a final
certificate of occupancy with respect to the Additional Improvements
has issued for the Leased Premises, but subject to punchlist items to
be completed subsequent to the Tenant's occupancy. The date on which
Landlord delivers to Tenant the certificate of the Architect certifying
the Additional Improvements are substantially complete, together with
the certificate of occupancy for
<PAGE> 2
the Leased Premises, constitutes the "Delivery Date" hereunder and such
notice is defined herein as the "Completion Notice".
1.2.3 TENANT'S TERMINATION RIGHT. If Landlord does not deliver
the Completion Notice to Tenant on or before April 15, 1998, the Tenant
may, by notice in writing delivered to Landlord on or before May 1,
1998, terminate this Lease ("Tenant's Termination Right").
1.2.4 LIQUIDATED DAMAGES FOR DELAYS IN COMPLETING CONSTRUCTION
OF ADDITIONAL IMPROVEMENTS. Tenant currently leases from Landlord
certain premises (the "Minneapolis Premises") located at 1225 East Lake
Street, Minneapolis, Minnesota pursuant to the Lease dated September
13, 1985, as amended (the "Minneapolis Lease"). If Landlord does not
deliver the Completion Notice to Tenant by the Projected Completion
Date, then the Base Rent for the Minneapolis Premises shall be reduced
to $10.75 per square foot of the area of the Minneapolis Premises for
the period from the Projected Completion Date until the earlier of (i)
the actual date the Landlord delivers the Completion Notice to Tenant
or (ii) the date Tenant terminates this Lease pursuant to the Tenant's
Termination Right. The foregoing reduction in the Base Rent for the
Minneapolis Premises is referred to as the "Completion Delay
Adjustment". Notwithstanding any other term or condition of this Lease
to the contrary, if Landlord does not complete the Additional
Improvements by the Projected Completion Date, then Tenant shall
nonetheless remain bound hereunder and Landlord shall continue to use
reasonable efforts to complete the Additional Improvements as soon as
reasonably possible with the Commencement Date occurring pursuant to
Section 4.1 hereunder. The parties hereto agree that it is difficult to
determine actual damages to Tenant resulting from a delay of the
Commencement Date beyond the Projected Completion Date and that the
Completion Delay Adjustment constitutes fair and liquidated damages to
compensate Tenant for such delay. Except for Tenant's Termination Right
and the Completion Delay Adjustment, Tenant shall not be entitled to
any other damages, relief, reimbursement or compensation from Landlord
resulting from the failure of the Landlord to complete the Additional
Improvements as of the Projected Completion Date.
1.2.5 CONSTRUCTION COSTS AND MODIFICATIONS TO PLANS. The costs
of constructing the Additional Improvements pursuant to the Plans is
included in the determination of the Based Rent and, except as
specifically provided herein, Tenant will not incur additional costs or
fees for the construction of the Additional Improvements. Tenant may,
at its option, direct Landlord and Architect to make modifications to
the Plans, which modifications are referred to as "Construction
Changes". Each Construction Change shall be documented by a change
order (a "Change Order") executed by Landlord and Tenant at the time
the Construction Change is ordered. Each Change Order, in addition to
specifying the Construction Change, shall specify any extension to the
Projected Completion Date necessitated by the Construction Change and
the Projected Construction Date shall be extended. Additionally, each
Change Order shall specify the cost of
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<PAGE> 3
completing each Construction Change. If the Construction Change results
in an increase in the cost of construction, Tenant shall pay such
increased amount to Landlord in cash or collected funds simultaneous
with and as a condition of the execution to Change Order, or, at
Tenant's option, such additional cost shall be deducted from the
Allowance provided in Section 32.1 of this Lease. If the Construction
Change results in a decrease to the construction costs, then the Base
Rent shall be adjusted accordingly and the parties shall execute an
appropriate amendment to this Lease.
1.2.6 REPRESENTATIONS AND WARRANTIES REGARDING CONSTRUCTION OF
ADDITIONAL IMPROVEMENTS. Landlord warrants that it will construct the
Additional Improvements in accordance with applicable Laws. Landlord
further warrants to Tenant for a period of one (1) year from the
Delivery Date (die "Warranty Period") that (i) the Additional
Improvements will be free from defects in materials and workmanship and
(ii) the mechanical systems of the Building will be free from defects
and in good working order. Additionally, on the Delivery Date Landlord
shall assign to Tenant all warranties which Landlord received from
suppliers regarding the Additional Improvements.
1.2.7 PUNCHLIST. Not later than seven (7) days after the
Delivery Date, Landlord, Tenant and the Architect shall inspect the
Leased Premises and, if necessary, create a punchlist (the "Punchlist")
of any portion of the work comprising Additional Improvements which is
incomplete or which needs correction. The Punchlist shall not affect
the Delivery Date and the Commencement Date of this Lease, provided
that the Architect has otherwise certified that the Additional
Improvements are substantially complete and that a certificate of
occupancy for the Premises has been obtained. Landlord shall, at its
expense, use its best efforts to complete the Punchlist work within
thirty (30) days after the Delivery Date, subject to the availability
of materials and other elements of force majeure and delays caused by
the Tenant. Landlord may enter the Leased Premises at any time for
purposes of completing the Punchlist work.
1.2.8 TENANT'S ACCESS TO LEASED PREMISES. Landlord shall use
reasonable efforts to allow Tenant access to the Leased Premises
fifteen (15) days prior to the Projected Completion Date (the "Tenant
Access Date") for the purpose of Tenant completing, at Tenant's cost
and expense, the installation of Tenant equipment and otherwise
preparing for occupancy (the "Tenant Work"). Notwithstanding the
foregoing Tenant shall ensure that the Tenant Work does not interfere
with or delay Landlord's completion of the Additional Improvements and
shall coordinate its activities with respect to the Tenant Work with
Landlord so as to prevent interfering with or delaying the completion
of the Additional Improvements. As of the date of this Lease, the
projected Tenant Access Date is October 1, 1997.
2. TITLE AND CONDITION. The Leased Premises are leased subject to (a)
the encumbrances (the "Encumbrances") described on Exhibit A hereto, (b) all
matters shown on the survey dated February 28, 1997, prepared by North American
Survey, (c) all zoning and building
3
<PAGE> 4
regulations, restrictions, rules and ordinances, (d) all federal, state, county,
municipal and other statutes, charters, laws, rules, orders, regulations and
ordinances now in effect or hereafter adopted by any governmental authority
having or acquiring jurisdiction (collectively, "Laws"), (e) any matters
affecting title (not created or allowed by Landlord) created or allowed by
Tenant or any party claiming under Tenant after the date of this Lease, and (f)
to the present state and condition of the Leased Premises and that Landlord is
not aware of any violations of any Laws covering the Leased Premises.
Notwithstanding the foregoing, Landlord makes no representation whether the
Leased Premises complies at this time with the Americans With Disabilities Act
(the "ADA") other than Landlord has received no written notice from any
governmental authority or other party that the Leased Premises violates the ADA.
3. USE OF LEASED PREMISES.
3.1. GENERALLY. Tenant shall use the Leased Premises solely as an
education and classroom facility and uses ancillary thereto. Tenant shall not
use or permit upon the Leased Premises anything that might be dangerous to life
or limb. Tenant shall not, in any manner, deface or injure any part of the
Leased Premises or commit waste thereon. Tenant shall not do anything or permit
anything to be done upon the Leased Premises which in any way would tend to
create a public or private nuisance or would tend to disturb occupants of
neighboring property or would tend to injure the reputation of the Leased
Premises. Tenant shall not use or occupy the Leased Premises or permit the
Leased Premises to be used or occupied in a manner which would violate any
certificate of occupancy affecting the Leased Premises, or would cause
structural injury to the Improvements, or would cause the value or usefulness of
any part of the Leased Premises to diminish in any material respect.
3.2. COMPLIANCE WITH LAW. Subject to the provisions of Section 1.2.1
hereof, Tenant shall, at its sole cost and expense, comply with (a) all Laws
affecting the Leased Premises and its occupancy, operation or use of the Leased
Premises, including those pertaining to the ADA, (b) all rules, orders and
regulations of the state fire marshal or fire insurance rating bureau or other
similar organization for the prevention of fire or the correction of hazardous
conditions, and (c) the requirements of all policies of public liability, fire
and other insurance at any time in force with respect to the Leased Premises.
Landlord represents that it has received no notice of any violations of Laws
affecting the Leased Premises.
3.3. TENANT'S BUSINESS. Tenant shall observe and comply with all
conditions and requirements necessary to conduct Tenant's business operations
upon the Leased Premises, including any and all rights, licenses, permits
(including but not limited to zoning variances, special exemptions and
nonconforming uses), privileges, franchises and concessions which may be
applicable to the Leased Premises. Tenant shall, at its sole cost and expense,
procure any and all necessary permits, certificates, licenses or other
authorizations required for its use of the Leased Premises, except those
required in connection with the construction of the Additional Improvements. If
the owner of the Leased Premises is required by law to join in any such
application, Landlord shall allow any applications for such permits,
certificates or other
4
<PAGE> 5
authorizations to be made in Landlord's name and shall execute any documents
required in connection with such applications promptly on request and shall
otherwise cooperate fully with Tenant in connection with such applications,
provided Tenant is otherwise in compliance with the terms and conditions hereof
and provided Landlord is not required to incur cost or expense in doing so,
other than the fees of attorneys or other professionals incurred in reviewing
same.
4. TERM.
4.1. INITIAL TERM. Subject to the terms, covenants, agreements and
conditions contained in this Lease, Tenant shall have and hold the Leased
Premises for an initial term (the "Initial Term") of eleven (11) years and five
(5) months commencing on the Delivery Date (the "Commencement Date") and
terminating at 11:59 p.m. on a date which is eleven (11) years and five (5)
months from the Commencement Date (the "Termination Date"). As soon as
reasonably possible after the Commencement Date, Landlord and Tenant shall
execute an amendment to this Lease specifying the actual Commencement Date and
the Termination Date of this Lease.
4.2 ADDITIONAL TERM. Tenant may, at its option, elect to extend this
Lease for two (2) additional terms (the "Additional Terms") of five (5) years
each. In order to exercise this option, Tenant shall deliver notice in writing
of its election to Landlord at least one (1) year prior to the expiration of the
Initial Term or the then current Additional Term, as the case may be (the
"Renewal Notice"). Such exercise shall not be valid or effective if, as of the
date of such election, an Event of Default exists under the terms of this Lease.
Each Additional Term shall be governed by the terms and conditions of this Lease
and Base Rent for the Additional Terms shall be as set forth in Section 5.3
hereof. Any reference to "Term" herein shall mean the Initial Term and the
Additional Terms (if Tenants elects any Additional Terms).
4.3. NON-TERMINABILITY. Except as otherwise expressly provided in this
Lease, Tenant shall not have any right to terminate this Lease or be entitled to
the abatement or any reduction of rent. Any Law to the contrary notwithstanding,
Base Rent and Additional Rent shall continue to be payable in all events and
Tenant's obligations pursuant to this Lease shall continue unaffected, unless
the requirement to pay or perform the same shall be terminated or abated
pursuant to an express provision of this Lease.
5. RENT.
5.1. BASE RENT. Tenant covenants to pay to Landlord commencing on the
Base Rent Commencement Date defined in Section 5.2 below, at such place or to
such person as Landlord from time to time may designate in writing, as Annual
Base Rent for the Leased Premises during the Term, payable in equal monthly
installments ("Monthly Base Rent"), according to the following schedule:
5
<PAGE> 6
<TABLE>
<CAPTION>
Lease Year Rent Per Square Foot Annual Base Rent Monthly Base Rent
---------- -------------------- ---------------- -----------------
<S> <C> <C> <C>
1,2 and 3 $ 9.45 $1,115,100 $ 92,925.00
4, 5 and 6 $10.33 $1,218,940 101,578.33
7, 8 and 9 $11.28 $1,331,040 110,920.00
10 and 11 $12.33 $1,454,845 121,237.08
</TABLE>
Monthly Base Rent shall be paid in advance on the first (1st) day of each month.
Base Rent for any period which is less than one month shall be apportioned based
on the number of days in that month. Lease Year 1 commences on the Base Rent
Commencement Date defined below.
5.2 BASE RENT COMMENCEMENT DATE. In further consideration of the
covenants and agreements of Tenant hereunder, the commencement date for the
payment of the Base Rent (the "Base Rent Commencement Date") shall be a date
which is six (6) months from the Commencement Date.
5.3 BASE RENT FOR ADDITIONAL TERM. Annual Base Rent for each Additional
Term shall be an amount which is equivalent to existing market rates for
comparable premises, but which in no event shall be less than the Annual Base
Rent in effect in the last year of Term of the Lease then expiring. Within
thirty (30) days after receipt of the Renewal Notice, Landlord shall deliver to
Tenant written notice of the Annual Base Rent for the Additional Term elected by
Tenant. In the Renewal Notice (the "Rent Notice"). Tenant shall have thirty (30)
days after receipt of the Rent Notice to rescind the Renewal Notice by written
notice delivered to Landlord. If Tenant does not rescind the Renewal Notice
within said thirty (30) day period, the Renewal Notice shall be deemed to be
final and the Annual Base Rent set forth in the Rent Notice shall govern the
Additional Term so elected. Annual Base Rent during each Additional Term shall
be payable in equal monthly payments in advance, payable on the first day of
each month.
5.4 NET LEASE. Except as specifically provided for in Section 8.4
hereof and subject to Sections 1.2.6 and 16.7 of this Lease, this Lease is a Net
Lease and Landlord shall be free from all costs, expenses and obligations
relating to the Leased Premises, including taxes, water charges, sewer charges,
assessments and all other governmental impositions and charges. Landlord and
Tenant specifically intend this Lease shall yield net to Landlord not less than
the Base Rent reserved under this Lease throughout the Term. Annual Base Rent,
Additional Rent and all other sums payable pursuant to this Lease to or on
behalf of Landlord shall be paid without notice and demand and without set off,
counterclaim, abatement, suspension, deduction or defense, except as
specifically set forth herein.
5.5. ADDITIONAL RENT. Commencing on the Commencement Date, Tenant
covenants to pay and discharge, as Additional Rent, punctually as and when the
same shall become due and
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payable, each and every cost, expense and obligation of every kind and nature,
foreseen or unforeseen, for the payment of which Tenant is or shall become
liable by reason of its estate or interest in the Leased Premises, by reason of
any right or interest of Tenant in or under this Lease, or by reason of or in
any manner connected with or arising out of the possession, operation,
maintenance, alteration, repair, rebuilding, use or occupancy of the Leased
Premises, unless such obligations have been specifically assigned to or assumed
by Landlord in this Lease. Additional Rent shall specifically include, but not
be limited to, the items described in Sections 5.5.1, 5.5.2, 5.5.3 and 5.6
hereof.
5.5.1. TAXES. Tenant agrees to pay and discharge, at least ten
(10) days before any penalty or interest is assessed, all real estate
taxes, personal property taxes, business and occupation taxes,
occupational license taxes, water charges, sewer charges, installments
of special assessments and all other governmental taxes, impositions
and charges of every kind and nature, extraordinary or ordinary,
general or special, unforeseen or foreseen (a) which are allocable to
the Term of this Lease; and (b) which at any time during the Term
shall be or become due and payable by Landlord or Tenant; and (c) which
shall be levied, assessed or imposed upon or with respect to (i) all or
any part of the Leased Premises, (ii) any interest of Landlord or
Tenant in the Leased Premises or under this Lease, (iii) the
possession, operation, maintenance, alteration, repair, rebuilding, use
or occupancy of all or any part of the Leased Premises, or (iv) this
transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Leased Premises (the
"Taxes"). All of the foregoing shall be payable by Tenant whether under
or by virtue of any Law or other requirement of any governmental
authority.
5.5.1.1. TENANT'S PAYMENT OF TAXES. Tenant's obligations under
this Lease with respect to real estate taxes and installments of
special assessments shall commence with those due and payable in
calendar year 1997 provided, however, that Tenant's share of said taxes
and assessments payable in the first and final calendar years of this
Lease shall be prorated to the Commencement Date and the Termination
Date of this Lease.
5.5.1.2. LANDLORD'S TAXES. It is expressly understood and
agreed that Tenant shall not be required to pay, or reimburse Landlord
for (a) any local, state or federal capital levy, franchise tax,
revenue tax, income tax or profits tax of Landlord, or (b) any tax
charged or levied upon or with respect to the Base Rent (unless such
levy or tax is in lieu of or a substitute for any other tax upon or
with respect to the leased Premises which, if such other tax were in
effect, would be payable by Tenant under the provisions of this Lease),
or (c) any estate, inheritance, devolution, succession or transfer
(other than taxes in connection with a conveyance by Landlord to
Tenant) of Landlord's interest in the Leased Premises, or any tax or
levy used to repay obligating incurred by Landlord related to the
construction of Improvements on the Leased Premises.
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<PAGE> 8
5.5.2. UTILITIES. Tenant will pay or cause to be paid when due
all charges for gas, water, sewer, electricity, light, heat, power,
telephone, and other utilities and services used, rendered or supplied
to, upon or in connection with the Leased Premises, and will pay and
protect, defend and indemnify Landlord from and against, any liability
or damages on such account. Tenant agrees that Landlord is not, nor
shall it be, required to furnish to Tenant or the Leased Premises any
gas, water, sewer, electricity, light, heat, power or any other
facilities, equipment, labor, materials or services of any kind and
Landlord shall not be liable in any respect for the suspension or delay
of utility services to the Leased Premises, unless such suspension or
delay is caused solely by Landlord's negligence or willful misconduct.
In such case, where the suspension or delay of utility services is
caused by Landlord's negligence or willful misconduct, Tenant's sole
remedy shall be an appropriate abatement of Base Rent until services
are restored.
5.5.3. INSURANCE. Tenant shall pay all of the costs and
premiums for the insurance which Tenant is required to obtain and
maintain under the terms of this Lease.
5.5.4. PROOF OF PAYMENT. Tenant shall deliver to Landlord
proof of payment of any tax, assessment, and other governmental or
similar charge which is payable by Tenant as provided in this Section
5, which proof shall be provided to Landlord within twenty (20) days
after payment is made by Tenant.
5.5.5. LATE PAYMENT; NON-PAYMENT. Tenant shall also pay or
discharge every fine, penalty, interest and cost which may be added for
non-payment or late payment of such Additional Rent. If Tenant fails to
pay or discharge any such Additional Rent, Landlord shall have all
rights, powers and remedies provided in this Lease, in the case of
non-payment of the Base Rent. Tenant will also pay to Landlord, on
demand, as Additional Rent, interest at the lesser of the rate of
twelve percent (12%) per annum or the highest rate permitted by law
(the "Default Rate") on all overdue installments of Base Rent and
amounts of Additional Rent from the dates the same are due until paid
in full.
5.5.6. PAYMENT BY LANDLORD. If Tenant defaults in the payment
of any of the charges described in this Section 5 when such charges are
due and does not cure such default within five (5) days after receipt
of written notice from Landlord. Landlord may, at its option, pay the
same and the amount so paid, with interest at the Default Rate from the
date of payment, shall be deemed Additional Rent immediately payable by
Tenant to Landlord after written demand from Landlord. Payment by
Landlord of any such charges shall not be deemed to waive or release
Tenant's default or the right of Landlord, at Landlord's election, to
recover possession of the Leased Premises by reason of such default as
provided in this Lease.
5.6 ESCROW FOR TAXES. Notwithstanding the provisions of any
other section of this Lease to the contrary, (i) if required by the
holder of any first mortgage covering the Leased Premises or (ii) if an
Event of Default occurs, then upon receipt of written notice from
Landlord
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<PAGE> 9
(which notice need be delivered only once), Tenant shall pay to Landlord,
together with Monthly Base Rent, an amount equal to one-twelfth (1/12th) of the
annual Taxes (the "Tax Escrow"). Landlord shall use the Tax Escrow to pay the
installments of Taxes when due. Landlord shall determine the amounts of the
monthly escrow payments based upon the most recent Tax statements. In addition
to the foregoing payments, on the first day of the month in which any
installment of Taxes is due, Tenant shall pay such additional amounts to
Landlord which, when added to the existing Tax Escrow (the "Make-Up Payment"),
is equal to the Tax obligation due that month. Notwithstanding the foregoing,
nothing contained herein makes Landlord liable for the payment of any Taxes in
excess of the amount of the then current balance of the Tax Escrow. If Tenant
pays the stipulated monthly Tax Escrow amounts when due, Tenant shall not be
liable for the penalty provided for in Section 5.5.5 hereof if said amounts are
less than the full amount of the Tax installment due, but the foregoing does not
limit Tenant's obligation to pay the Make-Up Payment when due.
6. LIENS. Subject to Section 13 hereof, Tenant will not create or
permit to be created or to remain, and will discharge (or immediately cause the
release of) any lien, encumbrance or charge (other than a lien, encumbrance or
charge created by Landlord) upon all or any part of the Leased Premises or upon
Tenant's leasehold interest in the Leased Premises. Nothing contained in this
Lease shall be construed as constituting the consent or request of Landlord,
expressed or implied, by inference or otherwise, to any contractor,
subcontractor, laborer or materialman for performance of any labor or services
or the furnishing of any materials for any improvement, alteration, addition or
repair of or to all or any part of the Leased Premises.
7. INDEMNIFICATION. To the fullest extent permitted by Law, Tenant
agrees to pay and protect, indemnify and hold Landlord harmless from and
against, any and all liabilities, damages, costs, expenses (including any and
all attorneys' fees and expenses of Tenant and any and all attorneys' fees and
expenses of Landlord), causes of action, suits, claims, demands or judgments of
any nature whatsoever arising from (a) any work or thing done during the Term
in, on or about the Leased Premises, by or on behalf of Tenant (b) injury to, or
the death of, persons or damage to property during the Term on the Leased
Premises or upon adjoining sidewalks, streets, alleys, or curbs, or in any
manner growing out of or connected with the use, non-use, conditions,
possession, operation, maintenance, management or occupation of the Leased
Premises or resulting from the condition of the Leased Premises or of adjoining
sidewalks, streets, alleys, or curbs, (c) any negligence on the part of Tenant
or any of its agents, contractors, servants, employees, licensees or invitees,
and (d) violation of any agreement or condition of this Lease or of Laws
affecting the Leased Premises, or the ownership, use or occupancy of the Leased
Premises (but excluding any negligence or willful misconduct by Landlord).
8. MAINTENANCE AND REPAIR.
8.1. ACCEPTANCE BY TENANT. Tenant's taking possession of the Leased
Premises constitutes acknowledgment that Tenant has received the Leased Premises
in good order and condition. Except as specifically provided in Section 1.2.6,
Landlord makes no warranty or
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representation regarding the physical condition of any part of the Leased
Premises or to the suitability or fitness of the Leased Premises or any part
thereof for any particular purpose.
8.2. TENANT'S MAINTENANCE OBLIGATIONS. During the Term hereof Tenant
shall, at its expense, take good care of the Leased Premises (including all of
Landlord's fixtures and appurtenances therein or thereon) and shall complete and
perform all maintenance and make all repairs and replacements to the Leased
Premises as soon as such repairs and replacements are necessary. Tenant's
obligations to maintain, repair and replace the Leased Premises shall exclude
only those items specifically set forth in Section 8.4 below, and shall
specifically include, without limitation, all (i) building systems located
within the Building and the Building's elevators and boilers (ii) broken or
damaged glass; (iii) damage by vandals (iv) the walls, ceilings, floors and
floor coverings (including carpets and tiles of the Building); (v) the exterior
improvements to the Land such as shrubbery, landscaping, fencing and exterior
lighting; (vi) snow plowing and ice removal and (vii) the common areas located
within the Building, including the common entrances, corridors, doors and
windows, stairways and lavatory facilities. All repairs made by the Tenant shall
be equal in quality and workmanship to the original work.
8.3. FAILURE TO MAINTAIN. If Tenant fails to comply with the provisions
of this Section 8, Landlord may give Tenant written notice of such failure to
comply, specifying the maintenance or repairs to be made by Tenant. If the
maintenance or repairs are not completed by Tenant within twenty (20) days after
said notice, Landlord may have the work done at Tenant's expense, and the cost
of the same shall become Additional Rent payable by Tenant to Landlord upon
written demand from Landlord. Notwithstanding the foregoing, if the maintenance
or repair is not susceptible of cure within twenty (20) days or if any cause
beyond Tenant's reasonable control (except for payments to be made by Tenant)
delays Tenant's completion of the maintenance or repair, said twenty (20) day
period shall be extended by the length of the delay so long as Tenant has
commenced the cure within said twenty (20) day period and diligently prosecutes
the same thereafter. If the required maintenance and repairs are of an emergency
nature or threaten the security or safety of the Building or persons, Landlord
may act on Tenant's behalf without notice to Tenant.
8.4. LANDLORD'S MAINTENANCE OBLIGATIONS. Landlord's sole repair and
maintenance obligations hereunder shall consist of maintaining and making all
needed repairs to the roof, exterior and bearing walls of the Building and
support beams, foundation columns and lateral support thereto and to repave (and
restripe) the parking lot when it has reached the end of its useful life, in
Landlord's reasonable determination. If repairs of these items are caused by
Tenant's negligence, Tenant's misuse of the Building or otherwise by Tenant's
failure to act, then Landlord shall make said repairs and charge Tenant all
direct costs associated with said repairs. Tenant shall pay said costs within
twenty (20) days after receipt of invoice. Tenant shall immediately notify
Landlord of any conditions or occurrences which relate to the Landlord's
maintenance obligations hereunder. Except as specifically provided herein in
this Section 8.4 and in Section 1.2 with respect to the Additional Improvements,
Landlord is not required to furnish any other services, utilities or work to the
Leased Premises during the Term hereof. Landlord
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shall, except in emergency situations, provide prior reasonable notice of its
entry onto the Leased Premises for purposes of completing Landlord's maintenance
obligations. The Landlord shall use reasonable efforts to complete its
maintenance obligations in a manner which does not unreasonably interfere with
Tenant or Tenant's business operations, but Landlord shall not be liable for any
damage caused to Tenant by virtue of Landlord performing its maintenance
obligations except to the extent that such damages arise out of Landlord's
negligence or willful misconduct.
9. ALTERATIONS AND ADDITIONS.
9.1 TENANT'S ALTERATIONS. Tenant may, at any time and from time to time
during the term of this lease and at its sole cost and expense, make additions
to or alterations, substitutions, removals or replacements of the Improvements
("Alterations") provided, however, that (a) the total market value of the Leased
Premises shall not be lessened by reason of any such Alterations, (b) any
Alterations shall be done in a good and workmanlike manner, (c) all such
Alterations shall be expeditiously completed and in compliance with all
applicable Laws, (d) the plans and specifications for all Alterations shall be
submitted to Landlord for Landlord's review and approval, which approval shall
not be unreasonably withheld or delayed and Landlord's review of the plans and
specifications shall be limited to determining whether (i) the Alterations
adversely affect the total market value of the Improvements and (ii) the plans
and specifications and the proposed Alterations comply with all applicable Laws,
(e) all Alterations shall be completed by contractors and subcontractors
reasonably acceptable to Landlord using as a basis of such review Landlord's
reasonable business concerns, (f) Tenant shall comply with all reasonable
insurance requirements of Landlord, together with any other reasonable
requirements of the holder of any mortgage covering the Leased Premises, and (g)
Tenant shall promptly pay all costs and expenses and discharge any and all liens
arising with respect to the construction of the Alterations. Title to all
Alterations made by Tenant, except trade fixtures, and other unattached personal
property shall become the property of Landlord at the termination of this Lease.
If the estimated cost of any proposed Alteration exceeds $25,000, upon the
written request of Landlord, Tenant shall deposit with Landlord payment and
performance or surety bonds or other security reasonably satisfactory to
Landlord to assure the completion of any such Alterations. Tenant shall procure
and pay for all required permits, certificates and licenses in connection with
Alterations.
9.2 LANDLORD'S ALTERATIONS. Landlord, except for purposes maintaining,
repairing and preserving the Leased Premises as required by Landlord herein,
shall not alter the Improvements. Notwithstanding the foregoing, however,
Landlord shall at all times have the right to further improve the Land, in its
reasonable discretion with Tenant's prior written approval, which approval shall
not be unreasonably withheld, delayed or denied including without limitation,
the right to erect onto the Land parking structure(s) or additional building(s)
provided that no such improvements to the Land shall unreasonably interfere with
access to and/or use of the Leased Premises.
10. INSURANCE.
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10.1. COVERAGE. Tenant will keep the Leased Premises insured
continuously during the term of this Lease by the kinds of insurance and in the
amounts set forth on Exhibit D. Notwithstanding the foregoing, Landlord may
elect, in lieu of Tenant, to obtain any of the required insurance coverages,
provided the cost of same is competitive with the coverages available to Tenant,
whereupon Tenant shall pay to Landlord the premium cost of such coverage.
10.2. EVIDENCE OF INSURANCE. Tenant shall deliver to Landlord promptly
after the execution and delivery of this Lease, original or duplicate policies,
or certificates or binders evidencing such insurance ("Insurance Evidence").
Tenant shall deliver to Landlord, at least thirty (30) days prior to the
expiration of any such insurance, additional Insurance Evidence regarding the
renewal of such insurance and the payment of all required premiums. On each
anniversary of the Commencement Date of this Lease, Tenant shall deliver
Insurance Evidence to Landlord, to the effect that there is then in force all
such insurance which is then required to be maintained by Tenant.
10.3. FAILURE TO INSURE. If Tenant fails to effect, maintain or renew
any kind of insurance required pursuant to this Section 10, or to deliver to
Landlord any Insurance Evidence, Landlord may, upon ten (10) days' written
notice to Tenant of its intention so to do, procure such insurance, and any sums
expended shall be deemed Additional Rent payable by Tenant on demand to
Landlord. Procurement by Landlord of any such insurance shall not be deemed to
waive or release the default of Tenant, or the right of Landlord, at Landlord's
option, to recover possession of the Leased Premises by reason of such default
as provided in this Lease. Tenant covenants and agrees to pay to Landlord any
and all damages which Landlord may sustain by reason of Tenant's failure to
obtain and maintain such insurance, which damages shall not be limited to the
amount of all required premiums.
10.4. SEPARATE INSURANCE. Tenant shall not take out separate insurance
covering the Leased Premises concurrent in form or contributing in the event of
loss with that required in this Section 10 unless Landlord is included as a
named insured, with loss payable as provided in this Section 10. Tenant shall
immediately notify Landlord whenever any such separate insurance is taken out
and shall promptly deliver the policy or policies or certificates evidencing the
same.
11. CONDEMNATION AND CASUALTY LOSS.
11.1 REPAIR. Except as provided elsewhere, if the Leased Premises, or
any portion thereof, are damaged or destroyed by fire or any other peril,
Landlord shall with due diligence commence and complete the reconstruction and
repair of the Leased Premises, so that upon completion, the same shall be, to
the extent reasonably possible, identical to their condition prior to such
damage or destruction; provided, however, (i) if such damage is caused by an
uninsured casualty (whether or not Tenant has maintained all insurance required
to be maintained by Tenant pursuant to this Lease) excluding casualties caused
by Landlord's negligence or willful misconduct; or (ii) in Landlord's
determination, the Leased Premises cannot be fully reconstructed and repaired
within three hundred (300) days; or (iii) the Leased Premises or if any portion
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thereof are damaged or destroyed within the final eighteen (18) months of the
term of the lease. Landlord or Tenant shall have the right, for a period of
thirty (30) days following receipt of notice by Tenant to Landlord of such
damage or destruction, to terminate this Lease by written notice to the other
delivered within said thirty (30) day period. If Tenant so terminates the Lease,
Tenant shall not be obligated to restore the Leased Premises but shall
nonetheless remain liable for all Base Rent and Additional Rent for the
remainder of the Lease Term which would have run but for the Tenant's
termination.
11.2 PARTIAL DESTRUCTION. In the event of a partial damage or
destruction by fire or other casualty, including all acts of vandalism to the
Leased Premises, (but excluding casualty caused by Landlord's negligence or
willful misconduct) for which Tenant reasonably estimates the cost of
reconstruction or repair to be less than $50,000, in any one instance, Tenant
shall with due diligence commence and complete the reconstruction and repair of
the Leased Premises, so that upon completion, the same shall be, to the extent
reasonably possible, identical to their condition prior to such damage or
destruction. Tenant shall give notice to Landlord, and Landlord shall make
available to Tenant any insurance proceeds received as a result of any claim
filed with respect to the event causing the partial damage or destruction.
11.3 PROCEEDINGS. Subject to Tenant's rights in Section 11.4 below,
Landlord shall have the responsibility for taking all actions and initiating all
proceedings necessary in order to obtain any condemnation or insurance award in
connection with any taking or casualty; provided, however, that all expenses
(including, without limitation, reasonable attorneys' fees) incurred by Landlord
in the course of obtaining such award shall be reimbursed to Landlord out of the
proceeds of such award.
11.4 CONDEMNATION. If all or any substantial part of the Leased
Premises shall be taken or appropriated by any public authority under the power
of eminent domain or conveyance in lieu thereof, either party hereto shall have
the right at its option to terminate this Lease, and Landlord shall be entitled
to any condemnation award. Tenant may seek a separate award applicable to
Tenant's business interruption and loss. If a part of the Leased Premises shall
be so taken or appropriated and neither party hereto shall elect to terminate
this Lease, the rental thereafter to be paid shall be adjusted on a pro rata
basis based on the amount of the area of the Leased Premises taken. Before
Tenant may terminate this Lease by reason of taking or appropriation as above
provided, such taking or appropriation shall be so substantial as to materially
prevent Tenant's use and occupancy thereof.
11.5 EFFECT OF TERMINATION. Except as provided in section 11.4 hereof,
Tenant shall not be entitled to any compensation or damages from Landlord for
loss of the use of the whole or any part of the Leased Premises, Tenant's
personal property or any inconvenience or annoyance occasioned by such
destruction, reconstruction or restoration or to any abatement in the rent and
other charges payable hereunder. In the event of any termination of this Lease
in accordance with this Section 11, the parties hereto shall have no further
obligation to one another arising from this Lease upon the surrender of the
possession of the Leased Premises to Landlord.
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except for items which have theretofore accrued and are then unpaid. Any items
prepaid by Tenant for a period beyond the date of termination shall be promptly
refunded to Tenant. Tenant, at its option, may obtain any policies of insurance
insuring itself against loss of use, business interruption, or any consequential
damages arising out of the damage or destruction to the Leased Premises
including Tenant's expenses associated with temporary move and relocation during
any periods of repair or reconstruction.
12. ASSIGNMENT AND SUBLETTING.
12.1 ASSIGNMENT BY TENANT. Except as allowed by Section 14.5 of this
Lease, Tenant shall not assign or in any manner transfer or encumber this Lease
or the Leased Premises or any interest in or of the same, nor sublet all or any
part of the Leased Premises, nor permit occupancy by anyone with, through or
under it, without the previous written consent of Landlord, which consent shall
not be unreasonably withheld by Landlord. Landlord's basis for withholding its
consent shall be limited to (i) the creditworthiness of the proposed assignee or
subtenant and in such respect the Landlord may require that the proposed
assignee or subtenant have a net worth in excess of 10 million dollars, has
conducted business operations for at least three (3) years and that the
financial statements, credit reports and other third party references which
Landlord reasonably requests to be provided to Landlord (and which reports the
Tenant shall provide) are satisfactory to Landlord in its reasonable and good
faith determination and (ii) the intended use to which the proposed assignee or
subtenant intends to put the Leased Premises and in such respect Landlord may
require that the Leased Premises be used only primarily for school, office, or
research facility purposes, that the proposed use complies with all Laws, that
the proposed use does not require a change in zoning classification or require a
special or conditional use permit, that the proposed use does not materially
increase the risk of casualty or damage to the Leased Premises compared with
Tenant's use or involve research on live animals and that the nature of the
proposed use by the proposed assignee or subtenant will not result in more
Hazardous Materials (as defined in Section 16.1 of this Lease) being used,
generated or disposed of than are used, generated or disposed of by Tenant.
Notwithstanding any provision of this Lease to the contrary, Landlord may
withhold its consent to any proposed assignment or sublease of the Leased
Premises if either the transaction or the proposed assignee or subtenant is not
consented to by the holder of the first mortgage covering the fee title to the
Leased Premises. Consent by Landlord to one or more assignment of this Lease or
to one or more subletting of the Leased Premises shall not operate as a waiver
of Landlord's rights under this Section 12 to any subsequent assignment or
subletting. No assignment or subletting shall release Tenant or any guarantor of
this Lease of any of its obligations under this Lease or be construed or taken
as a waiver of any of Landlord's rights or remedies pursuant to this Lease.
Notwithstanding the foregoing, Tenant may, without requirement of Landlord's
prior written consent, sublease areas not to exceed cumulatively twenty percent
(20%) of the area of the Leased of Premises pursuant to written subleases (the
"Subleases"). Tenant shall deliver true and correct copies of all Subleases to
Landlord promptly upon execution thereof. Each Sublease shall specifically
provide that (i) the Sublease is expressly subordinate to this Lease; (ii) the
tenant under the Sublease shall conform to all requirements of this Lease (other
than those relating to the payment of Base Rent) including, without limitation,
those regarding the use, maintenance and
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liability insurance of the Leased Premises and such tenant's activities therein;
(iii) that the term of the Sublease shall not extend beyond the Term of this
Lease and that upon the termination of this Lease prior to the Termination Date,
the Sublease and all rights thereunder shall terminate or, at the option of
Landlord, the Sublease shall remain in full force and effect and the tenant
under the Sublease shall attorn to Landlord as its landlord; and (iv) the tenant
under the Sublease shall promptly execute and deliver to Landlord and/or its
mortgagee such estoppel certificates, subordination and attornment agreements
and other agreements and certifications as reasonably requested by Landlord
and/or its mortgagee. The assignment by Tenant of its interest in this Lease to
(i) its parent, subsidiary or affiliated entity or (ii) another entity pursuant
to a merger, consolidation or the sale of substantially all of Tenant's stock or
assets is permitted without Landlord's consent hereunder provided the assignee
assumes in writing all of the obligations of Tenant under the Lease, but that
any such assignment shall not release Tenant from its liability hereunder.
12.2 LANDLORD'S ASSIGNMENT. Landlord shall have the right to assign its
interest in this Lease and in the rentals payable by Tenant hereunder. Such
assignment may be either absolute or as collateral security for the indebtedness
secured by any mortgage covering the Leased Premises. Tenant acknowledges and
agrees that from and after the receipt by Tenant of written notice from Landlord
or its mortgagee, all rents and other sums which are the subject matter of the
assignment shall be paid to said mortgagee (or as the mortgagee otherwise
directs) at the place of payment designated in such notice. Tenant's obligation
to make payment to the mortgagee pursuant to any loan assignment to said
mortgagee is absolute and unconditional and Tenant shall be relieved of
liability to Landlord with respect to any payment due hereunder upon delivery of
such payment to Landlord's mortgagee after receipt of written direction from
said mortgagee. Upon such assignment, the mortgagee shall have the sole right to
exercise all rights, privileges and remedies (either in its own name or in the
name of Landlord for the use and benefit of the mortgagee) which by the terms of
the Lease or applicable law are permitted or provided to be exercised by the
Landlord.
13. PERMITTED CONTESTS. Notwithstanding any provision to the contrary
contained in this Lease, Tenant shall not be required to pay, discharge or
remove any tax, assessment, levy, fee, charge or lien referred to in this Lease,
so long as Tenant shall contest in good faith at its own expense the amount or
the validity of the same by appropriate proceedings which shall operate to
prevent the collection of, or realization upon, the tax, assessment, levy, fee,
charge or lien so contested and the sale of all or any part of the Leased
Premises to satisfy the same. Pending any such proceedings, Landlord shall not
have the right to pay, remove, or cause to be discharged the tax, assessment,
levy, fee, charge or lien being contested. In the event of such contest, Tenant
shall furnish reasonable security (in the form of bond or otherwise) as may be
required by Landlord to ensure payment and prevent any sale, foreclosure or
forfeiture of the Leased Premises by reason of such contest. Tenant further
agrees that (a) such contest shall be prosecuted to a final conclusion
diligently, (b) Tenant will pay and hold Landlord harmless against any and all
losses, judgments, decrees and costs (including all attorneys' fees and
expenses) in connection with the same, and (c) Tenant will, promptly after the
Final determination of such contest, fully pay and discharge the amounts which
shall be levied, assessed, charged or imposed
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or be determined to be payable, together with all penalties, fines, interest,
cost and expenses resulting from such contest.
14. DEFAULT.
14.1. EVENTS OF DEFAULT. Any of the following occurrences or acts shall
constitute an event of default (sometimes referred to herein as a "Default" or
an "Event of Default") under this Lease:
14.1.1. LEASE TERMS. Tenant (a) fails to make payment of any
installment of Base Rent or Additional Rent within five (5) days after
Landlord's written notice of default to Tenant which notice shall also
be delivered to Guarantor and to any party listed in Section 14.5.2
hereof or (b) fails to observe or perform any of Tenant's other
covenants, agreements or obligations pursuant to this Lease and fails
to cure such non-monetary default within thirty (30) days after
Landlord's written notice to Tenant specifying such default or
defaults, which notice shall also be delivered to Guarantor and to any
party listed in Section 14.5.2 hereof;
14.1.2. INSOLVENCY. Tenant files a petition in bankruptcy or
is adjudicated a bankrupt or insolvent or makes an assignment for the
benefit of its creditors or admits in writing its inability to pay its
debts generally as they become due and such petition, adjudication,
assignment or admission is not discharged or denied within sixty (60)
days;
14.1.3. APPOINTMENT. A receiver, trustee or liquidator of all
or substantially all of the property of Tenant or of the Leased
Premises is appointed in any proceeding brought by Tenant and such
appointment is not discharged within sixty (60) days;
14.1.4. ABANDONMENT. The Leased Premises are abandoned or left
unoccupied for five (5) calendar days (excluding scheduled semester and
holiday breaks), and such action constitutes a default under any
mortgage granted by Landlord covering the Leased Premises.
14.2. EXTENSION OF CURE PERIOD. Notwithstanding the foregoing
provisions of this Section 14, if a default not related to the payment of
amounts to Landlord cannot be cured within the specified time period due to
causes beyond Tenant's reasonable control (except for payments to be made by
Tenant), the specified period shall be extended a reasonable period of time (not
to exceed sixty (60) days, provided Tenant has commenced the cure within thirty
(30) days after receipt of notice of default and diligently prosecutes the same
thereafter.
14.3. TERMINATION. If any event of default shall have happened and be
continuing, Landlord shall have the right (but not the obligation) to terminate
this Lease by written notice to Tenant, which notice shall also be delivered to
the party listed in Section 14.5.2 hereof. Thereupon, all right, title and
interest of Tenant shall immediately expire as fully and completely
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as if the date specified were the Termination Date. In that event, Tenant shall
then peaceably and quietly quit the Leased Premises and surrender the same to
Landlord, but Tenant shall remain liable as provided in Section 14.4 of this
Lease. If such notice is given, Landlord shall have the immediate right of
reentry and possession of the Leased Premises and the right to remove all
persons and property from the Leased Premises. Upon taking possession, Landlord
may make such alterations and repairs to the Leased Premises as Landlord deems
necessary and appropriate and Landlord may, from time to time, relet all or any
portion of the Leased Premises for such term or terms and such rental or rentals
and upon such other terms and conditions as Landlord, it in its sole discretion,
deems advisable.
14.4. LANDLORD'S REENTRY WITHOUT TERMINATION. Landlord may elect to
reenter and obtain possession of the Leased Premises by reason of or following
an event of default, with or without terminating this Lease in the manner set
forth in Section 14.3 above. Thereupon, Landlord shall have the right, at
Landlord's option and without notice: (a) to repair or alter the Leased Premises
in such manner as Landlord may deem necessary or advisable so as to put the
Leased Premises in good order and to make the same rentable and (b) to relet the
Leased Premises or any part of the Leased Premises. No such reentry or taking of
possession of the Leased Premises by Landlord shall be construed as an election
on Landlord's part to terminate this Lease unless a notice of such intention be
given to Tenant or unless the termination of this Lease is decreed by a court of
competent jurisdiction.
14.4.1. PAYMENT OF LANDLORD'S EXPENSES. If Landlord does
reenter the Leased Premises, Tenant shall pay to Landlord on demand all
expenses incurred by Landlord in (a) obtaining possession, (b)
altering, repairing and putting the Leased Premises in good order and
condition, and (c) reletting the same, including (i) reasonable fees of
attorneys, architects, and other experts and (ii) any other legitimate
expenses or commissions.
14.4.2. CONTINUING PAYMENT OF RENT. In the event of any
expiration or termination of Term of this Lease or re-entry or
possession of the Leased Premises by reason of the occurrence of an
Event of Default, Tenant shall pay to Landlord all Base Rent,
Additional Rent and all other sums required to be paid by Tenant
through and including the date of such expiration, termination, reentry
or repossession; and thereafter, until the end of what would have been
the Term of this Lease in the absence of such expiration, termination,
re-entry or re-possession (whether or not the Leased Premises shall
have been relet) and Tenant shall be liable to Landlord for and shall
pay to Landlord, as liquidated and agreed current damages, all Base
Rent, Additional Rent and all other sums which would be payable under
this Lease by Tenant in the absence of such expiration, termination,
re-entry or repossession less the net proceeds, if any, of any
reletting affected for the account of Tenant after deducting therefrom
the expenses set forth in Section 14.4.1 hereof. Said current damages
specifically include, in addition to any and all other damages
recoverable by Landlord hereunder, an amount equal to $464,625
representing the five (5) month's free rent allowed to Tenant hereunder
pursuant to Section 5.2 (the "Special Damages"). Except for Special
Damages, which shall be immediately due
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and payable in full upon Landlord's termination of this Lease or
re-entry or possession of the Leased Premises as a result of the
occurrence of an Event of Default. Tenant shall pay such current
damages on the days on which Base Rent would be payable under this
Lease in the absence of such expiration, termination, re-entry or
repossession and Landlord shall be entitled to recover the same from
Tenant on each day. Landlord shall have, from time to time, the right
to begin and maintain successive actions or other legal proceedings
against Tenant for the recovery of such amounts and such other sums
payable pursuant to this Lease. At any time after such termination or
repossession, whether or not Landlord shall have collected any current
damages as aforesaid, Landlord shall be entitled to recover from
Tenant, and Tenant shall pay to Landlord on demand, as and for
liquidated and final damages for Tenant's default hereunder (in
addition to Landlord's expenses set forth in Section 14.4.1 hereof) an
amount equal to the then present value of the excess of the Base Rent
and other sums or charges reserved under this Lease from the date of
such termination or repossession for what would be the then unexpired
Term if the same had remained in effect, over the amount of rent Tenant
establishes that Landlord could in all likelihood actually receive for
the Leased Premises for the same period. Said present value to be
arrived at on the basis of a discount of six percent (6%) per annum.
Tenant's liability hereunder shall survive the termination or
expiration of this Lease or any action to secure possession of the
Leased Premises. Nothing contained in this Lease shall be deemed to
require Landlord to wait until the Termination Date to begin such
action or other legal proceedings.
14.5 SPECIAL PROVISIONS REGARDING TENANT'S MORTGAGEE.
14.5.1 LEASEHOLD MORTGAGE. Tenant may grant a mortgage
covering its leasehold interest hereunder (a "Leasehold Mortgage") to
one institutional lender (which lender and its successors and assigns
are referred to herein as the "Holder") Tenant may, at any one time,
allow only one Leasehold Mortgage and any Leasehold Mortgage shall at
all times be subordinate to the lien of any and all mortgages which
Landlord grants covering the fee title to the Leased Premises. If
Tenant desires to change the identity of the Holder of the Leasehold
Mortgage, Tenant shall notify Landlord in writing and, provided Tenant
is not in default hereunder Landlord shall prepare, and both parties
shall execute, an amendment to this Lease setting forth the new name
and address of the Holder of the Leasehold Mortgage
14.5.2 NOTICE TO HOLDER OF LEASEHOLD MORTGAGE. Landlord will
give to the Holder simultaneous with service on Tenant a duplicate of
any and all notices or demands which are required by this Lease to be
given by Landlord to Tenant in the same form and manner as are allowed
by Section 17 of this Lease. As of the date of this Lease, the name and
address of the Holder are as follows:
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
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Attn: Mr. Eric Jeffries
Fax Number: (513) 579-2750
Telex Number: 214-109
14.5.3. RIGHT OF HOLDER TO CURE DEFAULTS. Upon a default
under this Lease, the Holder may, at it option, cure any defaults of
Tenant hereunder and Landlord agrees to accept such cure from the
Holder in the same manner as if the cure was performed by Tenant.
Landlord shall not terminate this Lease nor Tenant's right of
possession as the result of a Tenant default if, within the period
Tenant is expressly allowed in this Lease to cure such default, such
default is cured or caused to be cured by the Holder. Notwithstanding
the foregoing, except as provided for herein, there shall be no
obligation on the part of the Holder to cure any Tenant default under
this Lease and the Holder shall not be obligated for any of Tenant's
payment or performance obligations under this Lease. If no notice of
default is required by the terms of this Lease, Landlord shall not
terminate this Lease or Tenant's right to possession unless the Holder
fails to cure such default within ten (10) days after notice by
Landlord to the Holder of the occurrence of such default.
14.5.4 AMENDMENTS TO LEASE. Landlord will not, without prior
written notice to the Holder, enter into any amendment of this Lease
which reduces the original term of this Lease or which otherwise
materially and adversely affects, in the reasonable determination of
Landlord, the collateral interest of the Holder in the Leased Premises.
14.5.5 ESTOPPEL CERTIFICATES. Upon receipt of a written
request therefor (but no more frequently than once each calendar year),
Landlord shall execute an estoppel certificate for the benefit of the
Holder certifying, if true, that this Lease has not been modified and
is in full force and effect or, if there has been a modification of
this Lease, that this Lease is in full force and effect as modified,
stating such modifications; specifying the date to which the Base Rent
has been paid; stating whether or not, to the knowledge of the
Landlord, Tenant is in default and, if so, stating the nature of such
default; and stating which options to extend the term of this Lease
have been executed, if any.
14.5.6 ASSUMPTION OF TENANT'S INTEREST; RECOGNITION OF HOLDER
AS TENANT. If the Holder succeeds (after the expiration of any
applicable period of redemption) to the leasehold interest of Tenant
pursuant to foreclosure proceedings or if the Holder otherwise succeeds
to the Leasehold interest of Tenant by deed in lieu of foreclosure or
by any other manner, then (i) upon receipt of an instrument from the
Holder assuming, without condition or qualification, all of Tenant's
obligations under this Lease and (ii) upon receipt by Landlord of any
Base Rent or Additional Rent then owning and unpaid under this Lease
(which conditions are referred to as the "Recognition Conditions") then
Landlord shall recognize the Holder as Tenant under this Lease and the
Holder shall thereafter be fully bound under the terms and conditions
of this Lease and shall be entitled to the rights of Tenant under this
Lease, Further, if this Lease is rejected or terminated under
I I U.S.C. Section 365, the Lease, at the option of the Holder (by
notice in writing delivered to Landlord within ten (10) days after the
rejection or termination of this Lease), shall not be deemed to be
terminated and upon such election, Landlord shall, upon satisfaction of
the Recognition Conditions, recognize the Holder as Tenant under this
Lease and the Holder shall be fully bound under the terms and
conditions of this
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Lease and shall be entitled to the rights and benefits of Tenant under this
Lease (or, alternatively and at Landlord's option. Landlord and the Holder shall
execute a substitute lease for the remainder of the term of this Lease,
identical in all respects to this Lease, except that the Holder shall be named
as the Tenant thereunder). This provision shall be effective and self operative
without the execution of any further instrument on the part of any of the
parties hereto, except as provided for herein.
15. Additional Rights of Landlord.
15.1. Enforcement Rights. No right or remedy in this Lease conferred
upon or reserved to Landlord is intended to be exclusive of any other right or
remedy, and each and every right and remedy of Landlord shall be cumulative and
in addition to any other right or remedy given Landlord pursuant to this Lease,
or now or at any time existing at law or in equity. In addition to the other
remedies provided by this Lease, Landlord shall be entitled to (a) injunctive
relief in case of the violation or attempted or threatened violation of any of
the covenants, agreements, conditions or provisions of this Lease, (b) a decree
compelling performance of any of the covenants, agreements, conditions or
provisions of this Lease, or (c) any other remedy allowed to Landlord at law or
in equity.
15.2. Nonwaiver. The failure of Landlord or Tenant to insist at any
time upon Tenant's or Landlord's strict performance of any of the covenants or
agreements contained in this Lease shall not be construed as a waiver or a
relinquishment of such covenants or agreements for the future. Landlord's
receipt of any Base Rent or Additional Rent, with knowledge of a breach by
Tenant of any covenant or agreement contained in this Lease shall not be deemed
a waiver of such breach. No waiver by either party of any provision of this
Lease shall be deemed to have been made unless expressed in writing and signed
by the party waiving the same.
15.3. Waiver of Redemption. Tenant waives for itself and all those
claiming under it, any rights which it may have under any present or future Law
(a) to redeem the Leased Premises after termination of Tenant's right of
occupancy by order or judgment of any court or by any legal process or writ or
(b) which exempts property from liability for debt or for distress for rent.
15.4. Attorney's Fees. If either party defaults in the performance of
any of its obligations under this Lease, and the non-defaulting party commences
an action to enforce its rights and remedies hereunder, the losing party shall
pay to the prevailing party all costs and expenses incurred by the prevailing
party in enforcing its rights, including the prevailing party's reasonable
attorneys' fees.
15.5. Litigation. If Landlord shall without fault on its part, be made
a party to any litigation commenced against Tenant, and if the Tenant shall fail
to provide the other with counsel reasonably approved by Landlord, Tenant shall
pay all costs and reasonable attorneys' fees incurred by Landlord in connection
with such litigation. Landlord makes the similar covenant in favor of Tenant.
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16. Environmental Matters
16.1 Defined Terms.
(01) "Claim" shall mean and include any demand, cause of action,
proceeding or suit for any one or more of the following: 1)
actual or punitive damages, losses, injuries to person or
property, damages to natural resources, fines, penalties,
interest, contribution or settlement; 2) the costs of such
investigations, feasibility studies, information requests,
health or risk assessments, or Response (as hereinafter
defined) actions; and 3) enforcing insurance, contribution or
indemnification agreements.
(02) "Environmental Laws" shall mean and include all federal, state
and local statutes, ordinances, regulations and rules relating
to environmental quality, heath, safety, contamination and
clean-up, including, without limitation, the Clean Air Act, 42
U.S. C. Section 7401 et seg.; the Clean Water Act, 33 U.S.C.
Section 1251 et seq. and the Water Quality Act of 1987; the,
Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"),
7 U.S.C. Section 136 et seg.; the Marine Protection, Research,
and Sanctuaries Act, 33 U.S.C., Section 1401 et seg.; the
National Environmental Policy Act, 42 U.S.C. Section 4321 et
seg.; the Noise Control Act, 42 U.S.C. Section 4901 et seq.;
the Occupational Safety and Health Act. 29 U.S.C. Section 651
et seg.; the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. Section 6901 et seq, as amended by the Hazardous and
Solid Waste Amendments of 1984; the Safe Drinking Water Act,
42 U.S.C. Section 300 et seg.; the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seg., as amended by the Superfund Amendments
and Reauthorization Act; the Emergency Planning and Community
Right-to-Know Act, and Radon Gas and Indoor Air Quality
Research Act; the Toxic Substances Control Act ("TSCA"), 15 U.
S. C. Section 2601 et seg.; the Atomic Energy Act, 42 U.S.C.
Section 2011 et seg.; the Nuclear Waste Policy Act of 1982, 42
U.S.C. Section 10101 et seg.; the Minnesota Environmental
Response and Liability Act ("MERLA"), Minn. Stat. Ch. 1158;
and the state super lien and environmental clean-up statutes,
with implementing regulations and guidelines, as amended from
time to time. Environmental Laws shall also include all state,
regional, county, municipal and other local laws, regulations,
and ordinances insofar as they are equivalent or similar to
the federal laws recited above or purport to regulate
Hazardous Materials (as hereinafter defined).
(03) "Hazardous Materials" shall mean and include the following,
including mixtures thereof: any hazardous substance,
pollutant, contaminant, waste, by-product or constituent
regulated under CERCLA; oil and petroleum products and natural
gas, natural gas liquids, liquefied natural gas and synthetic
gas usable for fuel, pesticides regulated under the FIFRA;
asbestos and asbestos containing materials,
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PCBS, and other substances regulated under the TSCA; source
material, special nuclear material, by-product material and
any other radioactive materials or radioactive wastes, however
produced, regulated under the Atomic Energy Act or the Nuclear
Waste Policy Act; chemicals subject to the OSHA Hazard
Communication Standard, 29 C.F.R. Section 1910.1200 et seg.;
and industrial process and pollution control wastes, whether
or not hazardous within the meaning of RCRA; any substance
whose nature and/or quantity or existence, use, manufacture,
disposal or effect render it subject to federal, state or
local regulation, investigation, remediation, or removal as
potentially injurious to public heath or welfare.
(04) "Use" means to manage, generate, manufacture, process, treat,
store, use, re-use, refine, recycle, reclaim, blend or bum for
energy recovery, incinerate, accumulate speculatively,
transport, transfer, dispose of, or abandon Hazardous
Materials.
(05) "Release, or Released" shall mean any actual or threatened
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or
disposing of Hazardous Materials into the environment, as
'environment' is defined in CERCLA.
(06) "Response" or "Respond" shall mean action taken in compliance
with Environmental Laws to correct, remove, remediate,
cleanup, prevent, mitigate, monitor, evaluate, investigate,
assess or abate the Release of a Hazardous Material.
16.2 Tenant's Obligations with Respect to Environmental Matters.
Subject to the provisions of section 16.7, during the term of this Lease, Tenant
shall comply at its own cost with all Environmental Laws. Tenant shall not Use,
or authorize the Use of, any Hazardous Materials on the Leased Premises,
including installation of any underground storage tanks, without prior written
disclosure to and approval by the Landlord except that Tenant may use products
commonly used in office settings provided such use complies with Environmental
Laws. Tenant shall not take any action that would subject the Leased Premises to
permit requirements under RCRA for storage, treatment or disposal of Hazardous
Materials. Tenant shall not dispose of Hazardous Materials in dumpsters provided
for tenant use. Tenant shall not discharge Hazardous Materials into Project
drains or sewers except in amounts allowed under Environmental Laws. Tenant
shall not cause or allow the Release of any Hazardous Materials on, to, or from
the Project. Tenant shall arrange at its own cost for the lawful transportation
and off-site disposal of all Hazardous Materials that Tenant generates.
16.3 Copies of Notices. During the term of this Lease, Tenant shall
provide Landlord promptly with copies of all summons, citations, directives,
information inquiries or requests, notices of potential responsibility, notices
of violation or deficiency, orders or decrees, Claims, complaints,
investigations, judgments, letters, notices of environmental liens or Response
actions in progress, and other communications, written or oral, actual or
threatened, from the United
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States Environmental Protection Agency, Occupational Safety and Heath
Administration, Minnesota Pollution Control Agency, or Other federal, state or
local agency or authority, or any other entity or individual, concerning any
Release of a Hazardous Material on, to or from the Leased Premises, the
imposition of any lien on the Leased Premises, or any alleged violation of or
responsibility under Environmental Laws. Landlord and Landlord's beneficiaries,
agents and employees shall have the right to enter the Leased Premises and
conduct appropriate inspections or tests in order to determine Tenant's
compliance with Environmental Laws.
16.4 Tests and Reports. If Landlord has reasonable basis for concern,
in Landlord's opinion, with respect to possible environmental issues affecting
the Leased Premises caused by Tenant, then upon written request by Landlord,
Tenant shall provide Landlord with the results of appropriate reports and tests,
with transportation and disposal contracts for Hazardous Materials, with any
permits issued under Environmental Laws, and with any other applicable documents
to demonstrate that Tenant complies with all Environmental Laws relating to the
Leased Premises.
16.5 Tenant's Obligation to Respond. If Tenant's Use of Hazardous
Materials at the Leased Premises gives rise to liability or to a Claim under any
Environmental Law, causes a significant public heath effect, or creates a
nuisance, Tenant shall promptly, at its expense, take all applicable action in
Response.
16.6 Indemnification. Tenant shall indemnify, defend, and hold harmless
Landlord, its beneficiaries, its lenders, any managing agents and leasing agents
of the Leased Premises, and their respective agents, partners, officers,
directors and employees from and against any and all Claims arising from or
attributable to any breach by Tenant of any of its warranties, representations
or covenants in this Article. The obligations this section 16.6 shall survive
the termination or expiration of this Lease.
16.7 Landlord's Representations Regarding Environmental Matters
16.7.1 Deliverv of Existing Reports. Landlord has delivered to Tenant
the environmental testing reports affecting the Leased Premises
described on Exhibit E attached hereto incorporated herein by reference
(the "Existing Environmental Reports"). Tenant is deemed to take
occupancy of the Leased Premises having knowledge of and subject to all
matters referenced or disclosed in the Existing Environmental Reports
(the "Existing Conditions").
16.7.2 Representations and Indemnity of Landlord. Landlord represents
to Tenant that, except for the Existing Conditions disclosed by the
Existing Environmental Reports, Landlord is not aware of any Claim (or
threat or facts which would form the basis of a Claim) relating to the
violation of Environmental Laws pertaining to the Leased Premises or
the presence of any Hazardous Materials on, under or about the Leased
Premises. Except for (i) the Existing Conditions and (ii) matters
caused, created or allowed by
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Tenant, Tenant's employees, agents, contractors or invitees, Landlord
shall indemnify, defend and hold Tenant and its beneficiaries, lenders
and agents and their respective agents, partners, officers, directors
and employees from and against any and all Claims arising from or
attributable to the violation of Environmental Laws affecting the
Leased Premises or related to or arising from the presence of Hazardous
Materials on, under or about the Leased Premises. Landlord's
obligations herein under shall survive the termination or expiration of
this Lease.
17. Notices. Any notices required or permitted to be given hereunder
shall be in writing and shall be effective (i) when delivered personally, (ii)
when received by overnight courier service or facsimile communications (provided
that a copy of such notice is deposited in the United States mail within one (1)
business day of the facsimile transmission) or (iii) three (3) days after being
deposited in the United States Mail (sent certified or registered, return
receipt requested), in each case addressed as follows (or to such other address
as the parties hereto may designate in the manner set forth herein):
As to Landlord: Mortenson Properties, Inc.
700 Meadow Lane
Minneapolis, MN 55422
Attn: Director of Asset Management
Fax: 522-2278
With a copy to: Michael S. Margulies
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Fax: 371-3207
As to Tenant (before Delivery Date): Brown Institute, Ltd.
2225 East Lake Street
Minneapolis, MN 55407
Attn: Ron Anderson
President
Fax: 721-2179
As to Tenant (after Delivery Date): Brown Institute, Ltd.
1440 Northland Drive
Mendota Heights, MN
Attn: President
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With a copy to: Ms. Stacey Bender Rago
D'Ancona & Pflaum
Suite 2900
30 North LaSalle Street
Chicago, IL 60602
Fax: 312/580-0923
With a copy to: Career Education Corporation
Suite 790
2800 West Higgins Road
Hoffman Estates, IL 60195
Attn: William A. Klettke
Chief Financial Officer
Fax: 847/781-3610
18. Subordination and Non-Disturbance. This Lease is and shall be
subordinate and subject in all respects to any and all mortgages thereon and to
any mortgages covering all or any part of the Leased Premises, that may now or
hereafter affect the Leased Premises and to all renewals, modifications or
replacements thereof. Tenant shall execute such subordination agreements as the
Landlord may reasonably require. Such subordination shall be subject to the
condition that so long as this Lease is in full force and effect and so long as
no Event of Default shall have occurred and be continuing hereunder, Tenant's
possession and use of the Leased Premises in accordance with the provisions of
this Lease shall not be affected or disturbed by reason of this subordination to
or any modification of or default under the ground or underlying lease or
mortgage. If the ground or underlying lessor and/or mortgagee or any successor
in interest shall succeed to the rights of the Landlord under this Lease,
whether through possession, surrender, assignment, subletting, judicial or
foreclosure action, or delivery of a deed or otherwise, Tenant will attorn to
and recognize such successor landlord as Tenant's landlord and the successor
landlord will accept such attornment and recognize Tenant's rights of possession
and use of the Leased Premises in accordance with the provisions of this Lease.
Without limiting Tenant's obligation to execute and deliver the subordination
agreements provided for herein, the subordination and attornment provisions of
this section shall be self operative in the absence of the execution and
delivery of such instruments.
19. Estoppel Certificates. Tenant will, at any time and from time to
time, upon not less than ten (10) days prior request by Landlord, execute,
acknowledge and deliver to Landlord a statement certifying (a) that this Lease
is unmodified and in full force and effect, (b) the dates to which the Base Rent
and Additional Rent and other charges have been paid, (c) whether or not, to the
knowledge of Tenant, Landlord is in default in the performance of any covenant,
condition or provision of this Lease, and (d) if so, specifying each such
default of which the Tenant may leave knowledge. Any such statement delivered
pursuant to this Section 19 may be relied upon by any prospective purchaser or
mortgagee of the Leased Premises or any assignee of such mortgagee.
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20. Surrender and Holdover Tenancy. Upon the expiration of this Lease,
Tenant shall peaceably and quietly leave, yield up and surrender the Leased
Premises to Landlord in the same condition in which the Leased Premises were
received from Landlord as of the Commencement Date, ordinary wear and tear
excepted, but clean, orderly and free of occupants. Tenant shall remove from the
Leased Premises prior to such expiration or sooner termination all property
situated in or on the Leased Premises which is not owned by Landlord, and Tenant
shall, at its sole cost and expense, repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, which may
thereafter cause such property to be removed from the Leased Premises and
disposed of, but the cost of any such removal shall be borne by Tenant. If
Tenant does not surrender the Leased Premises to Landlord upon the expiration or
termination of this Lease then the Landlord may, at its option, treat the Tenant
as a holdover tenant on a month-month tenancy and the Base Rent for such monthly
holdover tenancy shall be in an amount equal to 1.50 times the monthly Base Rent
in effect as of the date of expiration or termination or this Lease.
21. Separability. Each and every covenant and agreement contained in
this Lease shall be for all purposes construed to be a separate and independent
covenant and agreement and the breach of any covenant or agreement contained in
this Lease by Landlord shall in no way or manner discharge or relieve Tenant
from Tenant's obligation to perform each and every covenant and agreement
contained in this Lease. If any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is invalid or unenforceable, shall not be affected and each term and
provision of this Lease shall be valid and shall be enforced to the fullest
extent permitted by law.
22. Binding Effect. All of the covenants, conditions and obligations
contained in this Lease shall be binding upon and inure to the benefit of the
respective heirs, legal representatives, successors and assigns of Landlord and
Tenant to the same extent as if each such successor and assign were in each case
named as a party to this Lease. This Lease may not be changed, modified or
discharged except by a writing signed by Landlord and Tenant.
23. Headings and Terms. The headings to the various Sections of this
Lease have been inserted for reference only and shall not in any manner be
construed as modifying, amending or affecting in any way the express terms and
provisions of this Lease. The term "person" when used in this Lease shall mean
any individual, corporation, partnership, firm, trust, joint venture, business
association, syndicate, combination, organization or any other person or entity.
24. Right to Inspect. Landlord and Landlord's agents shall have the
right to enter the Leased Premises at any and all reasonable times during the
term of this Lease for the purpose of (a) inspecting and repairing the Leased
Premises, (b) showing them to prospective purchasers or (during the last year of
the Term) tenants, and (c) displaying rental (during the last six (6) months of
the Term) and "For Sale" signs on the Leased Premises. In exercising its rights
under this Section 24, Landlord shall use reasonable efforts to not materially
interfere with Tenants use of
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the Leased Premises. The foregoing provision does not, and shall not be
construed so as to, impose liability on Landlord to inspect or repair the Leased
Premises beyond specifically provided in Section 8.4 hereof.
25. Exculpation. The term "Landlord," as used in this Lease, shall mean
only the owner or owners at the time in question of the fee title to the Leased
Premises, and in the event of any transfer of such title or interest, Landlord
(and in case of any subsequent transfers the then grantor) shall be relieved
from and after the date of such transfer of all liability as respects Landlord's
obligations thereafter to be performed, provided that any funds in the hands of
Landlord, or the then grantor at the time of such transfer, in which Tenant has
an interest, shall be delivered to the grantee. The obligations contained in
this Lease to be performed by Landlord shall, subject as aforesaid, be binding
on Landlord's successors and assigns, only during their respective periods of
ownership.
26. Counterparts. This Lease may be executed in several counterparts,
each of which shall be deemed to be an original, and all counterparts shall
constitute one in the same instrument.
27. No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Leased Premises by
reason of the fact that the same person or entity acquires or holds, directly or
indirectly, this Lease or the leasehold estate created hereby or any interest in
this Lease or in such leasehold estate as well as the fee estate in the Leased
Premises or any interest in such fee estate.
28. Governing Law. This Lease shall be governed by and interpreted
under the laws, of the State of Minnesota.
29. Brokerage Fees. Landlord and Tenant represent and warrant to each
other that neither has dealt with a broker, agent or other person in connection
with this Lease and each party hereby indemnifies and holds the other party
harmless from and against any claims by any broker, agent or other person
claiming a commission or other form of compensation by virtue of having dealt
with such indemnifying party with regard to this Lease. The provisions of this
section shall survive the expiration or termination of this Lease.
30. Delivery of Financial Statements. Tenant shall deliver to Landlord
copy of the audited financial statements of Tenant and of the Guarantor named in
the Guaranty attached hereto, within thirty (30) days after the date such
financial statements become available, but no more frequently than once each
calendar year.
31. Execution and Authority. The execution and delivery of this
instrument has been duly authorized by the Tenant and constitutes the legal,
valid and binding obligation of the Tenant and enforceable against the Tenant in
accordance with its terms. The execution, delivery and performance by the Tenant
of this Lease does not violate or contravene the Tenant's Articles of
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Incorporation, Bylaws or any other instrument, agreement or order to which the
Tenant is bound.
32. Guaranty of Lease. This Lease shall not be effective until and
unless Tenant obtains and delivers to Landlord a fully executed Guaranty of
Lease from Guarantor in the form attached hereto as Exhibit F.
33. Allowances.
33.1 Moving and Improvement Allowance. Landlord grants to Tenant an
allowance in an amount not to exceed $200,000.00 (the "Allowance") to pay Tenant
for costs actually incurred by Tenant with respect to (i) expenses in moving
from the Minneapolis Premises to the Leased Premises and (ii) the construction
by Tenant of Building improvements in addition to the Additional Improvements
(collectively, the "Permitted Allowance Costs"). Landlord shall pay the
Permitted Allowance Costs within twenty (20) days after the date Tenant delivers
to Landlord a written request for payment, which request must, in order to be
paid, be fully supported by invoices from third parties unrelated to Tenant
evidencing the Permitted Allowance Costs. Notwithstanding the foregoing,
Landlord shall not pay any portion of the Permitted Allowance Costs prior to the
Commencement Date nor during any period in which an Event Default exists. Tenant
may submit multiple draws for the Allowance but if Tenant has not requested full
payment of the Allowance within one (1) year from the Commencement Date, the
unpaid balance will be forfeited.
33.2 Signage Allowance. Landlord grants to Tenant an allowance to pay
Tenant for the actual costs incurred by Tenant for signage with respect to the
Leased Premises in an amount not to exceed $40,000 (the "Signage Allowance").
Notwithstanding the foregoing, if Tenant does not use the full amount of the
Signage Allowance for signage purposes, Tenant may, at its option, request that
the unused balance be used to reimburse Tenant for actual costs incurred by
Tenant for moving, Building improvements or other expenses related to the Leased
Premises. Landlord shall pay the Signage Allowance to Tenant within twenty (20)
days after the date Landlord receives a written request for payment, which
request, in order to be paid, must be accompanied by invoices from unrelated
third parties evidencing costs actually incurred by Tenant. Landlord shall not
pay the Signage Allowance prior to the Commencement Date nor during any period
in which an Event Default exists hereunder. Tenant may submit multiple draws for
the Signage Allowance, but if Tenant has not requested full payment of the
Signage Allowance with one (1) year from the Commencement Date, the unpaid
balance will be forfeited.
33.3 Recording. This capital Lease shall not be recorded. The parties
hereto shall execute a Memorandum Lease which Memorandum shall, at Tenant's
option, be placed of record.
34. Contingent Agreement. Not withstanding any other term or condition
of this Lease to the contrary, this Lease and Landlord's obligation to commence
construction of the Additional Improvements and deliver possession of the Leased
Premises to Tenant, is expressly conditioned upon Landlord closing the
acquisition of the Leased Premises, which acquisition shall
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include the closing of permanent financing covering the Leased Premises upon
terms and conditions satisfactory to Landlord at Landlord's sole discretion. If
Landlord does not close the acquisition of the Leased Premises on or before July
1, 1997, then Landlord may, at its option by notice in writing delivered to
Tenant, terminate this Lease. Thereupon, neither party shall be further liable
to the other hereunder. If Landlord does not terminate the Lease in the manner
provided herein on or before July 1, 1997, then Landlord's right to terminate
the Lease pursuant to this section shall cease and terminate and the Lease shall
remain in full force and effect.
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IN AGREEMENT, the parties have caused this Lease to be executed as of
the date and year first above written.
LANDLORD:
MORTENSON PROPERTIES, INC.
By /s/ illegible
--------------------------------------
Its: illegible
------------------------------------
LORI J. CURTIS
NOTARY PUBLIC-MINNESOTA
HENNEPIN COUNTY
My Comm. Expires Jan. 31, 2000
30
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TENANT:
BROWN INSTITUTE, LTD.
By /s/ illegible
--------------------------------------
Its illegible
--------------------------------------
31
<PAGE> 32
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
Lots 3 and 4, Block 1, and Outlot A, Inland Industrial Park, according to the
recorded plat thereof, Dakota County, Minnesota.
Subject to the following Encumbrances:
1. Any mortgage now existing or hereafter created by Landlord provided
that Tenant shall not be obligated with respect to the payment or
performance of any such mortgage, subject to the provisions of Section
18 hereof.
2. Easement for utilities and drainage as shown on the recorded plat of
Inland Industrial Park.
3. Terms and conditions of Agreement dated September 30, 1975, filed
October 9, 1975, as Document No. 457311 between Inland Construction
Corporation and the City of Mendota Heights.
4. Scenic Easement in favor of the State of Minnesota as shown by Final
Certificate filed February 14, 1985, as Document No. 678733 over the
South 50 feet of the Land.
5. Terms and conditions of and easements contained in the Agreement dated
February 7, 1980, filed February 21, 1980, as Document No. 555884,
between Cray Research, Inc., the City of Mendota Heights and the Board
of Water Commissioners of the City of St. Paul.
6. Permanent storm sewer easement and temporary construction easement as
shown by the Easement Agreement in favor of the City of Mendota Heights
dated December 28, 1981, filed December 30, 1981, as Document No.
594306.
7. Terms and conditions of and easements contained in the Agreement dated
January 25, 1983, filed May 4, 1983, as Document No. 622498, between
Cray Research, Inc., the City of Mendota Heights and the Board of Water
Commissioners of the City of St. Paul.
8. Drainage and utility easement per Document No. 371255 as shown on the
recorded plat of Inland Industrial Park.
9. Overhead power lines across Outlot A outside of any recorded easements.
<PAGE> 33
EXHIBIT B
DESCRIPTION OF EQUIPMENT AND FURNITURE
All personal property and equipment located within the Leased Premises as of the
date of this Lease except the following:
1. 80 KVA EPE 2000 U Uninterruptible Power Supply Unit and the Phase 3.5
Mechanical Room.
2. 3 Pomona Computer Room Air Conditioners from the Phase 3.5 Computer
Room.
3. Large Shelving in Phase 4 Computer Room.
4. Miscellaneous Art Work which is temporarily being stored in the
Building.
<PAGE> 34
EXHIBIT C
DESCRIPTION OF PLANS AND SPECIFICATIONS
<PAGE> 35
EXHIBIT D
INSURANCE REQUIREMENTS
1. Insurance covering loss or damage to the Leased Premises in the
amount of 100% of the full replacement value thereof (as determined by a credit
appraiser retained from time to time by Landlord) providing protection against
"all risks" of physical damage or loss, including, without limitation, coverage
within the classification of fire, extended coverage, vandalism, malicious
mischief and special extended perils. In addition thereto, Tenant shall maintain
boiler and machinery insurance on all boilers, air conditioning equipment and
other pressure vessels or mechanical equipment located on or about the Leased
Premises.
2. General public liability insurance in a single limit of not less
than $5,000,000.00 for injury or death to any one person, for injury or death
for any number of persons in any one occurrence, and for damage to property,
such insurance to cover the Leased Premises and all streets, alleys and
sidewalks adjacent to the Leased Premises.
3. Worker's compensation insurance covering all persons employed in
connection with any work done on or about the Leased Premises and with respect
to which death or bodily injury claims could be asserted against the Landlord or
the Leased Premises.
4. Such other insurance and in such amounts as may, from time to time,
be reasonably required by Landlord or by any first mortgagee of the Leased
Premises against other insurable hazards which, at the time, are normally
insured against in the case of premises similarly situated.
5. All policies shall name Landlord, Tenant and any other parties in
interest as additional named insurers, and shall contain a clause that the
insured will not cancel or change insurance without first giving Landlord and
other parties in interest at least thirty (30) days prior written notice. All
policies shall, to the greatest extent available, contain waivers of subrogation
in a form acceptable to Landlord. The insurance shall be placed with an
insurance carrier licensed to do business in Minnesota, having a rating in
"Bests Insurance Guide" of "A" or better. Tenant shall, upon occupancy, deliver
to Landlord certificates of copies of such policies and whenever requested by
Landlord in writing, shall notify Landlord that such policies are in full force
and effect.
<PAGE> 36
EXHIBIT E
SUMMARY OF EXISTING ENVIRONMENTAL REPORTS
1. Environmental Compliance/"Green Audits" dated August 29, 1994, prepared
by Bay West.
2. 1996 Hazardous Waste Generator Annual Report and License Renewal
Application.
3. Hazardous Waste Generator License from the Environmental Management
Department of Dakota County, Minnesota.
4. Environmental Site Assessment dated September 8, 1995, prepared by
Maxim Technologies, Inc.
5. Cray Research Industrial Hygiene Monitoring Results.
6. [INSERT HERE THE 1997 PHASE I ENVIRONMENTAL ASSESSMENT WHEN AVAILABLE]
<PAGE> 37
EXHIBIT F
LEASE GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to
MORTENSON PROPERTIES, INC. (Landlord) to enter into the foregoing Lease dated
____________ (the Lease), with BROWN INSTITUTE LTD., as Tenant, the undersigned
hereby absolutely and unconditionally guarantees to Landlord, its successors and
assigns, the prompt and full payment of all rent and all other payments to be
made by Tenant under the Lease, and the full performance and observance by
Tenant of all the other terms, covenants, conditions and agreements therein
provided to be performed and observed by Tenant, for which the undersigned shall
be jointly and severally liable with Tenant. All defined terms in this Guaranty
shall have the same definitions assigned to them in the Lease. The undersigned
hereby waives any notice of nonpayment, nonperformance or nonobservance, or
proof of notice or demand. The undersigned agrees that in the event of a default
by Tenant under the Lease. Landlord may proceed against the undersigned before,
after or simultaneously with proceeding against Tenant. This Guaranty shall not
be terminated, affected, or impaired in any manner by reason of: (1) the
assertion by Landlord against Tenant of any of the rights or remedies reserved
to Landlord pursuant to the provisions of the Lease; (2) the commencement of
summary or other proceedings against Tenant; (3) the failure of Landlord to
enforce any of its rights against Tenant; or (4) the granting by Landlord of any
extensions of time to Tenant. The undersigned further covenants and agrees that:
(1) the undersigned shall be bound by all the provisions, terms, conditions,
restrictions and limitations contained in the Lease which are to be observed or
performed by Tenant thereunder, the same as if the undersigned were named
therein as Tenant; and (2) this Guaranty shall be absolute and unconditional and
shall be in full force and effect with respect to any amendment, addition,
assignment, sublease, transfer or other modification of the Lease, whether or
not the undersigned shall have knowledge or have been notified of or agreed or
consented thereto. The undersigned will not assert against the Landlord any
defensive waiver, release, discharge in bankruptcy, statute of limitations, race
judicata, statute of frauds, anti-deficiency statute, fraud, alter vires acts,
usury, illegality or unenforceability which may or may not be available to the
Tenant with respect to the obligations guaranteed hereunder, or any set off
available against the Landlord in favor of the Tenant. The liability of the
undersigned shall not be affected or impaired by any voluntary or involuntary
dissolution, sale or other disposition of all or other disposition of Tenant's
assets, marshaling of assets and liabilities, receivership, insolvency,
bankruptcy, creditor assignment, reorganization or similar proceedings affecting
the Tenant. The undersigned further agrees that all indebtedness, liability or
liabilities now or at any time or times hereafter owing by the Tenant to the
undersigned are hereby subordinated to the indebtedness guaranteed by this
Agreement. Performance by the undersigned under this Guaranty shall not entitle
the undersigned to be subrogated to any of the indebtedness guaranteed or to any
security therefore unless and until the full amount of the indebtedness
guaranteed has been fully paid. If Landlord at any time is compelled to take
action, by legal proceedings or otherwise, to enforce or compel compliance with
the terms of this Guaranty, the undersigned shall, in addition to any other
rights or remedies to which Landlord may be entitled hereunder or as a matter of
law
<PAGE> 38
or in equity, pay to Landlord all costs, including reasonable attorneys' fees
incurred or expended by Landlord in connection therewith. If the Lease is
disaffirmed by a Trustee in Bankruptcy for Tenant, the undersigned shall, at the
election of Landlord, either assume the Lease and perform all of the covenants,
terms and conditions of Tenant thereunder or enter into a new lease, which said
new lease shall be in form and substance identical to the Lease. All duties and
obligations of the undersigned pursuant to this Guaranty shall be binding upon
the successors and assigns of the undersigned. For purposes of this Guaranty,
the word "Tenant" shall include the successors and permitted assigns of Tenant.
This Guaranty shall be governed by and construed in accordance with the laws of
the State of Minnesota.
The execution and delivery of this instrument has been duly authorized
by the undersigned and constitutes the legal, valid and binding obligation of
the undersigned enforceable against the undersigned in accordance with its
terms. The execution, delivery and performance by the undersigned of its
agreements herein do not violate or contravene the undersigned's Articles of
Incorporation, Bylaws or any other instrument, agreement or order to which the
undersigned is bound.
Dated: , 1997
CAREER EDUCATION CORPORATION
By: illegible
-------------------------------------
Its: illegible
----------------------------------
<PAGE> 1
Exhibit 10.5
INDUSTRIAL REAL ESTATE LEASE
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and are
to be read in conjunction with the Basic Terms.
Section 1.01. DATE OF LEASE: January , 1992
Section 1.02. LANDLORD: FS Realty Partners, Ltd. I,
a Texas Limited Partnership
Address of Landlord: 8201 Preston Road, Suite 450, Dallas, Texas 75225
Section 1.03. TENANT: General Dynamics Corporation,
A Delaware Corporation
Address of Tenant: P.O. Box 85227, San Diego, CA 92186-5227
Section 1.04. PROPERTY: That certain real property and the
buildings, structures and improvements located thereon commonly known as 16250
Technology Drive, San Diego, California (the "Property"), which Property is
more particularly described in Exhibit A attached hereto. An approximately
123,200 square foot office/warehouse building is part of the Property, together
with a 4,800 square foot building containing three (3) "chillers" which service
the office/warehouse building.
Section 1.05. LEASE TERM: 5 years beginning on February 1, 1992 and
ending on January 31, 1997 or such other date as is specified in this Lease
Section 1.06. PERMITTED USES: (See Section 5.01) Office,
engineering, manufacturing and storage of electronic equipment
Section 1.07. TENANT'S GUARANTOR: None
Section 1.08. LANDLORD'S BROKER: (See Article Fourteen) None
Section 1.09. TENANT'S BROKER: Commercial Pacific Properties
Section 1.10 COMMISSION PAYABLE TO LANDLORD'S BROKER: (See Article
Fourteen) None
Section 1.11 INITIAL SECURITY DEPOSIT: (See Paragraphs 3.03 and
13.03(c)) None
Section 1.12 VEHICLE PARKING SPACES ALLOCATED TO TENANT: Tenant may
use any parking space on the Property
Section 1.13. RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT: Ninety Three Thousand Seven Hundred Fifty and No/100
Dollars ($93,750.00) per month for the term hereof as provided in Section 3.01.
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section
4.02); (ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section
4.04); (iv) Maintenance, Repairs and Alterations (See Article Six).
Section 1.14 RIDERS: The following Riders are attached to and made
a part of this Lease: None.
ARTICLE TWO: LEASE TERM
Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.
Section 2.02. INTENTIONALLY DELETED.
Section 2.03. INTENTIONALLY DELETED.
<PAGE> 2
Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse Landlord
for and indemnify Landlord against all damages incurred by Landlord from any
delay by Tenant in vacating the Property. If Tenant does not vacate the Property
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant, Tenant's occupancy of the Property shall be a
"month-to-month" tenancy, subject to all of the terms of this Lease applicable
to a month-to-month tenancy, except that the Base Rent then in effect shall be
increased by twenty-five percent (25%).
Section 2.05. EARLY TERMINATION OPTION. Tenant shall have a one time option
to terminate this Lease on the last day of the thirty-sixth (36th) month of the
Lease Term, provided Tenant notifies Landlord in writing not less than three (3)
months in advance of the last day of thirty-sixth (36th) month of the Lease Term
and not more than six (6) months in advance of the last day of the thirty sixth
(36th) month of the Lease Term. Should Tenant exercise its early termination
option as set forth in this Section 2.05, the early termination date will be
treated as the original termination date of this Lease.
ARTICLE THREE: BASE RENT
Section 3.01. TIME AND MANNER OF PAYMENT. On the first day of the first
month of the Lease Term and each month thereafter, Tenant shall pay Landlord the
Base Rent, in advance, without offset, deduction or prior demand. The Base Rent
shall be payable at Landlord's address or at such other place as Landlord may
designate in writing. Prior to the first day of each calendar month of the lease
term, Landlord shall invoice Tenant for the amount of rent due, at Tenant's
address at such other place as Tenant may designate in writing.
Section 3.02. COST OF LIVING INCREASE. Intentionally deleted.
Section 3.03. SECURITY DEPOSIT INCREASES. Intentionally deleted.
Section 3.04. TERMINATION; ADVANCE PAYMENTS. Upon termination of this Lease
under Article Seven (Damage or Destruction), Article Eight (Condemnation) or any
other termination not resulting from Tenant's default, and after Tenant has
vacated the Property in the manner required by this Lease, an equitable
adjustment shall be made concerning advance rent, any other advance payments
made by Tenant to Landlord, and accrued real property taxes, and Landlord shall
refund the unused portion of the Security Deposit to Tenant or Tenant's
successor.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides otherwise,
all Additional Rent shall be paid with the next monthly installment of Base
Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02. REAL PROPERTY TAXES.
(a) PAYMENT OF TAXES. Tenant shall pay all real property taxes on the
Property during the Lease Term. Such payment shall be made at least ten (10)
days prior to the delinquency date of the taxes. Tenant shall promptly furnish
Landlord with satisfactory evidence that the real property taxes have been paid.
Landlord shall reimburse Tenant for any real property taxes paid by Tenant
covering any period of time prior to or after the Lease Term. If Tenant fails to
pay the real property taxes when due, Landlord may pay the taxes and Tenant
shall reimburse Landlord for the amount of such tax payment as Additional Rent.
(b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i)
any fee, license tax, business license fee, commercial rental tax, levy, charge,
assessment, penalty or tax imposed by any taxing authority against the Property
or land upon which the Property is located; (ii) any tax on the Landlord's right
to receive, or the receipt of, rent or income from the Property or against
Landlord's business of leasing the Property; (iii) any tax or charge for fire
protection, streets, sidewalks, road maintenance, refuse or other services
provided to the Property by any governmental agency; (iv) any tax imposed upon
this transaction or based upon a re-assessment of the Property due to a change
in ownership or transfer of all or part of Landlord's interest in the Property;
and (v) any charge or fee replacing any tax previously included within the
definition of real property tax. "Real property tax" does not, however, include
Landlord's federal or state income, franchise, inheritance or estate taxes.
(c) JOINT ASSESSMENT. Intentionally deleted.
(d) PERSONAL PROPERTY TAXES.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to
Tenant. Tenant shall try to have personal property taxed separately
from the Property.
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(ii) If any of Tenant's personal property is taxed with the Property,
and if Landlord pays such taxes, Tenant shall pay Landlord the taxes for
the personal property within fifteen (15) days after Tenant receives a
written statement from Landlord for such personal property taxes.
(e) TENANT'S RIGHT TO CONTEST TAXES. Tenant may attempt to have the
assessed valuation of the Property reduced or may initiate proceedings to
contest the real property taxes. If required by law, Landlord shall join in the
proceedings brought by Tenant. However, Tenant shall pay all costs of the
proceedings, including any costs or fees incurred by Landlord. Upon the final
determination of any proceeding or contest, Tenant shall immediately pay the
real property taxes due, together with all costs, charges, interest and
penalties incidental to the proceedings. If Tenant does not pay the real
property taxes when due and contests such taxes, Tenant shall not be in default
under this Lease for nonpayment of such taxes if Tenant deposits funds with
Landlord or opens an interest bearing account reasonably acceptable to Landlord
in the joint names of Landlord and Tenant. The amount of such deposit shall be
sufficient to pay the real property taxes plus a reasonable estimate of the
interest, costs, charges and penalties which may accrue if Tenant's action is
unsuccessful, less any applicable tax impounds previously paid by Tenant to
Landlord. The deposit shall be applied to the real property taxes due, as
determined at such proceedings. The real property taxes shall be paid under
protest from such deposit if such payment under protest is necessary to prevent
the Property from being sold under a "tax sale" or similar enforcement
proceeding.
Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property.
Section 4.04 INSURANCE PREMIUMS.
(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
policy of comprehensive general liability insurance at Tenant's expense
insuring against liability arising out of the ownership, use, occupancy or
maintenance of the Property and naming Landlord and, upon request of Landlord,
any lender to whom Landlord has granted a security interest in the Property as
additional insureds. The initial amount of such insurance shall be at least
$5,000,000, and shall be subject to periodic increase based upon inflation,
increased liability awards, recommendation of professional insurance advisers,
and other relevant factors. However, the amount of such insurance shall not
limit Tenant's liability nor relieve Tenant of any obligation hereunder. The
policy shall contain cross liability endorsements, if applicable, and shall
insure Tenant's performance of the indemnity provisions of Paragraphs 5.04(a),
(b) and (c). Tenant shall, at Tenant's expense, maintain such other liability
insurance as Tenant deems necessary to protect Tenant.
(b) HAZARD AND RENTAL INCOME INSURANCE. During the Lease Term, Tenant
shall maintain policies of insurance at Tenant's expense, covering loss of or
damage to the Property in the full amount of its replacement value naming
Landlord and, upon request of Landlord, any lender to whom Landlord has
granted a security interest in the Property as loss payees. Such policies shall
provide protection against all perils included within the classification of
earthquake, fire, extended coverage, vandalism, malicious mischief, special
extended periods (all risk), sprinkler leakage, earthquake sprinkler leakage,
and Inflation Guard endorsement, and any other perils (except flood, unless
required by any lender holding a security interest in the Property) which
Landlord deems necessary. Tenant shall, at Tenant's expense, maintain such
primary or additional insurance on its fixtures, equipment and building
improvements as Tenant deems necessary to protect its interest. During the
Lease Term, Tenant shall also maintain a rental income insurance policy at
Tenant's expense, with loss payable to Landlord in an amount equal to one
year's Base Rent, estimated real property taxes and insurance premiums. Tenant
shall not do or permit to be done anything which invalidates any such insurance
policies.
(c) PAYMENT OF PREMIUMS. Tenant shall promptly pay all premiums for the
insurance policies covering the Property described in Paragraphs 4.04 (a) and
(b) as and when same become due. Tenant shall be liable for the payment of any
deductible amount under any insurance policies.
(d) INSURANCE POLICIES. All insurance required under this Lease shall be
in companies holding a "General Policyholder's Rating" of "A" or better and a
financial size rating of "X" or better, as set forth in the most current issue
of "Best's Insurance Guide." No policy of insurance required to be maintained
by Tenant hereunder shall be subject to cancellation or modification except
upon at least thirty (30) days prior written notice to Landlord, and shall, at
Landlord's request, include a lender's loss payable clause for any lender to
whom Landlord has granted a security interest in the Property. Within thirty
(30) days after the commencement of the Lease Term, Tenant shall deliver to
Landlord copies of any policies required to be maintained by Tenant or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses satisfactory to Landlord. Tenant shall, within thirty (30) days
prior to the expiration of such policies, furnish Landlord with renewals or
"binders" thereof. If Tenant fails to procure and maintain any insurance
required to be maintained by Tenant hereunder, Landlord may, but shall not be
obligated to, procure and maintain such insurance at Tenant's expense. Tenant
shall not do or permit to be done anything which would invalidate any insurance
policy referred to herein. Tenant shall not, at any time, carry any stock of
goods or do anything in, on or about the Property which will in any way tend to
increase the insurance rates upon the Property or Rancho Bernardo Technology
Park and shall pay, upon demand, any
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<PAGE> 4
increase in any insurance premium resulting therefrom, whether or not Landlord
shall have consented to such act or use by Tenant.
Section 4.05. RULES AND REGULATIONS. Tenant shall abide by and Tenant's
use of the Property is subject to the rules and regulations of Landlord and any
industrial park (or similar entity) of which the Property is a part, including
but not limited to the Rancho Bernardo Technology Park. Any fees or assessments
due such organization in connection with the Property shall be the sole
obligation of the Tenant.
Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. The parties agree that a late charge shall represent
a fair and reasonable estimate of the costs Landlord will incur by reason of
such late payment. Therefore, if Landlord does not receive any payment within
twenty (20) days after it becomes due, Landlord shall notify Tenant, in
writing, that said payment has not been received. If Landlord has not received
payment within five (5) days after Tenant has been notified, then Tenant shall
pay to Landlord a late charge equal to one (1%) percent of the overdue amount.
Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest at the rate
of fifteen recent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this Lease
is higher than the rate permitted by law, the interest rate is hereby decreased
to the maximum legal interest rate permitted by law.
Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES.
Intentionally deleted.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. PERMITTED Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.
Section 5.02. MANNER OF USE. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of tenants of the development of which the Property is part, or
which constitutes a nuisance or waste. Tenant shall obtain and pay for all
permits, including a Certificate of Occupancy, required for Tenant's occupancy
of the Property and shall promptly take all substantial and non-substantial
actions necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act and the Americans
With Disabilities Act, except as set forth in Section 16.05 hereof.
Section 5.03. SIGNS AND AUCTIONS. Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.
Section 5.04. INDEMNITY. Tenant shall indemnify Landlord against and
hold Landlord harmless from any and all costs, claims or liability arising
from: (a) Tenant's use of the Property; (b) the conduct of Tenant's business
or anything else done or permitted by Tenant to be done in or about the
Property; (c) any breach or default in the performance of Tenant's obligations
under this Lease; (d) any misrepresentation or breach of warranty by Tenant
under this Lease; or (e) negligent acts or omissions of Tenant. Tenant shall
defend Landlord against any such cost, claim or liability at Tenant's expense
with counsel reasonably acceptable to Landlord. As a material part of the
consideration to Landlord, Tenant hereby assumes all risk of damage to
property or injury to persons in or about the Property arising from any cause,
and Tenant hereby waives all claims in respect thereof against Landlord, except
for any claim arising out of Landlord's negligence or willful misconduct, or
out of latent defects in the property.
Section 5.05. LANDLORD'S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties, or for any other purpose Landlord deems
necessary. Landlord shall give Tenant prior notice of such entry, except in the
case of an emergency. Landlord may place customary "For Sale" or "For Lease"
signs on the Property. Landlord or its agents access to the property is subject
to security requirements of Tenant and of the U.S. Government.
Section 5.06. QUIET POSSESSION. If Tenant pays the rent and complies
with all other terms of this Lease Tenant may occupy and enjoy the Property for
the full Lease Term, subject to the provisions of this Lease.
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ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. EXISTING CONDITIONS. Except as set forth in any rider
requiring Landlord to perform work on the Property prior to the Commencement
Date, and except for any latent defects in the Property, Tenant accepts the
Property in its condition as of the execution of the Lease, subject to all
recorded matters, laws, ordinances, and governmental regulations and orders.
Tenant acknowledges that neither Landlord nor any agent of Landlord has made
any representation as to the condition of the Property or the suitability of
the Property for Tenant's intended use.
Section 6.02 EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c) conditions arising in
or about the Property or upon other portions of any building of which the
Property is a part, or from other sources or places; or (d) any act or omission
of any other tenant of any building of which the Property is a part. Landlord
shall not be liable for any such damage or injury even though the cause of or
the means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's negligence or willful misconduct.
Section 6.03. TENANT'S OBLIGATIONS.
(a) Tenant shall keep the Property (including all structural,
nonstructural, interior, exterior, and landscaped areas, portions, systems and
equipment) in good order, condition and repair during the Lease Term. Tenant
shall promptly replace any portion of the Property or system or equipment in the
Property which cannot be fully repaired, regardless of whether the benefit of
such replacement extends beyond the Lease Term. Tenant shall also maintain a
preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed heating and
air conditioning contractor. However, Landlord shall have the right, upon
written notice to Tenant, to undertake the responsibility for preventive
maintenance of the heating and air conditioning system, at Tenant's expense. It
is the intention of Landlord and Tenant that, at all times during the Lease
Term, Tenant shall maintain the Property in an attractive, first-class and fully
operative condition.
(b) All of Tenant's obligations to maintain and repair shall be
accomplished at Tenant's sole expense. If Tenant fails to maintain and repair
the Property, Landlord may, on ten (10) days' prior notice (except that no
notice shall be required in case of emergency) enter the Property and perform
such repair and maintenance on behalf of Tenant. In such case, Tenant shall
reimburse Landlord for all costs so incurred immediately upon demand.
Landlord's right of entry shall be subject to security requirements of the
Tenant and U.S. Government.
Section 6.04. LANDLORD'S OBLIGATIONS. Except as to any latent defects in
the Property, and subject to the provisions of Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Landlord shall have absolutely
no responsibility to repair, maintain or replace any portion of the Property at
any time. Tenant waives the benefit of any present or future law which might
give Tenant the right to repair the Property at Landlord's expense or to
terminate the Lease due to the condition of the Property.
Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord's prior written consent, except for
non-structural alterations which do not exceed Fifty Thousand Dollars
($50,000) in cost individually or One Hundred Thousand Dollars ($100,000.00)
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violations of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions and improvements
will be accomplished in a good and workmanlike manner in conformity with all
applicable laws and regulations and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.
(b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least ten (10) days' prior
written notice of the commencement of any work on the Property. Landlord may
elect to record and post notices of non-responsibility on the Property.
Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required
to repair under Article Seven (Damage or Destruction). All alterations,
additions and improvements shall become Landlord's property and shall be
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surrendered to Landlord upon the termination of the Lease, except that Tenant
may remove any of Tenant's machinery or equipment which can be removed without
material damage to the Property. Tenant shall repair, at Tenant's expense, any
damage to the Property caused by the removal of any such machinery or equipment.
At any time during the twelve-(12) month period after surrender of the Property
to Landlord, upon Landlord demand Tenant shall promptly remove at its own
expense such portion of any alterations, additions or improvements as may be
requested by a bona fide prospective tenant for the Property and restore the
Property to its prior condition. Notwithstanding the foregoing, in any event and
for any reason whatsoever (with or without a prospective tenant for the
Property), Landlord may require Tenant, at any time during the twelve (12) month
period after surrender of the Property to Landlord, to promptly remove any
alterations, additions or improvements shown and described in Exhibit B attached
hereto and restore the Property to its prior condition, all at Tenant's expense.
In no event, however, shall Tenant remove any of the following materials or
equipment without Landlord's prior written consent: any power wiring or power
panels; lighting or lighting fixtures; wall coverings; drapes, blinds or other
window coverings; carpets or other floor coverings; heaters, air conditioners or
any other heating or air conditioning equipment; fencing or security gates; or
other similar building operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. PARTIAL DAMAGE TO PROPERTY. Tenant shall notify Landlord in
writing immediately upon the occurrence of any damage to the Property. If the
Property is only partially damaged and if the proceeds received by Landlord from
the insurance policies described in Paragraph 4.04(b) are sufficient to pay for
the necessary repairs, this Lease shall remain in effect and Landlord shall
repair the damage as soon as reasonably possible. Landlord may elect to repair
any damage to Tenant's fixtures, equipment, or improvements. If the insurance
proceeds received by Landlord are not sufficient to pay the entire cost of
repair, or if the cause of the damage is not covered by the insurance policies
which Tenant maintains under Paragraph 4.04(b), Landlord may elect either to (a)
repair the damage as soon as reasonably possible, in which case this Lease shall
remain in full force and effect, or (b) terminate this Lease as of the date the
damage occurred. Landlord shall notify Tenant within thirty (30) days after
receipt of notice of the occurrence of the damage, whether Landlord elects to
repair the damage or terminate the Lease. If Landlord elects to repair the
damage, Tenant shall pay the "deductible amount" (if any) under Tenant's
insurance policies, and if the damage was due to an act or omission of Tenant,
Tenant will pay the difference between the actual cost of repair and any
insurance proceeds received by Landlord. If Landlord elects to terminate this
Lease, Tenant may elect to continue this Lease in full force and effect, in
which case Tenant shall repair any damage to the Property and any building in
which the Property is located. Tenant shall pay the cost of such repairs, except
that, upon satisfactory completion of such repairs, Landlord shall deliver to
Tenant any insurance proceeds received by Landlord for the damage repaired by
Tenant. Tenant shall give Landlord written notice of such election within ten
(10) days after receiving Landlord's termination notice. If the damage to the
Property occurs during the last six (6) months of the Lease Term, Landlord may
elect to terminate this Lease as of the date the damage occurred, regardless of
the sufficiency of any insurance proceeds. In such event, Landlord shall not be
obligated to repair or restore the Property and Tenant shall have no right to
continue this Lease. Landlord shall notify Tenant of its election within thirty
(30) days after receipt of notice of the occurrence of the damage.
Section 7.02. TOTAL OR SUBSTANTIAL DESTRUCTION. If the Property is totally
or substantially destroyed by any cause whatsoever, or if the Property is in a
building which is substantially destroyed (even though the Property is not
totally or substantially destroyed), this Lease shall terminate as of the date
the destruction occurred regardless of whether Landlord receives any insurance
proceeds. If the destruction was caused by an act or omission of Tenant, Tenant
shall pay Landlord the difference between the actual cost of rebuilding and any
insurance proceeds received by Landlord.
Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Tenant's use of the Property is impaired. Except for such possible
reduction in rent, Tenant shall not be entitled to any compensation, reduction,
or reimbursement from Landlord as a result of any damage, destruction, repair,
or restoration of or to the Property.
Section 7.04. WAIVER. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial destruction of the leased property. Tenant agrees that
the provisions of Section 7.02 above shall govern the rights and obligations of
Landlord and Tenant in the event of any substantial or total destruction to the
Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is
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taken, either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice to
the other within ten (10) days after receipt of written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority takes possession). If neither Landlord nor Tenant terminate this
Lease, this Lease shall remain in effect as to the portion of the Property not
taken, except that the Base Rent shall be reduced in proportion to the reduction
in the floor area of the Property. Any Condemnation award or payment shall be
distributed in the following order: (a) first, to any ground lessor, mortgagee
or beneficiary under a deed of trust encumbering the Property, the amount of its
interest in the Property; (b) second, to Tenant, only the amount of any award
specifically designated for loss of or damage to Tenant's trade fixtures or
removable personal property; and (c) third, to Landlord, the remainder of such
award, whether as compensation for reduction in the value of the leasehold, the
taking of the fee, or otherwise. If this Lease is not terminated, Landlord shall
repair any damage to the Property caused by the Condemnation, except that
Landlord shall not be obligated to repair any damage for which Tenant has been
reimbursed by the condemning authority. If the severance damages received by
Landlord are not sufficient to pay for such repair, Landlord shall have the
right to either terminate this Lease or make such repair at Landlord's expense.
Except as stated in (b) above, Tenant waives any right to any further award. In
consideration thereof, Landlord agrees to pay to Tenant a reasonable amount to
compensate it for moving expenses to another location in the San Diego area if
this Lease is terminated as set forth herein and Tenant so relocates.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by assignment, mortgage, sublease, transfer, operation of law,
or act of Tenant, without Landlord's prior written consent, except as provided
in Section 9.02 below. Landlord shall grant or withhold its consent as provided
in Section 9.04 below. Any attempted transfer without consent shall be void and
shall constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than 20% of the partnership
interests shall require Landlord's consent.
Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this Lease.
Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Tenant's transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Tenant's transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Tenant's liability under
this Lease.
Section 9.04. LANDLORD'S ELECTION. Tenant's request for consent to any
transfer described in Section 9.01 above shall be accompanied by a written
statement setting forth the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and rent and security
deposit payable under any assignment or sublease), and any other information
Landlord deems relevant. Landlord shall have the right (a) to withhold consent,
if reasonable; (b) to grant consent; or (c) if the transfer is a sublease of
the Property or an assignment of this Lease, to terminate this Lease as of the
effective date of such sublease or assignment, in which case Landlord may elect
to enter into a direct lease with the proposed assignee or subtenant.
Section 9.05. NO MERGER. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord thereunder.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. COVENANTS AND CONDITIONS. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants
and conditions.
Section 10.02. DEFAULTS. Tenant shall be in material default under this
Lease:
(a) If Tenant's vacation of the Property results in the cancellation of
any insurance described in Section 4.04;
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(b) If Tenant fails to pay rent or any other charge required to be paid by
Tenant, as and when due:
(c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.
(d) (i) If Tenant makes a general assignment or general arrangement for the
benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days. If a court of competent jurisdiction determines that any of
the acts described in this subparagraph (d) is not a default under this Lease,
and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the difference between the rent
(or any other consideration) paid in connection with such assignment or sublease
and the rent payable by Tenant hereunder.
Section 10.03. REMEDIES. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which had been earned at the time
of the termination; (ii) the worth at the time of the award of the amount by
which the unpaid Base Rent, Additional Rent and other charges which would have
been earned after termination until the time of the award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; (iii)
the worth at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which would have been paid for the balance of
the term after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under the Lease or which in the
ordinary course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses incurred by the Landlord in maintaining or
preserving the Property after such default, the cost of recovering possession of
the Property, expenses of reletting, including necessary renovation or
alteration of the Property, Landlord's reasonable attorneys' fees incurred in
connection therewith, and any real estate commission paid or payable. As used in
subparts (i) and (ii) above, the "worth at the time of the award" is computed by
allowing interest on unpaid amounts at the rate of fifteen percent (15%) per
annum, or such lesser amount as may then be the maximum lawful rate. As used in
subpart (iii) above, the "worth at the time of the award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus 1%. If Tenant shall have abandoned the
Property, Landlord shall have the option of (i) retaking possession of the
Property and recovering from Tenant the amount specified in this Paragraph
10.03(a), or (ii) proceeding under Paragraph 10.03(b);
(b) Maintain Tenant's right to possession, in which this Lease shall
continue in effect whether or not Tenant shall have abandoned the Property. In
such event, Landlord shall be entitled to enforce all of Landlord'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 hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.
Section 10.04 CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. However, Tenant's right to quiet possession of the Property during
the Lease Term shall not be disturbed if Tenant pays the rent and performs all
of Tenant's obligations under this Lease and is not otherwise in default. If
any ground lessor,
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beneficiary or mortgagee elects to have this Lease prior to the lien of its
ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.
Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee or
purchaser at a foreclosure sale, Tenant shall attorn to the Transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. Such subordination and attornment
documents may contain such provisions as are customarily required by any ground
lessor, beneficiary under a deed of trust or mortgagee. If Tenant fails to do so
within ten (10) days after written request, Tenant hereby makes, constitutes and
irrevocably appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. ESTOPPEL CERTIFICATES.
(a) Upon Landlord's written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement certifying: (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has been canceled or
terminated; (iii) that the last date of payment of the Base Rent and other
charges and the time period covered by such payment; (iv) that Landlord is not
in default under this Lease (or, if Landlord is claimed to be in default,
stating why); and (v) such other matters as may be reasonably required by
Landlord or the holder of a mortgage, deed of trust or lien to which the
Property is or becomes subject. Tenant shall deliver such statement to Landlord
within ten (10) days after Landlord's request. Any such statement by Tenant may
be given by Landlord to any prospective purchaser or encumbrancer of the
Property. Such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord within such ten
(10) day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been canceled or terminated except as
otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be estopped from denying
the truth of such facts.
Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as are reasonably required by Landlord to verify the net worth of
Tenant, or any assignee, subtenant, or guarantor of Tenant. In addition, Tenant
shall deliver to any lender designated by Landlord any financial statements
required by such lender to facilitate the financing or refinancing of the
Property. Tenant represents and warrants to Landlord that each such financial
statement is a true and accurate statement as of the date of such statement. All
financial statements shall be confidential and shall be used only for the
purposes set forth herein.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. LEGAL PROCEEDINGS. Tenant shall reimburse Landlord, upon
demand, for any costs or expenses incurred by Landlord in connection with any
breach or default of Tenant under this Lease, whether or not suit is commenced
or judgment entered. Such costs shall include legal fees and costs incurred for
the negotiation of a settlement, enforcement of rights or otherwise.
Furthermore, if any action for breach of or to enforce the provisions of this
Lease is commenced, the court in such action shall award to the party in whose
favor a judgment is entered, a reasonable sum as attorneys' fees and costs. Such
attorneys' fees and costs shall be paid by the losing party in such action.
Tenant shall also indemnify Landlord against and hold Landlord harmless from all
costs, expenses, demands and liability incurred by Landlord if Landlord becomes
or is made a party to any claim or action (a) instituted by Tenant, or by any
third party against Tenant, or by or against any person holding any interest
under or using the Property by license of or agreement with Tenant; (b) for
foreclosure of any lien for labor or material furnished to or for Tenant or such
other person; (c) otherwise arising out of or resulting from any act or
transaction of Tenant or such other person; or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended. Tenant shall
defend Landlord against any such claim or action at Tenant's expense with
counsel reasonably acceptable to Landlord. Notwithstanding the foregoing, Tenant
will not pay Landlord's legal fees in any action in which Landlord is found to
be negligent.
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Section 12.02. LANDLORD's CONSENT. Tenant shall pay Landlord's reasonable
attorney's fees incurred in connection with Tenant's request for Landlord's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.
Section 13.02. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive
any and all rights of recovery against the other, or against the officers,
employees, agent or representatives of the other, for loss of or damage to its
property or the property of others under its control, if such loss or damage is
covered by any insurance policy in force (whether or not described in this
Lease) at the time of such loss or damage. Upon obtaining the policies of
insurance described herein, Landlord and Tenant shall give notice to the
insurance carrier or carriers of the foregoing mutual waiver of subrogation.
Section 13.03. LANDLORD'S LIABILITY; CERTAIN DUTIES.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or the leasehold estate under a
ground lease of the Property at the time in question. Each Landlord is obligated
to perform the obligations of Landlord under this Lease only during the time
such Landlord owns such interests or title. Any Landlord who transfers its title
or interest is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of transfer.
However, each Landlord shall deliver to its transferee all funds previously paid
by Tenant if such funds have not yet been applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than thirty (30) days to cure, Landlord
shall not be in default if such cure is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
(c) Intentionally deleted
Section 13.04. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.05. INTERPRETATION. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permission.
Section 13.06. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This Lease
is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
Section 13.07. NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid. Notices to Tenant shall be delivered
to the Electronics Division General Counsel at the address specified in Section
1.03 above. Notices to Landlord shall be delivered to the address specified in
Section 1.02 above. All notices shall be effective upon delivery or attempted
delivery in accordance with this Section 13.07. Either party may change its
notice address upon written notice to the other party.
Section 13.08. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
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Section 13.09. NO RECORDATION. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short-Form" memorandum of this Lease executed by both parties be
recorded.
Section 13.10. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 13.11. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person signing this Lease for Tenant represents and warrants that he is a
general partner of the partnership, that he has full authority to sign for the
partnership and that this Lease binds the partnership and all general partners
of the partnership. Tenant shall give written notice to Landlord of any general
partner's withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement
of partnership or certificate of limited partnership.
Section 13.12. JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.
Section 13.13. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
Section 13.14. EXECUTION OF LEASE. This Lease may be executed in
counterparts, and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. The delivery of this Lease by
Landlord to Tenant shall not be deemed to be an offer and shall not be binding
upon either party until executed and delivered by both parties.
ARTICLE FOURTEEN: BROKERS
Section 14.01. BROKER'S FEE. Intentionally deleted.
Section 14.02. PROTECTION OF BROKERS. Intentionally deleted.
Section 14.03. NO OTHER BROKERS. Tenant represents and warrants to
Landlord that the brokers named in Sections 1.08 and 1.09 above are the only
agents, brokers, finders or other parties with whom Tenant has dealt who are or
may be entitled to any commission or fee with respect to this Lease or the
Property.
ARTICLE FIFTEEN: TENANT IMPROVEMENT ALLOWANCE
Landlord shall contribute to any alterations, additions and improvements
made to the Property by Tenant (the "Tenant Improvements") up to a maximum of
One Hundred Eighty Seven Thousand Five Hundred and No/100 Dollars ($187,500.00)
(the "Allowance") over the Lease Term, which Tenant Improvements shall be
constructed in accordance with the terms of this Lease, including, but not
limited to, the terms of Article Six hereof and this Article Fifteen. Payment
of the Allowance shall be in installments as, when and if the Tenant
Improvements are completed, and within twenty-one (21) days after presentation
to and approval of paid invoices and receipts by Landlord. All requests for
payments of the Allowance shall be accompanied by lien releases from all
contractors and subcontractors for work performed and materials provided and,
if applicable, the certificate of completion from the supervising architect. In
the event of any mechanic's or other lien, claim or encumbrance arising out of
or in connection with the Tenant Improvements being asserted against the
Property, Landlord, or Landlord's property, Tenant shall discharge in full said
lien, claim or encumbrance within fifteen (15) days following notice thereof.
If Tenant fails to discharge the lien within said fifteen (15) day period,
Landlord may, at its option, discharge same and, upon Landlord's demand, Tenant
shall promptly reimburse Landlord for all costs incurred in discharging such
lien. Tenant shall indemnify and hold harmless Landlord from and against any
and all losses, damages, costs (including costs of suit and attorneys fees),
liabilities, or causes of action for injury to or death or any person, for
damage to any property, and for mechanics', materialmen's or other liens or
claims arising out of or in connection with the construction of the Tenant
Improvements. Nothing contained herein shall constitute an agreement to subject
the fee or leasehold interest in the Property to any lien or other encumbrance.
Notwithstanding anything to the contrary contained herein, should Tenant be in
material default under this Lease, no payment of the Allowance shall be made by
Landlord. Tenant shall not take any action which would cause any violation of
applicable laws to occur
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which would not have occurred but for the construction of the Tenant
Improvements. The rights of Tenant under this Article Fifteen are not
transferable.
ARTICLE SIXTEEN: ENVIRONMENTAL MATTERS
Section 16.01 DEFINITIONS.
(a) "Environment" means the navigable waters, the waters of the
United States, the waters of the contiguous zone, and the ocean waters of which
the natural resources are under the exclusive management authority of the
United States under the Fishery Conservation and Management Act of 1976, and
(2) any other surface water, groundwater, drinking water, drinking supply,
property, land surface, subsurface strata, or ambient air within the United
States or under the jurisdiction of the United States or any state or local
governmental entity.
(b) "Environmental Liabilities" means any and all administrative,
regulatory, or judicial actions, suits, allegations, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigations,
liabilities, losses, costs (including remedial, investigative and/or
monitoring costs), settlements, assessments, penalties, interest, legal fees
and costs of court relating in any way to any Hazardous Materials or
Environmental Laws incurred by or asserted against the Landlord based on,
arising out of or caused by acts or omissions of Tenant or its agents,
employees, directors, officers, shareholders, contractors, representatives,
invitees, successors or assigns, including without limitation: (i) any and all
claims by any governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial, or other actions or damages pursuant to any
applicable Environmental Laws, and (ii) any and all claims, brought under
common law or statute, by any party seeking damages, contribution,
indemnification, cost recovery, compensation, or injunctive relief resulting
from Hazardous Materials or arising from alleged injury or threat of injury to
health, property, safety, or the Environment.
(c) "Environmental Contamination" means the presence of one or more
Hazardous Materials in the Environment which is not allowed by Environmental
Laws or which is not in compliance with Environmental Laws.
(d) "Environmental Laws" means any federal, state, or local statute,
law, rule, regulation, ordinance, code, policy or rule of common law now in
effect and in each case as amended to date and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree, or judgment, relating to the Environment, human health or
Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sections 9601, et. seq.; The Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. Sections 6901, et seq.; the Federal
Water Pollution Control Act, as amended, 88 U.S.C. Sections 1201, et seq.; the
Toxic Substances Control Act, 15 U.S.C. Sections 2601, et seq.; the Clean Air
Act, 42 U.S.C. Sections 7401, et seq.; and the Safe Drinking Water Act, 42
U.S.C. Sections 3808, et. seq.
(e) "Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials, asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contains dielectric fluid containing
levels of polychlorinated biphenyls (PCBs), and radon gas; (ii) any chemicals,
materials, or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants," or "pollutants," or words of similar import, under any
applicable Environmental Laws; and (iii) any other chemical, material or
substance which is in any way regulated by any federal, state or local
governmental authority, agency, or instrumentality.
Section 16.02 TENANT'S REPRESENTATIONS AND WARRANTIES. Tenant makes the
following representations and warranties:
(a) Tenant represents and warrants that its operations are, and will
remain, in compliance with all Environmental Laws.
(b) Tenant represents and Warrants that it has secured, and will
continue to secure, all required permits, licenses, approvals, permission, or
authorizations necessary for its operations to comply with all Environmental
Laws. Tenant represents and warrants that it has had full and fair opportunity
to investigate the environmental condition of the property prior to entering
into this Lease and that it has been provided with all requested information
pertaining to the environmental condition of the property.
(c) Tenant represents and warrants that it has not received written
or oral notice of any actual, impending, or potential proceedings, allegations,
claims, losses or actions of any kind in connection with the Environmental Laws
pertaining to the Property, nor does it have any knowledge or reason to suspect
that any such proceedings, allegations, claims, losses or actions may be
brought or may arise.
12
<PAGE> 13
(d) Tenant represents and warrants that it is not subject to the
terms of any consent order, consent judgment, court or administrative order or
judgment, agreement, schedule, or decree issued by any administrative agency or
court of competent jurisdiction in connection with the Property.
(e) Tenant represents and warrants that there have been no spills,
releases, or disposal of Hazardous Materials into the Environment from Tenant's
operations on the Property in amounts that constitute an actionable violation
of Environmental Laws except as previously reported in writing to Landlord.
(f) Tenant represents and warrants that it has no knowledge of, or
reason to suspect the presence of any Environmental Contamination on, in or
under the Property or any site at which Tenant's materials generated on the
Property have been placed, taken, disposed or released.
(g) Tenant represents and warrants that it will maintain insurance
as agreed in Section 4.04 herein to cover its operations on the Property for
any Environmental Liabilities and that it will name Landlord and, upon request
of Landlord, any lender to whom Landlord has granted a security interest in the
Property as an additional insured and provide Landlord with indicia that such
insurance is in place during the entirety of the lease term.
(h) Tenant agrees to maintain compliance with the representations
and warranties set forth herein at all times and shall notify Landlord
immediately, but in no event later than 24 hours, upon any failure to maintain
such compliance.
Section 16.03 TENANT'S COVENANTS.
(a) Tenant Shall Conduct Only Approved Activities on the Property.
Tenant entered this Lease to perform on the Property activities directly
related to office use, engineering, manufacturing and storage of electronic
equipment ("Approved Activities"). Tenant shall conduct only Approved
Activities on the Property, unless Tenant first receives written consent from
Landlord to undertake any other Activities on the Property.
(b) Tenant Shall Notify Landlord of Environmental Contamination on
the Property. Tenant shall notify Landlord immediately, but in no event later
than 24 hours, upon Tenant becoming aware or reasonably suspecting that
Environmental Contamination may exist on the Property, regardless of whether
the Environmental Contamination was caused by the Tenant.
(c) Tenant Shall Notify Landlord of Non-Compliance with
Environmental Laws. Tenant shall notify Landlord immediately, but in no event
later than 24 hours, upon Tenant becoming aware or reasonably suspecting that
Tenant, or any other party (including Landlord) which has conducted activities
on the Property is not or may not be in compliance with all Environmental Laws
with respect to the Property and shall immediately provide Landlord with all
information available, written or oral, concerning whatever efforts Tenant may
have taken in response to such non-compliance.
(d) Tenant Shall Notify Landlord of Information Received Regarding
Environmental Contamination, Liabilities or Laws. Tenant shall notify Landlord
immediately, but in no event later than 24 hours, after Tenant has received any
information or notification that Tenant or Landlord is responsible for or
potentially responsible for any Environmental Liabilities, Environmental
Contamination or breach of any Environmental Laws. Tenant shall provide
Landlord with copies of any information received by Tenant or requested from
Tenant by any entity regarding such information or notification, including but
not limited to engineering studies, correspondence to and from federal and
state agencies, and corrective action plans.
(e) Tenant Shall Clean Up Property Prior to Evacuating the Property.
Prior to evacuation of the Property or whenever required by law or at the
request of Landlord, Tenant shall clean up all Tenant-caused Environmental
Contamination on, under, or adjacent to the Property, or wherever located, in
accordance with the requirements of all Environmental Laws and to Landlord's
satisfaction and the Property shall remain in its cleaned-up condition as of
the time of Tenant's evacuation. Should Tenant not fulfill its obligations
under this paragraph, Tenant shall reimburse Landlord for all such clean-up
costs as well as indemnify Landlord for all such costs under Section 16.04 of
this Lease.
(f) Tenant shall not cause or permit any Hazardous Material to be
brought upon, stored, or used in or about the Property by Tenant, its agents,
representatives, employees, contractors, or invitees, unless (a) such Hazardous
Material is used for Tenant's business, and (b) Tenant's business is an
Approved Activity under section 16.03(a) of this Lease.
(g) Tenant Agrees to Maintain Compliance with Foregoing Covenants.
Tenant agrees to maintain compliance with the covenants set forth herein at all
times and shall notify Landlord immediately, but in no event later than 24
hours, upon any failure to maintain such compliance.
13
<PAGE> 14
Section 16.04 INDEMNIFICATION OF LANDLORD.
Notwithstanding any other provision in this Lease, Tenant shall
indemnify, defend and hold harmless Landlord and its directors, officers,
shareholders, employees, representatives, agents, successors and assigns, from
and against any and all Environmental Liabilities by whomsoever asserted,
arising from: (1) acts or omissions of Tenant, its agents, employees,
directors, officers, shareholders, contractors, representatives, invitees,
successors or assigns on or in connection with the Property, and (2) any and
all breaches of the representations and warranties and covenants set forth
herein. Notwithstanding any other provision in this Lease, Tenant's
indemnification obligations shall survive the termination of this Lease, and
shall be effective regardless of when claims or liabilities are made or
asserted. The undersigned hereby agree that Tenant's obligations and
liabilities hereunder are in no way limited by that certain letter agreement
dated June 3, 1987 by and between Landlord, Tenant and Continental Illinois
National Bank and Trust Company of Chicago, and that any and all obligations
contained therein shall continue in full force and effect in addition to, not
in place of, the obligations and liabilities set forth in this Lease.
Section 16.05 AMERICANS WITH DISABILITIES ACT OF 1990.
Notwithstanding any other provisions in this Lease, any alterations,
improvements, or additions to the structural portion of the building and/or
plumbing in the Property, which may be required on or after January 26, 1992 by
the provisions of Title III of the Americans with Disabilities Act of 1990,
shall be the responsibility of, and shall be paid for by, the Landlord.
Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialled all Riders
which are attached to or incorporated by reference in this Lease.
Signed on , 1991 FS REALTY PARTNERS, LTD. I,
------------- a Texas limited partnership
at
------------------------------- By: Sarofim Investors Realty Fund
General Partner
By: Sarofim Trust Company
Trustee
Its: /s/ Raye G. White
------------------
"LANDLORD"
GENERAL DYNAMICS CORPORATION, A
Delaware Corporation
Signed on 3 March, 1992
at San Diego, California
By: /s/ James A. Slater
--------------------
Its: Vice President and General Manager
Electronics Division
"TENANT"
14
<PAGE> 15
EXHIBIT A
The Property
The land referred to herein is situated in the State of California, County
of San Diego, and is described as follows:
LOT 2 OF RANCHO BERNARDO TECHNOLOGY PARK, IN THE CITY OF SAN DIEGO, COUNTY
OF SAN DIEGO STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 10264, FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 17, 1981.
<PAGE> 16
EXHIBIT "B"
GENERAL DYNAMICS
Electronics Division
BUILDING 61
[DIAGRAM OF BUILDING 61]
Improvements marked [with a squiggly line] to be removed upon Landlord request
pursuant to Section 6.06
* Turnstiles to be removed upon Landlord request pursuant to Section 6.06
** The contents of the storage yards shall be removed upon Landlord request
pursuant to Section 6.06
<PAGE> 17
16250 Technology Drive
ASSIGNMENT OF LEASE
This Assignment of Lease (this "Assignment") is made this 20th day of
November, 1992 (the "Assignment Date"), by and between General Dynamics
Corporation, a Delaware corporation ("Assignor"), and GDE Systems, Inc., a
Delaware corporation ("Assignee").
RECITALS
A. Assignor and FS Realty Partners, Ltd. I ("Landlord"), a Texas limited
partnership, and parties to that certain Lease dated January 31, 1992 (the
"Lease"), pursuant to which Landlord leases to Assignor the building and
improvements commonly known as 16250 Technology Drive, San Diego, California
(the "Premises"), for a term that commenced on February 1, 1992 and ends on
January 31, 1997.
B. Assignor and Assignee are parties to that certain Asset Purchase
Agreement, dated as of October 5, 1992, pursuant to which Assignor agreed to
sell and assign to Assignee all of the assets of its Electronics Division,
including Assignor's interest as lessee under the Lease.
C. Assignor desires to assign to Assignee its right, title and interest in
and to the Lease, and Assignee desires to accept such assignment and assume
Assignor's obligations thereunder.
IN CONSIDERATION OF the terms and covenants set forth below and Ten and
no/100's Dollars ($10.00), the receipt and sufficiency of which are hereby
acknowledged, Assignor and Assignee agree as follows:
1. Assignment by Assignor.
(a) Assignor does hereby sell, assign and transfer to Assignee all of
Assignor's right, title and interest in and to the Lease, from and after the
Assignment Date including, without limitation, all of Assignor's right, title,
and interest in any security deposit or other deposits made pursuant to the
terms of the Lease.
(b) Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all claims, losses, liabilities, costs and
expenses (including reasonable attorneys' fees and costs) arising from any
liability whatsoever relating in any way to obligations under the Lease which
accrued prior to the Assignment Date.
(c) Assignor represents that it has delivered to Assignee a true and
correct copy of the Lease.
<PAGE> 18
2. Acceptance and Assumption of Assignor's Assignment.
(a) Assignee hereby assumes and agrees to make all payments and
to perform and keep all promises, covenants, conditions, obligations and
agreements under the Lease by Assignor to be made, kept and performed,
commencing on the Assignment Date.
(b) Assignee agrees that the taking by Landlord of any remedy
against Assignor shall not preclude Landlord from the exercise of such remedy
against Assignee, or Assignee's successors or assigns simultaneously with that
against Assignor.
(c) Assignee agrees to indemnify, defend and hold harmless
Assignor from and against any and all claims, losses, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs) arising from
any liability whatsoever relating in any way to obligations under the Lease
which accrue on or after the Assignment Date. If Assignee defaults in its
obligations under the Lease and Assignor pays rent to Landlord or fulfills any
of Assignee's other obligations in order to prevent Assignee from being in
default or in order to cure any default by Assignee, Assignee immediately shall
reimburse Assignor for the amount of rent or costs incurred by Assignor in
fulfilling Assignee's obligations under this Assignment or the Lease.
(d) Assignee agrees that the Premises shall be used and
occupied for the purposes permitted under the Lease and for no other purpose.
(e) Assignee acknowledges that it has received a copy of the
Lease.
(f) Assignee agrees to attorn to Landlord and recognize
Landlord as the landlord under the Lease.
3. Future Amendments. Assignee shall not enter into any agreement
with Landlord that amends the Lease (or extends the term of the Lease) without
Assignor's consent, unless by its terms such amendment is not binding upon
Assignor. Any amendment of the Lease in violation of this provision shall have
no force or effect on Assignor.
4. Fees and Costs. If any party commences an action against any of
the parties arising out of or in connection with this Assignment, the
prevailing party or parties shall be entitled to recover from the losing party
or parties, reasonable attorneys' fees and costs of suit.
5. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
-2-
<PAGE> 19
6. Miscellaneous. This Assignment is governed by and shall be
construed in accordance with the internal laws of the state in which the
Premises are located. No party to this Assignment may assign or delegate any of
its rights or obligations hereunder without the written consent of the other
party hereto. This Assignment constitutes the entire agreement of the parties
hereto and supersedes all previous agreements, promises, representations,
undertakings and negotiations between the parties hereto, whether written or
oral, with respect to the subject matter hereof. This Assignment may be executed
in counterparts, both of which taken together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
as of the date first above written.
Assignor:
GENERAL DYNAMICS CORPORATION,
a Delaware corporation
By: /s/ E. Alan Klobasa
-------------------
Name: E. Alan Klobasa
Title: Staff Vice President and
Secretary
Assignee:
GDE Systems, Inc.
a Delaware corporation
By: [Illegible]
---------------
Name:
Title:
-3-
<PAGE> 20
RENEWAL AND MODIFICATION OF LEASE AGREEMENT
This Renewal and Modification of Lease Agreement (this "Amendment") is
entered into as of the 16th day of August, 1996 by and between FS Realty
Partners, Ltd. 1, a Texas limited partnership ("Landlord") and GDE Systems,
Inc., a Delaware corporation ("Tenant").
RECITALS:
A. Landlord and General Dynamics Corporation, a Delaware corporation
("General Dynamics") entered into that certain Industrial Real Estate Lease
(the "Lease") dated January 31, 1992 covering the real property and the
buildings, structures and improvements located thereon commonly known as 16250
Technology Drive, San Diego, California, as more particularly described in
Exhibit A of the Lease (referred to herein and in the Lease as the "Property").
B. General Dynamics assigned all of its right, title and interest in and
to the Lease to Tenant pursuant to an Assignment of Lease dated November 20,
1992 (the "GD Assignment").
C. Landlord and Tenant desire to renew and modify the Lease as more
particularly set forth in this Amendment.
NOW THEREFORE, for and in consideration of the mutual promises set forth
herein, Landlord and Tenant hereby agree as follows:
1. DEFINITIONS: Unless otherwise defined herein, capitalized terms shall
have the meaning given such terms in the Lease.
2. TERM: The Lease Term is hereby extended until January 31, 2007.
Tenant has no further right to extend the Lease Term.
3. BASE RENT: A. For the period beginning February 1, 1997 and ending
January 31, 1998, the Base Rent shall be $1,125,000 per year, payable monthly
in advance in installments of $93,750.00 each.
B. Base Rent shall be subject to an annual cost of living increase,
beginning on February 1, 1998, and on February 1st of each year thereafter
(such adjustment dates hereinafter individually referred to as the "Adjustment
Date") throughout the Lease term as extended. The basis for computing the
adjustment is the Consumer Price Index for All Urban Consumers (1982-84 = 100)
for the Los Angeles - Anaheim - Riverside Area (the "Index"), as published by
the U.S. Department of Labor, Bureau of Labor Statistics. The Index published
for the month of November preceding each Adjustment Date shall be compared with
the Index published for November, 1996, and the Base Rent shall be increased in
1
<PAGE> 21
accordance with the percentage increase (if any) between such Indexes. No
adjustment shall decrease the Base Rent below the amount in effect immediately
prior to the adjustment. Landlord may calculate and give notice of the
adjustment after the effective date of the increase, since the Index may not be
available as of the Adjustment Date. In such event, Tenant shall continue to
pay the Base Rent at the rate in effect prior to the Adjustment Date until
Landlord gives notice of the adjustment. Within thirty (30) days after receipt
of such notice, Tenant shall pay in one lump sum the increase due from the
Adjustment Date to the date of the notice. If the Index is discontinued or
materially revised during the Lease Term, Landlord shall adopt a substitute
governmental Index or computation that reasonably reflects consumer prices for
purposes of computing the cost-of-living adjustment. In no event however, shall
the annual rental increase be less than the Minimum Base Rent (as set forth
below) nor more than the Maximum Base Rent (as set forth below) for the
applicable Lease Year. "Lease Year" means any twelve month period beginning on
February 1 and ending on the following January 31.
<TABLE>
<CAPTION>
Lease Year Maximum Base Rent Minimum Base Rent
<S> <C> <C>
2/1/97 - 1/31/98 $1,125,000 $1,125,000
2/1/98 - 1/31/99 $1,170,000 $1,147,500
2/1/99 - 1/31/00 $1,215,000 $1,170,000
2/1/00 - 1/31/01 $1,260,000 $1,192,500
2/1/01 - 1/31/02 $1,305,000 $1,215,000
2/1/02 - 1/31/03 $1,350,000 $1,237,500
2/1/03 - 1/31/04 $1,395,000 $1,260,000
2/1/04 - 1/31/05 $1,440,000 $1,282,500
2/1/05 - 1/31/06 $1,485,000 $1,305,000
2/1/06 - 1/31/07 $1,530,000 $1,327,500
</TABLE>
Any addition to Base Rent necessary to amortize the Excess costs associated
with the HVAC Retrofit (as defined in Section 4(b) below) shall not be taken
into consideration in making the adjustment to Base Rent set forth in this
Section 3 and such addition shall be made and added to Base Rent only after
the adjustment to Base Rent is made pursuant to this Section 3.
4. LANDLORD IMPROVEMENTS: Notwithstanding the provisions of Article
Six relating to the parties' respective responsibilities for improvements and
repairs and the costs thereof, Landlord hereby agrees to perform the
improvements and repairs set forth below in this Section 4 (collectively, the
"Work") at its sole cost and expense, except as may be otherwise noted herein.
The Work shall be completed in accordance with all applicable ordinances and
codes. Landlord agrees that all warranties provided by contractors performing
the Work shall be assigned to Tenant. Landlord shall cause all contractors to
conform with Tenant's security requirements, as set forth in Exhibit "A"
attached hereto and incorporated herein by this reference, and such additional
reasonable security requirements as Tenant may request.
2
<PAGE> 22
(a) ROOF: Landlord hereby agrees to repair the roof on the Property on or
before January 31, 1998 (the "Completion Date") and to obtain, in connection
with such repair, a 10-year warranty covering the roof. Landlord and Tenant
acknowledge that Tenant is currently entitled to the Allowance in the amount of
$187,500 referred to in Article Fifteen of the Lease for the purpose of funding
alternations, additions and improvements to the Property and that the Allowance
shall be applied against the cost of repairing the roof in accordance with this
paragraph (a). If the costs of performing the roof repair exceed the Allowance,
such Allowance shall be deemed to be expended and Landlord shall pay all costs
in excess of the Allowance, regardless of the total amount. Landlord shall have
the right to select the contractor to perform such roof repair and upon the
completion of the repair to the roof, Tenant agrees to look to such contractor
and the roof warranty as its sole and exclusive remedy for any and all claims
regarding the roof (other than claims that are attributable to damage to the
roof caused by Landlord). The roof repair shall be performed in a manner that
will not unreasonably interfere with Tenant's business operations, provided,
however, that Tenant expressly grants to Landlord the right to perform the work
during normal business hours. Upon completion of the roof repairs, Tenant shall
be responsible for maintenance and repair of the roof in accordance with Section
6.03 of the Lease.
(b) HVAC: Landlord agrees to upgrade the Property's existing heating,
ventilating and air conditioning system (the "HVAC System") by (i) replacing
two of the existing three chillers with new 150 ton chillers, (ii) modifying
the air handlers and pumps, and (iii) performing certain work relating to the
HVAC System, as more particularly set forth in Exhibit "B", attached hereto and
incorporated herein by this reference, the report dated April 2, 1996 by
Consultant Resource Services, Inc. (all such work hereinafter referred to as
the "HVAC Retrofit"). Landlord agrees to have the HVAC Retrofit substantially
completed on or before the Completion Date. The costs of performing the HVAC
Retrofit shall be paid by Landlord, subject to the following: (A) Landlord
shall apply for and take all steps necessary to obtain a rebate (the "Rebate")
from San Diego Gas and Electric Company with respect to the HVAC Retrofit and
such Rebate, if granted, shall be credited to the cost of the HVAC Retrofit,
and (B) if the Net HVAC Cost (as defined below) is greater that $200,000 (the
amount by which the Net HVAC Costs exceeds $200,000 is referred to herein as
the "Excess"), then upon substantial completion of the HVAC Retrofit, the Base
Rent for each year shall be increased by an amount equal to $15,872 per annum
for each $100,000 of Excess, or fraction thereof, over the remaining Lease
Term. The term "Net HVAC Costs" means Landlord's actual costs of performing the
HVAC Retrofit reduced by the amount of the Rebate, if any. Landlord shall have
the right to select the contractor or contractors to perform the HVAC Retrofit.
The HVAC Retrofit shall be performed in a manner that will not unreasonably
interfere with Tenant's business operations, provided that Tenant expressly
grants to Landlord the right to perform the HVAC Retrofit during normal
business hours. Upon completion of the HVAC Retrofit, Tenant shall be
responsible for maintenance and repair of the HVAC System in accordance with
Section 6.03 of the Lease.
(c) EXTERIOR PANELS: Landlord shall repair any damage to the Property that
is attributable to the bubbles that appear form time to time in the exterior
panels of the building on
3
<PAGE> 23
the Property. Such repairs shall be completed within 90 days after written
notification of the need for such repairs is given to Landlord by Tenant.
(d) PARKING LOT REPAIRS: Within two years from the date hereof, Landlord
agrees to install a new asphalt overlay on the existing parking lot and
restripe such parking lot upon completion of the overlay. Tenant is responsible
for all other maintenance and repairs to the existing parking lot in accordance
with Section 6.03 of the Lease.
(e) MAIN WATER LINE: Within 18 months from the date hereof Landlord
agrees to have a hydrostatic test performed on the main water line. If the
results of such test indicate that there are any defects in such water line or
there is corrosion or deterioration that poses any immediate risk of damage to
the Property, as determined by Landlord in its good faith business judgment,
Landlord shall promptly repair such water line. Except for the foregoing,
Tenant shall be responsible for all other maintenance and repairs to the water
lines serving the Property in accordance with Section 6.03 of the Lease. If
Landlord concludes that no such risk of damage to the Property exists, Landlord
shall give written notice of such conclusion to Tenant. If Tenant disputes such
conclusion in good faith, then within 30 days after receipt of Landlord's
written notice, Tenant shall have the right to notify Landlord of such dispute
and present Landlord with a list of at least three engineering firms
acceptable to Tenant who (i) have offices in the general vicinity of the
Property, (ii) have local expertise in designing, constructing and repairing
water lines, and (iii) have no past, present, or contemplated future
relationship (contractual or otherwise) with Landlord or Tenant. Landlord shall
select one engineering firm from the list provided by Tenant to conduct an
independent hydrostatic test of the main water line and to advise Landlord and
Tenant in writing whether such engineering firm believes that there is any
immediate risk of damage to the Property. The conclusion of such engineering
firm shall be binding on Landlord and Tenant. The costs of the work of such
engineering firm shall be paid one-half by Landlord and one-half by Tenant.
Landlord shall be entitled to an extension of the Completion Date for
delays arising from unusually adverse weather conditions, fire or other
casualty, labor disputes or other events beyond the control of Landlord.
5. ALTERATIONS, ADDITIONS AND IMPROVEMENTS: The first sentence of Paragraph
(a) of Section 6.05 of the Lease is hereby amended by adding the following
clause after the words "cumulatively over the Lease Term" in the third line
thereof:
", or an additional Two Hundred Fifty Thousand Dollars ($250,000.00)
cumulatively over the ten year Lease Term extension commencing on February 1,
1997,"
4
<PAGE> 24
6. GENERAL DYNAMICS: The GD Assignment provides in Section 3 that Tenant
cannot amend the Lease without the consent of General Dynamics unless the
amendment by its terms is not binding on General Dynamics. Accordingly, this
Amendment is not binding on General Dynamics.
7. RATIFICATION: All of the terms of the Lease, as amended by this
Amendment, are in full force and effect and Landlord and Tenant hereby ratify
and reaffirm their obligations under the Lease, as amended by this Amendment.
Tenant acknowledges that as of the date hereof, Tenant has no defenses, rights
of offset or counterclaims against Landlord in respect to Tenant's obligations
under this Lease, except as those that have been resolved by the agreements set
forth herein.
EXECUTED as of the date and year first above written.
LANDLORD: FS REALTY PARTNERS, LTD, I
a Texas limited partnership
By: Sarofim Investors Realty Fund,
general partner
By: Sarofim Trust Company,
Trustee
By: /s/ Raye G. White
---------------------------
Name: Raye G. White
--------------------------
Title: Executive Vice President
-------------------------
TENANT: GDE SYSTEMS, INC., a Delaware corporation
By: /s/ Terry A. Straeter
---------------------------
Terry A. Straeter
President
5
<PAGE> 25
RENEWAL AND MODIFICATION OF LEASE AGREEMENT
EXHIBIT "A"
SECURITY REQUIREMENTS APPLICABLE TO CONTRACTOR PERSONNEL FOR ACCESS TO GDE
BUILDING 61 LOCATED AT 16250 TECHNOLOGY DRIVE, SAN DIEGO, CALIFORNIA 92127:
1. Contractor personnel must be citizens of the United States of America.
2. Contractor personnel must sign a GDE Systems 6X-Complex Security
Acknowledgement form prior to issuance of a GDE Systems Visitor Badge.
3. Contractor personnel must sign in and out on a GDE Systems Visitors'
Register prior to issuance of a GDE Systems Visitor Badge.
4. Contractor personnel must wear a GDE Systems Visitor Badge at all times
while on the premises. These badges must be returned daily to the Security
Department upon completion of work.
5. Contractor personnel must be escorted at all times by a GDE Systems
employee while on the premises.
6. Contractor personnel will not be afforded access to classified areas of
Building 61 without advance special arrangements and, if such access is
approved, must be escorted at all times by an appropriately
accessed/cleared GDE Systems employee.
6
<PAGE> 1
EXHIBIT 10.7
LEASE AGREEMENT
by and between
ICE (TX) QRS 12-29, INC.,
a Texas corporation
as LANDLORD
and
TEXAS FREEZER COMPANY, INC.,
a Texas corporation,
as TENANT
Premises: 5210 Catron Drive
Dallas, Texas
Dated as of: September 23, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
Parties............................................................ 1
1. Demise of Premises................................................. 1
2. Certain Definitions................................................ 1
3. Title and Condition................................................ 12
4. Use of Leased Premises; Quiet Enjoyment............................ 12
5. Term .............................................................. 13
6. Basic Rent......................................................... 14
7. Additional Rent.................................................... 14
8. Net Lease; Non-Terminability....................................... 15
9. Payment of Impositions ............................................ 16
10. Compliance with Laws and Easement Agreements;
Environmental Matters.............................................. 18
11. Liens; Recording and Title......................................... 19
12. Maintenance and Repair............................................. 20
13. Alterations and Improvements....................................... 21
14. Permitted Contests................................................. 22
15. Indemnification.................................................... 23
16. Insurance.......................................................... 24
17. Casualty and Condemnation.......................................... 27
18. Termination Events................................................. 29
19. Restoration........................................................ 30
20. Procedures Upon Purchase........................................... 32
21. Assignment and Subletting; Prohibition
against Leasehold Financing........................................ 33
22. Events of Default.................................................. 36
23. Remedies and Damages Upon Default.................................. 38
24. Notices............................................................ 42
25. Estoppel Certificate............................................... 42
26. Surrender.......................................................... 43
27. No Merger of Title................................................. 43
28. Books and Records.................................................. 43
29. Determination of Value............................................. 46
30. Non-Recourse as to Landlord........................................ 48
31. Financing.......................................................... 49
32. Subordination, Non-Disturbance and Attornment...................... 49
33. Financial Covenants................................................ 50
34. Tax Treatment; Reporting........................................... 50
35. Rights of First Refusal............................................ 50
36. Restriction on Sale................................................ 52
37. Miscellaneous...................................................... 52
EXHIBITS
Exhibit "A-1" - Leased Premises
Exhibit "A-2" - Parking Lot
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Financial Covenants
Exhibit "F" - Project Costs
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<PAGE> 3
LEASE AGREEMENT, made as of this 23rd day of September, 1997, between
ICE (TX) QRS 12-29, INC., a Texas corporation ("Landlord"), with an address c/o
W.P. Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor, New York, New York
10020, and TEXAS FREEZER COMPANY, INC., a Texas corporation ("Tenant"), with an
address at 5140 Catron Drive, Dallas, Texas 75227.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon
the provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit
"A-1" hereto, together with the Appurtenances (collectively, the "Land"); (b)
the to-be constructed refrigerated-freezer warehouse facility to contain
approximately 90,000 square feet and any other improvements and structures to be
constructed on the Land (collectively, the "Improvements"); (c) the parking lot
to be constructed on an easement granted to Landlord by Tenant on a parcel of
land adjacent to the Land and more particularly described in Exhibit "A-2"
hereto (the "Parking Lot"); and (d) the fixtures, machinery, equipment and other
property described in Exhibit "B" hereto (collectively, the "Equipment").
2. Certain Definitions.
"Acquisition Fee" shall mean the fee payable to W.P. Carey &
Co., Inc. in connection with this transaction.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.
"Adjoining Property" shall mean the refrigerated freezer
warehouse facility adjacent to the Improvements and all sidewalks, driveways,
curbs, gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions, improvements
or repairs to, all alterations, reconstructions, renewals, replacements or
removals of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted
<PAGE> 4
by any Easement Agreement and (b) any streets, ways, alleys, vaults, gores or
strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in "Exhibit "D".
"Budget" shall mean the complete breakdown of all Project
Costs as set forth on Exhibit "F".
"Business Days" shall mean any day on which banks are required
to be open to carry on their normal business in the State of Texas.
"Casualty" shall mean any injury to or death of any person or
any loss of or damage to any property (including the Leased Premises) included
within or related to the Leased Premises or arising from the Adjoining Property.
"Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Construction Agency Agreement" shall mean the Construction
Agency Agreement of even date herewith between Landlord, as owner, and Tenant,
as agent, pursuant to which Tenant will construct the Improvements and Parking
Lot as agent for Landlord.
"Costs" of a Person or associated with a specified transaction
shall mean all reasonable out-of-pocket costs and expenses incurred by such
Person or associated with such transaction, including without limitation,
attorneys' fees and expenses, court costs, brokerage fees, escrow fees, title
insurance premiums, mortgage commitment fees, mortgage points, recording fees
and transfer taxes, as the circumstances require.
"Covenants" shall mean the covenants and agreements described
on Exhibit "E".
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"CPI" shall mean CPI as defined in Exhibit "D" hereto.
"Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).
"Direct Costs" shall mean all expenditures incurred or to be
incurred by Owner for work, labor or Materials (as defined in the Construction
Agency Agreement) furnished in connection with the Improvements, the categories
of which are enumerated in the Budget.
"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.
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<PAGE> 6
"Environmental Violation" shall mean (a) any direct or
indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law or
which is likely to result in any liability to Landlord, Tenant or Lender, any
Federal, state or local government or any other Person for the costs of any
removal or remedial action or natural resources damage or for bodily injury or
property damage, (b) any deposit, storage, dumping, placement or use of any
Hazardous Substance at, upon, under or within the Leased Premises or which
extends to any Adjoining Property in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which could result in any liability to any Federal, state or local government or
to any other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which is likely to result in any liability, cost or
expense to Landlord or Lender or any other owner or occupier of the Leased
Premises, or which is likely to result in a creation of a lien on the Leased
Premises under any Environmental Law, or (e) any violation of or noncompliance
with any Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph
1.
"Event of Default" shall mean an Event of Default as defined
in Paragraph 22(a).
"Expiration Date" shall mean Expiration Date as defined in
Paragraph 5.
"Extension" shall mean Extension as defined in Paragraph 5.
"Extension Notice" shall mean Extension Notice as defined in
Paragraph 5.
"Fair Market Value" shall mean the fair market value of the
Leased Premises as of the Relevant Date as affected and encumbered by this
Lease, without regard to renewal of the then current Term or any Extensions
unless such Extension has actually been requested by Tenant. For all purposes of
this Lease, Fair Market Value shall be determined in accordance with the
procedure specified in Paragraph 29.
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<PAGE> 7
"Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Final Completion Date" shall mean the date on which all of
the following events have occurred with respect to the Improvements: (A) all
"punch list" items have been completed to the satisfaction of Tenant, and (B) a
permanent Certificate of Occupancy for the Premises has been issued, but in no
event later than July 1, 1998.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would cause the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition which would support
any claim or liability under any Environmental Law, including the presence of
underground storage tanks.
"Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls, provided, however, that the storage of ammonia to the
extent permitted under and stored in accordance with applicable Environmental
Laws shall not be considered a Hazardous Substance.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
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<PAGE> 8
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph
15.
"Indirect Costs" shall mean costs and expenditures, other than
Direct Costs, incurred or to be incurred by Owner through the Final Completion
Date in connection with or incidental to the Project, including without
limitation, costs of title examination and insurance, costs of surveys, Basic
Rent during construction, overhead of Tenant for construction administration,
environmental assessments, water and sewer rents, fees of the Architect,
reasonable fees of counsel to Owner, Tenant and Lender, engineers' fees, and
appraisal fees.
"Initial Term" shall mean Initial Term as defined in Paragraph
5.
"Initial Term Commencement Date" shall mean January 1, 1999.
"Insurance Requirements" shall mean the requirements of all
insurance policies required to be maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Landlord's Share of Project Costs" shall mean the lesser of
(i) $8,900,525 and (ii) actual Project Costs, including all Direct Costs,
Indirect Costs and the Acquisition Fee.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Commencement Date and ending at midnight on the
last day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
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<PAGE> 9
"Legal Requirements" shall mean the requirements of all
present and future Laws (including but not limited to Environmental Laws and
Laws relating to accessibility to, usability by, and discrimination against,
disabled individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the Leased
Premises, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or restoration of any of the Leased Premises,
even if compliance therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any person or entity (and their respective
successors and assigns) which may, on or after the date hereof, make a Loan to
Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by
a Note.
"Monetary Obligations" shall mean Rent and all other sums
payable by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable to
Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or
by agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv),
(v), (vi) or (vii) of Paragraph 16(a), as the case may be, less any expenses
incurred by Landlord, Tenant and Lender in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Occupancy Date" shall mean July 1, 1998.
"Parking Lot" shall mean Parking Lot as defined in Paragraph
1.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does
not constitute a Termination Event.
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"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Plans" shall mean the plans and specifications prepared by
the Architect (as defined in the Construction Agency Agreement) for the
construction of the Improvements.
"Prepayment Premium" shall mean any payment by Landlord to
Lender (other than a payment of principal and/or interest which Landlord is
required to make under a Note or a Mortgage) by reason of any prepayment of the
Note by Landlord, of any principal due under a Note or Mortgage if such
prepayment of the Note is either requested by Tenant or is made as a result of
the occurrence of an Event of Default or is otherwise required by the terms of
this Lease, and which may be (in lieu of a prepayment premium or prepayment
penalty) a "make whole" clause requiring a prepayment premium in an amount
sufficient to compensate Lender for the loss of the benefit of the Loan due to a
prepayment and based on a "Treasury Rate" calculation. The Prepayment Premium
calculated with respect to the prepayment in full (with an appropriate
adjustment for any partial prepayment) of any Loan shall be calculated based on
the amount of principal of such Loan outstanding on the date of, but prior to
giving effect to, prepayment.
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) eight percent (8%) per annum.
"Primary Term" shall mean Primary Term as defined in Paragraph
5.
"Primary Term Expiration Date" shall mean the Primary Term
Expiration Date as defined in Paragraph 5.
"Prime Rate" shall mean the annual interest rate as published,
from time to time, in The Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event The Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to
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<PAGE> 11
time by the United States Treasury at its most recent auction, plus three
hundred (300) basis points. If no such 91-day Treasury Bills are then being
issued, the Discount Rate shall be the discount rate on Treasury Bills then
being issued for the period of time closest to ninety-one (91) days.
"Project Costs" shall mean the sum of all Direct Costs and
Indirect Costs incurred or to be incurred in connection with the acquisition of
the Land, the construction of the Improvements and Parking Lot and the
acquisition and installation of the Equipment as shown on the Budget and the
Acquisition Fee.
"Relevant Amount" shall mean the Termination Amount.
"Relevant Date" shall mean (a) the date immediately prior to
the date on which the applicable Condemnation Notice is received, in the event
of a Termination Notice under Paragraph 18 which is occasioned by a Taking, (b)
the date immediately prior to the date on which the applicable Casualty occurs,
in the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a termination offer under Paragraph
23(a)(iii) or (e) the date on which Landlord receives a Sale Contract that
complies with the terms of Paragraph 35(c).
"Rent" shall mean, collectively, Basic Rent and Additional
Rent.
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of Texas.
"Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
"Taking" shall mean (a) any taking or damaging by any
governmental authority of all or a portion of any of the Leased Premises (i) in
or by condemnation or other eminent domain
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<PAGE> 12
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (b) any de facto
condemnation. The Taking shall be considered to have taken place as of the later
of the date actual physical possession is taken by the condemnor, or the date on
which the right to compensation and damages accrues under the law applicable to
the Leased Premises.
"Term" shall mean the Primary Term, the Initial Term and any
exercised Extensions.
"Termination Amount" shall mean the greater of (a) Fair Market
Value or (b) the sum of the Landlord's Share of Project Costs and any Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Termination Amount.
"Termination Date" shall mean Termination Date as defined in
Paragraph 18.
"Termination Event" shall mean a Termination Event as defined
in Paragraph 18.
"Termination Notice" shall mean Termination Notice as defined
in Paragraph 18(a).
"Third Party Purchaser" shall mean Third Party Purchaser as
defined in Paragraph 21(g).
3. Title and Condition.
(a) The Leased Premises are demised and let subject to
(i) the Mortgage and Assignment presently in effect, (ii) the rights of any
Persons in possession of the Leased Premises, (iii) the existing state of title
of any of the Leased Premises, including any Permitted Encumbrances, (iv) any
state of facts which an accurate survey or physical inspection of the Leased
Premises might show, (v) all Legal Requirements, including any existing
violation of any thereof, and (vi) the condition of the Leased Premises as of
the commencement of the Term, without representation or warranty by Landlord.
(b) LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND
WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER
ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY
WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S
TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
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SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY
OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT;
AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES
THAT THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE
BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has
examined the title to the Leased Premises prior to the execution and delivery of
this Lease and has found the same to be satisfactory for the purposes
contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal
and equitable) is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) on the
Occupancy Date the Improvements and Parking Lot shall conform to, all material
Legal Requirements and all Insurance Requirements, (iii) all easements necessary
or appropriate for the use or operation of the Leased Premises have been
obtained, (iv) all contractors and subcontractors who have performed work on or
supplied materials to the Leased Premises have been fully paid except as
disclosed in that certain Seller's/Lessee's Certificate of even date from Tenant
to Lender, and all materials and supplies have been fully paid for, (v) no later
than the Final Completion Date, the Improvements and Parking Lot shall be fully
completed in all material respects in a workmanlike manner of first class
quality, and (vi) no later than the Final Completion Date, all Equipment
necessary or appropriate for the use or operation of the Improvements shall have
been installed and is fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse
or warranty whatsoever, all warranties, guaranties, indemnities and similar
rights which Landlord may have against any manufacturer, seller, engineer,
contractor or builder in respect of any of the Leased Premises. Such assignment
shall remain in effect until an Event of Default occurs or until the expiration
or earlier termination of this Lease, whereupon such assignment shall cease and
all of said warranties, guaranties, indemnities and other rights shall
automatically revert to Landlord.
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<PAGE> 14
(e) Pursuant to the Construction Agency Agreement, Tenant
will cause the Improvements, Parking Lot and Equipment to be constructed and
installed with funds more particularly described in the Construction Agency
Agreement. The Improvements, Parking Lot and Equipment will be owned by Landlord
and are included within the Leased Premises. Tenant acknowledges that the
Improvements, Parking Lot and Equipment have not yet been constructed and/or
installed and that, pursuant to the Construction Agency Agreement, Tenant has
the responsibility for causing the Improvements, Parking Lot and Equipment to be
completed in accordance with the terms of the Construction Agency Agreement.
Landlord will not make any representations or warranties with respect to the
Improvements, Parking Lot and Equipment. Tenant further acknowledges that, upon
occurrence of an Event of Default, Landlord may terminate the Construction
Agency Agreement, and in addition to all other remedies of Landlord under this
Lease, Landlord shall have the right but not the obligation to complete
construction of the Improvements, Parking Lot and Equipment. If Landlord so
completes, Tenant will not be excused from paying all Rent due pursuant to the
terms of this Lease as long as this Lease is not terminated, and Landlord shall
have the right to exercise any or all of its remedies hereunder following an
Event of Default.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for a
refrigerated-freezer warehouse facility and for no other purpose without having
obtained the prior written approval of Landlord, such approval not to be
unreasonably withheld. Tenant shall not use or occupy or permit any of the
Leased Premises to be used or occupied, nor do or permit anything to be done in
or on any of the Leased Premises, in a manner which would or might (i) violate
any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to
cancel any insurance required by this Lease, or make it difficult or impossible
to obtain any such insurance at commercially reasonable rates, (iii) cause
structural injury to any of the Improvements or (iv) constitute a public or
private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event
of Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord with respect to matters that arise after the date
hereof, provided that upon not less than 24 hours written notice from Landlord
to Tenant (except in the case of an emergency, in which no notice shall be
required) Landlord or its agents may enter upon and examine any of the Leased
Premises during normal business hours for the purpose of inspecting the Leased
Premises, verifying compliance or non-compliance by Tenant with its obligations
hereunder and the existence or non-existence of an Event of Default or event
which with the passage of time and/or notice would constitute an Event of
Default, showing the Leased
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Premises to prospective Lenders and purchasers and taking such other action with
respect to the Leased Premises as is permitted by any provision hereof;
provided, however, that Tenant shall have the right to restrict access to the
Leased Premises to any prospective purchaser whose business includes the leasing
of refrigerated-freezer warehouse space to third party users unless at the time
of any such entry and inspection an Event of Default then exists or Tenant has
failed to give any applicable Extension Notice.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have
and hold the Leased Premises for a primary term (the "Primary Term") commencing
on the date hereof ("Commencement Date") and ending at midnight on the day
immediately preceding the Initial Term Commencement Date (the "Primary Term
Expiration Date") and for an initial term (such initial term being called the
"Initial Term") commencing on the Initial Term Commencement Date and ending on
the last day of the two hundred fortieth (240th) calendar month next following
the Initial Term Commencement Date (the "Expiration Date"). Immediately
following the Primary Term Expiration Date, Landlord and Tenant shall execute an
addendum to this Lease setting forth the Initial Term Commencement Date and the
Expiration Date. If all Rent and all other sums due hereunder shall not have
been fully paid by the end of the Term, Landlord may, at its option, extend the
Term until all said sums shall have been fully paid.
(b) Provided that if, on or prior to the Expiration Date
or any other Renewal Date (as hereinafter defined) this Lease shall not have
been terminated pursuant to any provision hereof, then on the Expiration Date
and on the tenth (10th) twentieth (20th) and thirtieth (30th) anniversaries of
the Expiration Date (the Expiration Date and each such anniversary being a
"Renewal Date"), Tenant shall have the right to extend the Term for an
additional period of ten (10) years (each such ten (10) year period (an
"Extension"), upon written notice in recordable form ("Extension Notice") to
Landlord at least eighteen (18) months prior to the next Renewal Date; provided,
however, that if Tenant fails to timely exercise its option to extend the Term,
Tenant shall have thirty (30) days from the date that Landlord notifies Tenant
of such failure in which to exercise such option. Any such Extension shall be
subject to all of the provisions of this Lease, as the same may be amended,
supplemented or modified.
(c) If Tenant fails to exercise its option to extend or
further extend the Term, or if an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect and, in any
event, Landlord shall have the right during the last year of the Term, to (i)
advertise the availability of the Leased Premises for sale or reletting and to
erect upon the Leased Premises signs indicating such availability
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and (ii) show the Leased Premises to prospective purchasers or tenants or their
agents at such reasonable times as Landlord may select.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for
the Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent") on each Basic Rent Payment Date described in
Exhibit "D" hereto. Each such rental payment shall be made, at Landlord's sole
discretion, (a) to Landlord at its address set forth above and/or to such one or
more other Persons, at such addresses and in such proportions as Landlord may
direct by fifteen (15) days' prior written notice to Tenant (in which event
Tenant shall give Landlord notice of each such payment concurrent with the
making thereof) and (b) by check or by wire transfer in Federal Funds.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of Tenant's obligations under this
Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant
under this Lease, (D) any Condemnation proceedings, (E) the adjustment,
settlement or compromise of any insurance claims involving or arising from any
of the Leased Premises, (F) the prosecution, defense or settlement of any
litigation involving or arising from any of the Leased Premises, this Lease, or
the sale of the Leased Premises to Landlord, (G) the exercise or enforcement by
Landlord, its successors and assigns, of any of its rights under this Lease
after an Event of Default occurs, (H) any amendment to or modification or
termination of this Lease made at the request of Tenant, (I) Costs of Landlord's
counsel and reasonable internal Costs of Landlord incurred in connection with
any act undertaken by Landlord (or its counsel) at the request of Tenant, or
incurred in connection with any act of Landlord performed on behalf of Tenant,
and (J) any other items specifically required to be paid by Tenant under this
Lease;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid a late charge on any past due
installments of Basic Rent or portion thereof equal to the late charge, if any,
payable on the Note.
(iii) a sum equal to any additional sums (including
any default penalties, interest and fees of Lender's counsel) which are payable
by Landlord to any Lender under any
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Note by reason of Tenant's late payment or non-payment of Basic Rent or by
reason of an Event of Default; and
(iv) interest at the rate (the "Default Rate") of
three percent (3%) over the Prime Rate per annum on the following sums until
paid in full: (A) all overdue installments of Basic Rent from the respective due
dates thereof, (B) all overdue amounts of Additional Rent relating to
obligations which Landlord shall have paid on behalf of Tenant, from the date of
payment thereof by Landlord, and (C) all other overdue amounts of Additional
Rent, from the date when any such amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional
Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided
that amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within five (5) Business Days after Landlord's demand for payment
thereof, and (ii) any other Additional Rent, within five (5) Business Days after
Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations
shall be paid without notice or demand and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction, reduction
or defense (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this
Lease and the rights of Landlord and the obligations of Tenant hereunder shall
not be affected by any event or for any reason, including the following: (i) any
damage to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased
Premises other than pursuant to an express provision of this Lease, (iv) any
default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (v) any latent or other defect in any of the
Leased Premises, (vi) the breach of any warranty of any seller or manufacturer
of any of the Equipment, (vii) any violation of any provision of this Lease by
Landlord, (viii) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution or winding-up of, or other proceeding
affecting Landlord, (ix) the exercise of any remedy, including foreclosure,
under any Mortgage or Assignment, (x) any action with respect to this Lease
(including the disaffirmance hereof) which may be taken by Landlord, any
trustee, receiver or liquidator of Landlord or any court under the Federal
Bankruptcy Code or otherwise, (xi) any interference with Tenant's use of the
Leased
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<PAGE> 18
Premises, (xii) market or economic changes or (xiii) any other cause, whether
similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be separate
and independent covenants and agreements, all Monetary Obligations shall
continue to be payable in all events (or, in lieu thereof, Tenant shall pay
amounts equal thereto), and the obligations of Tenant hereunder shall continue
unaffected unless the requirement to pay or perform the same shall have been
terminated pursuant to an express provision of this Lease. All Rent payable by
Tenant hereunder shall constitute "rent" for all purposes (including Section
502(b)(6) of the Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's leasehold interest in the Leased Premises,
(iii) any of the Leased Premises, (iv) Landlord as a result of or arising in
respect of the acquisition, ownership, occupancy, leasing, use, possession or
sale of any of the Leased Premises, any activity conducted on any of the Leased
Premises, or the Rent, or (v) any Lender by reason of any Note, Mortgage,
Assignment or other document evidencing or securing a Loan and which (as to this
clause (v)) Landlord has agreed to pay (collectively, the "Impositions");
provided, that nothing herein shall obligate Tenant to pay (A) income, excess
profits or other taxes of Landlord (or Lender) which are determined on the basis
of Landlord's (or Lender's) net income or net worth (unless such taxes are in
lieu of or a substitute for any other tax, assessment or other charge upon or
with respect to the Leased Premises which, if it were in effect, would be
payable by Tenant under the provisions hereof or by the terms of such tax,
assessment or other charge), (B) any estate, inheritance, succession, gift or
similar tax imposed on Landlord or (C) any capital gains tax imposed on Landlord
in connection with the sale of the Leased Premises to any Person. If any
Imposition may be paid in installments without interest or penalty, Tenant shall
have the option to pay such Imposition in installments; in such
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event, Tenant shall be liable only for those installments which accrue or become
due and payable during the Term. Tenant shall prepare and file all tax reports
required by governmental authorities which relate to the Impositions. Tenant
shall deliver to Landlord (1) copies of all settlements and notices pertaining
to the Impositions which may be issued by any governmental authority within ten
(10) days after Tenant's receipt thereof, (2) receipts for payment of all taxes
required to be paid by Tenant hereunder within thirty (30) days after the due
date thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor.
(b) Landlord shall have the right at any time following
the failure by Tenant to pay Basic Rent, Impositions or insurance premiums by
the expiration of the applicable cure period or if required by any Lender to
require Tenant to pay to Landlord an additional monthly sum (each an "Escrow
Payment") sufficient to pay the Escrow Charges (as hereinafter defined) as they
become due. As used herein, "Escrow Charges" shall mean real estate taxes on the
Leased Premises or payments in lieu thereof and premiums on any insurance
required by this Lease. Landlord shall determine the amount of the Escrow
Charges and of each Escrow Payment. As long as the Escrow Payments are being
held by Landlord the Escrow Payments shall not be commingled with other funds of
Landlord or other Persons and interest thereon shall accrue for the benefit of
Tenant from the date such monies are received and invested until the date such
monies are disbursed to pay Escrow Charges. Landlord shall apply the Escrow
Payments to the payment of the Escrow Charges in such order or priority as
Landlord shall determine or as required by law. If at any time the Escrow
Payments theretofore paid to Landlord shall be insufficient for the payment of
the Escrow Charges, Tenant, within ten (10) Business Days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and conform
to, and cause the Leased Premises and any other Person occupying any part of the
Leased Premises to comply with and conform to, all Insurance Requirements and
Legal Requirements (including all applicable Environmental Laws). Tenant shall
not at any time (i) cause, permit or suffer to occur any Environmental Violation
or (ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation.
(b) Tenant, at its sole cost and expense, will at all
times promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement on the
part of Landlord or the occupier to be
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kept and performed thereunder. Tenant will not alter, modify, amend or terminate
any Easement Agreement, give any consent or approval thereunder, or enter into
any new Easement Agreement without, in each case, the prior written consent of
Landlord which consent shall not be unreasonably withheld or delayed.
(c) Upon prior written notice from Landlord, Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises and perform, as agents of Tenant, environmental site
investigations and assessments ("Site Assessments") on the Leased Premises for
the purpose of determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in any Environmental
Violation. Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be necessary,
in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant
shall supply to the Site Reviewers such historical and operational information
regarding the Leased Premises as may be reasonably requested by the Site
Reviewers to facilitate the Site Assessments, and shall make available for
meetings with the Site Reviewers appropriate personnel having knowledge of such
matters. The cost of performing and reporting a Site Assessment shall be paid by
Tenant if (i) at the time of such Site Assessment an Event of Default exists or
(ii) the Site Assessment discloses an Environmental Violation. The cost of all
other Site Assessments shall be paid by Landlord.
(d) If an Environmental Violation occurs or is found to
exist and, in Landlord's reasonable judgment, the cost of remediation of the
same is likely to exceed $50,000, Tenant shall provide to Landlord, within ten
(10) days after Landlord's request therefor, adequate financial assurances that
Tenant will effect such remediation in accordance with applicable Environmental
Laws. Such financial assurances shall be a bond or letter of credit reasonably
satisfactory to Landlord in form and substance and in an amount equal to
Landlord's reasonable estimate, based upon a Site Assessment performed pursuant
to Paragraph 10(c), of the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if
an Environmental Violation occurs or is found to exist and the Term would
otherwise terminate or expire, then, at the option of Landlord, the Term shall
be automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to correct any Environmental
Violation which occurs or is found to exist, Landlord shall have the right (but
no obligation) to take any and all actions as
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Landlord shall deem necessary or advisable in order to cure such Environmental
Violation.
(g) Tenant shall notify Landlord immediately after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord immediately upon receipt thereof
copies of all orders, reports, notices, permits, applications or other
communications relating to any such violation or noncompliance.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or
permit to be created or to remain and shall promptly discharge or remove any
lien, levy or encumbrance on any of the Leased Premises or on any Rent or any
other sums payable by Tenant under this Lease, other than any Mortgage or
Assignment, the Permitted Encumbrances and any mortgage, lien, encumbrance or
other charge created by or resulting solely from any act or omission of
Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND
THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY
OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or
register (collectively, "record") all such instruments as may be required or
permitted by any present or future Law in order to evidence the respective
interests of Landlord and Tenant in the Leased Premises, and shall cause a
memorandum of this Lease (or, if such a memorandum cannot be recorded, this
Lease), and any supplement hereto or thereto, to be recorded in such manner and
in such places as may be required or permitted by any present or future Law in
order to protect the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased
Premises and the Adjoining Property in as good repair and appearance as they are
in on the Final Completion Date, ordinary wear and tear excepted, and fit to be
used for their intended use in accordance with the better of the practices
generally recognized as then acceptable by other companies in its industry or
observed by Tenant with respect to the other real properties owned or operated
by it, and, in the case of the Equipment, in as good mechanical condition as it
was on the later of the Final Completion Date or the date of its installation,
except for ordinary wear and tear. Tenant shall take every other action
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reasonably necessary or appropriate for the preservation and safety of the
Leased Premises. Tenant shall promptly make all Alterations of every kind and
nature, whether foreseen or unforeseen, which may be required to comply with the
foregoing requirements of this Paragraph 12(a). Landlord shall not be required
to make any Alteration, whether foreseen or unforeseen, or to maintain any of
the Leased Premises or Adjoining Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or hereafter
in effect to make Alterations at the expense of Landlord or to require Landlord
to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12
shall be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed,
shall (i) encroach upon any setback or any property, street or right-of-way
adjoining the Leased Premises, (ii) violate the provisions of any restrictive
covenant affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained
the prior written consent of Landlord and Lender, to make (i) Alterations or a
series of related Alterations that, as to any such Alterations or series of
related Alterations, do not cost in excess of $250,000 and (ii) to install
Equipment in the Improvements or accessions to the Equipment that, as to such
Equipment or accessions, do not cost in excess of $250,000, so long as at the
time of construction or installation of any such Equipment or Alterations no
Event of Default exists and the value and utility of the Leased Premises is not
diminished thereby. If the cost of any Alterations, series of related
Alterations, Equipment or accessions thereto is in excess of $250,000, the prior
written approval of Landlord and Lender shall be required, such approval not to
be unreasonably withheld, delayed or conditioned. Tenant shall not construct
upon the Land any additional buildings without having first obtained the prior
written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this
Paragraph 13 or as required by Paragraph 12 or 17 (such Alterations and actions
being hereinafter collectively referred
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to as "Work"), whether or not Landlord's consent is required, then (i) the
market value of the Leased Premises shall not be lessened by any such Work or
its usefulness impaired, (ii) all such Work shall be performed by Tenant in a
good and workmanlike manner, (iii) all such Work shall be expeditiously
completed in compliance with all Legal Requirements, (iv) all such Work shall
comply with the Insurance Requirements, (v) if any such Work involves the
replacement of Equipment or parts thereto, all replacement Equipment or parts
shall have a value and useful life equal to the greater of (A) the value and
useful life on the Final Completion Date hereof of the Equipment being replaced
or (B) the value and useful life of the Equipment being replaced immediately
prior to the occurrence of the event which required its replacement, (vi) Tenant
shall promptly discharge or remove all liens filed against any of the Leased
Premises arising out of such Work, (vii) Tenant shall procure and pay for all
permits and licenses required in connection with any such Work, (viii) all such
Work shall be the property of Landlord and shall be subject to this Lease, and
Tenant shall execute and deliver to Landlord any document requested by Landlord
evidencing the assignment to Landlord of all estate, right, title and interest
(other than the leasehold estate created hereby) of Tenant or any other Person
thereto or therein, and (ix) Tenant shall comply, to the extent requested by
Landlord or required by this Lease, with the provisions of Paragraph 19(a),
whether or not such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
this Lease, Tenant shall not be required to (a) pay any Imposition, (b)
discharge or remove any lien referred to in Paragraph 11 or 13 or (c) take any
action with respect to any encroachment, violation, hindrance, obstruction or
impairment referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as "Permitted Violations"), so
long as at the time of such contest no Event of Default exists and so long as
Tenant shall contest, in good faith, the existence, amount or validity thereof,
the amount of the damages caused thereby, or the extent of its or Landlord's
liability therefor by appropriate proceedings which shall operate during the
pendency thereof to prevent or stay (i) the collection of, or other realization
upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of
any of the Leased Premises or any Rent to satisfy or to pay any damages caused
by any Permitted Violation, (iii) any interference with the use or occupancy of
any of the Leased Premises, (iv) any interference with the payment of any Rent,
or (v) the cancellation or increase in the rate of any insurance policy or a
statement by the carrier that coverage will be denied. If the Permitted
Violation is the imposition of a lien under Paragraph 11 or 13 and in the
reasonable judgment of Landlord or Lender the costs to pay or correct any such
Permitted Violation is in excess of $50,000 or if required by Law, Tenant shall
provide Landlord security which is satisfactory, in Landlord's reasonable
judgment, to assure that such Permitted Violation is corrected,
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including all Costs, interest and penalties that may be incurred or become due
in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and, if applicable, the required
security is held by Landlord, Landlord shall not have the right to correct any
Permitted Violation thereby being contested unless Landlord is required by law
to correct such Permitted Violation and Tenant's contest does not prevent or
stay such requirement as to Landlord. Each such contest shall be promptly and
diligently prosecuted by Tenant to a final conclusion, except that Tenant, so
long as the conditions of this Paragraph 14 are at all times complied with, has
the right to attempt to settle or compromise such contest through negotiations.
Tenant shall pay any and all losses, judgments, decrees and Costs in connection
with any such contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interest and Costs thereof or in
connection therewith, and perform all acts the performance of which shall be
ordered or decreed as a result thereof. No such contest shall subject Landlord
to the risk of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend, save
and hold harmless Landlord, Lender and all other Persons described in Paragraph
30 (each an "Indemnitee") from and against any and all liabilities, losses,
damages (including punitive damages), penalties, Costs (including attorneys'
fees and costs), causes of action, suits, claims, demands or judgments of any
nature whatsoever, howsoever caused, without regard to the form of action and
whether based on strict liability, negligence or any other theory of recovery at
law or in equity, arising from (i) any matter pertaining to the acquisition (or
the negotiations leading thereto), ownership, use, non-use, occupancy,
operation, condition, design, construction, maintenance, repair or restoration
of the Leased Premises or Adjoining Property, (ii) any casualty in any manner
arising from the Leased Premises or Adjoining Property, whether or not
Indemnitee has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant of any
provision of this Lease, any contract or agreement to which Tenant is a party,
any Legal Requirement or any Permitted Encumbrance or any encumbrance Tenant
consented to or the Mortgage or Assignment or (iv) any alleged, threatened or
actual Environmental Violation, including (A) liability for response costs and
for costs of removal and remedial action incurred by the United States
Government, any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to Section 107 of CERCLA, or any successor section or act or provision
of any similar state or local Law,
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(B) liability for costs and expenses of abatement, correction or clean-up,
fines, damages, response costs or penalties which arise from the provisions of
any of the other Environmental Laws and (C) liability for personal injury or
property damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance or for
carrying on of a dangerous activity.
(b) In case any action or proceeding is brought against
any Indemnitee by reason of any such claim, (i) Tenant may, except in the event
of a conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may employ counsel of its choice
to monitor the defense of any such action) and (ii) such Indemnitee shall notify
Tenant to resist or defend such action or proceeding by retaining counsel
reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate
and assist in the defense of such action or proceeding if reasonably requested
so to do by Tenant. In the event of a conflict of interest or dispute or during
the continuance of an Event of Default, Landlord shall have the right to select
counsel, and the cost of such counsel shall by paid by Tenant.
(c) The obligations of Tenant under this Paragraph 15
shall survive any termination, expiration or rejection in bankruptcy of this
Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or
in connection with the Leased Premises (provided that Tenant shall not be
required to maintain the insurance described in Paragraph 16(a)(iii) until
December , 1997):
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (if the Leased Premises is in a flood
zone) coverage in an amount not less than the actual replacement cost of the
Improvements and Equipment. Such policies shall contain Replacement Cost and
Agreed Amount Endorsements and shall contain deductibles of not more than
$50,000 per occurrence.
(ii) Commercial General Liability Insurance and
Business Automobile Liability Insurance (including Non-Owned and Hired
Automobile Liability) against claims for personal and bodily injury, death or
property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $5,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and type.
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(iii) Worker's compensation insurance covering all
persons employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Worker's Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the Leased Premises, in an
amount not less than $10,000,000 per accident for damage to property. Such
policies shall include at least $10,000,000 per accident for Off-Premises
Service Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous
Materials Clean-Up Expense and may contain a deductible not to exceed $50,000.
(v) Business Income/Extra Expense Insurance to
include loss of rents at limits sufficient to cover 100% of the annual rent
payable to Landlord with a period of indemnity not less than one year from time
of loss. Such insurance shall name Landlord as additional insured solely with
respect to Rent payable to or for the benefit of Landlord under this Lease.
(vi) During construction of the Improvements and
during any period in which substantial Alterations at the Leased Premises are
being undertaken, builder's risk insurance covering $5,875,000 of "hard costs"
and $775,000 of "soft costs" with respect to construction of the Improvements
and with respect to any substantial Alterations (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction or repair of
Improvements or Equipment, together with such endorsements as Landlord may
reasonably require with respect to the Improvements being constructed, altered
or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee clause)
on or in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size, use and location to
the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be
written by companies which have a Best's rating of A:X or above and are admitted
in, and approved to write insurance policies by, the State Insurance Department
for the State. The insurance policies (i) shall be for such terms as Landlord
may reasonably approve and (ii) shall be in amounts sufficient at all
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times to satisfy any coinsurance requirements thereof. The insurance referred to
in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and
Lender as loss payee and Tenant as its interest may appear. The insurance
referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional
insureds, and the insurance referred to in Paragraph 16(a)(v) shall name
Landlord as insured and Lender and Landlord as loss payee. If said insurance or
any part thereof shall expire, be withdrawn, become void, voidable, unreliable
or unsafe for any reason, including a breach of any condition thereof by Tenant
or the failure or impairment of the capital of any insurer, or if for any other
reason whatsoever said insurance shall become reasonably unsatisfactory to
Landlord, Tenant shall immediately obtain new or additional insurance reasonably
satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i),
(iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be cancelled except after thirty (30) days' prior notice to
Landlord and Lender. Each such policy shall also provide that any loss otherwise
payable thereunder shall be payable notwithstanding (i) any act or omission of
Landlord or Tenant which might, absent such provision, result in a forfeiture of
all or a part of such insurance payment, (ii) the occupation or use of any of
the Leased Premises for purposes more hazardous than those permitted by the
provisions of such policy, (iii) any foreclosure or other action or proceeding
taken by Lender pursuant to any provision of the Mortgage, Note, Assignment or
other document evidencing or securing the Loan upon the happening of an event of
default therein or (iv) any change in title to or ownership of any of the Leased
Premises.
(d) Tenant shall pay as they become due all premiums for
the insurance required by Paragraph 16(a), shall renew or replace each policy
and deliver to Landlord evidence of the payment of the full premium therefor or
installment then due at least thirty (30) days prior to the expiration date of
such policy, and shall promptly deliver to Landlord certificates of insurance or
certified duplicate copies of all policies.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to Landlord a
Statement of Values which shall be reviewed annually and amended as necessary
based on Replacement Cost Valuations. A certificate of insurance or a certified
copy of each such
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"blanket" or umbrella policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to (i)
all provisions of each insurance policy required by this Paragraph 16 and (ii)
all requirements of the insurers thereunder applicable to Landlord, Tenant or
any of the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates Alterations or results in interference with the
use or enjoyment of any of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent
in form or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as named
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance and shall deliver to
Landlord certificates of insurance or certified copies of such policies.
(h) All policies shall contain effective waivers by the
carrier against all claims for insurance premiums against Landlord and shall
contain full waivers of subrogation against the Landlord.
(i) All proceeds of any insurance required under
Paragraph 16(a) shall be payable as follows:
(i) Except for proceeds payable to a Person other
than Landlord, Tenant or Lender, all proceeds of insurance required under
clauses (ii), (iii), (iv), (v) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of Builder's Risk
insurance under clause (vi) of Paragraph 16(a) shall be payable to Landlord or,
if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required under clause (i)
of Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16(a) shall be payable to Landlord (or Lender) and applied as set forth in
Paragraph 17. Tenant shall apply the Net Award to restoration of the Leased
Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty to the Leased Premises occurs, Tenant
shall give Landlord and Lender immediate notice thereof. So long as no Event of
Default exists Tenant is hereby authorized to adjust, collect and compromise all
claims under any
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of the insurance policies required by Paragraph 16(a) (except public liability
insurance claims payable to a Person other than Tenant, Landlord or Lender) and
to execute and deliver on behalf of Landlord all necessary proofs of loss,
receipts, vouchers and releases required by the insurers and Landlord shall have
the right to join with Tenant therein. Any final adjustment, settlement or
compromise of any such claim in excess of $50,000 shall be subject to the prior
written approval of Landlord, and Landlord shall have the right to prosecute or
contest, or to require Tenant to prosecute or contest, any such claim,
adjustment, settlement or compromise. If an Event of Default exists, Tenant
shall not be entitled to adjust, collect or compromise any such claim or to
participate with Landlord in any adjustment, collection and compromise of the
Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the
request of Landlord, all such proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under said
policies, excluding return of unearned premiums (which shall be directed to
Tenant), directly to Landlord or, if required by the Mortgage, to Lender instead
of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord
and Lender as Tenant's attorneys-in-fact to endorse any draft therefor. The
rights of Landlord under this Paragraph 17(a) shall be extended to Lender if and
to the extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation
Notice, shall notify Landlord and Lender thereof. So long as no Event of Default
exists, Tenant is authorized to collect, settle and compromise the amount of any
Net Award and Landlord shall have the right to join with Tenant herein. If an
Event of Default exists, Landlord shall be authorized to collect, settle and
compromise the amount of any Net Award and Tenant shall not be entitled to
participate with Landlord in any Condemnation proceeding or negotiations under
threat thereof or to contest the Condemnation or the amount of the Net Award
therefor. No agreement with any condemnor in settlement or under threat of any
Condemnation shall be made by Tenant without the written consent of Landlord.
Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably
assigns to Landlord any award or payment to which Tenant is or may be entitled
by reason of any Condemnation, whether the same shall be paid or payable for
Tenant's leasehold interest hereunder or otherwise; but nothing in this Lease
shall impair Tenant's right to any award or payment on account of Tenant's trade
fixtures, equipment or other tangible property which is not part of the
Equipment, moving expenses or loss of business, if available, to the extent that
and so long as (i) Tenant shall have the right to make, and does make, a
separate claim therefor against the condemnor and (ii) such claim does not in
any way reduce either the amount of the award otherwise payable to Landlord for
the Condemnation of Landlord's fee interest in the Leased Premises or the amount
of the award (if any) otherwise payable for the Condemnation of Tenant's
leasehold interest hereunder. The rights of Landlord
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under this Paragraph 17(b) shall also be extended to Lender if and to the extent
that any Mortgage so provides.
(c) If any Partial Casualty (whether or not insured
against) or Partial Condemnation shall occur, this Lease shall continue,
notwithstanding such event, and there shall be no abatement or reduction of any
Monetary Obligations, except as provided in Paragraph 17(d). Promptly after such
Partial Casualty or Partial Condemnation, Tenant, as required in Paragraphs
12(a) and 13(b), shall commence and diligently continue to restore the Leased
Premises as nearly as possible to their value, condition and character
immediately prior to such event (assuming the Leased Premises to have been in
the condition required by this Lease). So long as no Event of Default exists,
any Net Award up to and including $250,000 shall be paid directly by Landlord to
Tenant and Tenant shall restore the Leased Premises in accordance with the
requirements of Paragraphs 12(a) and 13(b) of this Lease. Any Net Award in
excess of $250,000 shall (unless such Casualty resulting in the Net Award is a
Termination Event) be made available by Landlord (or Lender, if required by the
terms of any Mortgage) to Tenant for the restoration of any of the Leased
Premises pursuant to and in accordance with the provisions of Paragraph 19
hereof. If any Casualty or Condemnation which is not a Partial Casualty or
Partial Condemnation shall occur, Tenant shall comply with the terms and
conditions of Paragraph 18.
(d) In the event of a Requisition of any of the Leased
Premises, if any Net Award payable by reason of such Requisition is (i) retained
by Landlord, each installment of Basic Rent payable on or after the date on
which the Net Award is paid to Landlord shall be reduced by a fraction, the
denominator of which shall be the total amount of all Basic Rent due from such
date to and including the last Basic Rent Payment Date for the then existing
Term and the numerator of which shall be the amount of such Net Award retained
by Landlord, or (ii) paid to Lender, then each installment of Basic Rent
thereafter payable shall be reduced in the same amount and for the same period
as payments are reduced under the Note until such Net Award has been applied in
full or until the Term has expired, whichever first occurs.
18. Termination Events.
(a) If (i) the entire Leased Premises shall be taken by a
Taking or (ii) any substantial portion of the Leased Premises shall be taken by
a Taking or all or any substantial portion of the Leased Premises shall be
damaged or destroyed by a Casualty and, in such case, Tenant certifies and
covenants to Landlord that it will forever abandon operations at the Leased
Premises (each of the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as a "Termination Event"), then (x) in the case of
(i) above, Tenant shall be
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obligated, within thirty (30) days after Tenant receives a Condemnation Notice
and (y) in the case of (ii) above, Tenant shall have the option, within thirty
(30) days after Tenant receives a Condemnation Notice or thirty (30) days after
the Casualty, as the case may be, to give to Landlord written notice of the
Tenant's option to terminate this Lease (a "Termination Notice") in the form
described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of
Tenant's intention to terminate this Lease on the first Basic Rent Payment Date
which occurs at least sixty (60) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay to
Landlord the Termination Amount and (iii) if the Termination Event is an event
described in Paragraph 18(a)(ii), the certification and covenants described
therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine the Fair Market Value.
(c) If Landlord shall reject such offer to terminate this
Lease by written notice to Tenant (a "Rejection"), which Rejection shall contain
the written consent of Lender, not later than thirty (30) days following the
Fair Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen on or prior
to the Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on which
this Lease may terminate to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall immediately vacate and shall have no further right, title or interest in
or to any of the Leased Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the contrary hereinabove contained, if
Tenant shall have received a Rejection and, on the date when this Lease would
otherwise terminate as provided above, Landlord shall not have received the full
amount of the Net Award payable by reason of the applicable Termination Event,
then the date on which this Lease is to terminate automatically shall be
extended to the first Basic Rent Payment Date after the receipt by Landlord of
the full amount of the Net Award provided that, if Tenant has not satisfied all
Remaining Obligations on such date, then Landlord may, at its option, extend the
date on which this Lease may terminate to a date which is no later than the
first Basic Rent Payment Date after such date on which Tenant has satisfied all
such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not
later than the thirtieth (30th) day following the Fair Market
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Value Date, Landlord shall be conclusively presumed to have accepted such offer.
If such offer is accepted by Landlord then, on the Termination Date, Tenant
shall pay to Landlord the Termination Amount and all Remaining Obligations and,
if requested by Tenant, Landlord shall (i) convey to Tenant the Leased Premises
or the remaining portion thereof, if any, and (ii) pay to or assign to Tenant
Landlord's entire interest in and to the Net Award, all in accordance with
Paragraph 20.
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage)
shall hold any Net Award in excess of $250,000 in a fund (the "Restoration
Fund") and disburse amounts from the Restoration Fund only in accordance with
the following conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord and (B) Landlord and Lender shall be
provided with mechanics' lien insurance (if available) and acceptable
performance and payment bonds which insure satisfactory completion of and
payment for the restoration, are in an amount and form and have a surety
acceptable to Landlord, and name Landlord and Lender as additional dual
obligees;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged unless a
satisfactory bond shall have been posted in accordance with state law;
(iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Landlord can
verify that the amounts disbursed from time to time are represented by work that
is completed, in place and free and clear of mechanics' and materialmen's lien
claims;
(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is requested, stating
the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the work, also
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stating that the work has been fully completed and complies with the applicable
requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
restoration fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord,
the Restoration Fund shall not be commingled with Landlord's other funds and
shall bear interest at a rate agreed to by Landlord and Tenant; and
(vii) such other reasonable conditions as Landlord
or Lender may impose.
(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord, exceeds the amount of
the Net Award available for such restoration, the amount of such excess shall,
upon demand by Landlord, be paid by Tenant to Landlord to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum (the "Remaining Sum") shall be applied as follows: each
installment of Basic Rent payable after the completion of the restoration shall
be reduced by a fraction, the denominator of which shall be the total amount of
all Basic Rent due from such date to and including the last Basic Rent Payment
Date for the then existing Term and the numerator of which shall be the amount
of the Remaining Sum retained by Landlord. Any portion of the Remaining Sum not
so applied by the end of the Term shall be credited, if at all, against the
Relevant Amount in the same manner and to the same extent any remaining Net
Award would be so credited.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant
pursuant to any provision of this Lease, Landlord need not convey any better
title thereto than that which was conveyed to Landlord, and Tenant shall accept
such title, subject, however, to the Permitted Encumbrances and to all other
liens, exceptions and restrictions on, against or relating to any of the Leased
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises which have been
created by or resulted solely from acts of Landlord after the date of this
Lease, unless the
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same are Permitted Encumbrances or customary utility easements benefiting the
Leased Premises or were created with the concurrence of Tenant or as a result of
a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the
Leased Premises pursuant to any provision of this Lease (any such date the
"Purchase Date"), Tenant shall pay to Landlord, or to any Person to whom
Landlord directs payment, the Relevant Amount therefor specified herein, in
Federal Funds, less any credit of the Net Award received and retained by
Landlord or a Lender allowed against the Relevant Amount, and Landlord shall
deliver to Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Award not yet received by Landlord or a
Lender) then required to be sold by Landlord to Tenant pursuant to this Lease
and (iii) any Net Award received by Landlord, not credited to Tenant against the
Relevant Amount and required to be delivered by Landlord to Tenant pursuant to
this Lease; provided, that if any Monetary Obligations remain outstanding on
such date, then Landlord may deduct from the Net Award the amount of such
Monetary Obligations. If on the Purchase Date any Monetary Obligations remain
outstanding and no Net Award is payable to Tenant by Landlord or the amount of
such Net Award is less than the amount of the Monetary Obligations, then Tenant
shall pay to Landlord on the Purchase Date the amount of such Monetary
Obligations. Upon the completion of such purchase, this Lease and all
obligations and liabilities of Tenant hereunder shall terminate, except any
Surviving Obligations.
(c) If the completion of such purchase shall be delayed
after (i) the Termination Date, in the event of a purchase pursuant to Paragraph
18 or, (ii) the date scheduled for such purchase, in the event of a purchase
under any other provision of this Lease then (x) Rent shall continue to be due
and payable until completion of such purchase and (y) if such delay continues
for more than sixty (60) days at Landlord's sole option, Fair Market Value shall
be redetermined and the Relevant Amount payable by Tenant pursuant to the
applicable provision of this Lease shall be adjusted to reflect such
redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord
shall be prorated as of the Purchase Date, and the prorated unapplied balance
shall be deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.
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21. Assignment and Subletting; Prohibition against Leasehold
Financing.
(a) (i) Tenant shall have the right, upon thirty (30)
days prior written notice to Landlord and Lender, with no consent of Landlord or
Lender being required or necessary ("Preapproved Assignment") to assign this
Lease to any Person ("Preapproved Assignee") that, after the date hereof, is a
wholly-owned subsidiary of Tenant or (ii) that immediately following such
assignment will have a publicly traded unsecured senior debt rating of "A" or
better from Moody's Investors Services, Inc. or a rating of "A" or better from
Standard & Poor's Corporation, and in the event all of such rating agencies
cease to furnish such ratings, then a comparable rating by any rating agency
reasonably acceptable to Landlord and Lender.
(ii) If Tenant desires to assign this Lease
("Non-Preapproved Assignment") to a Person who would not be a Preapproved
Assignee ("Non-Preapproved Assignee") then Tenant shall, not less than ninety
(90) days prior to the date on which it desires to make a Non-Preapproved
Assignment submit to Landlord and Lender information regarding the following
with respect to the Non-Preapproved Assignee (collectively, the "Review
Criteria"): (A) credit, (B) capital structure, (C) management, (D) operating
history, (E) proposed use of the Leased Premises and (F) risk factors associated
with the proposed use of the Leased Premises by the Non-Preapproved Assignee,
taking into account factors such as environmental concerns, product liability
and the like. Landlord and Lender shall review such information and shall
approve or disapprove the Non-Preapproved Assignee no later than the thirtieth
(30th) day following receipt of all such information, and Landlord and Lender
shall be deemed to have acted reasonably in granting or withholding consent if
such grant or disapproval is based on their review of the Review Criteria
applying prudent business judgment.
(b) Tenant shall have the right with no consent or
approval of Landlord being required or necessary (i) to enter into occupancy
agreements or storage contracts for poundage for undefined space (with customer
on-site office space included therewith) and (ii) upon thirty (30) days prior
written notice to Landlord and Lender, to enter into one or more subleases that
demise, in the aggregate, up to but not in excess of twenty-five percent (25%)
of the gross space in the Improvements ("Preapproved Sublet"). Other than
pursuant to Preapproved Sublets, at no time during the Term shall subleases for
more than twenty-five percent (25%) of the gross space in the Improvements be
permitted without the consent of Landlord, which consent shall be granted or
withheld based on a review of the Review Criteria as they relate to the proposed
sublessee and the terms of the proposed sublease. Landlord and Lender shall be
deemed to have acted reasonably in granting or withholding consent if such grant
or disapproval is based on their review of the Review Criteria using prudent
business judgment.
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(c) If Tenant assigns all of its rights and interest
under this Lease, the assignee under such assignment shall expressly assume all
the obligations of Tenant hereunder, actual or contingent, including obligations
of Tenant which may have arisen on or prior to the date of such assignment, by a
written instrument delivered to Landlord at the time of such assignment. Each
sublease of any of the Leased Premises shall be subject and subordinate to the
provisions of this Lease. No assignment or sublease shall affect or reduce any
of the obligations of Tenant hereunder, and all such obligations shall continue
in full force and effect as obligations of a principal and not as obligations of
a guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.
(d) Tenant shall, within ten (10) days after the
execution and delivery of any assignment or sublease consented to by Landlord,
deliver a duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(e) As security for performance of its obligations under
this Lease, Tenant hereby grants, conveys and assigns to Landlord all right,
title and interest of Tenant in and to all subleases and, unless assignment by
Tenant is specifically prohibited by the terms thereof, storage contracts,
occupancy and other rights to possession agreements (collectively, "Occupancy
Agreements") now in existence or hereafter entered into for any or all of the
Leased Premises and any and all extensions, modifications and renewals thereof
and Tenant covenants and agrees that it shall not sell, assign, pledge or grant
a security interest in its rights in and to any Occupancy Agreement or payments
due thereunder to any Person except for the grant of a security interest in the
receivables from the Occupancy Agreements to any working capital lender of
Tenant. Landlord hereby grants to Tenant a license to collect and enjoy all
rents and other sums of money payable under any sublease of any of the Leased
Premises, provided, however, that Landlord shall have the absolute right to
revoke said license and to collect such rents and sums of money and to retain
the same upon the occurrence of, and during the continuance of, an Event of
Default. Tenant shall not consent to, cause or allow any modification or
alteration of any of the terms, conditions or covenants of any of the subleases
or the termination thereof, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, nor shall Tenant accept any rents
more than thirty (30) days in advance of the accrual thereof nor do nor permit
anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of any of the subleases.
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(f) Tenant shall not have the power to mortgage, pledge
or otherwise encumber its interest under this Lease or any sublease of the
Leased Premises, and any such mortgage, pledge or encumbrance made in violation
of this Paragraph 21 shall be void and of no force and effect.
(g) Subject to Tenant's rights under Paragraphs 35 and 36
hereof, Landlord may sell or transfer the Leased Premises at any time without
Tenant's consent to any third party (each a "Third Party Purchaser"). In the
event of any such transfer, Tenant shall attorn to any Third Party Purchaser as
Landlord so long as such Third Party Purchaser and Landlord notify Tenant in
writing of such transfer. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other agreements
as Landlord may reasonably request, provided that such agreements do not
increase the liabilities, costs of doing business, and obligations of Tenant
hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following
(after expiration of any applicable cure period as provided in Paragraph 22(b))
shall, at the sole option of Landlord, constitute an "Event of Default" under
this Lease:
(i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe,
or a violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant
herein or in any certificate, demand or request made pursuant hereto proves to
be incorrect, now or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or
at maturity by Tenant in any payment of principal or interest on any obligations
for borrowed money having a principal balance of $2,000,000 or more in the
aggregate at the time of such default, or in the performance of any other
provision contained in any instrument under which any such obligation is created
or secured (including the breach of any covenant thereunder), (x) if such
payment is a payment at maturity or a final payment, or (y) if an effect of such
default is to cause such obligation to become due prior to its stated maturity;
(v) a default by Tenant beyond any applicable cure
period in the payment of rent under, or in the performance of any other material
provision of, any other lease or leases that have, in the aggregate, rental
obligations over
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the terms thereof of $2,000,000 or more and the Landlord under such lease or
leases is the prevailing party in the exercise of any of its remedies
thereunder;
(vi) a final, non-appealable judgment or judgments
for the payment of money in excess of $2,000,000 in the aggregate shall be
rendered against Tenant and the same shall remain undischarged for a period of
sixty (60) consecutive days;
(vii) the breach of any Covenant shall occur;
(viii) Tenant shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for the Leased Premises, (C) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
(ix) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;
(x) the Leased Premises shall have been vacated for a
period in excess of nine (9) months or shall have been abandoned;
(xi) Tenant shall be liquidated or dissolved or shall
begin proceedings towards its liquidation or dissolution;
(xii) the estate or interest of Tenant in any of the
Leased Premises shall be levied upon or attached in any proceeding and such
estate or interest is about to be sold or transferred or such process shall not
be vacated or discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant to perform or observe, or
a violation or breach of, or a misrepresentation by Tenant under any provision
of any Assignment or any other document between Tenant and Lender, if such
failure, violation, breach or misrepresentation gives rise to a default beyond
any applicable cure period with respect to any Loan;
(xiv) a failure by Tenant to maintain in effect any
other license or permit necessary for the use, occupancy or operation of the
Leased Premises; or
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(xv) an Event of Default (as defined in the
Construction Agency Agreement) beyond any applicable cure period shall occur
under the Construction Agency Agreement.
(b) No notice or cure period shall be required in any one
or more of the following events: (A) the occurrence of an Event of Default under
clause (iii), (iv), (v), (vi), (vii) (except as otherwise set forth below),
(viii), (ix), (x), (xi), (xii), (xiii) or (xv) of Paragraph 22(a); (B) the
default consists of a failure to pay Basic Rent, a failure to provide any
insurance required by Paragraph 16 or an assignment or sublease entered into in
violation of Paragraph 21; or (C) the default is such that any delay in the
exercise of a remedy by Landlord could reasonably be expected to cause
irreparable harm to Landlord. If the default consists of the failure to pay any
Monetary Obligation under clause (i) of Paragraph 22(a), the applicable cure
period shall be five (5) days from the date on which notice is given, but
Landlord shall not be obligated to give notice of, or allow any cure period for,
any such default more than one (1) time within any Lease Year. If the default
consists of a default under clause (ii) or under clause (iii) of Paragraph 22(a)
and with respect to clause (iii) is a default that, in the reasonable opinion of
Landlord is capable of cure, other than the events specified in clauses (B) and
(C) of the first sentence of this Paragraph 22(b), the applicable cure period
shall be twenty (20) days from the date on which notice is given or, if the
default cannot be cured within such twenty (20) day period and delay in the
exercise of a remedy would not (in Landlord's reasonable judgment) cause any
material adverse harm to Landlord or any of the Leased Premises, the cure period
shall be extended for the period required to cure the default (but such cure
period, including any extension, shall not in the aggregate exceed sixty (60)
days), provided that Tenant shall commence to cure the default within the said
twenty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured. If the
default is a default under clause (vii) of Paragraph 22(a) the applicable cure
period shall be thirty (30) days following the earlier of the date on which
Tenant has knowledge of the default or the date on which Landlord notifies
Tenant that a default has occurred under Paragraph 22(a)(vii), provided,
however, that no notice and/or cure period shall be permitted if the default is
a default under Section 5 or Section 7 of Exhibit "E", Covenants.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter (provided a written waiver of such Event of Default has not been
provided by Landlord to Tenant), to exercise its remedies and to collect damages
from Tenant in accordance with this Paragraph 23, subject in all events to
applicable Law, without demand upon or notice to Tenant
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except as otherwise provided in Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon such
date, this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of the Leased Premises, Landlord may re-enter and repossess the
Leased Premises, with or without legal process, by peaceably entering the Leased
Premises and changing locks or by summary proceedings, ejectment or any other
lawful means or procedure. Upon or at any time after taking possession of the
Leased Premises, Landlord may, by peaceable means or legal process, remove any
Persons or property therefrom. Landlord shall be under no liability for or by
reason of any such entry, repossession or removal. Notwithstanding such entry or
repossession, Landlord may (A) exercise the remedy set forth in and collect the
damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth
in Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right to relet any of the
Leased Premises to such tenant or tenants, for such term or terms, for such
rent, on such conditions and for such uses as Landlord in its sole discretion
may determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may, upon notice to Tenant, require
Tenant to make an irrevocable offer to terminate this Lease upon payment to
Landlord of the Termination Amount. Upon such notice to Tenant, Tenant shall be
deemed to have made such offer and shall, if requested by Landlord, within sixty
(60) days following such request deposit with Landlord as payment against the
Termination Amount an amount equal to the sum of Landlord's Share of Project
Costs and the applicable Prepayment Premium and Landlord and Tenant shall
promptly commence to determine Fair Market Value. Within thirty (30) days after
the Fair Market Value Date, Landlord shall accept or reject such offer. If
Landlord accepts such offer then, on the earlier to occur of ten (10) days after
such acceptance if Landlord has required an amount equal to the sum of
Landlord's Share of Project Costs and the applicable Prepayment Premium or, if
not required, within sixty (60) days after such acceptance, Tenant shall pay to
Landlord the balance, if any, of the Termination Amount and, at the request of
Tenant, Landlord will convey the Leased Premises to Tenant or its designee in
accordance with Paragraph 20. Any
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rejection by Landlord of such offer shall have no effect on any other remedy
Landlord may have under this Lease.
(iv) Landlord may declare by notice to Tenant the
entire Basic Rent (in the amount of Basic Rent then in effect) for the remainder
of the then current Term to be immediately due and payable. Tenant shall
immediately pay to Landlord the Present Value of all such Basic Rent, all
accrued Rent then due and unpaid, all other Monetary Obligations which are then
due and unpaid and all Monetary Obligations which arise or become due by reason
of such Event of Default (including any Costs of Landlord). Upon receipt by
Landlord of all such accelerated Basic Rent and Monetary Obligations, this Lease
shall remain in full force and effect and Tenant shall have the right to
possession of the Leased Premises from the date of such receipt by Landlord to
the end of the Term, and subject to all the provisions of this Lease, including
the obligation to pay all increases in Basic Rent and all Monetary Obligations
that subsequently become due, except that (A) no Basic Rent which has been
prepaid hereunder shall be due thereafter during the said Term and (B) Tenant
shall have no option to extend or renew the Term.
(b) The following constitute damages to which Landlord
shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):
(i) If Landlord exercises its remedy under Paragraph
23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise
such remedy and is unsuccessful in reletting the Leased Premises) then, upon
written demand from Landlord, Tenant shall pay to Landlord, as liquidated and
agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, re-entry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses attorneys' fees, employees'
expenses, costs of Alterations and expenses and preparation for reletting.
(ii) If Landlord exercises its remedy under Paragraph
23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant
shall, until the end of what would have been the Term in the absence of the
termination of the Lease, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages all Monetary Obligations
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which would be payable under this Lease by Tenant in the absence of such
termination less the net proceeds, if any, of any reletting pursuant to
Paragraph 23(a)(ii), after deducting from such proceeds all of Landlord's Costs
(including the items listed in the last sentence of Paragraph 23(b)(i) hereof)
incurred in connection with such repossessing and reletting; provided, that if
Landlord has not relet the Leased Premises, such Costs of Landlord shall be
considered to be Monetary Obligations payable by Tenant. Tenant shall be and
remain liable for all sums aforesaid, and Landlord may recover such damages from
Tenant and institute and maintain successive actions or legal proceedings
against Tenant for the recovery of such damages. Nothing herein contained shall
be deemed to require Landlord to wait to begin such action or other legal
proceedings until the date when the Term would have expired by its own terms had
there been no such Event of Default.
(c) Notwithstanding anything to the contrary herein
contained, in lieu of or in addition to any of the foregoing remedies and
damages, Landlord may exercise any remedies and collect any damages available to
it at law or in equity. If Landlord is unable to obtain full satisfaction
pursuant to the exercise of any remedy, it may pursue any other remedy which it
has hereunder or at law or in equity.
(d) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.
(e) No termination of this Lease, repossession or
reletting of the Leased Premises, exercise of any remedy or collection of any
damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving
Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time upon
the strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of
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such breach, and no waiver by Landlord of any provision hereof shall be deemed
to have been made unless expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and
all those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.
(j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Reed Smith Shaw & McClay, LLP, 2500 One Liberty Place,
Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For the
purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days' notice of the new address to the other party, in the manner provided
above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the "Responding Party"), the Responding Party shall
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise
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specified, there are no proceedings pending or, to the knowledge of the signer,
threatened, against Tenant before or by any court or administrative agency
which, if adversely decided, would materially and adversely affect the financial
condition and operations of Tenant. Any such statements by the Responding Party
may be relied upon by the Requesting Party, any Person whom the Requesting Party
notifies the Responding Party in its request for the Certificate is an intended
recipient or beneficiary of the Certificate, any Lender or their assignees and
by any prospective purchaser or mortgagee of any of the Leased Premises. Any
certificate required under this Paragraph 25 and delivered by Tenant shall state
that, in the opinion of each person signing the same, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to the subject matter of such certificate, and shall briefly
state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The cost
of removing and disposing of such property and repairing any damage to any of
the Leased Premises caused by such removal shall be paid by Tenant to Landlord
upon demand. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall deliver to Landlord and Lender in
duplicate:
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(i) as soon as practicable after the end of each
quarter in each fiscal year, the interim consolidated statements of earnings,
stockholders' equity and cash flows of the Tenant and its Subsidiaries for such
period and for that part of the fiscal year ended with such period and the
consolidated balance sheet of the Tenant and its Subsidiaries as at the end of
such period, all in reasonable detail, prepared in conformity with generally
accepted accounting principles applied on a basis consistent with that of
previous years (except as otherwise stated therein or in the notes thereto) and
certified by either the President or Treasurer of the Tenant as presenting
fairly the financial condition and results of operations of the Tenant and its
Subsidiaries as at the end of and for the fiscal periods to which they relate,
subject to the Tenant's year-end adjustments;
(ii) as soon as practicable after the end of each
fiscal year, and in any event within 120 days after the end of each fiscal year,
the consolidated balance sheet and related consolidated statements of earnings,
stockholders' equity and cash flows of the Tenant and its Subsidiaries as of the
end of and for such year, setting forth in each case in comparative form the
corresponding figures of the previous fiscal year, all in reasonable detail,
prepared in conformity with generally accepted accounting principles applied on
a basis consistent with that of previous years (except as otherwise stated
therein or in the notes thereto) and accompanied by a report or opinion of
independent certified public accountants, selected by the Tenant and reasonably
acceptable to Landlord and Lender, stating that such financial statements
present fairly the consolidated financial condition and results of operations
and cash flows of the Tenant and its Subsidiaries in accordance with generally
accepted accounting principles consistently applied (except for changes with
which such accountants concur) and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards;
(iii) concurrently with the financial statements
delivered pursuant to Paragraph 28(a)(ii), the written statement of said
accountants, which accountants shall be reasonably acceptable to Landlord and
Lender, that in the ordinary course of making their normal examination necessary
for their report or opinion on said financial statements they have obtained no
knowledge of any Event of Default or event which, with notice or lapse of time
or both, would become an Event of Default or, if such accountants shall have
obtained knowledge of any such Event of Default or event, they shall disclose in
such statement the event or Events of Default and/or such event or events and
the nature and status thereof, but such accountants shall not be liable,
directly or indirectly, to anyone for any failure to obtain knowledge of any
such Event of Default or event;
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(iv) concurrently with the financial statements
delivered pursuant to Paragraph 28(a)(i) and (ii) a certificate of either the
President or the Treasurer of the Tenant (1) setting forth, as of the end of the
preceding fiscal quarter or fiscal year, as the case may be, the extent to which
the Tenant and its Subsidiaries have complied with the requirements of the
Covenants, including in each case a brief description, together with all
necessary computations, of the manner in which such compliance was determined
and the respective amounts as of the end of or for such fiscal quarter or fiscal
year, as the case may be, of Consolidated Total Indebtedness, Consolidated Total
Capitalization, Consolidated Net Income Available for Interest, Interest
Charges, Consolidated Current Assets, Consolidated Current Liabilities,
Consolidated Working Capital, Consolidated Tangible Net Worth, Consolidated Net
Worth (Stockholders' Equity), Consolidated Net Income, Restricted Payments and
operating lease obligations, (2) stating that a review of the activities of the
Tenant and its Subsidiaries during the preceding fiscal quarter or fiscal year,
as the case may be, has been made under his or her supervision to determine
whether the Company has fulfilled all of its obligations under this Lease, (3)
stating that, to the best of his or her knowledge, the Tenant is not and has not
been in default in the fulfillment of any of the terms, covenants, provisions or
conditions hereof and thereof and no Event of Default or event which, with
notice or lapse of time or both, would become an Event of Default exists or
existed or, if any such default or Event of Default or event exists or existed,
specifying such default, Event of Default or event and the nature and status
thereof, and (4) giving, in the event of the formation or acquisition of a
Subsidiary during the preceding fiscal quarter or fiscal year, as the case may
be, the name of such Subsidiary, its jurisdiction of incorporation and a brief
description of its business;
(v) as soon as practicable, copies of all financial
statements, proxy statements and reports as the Tenant or any of its
Subsidiaries shall send or make available generally to its stockholders or any
governmental agency or agencies and regular periodic reports, if any, which it
or any of its Subsidiaries, may file with any governmental agency or agencies;
(vi) immediately upon a responsible officer of the
Tenant's becoming aware of the existence of a condition, event or act which
constitutes an Event of Default or an event of default under any other evidence
of Indebtedness of the Tenant or any Subsidiary, or an event which, with notice
or lapse of time or both, would constitute such an Event of Default or event of
default, a written notice specifying the nature and period of existence thereof
and what action the Tenant or such Subsidiary, as the case may be, is taking or
proposes to take with respect thereto;
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(vii) immediately upon a responsible officer of the
Tenant's becoming aware of the occurrence of any (1) "reportable event," as
defined in Section 4043(b) of ERISA, or (2) non-exempted "prohibited
transaction," as defined in Sections 406 and 408 of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended in connection with any "employee
pension benefit plan," as defined in Section 3 of ERISA, or any trust created
thereunder, a written notice specifying the nature thereof, what action the
Tenant is taking or proposes to take with respect thereto and, when known, any
action taken by the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect thereto;
(viii) promptly upon a responsible officer of the
Tenant's becoming aware of the occurrence of (1) any surrender of assets of the
Tenant or any Subsidiary in satisfaction of any Indebtedness, (2) the
dissolution of any operating partnership or real estate ownership partnership of
the Tenant or any Subsidiary, (3) the termination or expiration of any lease of
real property to which the Tenant or any Subsidiary is lessee, or (4) the
commencement of any litigation, including any arbitration or mediation, and of
any proceedings before any governmental agency which could materially and
adversely affect the business, properties, prospects or financial condition of
the Tenant and its Subsidiaries taken as a whole (including any such action
commenced by counterclaim), written notice specifying the nature thereof and
what action the Tenant or such Subsidiary, as the case may be, is taking with
respect thereto; and
(ix) such other information as to the business and
properties of the Tenant and of its Subsidiaries, including consolidating
financial statements of the Tenant and its Subsidiaries, and financial
statements and other reports filed with any governmental department, bureau,
commission or agency, as you may from time to time reasonably request.
(b) Landlord and Lender shall have the right (i) to visit
and inspect, at the expense of Landlord and Lender, as the case may be, the
Leased Premises and any of the other properties, all at such reasonable times
and as often as Landlord or Lender may reasonably request, of the Tenant or of
any of its Subsidiaries, to examine its books of account and those of its
Subsidiaries and to discuss the affairs, finances and accounts of the Tenant and
the Subsidiaries with its and their officers and managers and independent public
accountants, and (ii) to contact such third parties doing business with the
Tenant (but only after providing Tenant prior notice and an opportunity to
advise such third parties that Landlord will contact them), and to engage in
other auditing procedures as Landlord and Lender deem reasonable to ensure the
accuracy of the Tenant's representations, warranties and certifications.
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29. Determination of Value.
(a) Whenever a determination of Fair Market Value is
required pursuant to any provision of this Lease, such Fair Market Value shall
be determined in accordance with the following procedure:
(i) Landlord and Tenant (or Third Party Purchaser
with respect to a determination under clause (D) below) shall endeavor to agree
upon such Fair Market Value within thirty (30) days after the date (the
"Applicable Initial Date") on which (A) Tenant provides Landlord with notice of
its intention to terminate this Lease and purchase the Leased Premises pursuant
to Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c) or (C) Landlord
provides Tenant with notice of Landlord's intention to require Tenant to make an
offer to terminate this Lease pursuant to Paragraph 23(a)(iii). Upon reaching
such agreement, the parties shall execute an agreement setting forth the amount
of such Fair Market Value.
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable Initial Date, Tenant
shall within fifty (50) days after the Applicable Initial Date select an
appraiser and notify Landlord in writing of the name, address and qualifications
of such appraiser. Within twenty (20) days following Landlord's receipt of
Tenant's notice of the appraiser selected by Tenant, Landlord shall select an
appraiser and notify Tenant of the name, address and qualifications of such
appraiser. Such two appraisers shall endeavor to agree upon Fair Market Value
based on a written appraisal made by each of them (and given to Landlord by
Tenant) as of the Relevant Date. If such two appraisers shall agree upon a Fair
Market Value, the amount of such Fair Market Value as so agreed shall be binding
and conclusive upon Landlord and Tenant.
(iii) If such two appraisers shall be unable to agree
upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The selection of the
third appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree
upon the designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value
within twenty (20) days after his selection, then such third appraiser or a
substituted third appraiser, as applicable, shall, at the request of either
party hereto, be appointed by the President or Chairman of the American
Arbitration Association in New York, New York.
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The determination of Fair Market Value made by the third appraiser appointed
pursuant hereto shall be made within twenty (20) days after such appointment.
(v) If a third appraiser is selected, Fair Market
Value shall be the average of the determination of Fair Market Value made by the
third appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Value is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have
no right, power or authority to alter or modify the provisions of this Lease,
(C) utilize the definition of Fair Market Value hereinabove set forth above, and
(D) be registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a) above
shall be borne by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made.
(c) In determining Fair Market Value the appraisers shall
add (a) the present value of the Rent for the then remaining Term, assuming the
Term has been extended for any extension periods provided herein for which
Tenant has given an Extension Notice (with assumed increases in the CPI to be
determined by the appraisers) using a discount rate (which may be determined by
an investment banker retained by each appraiser) based on the creditworthiness
of Tenant and (b) the present value of the Leased Premises as of the end of such
Term assuming that the Leased Premises will continue to be operated as a
refrigerated-freezer warehouse. The appraisers shall further assume that no
default then exists under the Lease, that Tenant has complied (and will comply)
with all provisions of the Lease, and that Tenant has not violated (and will not
violate) any of the Covenants.
30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (i) Landlord, (ii) any
director, officer, general partner, shareholder, limited partner, beneficiary,
employee or agent of Landlord or any general partner of Landlord or any of its
general partners (or any legal representative, heir, estate, successor or assign
of any
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thereof), (iii) any predecessor or successor partnership or corporation (or
other entity) of Landlord or any of its general partners, shareholders,
officers, directors, employees or agents, either directly or through Landlord or
its general partners, shareholders, officers, directors, employees or agents or
any predecessor or successor partnership or corporation (or other entity), or
(iv) any Person affiliated with any of the foregoing, or any director, officer,
employee or agent of any thereof.
31. Financing.
(a) If Metropolitan Life Insurance Company ("MetLife")
finances the initial Loan Tenant agrees to pay, within three (3) Business Days
of written request from Landlord, all reasonable costs and expenses incurred by
Landlord in connection with the financing of the initial Loan. If a Lender,
other than MetLife is the initial Lender, Tenant shall pay $10,000 of legal fees
incurred by Landlord and initial Lender and costs (provided that if such legal
fees and expenses exceed $10,000 Tenant shall not unreasonably refuse to pay
such excess fees and expenses) within three (3) Business Days of written request
from Landlord the $10,000 and all such additional approved fees and expenses.
(b) Tenant agrees to pay, within three (3) business days
of written demand therefor, any cost, charge or expense (other than the
principal of the Note and interest thereon at the contract rate of interest
specified therein) imposed upon Landlord by Lender pursuant to the Note, the
Mortgage or the Assignment which is not caused solely by the gross negligence or
willful misconduct of Landlord and which is not otherwise reimbursed by Tenant
to Landlord pursuant to any other provision of this Lease.
(c) If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes or modifications in this Lease,
provided, that such modifications do not increase Tenant's cost of doing
business or materially and adversely affect its obligations and liabilities
under this Lease. In particular, Tenant shall agree, upon request of Landlord,
to supply any such Lender with such notices and information as Tenant is
required to give to Landlord hereunder and to extend the rights of Landlord
hereunder to any such Lender and to consent to such financing if such consent is
requested by such Lender. Tenant shall provide any other consent or statement
and shall execute any and all other documents that such Lender requires in
connection with such financing, including any environmental indemnity agreement
and subordination, non-disturbance and attornment agreement, so long as the same
do not materially adversely affect any right, benefit or privilege of Tenant
under this Lease or materially increase Tenant's obligations or the cost of
doing business under this Lease.
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32. Subordination, Non-Disturbance and Attornment Agreement.
(a) Upon written request of Landlord, or any mortgagee or
beneficiary of Landlord, including Lender, Tenant will, in writing, subordinate
its right hereunder to the interest of any ground lessor of the Land upon which
the Leased Premises is situated and to the lien of any mortgage or deed of trust
now or hereafter in force against the Leased Premises and to all advances made
or hereafter to be made upon the security thereof; provided, however, that the
ground lessor or the mortgagee or trustee named in said mortgage or trust deed
shall agree that Tenant's peaceable possession of the Leased Premises and its
rights under this Lease will not be diminished on account thereof unless and
until an Event of Default exists or Landlord shall have the right to terminate
this Lease pursuant to any applicable provision hereof.
(b) In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgages or deeds of trust, upon any such foreclosure or sale Tenant agrees to
recognize such beneficiary or purchaser as the Landlord under this Lease,
provided Tenant's right to possession continues unabated and Tenant's rights
under this Lease continue undiminished unless and until an Event of Default
exists or Landlord shall have the right to terminate this Lease pursuant to any
applicable provision hereof.
(c) Such subordination, nondisturbance and attornment
agreement may require Tenant to confirm that (i) Lender and its assigns will not
be liable for any misrepresentation, act or omission of Landlord and (ii) Lender
and its assigns will not be subject to any counterclaim, demand or offset which
Tenant may have against Landlord.
33. Financial Covenants. Tenants hereby covenants and agrees to
comply with all the covenants and agreements described in Exhibit "E" hereto.
34. Tax Treatment; Reporting. Landlord and Tenant each acknowledge
that each shall treat this transaction as a true lease for state law purposes
and shall report this transaction as a Lease for Federal income tax purposes.
For Federal income tax purposes each shall report this Lease as a true lease
with Landlord as the owner of the Leased Premises and Equipment and Tenant as
the lessee of such Leased Premises and Equipment including: (1) treating
Landlord as the owner of the property eligible to claim depreciation deductions
under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
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35. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this
Paragraph 35, and provided an Event of Default does not then exist if Landlord
shall enter into a contract for the sale (the "Sale Contract") of the Leased
Premises with a Third Party Purchaser, which Sale Contract shall be conditioned
upon Tenant's failure to exercise its right under this Paragraph 35, Landlord
shall give written notice to Tenant of the Sale Contract, together with a copy
of the executed Sale Contract and the name and business address of the Third
Party Purchaser.
(b) For a period of thirty (30) days following receipt of
such notice, Tenant shall have the right and option, exercisable by written
notice to Landlord given within said thirty (30) day period, to elect to
purchase the Leased Premises at the purchase price and upon all the terms and
conditions set forth in such Sale Contract except that no contingencies
contained in such Sale Contract as to environmental assessments, engineering
studies, inspection of the Leased Premises, availability of financing or sale of
other property, encumbrances on the Leased Premises created by or with the
concurrence of Landlord, shall apply to Tenant's obligation to purchase the
Leased Premises under this Paragraph 35, and Tenant shall be obligated to
purchase the Leased Premises without any such condition or contingency. If at
the expiration of the aforesaid thirty (30) day period Tenant shall have failed
to exercise the aforesaid option, Landlord may sell the Leased Premises to such
Third Party Purchaser upon the terms set forth in such Sale Contract.
(c) For the purposes of this Paragraph 35, any Sale
Contract which is received by Landlord between the tenth (10th) and eleventh
(11th) anniversaries of the date of this Lease shall be acceptable to Landlord
if the terms of such Sale Contract provide (i) for a purchase price for an
amount equal to or greater than the greater of (A) Fair Market Value (which
shall be determined in accordance with the procedure set forth in Paragraph 29
of this Lease, except that references to Tenant in Paragraphs 29(a) and 29(b)
hereof shall mean the Third Party Purchaser) or (B) Landlord's Share of Project
Costs plus Prepayment Premium, (ii) that the Third Party Purchaser pays all
costs in connection with such purchase, (iii) that such purchase price is
payable in cash at the closing of the sale of the Leased Premises and (iv) the
closing date for such purchase will occur no later than the thirtieth (30th) day
following the eleventh (11th) anniversary of the date of this Lease and (v)
title will be conveyed subject to the matters specified in Paragraph 20(a).
(d) Except as otherwise specifically provided herein, the
closing date for any purchase of the Leased Premises by Tenant pursuant to this
Paragraph 35 shall be the later to occur of (i) ninety (90) days after the date
of Tenant's notice to Landlord of its intention to purchase the Leased Premises
upon
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the terms of the Sale Contract with a Third Party Purchaser or (ii) the date in
the Sale Contract.
(e) Tenant shall have the right during the Term to
exercise the foregoing right of first refusal upon each proposed sale of the
Leased Premises. Notwithstanding anything to the contrary, if this Lease
terminates or the Term expires, such right of first refusal shall terminate and
be null and void and of no further force and effect. In such event Tenant shall
execute a quitclaim deed and such other documents as Landlord shall reasonably
request evidencing the termination of its right of first refusal.
(f) If Tenant does not exercise its right of first
refusal to purchase the Leased Premises and the Leased Premises are transferred
to a Third Party Purchaser, Tenant will attorn to any Third Party Purchaser as
Landlord so long as such Third Party Purchaser and Landlord notify Tenant in
writing of such transfer. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other agreements
as Landlord may reasonably request, provided that such agreements do not
increase the liabilities and obligations of Tenant hereunder.
(g) The provisions of this Paragraph 35 shall not apply
to or prohibit (i) any mortgaging, subjection to deed of trust or other
hypothecation of Landlord's interest in the Leased Premises, (ii) any sale of
the Leased Premises pursuant to a private power of sale under or judicial
foreclosure of any Mortgage or other security instrument or device to which
Landlord's interest in the Leased Premises is now or hereafter subject, (iii)
any transfer of Landlord's interest in the Leased Premises to a Lender,
beneficiary under deed of trust or other holder of a security interest therein
or their designees by deed in lieu of foreclosure, (iv) any transfer of the
Leased Premises to any governmental or quasi-governmental agency with power of
condemnation, (v) any transfer of the Leased Premises to any affiliate of
Landlord or to any entity for whom W.P. Carey & Co., Inc., W.P. Carey
Incorporated or any of their affiliates provides management services or
investment advice, (vi) any Person to whom Landlord sells all or substantially
all of its assets, or (vii) any transfer of the Leased Premises to any of the
successors or assigns of any of the Persons referred to in the foregoing clauses
(i) through (iv).
36. Restrictions on Sale. Landlord shall not sell the Leased
Premises to any Person whose business includes the operation of a
refrigerated-freezer warehouse facility to third party users, provided, however,
that such restriction shall not apply at any time that an Event of Default
exists or following the failure of Tenant to deliver an Extension Notice.
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37. Miscellaneous.
(a) The paragraph headings in this Lease are used only
for convenience in finding the subject matters and are not part of this Lease or
to be used in determining the intent of the parties or otherwise interpreting
this Lease.
(b) As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to perform under
this Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall have
the right, at its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason. Time is of the essence with
respect to the performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any
purpose to be a partner, joint venturer or associate of Tenant or of any
subtenant, operator, concessionaire or licensee of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by
Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein. Landlord and
Tenant are business entities having substantial experience with the subject
matter of this Lease and have each fully participated in the negotiation and
drafting of this Lease. Accordingly, this Lease shall be construed without
regard to the
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rule that ambiguities in a document are to be construed against the drafter.
(f) This Lease may be modified, amended, discharged or
waived only by an agreement in writing signed by the party against whom
enforcement of any such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land
and bind Tenant, its successors and assigns and all present and subsequent
encumbrancers and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in
this Lease shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and
enforced in accordance with the Laws of the State.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
ICE (TX) QRS 12-29, INC.,
a Texas corporation
By:____________________________________
Title:_________________________________
ATTEST: TENANT:
TEXAS FREEZER COMPANY, INC.
a Texas corporation
By:_____________________________ By:____________________________________
Title:__________________________ Title:_________________________________
[Corporate Seal]
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<PAGE> 57
EXHIBIT A-1
PREMISES
<PAGE> 58
EXHIBIT A-2
PARKING LOT EASEMENT
<PAGE> 59
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises and used or useful in the operation of the Leased
Premises as a refrigerated-freezer warehouse facility, including all electrical,
anti-pollution, heating, lighting (including hanging fluorescent lighting),
incinerating, power, air cooling, air conditioning, humidification, sprinkling,
plumbing, lifting, cleaning, fire prevention, fire extinguishing and ventilating
systems, devices and machinery and all engines, pipes, pumps, tanks (including
exchange tanks and fuel storage tanks), motors, conduits, ducts, steam
circulation coils, blowers, steam lines, compressors, oil burners, boilers,
doors, windows, loading platforms, lavatory facilities, stairwells, fencing
(including cyclone fencing), passenger and freight elevators, overhead cranes,
garage units and racking, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, excluding
only machinery, apparatus, equipment and other personal property not listed
above.
<PAGE> 60
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE> 61
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in
Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Term for the
Leased Premises shall be calculated as follows:
(a) Commencing on October 1, 1997 and continuing on the first
day of each succeeding month to and including the Initial Term Commencement Date
(each such date a "Basic Rent Payment Date"), Basic Rent shall be payable in an
amount ("Basic Rent") equal to 0.8% multiplied by the average of the amount
advanced by or on behalf of Landlord for Project Costs (exclusive of the
Acquisition Fee) based on the number of days each advance is outstanding during
the month prior to such Basic Rent Payment Date. The amount set forth in the
foregoing sentence shall, absent manifest error, be conclusively determined from
the books and records of Landlord. Tenant shall have the right, upon reasonable
prior notice, to inspect Landlord's books and records to verify the accuracy of
Landlord's calculation of Basic Rent.
(b) Commencing on the Initial Term Commencement Date and
continuing on the first day of each third month thereafter until the expiration
of the Term (each such date, also a "Basic Rent Payment Date"), Basic Rent shall
be payable in an amount equal to the product of one-quarter of 10.95% multiplied
by Landlord's Share of Project Costs exclusive of the Acquisition Fee. Promptly
following the Initial Term Commencement Date, Landlord and Tenant shall execute
an addendum to this Lease setting forth the amount of the initial annual Basic
Rent and the quarterly payments of Basic Rent.
(c) For so long as an Event of Default has not occurred and is
continuing, on each Basic Rent Payment Date that occurs on or prior to, but not
after the Final Completion Date, and relates to any period occurring prior to
the Final Completion Date, Landlord shall approve as an advance of Landlord's
Share of Project Costs, the monthly installments of Basic Rent payable by Tenant
under this Paragraph 1 for the Improvements and will credit each such advance
against the installment of Basic Rent then due and owing, provided, however,
that (i) from and after the Final Completion Date Landlord's obligation to make
any further advance for future installments of Basic Rent shall terminate and
all such future payments of Basic Rent shall be made by Tenant and (ii) during
the continuation of an Event of Default Landlord shall have no obligation to
make any further advances for installments of Basic Rent payable under this
Paragraph 1, and Tenant shall make all further payments of Basic Rent from its
own funds unless and until any such Event of Default is cured.
<PAGE> 62
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject
to adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the three (3) year period immediately preceding the
first adjustment of Basic Rent or less than the Basic Rent in effect for the one
(1) year period immediately preceding each adjustment after the first
adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be
adjusted to reflect changes in the CPI until January 1, 2002 (the "First Full
Basic Rent Payment Date"). As of January 1, 2002 and on each January 1st
thereafter during the Term, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent three (3) year period immediately preceding the
third anniversary of the First Full Basic Rent Payment Date with respect to the
first adjustment of Basic Rent and reflect increases in the CPI during the most
recent one (1) year period immediately preceding each anniversary of the First
Full Basic Rent Payment Date thereafter (each such date being hereinafter
referred to as the "Basic Rent Adjustment Date").
4. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be the difference between (i) the average CPI for the three (3) most
recent calendar months (the "Prior Months") ending prior to such Basic Rent
Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. Ninety
percent (90%) of an amount equal to the lesser of the following shall be added
to the Basic Rent in effect immediately prior to such Basic Rent Adjustment
Date: (A) the product of such multiplication or (B) the product of the Basic
Rent in effect immediately prior to such Basic Rent Adjustment Date multiplied
by 22.50% with respect to the first adjustment of Basic Rent and
<PAGE> 63
multiplied by 7% with respect to each subsequent adjustment of Basic Rent. As
used herein, "Beginning CPI" shall mean the average CPI for the three (3)
calendar months corresponding to the Prior Months, but occurring three (3) years
earlier with respect to the first adjustment of Basic Rent and one (1) year
earlier with respect to each subsequent adjustment of Basic Rent. If the average
CPI determined in clause (i) is the same or less than the Beginning CPI, the
Basic Rent will remain the same for the ensuing one (1) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the tenth (10th) day preceding each Basic Rent Adjustment
Date, but any failure to do so by Landlord shall not be or be deemed to be a
waiver by Landlord of Landlord's rights to collect such sums. Tenant shall pay
to Landlord, within ten (10) days after a notice of the new annual Basic Rent is
delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated
amount as set forth above was not delivered to Tenant at least ten (10) days
preceding the basic Rent Adjustment Date in question.
<PAGE> 64
EXHIBIT E
COVENANTS
1. Interest Coverage; Total Indebtedness/Total Capitalization;
Lease Obligations.
A. Tenant and its Subsidiaries shall not permit, as of
the end of each fiscal year during the Term, Consolidated Net Income Available
For Interest for the immediately preceding two fiscal year period to be less
than 150% of the Interest Charges for such two year period.
B. Tenant and its Subsidiaries shall not at any time
permit the ratio of Consolidated Total Indebtedness to Consolidated Total
Capitalization to exceed 82%.
C. Tenant or its Subsidiaries shall not at any time
after the date of this Lease enter into any lease or leases of real or personal
property with terms in excess of one year (exclusive of Capital Leases) in which
the rentals due in any fiscal year exceed the aggregate amount of $100,000.
2. Current Ratio and Working Capital.
A. From and after the Initial Term Commencement Date,
Tenant and its Subsidiaries shall not at any time permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be less than
1.1 to 1 at any time during fiscal year 1997 and 1.25:1.00 at any time
thereafter.
B. From and after the Initial Term Commencement Date,
Tenant and its Subsidiaries shall not at any time permit Consolidated Working
Capital to be less than $100,000.00 during any fiscal year.
3. Tangible Net Worth. For fiscal year 1999 Tenant and
its Subsidiaries shall not at any time permit Consolidated Tangible Net Worth at
the end of each fiscal quarter to be less than $1,750,000.00. For fiscal year
1998 Tenant and its Subsidiaries shall not at any time permit Consolidated
Tangible Net Worth at the end of each fiscal quarter to be less than $1,850,000.
Commencing with fiscal year 1999 and for each fiscal year thereafter during the
Term, Tenant and its Subsidiaries shall not at any time permit Consolidated
Tangible Net Worth at the end of each fiscal quarter to be less than the greater
of, the minimum required Consolidated Tangible Net Worth for the immediately
preceding fiscal year, and (ii) the minimum required Consolidated Tangible Net
Worth for the immediately preceding fiscal year plus an amount equal to fifty
percent (50%) of such
<PAGE> 65
immediately preceding fiscal year's Consolidated Net Income plus an amount equal
to 100% of net cash proceeds (after customary costs and expenses) from the sales
of capital shares of stock of the Tenant.
4. Restricted Payments; Pledge of Stock; Restricted Investments.
A. Tenant and its Subsidiaries will not, directly or
indirectly, make any Restricted Payments or incur any liability to make any
Restricted Payments unless, (1) the sum of all such Restricted Payments
(excluding any and all payments made by Tenant or its Subsidiaries upon
Indebtedness owed to stockholders) does not exceed (a) fifty percent (50%) of
Consolidated Net Income (or minus 100% in the case of a deficit) for the period
to begin on January 1, 1998, plus (b) net cash proceeds received after January
1, 1998 from the sales of capital shares of stock of Tenant, and (2) immediately
after giving effect to such action, there shall not exist any Event of Default
or event which, with notice or lapse of time or both, would become an Event of
Default.
All dividends, distributions, purchases, redemptions,
retirements, acquisitions and payments made pursuant to this Section 4 in
property other than cash shall be included for purposes of calculations pursuant
to this Section 4 at the fair market value thereof (as determined in good faith
by the Board of Directors) at the time of declaration of such dividend or at the
time of making such distribution, purchase, redemption, retirement, acquisition
or payment.
B. Tenant's outstanding stock held by Persons, (1) who
are either employees, officers or directors of Tenant, or (2) which represent
greater than a ten percent (10%) interest in Tenant, shall remain free and clear
of any and all Liens at all times.
C. Tenant and its subsidiaries will not make any
Restricted Investment.
5. Merger, Consolidation, Sale of Assets.
A. Tenant will not consolidate with or merge into any
Person, or permit any Person to merge into it, or sell, transfer or otherwise
dispose of all or substantially all of its properties and assets in a single
transaction or series of related transactions, unless:
(1) the successor formed by or resulting from
such consolidation or merger (if other than Tenant) or
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the transferee to which such sale, transfer or other
disposition shall be made shall be a solvent corporation duly
organized and existing under the laws of the United States of
America or any State thereof and authorized to do business in
the State of Texas;
(2) the surviving corporation, in the case of a
merger, or purchaser, in the case of a sale of assets, shall
have, on a proforma basis, a Consolidated Tangible Net Worth
of not less than Tenant's Consolidated Tangible Net Worth
immediately preceding such consolidation or merger.
(3) the due and punctual performance and
observance of all the obligations, terms, covenants,
agreements and conditions of this Lease and other document and
instruments in favor of Landlord to be performed or observed
by Tenant shall, by written instrument furnished to the
Landlord, be expressly assumed by such successor (if other
than Tenant) or transferee; and
(4) at the time of such transaction and
assumption, and immediately after giving effect thereto, no
Event of Default or event which, with notice or lapse of time
or both, would constitute an Event of Default shall have
occurred and be continuing.
B. Except as permitted in Section 5 above, Tenant will
not, and will not permit any Subsidiary to, sell, assign, transfer or otherwise
dispose of (other than in the ordinary course of business) any of its properties
and assets to any Person.
6. Consolidated Fixed Charge Coverage Ratio. The Consolidated
Fixed Charge Coverage Ratio of Tenant for the twelve (12) month period ending on
the last day of each fiscal quarter of Tenant that occurs during the Term shall
not be less than 1.50 to 1.
7. Change in Control. At no time during the Term shall any Person
of group of related Persons (i) acquire beneficial ownership, directly or
indirectly, or control of forty percent (40%) or more of the outstanding Voting
Stock of Tenant or acquire or enter into an agreement to acquire, directly or
indirectly, or control of all or substantially all of the assets of Tenant, or
(ii) acquire beneficial ownership, directly or indirectly, or control of 40% or
more of the outstanding Voting Stock of an entity with or into which the Tenant
has merged or consolidated, whether pursuant to a statutory merger or
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consolidation or otherwise. For purposes of this Section 7 only, the term
"Person" shall not include any of the stockholders of Tenant as of the date of
this Lease. A transfer of shares of stock under the terms of a will or by
intestate succession shall not be deemed a transfer under the terms of this
Section 7.
8. Transactions with Affiliates. Tenant will not, and will not
permit any Subsidiary to, engage in any transaction with an Affiliate on terms
more favorable to the Affiliate than would have been obtainable in arm's length
dealing in the ordinary course of business with a Person not an Affiliate.
Tenant hereby agrees that, to the extent there are any inter-company loans
involving Tenant and/or any Subsidiary on a date on which an Event of Default
exists, no payment of any amounts owing in connection therewith may be made
until the earlier of your waiver of such Event of Default or the repayment in
full of all amounts owing under this Lease. To the extent any amounts are
received in any manner whatsoever in connection with such inter-company loans by
an obligee thereof during the period described in the immediately preceding
sentence, such amounts shall be held in trust for and paid over to Landlord
until Landlord is in receipt of all amounts owing to it in connection with this
Lease.
9. Encumbrances On and Transfers of the Collateral.
A. Tenant and its Subsidiaries will not create, incur,
assume or suffer to exist any Lien on any of the Collateral or any interest
therein. Notwithstanding anything contained herein to the contrary, Tenant may
create, incur, assume or suffer to exist Liens, whether now existing or
hereafter created, superior to your liens and interests, on pallets, pallet
jacks, electric jacks, forklifts, hand trucks, narrow isle reach trucks and
transports, propane fork trucks and slipsheets, and all battery chargers, parts
and accessories used in connection with any of the foregoing, office furniture
and computer software utilized for office purposes.
B. Except as permitted by Section 8 hereof, Tenant and
its Subsidiaries will not sell, convey, lease, assign or otherwise transfer all
or any of the Collateral or any interest therein whether voluntarily or by
operation of law. Notwithstanding anything contained herein to the contrary,
Tenant may sell or otherwise dispose of furniture, furnishings, equipment,
tools, appliances, machinery, fixtures, or appurtenances subject to the lien
thereof, which may become worn out, undesirable, obsolete, disused or
unnecessary for use in the operation of its business in the Leased Premises, not
exceeding in value at the time of disposition thereof Fifty Thousand Dollars
($50,000.00) for any single transaction, or a total of One Hundred Thousand
Dollars ($100,000.00) in any one fiscal
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year, upon replacing the same by, or substituting for the same, other furniture,
furnishings, equipment, tools, appliances, machinery, fixtures, or appurtenances
not necessarily of the same character, but of at least equal value to Tenant and
costing not less than the amount realized from the property sold or otherwise
disposed of.
10. Indebtedness. Tenant will not incur any Indebtedness in
addition to the Indebtedness described in Schedule 1 hereto.
11. Fiscal Year. Tenant shall not change its fiscal year.
12. Definitions.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
"Affiliate" means any Person which, directly or indirectly,
controls or is controlled by or is under common control with Tenant or a
Subsidiary or which beneficially owns or holds or has the power to direct the
voting power of 5% or more of any class of voting stock of Tenant or a
Subsidiary or which has 5% or more of its voting stock (or in the case of a
Person which is not a corporation, 5% or more of its equity interest)
beneficially owned or held, directly or indirectly, by Tenant or a Subsidiary.
For purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Board of Directors" means either the board of directors of
Tenant (or, when so specified or the context so indicates, a Subsidiary) or, if
duly authorized to exercise the power of the Board of Directors, any duly
authorized committee thereof.
"Capital Expenditures" of any Person shall mean, for any
period, all expenditures (whether paid in cash or received as liability during
such period) of such Person during such period which would be classified as
capital expenditures in accordance with GAAP (including without limitation,
expenditures for maintenance and repairs which are capitalized and leases to the
extent an asset is recorded in connection therewith in accordance with GAAP).
"Capital Lease" means and includes at any time any lease of
property, real or personal, which in accordance with GAAP would at such time be
required to be capitalized on a balance sheet of the lessee.
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<PAGE> 69
"Capital Lease Obligation" means at any time the capitalized
amount of the rental commitment under a Capital Lease which in accordance with
GAAP would at such time be required to be shown on a balance sheet.
"Collateral" means all property and assets, and proceeds
thereof, subjected, or intended to be subjected, at any time to the Liens of any
of the Collateral Documents.
"Consolidated Assets" means, as of the date of determination
thereof, the aggregate of all assets which in accordance with GAAP would be so
classified and appear as assets on the consolidated balance sheet of Tenant and
its Subsidiaries.
"Consolidated Current Assets" means, as of the date of
determination thereof, the aggregate of all assets which in accordance with GAAP
would be so classified and appear as current assets on the consolidated balance
sheet of Tenant and its subsidiaries.
"Consolidated Current Liabilities" means, as of the date of
determination thereof, the aggregate of all liabilities which in accordance with
GAAP would be so classified and appear as current liabilities on the
consolidated balance sheet of Tenant and its Subsidiaries. For purposes of
determining compliance with the provisions of Section 2 hereof, Consolidated
Current Liabilities shall not be deemed to include any and all payments made by
Tenant or its subsidiaries upon Indebtedness owed to stockholders.
"Consolidated EBITDAR" for any period, with respect to Tenant
and its consolidated Subsidiaries, shall mean earnings from continuing
operations, exclusive of extraordinary items, if any, before interest expense,
depreciation, taxes, amortization expense (including amortization of debt
issuance costs), lease/rent expense, less Capital Expenditures.
"Consolidated Fixed Charges" for any period, with respect to
Tenant and its consolidated Subsidiaries, shall mean the sum of the total
interest and lease/rent expense paid in cash for such period determined on a
consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" for any period
shall mean the ratio of (a) Consolidated EBITDAR for such period to (b)
Consolidated Fixed Charges for such period.
"Consolidated Liabilities" means, as of the date of
determination thereof, the aggregate of all liabilities which in
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accordance with GAAP would be so classified and appear as liabilities on the
consolidated balance sheet of Tenant and the Subsidiaries.
"Consolidated Net Income" means the net income of Tenant and
its Subsidiaries, after eliminating inter-company items, all as consolidated and
determined in accordance with GAAP.
"Consolidated Net Income Available for Interest" means, with
respect to a particular fiscal period, the Consolidated Net Income of Tenant and
its Subsidiaries (before income taxes), plus the aggregate depreciation and
Interest Charges for such period, all as consolidated and determined in
accordance with GAAP.
"Consolidated Net Worth (Stockholders' Equity)" means, as of
the date of determination thereof, the aggregate amount of the Consolidated
Assets less the Consolidated Liabilities of Tenant and its Subsidiaries plus
subordinated Indebtedness due and owing to stockholders in Tenant, in each case
after eliminating inter-company items and as determined in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as of the date of
determination thereof, the Consolidated Net Worth (Stockholders' Equity) of
Tenant and its Subsidiaries plus subordinated Indebtedness due to stockholders,
less (i) the net book value of intangibles and goodwill, and (ii) Indebtedness
due from stockholders and Affiliates (excluding Subsidiaries), in each case
after eliminating inter-company items and as determined in accordance with
GAAP."
"Consolidated Total Capitalization" shall mean the aggregate
of Consolidated Total Indebtedness plus Consolidated Net Worth (Stockholders'
Equity).
"Consolidated Total Indebtedness" shall mean the sum of:
(i) any obligation of Tenant and its Subsidiaries for borrowed
money, which under generally accepted accounting principles is shown on the
balance sheet as a liability (including, without limitation, Capitalized Lease
Obligations but excluding subordinated shareholder debt as of the date hereof,
reserves for deferred income taxes, operating leases, deferred pension liability
and other deferred expenses and reserves);
(ii) Indebtedness of Tenant and its Subsidiaries secured by
any Lien existing on property owned subject to such
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Lien, whether or not the Indebtedness secured thereby shall have been assumed;
and
(iii) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of business) and
other contractual commitments of Tenant and its Subsidiaries (whether direct or
indirect in connection with obligations, stock or dividends of any person), in
each case after eliminating inter-company items and as determined in accordance
with GAAP.
"Consolidated Working Capital" means, as of the date of
determination thereof, the excess of Consolidated Current Assets over
Consolidated Current Liabilities.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Events of Default" has the meaning specified in Paragraph 22
of this Lease.
"GAAP" means, as to a particular corporation and at a
particular time of determination, such accounting principles as, in the opinion
of the independent public accountants regularly employed by such corporation,
conform at such time of determination to generally accepted accounting
principles.
"Indebtedness" means and includes (i) all indebtedness or
obligations for money borrowed or for the purchase price of property (exclusive
of orders or commitments made in the ordinary course of business for future
delivery of goods or services prior to the time the obligation to pay becomes
firm) and any notes payable and drafts accepted representing extensions of
credit, whether or not representing indebtedness or obligations for money
borrowed or for the purchase price of property, (ii) indebtedness or obligations
secured by or constituting any Lien existing on property owned by the Person
whose Indebtedness is being determined, whether or not the indebtedness or
obligations secured thereby shall have been assumed, (iii) Capital Lease
Obligations, (iv) guarantees and endorsements of (other than endorsements for
purposes of collection in the ordinary course of business), and obligations to
purchase goods or services for the purpose of supplying funds for the purchase
or payment of, or measured by, indebtedness, liabilities or obligations of
others (whether or not representing money borrowed) and other contingent
obligations in respect of, or to purchase or otherwise acquire or service,
indebtedness, liabilities or obligations of others (whether or not representing
money borrowed) and (v) all indebtedness, liabilities or obligations (whether or
not representing money borrowed) in effect guaranteed by an
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<PAGE> 72
agreement, contingent or otherwise, to make a loan, advance or capital
contribution to or other investment in the debtor for the purpose of assuring or
maintaining a minimum equity, asset base, working capital or other balance sheet
condition for any date, or to provide funds for the payment of any liability,
dividend or stock liquidation payment, or otherwise to supply funds to or in any
manner invest in the debtor for such purpose. A renewal or extension of any
Indebtedness without increase in the principal amount thereof shall not be
deemed to be the incurrence of the Indebtedness so renewed or extended. In case
any corporation shall become a Subsidiary, such corporation shall be deemed to
have incurred at the time it becomes a Subsidiary all Indebtedness of such
corporation outstanding immediately thereafter.
"Interest Charges" shall mean the aggregate of amounts
deducted in the computation of Consolidated Net Income for interest charges on
the consolidated Indebtedness of Tenant and its Subsidiaries, in each case after
eliminating intercompany items and as determined in accordance with GAAP.
"Lien" means any mortgage, lien, pledge, security interest,
encumbrance or charge of any kind, whether or not consensual, any conditional
sale or other title retention agreement or any Capital Lease.
"Overdue Interest Rate" means the lesser of (a) the Default
Rate and (b) the maximum interest rate provided by law.
"Person" includes an individual, a corporation, a partnership,
a joint venture, a trust, an unincorporated organization or a government or any
agency or political subdivision thereof.
"Restricted Investment" means any investment (other than by
guaranteeing or otherwise becoming liable, contingently or otherwise, in respect
of the Indebtedness of another Person) by Tenant or any Subsidiary in any other
Person, whether by acquisition of stock or Indebtedness, or by loan, advance,
transfer of property out of the ordinary course of business, capital
contribution, extension of credit on terms other than those normal in the
business of Tenant or such Subsidiary, or otherwise (the foregoing items being
herein collectively called "Investments", and individually, an "Investment");
Provided, however, that the term "Restricted Investment" shall not include:
(i) marketable obligations issued or guaranteed by the United
States of America or by any agency of the United States of America, and maturing
not later than twelve months from the date of acquisition thereof,
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(ii) commercial paper, issued by a corporation duly organized
and existing under the laws of the United States of America or any State thereof
and having a net worth of not less than $100,000,000, which has one of the two
highest credit ratings by a responsible independent credit agency of recognized
standing, and maturing not later than 270 days from the date of issuance
thereof,
(iii) Investments, up to an amount insured by the Federal
Deposit Insurance Corporation, in negotiable certificates of deposit or bankers'
acceptances issued by, or drawn on, a United States bank or trust company that
is a member of the Federal Reserve Bank, and having capital and surplus and
undivided profits aggregating not less than $250,000,000,
(iv) Investments in any Subsidiary or in any corporation which
by reason thereof will immediately after such Investment become a Subsidiary,
(v) Investments in assets which are used by Tenant and its
subsidiaries in the ordinary course of business, and
(vi) Investments, not otherwise permitted pursuant to
subsections (i) through (v) above, which do not exceed an aggregate amount of
ten percent (10%) of Consolidated Tangible Net Worth during any fiscal year.
"Restricted Payments" means dividends paid on capital stock
(in either cash or property), Restricted Investments, and purchases or
redemptions of capital stock.
"Subsidiary" means any corporation at least a majority of
whose outstanding stock having ordinary voting power for the election of a
majority of the members of the board of directors (or other governing body) of
such corporation (other than stock having such power only by reason of the
happening of a contingency) shall at the time be owned directly or indirectly by
Tenant and/or one or more subsidiaries of Tenant.
"Voting Stock", as applied to the stock of any corporation,
shall mean stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the directors of such corporation
other than stock having such power only by reason of the happening of a
contingency.
All accounting terms used herein and not expressly defined in this Agreement
shall have the meanings respectively given to them
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in accordance with GAAP as it exists at the date of applicability thereof.
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<PAGE> 75
SCHEDULE 1 OF EXHIBIT E
SCHEDULE OF EXISTING INDEBTEDNESS
1. Metropolitan Life Insurance Company
Dated: August 9, 1995
Maturity Date: August 1, 2005
Loan Amount: $9,000,000
Amount Outstanding: $8,916,280.82
2. Texas Commerce Bank
Dated: March 31, 1996
Maturity Date: March 31, 1998 (renewal)
Loan Amount: $300,000
Amount Outstanding: $00
3. Overton Bank and Trust, N.A. - Loan #1408001205
Dated: June 30, 1997
Maturity Date: June 1, 1998
Loan Amount: $500,000
Amount Outstanding: $00
4. Subordinated Debt to Shareholders:
Dated: April 1, 1994
Maturity Date: January 28, 2004
Loan Amount: $700,000
Amount Outstanding: $700,000
Shareholders and Amounts to Each:
George Beggs, III $ 50,000
Ida L. Clement $100,000
James H. Clement, Jr. $100,000
James A. Elkins, III $ 50,000
Barry J. Fenton $ 50,000
Henrietta P.C. Hildebrand $100,000
Claudia Huntington-Miller $100,000
Harvey H. Mueller, II $ 50,000
Walter Negley $ 50,000
Clement Equities $ 50,000
<PAGE> 76
Dated: June 1, 1996
Maturity Date: May 31, 2006
Loan Amount: $380,000
Amount Outstanding: $380,000
Shareholders and Amounts to Each:
George Beggs, III $ 20,000
Ida L. Clements $ 40,000
James A. Elkins, III $ 20,000
Barry J. Fenton $ 20,000
Henrietta P.C. Hildebrand $ 40,000
Claudia Huntington-Miller $ 40,000
Harvey H. Mueller, II $ 20,000
James H. Clement, Jr. $ 40,000
Clement Equities $ 20,000
Clark Partnership, Ltd. $120,000
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<PAGE> 1
EXHIBIT 10.8
SECOND
AMENDED AND RESTATED
LEASE AGREEMENT
by and between
ET LLC,
a Delaware limited liability company
d/b/a
ET QRS LLC
as LANDLORD
and
ETEC SYSTEMS, INC.,
a Nevada corporation,
as TENANT
Premises: Hayward, California
Dated as of: February 2, 1998
<PAGE> 2
SECOND AMENDED AND RESTATED LEASE AGREEMENT, made as of this 2nd day
of February, 1998, between ET LLC, a Delaware limited liability company d/b/a
ET QRS LLC ("Landlord"), with an address c/o W. P. Carey & Co., Inc., 50
Rockefeller Plaza, Second Floor, New York, New York 10020, and ETEC SYSTEMS,
INC., a Nevada corporation ("Tenant"), with an address at 26460 Corporate
Avenue, Hayward, California 94545.
BACKGROUND
A. ESI (CA) QRS 12-6, Inc., as landlord ("Original Landlord") and
Tenant entered into a Lease Agreement dated as of February 1, 1995, as amended
by the terms of Exhibit 1 to that certain letter agreement dated August 7, 1996
and amended and restated by an Amended and Restated Lease Agreement, dated as
of January 31, 1997 (said Lease Agreement, as amended and amended and restated,
the "Original Lease").
B. By Articles of Merger filed with the Secretary of State of
Delaware on January 29, 1998 Original Landlord merged with ET-ESI, INC. and by
Articles of Merger filed with the Secretary of State of Delaware on January 29,
1998 ET-ESI, Inc. merged with ET LLC and by Limited Liability Company
Application for Registration filed with the Secretary of State of the State
said ET LLC qualified to do business in the State in the name of ET QRS LLC.
C. Landlord desires to demise to Tenant and Tenant desires to
lease from Landlord the Project I Improvements and the Project II Improvements
(as such terms are hereinafter defined) and in connection therewith to amend
and restate the Original Lease in its entirety.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon
the provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit
"A" hereto, together with the Appurtenances (collectively, the "Land"); (b) the
three office/manufacturing facilities constructed on the Land, known as
"Building 1," "Building 2" and "Building 3" and containing approximately 60,000
square feet, 47,000 square feet and 106,000 square feet, respectively; (c) the
Project I Improvements described in Schedule 3 hereto; (d) the Project II
Improvements, and all other buildings, structures and other improvements now or
hereafter constructed on the Land (collectively, together with the Project I
Improvements, the "Improvements"); and (e) the fixtures, machinery, equipment
and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
<PAGE> 3
2. Certain Definitions.
"ACQUISITION COST" shall mean the sum of (a) $14,321,137, (b) Project
I Costs and (c) Project II Costs.
"ADDITIONAL RENT" shall mean Additional Rent as defined in Paragraph
7(a).
"ADJOINING PROPERTY" shall mean all sidewalks, driveways, curbs, gores
and vault spaces adjoining any of the Leased Premises.
"ALTERATIONS" shall mean all changes, additions, modifications,
improvements or repairs to, all alterations, reconstructions, remodeling,
renovations, renewals, replacements or removals of and all substitutions or
replacements for any of the Improvements or Equipment, both interior and
exterior, structural and non-structural, and ordinary and extraordinary.
"APPURTENANCES" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, privileges in and to the Land, including (a) easements
over other lands granted by any Easement Agreement and (b) any streets, ways,
alleys, vaults, gores or strips of land adjoining the Land.
"ASSIGNMENT" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
"BASIC RENT" shall mean Basic Rent as defined in Paragraph 6.
"BASIC RENT PAYMENT DATES" shall mean the Basic Rent Payment Dates as
defined in Paragraph 6.
"BUILDING 4" shall mean the building to contain not less than 129,000
square feet, to be constructed on the easterly portion of the Land, in
accordance with the Project II Plans and the Project II Budget and to be known
as "Building 4".
"BUILDINGS 2 AND 3 RENOVATIONS" shall mean Buildings 2 and 3
Renovations as defined in the Construction Agency Agreement.
"CASUALTY" shall mean any injury to or death of any person or any loss
of or damage to any property (including the Leased Premises) included within or
related to the Leased Premises or arising from the Adjoining Property.
<PAGE> 4
"COMMENCEMENT DATE" shall mean Commencement Date as defined in
Paragraph 5(a).
"COMPLETION AGREEMENT" shall mean the Completion Agreement of even
date between Landlord and Tenant pursuant to which Tenant has agreed to
complete the Project I Improvements.
"CONDEMNATION" shall mean a Taking and/or a Requisition.
"CONDEMNATION NOTICE" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"CONSTRUCTION AGENCY AGREEMENT" shall mean the Construction Agency
Agreement of even date between Landlord, as owner, and Tenant, as agent for
Landlord pursuant to which Tenant, as such agent will cause the Project II
Improvements to be constructed.
"COSTS" of a Person or associated with a specified transaction shall
mean all costs and expenses incurred by such Person or associated with such
transaction, including without limitation, reasonable attorneys' fees and
expenses, court costs, escrow fees, title insurance premiums, mortgage points,
recording fees and transfer taxes, as the circumstances require.
"COVENANT BREACH" shall mean Covenant Breach as defined in Paragraph
33(b).
"COVENANTS" shall mean Covenants as defined in Paragraph 33(a).
"CPI" shall mean CPI as defined in Paragraph 2 of Exhibit "D".
"DEFAULT TERMINATION AMOUNT" shall mean the Default Termination Amount
as defined in Paragraph 23(a)(iii).
"DEFAULT RATE" shall mean the Default Rate as defined in Paragraph
7(a)(iv).
"DEPOSIT AMOUNT" shall mean Deposit Amount as defined in Paragraph
21(d).
"EASEMENT AGREEMENT" shall mean any conditions, covenants,
reservations, restrictions, easements, declarations, licenses and other
agreements listed as Permitted Encumbrances, including the Parking Easement of
even date from Tenant to Landlord or as may hereafter affect the Leased
Premises.
<PAGE> 5
"ENVIRONMENTAL LAW" shall mean (i) whenever enacted or promulgated,
any applicable federal, state, foreign and local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup thereof), or the
protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act,
the Clean Air Act, the Clean Water Act, the Resources Conservation and Recovery
Act of 1976 (including the Hazardous and Solid Waste Amendments to RCRA), the
Solid Waste Disposal Act, the Toxic Substance Control Act, the Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act of 1970,
the National Environmental Policy Act and the Hazardous Materials
Transportation Act, each as amended and as now or hereafter in effect and any
similar foreign, state or local Law.
"ENVIRONMENTAL VIOLATION" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration, migration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or
from the Leased Premises to the environment, in violation of any Environmental
Law or which could be reasonably expected to result in any liability to
Landlord, Tenant or Lender, any Federal, state or local government or any other
Person for the costs of any removal or remedial action or natural resources
damage or for bodily injury or property damage, (b) any deposit, storage,
dumping, placement or use of any Hazardous Substance at, upon, under or within
the Leased Premises or which extends to any other property in violation of any
Environmental Law or which could reasonably be expected to result in any
liability to any Federal, state or local government or to any other Person for
the costs of any removal or remedial action or natural resources damage or for
bodily injury or property damage, (c) the abandonment or discarding of any
barrels, containers or other
<PAGE> 6
receptacles containing any Hazardous Substances in violation of any
Environmental Laws, (d) any activity, occurrence or condition which could be
reasonably expected to result in any liability, cost or expense to Landlord or
Lender or any other owner or occupier of the Leased Premises, or which could be
reasonably expected to result in a creation of a lien on the Leased Premises
under any Environmental Law, or (e) any violation of or noncompliance with any
Environmental Law.
"EQUIPMENT" shall mean the Equipment as defined in Paragraph 1.
"EVENT OF DEFAULT" shall mean an Event of Default as defined in
Paragraph 22(a).
"EXISTING IMPROVEMENTS" shall mean Building 1, Building 2 and Building
3 as described in Paragraph 1 hereof together with the existing Equipment
installed therein.
"EXPIRATION DATE" shall mean Expiration Date as defined in Paragraph
5(a).
"FAIR MARKET RENTAL VALUE" shall mean the fair market rental value of
the Leased Premises for the relevant Renewal Term determined in accordance with
the procedure specified in Paragraph 29.
"FAIR MARKET RENTAL VALUE DATE" shall mean any date on which Fair
Market Rental Value is finally determined in accordance with Paragraph 29.
"FAIR MARKET VALUE" shall mean the fair market value of the Leased
Premises as of the Relevant Date. For all purposes of this Lease, Fair Market
Value shall be determined in accordance with the procedure specified in
Paragraph 29.
"FAIR MARKET VALUE DATE" shall mean the date when the Fair Market
Value is finally determined in accordance with Paragraph 29.
"FEDERAL FUNDS" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of public
and private debts in the United States of America.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean for any day, the rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
<PAGE> 7
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30
p.m. Quotations") for such day under the caption "Federal Funds Effective
Rate." If on any relevant day the appropriate rate for such day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean of the rates for the last transaction
in overnight Federal Funds arranged prior to 9:00 a.m., New York time, on that
day by each of three leading brokers of federal funds transactions in New York
City, selected by the Landlord.
"FINAL COMPLETION DATE" shall mean, individually, the Project I Final
Completion Date or the Project II Final Completion Date, as the context may
require, and collectively, the Project I Final Completion Date and the Project
II Final Completion Date.
"HAZARDOUS ACTIVITY" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including, without limitation, the
air, surface water, groundwater, watercourses or water systems), (iii) involves
the containment or storage of any Hazardous Substance; or (iv) would cause the
Leased Premises or any portion thereof to become a hazardous waste treatment,
recycling, reclamation, processing, storage or disposal facility within the
meaning of any Environmental Law.
"HAZARDOUS CONDITION" means any condition which would support or be
reasonably likely to result in any claim or liability under any Environmental
Law, including the presence of underground storage tanks.
"HAZARDOUS SUBSTANCE" means (i) any substance, material, product,
(including, without limitation, petroleum products), derivative (including,
without limitation, petroleum products), compound, mixture, mineral (including,
without limitation, asbestos), chemical, gas, waste, contaminant or pollutant,
in each case whether naturally occurring, man-made or the by-product of any
process, that is toxic, harmful or hazardous or acutely hazardous to public
health or safety or the environment or (ii) any substance supporting a claim
under any Environmental Law, whether or not such substance is defined as
hazardous or toxic as such under any Environmental Law. By way of example, and
not of limitation, Hazardous Substances include, but are not limited to, any
toxic substance, hazardous substance, hazardous waste, hazardous constituent,
pollutant, contaminant, industrial waste, medical waste, petroleum product,
petroleum derivative, petroleum waste, radon, radioactive material, asbestos,
asbestos containing
<PAGE> 8
materials, urea formaldehyde, foam insulation, lead or polychlorinated
biphenyl.
"IMPOSITIONS" shall mean the Impositions as defined in Paragraph 9(a).
"IMPROVEMENTS" shall mean the Improvements as defined in Paragraph 1.
"INDEMNITEE" shall mean an Indemnitee as defined in Paragraph 15.
"INITIAL LENDER" shall mean Creditanstalt-Bankverein, its successors
and assigns.
"INITIAL LOAN" shall mean the $8,221,345 loan from Initial Lender
evidenced by a Note dated January 31, 1997.
"INITIAL TERM" shall mean Initial Term as defined in Paragraph 5(a).
"INSURANCE REQUIREMENTS" shall mean the requirements of all insurance
policies required to be maintained in accordance with this Lease.
"INTENDED ASSIGNMENT OFFER" shall mean Intended Assignment Offer as
defined in Paragraph 21(d).
"INTENDED ASSIGNMENT PURCHASE DATE" shall mean Intended Assignment
Purchase Date as defined in Paragraph 21(d).
"INTENDED TRANSACTION" shall mean Intended Transaction as defined in
Paragraph 33(b).
"LAND" shall mean the Land as defined in Paragraph 1.
"LAW" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"LEASE" shall mean this Second Amended and Restated Lease Agreement.
"LEASE YEAR" shall mean any twelve (12) consecutive month period
during the Term except that the first Lease Year commenced on February 16, 1995
and terminated on February 29, 1996 and the last Lease Year shall end on the
last day of the Term.
<PAGE> 9
"LEASED PREMISES" shall mean the Leased Premises as defined in
Paragraph 1.
"LEGAL REQUIREMENTS" shall mean all present and future Laws (including
but not limited to Environmental Laws and Laws relating to accessibility to,
usability by, and discrimination against, disabled individuals) and all
covenants, restrictions and conditions now or hereafter of record which may be
applicable to Tenant or to any of the Leased Premises, or to the use, manner of
use, occupancy, possession, operation, maintenance, alteration, repair or
restoration of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.
"LENDER" shall mean (a) Initial Lender, and (b) any person or entity
(and their respective successors and assigns) which may, after the date hereof,
make a Loan to Landlord or is the holder of any Note.
"LIBOR" means the rate of interest designated by Tenant corresponding
to the rate for one-month, two-month, three-month, six-month or one-year
periods for LIBOR as published in The Wall Street Journal on the business day
(the "Rate Determination Date") prior to the first day of the applicable period
(the first such designation to be made as of the date hereof) which rate (a)
shall remain fixed during the period to which the rate corresponds, (b) shall,
as to each such period, be designated by notice to Landlord and (c) shall, as
to such period, not extend beyond May 31, 1999 as to the Project II
Improvements and (d) shall be the one-month rate if Tenant fails to make any
required designation.
If no such LIBOR rate appears in The Wall Street Journal as
described in the foregoing paragraph, LIBOR shall be the Federal Funds
Effective Rate on the Rate Determination Date.
All percentages resulting from any calculations referred to in
this definition will be rounded upwards, if necessary, to the nearest multiple
of 1/100 of 1% and all U.S. dollar amounts used in or resulting from such
calculations will be rounded to the nearest dollar (with fifty cents or more
being rounded upward).
"LOAN" shall mean any loan made by one or more Lenders to Landlord,
which loan is secured by a Mortgage and an Assignment and evidenced by a Note.
"MAJOR ALTERATIONS" shall mean Major Alterations as defined in
Paragraph 36(a).
<PAGE> 10
"MONETARY OBLIGATIONS" shall mean Rent and all other sums payable by
Tenant under this Lease to Landlord, to any third party on behalf of Landlord
or to any Indemnitee.
"MORTGAGE" shall mean any mortgage or deed of trust from Landlord to a
Lender which (a) encumbers any of the Leased Premises and (b) secures
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.
"NET AWARD" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv),
(v) or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred
by Landlord and Lender in collecting such award or proceeds.
"NON-PREAPPROVED ASSIGNEE" shall mean Non-Preapproved Assignee as
defined in Paragraph 21(b).
"NON-PREAPPROVED ASSIGNMENT" shall mean Non-Preapproved Assignment as
defined in Paragraph 21(b).
"NOTE" shall mean any promissory note evidencing Landlord's obligation
to repay a Loan, as the same may be amended, supplemented or modified.
"OFFER AMOUNT" shall mean (i) prior to the expiration of the Initial
Term, the greater of (a) the Fair Market Value of the Leased Premises as of the
Relevant Date and (b) the sum of the Acquisition Cost and the applicable
Prepayment Premium which Landlord will be required to pay in prepaying any Loan
with the proceeds of the Offer Amount and (ii) after the expiration of the
Initial Term, the Fair Market Value of the Leased Premises as of the Relevant
Date.
"ORIGINAL LANDLORD" shall mean Original Landlord as described in the
BACKGROUND.
"PARTIAL CASUALTY" shall mean any Casualty which does not constitute a
Termination Event.
"PARTIAL CONDEMNATION" shall mean any Condemnation which does not
constitute a Termination Event.
"PERMITTED ENCUMBRANCES" shall mean those covenants, restrictions,
reservations, liens, conditions, easements, declarations, licenses and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that
<PAGE> 11
have expired or terminated or are otherwise invalid or unenforceable).
"PERSON" shall mean an individual, partnership, association,
corporation or other entity.
"PREAPPROVED ASSIGNEE" shall mean Preapproved Assignee as defined in
Paragraph 21(a).
"PREAPPROVED ASSIGNMENT" shall mean Preapproved Assignment as defined
in Paragraph 21(a).
"PREAPPROVED SUBLET" shall mean Preapproved Sublet as defined in
Paragraph 21(h).
"PREPAYMENT PREMIUM" shall mean any payment (other than a payment of
principal and/or interest which Landlord is required to make under a Note or a
Mortgage) by reason of any prepayment by Landlord of any principal due under a
Note or Mortgage, and which may be (in lieu of such prepayment premium or
prepayment penalty) a "make whole" clause requiring a prepayment premium in an
amount sufficient to compensate the Lender for the loss of the benefit of the
Loan due to a prepayment or a "breakage fee" or "funding losses" as a result of
any prepayment; provided, however, that the Prepayment Premium shall not exceed
the prepayment premium amount that would be payable if the outstanding
principal amount of the Loan being prepaid were the original principal amount
of the Replacement Loan (calculated on the basis of the full funding of the
Replacement Loan).
"PRIME RATE" shall mean the annual interest rate as published, from
time to time, in the Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event the Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.
"PROJECT I ACQUISITION FEE" shall mean $518,324.
"PROJECT I COSTS" shall mean with respect to the Project I
Improvements, the sum of $11,000,000 and the Project I Acquisition Fee.
<PAGE> 12
"PROJECT I FINAL COMPLETION DATE" shall mean March 31, 1998.
"PROJECT I IMPROVEMENTS" shall mean the Improvements to Buildings 2
and 3 as generally described in Schedule 3 to this Lease and more particularly
described in the Project I Plans.
"PROJECT I PLANS" shall mean Project I Plans delivered to Landlord on
the date hereof.
"PROJECT II ACQUISITION FEE" shall mean an amount equal to the
difference between (x) Project II Costs (exclusive of the Project II
Acquisition Fee), divided by .955, minus (y) Project II Costs (exclusive of the
Project II Acquisition Fee).
"PROJECT II BUDGET" shall mean the Project II Budget attached as
Exhibit B to the Construction Agency Agreement as the same may be amended from
time to time in accordance with the applicable provisions of the Construction
Agency Agreement.
"PROJECT II COSTS" shall mean (i) with respect to the Project II
Improvements the lesser of (A) the sum of $50,000,000 and the Project II
Acquisition Fee and (B) the sum of Project II Direct Costs, Project II Indirect
Costs and the Project II Acquisition Fee.
"PROJECT II DIRECT COSTS" shall mean Direct Costs as defined in
Section 1.01 of the Construction Agency Agreement.
"PROJECT II FINAL COMPLETION DATE" shall mean the date on which all
"punch list" items are completed with respect to the Project II Improvements
which shall occur not later than July 31, 1999 with respect to Building 4 and
October 31, 1999 with respect to the Building 2 and 3 Renovations.
"PROJECT II SUBSTANTIAL COMPLETION DATE" shall mean the date on which
a permanent certificate of occupancy is issued for Building 4, but in no event
later than May 31, 1999.
"PROJECT II IMPROVEMENTS" shall mean, collectively, Building 4 and the
Buildings 2 and 3 Renovations.
"PROJECT II INDIRECT COSTS" shall mean Indirect Costs as defined in
Section 1.01 of the Construction Agency Agreement.
"PROJECT II PLANS" shall mean Plans as defined in Section 1.01 of the
Construction Agency Agreement.
"PROJECT" shall mean, the Project I Improvements or Project II
Improvements, as applicable.
<PAGE> 13
"RELEVANT AMOUNT" shall mean the Termination Amount, Offer Amount or
the Default Termination Amount, as the case may be.
"RELEVANT DATE" shall mean (a) the date immediately prior to the date
on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of
a redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the
date immediately prior to the date on which Landlord makes an Intended
Assignment Offer, (e) the date immediately prior to the Event of Default giving
rise to the need to determine Fair Market Value in the event Landlord provides
Tenant with notice of its intention to require Tenant to make a termination
offer under Paragraph 23(a)(iii), (f) the Fair Market Value Date, in the event
Landlord receives an offer to purchase the Leased Premises pursuant to
Paragraph 35(c), (g) with respect to a Covenant Breach or an Intended
Transaction, the date that is the earlier of (i) the date immediately prior to
the date on which Tenant notifies Landlord that an Intended Transaction or
Covenant Breach will occur or makes a public announcement to such effect, or
(ii) the date immediately prior to the date on which the Covenant Breach or the
Intended Transaction occurs or, but for the acceptance by Landlord of the
rejectable offer under Paragraph 33, would occur, and (h) the date immediately
prior to the date on which Tenant vacates the Leased Premises in the event
Tenant makes a Vacation Offer pursuant to Paragraph 38 or, with respect to any
determination of Fair Market Rental Value, the first day of the Renewal Term
for which a determination of Fair Market Rental Value is being made.
"REMAINING SUM" shall mean Remaining Sum as defined in Paragraph
19(c).
"RENEWAL TERM" shall mean Renewal Term as defined in Paragraph 5(b).
"RENT" shall mean, collectively, Basic Rent and Additional Rent.
"REPLACEMENT LOAN" shall mean the Loan that refinances the Initial
Loan.
"REQUISITION" shall mean any temporary requisition or confiscation of
the use or occupancy of any of the Leased Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.
<PAGE> 14
"RETENTION DATE" shall mean the later of the date on which the amount
of the Remaining Sum is finally determined or the date on which Landlord's
right to the Remaining Sum is finally determined.
"SECURITY DEPOSIT" shall mean Security Deposit as defined in Paragraph
37(a).
"SIGNIFICANT SUBSIDIARY" shall mean at any time any Subsidiary that
would at such time constitute a "significant subsidiary" (as such term is
defined in Regulation S-X of the Securities and Exchange Commission as in
effect on the date hereof) of the Tenant.
"SITE ASSESSMENT" shall mean a Site Assessment as defined in Paragraph
10(c).
"STATE" shall mean the State of California.
"SUBSIDIARY" shall mean any corporation, partnership, limited
liability company, joint venture, association or other business entity of which
the Tenant now or hereafter owns directly or indirectly, securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other governing body thereof.
"SURVIVING OBLIGATIONS" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the expiration or
prior termination of this Lease or which survive such expiration or termination
by their own terms.
"TAKING" shall mean (a) any taking or damaging of all or a portion of
any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means,
or (b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the Law applicable to the Leased Premises.
"TERM" shall mean the Term as defined in Paragraph 5(a).
"TERMINATION AMOUNT" shall mean (i) prior to the expiration of the
Initial Term, the greater of (a) the sum of the applicable Termination Value
specified on Schedule 1 hereto and any Prepayment Premium which Landlord will
be required to pay in prepaying any Loan with proceeds of the Termination
Amount or (b) the Fair Market Value of the Leased Premises as of the
<PAGE> 15
Relevant Date and (ii) after the expiration of the Initial Term, the Fair
Market Value of the Leased Premises as of the Relevant Date.
"TERMINATION DATE" shall mean Termination Date as defined in Paragraph
18(b).
"TERMINATION EVENT" shall mean a Termination Event as defined in
Paragraph 18(a).
"TERMINATION NOTICE" shall mean Termination Notice as defined in
Paragraph 18(a).
"THIRD PARTY PURCHASER" shall mean Third Party Purchaser as defined in
Paragraph 21(o).
"VACATION OFFER" shall mean Vacation Offer as defined in Paragraph 38.
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment presently in effect, (ii) the rights of any Persons in
possession of the Leased Premises, (iii) the existing state of title of the
Leased Premises, including any Permitted Encumbrances, (iv) any state of facts
which an accurate survey or physical inspection of the Leased Premises might
show, (v) all Legal Requirements, including any existing violation of any
thereof, and (vi) the condition of the Leased Premises as of the commencement
of the Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Existing Improvements are in
acceptable condition and repair at the inception of this Lease. LANDLORD
LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS.
TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN
ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE
DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION
AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE,
(ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF
ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi)
COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x)
MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv)
OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION
OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW
OR LEGAL REQUIREMENT; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.
TENANT ACKNOWLEDGES THAT THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS
SPECIFICATIONS AND THAT
<PAGE> 16
THE EXISTING IMPROVEMENTS HAVE BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO
IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF
ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby.
Tenant represents and warrants that (i) Tenant has conveyed fee simple title
(both legal and equitable) in the Leased Premises to Landlord and that Tenant
has only the leasehold right of possession and use of the Leased Premises as
provided herein, (ii) the Existing Improvements conform and on the applicable
Final Completion Date the applicable Project shall conform to all material
Legal Requirements and all Insurance Requirements, (iii) to Tenant's knowledge
all permits, licenses, approvals, consents and easements necessary or
appropriate for the use or operation of the Leased Premises have been obtained,
(iv) all contractors engaged by Tenant and to Tenant's knowledge, all
subcontractors who have performed work on or supplied materials to the Existing
Improvements have been fully paid or Tenant is holding retainage sufficient to
pay such contractors in full, and all materials and supplies have been fully
paid for or Tenant is holding retainage sufficient to pay for such materials
and supplies in full, (v) the Existing Improvements have been fully completed,
and on the applicable Final Completion Date the applicable Project shall be
completed in all material respects in a workmanlike manner of first class
quality, and (vi) all Equipment necessary or appropriate for the use or
operation of the Leased Premises has been installed and is presently fully
operative in all material respects, and on the Project I Final Completion Date
and Project II Final Completion Date, as applicable, all Equipment necessary or
appropriate for the use and operation of the applicable Project shall have been
installed and shall be fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties, indemnities and similar rights
which Landlord may have against any manufacturer, seller, engineer, contractor
or builder in respect of any of the Leased Premises. Such assignment shall
remain in effect until an Event of Default occurs or until the expiration or
earlier termination of this Lease, whereupon such assignment shall cease and
all of said warranties, guaranties, indemnities and other rights shall
automatically revert to Landlord.
<PAGE> 17
(e) As of the date hereof, Landlord has acquired a portion of the
Project I Improvements. Tenant covenants and agrees to cause the Project I
Improvements to be completed in a good and workmanlike manner no later than the
Project I Final Completion Date in accordance with the terms of the Completion
Agreement and shall pay in full all Project I Costs no later than April 1,
1998, subject, however, to Tenant's right to contest under Paragraph 14 hereof.
All acknowledgments of Tenant regarding the Leased Premises contained in
Paragraph 3(b) shall be deemed to have been made with respect to Project I as
of the Project I Final Completion Date.
(f) Pursuant to the Construction Agency Agreement, Tenant will
cause the Project II Improvements to be constructed with funds more
particularly described in the Construction Agency Agreement. The Project II
Improvements will be owned by Landlord and included within the Leased Premises.
Tenant acknowledges that the Project II Improvements have not yet been
constructed and that, pursuant to the Construction Agency Agreement entered
into by Landlord and Tenant, Tenant has the responsibility for causing the
Project II Improvements to be completed in accordance with the terms of the
Construction Agency Agreement. Landlord will not make any representations or
warranties with respect to the Project II Improvements. Tenant further
acknowledges that, upon occurrence of an Event of Default, Landlord may
terminate the Construction Agency Agreement, and in addition to all other
remedies of Landlord under this Lease, Landlord shall have the right but not
the obligation to complete construction of the Project II Improvements in
accordance with the Project II Plans. If Landlord so completes construction of
the Project II Improvements, Tenant will not be excused from paying all Rent
due pursuant to the terms of this Lease, and Landlord shall have the right to
exercise any or all of its remedies hereunder following an Event of Default.
All acknowledgments of Tenant regarding the Leased Premises contained in
Paragraph 3(b) shall be deemed to have been made with respect to the Project II
Improvements as of the Project II Final Completion Date.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for offices,
manufacturing, warehouse, distribution and research and development and uses
ancillary thereto and for no other purpose without Landlord's prior written
consent, which shall not be unreasonably withheld, delayed or conditioned.
Tenant shall not use or occupy or permit any of the Leased Premises to be used
or occupied, nor do or permit anything to be done in or on any of the Leased
Premises, in a manner which would or might (i) violate any Law, Legal
Requirement or Easement Agreement, (ii) make void or voidable or cause any
insurer to cancel any insurance required by this Lease, or make it difficult or
impossible to obtain any such insurance at commercially reasonable rates, (iii)
make void or voidable, or cancel or cause to be cancelled or released any
warranty, guaranty or indemnity, (iv) cause structural injury to
<PAGE> 18
any of the Improvements or (v) constitute a public or private nuisance or
waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord may, upon not less than 48 hours' notice to
Tenant, enter upon and examine any of the Leased Premises at such reasonable
times as Landlord may elect (except that no notice shall be required if an
Event of Default exists and remains uncured), for the purpose of inspecting the
Leased Premises, verifying compliance or non-compliance by Tenant with its
obligations hereunder and the existence or non-existence of an Event of Default
or event which with the passage of time and/or notice would constitute an Event
of Default, showing the Leased Premises to prospective Lenders and purchasers
and taking such other action with respect to the Leased Premises as is
permitted by any provision hereof.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and hold
the Leased Premises for an initial term (herein, the "Initial Term", and the
Initial Term, as extended or renewed in accordance with the provisions hereof,
being called the "Term") that commenced on February 16, 1995 (the "Commencement
Date") and that expires on May 31, 2014 (the "Expiration Date"). If all Rent
and all other sums due hereunder shall not have been fully paid by the end of
the Term, Landlord may, at its option, extend the Term until all said sums
shall have been fully paid.
(b) Provided that if, on or prior to the Expiration Date or any
other Renewal Date (as hereinafter defined) (i) no Event of Default exists and
remains uncured, and (ii) this Lease shall not have been terminated pursuant to
any provision hereof, then on the Expiration Date and on the fifth (5th) and
tenth (10th) anniversaries of the Expiration Date, each such anniversary being
a "Renewal Date", the Term shall be deemed to have been automatically extended
for an additional period of five (5) years, and on the fifteenth (15th)
anniversary of the Expiration Date for eight (8) months, such anniversary also
being a "Renewal Date", the Term shall be deemed to have been automatically
extended (each such extension period, a "Renewal Term"), unless in any case
Tenant shall notify Landlord in writing at least one (1) year prior to the next
Renewal Date that Tenant is terminating this Lease as of the next Renewal Date.
If Tenant elects not to extend the Term of this Lease then, prior to the
expiration date, Tenant shall, at the request of Landlord, provide to Landlord
a Termination of Lease in recordable form. Any such extension of the Term
shall be subject to all of the provisions of this Lease, as the same may be
amended, supplemented or modified.
<PAGE> 19
(c) If Tenant exercises its option not to extend or further extend
the Term, or if an Event of Default exists, then Landlord shall have the right
during the remainder of the Term then in effect and, in any event, Landlord
shall have the right during the last year of the Term, to (i) advertise the
availability of the Leased Premises for sale or reletting and to erect upon the
Leased Premises signs indicating such availability and (ii) upon reasonable
prior notice to Tenant show the Leased Premises to prospective purchasers or
tenants or their agents at such reasonable times as Landlord may select and as
may be approved by Tenant, such approval not to be unreasonably withheld or
delayed (except that no approval shall be required if an Event of Default
exists and remains uncured).
6. Basic Rent. Landlord acknowledges that all Basic Rent has
been paid through January 31, 1998. Tenant shall pay to Landlord, as annual
rent for the Leased Premises during the portion of the Term remaining from and
after February 1, 1998, the amounts determined in accordance with Exhibit "D"
hereto ("Basic Rent"). Payments shall be made on March 1, 1998 and on the
first day of each month during the remainder of the Term (each such day being a
"Basic Rent Payment Date"). Each such rental payment shall be made, (a) at
Landlord's sole discretion, to Landlord at its address set forth above and/or
to such one or more other Persons, at such addresses and in such proportions as
Landlord may direct by fifteen (15) days' prior written notice to Tenant (in
which event Tenant shall give Landlord notice of each such payment concurrent
with the making thereof), and (b) in funds available to Landlord on the
applicable Basic Rent Payment Date.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein, all
costs and expenses of Tenant and all reasonable costs and expenses of,
Landlord and any other Persons specifically referenced herein which
are incurred in connection or associated with (A) the use, non-use,
occupancy, possession, operation, condition, design, construction,
maintenance, alteration, repair or restoration of any of the Leased
Premises, (B) the performance of any of Tenant's obligations under
this Lease, (C) any sale or other transfer of any of the Leased
Premises to Tenant under this Lease, (D) any Condemnation proceedings,
(E) the adjustment, settlement or compromise of any insurance claims
involving or arising from any of the Leased Premises, (F) the
prosecution, defense or settlement of any litigation involving or
arising from any of the Leased Premises, this Lease, or the sale of
the Leased Premises to Landlord, (G) the enforcement by
<PAGE> 20
Landlord, its successors and assigns, of any of its rights under this
Lease, (H) any amendment to or modification or termination of this
Lease made at the request of Tenant, (I) Costs of Landlord's and
Lender's counsel incurred in connection with the preparation,
negotiation and execution of this Lease, Costs of Landlord's and
Lender's counsel incurred in connection with the review and/or
negotiation of documents requested by Tenant and Costs of third party
consultants retained by Landlord in connection with any act undertaken
by Landlord at the request of Tenant, or incurred in connection with
any act of Landlord performed on behalf of Tenant that Landlord has
the right to perform under the terms of this Lease, (J) the reasonable
cost of a consultant retained by Lender to review plans,
specifications, and contracts in connection with any Alteration for
which the approval of Lender is required or permitted under the terms
of the Mortgage and the reasonable costs of Lender in connection with
any inspection of the Leased Premises, (K) out-of-pocket costs
incurred by Lender in connection with an Event of Default, (L) costs
and expenses of any trustee under any Mortgage and (M) any other items
specifically required to be paid by Tenant under this Lease, which
costs and expenses shall include, without limitation, all Costs,
judgments, settlement amounts, Impositions, insurance premiums,
appraisal fees, the cost of performing and reporting any Site
Assessment if an Environmental Violation is found, the cost of
monitoring compliance with the provisions of Paragraph 10(f) hereof,
including the reasonable cost of consultants retained by Landlord and
Lender, the cost of curing any Environmental Violation, and the cost
of complying with all Legal Requirements, fines, penalties and
interest;
(ii) after the date all or any portion of any installment of
Basic Rent is due and not paid, an amount ("Late Charge") equal to
three percent (3%) of the amount of such unpaid installment or portion
thereof; provided, however, that with respect to the first two late
payments of all or any portion of any installment of Basic Rent in any
consecutive twelve (12) month period the Late Charge shall not be due
and payable unless the Basic Rent has not been paid within three (3)
business days following receipt by Tenant of written notice that such
installment has not been received;
(iii) a sum equal to any additional sums (including any late
charge, default penalties, interest and fees of Lender's counsel)
which are payable by Landlord to any Lender under any Note by reason
of Tenant's late payment or non-payment of Basic Rent or by reason of
an Event of Default; and
<PAGE> 21
(iv) interest at the rate per annum (the "Default Rate")
equal to the default interest rate per annum in the Note on the
following sums until paid in full: (A) all overdue installments of
Basic Rent from the respective due dates thereof, (B) all overdue
amounts of Additional Rent relating to obligations which Landlord
shall have paid on behalf of Tenant, from the date Tenant receives
notice of payment thereof by Landlord, and (C) all other overdue
amounts of Additional Rent, from the date that Tenant receives notice
any such amount has become overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due, provided that
amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within five (5) days after Landlord's demand for payment thereof,
and (ii) any other Additional Rent, immediately upon Landlord's demand for
payment thereof.
(c) In no event shall amounts payable under Paragraph 7(a)(ii),
(iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations shall be paid
without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense,
except as specifically provided herein to the contrary (collectively, a
"Set-Off").
(b) Except as otherwise expressly provided herein, this Lease and
the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any
damage to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) the prohibition, limitation or restriction of Tenant's use
of any of the Leased Premises, (iv) any eviction by paramount title or
otherwise, (v) Tenant's acquisition of ownership of any of the Leased Premises
other than pursuant to an express provision of this Lease, (vi) any default on
the part of Landlord hereunder or under any Note, Mortgage, Assignment or any
other agreement, (vii) any latent or other defect in any of the Leased
Premises, (viii) the breach of any warranty of any seller or manufacturer of
any of the Equipment, (ix) any violation of Paragraph 4(b) or any other
provision of this Lease by Landlord, (x) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up of, or other proceeding affecting Landlord or Tenant, (xi) the
exercise of any remedy, including foreclosure, under any Mortgage or
Assignment, (xii) any action with respect to this Lease (including the
disaffirmance hereof) which may be taken by Landlord, any
<PAGE> 22
trustee, receiver or liquidator of Landlord or any court under the Federal
Bankruptcy Code or otherwise, (xiii) any interference with Tenant's use of the
Leased Premises, (xiv) market or economic changes or (xv) any other cause,
whether similar or dissimilar to the foregoing, any present or future Law to
the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue
to be payable in all events (or, in lieu thereof, Tenant shall pay amounts
equal thereto), and the obligations of Tenant hereunder shall continue
unaffected unless the requirement to pay or perform the same shall have been
terminated pursuant to an express provision of this Lease. All Rent payable by
Tenant hereunder shall constitute "rent" for all purposes (including Section
502(b)(6) of the Federal Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant shall
have no right and hereby waives all rights which it may have under any Law (i)
to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, not later than the due date thereof, or at least
five (5) days prior to the day before any fine, interest, penalty or cost may
be added thereto or imposed, or at least five (5) days prior to the day any
lien may be filed for the non-payment thereof (if such day is used to determine
the due date of the respective item), pay and discharge all taxes (including
real and personal property, franchise, sales and rent taxes), all charges for
any easement or agreement maintained for the benefit of any of the Leased
Premises, all assessments and levies, all permit, inspection and license fees,
all rents and charges for water, sewer, utility and communication services
relating to any of the Leased Premises, all ground rents and all other public
charges whether of a like or different nature, even if unforeseen or
extraordinary, imposed upon or assessed against (i) Tenant, (ii) any of the
Leased Premises, including any increases in real estate taxes from a
reassessment of the Leased Premises by the applicable taxing authority as a
result of any transfer of the Leased Premises (A) to any affiliate of Landlord
or Landlord's parent of which Landlord's parent directly or indirectly owns
beneficially more than fifty percent (50%) or (B) to Landlord's parent so long
as in any such case Tenant has an opportunity to review and comment upon the
structure of such transfer prior to the occurrence thereof, (iii) Landlord as a
result of or arising in respect of the acquisition, ownership, occupancy,
leasing, use, possession or sale of any of the Leased Premises, any activity
conducted on any of the Leased Premises, or the Rent, or (iv) any Lender by
reason of any Note, Mortgage,
<PAGE> 23
Assignment or other document evidencing or securing a Loan and which (as to
this clause (iv)) Landlord has agreed to pay (collectively, the "Impositions");
provided, that nothing herein shall obligate Tenant to pay (A) income, excess
profits or other taxes of Landlord (or Lender) which are determined on the
basis of Landlord's (or Lender's) net income or net worth (unless such taxes
are a substitute for any then existing tax, assessment or other charge upon or
with respect to the Leased Premises which, if it were in effect, would be
payable by Tenant under the provisions hereof or by the terms of such tax,
assessment or other charge), (B) any estate, inheritance, succession, gift or
similar tax imposed on Landlord or Lender, (C) any capital gains tax imposed on
Landlord in connection with the sale of the Leased Premises to any Person or
(D) any increases in real estate taxes from a reassessment of the Leased
Premises by the applicable taxing authority as a result of (x) any sale or
transfer of the Leased Premises or, (y) any sale or transfer of ownership
interests by any member of Landlord, except as provided in (ii) above. If any
Imposition may be paid in installments without interest or penalty, Tenant
shall have the option to pay such Imposition in installments; in such event,
Tenant shall be liable only for those installments which accrue or become due
and payable during the Term. Tenant shall prepare and file all tax reports
required by governmental authorities which relate to the Impositions. Tenant
shall deliver to Landlord (1) copies of all settlements and notices pertaining
to the Impositions which may be issued by any governmental authority within ten
(10) days after Tenant's receipt thereof, (2) receipts for payment of all taxes
required to be paid by Tenant hereunder within thirty (30) days after the due
date thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor. Any refunds of Impositions
attributable to any period during the Term shall be payable to, and shall be
the property of, Tenant.
(b) Landlord shall have the right at any time following the
occurrence and during the continuation of an Event of Default to require Tenant
to pay to Landlord (or Lender if Landlord is so required pursuant to the terms
of the Mortgage) an additional monthly sum (the "Escrow Payments") sufficient
to pay the Escrow Charges (as hereinafter defined) as they become due. As used
herein, "Escrow Charges" shall mean real estate taxes on the Leased Premises or
payments in lieu thereof and premiums on any insurance required by this Lease.
Landlord shall determine the amount of the Escrow Charges and of each Escrow
Payment. As long as the Escrow Payments are being held by Landlord and not
Lender, or if Lender shall hold the Escrow Payments and shall so agree, the
Escrow Payments shall not be commingled with other funds of Landlord or other
Persons and interest shall accrue thereon for the benefit of Tenant, from the
date such monies are received by or on behalf of Landlord to the date such
monies are disbursed to pay Escrow Charges. Landlord or Lender, as the case
may be, shall apply the Escrow Payments to the payment of the Escrow
<PAGE> 24
Charges in such order or priority as Landlord shall determine or as required by
law. If at any time the Escrow Payments theretofore paid to Landlord or
Lender, as the case may be, shall be insufficient for the payment of the Escrow
Charges, Tenant, within ten (10) days after Landlord's demand therefor, which
shall include written verification of such deficiency, shall pay the amount of
the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its sole expense, be in material compliance
with and conform to, and cause any other Person occupying any part of the
Leased Premises to be in material compliance with and conform to, all Insurance
Requirements and Legal Requirements (except that Tenant and the Leased Premises
shall be in absolute compliance with all applicable Environmental Laws).
Tenant shall not at any time (i) cause, permit or suffer to occur any material
Environmental Violation or (ii) permit any sublessee, assignee or other Person
occupying the Leased Premises under or through Tenant to cause, permit or
suffer to occur any material Environmental Violation and, at the request of
Landlord or Lender, Tenant shall promptly remediate or undertake any other
appropriate response action to correct any existing Environmental Violation,
however immaterial.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or other occupier of the Leased Premises, to be kept and performed
thereunder. Tenant will not alter, modify, amend or terminate any Easement
Agreement, give any consent or approval thereunder, or enter into any new
Easement Agreement without, in each case, the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Any such new
Easement Agreement shall automatically be a Permitted Encumbrance.
(c) In connection with the refinancing of the Initial Loan or as
reasonably requested by a Lender and in any other case not more frequently than
once every three (3) years or at any other time that, in the opinion of
Landlord or Lender, a reasonable basis exists to believe that an Environmental
Violation exists or a condition that could be reasonably expected to result in
an Environmental Violation exists, upon prior written notice from Landlord or
Lender, Tenant shall permit such persons as Landlord or Lender may designate
("Site Reviewers") to visit the Leased Premises at reasonable times agreed to
by Tenant and perform, as agents of Tenant, environmental site investigations
and assessments ("Site Assessments") on the Leased Premises for the purpose of
investigating the Leased Premises. In addition to the permitted Site
Assessments, the Site Reviewers shall have the right to obtain from Tenant
information reasonably necessary to update any Site Assessment. Such Site
Assessments may include
<PAGE> 25
both above and below the ground testing for Environmental Violations and such
other tests as may be reasonably necessary, in the opinion of the Site
Reviewers, to conduct the Site Assessments. Tenant shall supply to the Site
Reviewers such historical and operational information regarding the Leased
Premises as may be reasonably requested by the Site Reviewers to facilitate the
Site Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. Landlord shall pay the
cost of any such Site Assessment unless an Environmental Violation is found, in
which event the cost shall be paid by Tenant.
(d) If an Environmental Violation occurs or is found to exist and,
in Landlord's reasonable judgment, the cost of remediation of, or other
response action with respect to, the same is likely to exceed $250,000, or, if
an Event of Default under Paragraph 22(a)(i) hereof has occurred during the
immediately preceding twelve (12) month period, $50,000, Tenant shall provide
to Landlord and Lender within ten (10) days after Landlord's or Lender's
request therefor, adequate financial assurances that Tenant will effect such
remediation or other response action in accordance with applicable
Environmental Laws.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist that would render the
Leased Premises untenantable or unmarketable and the Term would otherwise
terminate or expire, then, at the option of Landlord, the Term shall be
automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial or other response action in
accordance with applicable Environmental Laws or (ii) the date specified in a
written notice from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to comply with (or promptly commence to comply
with and diligently pursue to completion) any requirement of any Environmental
Law in connection with any Environmental Violation which occurs or is found to
exist, then after ten (10) days prior notice to Tenant (except that no notice
shall be required if any emergency exists) Landlord and/or Lender shall have
the right (but no obligation) to take any and all actions as Landlord and/or
Lender shall deem necessary or advisable in order to cure such Environmental
Violation.
(g) Tenant shall notify Landlord and Lender immediately after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord and Lender immediately upon receipt
thereof copies of all orders, claims, reports, notices, permits, applications
or other communications relating to any such violation or noncompliance.
<PAGE> 26
(h) All future leases, subleases or concession agreements relating
to the Leased Premises entered into by Tenant shall contain covenants of the
other party thereto which are comparable to the covenants contained in this
Paragraph 10.
(i) Tenant shall not release The Perkin-Elmer Corporation ("PE")
from any of its obligations under the Asset Purchase Agreement, dated March 16,
1990, between Tenant and PE that relate to clause (f) of Section 6.2 thereof or
otherwise amend said clause (f) or any other applicable provision without
having obtained the prior written approval of Landlord and Lender. Tenant
represents and warrants to Landlord that the indemnity under clause (f) of
Section 6.2 includes 1, 1-dichloroethene on the Leased Premises.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit to
be created or to remain and shall promptly discharge or remove any lien, levy
or encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL
ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY
OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted
by any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of
this Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to
protect the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain, at Tenant's sole cost and
expense, the Existing Premises and the Adjoining Property in substantially as
good repair and appearance as they are in on the date hereof and shall at all
times maintain the Project I Improvements and Project II Improvements in
substantially as good repair and appearance as they are on the Project I Final
Completion Date and Project II Final Completion
<PAGE> 27
Date, ordinary wear and tear excepted, and fit to be used for their intended
use in accordance with the practices generally recognized as then acceptable by
other companies in its industry, and, in the case of the Equipment, in as good
mechanical condition as it was on the later of the date hereof or the date of
its installation, except for ordinary wear and tear. Tenant shall take every
other reasonable action necessary or appropriate for the preservation and
safety of the Leased Premises. Tenant shall promptly make all Alterations of
every kind and nature, whether foreseen or unforeseen, which may be required to
comply with the foregoing requirements of this Paragraph 12(a). Landlord shall
not be required to make any Alteration, whether foreseen or unforeseen, or to
maintain any of the Leased Premises or Adjoining Property in any way, and
Tenant hereby expressly waives any right which may be provided for in any Law
now or hereafter in effect to make Alterations at the expense of Landlord or to
require Landlord to make Alterations. Any Alteration made by Tenant pursuant
to this Paragraph 12 shall be made in conformity with the provisions of
Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall (i)
encroach upon any setback or any property, street or right-of-way adjoining the
Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, at
Tenant's sole cost and expense, promptly after receiving a notice thereof,
correct such condition from the party entitled to make such demand, and either
(A) obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove all
such encroachments, hindrances or obstructions and to end all such violations
or impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the prior
written consent of Landlord and Lender, to make (i) non-structural Alterations
to the Leased Premises, (ii) structural Alterations or a series of related
structural Alterations that, as to any such Alterations or series of related
Alterations, do not cost in excess of $1,000,000 or, with respect to
Alterations to any "clean room" test area in Buildings 2, 3 or 4 and any
"process laboratory" in Buildings 2, 3 and 4, $2,500,000, (iii) to install
Equipment in the Improvements or accessions to the Equipment that, as to such
Equipment or accessions, do not cost in excess of $1,000,000 or, with respect
to Alterations to any "clean room" test area in Buildings 2, 3 and 4 and any
"process laboratory" in Buildings 2, 3 and 4 $2,500,000, and (iv) the
Alterations identified in Schedule 2
<PAGE> 28
attached hereto, so long as at the time of construction or installation of any
such Equipment or Alterations pursuant to clauses (i) through (iv) no Event of
Default exists and the value and utility of the Leased Premises is not
diminished thereby and no such Alterations shall be permitted under this
Paragraph 13 with respect to the Project II Improvements until the Project II
Final Completion Date. If the cost of any structural Alterations, series of
related structural Alterations, Equipment or accessions thereto is in excess of
$1,000,000 or, with respect to Alterations to any "clean room" test area in
Buildings 2, 3 or 4 and any "process laboratory" in Buildings 2, 3 or 4,
$2,500,000, the prior written approval of Lender shall be required, such
approval not to be unreasonably withheld, delayed or conditioned, but may be
withheld if an Event of Default exists and remains uncured. Tenant shall not
construct upon the Land any additional buildings without having first obtained
the prior written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph 13
or Paragraph 36 or as required by Paragraph 12 or 17 (such Alterations and
actions being hereinafter collectively referred to as "Work"), whether or not
Landlord's or Lender's consent is required, then (i) the market value of the
Leased Premises shall not be lessened by any such Work or its usefulness
impaired, (ii) all such Work shall be performed by Tenant in a good and
workmanlike manner, (iii) all such Work shall be expeditiously completed in
compliance with all Legal Requirements, (iv) all such Work shall comply with
the Insurance Requirements, (v) if any such Work involves the replacement of
Equipment or parts thereto, all replacement Equipment or parts shall have a
value and useful life so as not to diminish the value of the Improvements, (vi)
Tenant shall promptly discharge or remove all liens filed against any of the
Leased Premises arising out of such Work, (vii) Tenant shall procure and pay
for all permits and licenses required in connection with any such Work, (viii)
all such Work that constitutes part of the Leased Premises shall be the
property of Landlord and shall be subject to this Lease, and Tenant shall
execute and deliver to Landlord any document requested by Landlord evidencing
the assignment to Landlord of all estate, right, title and interest (other than
the leasehold estate created hereby) of Tenant or any other Person thereto or
therein, and (ix) Tenant shall comply, to the extent requested by Landlord or
required by this Lease, with the provisions of Paragraph 19(a), whether or not
such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
this Lease, Tenant shall not be required to (a) pay any Imposition, (b) comply
with any Legal Requirement, (c) discharge or remove any lien referred to in
Paragraph 11 or 13 or (d) take any action with respect to any encroachment,
violation, hindrance, obstruction or impairment referred to in Paragraph 12(b)
(such non-compliance with the terms hereof being
<PAGE> 29
hereinafter referred to collectively as "Permitted Violations"), so long as at
the time of such contest no Event of Default exists and so long as Tenant shall
contest, in good faith, the existence, amount or validity thereof, the amount
of the damages caused thereby, or the extent of its or Landlord's liability
therefor by appropriate proceedings which shall operate during the pendency
thereof to prevent or stay (i) the collection of, or other realization upon,
the Permitted Violation so contested, (ii) the sale, forfeiture or loss of any
of the Leased Premises or any Rent to satisfy or to pay any damages caused by
any Permitted Violation, (iii) any material interference with the use or
occupancy of any of the Leased Premises, (iv) any interference with the payment
of any Rent, (v) the cancellation or increase in the rate of any insurance
policy or a statement by the carrier that coverage will be denied or (vi) the
enforcement or execution of any injunction, order or Legal Requirement with
respect to the Permitted Violation. Tenant shall provide Landlord security
which is satisfactory, in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected, including all Costs, interest and penalties
that may be incurred or become due in connection therewith. While any
proceedings which comply with the requirements of this Paragraph 14 are pending
and the required security (if any) is held by Landlord, Landlord shall not have
the right to correct any Permitted Violation thereby being contested unless
Landlord is required by Law to correct such Permitted Violation and Tenant's
contest does not prevent or stay such requirement as to Landlord. Each such
contest shall be promptly and diligently prosecuted by Tenant to a final
conclusion, except that Tenant, so long as the conditions of this Paragraph 14
are at all times complied with, has the right to attempt to settle or
compromise such contest through negotiations. Tenant shall pay any and all
losses, judgments, decrees and Costs in connection with any such contest and
shall, promptly after the final determination of such contest, fully pay and
discharge the amounts which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith, together with all
penalties, fines, interest and Costs thereof or in connection therewith, and
perform all acts the performance of which shall be ordered or decreed as a
result thereof. No such contest shall subject Landlord or Lender to the risk
of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, save and hold harmless
Landlord, Lender, its officers, directors, shareholders, employees and trustees
and all other Persons described in Paragraph 30 (each an "Indemnitee") from and
against any and all liabilities, obligations, fines, losses, damages (including
punitive damages), penalties, Costs, causes of action, suits, claims, demands
or judgments of any nature whatsoever, howsoever caused, without regard to the
form of action and whether based on strict liability, gross negligence,
negligence or any other
<PAGE> 30
theory of recovery at law or in equity, arising from (i) any matter pertaining
to the acquisition (or the negotiations leading thereto), ownership, use,
non-use, occupancy, operation, condition, design, construction, maintenance,
repair or restoration of the Leased Premises or Adjoining Property, (ii) any
casualty in any manner arising from the Leased Premises or Adjoining Property,
whether or not Landlord has or should have knowledge or notice of any defect or
condition causing or contributing to said casualty, (iii) any violation by
Tenant of any provision of this Lease, any contract or agreement to which
Tenant is a party, any Legal Requirement or any Permitted Encumbrance or (iv)
any alleged, threatened or actual Environmental Violation, however immaterial,
including (A) liability for response costs and for costs of removal and
remedial action incurred by the United States Government, any state or local
governmental unit or any other Person, or damages from injury to or destruction
or loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any
successor section or act or provision of any similar state or local Law, (B)
liability for costs and expenses of abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or property
damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance or for
carrying on of a dangerous activity, but excluding in all cases any and all
liabilities, losses, damages (including punitive damages), penalties, costs,
causes of action, suits, claims, demands or judgments caused by the gross
negligence or willful misconduct of any Indemnitee.
(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, such Indemnitee may either (i) retain
its own counsel and defend such action (it being understood that Tenant may
employ counsel of its choice to monitor the defense of any such action) or (ii)
notify Tenant to resist or defend such action or proceeding by retaining
counsel reasonably satisfactory to such Indemnitee, and such Indemnitee will
cooperate and assist in the defense of such action or proceeding if reasonably
requested so to do by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall
survive any termination or expiration of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk"
property policy including but not limited to flood (if the Leased
Premises is in a flood zone) in amounts not less
<PAGE> 31
than the actual replacement cost of the Improvements and Equipment.
Such policies shall contain replacement cost and agreed amount
endorsements and shall contain deductibles not more than $50,000.00
per occurrence. Tenant shall maintain earthquake insurance for the
Improvements and Equipment in an amount equal to the product of full
replacement cost of the Improvements multiplied by the Probable
Maximum Loss of the Improvements determined every four (4) years by a
seismic engineer mutually acceptable to Landlord and Tenant with a
deductible of not more than 25% of the product of the full replacement
cost of the Improvements multiplied by the Probable Maximum Loss,
provided, however, that in the event of a substantial change in the
availability or cost of earthquake coverage Landlord and Tenant shall
in good faith negotiate a different amount or a different deductible
or other different terms of such insurance (subject to the consent of
Lender), taking into account the cost and availability of such
insurance and the objective of reasonably protecting the interests of
Landlord and Lender.
(ii) Commercial General Liability Insurance against claims
for personal and bodily injury, death or property damage occurring on,
in or as a result of the use of the Leased Premises, in an amount not
less than $15,000,000 per occurrence/annual aggregate including but
not limited to Incidental Medical Malpractice, Garagekeepers
Liability, Host Liquor Liability, Non-Owned and Hired Automobile
Liability and all other coverage extensions that are usual and
customary for properties of this size and type provided, however, that
the Landlord shall have the right to require such higher limits as may
be reasonable and customary for properties of this size and type.
(iii) Workers' Compensation Insurance covering all persons
employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily
injury may be asserted against Landlord, Tenant or any of the Leased
Premises or, in lieu of such Workers' Compensation Insurance, a
program of self-insurance complying with the rules, regulations and
requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on any of
the Equipment or any other equipment on or in the Leased Premises
including but not limited to Service Interruption, Expediting
Expenses, Ammonia Contamination, Hazardous Clean-Up and Comprehensive
Object Definition, in an amount not less than $1,000,000 for damage to
property, bodily injury or death resulting from such covered perils as
found in a standard Comprehensive Boiler and Machinery Policy. Such
policies may contain a deductible not in excess of $50,000.
<PAGE> 32
(v) Business Income/Interruption Insurance to include Loss of
Rents on an Actual Loss Sustained basis with a period of indemnity not
less than one year from the time of loss. Such insurance shall name
Landlord and Lender as "loss payee" solely with respect to Rent
payable to or for the benefit of Landlord under this Lease.
(vi) During construction of the Project I Improvements and
the Project II Improvements and during any period in which substantial
Alterations at the Leased Premises are being undertaken, Builder's
Risk insurance covering the total completed value including any "soft
costs" with respect to the Improvements being altered or repaired (on
a completed value, non-reporting basis), replacement cost of work
performed and equipment, supplies and materials furnished in
connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such other
endorsements as Landlord may reasonably require and General Liability,
Workers' Compensation and Automobile Liability Insurance with respect
to the Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with respect to
any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee
clause) on or in connection with any of the Leased Premises as
Landlord or Lender may reasonably require, which at the time is usual
and commonly obtained in connection with properties similar in type of
building size and use to the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written by
companies which have a Best's rating of A:X or above and are admitted in, and
approved to write insurance policies by the State Insurance Department for, the
State. The insurance policies (i) shall be for such terms as Landlord may
reasonably approve, (ii) shall be in amounts sufficient at all times to satisfy
any coinsurance requirements thereof and (iii) shall (except for the worker's
compensation insurance referred to in Paragraph 16(a)(iii) hereof) name
Landlord, Tenant and Lender as additional insureds or loss payees, as their
respective interests may appear. If said insurance or any part thereof shall
expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become reasonably unsatisfactory to Landlord of Lender,
Tenant shall immediately obtain new or additional insurance reasonably
satisfactory to Landlord and Lender.
(c) Each policy required by any provision of Paragraph 16(a),
except clause (iii) thereof, shall provide that it may not be canceled,
substantially modified or allowed to lapse on any renewal date except after
sixty (60) days' prior
<PAGE> 33
notice to Landlord and Lender. Each such policy shall also provide that any
loss otherwise payable thereunder shall be payable notwithstanding (i) any act
or omission of Landlord or Tenant which might, absent such provision, result in
a forfeiture of all or a part of such insurance payment, (ii) the occupation or
use of any of the Leased Premises for purposes more hazardous than those
permitted by the provisions of such policy, (iii) any foreclosure or other
action or proceeding taken by Lender pursuant to any provision of the Mortgage,
Note, Assignment or other document evidencing or securing the Loan upon the
happening of an event of default therein or (iv) any change in title to or
ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord evidence of the payment of the full premium therefor or
installment then due prior to the expiration date of such policy, and shall
promptly deliver to Landlord each original policy or a duplicate thereof.
(e) Anything in this Paragraph 16 to the contrary notwithstanding,
any insurance which Tenant is required to obtain pursuant to Paragraph 16(a)
may be carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16
and provided further that such policies shall provide for a reserved amount
thereunder with respect to the Leased Premises sufficient to assure that the
amount of insurance required by this Paragraph 16 will be available
notwithstanding any losses with respect to other property covered by such
blanket policies. The amount of the total insurance allocated to the Leased
Premises, which amount shall be not less than the amounts required pursuant to
this Paragraph 16, shall be specified either (i) in each such "blanket" or
umbrella policy or (ii) in a written statement, which Tenant shall deliver to
Landlord and Lender, from the insurer thereunder. The original or a certified
copy of each such "blanket" or umbrella policy shall promptly be delivered to
Landlord and Lender.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
requirements of the insurers thereunder applicable to Landlord, Tenant or any
of the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises,
even if such compliance necessitates Alterations or results in interference
with the use or enjoyment of any of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent in form
or contributing in the event of a Casualty with that required in this Paragraph
16 unless (i) Landlord and Lender are included therein as loss payee or
additional insureds, with loss
<PAGE> 34
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify
Landlord and Lender of such separate insurance and shall deliver to Landlord
and Lender copies of the policies therefor.
(h) All policies shall contain effective waivers by the carrier
against all claims for insurance premiums against Landlord and Lender and shall
contain full waivers of subrogation against the Landlord and Lender.
(i) All proceeds of any insurance required under Paragraph 16(a)
shall be payable as follows:
(i) Except for proceeds payable to a Person other than
Landlord, Tenant or Lender and, so long as no Event of Default exists
and remains uncured, proceeds of less than $1,000,000, all proceeds of
insurance required under clauses (ii), (iv) and (vii) of Paragraph
16(a) and proceeds attributable to the general liability coverage
provisions of Builder's Risk insurance under clause (vi) of Paragraph
16(a) shall be payable to Landlord or, if required by the Mortgage or
requested by Lender pursuant to the Mortgage, to Lender. All proceeds
of insurance required under clause (v) of Paragraph 16(a) shall be
payable to Landlord or, if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required under clause (i) of
Paragraph 16(a) and proceeds attributable to Builder's Risk insurance
(other than its general liability coverage provisions) under clause
(vi) of Paragraph 16(a) shall be payable as follows:
(A) In the event of a Casualty that is a
Termination Event for which a Termination Notice has been
given under Paragraph 18(a), the proceeds shall be payable to
Landlord or, if required by the Mortgage or requested by
Lender pursuant to the Mortgage, to Lender. Landlord shall
retain or apply the Net Award in accordance with the
provisions of Paragraphs 18 and 20.
(B) In the event of a Casualty that is not a
Termination Event where the proceeds exceed $1,000,000, the
proceeds shall be payable to Landlord or, if required by the
Mortgage or requested by Lender pursuant to the Mortgage, to
Lender. Landlord shall apply the Net Award in accordance with
the provisions of Paragraph 19.
(C) In the event of a Casualty that is not a
Termination Event where the proceeds are equal to or less than
$1,000,000 and provided no Event of Default exists and is
continuing, and no fact or condition
<PAGE> 35
exists which with the lapse of time or giving of notice, or
both, would in Landlord's or Lender's judgment constitute an
Event of Default, at the time such proceeds are paid, the Net
Award shall be payable to Tenant. Tenant shall apply the Net
Award to restoration of the Leased Premises in accordance with
the applicable provisions of this Lease. If an Event of
Default exists and is continuing or a fact or condition exists
which with the lapse of time or giving of notice, or both,
would in Landlord's or Lender's judgment constitute an Event
of Default, all proceeds shall be payable to Landlord or
Lender.
(iii) In the event that Tenant is listed as a payee on a
check from an insurance carrier for insurance proceeds which
subparagraphs (i) and (ii) provide are to be payable to Landlord,
Lender or another party or parties, Tenant shall cooperate by promptly
endorsing said check over to the party to whom the proceeds are to be
payable under subparagraphs (i) or (ii). Tenant hereby appoints each
of Landlord or Lender as Tenant's attorneys-in-fact to endorse any
such check.
17. Casualty and Condemnation.
(a) If any Casualty occurs the insurance proceeds for which is
reasonably estimated by Tenant to be equal to or in excess of One Hundred
Thousand Dollars ($100,000), Tenant shall give Landlord and Lender immediate
notice thereof. So long as no Event of Default exists, and subject to the
provisions of Paragraph 16(i)(ii), Tenant is hereby authorized to adjust,
collect and compromise all claims under any of the insurance policies required
by Paragraph 16(a) (except public liability insurance claims payable to a
Person other than Tenant, Landlord or Lender) and to execute and deliver on
behalf of Landlord and Lender all necessary proofs of loss, receipts, vouchers
and releases required by the insurers and Landlord and Lender shall have the
right to join with Tenant therein. Any adjustment, settlement or compromise of
any such claim in excess of $1,000,000 shall be subject to the prior written
approval of Landlord and Lender, which shall not be unreasonably withheld,
conditioned or delayed and Landlord and Lender shall have the right to
prosecute or contest, or to require Tenant to prosecute or contest, any such
claim, adjustment, settlement or compromise. If an Event of Default exists,
Tenant shall not be entitled to adjust, collect or compromise any claim or to
participate with Landlord or Lender in any adjustment, collection and
compromise of the Net Award payable in connection with a Casualty. Tenant
agrees to sign, upon the request of Landlord or Lender, all proofs of loss,
receipts, vouchers and releases. Each insurer is hereby authorized and
directed to make payment under said policies in excess of $1,000,000 and return
of unearned premiums, directly to Landlord or, if required by the Mortgage or
requested by Lender pursuant to the Mortgage, to Lender instead of to
<PAGE> 36
Landlord or Landlord and Tenant jointly, and Tenant hereby appoints each of
Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft
therefor.
(b) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. So long as no Event of Default
exists, Tenant is authorized to collect, settle and compromise the amount of
any Net Award and Landlord and Lender shall have the right to join with Tenant
therein. No agreement with any condemnor in settlement or under threat of any
Condemnation shall be made by Tenant without the written consent of Landlord
and Lender which shall not be unreasonably withheld, conditioned or delayed.
If an Event of Default exists, Landlord and Lender shall be authorized to
collect, settle and compromise the amount of any Net Award and Tenant shall not
be entitled to participate with Landlord and Lender in any Condemnation
proceeding or negotiations under threat thereof or to contest the Condemnation
or the amount of the Net Award therefor. Subject to the provisions of this
Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord and Lender any
award or payment to which Tenant is or may be entitled by reason of any
Condemnation, whether the same shall be paid or payable for Tenant's leasehold
interest hereunder or otherwise; but nothing in this Lease shall impair
Tenant's right to any award or payment on account of Tenant's trade fixtures,
equipment or other tangible property which is not part of the Equipment, moving
expenses or loss of business, if available, to the extent that and so long as
(i) Tenant shall have the right to make, and does make, a separate claim
therefor against the condemnor and (ii) such claim does not in any way reduce
either the amount of the award otherwise payable to Landlord for the
Condemnation of Landlord's fee interest in the Leased Premises or the amount of
the award (if any) otherwise payable for the Condemnation of Tenant's leasehold
interest hereunder.
(c) If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations, except as provided in Paragraph 17(d) and 19(c). Promptly after
such Partial Casualty or Partial Condemnation, Tenant, as required in Paragraph
12(a), shall commence and diligently continue to restore the Leased Premises as
nearly as practicable to their value, condition and character immediately prior
to such event. Upon the receipt by Landlord of the entire Net Award of such
Partial Casualty or Partial Condemnation, Landlord shall make such Net Award
available to Tenant for restoration in accordance with and subject to the
provisions of Paragraph 19(a). If any Casualty or Condemnation which is not a
Partial Casualty or Partial Condemnation shall occur, Tenant shall comply with
the terms and conditions of Paragraph 18.
(d) In the event of a Requisition of any of the Leased Premises,
if any Net Award payable by reason of such Requisition
<PAGE> 37
is retained by Landlord or Lender, each installment of Basic Rent payable on or
after the date on which the Net Award is paid to Landlord shall be reduced by a
fraction, the denominator of which shall be the total amount of all Basic Rent
due from such date to and including the last day of the Term (calculated on the
basis of the Basic Rent in effect as of the date of the Requisition) and the
numerator of which shall be the amount of such Net Award retained by Landlord.
Upon the expiration of the Term, any portion of such Net Award which shall not
have been previously credited to Tenant shall be retained by Landlord.
18. Termination Events.
(a) If (i) the Leased Premises shall be taken by a Taking or (ii)
any substantial portion of the Leased Premises shall be taken by a Taking or
all or any substantial portion of the Leased Premises shall be damaged or
destroyed by a Casualty and, in such case, Tenant certifies to Landlord that it
will forever abandon operations at the Leased Premises (each of the events
described in the above clauses (i) and (ii) shall hereinafter be referred to as
a "Termination Event"), then (x) in the case of (i) above, Tenant shall be
obligated, within thirty (30) days after Tenant receives a Condemnation Notice
and (y) in the case of (ii) above, Tenant shall have the option, within thirty
(30) days after Tenant receives a Condemnation Notice or thirty (30) days after
the Casualty, as the case may be, to give to Landlord and Lender written notice
of the Tenant's option to terminate this Lease (a "Termination Notice") in the
form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date which
occurs at least ninety (90) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to purchase
the Leased Premises for an amount equal to the Termination Amount and (iii) if
the Termination Event is an event described in Paragraph 18(a)(ii), the
certification described therein and a certified resolution of the Board of
Directors of Tenant authorizing the same. Promptly upon the delivery to
Landlord of a Termination Notice, Landlord and Tenant shall commence to
determine the Fair Market Value of the Leased Premises.
(c) If Landlord shall reject such offer to purchase the Leased
Premises by written notice to Tenant (a "Rejection"), which Rejection shall
contain the written consent of Lender, not later than thirty (30) days
following the Fair Market Value Date, then this Lease shall terminate on the
Termination Date; provided that, if Tenant has not satisfied all Monetary
Obligations and all other obligations and liabilities under this Lease which
have arisen on or prior to the Termination Date (collectively, "Remaining
Obligations") on the Termination Date, then Landlord may, at its option, extend
the date on which this Lease may terminate to a date which is no later than the
first Basic Rent
<PAGE> 38
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall promptly vacate and shall have no further right, title or interest in or
to any of the Leased Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the contrary hereinabove contained, if
Tenant shall have received a Rejection and, on the date when this Lease would
otherwise terminate as provided above, Landlord shall not have received the
full amount of the Net Award payable by reason of the applicable Termination
Event, then on the Termination Date Tenant shall assign to Landlord all of its
right, title and interest, if any, in and to the Net Award.
(d) Unless Tenant shall have received a Rejection not later than
the thirtieth (30th) day following the Fair Market Value Date, Landlord shall
be conclusively presumed to have accepted such offer. If such offer is
accepted by Landlord then, on the Termination Date, Tenant shall pay to
Landlord (or Lender if the Mortgage requires or permits Lender to so require)
the Termination Amount and all Remaining Obligations and, if requested by
Tenant, Landlord shall (i) convey to Tenant the Leased Premises or the
remaining portion thereof, if any, and (ii) pay to or assign to Tenant its
entire interest in and to the Net Award, all in accordance with Paragraph 20.
19. Restoration; Reduction of Rent.
(a) So long as no Event of Default, or fact or condition which
with the lapse of time or giving of notice or both would, in the judgment of
Landlord or Lender, constitute an Event of Default, exists, any Net Award up to
and including $1,000,000 shall be paid directly to Tenant and Tenant shall
restore the Leased Premises in accordance with the requirements of Paragraph
13(b) of this Lease. Any Net Award in excess of $1,000,000 shall be made
available by Landlord to Tenant for the restoration of any of the Leased
Premises, and Landlord (or Lender if required by any Mortgage or if the
Mortgage permits Lender to so require) shall hold such Net Award in a fund (the
"Restoration Fund") and disburse amounts from the Restoration Fund only in
accordance with the following conditions:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord and Lender, such approval not to
be unreasonably withheld, conditioned or delayed and (B) Landlord and
Lender shall, upon reasonable request and based upon a review of the
contractor's and prime subcontractors' credit, be provided with
acceptable performance bonds which insure satisfactory completion of
the restoration, are in an amount and form and have a surety
acceptable to Landlord, and name Landlord and Lender as additional
dual obligees;
<PAGE> 39
(ii) at the time of any disbursement, no Event of Default, or
fact or condition which with the giving of notice or lapse of time or
both would, in the judgment of Landlord or Lender, constitute an Event
of Default shall exist and any mechanics' or materialmen's liens filed
against any of the Leased Premises shall have been insured over or
covered by a bond;
(iii) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including
architects' certificates, of the stage of completion, the estimated
total cost of completion and performance of the work to date in a good
and workmanlike manner in accordance with the contracts, plans and
specifications, (B) waivers of liens, (C) contractors' and
subcontractors' sworn statements as to completed work and the cost
thereof for which payment is requested, (D) a satisfactory bringdown
of title insurance and (E) other evidence of cost and payment so that
Landlord and Lender can verify that the amounts disbursed from time to
time are represented by work that is completed, in place and free and
clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president or
the chief financial officer of Tenant, describing the work for which
payment is requested, stating the cost incurred in connection
therewith, stating that Tenant has not previously received payment for
such work and, upon completion of the work, also stating that the work
has been fully completed and complies with the applicable requirements
of this Lease;
(v) Landlord or Lender may retain ten percent (10%) of the
Restoration Fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Lender it may be
commingled with Lender's other funds and shall bear interest unless
otherwise required by Lender; if it is held by Landlord it shall be
commingled with Landlord's other funds and shall bear interest at the
best available interest rate; and
(vii) such other reasonable conditions to insure timely, lien
free completion of the restoration as Landlord or Lender may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as determined by Landlord or if required by a Mortgage, by
Lender, exceeds the amount of the Net Award available for such restoration, the
<PAGE> 40
amount of such excess shall, upon demand by Landlord, be paid by Tenant to
Landlord or if required by a Mortgage or by Lender pursuant to the terms of a
Mortgage, to Lender to be added to the Restoration Fund. Any sum so added by
Tenant which remains in the Restoration Fund upon completion of restoration
shall be refunded to Tenant. For purposes of determining the source of funds
with respect to the disposition of funds remaining after the completion of
restoration, the Net Award shall be deemed to be disbursed prior to any amount
added by Tenant.
(c) If any sum remains in the Restoration Fund after completion of
the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum
(the "Remaining Sum") shall be retained by Landlord or, if required by a Note
or Mortgage or by Lender pursuant to the terms of a Note or Mortgage, paid by
Landlord to a Lender. If the Remaining Sum is (i) retained by Landlord, each
installment of Basic Rent payable on or after the Retention Date shall be
reduced by a fraction, the denominator of which shall be the total amount of
all Basic Rent due from such date to and including the last Basic Rent Payment
Date for the then existing Term calculated on the basis of the Basic Rent then
in effect and taking into account any applicable adjustments under Paragraphs
1(c)(i) and 1(c)(ii) of Exhibit D and the numerator of which shall be the
Remaining Sum, or (ii) paid to Lender, then each installment of Basic Rent
thereafter payable shall be reduced in the same amount as payments are reduced
under any Note as if the Loan were reamortized to reflect such payment, in each
case until such Remaining Sum has been applied in full or until the Term has
expired, whichever occurs first. Landlord agrees that if the terms of a Note
or Mortgage permit partial prepayment of the principal balance of the Loan
without premium or penalty and, in such event, require the Lender to thereupon
reamortize the Loan, Landlord shall pay any Remaining Sum to Lender as a
partial prepayment of the Loan and clause (ii) of this Paragraph 19(c) shall
apply. Upon the expiration of the Term, any portion of the Remaining Sum which
has not been so applied shall be retained by Landlord.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to any
provision of this Lease, Landlord need not convey any better title thereto than
that which was conveyed to Landlord, and Tenant shall accept such title,
subject, however, to the Permitted Encumbrances and to all other liens,
exceptions and restrictions on, against or relating to any of the Leased
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises which have been
created by or resulted solely from acts of Landlord after the date of this
Lease, unless the same are Permitted Encumbrances or customary utility
easements benefiting the Leased Premises or were created with the
<PAGE> 41
concurrence of Tenant or as a result of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the "Purchase
Date"), through an appropriate escrow, Tenant shall pay to Landlord, or to any
Person to whom Landlord directs payment, the Relevant Amount therefor specified
herein, in Federal Funds, less any credit of the Net Award received and
retained by Landlord or Lender allowed against the Relevant Amount, and
Landlord shall deliver to Tenant (i) a special warranty deed which describes
the premises being conveyed and conveys the title thereto as provided in
Paragraph 20(a), (ii) such other instruments as shall be necessary to transfer
to Tenant or its designee any other property (or rights to any Net Award not
yet received by Landlord or a Lender) then required to be sold by Landlord to
Tenant pursuant to this Lease and (iii) any Net Award received by Landlord, not
credited to Tenant against the Relevant Amount and required to be delivered by
Landlord to Tenant pursuant to this Lease; provided, that if any Monetary
Obligations remain outstanding on such date, then Landlord may deduct from the
Net Award the amount of such Monetary Obligations; and further provided, that
if any event has occurred which, in Landlord's reasonable judgment, is likely
to subject any Indemnitee to any liability which Tenant is required to
indemnify against pursuant to Paragraph 15, then an amount shall be deducted
from the Net Award which, in Landlord's reasonable judgment, is sufficient to
satisfy such liability, which amount shall be deposited in an escrow account
with a financial institution reasonably satisfactory to Landlord and Tenant on
terms reasonably satisfactory to Landlord and Tenant pending resolution of such
matter. If on the Purchase Date any Monetary Obligations remain outstanding
and no Net Award is payable to Tenant by Landlord or the amount of such Net
Award is less than the amount of the Monetary Obligations, then Tenant shall
pay to Landlord on the Purchase Date the amount of such Monetary Obligations.
Upon the completion of such purchase, this Lease and all obligations and
liabilities of Tenant hereunder shall terminate, except any Surviving
Obligations.
(c) If the Tenant shall cause completion of such purchase to be
delayed after (i) the Termination Date, in the event of a purchase pursuant to
Paragraph 18 or, (ii) the date scheduled for such purchase, in the event of a
purchase under any other provision of this Lease then (x) Rent shall continue
to be due and payable until completion of such purchase and (y) at Landlord's
sole option, Fair Market Value shall be redetermined and the Relevant Amount
payable by Tenant pursuant to the applicable provision of this Lease shall be
adjusted to reflect such redetermination. Landlord shall not be deemed to have
caused completion of such purchase to be delayed if it in good faith disputes
the process or methodology for determining Fair Market Value.
<PAGE> 42
(d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord.
21. Assignment and Subletting; Prohibition against Leasehold
Financing.
(a) Tenant shall have the right so long as no Event of Default has
occurred and is continuing, upon thirty (30) days prior written notice to
Landlord and Lender, with no consent of Landlord or Lender being required or
necessary ("Preapproved Assignment") to assign this Lease to any Person
("Preapproved Assignee") that is a Subsidiary of Tenant on the date hereof or
that, after the date hereof, is a wholly-owned Subsidiary of Tenant or which,
whether or not in connection with the transfer or sale of all or substantially
all of Tenant's business, immediately following such assignment satisfies all
published criteria necessary to obtain a publicly traded unsecured senior debt
rating of "A2" or better from Moody's Investors Services, Inc. or a rating of
"A" or better from Standard & Poor's Ratings Service, and in the event all of
such rating agencies cease to furnish such ratings, then a comparable rating by
any rating agency reasonably acceptable to Landlord and Lender.
(b) During the Initial Term, if Tenant desires to assign this
Lease to a Person ("Non-Preapproved Assignee") who would not be a Preapproved
Assignee ("Non-Preapproved Assignment") then Tenant shall, not less than ninety
(90) days prior to the date on which it desires to make a Non-Preapproved
Assignment submit to Landlord and Lender information regarding the following
with respect to the Non-Preapproved Assignee: (A) credit, (B) capital
structure, (C) management, (D) operating history, (E) proposed use of the
Leased Premises and (F) risk factors associated with the proposed use of the
Leased Premises by the Non-Preapproved Assignee, taking into account factors
such as environmental concerns, product liability and the like. Landlord and
Lender shall review such information and shall approve or disapprove the
Non-Preapproved Assignee no later than the thirtieth (30th) day following
receipt of all such information, and Landlord and Lender shall be deemed to
have acted reasonably in granting or withholding consent for any or no reason
if such grant or disapproval is based on any of the above-described
information. Notwithstanding anything to the contrary contained herein, if the
request for consent to a Non-Preapproved Assignment is in connection with the
sale by Tenant of all or substantially all of its assets, Landlord and Lender
shall be deemed to have consented to the Non-Preapproved Assignment so long as
no Event of Default has occurred and is continuing and if, immediately after
the assignment, the Non-Preapproved Assignee has, on a pro forma basis, an
Adjusted Consolidated Net Worth (as defined in Exhibit "E") of not less than
the sum of (x) Fifty-three Million
<PAGE> 43
Dollars ($53,000,000) plus (y) an amount equal to 60% of Tenant's Consolidated
Net Income on a cumulative basis for each fiscal quarter in which such
Consolidated Net Income is positive, but with no adjustment for each fiscal
quarter in which Consolidated Net Income is negative (calculated at the end of
each fiscal quarter), commencing with the fiscal quarter of Tenant that
commenced on August 1, 1996 and continuing for each quarter to and including
the end of the fiscal quarter prior to the fiscal quarter in which the
Non-Preapproved Assignment occurs.
(c) After the Initial Term, if Tenant desires to carry out a
Non-Preapproved Assignment, then Tenant shall, not less than fifteen (15) days
prior to the date on which it desires to make such Non-Preapproved Assignment,
submit to Landlord (and Lender, if Lender's consent to the Non-Preapproved
Assignment is required), reasonable information regarding the identity and
credit of the Non-Preapproved Assignee. Landlord (and Lender, if applicable)
shall review such information and shall, no later than the fifteenth (15th) day
following receipt of such information, approve or disapprove the
Non-Preapproved Assignee. Such approval shall be deemed given if the net worth
of the Non-Preapproved Assignee is greater than or equal to the net worth of
the Tenant as shown on its then most recently prepared financial statements,
and otherwise such approval shall not be unreasonably withheld, conditioned or
delayed.
(d) If Landlord and Lender withhold consent to the Non-Preapproved
Assignment and Tenant desires to complete the Non-Preapproved Assignment,
Tenant shall make a rejectable offer (the "Intended Assignment Offer") to
purchase the Leased Premises for a purchase price equal to the Offer Amount and
to consummate the purchase on the first Basic Rent Payment Date occurring
thirty (30) days after the determination of Fair Market Value (the "Intended
Assignment Purchase Date"). Notwithstanding the foregoing, if the Intended
Assignment Offer is accepted by Landlord and the Non-Preapproved Assignment
occurs on a date (the "Assignment Date") that is prior to the Intended
Assignment Purchase Date, then on the Assignment Date Tenant shall deposit in
escrow with Lender an amount (the "Deposit Amount") equal to one hundred
percent (100%) of the sum of the Acquisition Cost and any estimated Prepayment
Premium. On the Intended Assignment Purchase Date, Tenant shall increase the
Deposit Amount by the amount by which the actual Prepayment Premium exceeds the
estimated Prepayment Premium. The Deposit Amount shall be held by and invested
by Lender and the Deposit Amount, together with any interest earned thereon,
shall be applied on the Intended Assignment Purchase Date to payment of the
Offer Amount.
(e) If Landlord shall reject the Intended Assignment Offer by
notice to Tenant, such notice to contain the written consent of Lender to such
rejection, no later than the thirtieth (30th) day following receipt of the
Intended Assignment Offer by Landlord, then this Lease shall remain in full
force and effect and Landlord and Lender shall be deemed to have consented to
the
<PAGE> 44
Non-Preapproved Assignment. Nothing provided herein shall constitute a waiver
by Landlord of the obligation of Tenant to comply with the requirements of this
Paragraph 21(e) if a subsequent Non-Preapproved Assignment arises. No
rejection of the Intended Assignment Offer shall be effective for any purpose
unless consented to in writing by Lender.
(f) Unless Landlord shall have rejected the Intended Assignment
Offer by the foregoing notice to Tenant not later than the thirtieth (30th) day
following receipt of information described in the foregoing Paragraph 21(b) or
21(c), Landlord shall be conclusively presumed to have accepted the Intended
Assignment Offer. If the Intended Assignment Offer is accepted by Landlord,
Tenant shall pay to Landlord the Offer Amount (less the Deposit Amount and
interest thereon paid to Landlord) on the Intended Assignment Purchase Date
and, provided that no Rent or any other charge is due and unpaid under this
Lease as of the Intended Assignment Purchase Date and Tenant is otherwise in
compliance with the terms of this Lease, Landlord shall convey to Tenant the
Leased Premises in accordance with the provisions of Paragraph 20 of this
Lease.
(g) Any assignment of Tenant's interest in this Lease by operation
of law as a result of any merger or consolidation by Tenant shall be governed
by the provisions of Paragraph 1(c) of Exhibit "E".
(h) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, to enter into one or more subleases that
demise, in the aggregate, up to but not in excess of thirty-one percent (31%)
of the gross space in the Improvements with no consent or approval of Landlord
or Lender being required or necessary ("Preapproved Sublet"). Other than
pursuant to a Preapproved Sublet, during the Initial Term, no portion of the
Leased Premises shall be subleased during the Term to any other Person without
the prior written consent of Landlord and Lender, which consent shall not be
unreasonably withheld or delayed, and which consent shall be granted or
withheld based on a review of the following criteria as they relate to the
proposed sublessee: (1) credit, (2) capital structure, (3) management, (4)
operating history and (5) the proposed use of the sublet portion of the
Improvements, taking into account factors related to the proposed subtenant's
use of the Leased Premises such as environmental concerns. Landlord and Lender
shall be deemed to have acted reasonably in granting or withholding consent if
such grant or disapproval is based on their reasonable review of the
above-described criteria.
(i) After the Initial Term, if Tenant desires to sublet any
portion of the Leased Premises other than as permitted by the first sentence
of Paragraph 21(b) above, then Tenant shall, not less than fifteen (15) days
prior to the date on which it desires to enter into such sublease, submit to
Landlord and Lender such
<PAGE> 45
information as Landlord and Lender reasonably request regarding the identity
and credit of the proposed subtenant. Landlord and Lender shall review such
information and shall, no later than the fifteenth (15th) day following receipt
of such information, approve or disapprove the proposed sublease. Such
approval shall be deemed given if the net worth of the proposed subtenant is
greater than or equal to the net worth of the Tenant as shown on its then most
recently prepared financial statements, and otherwise such approval shall not
be unreasonably withheld, conditioned or delayed.
(j) If Tenant assigns all its rights and interest under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including obligations of
Tenant which may have arisen on or prior to the date of such assignment,
including the obligation to comply with Exhibit "E", by a written instrument
delivered to Landlord at the time of such assignment. Each sublease of any of
the Leased Premises shall be subject and subordinate to the provisions of this
Lease. No assignment or sublease made as permitted by this Paragraph 21 shall
affect or reduce any of the obligations of Tenant hereunder or under any
document executed by Tenant in favor of or for the benefit of Lender, and all
such obligations shall continue in full force and effect as obligations of a
principal and not as obligations of a guarantor, as if no assignment or
sublease had been made. No assignment or sublease shall impose any additional
obligations on Landlord under this Lease.
(k) With respect to any Preapproved Assignment or Preapproved
Sublet, Tenant shall provide to Landlord and to Lender legal opinions and other
information reasonably required by Landlord and Lender to establish that any
proposed Preapproved Assignment or Preapproved Sublet satisfies the criteria
set forth above.
(l) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease consented to by Landlord and Lender ,
deliver a duplicate original copy thereof to Landlord and Lender which, in the
event of an assignment, shall be in recordable form.
(m) As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all subleases hereinafter entered into for any
or all of the Leased Premises, any and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom. Landlord hereby
grants to Tenant a license to collect and enjoy all rents and other sums of
money payable under any sublease of any of the Leased Premises, provided,
however, that Landlord shall have the absolute right at any time during the
existence of an Event of Default, upon notice to Tenant and any subtenants, to
revoke said
<PAGE> 46
license and to collect such rents and sums of money and to retain the same.
Tenant shall not consent to, cause or allow any modification or alteration of
any of the terms, conditions or covenants of any of the subleases or the
termination thereof, without the prior written approval of Landlord, which
consent shall not be unreasonably withheld, nor shall Tenant do nor permit
anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of any of the subleases.
(n) Tenant shall have no right or power to grant a mortgage on, or
to pledge its leasehold interest in, or otherwise encumber its interest under
this Lease or any sublease of the Leased Premises, and any such mortgage,
pledge or encumbrance made in violation of this Paragraph 21 shall be void.
Tenant shall not permit any subtenant to mortgage, pledge or otherwise encumber
its subleasehold interest in the Leased Premises.
(o) Subject to Tenant's rights under Paragraph 35, Landlord may
sell or transfer the Leased Premises at any time without Tenant's consent to
any third party (each a "Third Party Purchaser"), provided, that so long as no
Event of Default exists either at the time Landlord enters into an agreement of
sale for the purchase of the Leased Premises or on the date of conveyance to a
Third Party Purchaser, Landlord shall not sell the Leased Premises to any
Person whose primary business is the manufacturing of equipment that makes
masks for the semi-conductor industry. In the event of any such transfer,
Tenant shall attorn to any Third Party Purchaser as Landlord so long as such
Third Party Purchaser and Landlord notify Tenant in writing of such transfer
and such Third Party Purchaser assumes in writing the obligations of Landlord
under this Lease. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other agreements
as Landlord may reasonably request, provided that such agreements do not
increase the liabilities and obligations of Tenant hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:
(i) a failure by Tenant to make any payment of any Monetary
Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);
<PAGE> 47
(iii) any representation or warranty made by Tenant herein or
in any certificate, demand or request made pursuant hereto proves to
be incorrect, now or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or at
maturity by Tenant or any Subsidiary of Tenant in any payment of
principal or interest on any obligations for borrowed money having an
outstanding principal balance of $10,000,000 or more in the aggregate,
or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured
(including the breach of any covenant thereunder), (x) if such payment
is a payment at maturity or a final payment, or (y) if a result of
such default is to cause such obligation to be accelerated prior to
its stated maturity;
(v) a default by Tenant or any Subsidiary of Tenant beyond
any applicable cure period in the payment of rent under, or in the
performance of any other material provision of, any other lease or
leases that have, in the aggregate, rental obligations over the terms
thereof of $10,000,000 or more in the aggregate if the landlord under
any such lease or leases commences to terminate such lease or leases,
dispossess Tenant or any Subsidiary or accelerate the rent payable
thereunder;
(vi) a final, non-appealable judgment or judgments for the
payment of money in excess of $10,000,000 (less any amounts payable
from the proceeds of insurance) in the aggregate shall be rendered
against Tenant or any Subsidiary and the same shall not be payable
from the proceeds of insurance and shall remain undischarged, unbonded
or unsatisfied for a period of sixty (60) consecutive days;
(vii) Tenant shall breach any Covenant or an Intended
Transaction or a Non-Preapproved Assignment shall occur and Tenant
shall have failed to comply with the provisions of Paragraph 21(d)
through (f) or Paragraph 33, as applicable;
(viii) Tenant or any Significant Subsidiary of Tenant shall
(A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or
consent to the appointment of a receiver or trustee for itself or for
the Leased Premises, (C) file a petition seeking relief under the
bankruptcy or other similar laws of the United States, any state or
any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;
<PAGE> 48
(ix) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant or any Significant
Subsidiary of Tenant, a receiver or trustee for it or for any of the
Leased Premises or approving a petition filed against Tenant or any
Significant Subsidiary which seeks relief under the bankruptcy or
other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed ninety (90) days after it is entered;
(x) the Leased Premises shall have been vacated (i.e., ceased
to be operated on a consistent basis) except as permitted under, and
subject to the terms and conditions of, Paragraph 38 hereof or the
Leased Premises shall have been abandoned;
(xi) Tenant or any Significant Subsidiary of Tenant shall be
liquidated or dissolved or shall begin proceedings towards its
liquidation or dissolution;
(xii) the estate or interest of Tenant or any Significant
Subsidiary of Tenant in any of the Leased Premises shall be levied
upon or attached in any proceeding and such estate or interest is
about to be sold or transferred or such process shall not be vacated
or discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant, following any notice and an
opportunity to cure, to perform or observe, or a violation or breach
of, or a misrepresentation by Tenant under any provision of any
Assignment or any other document between Tenant and Lender that, as to
such Assignment or other document, (A) recites that a breach,
violation or misrepresentation by Tenant thereunder will cause a
default under the Loan and (B) provides that Lender will give to
Tenant any notice of such default that it is required to give to
Landlord, if such failure, violation, breach or misrepresentation
gives rise to a default beyond any applicable cure period with respect
to any Loan;
(xiv) a failure by Tenant to maintain in effect any occupancy
permit for the Leased Premises or permit required under any
Environmental Law;
(xv) an Event of Default shall have occurred and be
continuing under the Construction Agency Agreement or the Completion
Agreement; or
<PAGE> 49
(xvi) Tenant shall have failed to occupy Building 4 by August
1, 1999.
(b) No notice or cure period shall be required in any one or more
of the following events: (A) except as otherwise set forth below, the
occurrence of an Event of Default under clause (i), (iv), (v), (vi), (vii),
(viii), (ix), (x), (xi), (xii), (xiii), (xv) or (xvi) of Paragraph 22(a); (B)
the default consists of a failure to provide any insurance required by
Paragraph 16 or an assignment or sublease entered into in violation of
Paragraph 21; or (C) the default is such that any delay in the exercise of a
remedy by Landlord could reasonably be expected to cause irreparable
non-monetary harm to Landlord. If the default consists of the failure to pay
any Monetary Obligation under clause (i) of Paragraph 22(a), the applicable
cure period shall be five (5) days from the date on which notice is given
except that if the failure is the failure to pay Basic Rent no notice shall be
required and only the five (5) day cure period shall be applicable, but in any
event Landlord shall not be obligated to allow any cure period for or, if
required, give notice of, any such default more than twice within any Lease
Year. If the default consists of a default under clauses (iv), (v) or (x) the
applicable cure period shall be ten (10) days from the date on which notice is
given provided that (X) with respect to a default under clause (iv) or (v)
Tenant immediately gives to Landlord notice of acceleration or failure to pay
at maturity or the exercise of remedies by a landlord or (Y) with respect to a
default under clause (x) Tenant immediately give to Landlord notice that it has
vacated the Leased Premises. If the default consists of a default under
clauses (ii), (iii) or (xiv) of Paragraph 22(a), other than the events
specified in clauses (B) and (C) of the first sentence of this Paragraph 22(b),
the applicable cure period shall be twenty (20) days from the date on which
notice is given or, if the default cannot be cured within such twenty (20) day
period, the cure period shall be extended for the period required to cure the
default (but such cure period, including any extension, shall not in the
aggregate exceed one hundred eighty (180) days), provided that Tenant shall
commence to cure the default within the said twenty-day period and shall
actively, diligently and in good faith proceed with and continue the curing of
the default until it shall be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is continuing,
Landlord shall have the right, at its sole option, then or at any time
thereafter, to the extent permitted by applicable law, to exercise its remedies
and to collect damages from Tenant in accordance with this Paragraph 23,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's intention
to terminate this Lease on a date specified
<PAGE> 50
in such notice. Upon such date, this Lease, the estate hereby granted
and all rights of Tenant hereunder shall expire and terminate. Upon
such termination, Tenant shall immediately surrender and deliver
possession of the Leased Premises to Landlord in accordance with
Paragraph 26. If Tenant does not so surrender and deliver possession
of the Leased Premises, Landlord may re-enter and repossess the Leased
Premises, with or without legal process, by peaceably entering the
Leased Premises and changing locks or by summary proceedings,
ejectment or any other lawful means or procedure. Upon or at any time
after taking possession of the Leased Premises, Landlord may, by
peaceable means or legal process, remove any Persons or property
therefrom. Landlord shall be under no liability for or by reason of
any such entry, repossession or removal. Notwithstanding such entry
or repossession, Landlord may (A) exercise the remedy set forth in and
collect the damages permitted by Paragraph 23(a)(iii) or (B) collect
the damages set forth in Paragraph 23(c).
(ii) After repossession of the Leased Premises pursuant to
clause (i) above, Landlord shall have the right to relet any of the
Leased Premises to such tenant or tenants, for such term or terms, for
such rent, on such conditions and for such uses as Landlord in its
sole discretion may determine, and collect and receive any rents
payable by reason of such reletting. Landlord may make such
Alterations in connection with such reletting as it may deem advisable
in its sole discretion. Notwithstanding any such reletting, Landlord
may collect the damages set forth in Paragraph 23(c).
(iii) To the extent permitted by applicable law, Landlord
may, upon notice to Tenant, require Tenant to make an irrevocable
offer to terminate this Lease upon payment to Landlord of an amount
(the "Default Termination Amount") specified in the next sentence.
The "Default Termination Amount" shall be the greater of (A) the Fair
Market Value of the Leased Premises, or (B) the Acquisition Cost and
the Prepayment Premium which Landlord will be required to pay in
prepaying any Loan with proceeds of the Default Termination Amount.
Upon such notice to Tenant, Tenant shall be deemed to have made such
offer and shall, if requested by Landlord, within ten (10) days
following such request deposit with Landlord as payment against the
Default Termination Amount the amount described in (B) above, and
Landlord and Tenant shall promptly commence to determine Fair Market
Value. Within thirty (30) days after the Fair Market Value Date,
Landlord shall accept or reject such offer. If Landlord accepts such
offer then, on the tenth (10th) business day after such
<PAGE> 51
acceptance, Tenant shall pay to Landlord the Default Termination
Amount and, at the request of Tenant, Landlord will convey the Leased
Premises to Tenant or its designee in accordance with Paragraph 20.
Any rejection by Landlord of such offer (which rejection shall have
been consented to in writing by Lender) shall have no effect on any
other remedy Landlord may have under this Lease.
(b) In addition to its other rights under this Lease, Landlord has
the remedy described in California Civil Code Section 1951.4 which provides
substantially as follows: Landlord may continue the Lease in effect after
Tenant's breach and abandonment and recover the Rent as it becomes due. In
accordance with California Civil Code Section 1951.4 (or any successor
statute), Tenant acknowledges that in the event Tenant breaches this Lease and
abandons the Leased Premises, 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 its rights and remedies under this Lease, including the right to
recover the Rent as it becomes due under this Lease. Tenant acknowledges that
the limitations on subletting and assignment set forth in Paragraph 21 are
reasonable. Acts of maintenance or preservation or efforts to relet the Leased
Premises or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession.
(c) If Landlord elects to terminate this Lease upon the occurrence
of an Event of Default, Landlord may collect from Tenant damages computed in
accordance with the following provisions in addition to Landlord's other
remedies under this Lease:
(i) the worth at the time of award of any unpaid Rent which
has been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which
any unpaid Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; plus
(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 Tenant proves could be
reasonably avoided, plus
(iv) any other reasonable Cost necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure
to perform its obligations under this Lease, including out of pocket
costs
<PAGE> 52
incurred by Lender, or which in the ordinary course of things would be
likely to result therefrom including, without limitation, brokerage
commissions, the cost of repairing and reletting the Leased Premises
and reasonable attorneys' fees; plus
(v) 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 state law. Damages shall be due and payable from the date
of termination.
(d) For purposes of clauses (i) and (ii) of Paragraph 23(c), the
"worth at the time of award" shall be computed by adding interest at the
Default Rate to the past due Rent. For the purposes of clause (iii) of
Paragraph 23(c), the "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%).
(e) Landlord shall be entitled to apply the Security Deposit to
any amounts due under Paragraph 23(c) if this Lease shall be terminated, or, if
this Lease shall remain in full force and effect, to any amounts due under
Paragraph 23(b) or in the following order: (i) to past due Basic Rent, (ii) to
other Monetary Obligations then due and owing and (iii) to installments of
Basic Rent in inverse order of maturity commencing with the last installment of
the Term.
(f) Notwithstanding anything to the contrary herein contained, in
lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder
or at law or in equity.
(g) Landlord shall not be required to mitigate any of its damages
hereunder unless required to by applicable Law. If any Law shall validly limit
the amount of any damages provided for herein to an amount which is less than
the amount agreed to herein, Landlord shall be entitled to the maximum amount
available under such Law.
(h) No termination of this Lease, repossession or reletting of the
Leased Premises, exercise of any remedy or collection of any damages pursuant
to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(i) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY. Tenant agrees that this
Lease constitutes a written consent to waiver of trial by jury pursuant to the
provisions of California Code of Civil Procedure Section 631 and Tenant does
hereby appoint
<PAGE> 53
Landlord its true and lawful attorney-in-fact, which appointment is coupled
with an interest, and Tenant does hereby authorize and empower Landlord, in the
name, place and stead of Tenant, to file this Lease with the clerk or judge of
any court of competent jurisdiction as statutory written consent to waiver of
trial by jury.
(j) During the existence of any Event of Default, Landlord shall
have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(k) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any
sum in satisfaction of any Monetary Obligation with knowledge of the breach of
any provision hereof shall not be deemed a waiver of such breach, and no waiver
by Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(l) Tenant hereby waives and surrenders, for itself and all those
claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.
(m) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be
exhausted by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or
permitted to be given pursuant to the provisions of this Lease shall be in
writing and shall be deemed to have been given for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service,
addressed to the other party at its address stated on page 1 of this Lease. A
copy of any notice given by Tenant to Landlord shall simultaneously be given by
Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place, Philadelphia, PA
19103, Attention: Chairman, Real Estate Department. For the purposes of this
Paragraph, any party may substitute another address stated above (or
substituted by a previous notice) for its
<PAGE> 54
address by giving fifteen (15) days' notice of the new address to the other
party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by any of Landlord, Tenant or Lender (the
"Requesting Party") to Landlord or Tenant, as applicable, (the "Responding
Party"), the Responding Party shall deliver to the Requesting Party a statement
in writing, executed by an authorized officer of the Responding Party,
certifying (a) that, except as otherwise specified, this Lease is unmodified
and in full force and effect, (b) the dates to which Basic Rent, Additional
Rent and all other Monetary Obligations have been paid, (c) that, to the
knowledge of the signer of such certificate and except as otherwise specified,
no default by either Landlord or Tenant exists hereunder, (d) such other
matters as the Requesting Party may reasonably request, and (e) if Tenant is
the Responding Party that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened, against
Tenant before or by any court or administrative agency which, if adversely
decided, would materially and adversely affect the financial condition and
operations of Tenant or Tenant's ability to perform its obligations under this
Lease. Any such statements by the Responding Party may be relied upon by the
Requesting Party, any Person whom the Requesting Party notifies the Responding
Party in its request for the Certificate is an intended recipient or
beneficiary of the Certificate, any Lender or their assignees and by any
prospective purchaser or mortgagee of any of the Leased Premises. Any
certificate required under this Paragraph 25 and delivered by Tenant shall
state that, in the opinion of each person signing the same, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to the subject matter of such certificate, and
shall briefly state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The
cost of removing and disposing of such property and repairing any damage to any
of the Leased Premises caused by such removal shall be paid by Tenant to
Landlord upon demand. Landlord shall not in any manner or to any extent be
obligated to reimburse Tenant for any such property which becomes the property
of Landlord pursuant to this Paragraph 26.
<PAGE> 55
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall permit Landlord and Lender by their respective
agents, accountants and attorneys, upon not less than 48 hours notice to Tenant
(except that if an Event of Default exists no notice shall be required), to
visit and inspect the Leased Premises and examine (and make copies of) the
records and books of account and to discuss the finances and business with the
officers of Tenant and its independent accountants, at such reasonable times as
may be requested by Landlord. Upon the request of Lender (either
telephonically or in writing), Tenant shall provide to Lender (with a copy to
Landlord) such other information as Lender shall reasonably request.
(b) Tenant shall deliver to Landlord and to Lender within ninety
(90) days of the close of each fiscal year, annual audited financial statements
of Tenant and its consolidated Subsidiaries prepared by nationally recognized
independent certified public accountants. Tenant shall also furnish to
Landlord and Lender within forty-five (45) days of the close of each of the
remaining three (3) fiscal quarters unaudited financial statements of Tenant,
certified by Tenant's chief financial officer, and all other quarterly reports
of Tenant, and all filings, if any, of Form 10-K, Form 10-Q and other required
filings with the Securities and Exchange Commission pursuant to the provisions
of the Securities Exchange Act of 1934, as amended, or any other Law. All
financial statements of Tenant shall be prepared in accordance with GAAP (as
defined in Exhibit "E" hereto) consistently applied. All annual financial
statements shall be accompanied (x) by an opinion of said accountants stating
that (1) there are no qualifications as to the scope of the audit and (2) the
audit was performed in accordance with GAAP and (y) by the affidavit of the
president or a vice president of Tenant, dated within five (5) days of the
delivery of such statement, stating that (i) the affiant knows of no Event of
Default, or event which, upon notice or the passage of time or both, would
become an Event of Default which has occurred and is continuing hereunder or,
if any such event has occurred and is continuing, specifying the nature and
period of existence thereof and what action Tenant has taken or proposes to
take with respect thereto and (ii) except as otherwise specified in such
affidavit, that Tenant has fulfilled all of its obligations under this Lease
<PAGE> 56
which are required to be fulfilled on or prior to the date of such affidavit.
(c) Landlord and its agents, accountants and attorneys, shall
consider and treat on a confidential basis (i) any information contained in the
books and records of Tenant, (ii) any copies of any books and records of
Tenant, and any financial statements of Tenant pursuant to Paragraph 28(b)
which are delivered to or received by them. Neither Landlord nor its agents,
accountants and attorneys, shall disclose any information contained in Tenant's
books and records nor distribute copies of any of such books and records nor
Tenant's financial statements to any other Persons without the prior written
consent of the chief operating officer of Tenant.
(d) The restrictions contained in Paragraph 28(c) shall not
prevent disclosure by Landlord of any information in any of the following
circumstances:
(i) Upon the order of any court or administrative agency to
the extent required by such order and not effectively stayed or by
appeal or otherwise;
(ii) Upon the request, demand or requirement of any
regulatory agency or authority having jurisdiction over such party,
including the United States Securities and Exchange Commission
(whether or not such request or demand has the force of law);
(iii) That has been publicly disclosed by Tenant in a press
release or other public announcement of general circulation or filed
with the United States Securities and Exchange Commission or that has
become public through no breach by the recipient of these
confidentiality obligations;
(iv) To counsel or accountants or other agents for Landlord
or counsel or accountants or other agents for such other Person who
has agreed to abide by the provisions of Paragraph 28(c);
(v) While an Event of Default exists, in connection with the
exercise of any right or remedy under this Lease or any other related
document;
(vi) Independently developed by Landlord to the extent that
confidential information provided by Tenant is not used to develop
such information;
(vii) With respect to financial information and information
that Landlord or its attorneys deem to be material in any reporting to
the shareholders of Landlord or the shareholders or prospective
<PAGE> 57
shareholders (whether through a registered public offering or
otherwise) of Landlord's parent company;
(viii) In connection with any sale or financing of the Leased
Premises, provided that any recipient of such information who is a
prospective purchaser of the Leased Premises (except for a purchaser
that purchases all or substantially all of the assets of Landlord's
parent company) shall agree to be bound by the terms of Paragraph
28(c);
(ix) From Landlord to Lender or to any prospective purchaser
of the Leased Premises or to the National Association of Insurance
Commissioners; or
(x) As otherwise required by Law.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value or Fair Market
Rental Value is required pursuant to any provision of this Lease, such Fair
Market Value or Fair Market Rental Value shall be determined in accordance with
the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such
Fair Market Value within thirty (30) days after the date (the
"Applicable Initial Date") on which (A) Tenant provides Landlord with
notice of its intention to terminate this Lease and purchase the
Leased Premises pursuant to Paragraph 18, (B) Landlord provides Tenant
with notice of its intention to redetermine Fair Market Value pursuant
to Paragraph 20(c), (C) Landlord provides Tenant with notice of
Landlord's intention to require Tenant to make an offer to terminate
this Lease pursuant to Paragraph 23(a)(iii), (D) Tenant provides
Landlord with an Intended Assignment Offer under Paragraph 21(d), (E)
the date on which Landlord accepts Tenant's offer pursuant to
Paragraph 33(c), (F) the date on which Landlord accepts the Third
Party Purchaser's offer pursuant to Paragraph 35(c) and (G) the date
on which Landlord accepts Tenant's offer pursuant to Paragraph 38(d).
Landlord and Tenant shall endeavor to agree on Fair Market Rental
Value on the date (also, an "Applicable Initial Date") which is six
(6) calendar months prior to the expiration of the then current Term
unless Tenant has previously exercised its option pursuant to
Paragraph 5(b) not to have the Term automatically extended. Upon
reaching such agreement, the parties shall execute an agreement
setting forth the amount of such Fair Market Value or Fair Market
Rental Value, as the case may be.
<PAGE> 58
(ii) If the parties shall not have signed such agreement
within thirty (30) days after the Applicable Initial Date, Tenant
shall within fifty (50) days after the Applicable Initial Date select
an appraiser and notify Landlord in writing of the name, address and
qualifications of such appraiser. Within twenty (20) days thereafter,
Landlord shall select an appraiser and notify Tenant of the name,
address and qualifications of such appraiser. Such two appraisers
shall endeavor to agree upon Fair Market Value or Fair Market Rental
Value, as the case may be, based on an appraisal made by each of them
as of the Relevant Date. If such two appraisers shall agree upon a
Fair Market Value or Fair Market Rental Value, as the case may be, the
amount of such Fair Market Value or Fair Market Rental Value, as the
case may be, as so agreed shall be binding and conclusive.
(iii) If such two appraisers shall be unable to agree upon a
Fair Market Value or Fair Market Rental Value, as the case may be,
within twenty (20) days after the selection of an appraiser by
Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value or Fair Market
Rental Value, as the case may be, and shall select a third appraiser
to make the determination of Fair Market Value or Fair Market Rental
Value, as the case may be, which determination as to the selection of
the third appraiser shall be binding and conclusive upon Landlord and
Tenant.
(iv) If such two appraisers shall be unable to agree upon the
designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii)
above, or if such third appraiser does not make a determination of
Fair Market Value or Fair Market Rental Value, as the case may be,
within twenty (20) days after his selection, then such third appraiser
or a substituted third appraiser, as applicable, shall, at the request
of either party hereto (with notice to the other party), be appointed
by the President or Chairman of the American Arbitration Association
in San Francisco, California. The determination of Fair Market Value
or Fair Market Rental Value, as the case may be, made by the third
appraiser appointed pursuant hereto shall be made within twenty (20)
days after such appointment.
(v) Fair Market Value or Fair Market Rental Value, as the
case may be, shall be the average of the determination of Fair Market
Value or Fair Market Rental Value, as the case may be, made by the
third appraiser and the determination of Fair Market Value or Fair
Market Rental Value, as the case may be, made by
<PAGE> 59
the appraiser (pursuant to Paragraph 29(a)(iii) hereof) whose
determination of Fair Market Value or Fair Market Rental Value, as the
case may be, is nearest to that of the third appraiser. Such average
shall be binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to this
Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B)
have no right, power or authority to alter or modify the provisions of
this Lease, (C) utilize the methodology for determining Fair Market
Value set forth in Paragraph 29(c) or the methodology for determining
Fair Market Rental Value as set forth in Paragraph 29(d), and (D) be
registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph
29(a) above shall be borne equally by Landlord and Tenant, except that
the Cost with respect to the appraisals performed under Paragraphs 21,
23, 33 or 38 shall be paid by Tenant and the Cost with respect to the
appraisals performed under Paragraph 35 shall be paid by the Third
Party Purchaser.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made. If, by
virtue of any delay, Fair Market Rental Value is not determined by the
expiration or termination of the then current Term, then until Fair Market
Rental Value is determined, Tenant shall continue to pay Basic Rent during the
succeeding Renewal Term in the same amount which it was obligated under this
Lease to pay prior to the commencement of the Renewal Term. When Fair Market
Rental Value is determined, the appropriate Basic Rent shall be calculated
retroactive to the commencement of the Renewal Term and Tenant shall either
receive a refund from Landlord (in the case of an overpayment) or shall pay any
deficiency to Landlord (in the case of an underpayment).
(c) Fair Market Value shall be determined as follows: The
appraisers shall add (i) the present value of the Rent for the remaining Term,
(with assumed increases in the CPI to be determined by the appraisers) using a
discount rate (which may be determined by an investment banker) based on the
creditworthiness of Tenant and (ii) the present value of the Fair Market Value
of the Leased Premises as of the end of the then current Term (without
necessarily making any assumption as to whether the Tenant will or will not
exercise any remaining options), using a yield rate required by investors for
property having similar characteristics, without consideration given to
Tenant's credit rating or creditworthiness. In determining the value under
(ii),
<PAGE> 60
the appraisers shall, insofar as possible, consider properties having similar
characteristics and in reasonable proximity to the Leased Premises, but the
appraisers shall not be precluded from considering properties that do not have
"clean" rooms, properties that are (or are not) located in Hayward, California
or properties having a different use than the Leased Premises. The appraisers
shall further assume that no default then exists under the Lease, that Tenant
has complied (and will comply) with all provisions of the Lease, and that
Tenant has not violated (and will not violate) any of the Covenants.
(d) In determining Fair Market Rental Value, the appraisers shall
determine the amount that a willing tenant would pay, and a willing landlord of
a building having similar characteristics and in reasonable proximity to the
Leased Premises would accept, at arm's length, taking into account: (a) the
age, quality, and condition of the Improvements; (b) that the Leased Premises
may be leased as a whole or substantially as a whole to a single user or leased
to multiple users; (c) a lease term of five (5) years; (d) an absolute triple
net lease; and (e) such other items that professional real estate appraisers
customarily consider. In determining Fair Market Rental Value, the appraisers
shall, insofar as possible, consider properties having similar characteristics
and in reasonable proximity to the Leased Premises, but the appraisers shall
not be precluded from considering properties that do not have "clean" rooms,
properties that are (or are not) located in Hayward, California or properties
having a different use than the Leased Premises.
30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises
and not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, shareholder, member, limited partner,
advisor, employee or agent of Landlord or any general partner of Landlord or
any of its general partners (or any legal representative, heir, estate,
successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or other entity) of Landlord or any of its general
partners, shareholders, officers, directors, advisors, employees or agents,
either directly or through Landlord or its general partners, shareholders,
officers, directors, advisors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (d) any other Person
(including W.P. Carey Incorporated) affiliated with any of the foregoing, or
any director, officer, advisor, employee or agent of any thereof.
31. Financing.
(a) Tenant covenants and agrees that it shall pay all reasonable
costs and expenses incurred by Landlord in refinancing the Initial Loan,
including the cost of any mortgage broker's fees, "points" or commitment fees
payable to the Lender,
<PAGE> 61
survey, title and environmental costs and costs of Landlord's and Lender's
counsel. Payment of such costs shall be made within ten (10) days following
receipt of a written request from Landlord accompanied by invoices for the
amounts requested.
(b) If Landlord desires to obtain or refinance any Loan, Tenant
shall negotiate in good faith with Landlord concerning any request made by any
Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this Lease or
materially increase Tenant's obligations under this Lease.
(c) Except as provided in Paragraph 31(a) above, Tenant shall not
be responsible for any fees or expenses associated with any of the transactions
contemplated by this Paragraph 31. Landlord shall reimburse Tenant for all
reasonable costs and expenses incurred by Tenant in carrying out its
obligations under this Paragraph 31 other than as provided in the foregoing
Paragraph 31(a).
32. Subordination. This Lease and Tenant's interest hereunder
shall be subordinate to any Mortgage or other security instrument hereafter
placed upon the Leased Premises by Landlord, and to any and all advances made
or to be made thereunder, to the interest thereon, and all renewals,
replacements and extensions thereof, provided that any such Mortgage or other
security instrument (or a separate instrument in recordable form duly executed
by the holder of any such Mortgage or other security instrument and delivered
to Tenant) shall provide for the recognition of this Lease and all Tenant's
rights hereunder unless and until an Event of Default exists or Landlord shall
have the right to terminate this Lease pursuant to any applicable provision
hereof all as set forth in a Subordination, Non-Disturbance and Attornment
Agreement in form and substance reasonably satisfactory to Tenant.
33. Financial Covenants; Covenant Breach Offer.
(a) Until the expiration of the Initial Term, Tenant hereby
covenants and agrees to comply with all the covenants and agreements (the
"Covenants") described in Paragraphs 1 through 3 in Exhibit "E" hereto.
<PAGE> 62
(b) If (i) Tenant intends to take any action or, with respect to
Paragraph 1(b) of Exhibit "E", has knowledge that such action is intended to be
taken by another Person, or such action occurs (such action, an "Intended
Transaction") that would result in a breach of any Covenant set forth in
Paragraphs 1 or 2 of Exhibit "E" attached hereto or (ii) Tenant becomes aware
that the Covenant set forth in Paragraph 3 of Exhibit "E" will be or has been
breached (a "Covenant Breach"), then, not later than ninety (90) days prior to
the Intended Transaction or the date on which Tenant obtains knowledge of any
such action, in the case of (i) above, or immediately upon becoming aware that
a Covenant Breach will occur or has occurred, in the case of (ii) above, Tenant
shall submit to Landlord and Lender a description thereof specifying the
Intended Transaction or the Covenant Breach, as the case may be, together with
a rejectable offer of Tenant to purchase the Leased Premises (as required by,
and in accordance with, the provisions of this Paragraph 33) and, if such offer
is accepted by Landlord, Tenant shall purchase the Leased Premises within the
time prescribed for such purchase (as provided in this Paragraph 33) and
otherwise in accordance with the provisions of Paragraph 20 of this Lease.
(c) Tenant shall make an offer to purchase the Leased Premises no
later than the date (the "Intended Transaction Closing Date") on which the
Intended Transaction will occur (or, in the case of a Covenant Breach, no later
than the earlier of ninety (90) days from the date Tenant becomes aware that a
Covenant Breach has occurred or will occur) for a purchase price equal to the
Offer Amount.
(d) If Landlord shall reject such offer by notice to Tenant, such
notice to contain the written consent of Lender to such rejection, not later
than the thirtieth (30th) day following receipt of such offer by Landlord, then
the Lease shall remain in full force and effect and the Intended Transaction or
Covenant Breach, as the case may be, shall be deemed waived or acceptable by
Landlord and Lender, respectively, and the waiver or acceptance shall remain in
effect for the balance of the Term with respect to the specific Intended
Transaction or specific set of facts giving rise to the Covenant Breach only.
No rejection of an offer under this Paragraph 33 shall be effective for any
purpose unless consented to in writing by Lender.
(e) Unless Landlord shall have rejected such offer by the
foregoing notice to Tenant not later than the thirtieth (30th) day following
receipt of Tenant's offer by Landlord, Landlord shall be conclusively presumed
to have accepted such offer. If such offer is accepted by Landlord, Tenant
shall pay to Landlord the Offer Amount on the Intended Transaction Closing Date
(except that if the Fair Market Value of the Leased
<PAGE> 63
Premises shall not yet have been determined, Tenant shall pay to Landlord an
amount equal to the Deposit Amount on the Intended Transaction Closing Date and
any excess of the Fair Market Value of the Leased Premises over such sum shall
be paid by Tenant to Landlord within ten (10) days of the determination of such
Fair Market Value) and, provided that no Rent or any other charge is due and
unpaid under this Lease as of the Intended Transaction Closing Date, and Tenant
is otherwise in compliance with the terms of this Lease, Landlord shall convey
to Tenant the Leased Premises in accordance with the provisions of Paragraph
20.
(f) Notwithstanding the foregoing, and only with respect to offers
made solely in anticipation of an Intended Transaction or a Covenant Breach
which Tenant anticipates will occur, if Tenant determines that the Intended
Transaction or Covenant Breach will not occur, Tenant shall have the right to
revoke its offer to purchase the Leased Premises by notice to Landlord received
not later than fifteen (15) days prior to the anticipated Intended Transaction
Closing Date (TIME BEING OF THE ESSENCE), provided that Tenant shall be
obligated to pay all Costs of Landlord and Lender reasonably incurred as a
result of the offer made by Tenant pursuant to this Paragraph 33. Nothing
provided herein shall constitute a waiver by Landlord of the obligation of
Tenant to comply with the requirements of this Paragraph 33 if a subsequent
Covenant Breach or subsequent Intended Transaction will occur or occurs.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true lease for state
law purposes and shall report this transaction as a lease for Federal income
tax purposes. For Federal income tax purposes each shall treat this Lease as a
true lease with Landlord as the owner of the Leased Premises and Tenant as the
lessee of such Leased Premises including: (1) treating Landlord as the owner
of the property eligible to claim depreciation deductions under Section 167 or
168 of the Internal Revenue Code of 1986 (the "Code") with respect to the
Leased Premises, (2) Tenant reporting its Rent payments as a business expense
under Section 162 of the Code, and (3) Landlord reporting the Rent payments as
rental income.
35. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this Paragraph
35, and provided an Event of Default does not then exist, prior to selling the
Leased Premises to any Third Party Purchaser, if Landlord shall enter into a
contract for the sale of the Leased Premises with a Third Party Purchaser, (i)
such contract shall be conditioned upon Tenant's failure to exercise its right
under this Paragraph 35 and (ii) Landlord shall give written notice to Tenant
of the contract for sale, together with a copy of the executed offer or
contract and the name and business address of the Third Party Purchaser.
(b) For a period of thirty (30) days following receipt of such
notice, Tenant shall have the right and option, exercisable by written notice
to Landlord given within said thirty (30) day
<PAGE> 64
period, to elect to purchase the Leased Premises at the purchase price and upon
all the terms and conditions set forth in such contract for sale except that no
contingencies contained in such contract for sale as to environmental
assessments, engineering studies, inspection of the Leased Premises, sale of
other property, state of the title to or encumbrances on the Leased Premises
which pertains to any exception of title created by, or suffered to exist by,
Tenant, or any other condition or contingency to the Third Party Purchaser's
obligation to purchase the Leased Premises which pertains to the condition of
the Leased Premises, shall apply to Tenant's obligation to purchase the Leased
Premises under this Paragraph 35, and Tenant shall be obligated to purchase the
Leased Premises without any such condition or contingency.
(c) If at the expiration of the aforesaid thirty (30) day period
Tenant shall have failed to exercise the aforesaid option, Landlord may sell
the Leased Premises to such Third Party Purchaser upon the terms set forth in
such contract. For the purposes of Paragraph 35(a), the purchase price in any
contract to purchase the Leased Premises which is received by Landlord between
June 1, 2007 and May 31, 2008 shall be deemed to be "acceptable to Landlord" if
such offer (i) is for an amount equal to or greater than the greater of (A) the
sum of (1) Fair Market Value (which shall be determined in accordance with the
procedure set forth in Paragraph 29 of this Lease, except that references to
Tenant in Paragraphs 29(a) and (b) hereof shall mean Third Party Purchaser) and
(2) the Prepayment Premium or (B) the sum of (1) the Acquisition Cost reduced
by the principal payments made on the Note to the date of purchase and (2) the
Prepayment Premium, (ii) provides that the purchaser pays all costs in
connection with such purchase, (iii) provides that such purchase price is
payable in cash at the closing of the sale of the Leased Premises and (iv) the
closing date for such purchase will occur not later than sixty (60) days
following May 31, 2008.
(d) Except as otherwise specifically provided in the foregoing
Paragraph 35(a), the closing date for any purchase of the Leased Premises by
Tenant pursuant to this Paragraph 35 shall be on a date designated by Tenant,
but not later than (i) ninety (90) days after the date of Tenant's notice to
Landlord of its intention to purchase the Leased Premises upon the terms of the
contract for sale with a Third Party Purchaser or (ii) the closing date
provided in such contract for sale. At such closing Landlord shall convey the
Leased Premises to Tenant in accordance with, and Tenant shall pay to Landlord
the purchase price and other consideration set forth in, the applicable offer
or contract.
(e) Tenant shall have the right during the Term to exercise the
foregoing right of first refusal upon each proposed sale of the Leased Premises
prior to May 31, 2008; provided, that if, following compliance with the
procedure described in this
<PAGE> 65
Paragraph 35, a Third Party Purchaser does not purchase the Leased Premises,
such event shall not count as an exercise of Tenant's right of first refusal.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, IF TENANT FAILS TO EXERCISE THE RIGHT
OF FIRST REFUSAL BY MAY 31, 2008, OR IF THIS LEASE TERMINATES OR THE TERM
EXPIRES, SUCH RIGHT SHALL TERMINATE AND BE NULL AND VOID AND OF NO FURTHER
FORCE AND EFFECT.
(f) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to a Third
Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and Landlord notify Tenant in writing of
such transfer. At the request of Landlord, Tenant will execute such documents
confirming the agreement referred to above and such other agreements as
Landlord may reasonably request, provided that such agreements do not increase
the liabilities and obligations of Tenant hereunder.
(g) The provisions of Paragraph 35(a) shall not apply to or
prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the Leased Premises, (ii) any sale of the Leased
Premises pursuant to a private power of sale under or judicial foreclosure of
any Mortgage or other security instrument or device to which Landlord's
interest in the Leased Premises is now or hereafter subject, (iii) any transfer
of Landlord's interest in the Leased Premises to a Lender, beneficiary under
deed of trust or other holder of a security interest therein by deed in lieu of
foreclosure, (iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer of the
Leased Premises to any affiliate of Landlord, Corporate Property Associates 12
Incorporated ("CPA 12") or Corporate Property Associates 14 Incorporated ("CPA
14") or to any entity for whom W.P. Carey & Co., Inc., W.P. Carey Incorporated
or any of their affiliates provides material management or investment advice,
(vi) any Person to whom CPA 12 or CPA 14 sell all or substantially all of their
assets, (vii) any transfer of the Leased Premises to any of the successors or
assigns of any of the Persons referred to in the foregoing clauses (i) through
(vi) or (viii) any transfer, sale or conveyance of any part or all of the
interests in Landlord between its members or to any affiliates of Landlord, CPA
12 or CPA 14.
36. Financing Major Alterations.
(a) Should Tenant, during the Term of this Lease, desire to make
Alterations to any of the Leased Premises which are not readily removable
without causing material damage to the Leased Premises which cannot be repaired
and which will cost in excess of Five Hundred Thousand Dollars ($500,000)
("Major Alterations"), Tenant may, prior to the commencement of construction of
such Major Alterations, request Landlord (with a
<PAGE> 66
copy of such request to Lender) to reimburse the costs thereof to Landlord (the
"Alteration Cost") to Tenant, to wit: cost of labor and materials, financing
fees, legal fees, survey, title insurance and other normal and customary loan
or construction costs.
(b) Should Landlord agree to reimburse such costs, Landlord and
Tenant shall enter into good faith negotiations regarding the execution and
delivery of a written agreement of modification of this Lease, which agreement
shall provide for the following:
(i) payment by Landlord to Tenant of the Alteration Cost
within one hundred twenty (120) days of the date of Landlord's
agreement to pay the Alteration Cost, or in installment payments as
agreed, or on the date of completion of the Major Alterations,
whichever shall be the later;
(ii) an increase in the annual Basic Rent payable during the
Amortization Period (as hereinafter defined) to an amount sufficient
to amortize the Alteration Cost ("Total Financing") over a period (the
"Amortization Period") which shall be the remainder of the then
current Term and, if Tenant so elects, any additional extension
periods provided for herein (so long as Tenant shall confirm any such
extension periods included in the Amortization Period by a written
waiver of its right to give notice of its intention not to renew this
Lease prior to the expiration of such extension periods), at such rate
of interest and upon such other terms as shall be agreed upon between
Landlord and Tenant, but which shall be no less favorable than the
prevailing interest rate and terms for unsecured loans in a principal
amount equal to the Total Financings for borrowers with credit ratings
equivalent to the lesser of Landlord's or Tenant's credit rating at
that time; and
(iii) such other changes and amendments to this Lease as may
be necessary and appropriate in view of such payment of the Alteration
Cost by Landlord to Tenant.
(c) Tenant shall pay all Costs incurred by Landlord in connection
with any such modification to this Lease and such financing, including closing
costs, brokerage fees, taxes, recording charges and legal fees and expenses.
(d) If Landlord and Tenant do not reach agreement on Tenant's
request to have Landlord finance the Alteration Costs, Tenant shall, subject to
the provisions of Paragraph 13 of this Lease, have the right to construct the
Major Alterations at Tenant's sole cost and expense. In any event, the
construction
<PAGE> 67
of the Major Alterations shall be performed in accordance with the provisions
of Paragraph 13 hereof and the Major Alterations shall be the property of
Landlord and part of the Leased Premises subject to this Lease.
(e) Nothing contained in this Paragraph 36 shall be construed to
modify Paragraph 13 hereof, and the provisions of Paragraph 12 and
subparagraphs (i) and (ii) of Paragraph 13(a) shall apply to all Major
Alterations made or constructed hereunder, including the requirement for
Landlord's consent to Alterations.
37. Security Deposit.
(a) Tenant has delivered to Landlord a security deposit (the
"Security Deposit") in the amount of Three Hundred Forty-two Thousand Five
Hundred Eighty-one and 25/100 ($342,581.25). If not sooner applied as provided
in Paragraph 23(e), the Security Deposit shall be applied (i) to monthly
payments of the Basic Rent in reverse order, commencing with the last month of
the Initial Term, commencing with the last payment due or (ii) if Tenant
purchases the Leased Premises, against Tenant's obligation to pay the Default
Termination Amount, Offer Amount or Termination Amount, as the case may be.
The Security Deposit shall be security for the payment by Tenant of the Rent
and all other charges or payments to be paid hereunder and the performance of
the covenants and obligations contained herein. Landlord shall have the right
to commingle the Security Deposit with other funds of Landlord. Anything
herein contained to the contrary notwithstanding, the Security Deposit shall be
credited against Rent or other obligations of Tenant hereunder.
(b) Landlord shall have the right to assign to Lender or any other
holder of a Mortgage the Security Deposit during the term of the applicable
Loan, and the Lender or such other holder of a Mortgage shall have all of the
rights of, and shall be subject to the terms of, this Paragraph 37. Tenant
covenants and agrees to execute such agreements, consents and acknowledgments
as may be reasonably requested by Landlord and Lender from time to time to
acknowledge the assignment of the Security Deposit.
38. Right to Vacate; Rejectable Offer Upon Vacation.
(a) Tenant shall have the right at any time after June 1, 2004 to
vacate the Leased Premises; provided that (i) Tenant shall notify Landlord and
Lender within ten (10) days after vacation of the Leased Premises by Tenant,
(ii) Tenant shall make reasonable good faith efforts to sublet the Leased
Premises, which sublease or subleases which shall be subject to the provisions
of Paragraph 21(h) or (i) hereof, as the case may be, and (iii) Tenant shall
continue to perform all of its obligations under this Lease, including its
obligation to maintain the Leased Premises and to pay all Rent as and when due
hereunder.
<PAGE> 68
(b) If, at any time during the Term, the Leased Premises shall be
vacant for twelve (12) consecutive months, Tenant shall, on the first day of
the thirteenth (13th) month that Leased Premises are vacant, make an offer (the
"Vacation Offer") to purchase the Leased Premises on the first Basic Rent
Payment Date occurring thirty (30) days after the determination of Fair Market
Value (the "Vacation Purchase Date") for a purchase price equal to the Offer
Amount. Promptly upon the delivery to Landlord of the Vacation Offer, Landlord
and Tenant shall commence to determine the Fair Market Value of the Leased
Premises.
(c) No rejection of the Vacation Offer shall be effective for any
purpose unless consented to in writing by Lender. If Landlord shall reject the
Vacation Offer by notice to Tenant, containing the written consent of Lender to
such rejection, no later than the thirtieth (30th) day following receipt of the
Vacation Offer by Landlord, then this Lease shall remain in full force and
effect and Landlord and Lender shall be deemed to have waived the Event of
Default described in Paragraph 22(a)(x) with respect to a vacation of the
Leased Premises.
(d) Unless Landlord shall have rejected the Vacation Offer by the
foregoing notice to Tenant not later than the thirtieth (30th) day following
receipt of the Vacation Offer by Landlord, Landlord shall be conclusively
presumed to have accepted the Vacation Offer. If the Vacation Offer is
accepted by Landlord, then, through an appropriate escrow, (i) Tenant shall pay
to Landlord the Offer Amount on the Vacation Purchase Date and, (ii) provided
that no Rent or any other charge is due and unpaid under this Lease as of the
Vacation Purchase Date and Tenant is otherwise in compliance with the terms
hereof, Landlord shall convey to Tenant the Leased Premises in accordance with
the provisions of Paragraph 20.
39. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
(b) As used in this Lease, the singular shall include the plural
and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien"
shall mean "lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any
of the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements"
<PAGE> 69
shall mean "the Improvements or any part thereof or interest therein"; (viii)
"any of the Equipment" shall mean "the Equipment or any part thereof or
interest therein"; and (ix) "any of the Adjoining Property" shall mean "the
Adjoining Property or any part thereof or interest therein".
(c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall
have the right, at its sole option, to withhold or delay its consent whenever
such consent is required under this Lease for any reason or no reason. Time is
of the essence with respect to the performance by Tenant of its obligations
under this Lease.
(d) Landlord shall in no event be construed for any purpose to be
a partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which were executed by Tenant at
the request of Landlord on or about the date of the Original Lease and may be
executed by Tenant on or about the effective date hereof at Landlord's request
constitute the entire agreement between the parties and supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the Leased Premises and the transactions provided for
herein. Landlord and Tenant are business entities having substantial
experience with the subject matter of this Lease and have each fully
participated in the negotiation and drafting of this Lease. Accordingly, this
Lease shall be construed without regard to the rule that ambiguities in a
document are to be construed against the drafter.
(f) This Lease may be modified, amended, discharged or waived only
by an agreement in writing signed by the party against whom enforcement of any
such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrances
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if such
invalid,
<PAGE> 70
illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and enforced in
accordance with the Laws of the State.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
ET LLC, a Delaware limited
liability company, d/b/a ET QRS LLC
By: Corporate Property Associates
12 Incorporated, Member
By:
------------------------------
Title: First Vice President
By: Corporate Property Associates
14 Incorporated, Member
By:
------------------------------
Title: First Vice President
TENANT:
ATTEST: ETEC SYSTEMS, INC.,
a Nevada corporation
By: By:
------------------- ---------------------------------
Title: Title:
---------------- ------------------------------------
[Corporate Seal]
<PAGE> 71
EXHIBIT A
PREMISES
REAL PROPERTY in the City of Hayward, County of Alameda, State of
California, described as follows:
Beginning on the Northeast line of Corporate Avenue at the common line
of Parcels 1 and 2, Parcel Map No. 461, filed April 10, 1969, Book 58, of
Parcel Maps, Page 96, Alameda County Records; thence from said point of
beginning, North 33# 20' 15" West, along said Northeast line of Corporate
Avenue as shown on said Parcel Map, 564.987 feet and Northwesterly, along the
arc of a tangent curve to the right with a radius of 1166 feet, an arc distance
of 235.490 feet to the common line of Parcels 1 and 2 of Parcel Map No. 1500,
filed February 25, 1975, Book 87 of Parcel Maps, Page 23, Alameda County
Records; thence along said last mentioned common line, as follows: North 58#
22' 09" East, 611.160 feet, North 80# 11' 21" East 201.924 feet and South 65#
00' 00" East, 203.000 feet to the most Easterly corner of Parcel 2 of said
Parcel Map No. 1500 (87 PM 23), being also the most Northerly corner of Parcels
1 and 2 of the aforesaid Parcel Map No. 461 (58 PM 96); thence along the
exterior line of said Parcel 2 of said Parcel Map No. 461, South 41# 29' 51"
East, 562.970 feet and South 58# 22' 09" West, 1006.638 feet to the point of
beginning.
Being also known as Parcel 2 of Parcel Map 461, filed April 10, 1969
in Book 58 of Parcel Maps, at Page 96; and Parcel 2 of Parcel Map 1500, filed
February 25, 1975 in Book 87 of Parcel Maps, at Page 23, Official Records of
said County.
TOGETHER WITH:
Easement granted pursuant to Agreement including Grant of Easement
dated February 2, 1998 affecting the Real Property in the City of Hayward,
County of Alameda, State of California, described as follows:
Lots 19 and 20, Tract 2898, filed June 30, 1967, in Book 55 of Maps,
Pages 25 to 29, inclusive, in the Office of the County Recorder of
Alameda County.
Assessor's Parcel No. 461-0001-021-01
<PAGE> 72
EXHIBIT B
MACHINERY AND EQUIPMENT
(a) All fixtures, now or hereafter affixed or attached to or
installed in any of the Leased Premises (except as hereafter provided)
including all electrical, anti-pollution, heating, lighting (including hanging
fluorescent lighting), incinerating, air cooling, air conditioning,
humidification, sprinkling, power, plumbing, lifting, cleaning, fire
prevention, fire extinguishing and ventilating systems, devices and machinery
and all engines, pipes, pumps, tanks (including exchange tanks and fuel storage
tanks), motors, conduits, ducts, steam circulation coils, blowers, steam lines,
compressors, oil burners, boilers, doors, windows, loading platforms, lavatory
facilities, stairwells, fencing (including cyclone fencing), passenger and
freight elevators, overhead cranes and garage units;
(b) All personal property described in Schedule 2 and Schedule 3
attached hereto and all other personal property now or hereafter affixed or
attached to or installed in the "clean room" and the process laboratory that is
integral to the suitability of such room as a "clean room" and the process
laboratory (including electrical, anti-pollution, heating, lighting,
air-conditioning, plumbing and ventilation systems) and cable, wiring and
networking equipment for computer interface, together with all additions
thereto, substitutions therefor and replacements thereof required or permitted
by this Lease,
but excluding all personal property and all trade fixtures and all
machinery, office, manufacturing and warehouse equipment whether or not
attached to or built-in as part of the buildings (except for personal property
described in clause (b) above) that are not necessary to the operation, as
buildings, of the buildings that constitute part of the Leased Premises.
<PAGE> 73
EXHIBIT C
PERMITTED ENCUMBRANCES
1. Real Estate Taxes for the current year.
2. The Lien of supplemental taxes, if any, assessed pursuant to
Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation
Code.
3. EASEMENT for the purposes stated herein
(a) Purpose: Utilities
(b) Granted to: Pacific Gas and Electric Company
(c) Recorded: June 28, 1951, Book 6474, Page 395,
Official
(d) Records
(e) Affects: The Northerly 175 feet of the Land
4. EASEMENT for the purposes stated herein
(a) Purpose: Utilities
(b) Granted to: Pacific Gas and Electric Company, a
California
(c) corporation
(d) Recorded: August 19, 1954, Book 7403, Page 177,
Official
(e) Records
(f) Affects: The Southerly 65 feet of the Northerly
24 feet
(g) of the Land
5. EASEMENT as shown on the filed map of Tract 2898
(a) Purpose: Public Utilities
(b) Affects: The Westerly 10 feet of the Land
6. LIMITATIONS, covenants, conditions, restrictions,
reservations, exceptions or terms in the instrument recorded June 30, 1967,
Reel 1991, Image 793, Official Records.
7. POSSIBLE EASEMENT for Communication Facilities, as disclosed
by the Grant of Easement from Crow-Spieker #18 to The Pacific Telephone &
Telegraph Company, recorded July 24, 1974, Reel 3736, Image 788, Official
Records.
8. Any rights, interests or claims which may exist or arise by
reason of the following facts shown on a survey plat entitled "ETEC, 26460
Corporate Avenue, Hayward, California, Alameda County" prepared by Lea & Sung
Engineering, Inc. dated January 29, 1997, Job No. 96433ALT.
<PAGE> 74
(a) The fact that a chainlink fence is located within the
boundaries of said land in varying distances of up to
2.20 feet from said boundaries.
(b) The fact that walkways, curbs and storm drain lines
are located within the easements described in
documents recorded June 8, 1951, Book 6474, Page 395
and August 19, 1954, Book 7403, Page 177, Official
Records.
(c) A Water Backflow Preventer located partly on a
Southwesterly portion of said land and partly outside
the boundary of said land.
(d) The fact that a PG&E Vault is located within the area
identified on said Survey as " ... under construction
as of 1/9/97" (said improvements being constructed
disclosed by Surveyor as Courtyard Area).
9. Easement granted pursuant to Agreement including Grant of
Easement dated February 2, 1998 affecting the Real Property in the City of
Hayward, County of Alameda, State of California, described as follows:
Lots 19 and 20, Tract 2898, filed June 30, 1967, in Book 55 of Maps,
Pages 25 to 29, inclusive, in the Office of the County Recorder of
Alameda County.
Assessor's Parcel No. 461-0001-021-01
<PAGE> 75
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in
Paragraphs 2, 3, 4 and 5 below, Basic Rent payable in respect of the portion of
the Initial Term remaining after January 31, 1998 shall be the sum of the
following amounts:
(a) with respect to the Existing Improvements, One
Million Six Hundred Four Thousand Eight Hundred Eighty Dollars ($1,604,880) per
annum, payable monthly in arrears commencing on March 1, 1998 and on each Basic
Rent Payment Date thereafter, in equal installments of $133,740.00 each, plus
(b) on March 1, 1998 Basic Rent for the Project I
Improvements in the amount of $99,867 for the period from February 3, 1998 to
and including February 28, 1998 and commencing on April 1, 1998 and continuing
on the first day of each calendar month thereafter (each such date also a
"Basic Rent Payment Date") until the expiration of the Initial Term, annual
Basic Rent payable with respect to the Project I Improvements shall be
$1,290,588 per annum, payable in equal installments of $107,549 each, plus
(c) (i) with respect to the Project II Improvements,
commencing on the first day of the first calendar month following the calendar
month in which the first advance of Project II Costs is made and continuing on
the first day of each calendar month thereafter to and including June 1, 1999
(each such date also a "Basic Rent Payment Date"), Basic Rent with respect to
the Leased Premises shall be payable monthly in arrears on each Basic Rent
Payment Date in an amount equal to the product of (x) the LIBOR then in effect
stated on an annual basis divided by 12 plus 150 basis points multiplied by (y)
the weighted average of the amount outstanding during the prior calendar month
for Project II Costs (exclusive of the Project II Acquisition Fee) for the
Project II Improvements based on the number of days each advance is outstanding
prior to such Basic Rent Payment Date. The amount set forth in the foregoing
sentence shall, absent manifest error, be conclusively determined from the
books and records of Landlord. Tenant shall have the right, upon reasonable
prior notice, to inspect Landlord's books and records to verify the accuracy of
Landlord's calculation of such Basic Rent.
(ii) commencing on July 1, 1999 and continuing on
the first day of each calendar month thereafter (each such date also a "Basic
Rent Payment Date") until the expiration of the Initial Term, monthly
installments of Basic Rent payable with respect to the Project II Improvements
shall be an amount equal to the equal monthly amortization payment required to
pay the Project II Costs (exclusive of the Project II Acquisition Fee) in full
over the remainder of the Initial Term assuming an interest
<PAGE> 76
rate of 7.98% per annum. Promptly following the Project II Final Completion
Date Landlord and Tenant shall execute an addendum to this Lease setting forth
the numerical amount of the initial annual and monthly installments of Basic
Rent with respect to the Project II Improvements.
(d) For so long as an Event of Default has not occurred
and is not continuing, on each Basic Rent Payment Date that occurs on or prior
to, but not after June 1, 1999 and relates to any period occurring prior to
June 1, 1999, Landlord shall approve as an advance of Landlord's Share of
Project Costs, the monthly installments of Basic Rent payable by Tenant under
Paragraph 1(c) and will credit each such advance against the installment of
Basic Rent then due and owning, provided, however, that (i) from and after June
1, 1999, Landlord's obligation to make any further advance for future
installments of Basic Rent shall terminate and all such future payments of
Basic Rent shall be made by Tenant and (ii) during the continuation of an Event
of Default Landlord shall have no obligation to make any further advances for
installments of Basic Rent payable under Paragraph 1(c), and Tenant shall make
all further payments of Basic Rent from its own funds unless and until any such
Event of Default is cured.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be
subject to adjustment, in the manner hereinafter set forth, for increases in
the index known as United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index, All Urban Consumers, United States City
Average, All Items, (1982-84=100) ("CPI") or the successor index that most
closely approximates the CPI. If the CPI shall be discontinued with no
successor or comparable successor index, Landlord and Tenant shall attempt to
agree upon a substitute index or formula, but if they are unable to so agree,
then the matter shall be determined by arbitration in accordance with the rules
of the American Arbitration Association then prevailing in New York City. Any
decision or award resulting from such arbitration shall be final and binding
upon Landlord and Tenant and judgment thereon may be entered in any court of
competent jurisdiction. In no event will the Basic Rent as adjusted by the CPI
adjustment be less than the Basic Rent in effect immediately preceding such
adjustment. No CPI adjustments shall be made during any Renewal Term.
3. ARBITRATION OF DISPUTES. NOTICE: BY INITIALING IN
THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS
INCLUDED IN PARAGRAPH 2 ABOVE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE
DISPUTE LITIGATED IN A COURT OF LAW. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN PARAGRAPH 2 ABOVE. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR
<PAGE> 77
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND
UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN PARAGRAPH 2 ABOVE TO NEUTRAL ARBITRATION.
LANDLORD TENANT
4. Effective Dates of CPI Adjustments. (a) Basic Rent shall be
adjusted on March 1, 1998 (the "First Basic Rent Adjustment Date") and on March
1, 2001 (the "Second Basic Rent Adjustment Date") to reflect changes in the
CPI. On the First Basic Rent Adjustment Date $1,030,452 of Basic Rent shall be
adjusted to reflect increases in the CPI during the three year period preceding
March 1, 1998 and $574,428 of Basic Rent shall be adjusted to reflect increases
in the CPI for the one year period preceding March 1, 1998. On the Second
Basic Rent Adjustment Date that portion of the Basic Rent described in
Paragraph 1(a) and Paragraph 1(b) shall be adjusted to reflect changes in the
CPI during the three year period preceding March 1, 2001 and that portion of
the Basic Rent described in Paragraph 1(c)(ii) shall be adjusted to reflect
changes in the CPI for the period from June 1, 1999 to and including March 1,
2001.
(b) After the Second Basic Rent Adjustment Date all Basic
Rent shall be adjusted on March 1, 2004, March 1, 2007, March 1, 2010 and March
1, 2013 to reflect increases in the CPI during the most recent three (3) year
period immediately preceding each of the foregoing dates in this subparagraph
3(b) (the First Basic Rent Adjustment Date, the Second Basic Rent Adjustment
Date and each date referred to in this Subparagraph 3(b) being hereinafter
referred to as the "Basic Rent Adjustment Date").
5. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the
average CPI determined in clause (i) below exceeds the Beginning CPI (as
defined in this Paragraph 4(a)), the Basic Rent (or portion thereof to be
adjusted as specified in Paragraph 4) in effect immediately prior to the
applicable Basic Rent Adjustment Date shall be multiplied by a fraction, the
numerator of which shall be the difference between (i) the average CPI for the
three (3) most recent calendar months (the "Prior Months") ending prior to such
Basic Rent Adjustment Date for which the CPI has been published on or before
the forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii)
the Beginning CPI, and the denominator of which shall be the Beginning CPI. An
amount equal to the lesser of (A) the product of such multiplication or (B)
$145,960 with respect to the first Basic Rent Adjustment Date and the product
of the Basic Rent (or portion thereof to be adjusted as specified in Paragraph
4) in effect immediately prior to such Basic Rent Adjustment Date multiplied by
12% with respect to each
<PAGE> 78
succeeding Basic Rent Adjustment Date, shall be added to the Basic Rent (or
portion thereof to be adjusted as specified in Paragraph 4) in effect
immediately prior to such Basic Rent Adjustment Date. As used herein,
"Beginning CPI" shall mean the average CPI for the three (3) calendar months
corresponding to the Prior Months, but occurring three (3) years earlier with
respect to each adjustment of Basic Rent, except that (1) with respect to the
$574,428 of Basic Rent to be adjusted on the First Basic Rent Adjustment Date,
"Beginning CPI" shall mean the average CPI for the three (3) calendar months
corresponding to the Prior Months but occurring one (1) year earlier and (2)
with respect to the adjustment on March 1, 2001 of that portion of Basic Rent
described in Paragraph 1(c)(ii) of this Exhibit "D" the "Beginning CPI" shall
mean the average CPI for the three (3) calendar months occurring prior to June
1, 1999. If the average CPI determined in clause (i) is the same or less than
the Beginning CPI, the Basic Rent will remain the same for the ensuing three
(3) year period.
(b) Effective as of a given Basic Rent Adjustment Date
occurring during the Initial Term, Basic Rent payable under this Lease until
the next succeeding Basic Rent Adjustment Date shall be the Basic Rent in
effect after the adjustment provided for as of such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be
delivered to Tenant on or before the tenth (10th) day preceding each Basic Rent
Adjustment Date.
6. Basic Rent During Each Renewal Term. During each Renewal
Term, annual Basic Rent for the Renewal Term shall be Fair Market Rental Value
as of the first day of such Renewal Term, as determined in accordance with
Paragraph 29 of the Lease. Basic Rent during each Renewal Term shall be
payable monthly in arrears in installments equal to 1/12 of the annual Basic
Rent for such Renewal Term. If the Fair Market Rental Value of the Leased
Premises has not been determined as of the first day of any Renewal Term,
Tenant shall pay as monthly installments of Basic Rent an amount equal to the
Basic Rent in effect immediately prior to such Renewal Date, and shall receive
a credit or make an additional payment, as applicable, on the first Basic Rent
Payment Date following the determination of Fair Market Rental Value.
<PAGE> 79
EXHIBIT E
FINANCIAL COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Tenant shall maintain its corporate existence, rights and
franchises in full force and effect in its jurisdiction of incorporation.
Tenant shall, and shall cause of its Subsidiaries to, qualify and remain
qualified as a foreign corporation in each jurisdiction in which failure to
receive or retain such qualification would have an adverse effect on the
business, operations or financial condition of the enterprise comprised of the
Tenant and its Subsidiaries taken as a whole.
(b) At no time during the Term shall any Person acquire directly
or indirectly more than 50% of any class of Tenant's Voting Stock.
(c) The Tenant shall not consolidate with or merge into any other
Person unless an Event of Default does not then exist and, immediately
following such consolidation or merger, (i) the surviving corporation shall
have, on a proforma basis, an Adjusted Consolidated Net Worth of not less than
the sum of (A) Fifty-three Million Dollars ($53,000,000) and (B) an amount
equal to sixty percent (60%) of the Consolidated Net Income of Tenant for each
fiscal quarter in which Consolidated Net Income is positive, but with no
adjustment for each fiscal quarter in which Consolidated Net Income is
negative, on a cumulative basis (calculated at the end of each fiscal quarter),
commencing with the fiscal quarter of Tenant that commenced August 1, 1996 and
continuing for each quarter to and including the end of the fiscal quarter
immediately prior to the fiscal quarter in which such merger or consolidation
occurs, (ii) the Board of Directors of Tenant immediately prior to such merger
or consolidation remains in control following such merger or consolidation,
(iii) the senior management does not substantially change immediately following
such merger or consolidation and (iv) after giving effect thereto, an Event of
Default does not then exist. This Section 1(c) shall not apply to a merger
with a Person that is a Subsidiary of Tenant as of December 31, 1994 nor a
wholly-owned Subsidiary of Tenant if, in each case, Tenant is the surviving
entity.
(d) The Tenant shall not, except as specifically permitted under,
and in accordance with the terms of Paragraph 21 of this Lease, in a single
transaction or series of related transactions, sell or convey, transfer,
abandon or lease all or substantially all of its assets to any Person.
(e) The Tenant shall not make any substantial change in the nature
of its business.
<PAGE> 80
2. Debt and Restricted Payments.
(a) Tenant will not, directly or indirectly make, or cause or
permit any Subsidiary of the Tenant to make, any Restricted Payment, unless at
the time thereof, and after giving effect thereto:
(i) no Event of Default shall have occurred and be
continuing; and
(ii) the Tenant's Adjusted Consolidated Net Worth equals or
exceeds $53,000,000 as of the end of the month preceding the date of
such Restricted Payment; and
(iii) such Restricted Payment, together with all other
Restricted Payments made from the commencement date of the Term to the
date of such Restricted Payment does not exceed the sum of 40% of the
Tenant's Consolidated Net Income on a cumulative basis beginning with
and including the fiscal year in which the Term commenced to the month
immediately preceding the date of such Restricted Payment.
(b) The Tenant will not become or be a guarantor or surety of, or
otherwise incur any Contingent Obligation or become or be responsible in any
manner (whether by agreement to purchase any obligations, stock, assets, goods
or services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person (except as to
any Subsidiary), or make or permit to exist any loans or advances to, or
investments in, any other Person (except as to any Subsidiary) other than (i)
for an amount outstanding at any time not to exceed Fifteen Million Dollars
($15,000,000) less the amount of Funded Debt outstanding at such time under
clause (iii) of paragraph (c) below and (ii) additional Contingent Obligations
up to three (3) times Consolidated EBIDTA for the most recent four (4) fiscal
quarters ending immediately prior to such date of determination on a proforma
basis, reduced by the amount of Funded Debt outstanding under clause (iv) of
paragraph (c) below.
(c) Tenant will not, and will not permit any Subsidiary directly
or indirectly to, incur, create, assume any Indebtedness other than (i) Funded
Debt outstanding on the Closing Date and reflected in the audited financial
statements described in Paragraph 28(b), (ii) Funded Debt that replaces or
refinances the Funded Debt described in (i) above and is repayable on the basis
of an amortization schedule substantially similar to, or having lower scheduled
payments than, the amortization schedule for the Funded Debt outstanding on the
Closing Date, (iii) not more than the amount at any time of Fifteen Million
Dollars ($15,000,000) in Funded Debt in addition to the Funded Debt described
in (i) and (ii) above less the amount of Contingent Obligation outstanding at
such time under clause (i) of paragraph (b) above
<PAGE> 81
and (iv) additional Funded Debt up to three (3) times Consolidated EBIDTA for
the most recent four (4) fiscal quarters ending immediately prior to such date
of determination on a proforma basis, reduced by the amount of Contingent
Obligations outstanding at such time under clause (ii) of paragraph (b) above.
3. Consolidated Net Worth. Consolidated Net Worth shall not as
of the end of each fiscal quarter of Tenant that ends on and after January 31,
1997 be less than an amount equal to the sum of (a) $53,000,000 and (b) 60% of
Consolidated Net Income for each fiscal quarter in which Consolidated Net
Income is positive, with no adjustment for each fiscal quarter in which
Consolidated Net Income is negative, on a cumulative basis (calculated at the
end of each fiscal quarter commencing with the fiscal quarter of Tenant that
commenced August 1, 1996).
4. Definitions. For the purpose of this Exhibit "E" the
following terms shall have the following meanings:
(a) "Adjusted Consolidated Net Worth" shall mean, at any date, the
net worth of Tenant and its consolidated Subsidiaries on a consolidated basis,
determined in accordance with GAAP, except that any Qualified Subordinated Debt
of Tenant shall be computed as equity.
(b) "Affiliate" shall mean as to any Person, any other Person
controlled by, under common control with, or controlling, such Person.
(c) "Closing Date" shall mean February 2, 1998.
(d) "Consolidated EBIDTA" for any period, with respect to Tenant
and its consolidated Subsidiaries, shall mean earnings from continuing
operations, exclusive of extraordinary items, if any, before interest expense,
depreciation, taxes, amortization expense (including amortization of debt
issuance costs) and less capital expenditures.
(e) "Consolidated Net Income" shall mean, for any period, the
aggregate net income (or loss) of Tenant, and its Subsidiaries for such period
on a consolidated basis, determined in accordance with GAAP.
(f) "Consolidated Net Worth" shall mean, at any date, the net
worth of Tenant and its consolidated Subsidiaries on a consolidated basis,
determined in accordance with GAAP.
(g) "Contingent Obligation" as to any Person shall mean the
undrawn face amount of any letters of credit issued for the account of such
Person and shall also mean any obligation of such Person guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends, letters of credit or
other obligations
<PAGE> 82
("primary obligations") of any other Person other than a Subsidiary (the
"primary obligor") in any manner, whether directly or indirectly including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
financial condition or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the
obligee under any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the obligee under such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include (x) endorsements of instruments for deposit or collection in the
ordinary course of business or (y) usual and customary representations and
warranties contained in loan and other financing agreements. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation or, where such Contingent
Obligation is specifically limited to a portion of any such primary obligation,
that portion to which it is limited.
(h) "Funded Debt" of any Person shall mean all Indebtedness of
such Person which in accordance with GAAP would be classified on a balance
sheet as long term debt, and shall in any event include (without duplication)
all Indebtedness, whether secured or unsecured, having a final maturity (or
which, pursuant to the terms of a revolving credit agreement or otherwise is
renewable or extendible at the option of the obligor for a period ending) more
than one year after the date of the creation thereof (including, without
limitation, any portion of such Funded Debt maturing in less than one year) and
money borrowed for working capital purposes unless for a period of not less
than sixty (60) consecutive days in any period of twelve (12) consecutive
months such obligations are reduced to zero.
(i) "GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States of America, applied on a
consistent basis.
(j) "Indebtedness" of any Person shall mean, as of any date, all
obligations which would in accordance with GAAP be classified as debt, and
shall include (a) all obligations of such Person for borrowed money, (b) all
obligations of such person in respect of letters of credit, surety bonds or
similar obligations issued for the account of such Person, (c) all obligations
of such Person as lessee, user or obligor under any lease of real or personal
property which, in accordance with GAAP, are or should be capitalized on the
books of the lessee, user or obligor (excluding, in the case of Tenant, any
lease classified in
<PAGE> 83
accordance with GAAP as an operating lease), (d) all obligations of such Person
in respect of the deferred purchase price for goods, property or services
acquired by such Person, (e) all obligations of such Person to purchase goods,
property or services where payment therefor is required regardless of whether
delivery of such goods or property or the performance of such services is ever
made or tendered, (f) all obligations of such Person in respect of any interest
rate or currency swap, rate cap or other similar transaction (valued in an
amount equal to the highest termination payment, if any, that would be payable
by such Person upon termination for any reason on the date of determination),
and (g) all obligations of others similar in character to those described in
clauses (a) through (f) of this definition to the extent such person is liable,
contingently or otherwise, as obligor, guarantor or in any other capacity, or
in respect of which obligations such Person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including, without limitation, all obligations of such Person to advance funds
to, or to purchase property or services from, any other Person in order to
maintain the financial condition of such other Person and, in the case of
Tenant, all Indebtedness which is non-recourse to the credit of Tenant but
which is secured by the assets or property of Tenant (but excluding any such
non-recourse Indebtedness of Subsidiaries of Tenant in which Tenant has no
liability). Any Indebtedness which is extended or renewed (other than by an
option created with the original creation of such Indebtedness) will be deemed
to have been created when extended or renewed.
(k) "Person" shall mean an individual, partnership, association,
corporation or other entity.
(l) "Qualified Subordinated Debt" means subordinated debt pursuant
to which the borrower's obligation to pay interest on a current basis is
contingent upon the borrower meeting certain financial tests satisfactory to
Landlord and Lender.
(m) "Restricted Payment" shall mean and include (a) any direct or
indirect purchase, redemption or other acquisition or retirement for value of
any equity security of Tenant or any option, warrant or right to acquire any
such equity security, or any security convertible into or exchangeable for any
such equity security, (b) any dividend, distribution, loan advance, guarantee,
extension of credit or other payment of transfer, whether in cash or property
and whether direct or indirect, to or for the benefit any Person holding an
equity interest in the Tenant, whether or not such interest is evidenced by a
security, or any Affiliate of any such Person, and (c) any direct or indirect
purchase, redemption, prepayment or other acquisition or retirement for value,
prior to its stated maturity, scheduled repayment or scheduled sinking fund
payment of any Qualified Subordinated Debt of the Tenant or any Subsidiary held
by any
<PAGE> 84
Person described in clause (b) above; provided, however, that so long as an
Event of Default shall not exist, the term Restricted Payment shall not include
(i) the repurchase by Tenant of stock in Tenant for an amount not to exceed on
a cumulative basis the sum of $2,500,000 and the cash purchase price received
by Tenant from the sale of stock in Tenant to employees, consultants or
directors or prospective employees, consultants or directors, or (ii) the
repayment of Qualified Subordinated Debt (including any interest thereof,
whether current, "blocked" or accrued) from (A) the proceeds of an initial
public offering or (B) from cash balances of Tenant so long as following such
payment Tenant will have cash balances, on a proforma basis, of not less than
$10,000,000 and is otherwise in compliance with the Covenants.
(n) "Subsidiary" of any Person means a corporation a majority of
the Voting Stock of which is at the time owned, or the management of which is
otherwise controlled, directly or indirectly, through one or intermediaries, or
both, by such Person.
(o) "Voting Stock" means shares of stock of a corporation having
ordinary voting power to elect the board of directors or other managers of such
corporation.
<PAGE> 85
SCHEDULE 1
TERMINATION VALUES
<TABLE>
<CAPTION>
Lease Year Termination Value
---------- -----------------
<S> <C>
1 $12,000,000
2 $12,000,000
3 $15,329,860
4 $26,494,861 + 101.50% of PIIC
5 $24,994,861 + 101.50% of PIIC
6 $24,536,746 + 101.50% of PIIC
7 $24,536,746 + 101.25% of PIIC
8 $23,536,746 + 101.25% of PIIC
9 $23,536,746 + 88.75% of PIIC
10 $23,099,363 + 88.75% of PIIC
11 $23,099,363 + 88.75% of PIIC
12 $22,039,363 + 88.75% of PIIC
13 $22,039,363 + 70.50% of PIIC
14 $21,960,829 + 70.50% of PIIC
15 $21,960,829 + 70.50% of PIIC
16 $21,960,829 + 70.50% of PIIC
17 $21,960,829 + 69.00% of PIIC
18 $21,960,829 + 69.00% of PIIC
19 and thereafter $21,960,829 + 69.00% of PIIC
</TABLE>
"PIIC" means Project II Costs. At any time following the Project II Completion
Date Landlord, Tenant or Lender may request that this Schedule 1 be amended to
reflect the final dollar amount of Project II Costs.
<PAGE> 86
SCHEDULE 2
APPROVED ALTERATIONS TO
BUILDING TWO AND BUILDING THREE
1. Integrated Facility Management System: Fault Tolerant,
Upgradable, Electronic Direct Digital Control System
2. Water-Cooled Chiller with Cooling Towers and Pumps (Three to
replace existing systems)
3. Main Air Conditioning system and DX to AHU Conversion
4. AHU (Air Handling Unit) and Backup Systems
5. Toxic Gas Control System and HVAC Isolation System
6. Electrical Main replacements
7. Hi-Voltage Monitor
8. Boiler Auto Blowdown Control
9. House Vacuum System and Control
10. Engineering Computer Room--Air Conditioning Backup, Controls
and Monitoring
11. Process Exhaust Monitoring
12. New Cage for Inspection Equipment and Kits
13. Test Cell Enclosures
14. Backup Generator
15. Process Lab Test Cells
16. Process Lab Production Upgrades
17. Patio Area Adjoining Building One
<PAGE> 87
SCHEDULE 3
PROJECT I IMPROVEMENTS
1. Buildings 2 and 3 Fire Alarm System Replacement
2. Building 3 Roof Replacement
3. Building 3 Maintenance Unisex Restroom
4. Building 2 Advances Tech/Micro Column Lab
5. Door Replacements Building 2/3 Breezeway
6. South Guard Station
7. Parking Lot Lighting Additions
8. CCTV Surveillance
9. B3-HVAC Replacements (AHU #5 & 7)
10. B2-HVAC Replacements (8 units)
11. Chemical Shed w/Foundation (Code Requirement)
12. Phone Equipment UPS
13. B2-Acid Waste Neutralization System
14. Chemical Hoods (Class A) Code Upgrades
15. Disaster Plan Modifications
<PAGE> 88
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Title and Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Use of Leased Premises; Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6. Basic Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7. Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9. Payment of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10. Compliance with Laws and Easement Agreements;
Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11. Liens; Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13. Alterations and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17. Casualty and Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
18. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
19. Restoration; Reduction of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
20. Procedures Upon Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
21. Assignment and Subletting; Prohibition against
Leasehold Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
22. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23. Remedies and Damages Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
25. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
26. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
27. No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
28. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
29. Determination of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
30. Non-Recourse as to Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
31. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
32. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
33. Financial Covenants; Covenant Breach Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 62
34. Tax Treatment; Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
35. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
36. Financing Major Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
37. Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
38. Right to Vacate; Rejectable Offer Upon Vacation . . . . . . . . . . . . . . . . . . . . . . . . 66
39. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
<PAGE> 89
Exhibit A - Premises
Exhibit B - Machinery and Equipment
Exhibit C - Permitted Encumbrances
Exhibit D - Basic Rent Payments
Exhibit E - Financial Covenants
Schedule 1 - Termination Values
Schedule 2 - Approved Alterations to Building 2 and Building 3
Schedule 3 - Project I Improvements
<PAGE> 1
EXHIBIT 10.9
LEASE AGREEMENT
by and between
PRINT (WI) QRS 12-40, INC.,
a Wisconsin corporation
as LANDLORD
and
PERRY GRAPHIC COMMUNICATIONS, INC.,
a Delaware corporation, and
JUDD'S, INCORPORATED,
a Maryland, corporation, jointly
as TENANT
Premises: 1300 Sauk Avenue, Baraboo, WI
161 N. Jackson St., Waterloo, WI
275 S. Jackson St., Waterloo, WI
200 S. Jackson St., Waterloo, WI
207 S. Jackson St., Waterloo, WI
575 W. Madison St., Waterloo, WI
Dated as of: December 16, 1997
<PAGE> 2
TABLE OF CONTENTS
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Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Title and Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Use of Leased Premises; Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Basic Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. Payment of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Compliance with Law; Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11. Liens; Recording and Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Alterations and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
17. Casualty and Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
18. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
19. Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
20. Procedures Upon Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21. Assignment and Subletting; Prohibition
against Leasehold Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
23. Remedies and Damages Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
25. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
26. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
27. No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
28. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
29. Determination of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
30. Non-Recourse as to Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
31. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
32. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
33. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
34. Tax Treatment; Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
35. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
36. Baraboo Premises Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
37. Economic Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
38. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
<PAGE> 3
EXHIBITS
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Acquisition Costs
Exhibit "F" - Percentage Allocation of Basic Rent
Exhibit "G" - Financial Covenants
Exhibit "H" - Form of Memorandum of Lease
<PAGE> 4
LEASE AGREEMENT, made as of this 16 day of December, 1997,
between PRINT (WI) QRS 12-40, INC., a Wisconsin corporation, as landlord
("Landlord"), with an address c/o W. P. Carey & Co., Inc., 50 Rockefeller Plaza,
2nd Floor, New York, New York 10020, and PERRY GRAPHIC COMMUNICATIONS, INC., a
Delaware corporation and JUDD'S, INCORPORATED, a Maryland corporation, as
tenants in common (collectively, "Tenant"), each with an address at 575 West
Madison Street, Waterloo, Wisconsin 53594.
In consideration of the rents and provisions herein stipulated
to be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Demise of Premises. Landlord hereby demises and lets
to Tenant, and Tenant hereby takes and leases from Landlord, for the term and
upon the provisions hereinafter specified, the following described property
(hereinafter referred to collectively as the "Leased Premises" and individually
as the "Baraboo Premises" "161 N. Jackson St. Premises" "200 S. Jackson St.
Premises" "275 S. Jackson St. Premises" "207 S. Jackson St. Premises" and "575
W. Madison St. Premises" each of which premises is more particularly described
in the applicable description in Exhibit "A" attached hereto and made a part
hereof and shall include the portions of items (a), (b) and (c) of this
Paragraph 1 located thereon or therein and appertaining thereto): (a) the
premises described in Exhibit "A" hereto, together with the Appurtenances
(collectively, the "Land"); (b) the buildings, structures and other
improvements now or hereafter constructed on the Land (collectively, the
"Improvements"); and (c) the fixtures, machinery, equipment and other property
described in Exhibit "B" hereto (collectively, the "Equipment") which shall not
include Tenant's printing equipment or other trade fixtures or equipment.
2. Certain Definitions.
"Acquisition Cost" of each of the Related Premises
shall mean the amount set forth opposite such premises on Exhibit "E" hereto.
"Additional Rent" shall mean Additional Rent as
defined in Paragraph 7.
"Adjoining Property" shall mean all sidewalks,
driveways, curbs, gores and vault spaces adjoining any of the Leased Premises.
"Affected Premises" shall mean the Affected Premises
as defined in Paragraph 18.
"Alterations" shall mean all changes, additions,
improvements or repairs to, all alterations, reconstructions, renewals,
replacements or removals of and all substitutions or replacements for any of
the Improvements or Equipment, both interior and exterior, structural and
non-structural, and ordinary and extraordinary.
"Appurtenances" shall mean all tenements,
hereditaments, easements, rights-of-way, rights, privileges in and to the Land,
including (a) easements over other lands granted by any Easement Agreement and
(b) any streets, ways, alleys, vaults, gores or strips of land adjoining the
Land.
"Assignment" shall mean any assignment of rents and
leases from Landlord to a Lender which (a) encumbers any of the Leased Premises
and (b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified from time to time.
<PAGE> 5
"Basic Rent" shall mean Basic Rent as defined in
Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent
Payment Dates as defined in Paragraph 6.
"Casualty" shall mean any injury to or death of any
person or any loss of or damage to any property (including the Leased Premises)
included within or related to the Leased Premises or arising from the Adjoining
Property.
"Commencement Date" shall mean Commencement Date as
defined in Paragraph 5.
"Condemnation" shall mean a Taking and/or a
Requisition.
"Condemnation Notice" shall mean notice or knowledge
of the institution of or intention to institute any proceeding for
Condemnation.
"Costs" of a Person or associated with a specified
transaction shall mean all actual and reasonable out-of-pocket costs and
expenses incurred by such Person or associated with such transaction, including
without limitation, reasonable attorneys' fees and expenses, court costs,
brokerage fees, escrow fees, title insurance premiums, mortgage commitment
fees, mortgage points, recording fees and transfer taxes, as the circumstances
require.
"Covenants" shall mean the covenants and agreements
described on Exhibit "G" hereto.
"Default Rate" shall mean the Default Rate as defined
in Paragraph 7(a)(iv).
"Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23(a)(iii).
"Easement Agreement" shall mean any conditions,
covenants, restrictions, easements, declarations, licenses and other agreements
(i) listed as Permitted Encumbrances or (ii) as may, with the consent of
Tenant, hereafter affect any Leased Premises.
"Environmental Law" shall mean (i) whenever enacted
or promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Condition or Hazardous Activity, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act,
the federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments
<PAGE> 6
to RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance
Control Act, the federal Insecticide, Fungicide and Rodenticide Act, the
federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation
Act, each as amended and as now or hereafter in effect and any similar state or
local Law.
"Environmental Violation" shall mean (a) any direct
or indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or
from the Leased Premises to the environment, in violation of any Environmental
Law or in excess of any reportable quantity established under any Environmental
Law or which could result in any liability to Landlord (including any Lender
succeeding to Landlord's interest hereunder) or Tenant, any Federal, state or
local government or any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (b)
any deposit, storage, dumping, placement or use of any Hazardous Substance at,
upon, under or within the Leased Premises or which extends to any Adjoining
Property in violation of any Environmental Law or in excess of any reportable
quantity established under any Environmental Law or which could result in any
liability to any Federal, state or local government or to any other Person for
the costs of any removal or remedial action or natural resources damage or for
bodily injury or property damage, (c) the abandonment or discarding of any
barrels, containers or other receptacles containing any Hazardous Substances in
violation of any Environmental Laws, (d) any activity, occurrence or condition
which could result in any liability, cost or expense to Landlord or any other
owner or occupier of the Leased Premises, or which could result in a creation
of a lien on any Related Premises under any Environmental Law or (e) any
violation of or noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as defined in
Paragraph 1.
"Event of Default" shall mean an Event of Default as
defined in Paragraph 22(a).
"Fair Market Value" of either the Leased Premises or
any Related Premises, as the case may be, and the context may require, shall
mean the higher of (a) the fair market value of the Leased Premises or any
Related Premises, as the case may be, as of the Relevant Date as if unaffected
and unencumbered by this Lease or (b) the fair market value of the Leased
Premises or Related Premises, as the case may be, as of the Relevant Date as
affected and encumbered by this Lease; provided that, with respect to a
determination of Fair Market Value in connection with an Intended Assignment
Offer, the Fair Market Value of the Leased Premises for the Term shall not be
assumed to have been extended for any unexercised extension period. For all
purposes of this Lease, Fair Market Value shall be determined in accordance
with the procedure specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the
Fair Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other
immediately available funds which at the time of payment are legal tender for
the payment of public and private debts in the United States of America.
"Hazardous Activity" means any activity, process,
procedure or undertaking which directly or indirectly (i) procures, generates
or creates any Hazardous Substance; (ii) causes or results in (or threatens to
cause or result in) the release, seepage, spill, leak, flow, discharge or
emission of any Hazardous Substance into the environment (including the air,
ground water, watercourses or water systems), (iii) involves the containment or
storage of
<PAGE> 7
any Hazardous Substance; or (iv) would cause any of the Leased Premises or any
portion thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any
Environmental Law.
"Hazardous Condition" means any condition which would
support any claim or liability under any Environmental Law, including the
presence of underground storage tanks.
"Hazardous Substance" means (i) any substance,
material, product, petroleum, petroleum product, derivative, compound or
mixture, mineral (including asbestos), chemical, gas, medical waste, or other
pollutant, in each case whether naturally occurring, man-made or the by-product
of any process, that is toxic, harmful or hazardous or acutely hazardous to the
environment or public health or safety or (ii) any substance supporting a claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law. Hazardous Substances include, without limitation, any
toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum
or petroleum-derived substances or waste, radon, radioactive materials,
asbestos, asbestos containing materials, urea formaldehyde foam insulation,
lead, polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined
in Paragraph 9(a).
"Improvements" shall mean the Improvements as defined
in Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in
Paragraph 15.
"Insurance Requirements" shall mean the requirements
of all insurance policies maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of
law, code, ordinance, order, judgment, decree, injunction, rule, regulation,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first
Lease Year, the period commencing on the Commencement Date and ending at
midnight on the last day of the twelfth (12th) consecutive calendar month
following the month in which the Commencement Date occurred, and each
succeeding twelve (12) month period during the Term.
"Leased Premises" shall mean the Leased Premises as
defined in Paragraph 1.
"Legal Requirements" shall mean the requirements of
all present and future Laws (including but not limited to Environmental Laws)
and all Easement Agreements now or hereafter of record which may be applicable
to Tenant or to any of the Leased Premises or Related Premises, or to the use,
manner of use, occupancy, possession, operation, maintenance, alteration,
repair or restoration of any of the Leased Premises or Related Premises, even
if compliance therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the Leased Premises
or Related Premises.
<PAGE> 8
"Lender" shall mean any person or entity (and their
respective successors and assigns) which may, after the date hereof, make a
Loan to Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more
Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and
evidenced by a Note.
"Monetary Obligations" shall mean Rent and all other
sums payable by Tenant under this Lease to Landlord, to any third party on
behalf of Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust
from Landlord to a Lender which (a) encumbers any of the Leased Premises and
(b) secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable
pursuant to the terms of this Lease to Landlord or Lender by reason of a
Condemnation whether pursuant to a judgment or by agreement or otherwise, or
(b) the entire proceeds of any insurance required under clauses (i), (ii) (to
the extent payable to Landlord or Lender), (iv), (v) or (vi) of Paragraph
16(a), as the case may be, less any reasonable expenses incurred by Landlord,
Lender and Tenant in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.
"Offer Amount" shall mean the greater of (a) Fair
Market Value or (b) the sum of the Acquisition Cost and any Prepayment Premium
which Landlord will be required to pay in prepaying any Loan in connection with
the payment of such Acquisition Cost.
"Partial Casualty" shall mean any Casualty which does
not constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation
which does not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership,
association, corporation or other entity.
"Prepayment Premium" shall mean any payment (other
than a payment of principal and/or interest which Landlord is required to make
under a Note or a Mortgage) by reason of any prepayment by Landlord of any
principal due under a Note or Mortgage, and which may be (in lieu of such
prepayment premium or prepayment penalty) a "make whole" clause requiring a
prepayment premium or other charges in an amount sufficient to compensate the
Lender for the loss of the benefit of the Loan due to prepayment; provided any
such Prepayment Premium is not materially at variance with then prevailing
prepayment premiums or prepayment penalties in the market for similar loans at
the time of placement.
<PAGE> 9
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) seven percent (7%) per annum.
"Prime Rate" shall mean the interest rate per annum
as published, from time to time, in The Wall Street Journal as the "Prime Rate"
in its column entitled "Money Rate". The Prime Rate may not be the lowest rate
of interest charged by any "large U. S. money center commercial banks" and
Landlord makes no representations or warranties to that effect. In the event
The Wall Street Journal ceases publication or ceases to publish the "Prime
Rate" as described above, the Prime Rate shall be the average per annum
discount rate (the "Discount Rate") on ninety-one (91) day bills ("Treasury
Bills") issued from time to time by the United States Treasury at its most
recent auction, plus three hundred (300) basis points. If no such 91-day
Treasury Bills are then being issued, the Discount Rate shall be the discount
rate on Treasury Bills then being issued for the period of time closest to
ninety-one (91) days.
"Related Premises" shall mean any one of the "Baraboo
Premises" "161 N. Jackson St. Premises" "200 S. Jackson St. Premises" "275 S.
Jackson St. Premises" "207 S. Jackson St. Premises" and "575 W. Madison St.
Premises".
"Relevant Amount" shall mean the Termination Amount
or the Default Termination Amount, as the case may be.
"Relevant Date" shall mean (a) the date immediately
prior to the date on which the applicable Condemnation Notice is received, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Taking, (b) the date immediately prior to the date on which the applicable
Casualty occurs, in the event of a Termination Notice under Paragraph 18 which
is occasioned by a Casualty, (c) the date when Fair Market Value is
redetermined, in the event of a redetermination of Fair Market Value pursuant
to Paragraph 20(c), (d) the date immediately prior to the Event of Default
giving rise to the need to determine Fair Market Value in the event Landlord
provides Tenant with notice of its intention to require Tenant to make a
Termination Offer under Paragraph 23(a)(iii)), (e) the Intended Assignment
Purchase Date, in the event Landlord receives an Intended Assignment Offer to
purchase the Leased Premises pursuant to Paragraph 21(c) or (f) the date
immediately prior to the date on which Tenant vacates the Related Premises in
the event Tenant exercises its rights under Paragraph 37(a) or Landlord elects
to treat an Event of Default under subparagraph 22(a)(ix) as an exercise by
Tenant of its rights under Paragraph 37.
"Remaining Premises" shall mean the Related Premises which
are not Affected Premises under Paragraph 18.
"Rent" shall mean, collectively, Basic Rent and Additional
Rent.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of Wisconsin.
"Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
"Taking" shall mean any taking of all or a portion of any of
the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or
<PAGE> 10
under threat of any such condemnation or other eminent domain proceeding, or
(iii) by any other means. The Taking shall be considered to have taken place
as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Related Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean (i) the sum of the
Acquisition Cost and any Prepayment Premium which Landlord will be required to
pay in prepaying any Loan with proceeds of the Termination Amount or (ii) if an
Event of Default shall have occurred and then be continuing, the greater of (a)
Fair Market Value or (b) the sum of the Acquisition Cost and any Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Termination Amount.
"Termination Date" shall mean the Termination Date as
defined in Paragraph 18.
"Termination Event" shall mean a Termination Event as
defined in Paragraph 18.
"Termination Notice" shall mean Termination Notice as
defined in Paragraph 18(a).
"Third Party Purchaser" shall mean the Third Party Purchaser
as defined in Paragraph 21(f).
"Treasury Rate" shall mean the rate per annum as
conclusively determined by Landlord (absent manifest error) . The Treasury
Rate will be based upon the weekly average Treasury Constant Maturity yields
reported in the most recently available Federal Reserve Statistical Release
H.15 - Selected Interest Rates (or its successor publication). The Treasury
Rate will be the yield implied by the Treasury Constant Maturity series for a
U. S. Treasury obligation having a maturity date of ten (10) years. In the
event that Release H.15 is no longer published, Landlord may select a
comparable publication to determine the Treasury Rate.
3. Title and Condition.
(a) The Leased Premises are demised and let
subject to (i) the rights of any Persons in possession of the Leased Premises,
(ii) the existing state of title of any of the Leased Premises, including any
Permitted Encumbrances, but excluding any liens or encumbrances resulting
solely from the acts of Landlord without the consent of Tenant (other than any
lien of any Lender as contemplated by this Lease), (iii) any state of facts
which an accurate survey or physical inspection of the Leased Premises might
show, (iv) all Legal Requirements, including any existing violation of any
thereof, and (v) the condition of the Leased Premises as of the commencement of
the Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises
are in good condition and repair at the inception of this Lease. LANDLORD
LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS.
TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN
ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE
DEEMED TO HAVE MADE, ANY WARRANTY OR
<PAGE> 11
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT,
(iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS,
(vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY,
(xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF
ANY HAZARDOUS SUBSTANCE; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND
TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY
TENANT AND ARE SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN
ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD
SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE
PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE
A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE.
(c) Tenant represents to Landlord that Tenant has
examined the title to the Leased Premises prior to the execution and delivery
of this Lease and has found the same to be satisfactory for the purposes
contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal
and equitable) to the Leased Premises is in Landlord and except, as provided in
Paragraph 35 hereof with respect to certain rights of refusal to purchase the
Leased Premises that Tenant has only the leasehold right of possession and use
of the Leased Premises as provided herein, (ii) this Lease is a single Lease
for multiple properties and shall not be terminable with respect to less than
all of the Leased Premises or severable with respect to any one or more Related
Premises except as specifically provided herein, (iii) the Improvements conform
to all material Legal Requirements and all Insurance Requirements, (iv) all
easements necessary or appropriate for the use or operation of the Leased
Premises have been obtained, (v) all contractors and subcontractors who have
performed work on or supplied materials to the Leased Premises have been fully
paid, and all materials and supplies have been fully paid for, (vi) the
Improvements have been fully completed in all material respects in a good and
workmanlike manner, and (vii) all Equipment necessary or appropriate for the
use or operation of the Leased Premises has been installed and is presently
fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without
recourse or warranty whatsoever, all assignable warranties, guaranties,
indemnities and similar rights which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this Lease,
whereupon such assignment shall cease and all of said warranties, guaranties,
indemnities and other rights shall automatically revert to Landlord.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises
for the operation of Tenant's printing business and for uses incidental
thereto, and for no other purpose. In the event that Tenant desires to use and
occupy the Leased Premises or any portion thereof for a use unrelated to
Tenant's printing business, Tenant shall first obtain the written consent of
Landlord
<PAGE> 12
to such change in use, which consent shall not be unreasonably withheld,
delayed or conditioned by Landlord. Notwithstanding the foregoing, Tenant
shall not, in any event, use or occupy or permit any of the Leased Premises to
be used or occupied, nor do or permit anything to be done in or on any of the
Leased Premises, in a manner which would or might (i) violate any Law or Legal
Requirement, (ii) make void or voidable or cause any insurer to cancel any
insurance required by this Lease, or make it impracticable to obtain any such
insurance at commercially reasonable rates, (iii) cause structural injury to
any of the Improvements or (iv) constitute a public or private nuisance or
waste.
(b) Subject to the provisions hereof, so long as
no Event of Default has occurred and is continuing, Tenant shall quietly hold,
occupy and enjoy the Leased Premises throughout the Term, without any
hindrance, ejection or molestation by Landlord with respect to matters that
arise after the date hereof, provided that Landlord or its agents may enter
upon and examine any of the Leased Premises at such reasonable times as
Landlord may select and upon reasonable prior notice to Tenant (except in the
case of any emergency, in which event no notice shall be required) for the
purpose of inspecting the Leased Premises, verifying compliance or
non-compliance by Tenant with its obligations hereunder and the existence or
non-existence of an Event of Default or event which with the passage of time
and/or notice would constitute an Event of Default, showing the Leased Premises
to prospective Lenders and purchasers and taking such other action with respect
to the Leased Premises as is permitted by any provision hereof; provided that,
Landlord shall exercise its rights of entry hereunder in a manner reasonably
designed to minimize interference with the normal operation of Tenant's
business at the Leased Premises.
5. Term.
(a) Subject to the provisions hereof, Tenant
shall have and hold the Leased Premises for an initial term (such term, as
extended or renewed in accordance with the provisions hereof, being called the
"Term") commencing on the date hereof (the "Commencement Date") and ending on
the last day of the two hundred fortieth (240th) calendar month next following
the date hereof (the "Expiration Date").
(b) Provided that if, on or prior to the
Expiration Date or any other Renewal Date (as hereinafter defined) this Lease
shall not have been terminated pursuant to any provision hereof, then on the
Expiration Date and on the fifth (5th) and tenth (10th) anniversaries of the
Expiration Date (the Expiration Date and each such anniversary being a "Renewal
Date"), the Term shall have the option, at its election, to extend the Term for
an additional period of five (5) years, by giving notice of such election to
Landlord in writing in recordable form at least eighteen (18) months prior to
the expiration of the initial Term or the applicable Renewal Term, as the case
may be. Any such extension of the Term shall be subject to all of the
provisions of this Lease, as the same may be amended, supplemented or modified.
(c) If (i) Tenant fails to timely exercise its
option pursuant to Paragraph 5(b) or (ii) an Event of Default shall occur and
then be continuing, then Landlord shall have the right during the remainder of
the Term then in effect (and at any time during the last year of the Term),
Landlord shall have the right to (i) advertise the availability of any of the
Leased Premises for sale or reletting and to erect upon any of the Leased
Premises signs indicating such availability and (ii) show any of the Leased
Premises to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may select; provided that, Landlord shall use
reasonable efforts to exercise its rights hereunder in a manner reasonably
designed to minimize interference with the normal operation of Tenant's
business at the Leased Premises.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent
for the Leased Premises during the Term, the amounts determined in accordance
with Exhibit "D" hereto
<PAGE> 13
("Basic Rent"), commencing on the first day of January, 1998, and continuing on
the first day of each April, July, October and January thereafter during the
Term (each such day being a "Basic Rent Payment Date"). Each such rental
payment shall be made, at Landlord's sole discretion, (a) to Landlord at its
address set forth above and/or to such one or two other Persons, at such
addresses and in such proportions as Landlord may direct by fifteen (15) days'
prior written notice to Tenant (in which event Tenant shall give Landlord
notice of each such payment concurrent with the making thereof), and (b) by a
check hand delivered or mailed and received on or before the applicable Basic
Rent Payment Date, or by wire transfer of immediately available Federal Funds.
Pro rata Basic Rent for the period from the date hereof through the last day of
the initial calendar quarter (or portion thereof) shall be paid on the date
hereof.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional
rent (collectively, "Additional Rent"):
(i) except as otherwise specifically
provided herein, all costs and expenses of Tenant, and all actual and
reasonable costs and expenses incurred, payable or reimbursable by Landlord in
connection with (A) the ownership, use, non-use, occupancy, possession,
operation, condition, design, construction, maintenance, alteration, repair or
restoration of any of the Leased Premises, (B) the performance of any of
Tenant's obligations under this Lease, (C) any sale or other transfer of any of
the Leased Premises to Tenant under this Lease (except that in the case of
Tenant's exercise of its rights pursuant to Paragraph 35 hereof, only to the
extent such third party would be obligated to pay such costs or expenses), (D)
to the extent same are not paid from any Net Award, any Condemnation
proceedings, (E) to the extent same are not paid from any Net Award, the
adjustment, settlement or compromise of any insurance claims involving or
arising from any of the Leased Premises, (F) other than a suit by Tenant
against Landlord in which Tenant is the prevailing party, the prosecution,
defense or settlement of any litigation involving or arising from any of the
Leased Premises, this Lease, or the sale of the Leased Premises to Landlord,
(G) the exercise or enforcement by Landlord, its successors and assigns, of any
of its rights under this Lease, (H) any amendment to or modification or
termination of this Lease made at the request of Tenant, (I) Costs of
Landlord's counsel in connection with the preparation, negotiation and
execution of this Lease or Costs incurred in connection with any act undertaken
by Landlord (or its counsel) at the request of Tenant, or incurred in
connection with any act of Landlord performed on behalf of Tenant, and (J) the
reasonable Costs of Landlord incurred in connection with any act undertaken by
Landlord at the request of Tenant or Tenant's failure to act promptly in an
emergency situation, and (K) any other items specifically required to be paid
by Tenant under this Lease;
(ii) after the date all or any portion of
any installment of Basic Rent is due and not paid, an amount equal to four
percent (4%) of the amount of such unpaid installment or portion thereof,
provided, however, that with respect to the first two late payments of all or
any portion of any installment of Basic Rent in any consecutive twelve (12)
month period, the Late Charge shall not be due and payable unless the Basic
Rent has not been paid within five (5) business days' following the due date
thereof;
(iii) a sum equal to any additional sums
(including any late charges, default penalties and interest, and Landlord's and
Lender's reasonable attorneys' fees) which are actually incurred and paid by
Landlord under any Note, by reason of Tenant's late payment or non-payment of
Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate (the "Default
Rate") of five percent (5%) over the Prime Rate per annum on the following sums
until paid in full: (A) all overdue installments of Basic Rent from the
respective due dates thereof, (B) all overdue amounts of
<PAGE> 14
Additional Rent relating to obligations which Landlord shall have paid on
behalf of Tenant, from the date of payment thereof by Landlord, and (C) all
other overdue amounts of Additional Rent, from the date when any such amount
becomes overdue.
(b) Tenant shall pay and discharge (i) any
Additional Rent referred to in Paragraph 7(a)(i) when the same shall become
due, provided that amounts which are billed to Landlord or any third party, but
not to Tenant, shall be paid within thirty (30) days after Landlord's demand
for payment thereof, and (ii) any other Additional Rent, within thirty (30)
days after Landlord's demand for payment thereof.
(c) In no event shall amounts payable under
Paragraph 7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by
applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary
Obligations shall be paid without notice or demand (except as otherwise
expressly provided herein to the contrary), and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction, reduction
or defense (collectively, a "Set-Off"). Notwithstanding anything to the
contrary contained this Lease, Perry Graphic Communications, Inc. and Judd's,
Incorporated each acknowledge and agree that each of them shall be jointly and
severally liable for the payment, performance and observance of all Monetary
Obligations and all non-monetary obligations of Tenant under this Lease.
(b) Except as otherwise expressly provided
herein, this Lease and the rights of Landlord and the obligations of Tenant
hereunder shall not be affected by any event or for any reason, including the
following: (i) any damage to or theft, loss or destruction of any of the
Leased Premises, (ii) any Condemnation, (iii) Tenant's acquisition of ownership
of any of the Leased Premises other than pursuant to an express provision of
this Lease or any subsequent written agreement executed by and between Landlord
and Tenant, (iv) subject to the terms of any non-disturbance subordination and
attornment agreement between Tenant and Lender, any default on the part of
Landlord hereunder or under any Note, Mortgage, Assignment or any other
agreement, (v) any latent or other defect in any of the Leased Premises, (vi)
the breach of any warranty of any seller or manufacturer of any of the
Equipment, (vii) any violation of Paragraph 4(b) or any other provision of this
Lease by Landlord, (viii) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution or winding-up of, or other
proceeding affecting Landlord, (ix) subject to the provisions of Paragraph 32
hereof, the exercise of any remedy, including foreclosure, under any Mortgage
or Assignment, (x) any action with respect to this Lease (including the
disaffirmance hereof) which may be taken by any trustee, receiver or liquidator
of Landlord or any court under the Federal Bankruptcy Code or other similar
proceeding, (xi) subject to the provisions of Paragraph 32 hereof, any
interference with Tenant's use of the Leased Premises, (xii) market or economic
changes or (xiii) any other cause, whether similar or dissimilar to the
foregoing, any present or future Law to the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be
separate and independent covenants and agreements, all Monetary Obligations
shall continue to be payable in all events (or, in lieu thereof, Tenant shall
pay amounts equal thereto), and the obligations of Tenant hereunder shall
continue unaffected unless the requirement to pay or perform the same shall
have been terminated pursuant to an express provision of this Lease. All Rent
payable by Tenant hereunder shall constitute "rent" for all purposes (including
Section 502(b)(6) of the Bankruptcy Code).
<PAGE> 15
(d) Except as otherwise expressly provided
herein, Tenant shall have no right and hereby waives all rights which it may
have under any Law (i) to quit, terminate or surrender this Lease or any of the
Leased Premises, or (ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties
are due thereon, pay and discharge all taxes (including real and personal
property, franchise, sales, gross receipts and rent taxes), all charges for any
easement or agreement maintained for the benefit of any of the Leased Premises,
all assessments and levies, all permit, inspection and license fees, all rents
and charges for water, sewer, utility and communication services relating to
any of the Leased Premises, all ground rents (other than any ground rent
payable under any ground lease executed after the date hereof) and all other
public charges whether of a like or different nature, even if unforeseen or
extraordinary, imposed upon or assessed against (i) Tenant, (ii) Tenant's
possessory interest in the Leased Premises, (iii) any of the Leased Premises,
(iv) Landlord as a result of or arising in respect of the acquisition,
ownership, occupancy, leasing, use, possession or sale of any of the Leased
Premises, any activity conducted on any of the Leased Premises, or the Rent,
or (v) any Lender by reason of any Note, Mortgage, Assignment or other document
evidencing or securing a Loan and which (as to this clause (v)) Landlord is
obligated to pay (collectively, the "Impositions"); provided, that nothing
herein shall obligate Tenant to pay (A) income, excess profits or other taxes
of Landlord (or Lender) which are determined on the basis of Landlord's (or
Lender's) net income or net worth (unless such taxes are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect
to the Leased Premises which, if it were in effect, would be payable by Tenant
under the provisions hereof or by the terms of such tax, assessment or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed
on Landlord or (C) any capital gains tax imposed on Landlord in connection with
the sale of the Leased Premises to any Person or otherwise. If any Imposition
may be paid in installments without interest or penalty, Tenant shall have the
option to pay such Imposition in installments; in such event, Tenant shall be
liable only for those installments which accrue or become due and payable
during the Term. Tenant shall prepare and file all tax reports required by
governmental authorities which relate to the Impositions. Tenant shall deliver
to Landlord (1) copies of all settlements and notices pertaining to the
Impositions which may be issued by any governmental authority within ten (10)
days after Tenant's receipt thereof, (2) receipts for payment of all taxes
required to be paid by Tenant hereunder within thirty (30) days after the due
date thereof and (3) receipts for payment of all other Impositions within
thirty (30) days after Landlord's request therefor.
(b) Landlord shall have the right at any time
after occurrence and during the continuance of an Event of Default to require
Tenant to pay to Landlord an additional monthly sum (each an "Escrow Payment")
sufficient to pay the Escrow Charges (as hereinafter defined) as they become
due. As used herein, "Escrow Charges" shall mean real estate taxes on the
Leased Premises or payments in lieu thereof and premiums on any insurance
required by this Lease. Landlord shall in good faith determine the amount of
the Escrow Charges and of each Escrow Payment. The Escrow Payments may be
commingled with other funds of Landlord or other Persons and no interest
thereon shall be due or payable to Tenant. Landlord shall apply the Escrow
Payments to the payment of the Escrow Charges in such order or priority as
Landlord shall determine or as required by law. If at any time the Escrow
Payments theretofore paid to Landlord shall be insufficient for the payment of
the Escrow Charges, Tenant, within ten (10) days after Landlord's demand
therefor, shall pay the amount of the deficiency to Landlord.
<PAGE> 16
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and
conform to, and cause any other Person occupying any part of the Leased
Premises to comply with and conform to, all Insurance Requirements and Legal
Requirements (including all applicable Environmental Laws). Tenant shall not
at any time (i) cause, permit or suffer to occur any Environmental Violation or
(ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation.
(b) Tenant, at its sole cost and expense, will at
all times promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement on the
part of Landlord or the occupier to be kept and performed thereunder. Neither
Landlord nor Tenant shall alter, modify, amend or terminate any Easement
Agreement, give any consent or approval thereunder, or enter into any new
Easement Agreement without, in each case, the prior written consent of the
other party, which consent shall not be unreasonably withheld, delayed or
conditioned. In the event that Tenant desires to alter, modify, amend or
terminate any Easement Agreement or enter into any new Easement Agreement
which, in each case, Tenant believes in good faith to be beneficial to the
continued use and/or operation of Leased Premises, Tenant shall give Landlord
written notice thereof and, in connection therewith, Landlord agrees to
reasonably cooperate with Tenant (including execution of any such agreement, if
required), at no cost to Landlord.
(c) If (i) at any time, in the opinion of
Landlord or Lender, a reasonable basis exists to believe that an Environmental
Violation exists, (ii) this Lease shall be terminated or canceled or otherwise
expire pursuant to the terms hereof (including, without limitation, pursuant to
the provisions of Article 18 or 23 hereof) and Tenant shall not acquire the
Leased Premises upon the occurrence of any such event, (iii) any Lender shall
so require (pursuant to the terms of the applicable Loan documents), (iv)
Landlord shall sell or transfer its interest in the Leased Premises pursuant to
Section 21(g) hereof or (v) Tenant shall exercise its rights under Paragraph 37
hereof, then upon prior written notice from Landlord, Tenant shall permit such
persons as Landlord may designate ("Site Reviewers") to visit the Leased
Premises (or the Abandonment Premises, as applicable) and perform, as agents of
Tenant, environmental site investigations and assessments ("Site Assessments")
on the Leased Premises (or the Abandonment Premises, as applicable) for the
purpose of determining whether there exists on the Leased Premises (or the
Abandonment Premises, as applicable) any Environmental Violation or any
condition which could result in any Environmental Violation. Such Site
Assessments may include both above and below the ground testing for
Environmental Violations and such other tests as may be necessary, in the
opinion of the Site Reviewers, to conduct the Site Assessments. Tenant shall
supply to the Site Reviewers such historical and operational information
regarding the Leased Premises (or the Abandonment Premises, as applicable) as
may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The cost of performing
and reporting Site Assessments shall be paid by Tenant, except that with
respect to clauses (i) and (iii) above, if no Environmental Violation is
discovered at the Leased Premises, then the cost of performing and reporting
such Site Assessments shall be paid by Landlord and with respect to clause (iv)
above, the cost of performing and reporting such Site Assessments shall be paid
by Landlord.
(d) If an Environmental Violation occurs or is
found to exist and, in Landlord's reasonable judgment, the cost of remediation
of the same is likely to exceed $50,000, Tenant shall provide to Landlord,
within thirty (30) days after Landlord's request therefor, adequate financial
assurances that Tenant will effect such remediation in accordance with
applicable Environmental Laws.
<PAGE> 17
(e) Notwithstanding any other provision of this
Lease, if an Environmental Violation occurs or is found to exist and the Term
would otherwise terminate or expire, then, at the option of Landlord, the Term
shall be automatically extended beyond the date of termination or expiration
and this Lease shall remain in full force and effect beyond such date until the
earlier to occur of (i) the completion of all remedial action in accordance
with applicable Environmental Laws or (ii) the date specified in a written
notice from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to comply with any
requirement of any Environmental Law in connection with any Environmental
Violation which occurs or is found to exist within thirty (30) days of Tenant's
notice thereof or fails to commence to cure any such non-compliance within such
thirty (30) day period (or, in each case, within such shorter period as may be
required under applicable Law) and thereafter diligently pursue such cure to
completion, Landlord shall have the right (but no obligation) to take any and
all actions as Landlord shall deem necessary or advisable in order to cure such
Environmental Violation.
(g) Tenant shall notify Landlord promptly after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord promptly upon receipt thereof copies
of all orders, reports, notices, permits, applications or other communications
relating to any such violation or noncompliance.
(h) [Intentionally deleted].
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly,
create or permit to be created or to remain and shall promptly discharge or
remove any lien, levy or encumbrance on any of the Leased Premises or on any
Rent or any other sums payable by Tenant under this Lease, other than any
Mortgage or Assignment, the Permitted Encumbrances and any mortgage, lien,
encumbrance or other charge created by or resulting solely from any act or
omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE
FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR
TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER
TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF
THE LEASED PREMISES. LANDLORD MAY AT ANY REASONABLE TIME POST ANY NOTICES ON
THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record,
file or register (collectively, "record") all such instruments as may be
required or permitted by any present or future Law in order to evidence the
respective interests of Landlord and Tenant in any of the Leased Premises, and
shall cause a memorandum of this Lease substantially in the form of Exhibit H
annexed hereto (or, if such a memorandum cannot be recorded, this Lease), and
any supplement hereto or thereto, to be recorded in such manner and in such
places as may be required or permitted by any present or future Law in order to
protect the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain each
Related Premises and the Adjoining Property in as good repair and appearance as
each is in on the date hereof, reasonable wear and tear excepted, and fit to be
used for their intended use in accordance with the better of
<PAGE> 18
the practices generally recognized as then acceptable by other companies in its
industry or observed by Tenant with respect to the other real properties owned
or operated by it, and, in the case of the Equipment, in as good mechanical
condition as it was on the later of the date hereof or the date of its
installation, except for ordinary wear and tear. Tenant shall take every other
action necessary or appropriate for the preservation and safety of each Related
Premises. Tenant shall promptly make all Alterations of every kind and nature,
whether foreseen or unforeseen, which may be required to comply with the
foregoing requirements of this Paragraph 12(a). Landlord shall not be required
to make any Alteration, whether foreseen or unforeseen, or to maintain any of
the Related Premises or Adjoining Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or
hereafter in effect to make Alterations at the expense of Landlord or to
require Landlord to make Alterations. Any Alteration made by Tenant pursuant
to this Paragraph 12 shall be made in conformity with the provisions of
Paragraph 13.
(b) If any Improvement, now or hereafter
constructed, shall (i) encroach upon any setback or any property, street or
right-of-way adjoining any of the Leased Premises, (ii) violate the provisions
of any restrictive covenant affecting any of the Leased Premises, (iii) hinder
or obstruct any easement or right-of-way to which any of the Leased Premises is
subject or (iv) impair the rights of others in, to or under any of the
foregoing, Tenant shall, promptly after receiving notice or otherwise acquiring
knowledge thereof, either (A) obtain from all necessary parties waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, hindrance, obstruction or impairment, whether the same
shall affect Landlord, Tenant or both, or (B) take such action as shall be
necessary to remove all such encroachments, hindrances or obstructions and to
end all such violations or impairments, including, if necessary, making
Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having
obtained the prior written consent of Landlord and Lender, to make (i)
Alterations or a series of related Alterations that, as to any such Alterations
or series of related Alterations, do not cost in excess of $250,000 for any one
Related Premises (or $1,500,000 in the aggregate) and (ii) to install Equipment
in the Improvements or accessions to the Equipment that, as to such Equipment
or accessions, do not cost in excess of $250,000 for any one Related Premises
(or $1,500,000 in the aggregate), so long as at the time of construction or
installation of any such Equipment or Alterations no Event of Default exists
and the value and utility of the Leased Premises is not diminished thereby. If
the cost of any Alterations, series of related Alterations, Equipment or
accessions thereto is in excess of $250,000 for any one Related Premises (or
$1,500,000 in the aggregate), the prior written approval of Landlord and Lender
shall be required, such approval not to be unreasonably withheld, delayed or
conditioned. Tenant shall not construct upon the Land any additional buildings
without having first obtained the prior written consent of Landlord and Lender,
which consent shall not be unreasonably withheld, delayed or conditioned.
(b) If Tenant makes any Alterations pursuant to
this Paragraph 13 or Paragraph 36 hereof or as required by Paragraph 12 or 17
hereof (such Alterations and actions being hereinafter collectively referred to
as "Work"), then (i) the market value of the Leased Premises or any Related
Premises shall not be materially lessened by any such Work or its usefulness
impaired, (ii) all such Work shall be performed by Tenant in a good and
workmanlike manner, (iii) all such Work shall be expeditiously completed in
compliance with all Legal Requirements, (iv) all such Work shall comply with
the requirements of all insurance policies required to be maintained by Tenant
hereunder, (v) if any such Work involves the replacement of Equipment or parts
thereto, all replacement Equipment or parts shall have a value and useful life
equal to the greater of (A) the value and useful life on the date hereof of the
Equipment being replaced or (B) the value and useful life of the Equipment
being replaced immediately prior to
<PAGE> 19
the occurrence of the event which required its replacement (assuming such
Replaced Equipment was then in the condition required by this Lease), (vi)
Tenant shall promptly discharge or remove all liens filed against any of the
Leased Premises arising out of such Work, (vii) Tenant shall procure and pay
for all permits and licenses required in connection with any such Work, (viii)
all such Work shall be the property of Landlord and shall be subject to this
Lease, and Tenant shall execute and deliver to Landlord any document requested
by Landlord evidencing the assignment to Landlord of all estate, right, title
and interest (other than the leasehold estate created hereby) of Tenant or any
other Person thereto or therein, and (ix) Tenant shall comply, to the extent
requested by Landlord or required by this Lease, with the provisions of
Paragraphs 12(a) and 19(a), whether or not such Work involves restoration of
the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
this Lease, Tenant shall not be required to (a) pay any Imposition, (b)
discharge or remove any lien referred to in Paragraph 11 or 13 or (c) take any
action with respect to any encroachment, violation, hindrance, obstruction or
impairment referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as "Permitted Violations"),
so long as at the time of such non-compliance no Event of Default exists and so
long as Tenant shall contest, in good faith, the existence, amount or validity
thereof, the amount of the damages caused thereby, or the extent of its or
Landlord's liability therefor by appropriate proceedings which shall operate
during the pendency thereof to prevent or stay (i) the collection of, or other
realization upon, the Permitted Violation so contested, (ii) the sale,
forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to
pay any damages caused by any Permitted Violation, (iii) any interference with
the use or occupancy of any of the Leased Premises, (iv) any interference with
the payment of any Rent, or (v) the cancellation or increase in the rate of any
insurance policy or a statement by the carrier that coverage will be denied.
Tenant shall provide Landlord security which is satisfactory, in Landlord's
reasonable judgment, to assure that such Permitted Violation is corrected,
including all Costs, interest and penalties that may be incurred or become due
in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right
to attempt to settle or compromise such contest through negotiations. Tenant
shall pay any and all losses, judgments, decrees and Costs in connection with
any such contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interest and Costs thereof or in
connection therewith, and perform all acts the performance of which shall be
ordered or decreed as a result thereof. No such contest shall subject Landlord
to the risk of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend,
save and hold harmless Landlord, Lender and all other Persons described in
Paragraph 30 (a), (b) and (c) and the Persons identified parenthetically in
Paragraph 30 (d) (each of the foregoing, an "Indemnitee") from and against any
and all liabilities, losses, damages, penalties, Costs (including reasonable
attorneys' fees and costs), causes of action, suits, claims, demands or
judgments of any nature whatsoever, howsoever caused, without regard to the
form of action and whether based on strict liability, negligence or any other
theory of recovery at law or in equity, arising from (i) any matter pertaining
to the acquisition (or the negotiations leading thereto), ownership, leasing,
use, non-use, occupancy, operation, management, condition, design,
construction, maintenance, repair or restoration of any of the Leased Premises
or Adjoining
<PAGE> 20
Property, except to the extent caused by the gross negligence or willful
misconduct of Landlord, (ii) any casualty in any manner arising from any of the
Leased Premises or Adjoining Property, whether or not Indemnitee has or should
have knowledge or notice of any defect or condition causing or contributing to
said casualty, (iii) any violation by Tenant of any provision of this Lease or
the Mortgage or Assignment, or any contract or agreement to which Tenant is a
party, any Legal Requirement, or any Permitted Encumbrance, or any encumbrance
consented to by Tenant, (iv) any alleged, threatened or actual Environmental
Violation, including (A) liability for response costs and for costs of removal
and remedial action incurred by the United States Government, any state or
local governmental unit or any other Person, or damages from injury to or
destruction or loss of natural resources, including the reasonable costs of
assessing such injury, destruction or loss, incurred pursuant to Section 107 of
CERCLA, or any successor section or act or provision of any similar state or
local Law, (B) liability for costs and expenses of abatement, correction or
clean-up, fines, damages, response costs or penalties which arise from the
provisions of any of the other Environmental Laws and (C) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity, except to the
extent caused by the gross negligence or willful misconduct of Landlord.
(b) In case any action or proceeding is brought
against any Indemnitee by reason of any such claim, (i) Tenant may, except in
the event of a conflict of interest between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and
defend such action (it being understood that Landlord may employ counsel of its
choice to monitor the defense of any such action) and (ii) such Indemnitee
shall notify Tenant to resist or defend such action or proceeding by retaining
counsel reasonably satisfactory to such Indemnitee, and such Indemnitee will
cooperate and assist in the defense of such action or proceeding if reasonably
requested to do so by Tenant. In the event of a conflict of interest or
dispute or during the continuance of an Event of Default, Landlord shall have
the right to select counsel, and the reasonable cost of such counsel shall be
paid by Tenant.
(c) The obligations of Tenant under this
Paragraph 15 shall survive any termination, expiration or rejection in
bankruptcy of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance
on or in connection with the Leased Premises:
(i) Insurance against physical loss or
damage to the Improvements and Equipment as provided under a standard "All
Risk" property policy including but not limited to flood (to the extent that a
Related Premises is in a flood zone) and earthquake coverage (to the extent a
Related Premises is in an earthquake zone) in amounts not less than the actual
replacement cost of the Improvements and Equipment. Such policies shall
contain "Replacement Cost" and "Agreed Amount" endorsements and shall contain
deductibles not more than $50,000 per occurrence.
(ii) Commercial General Liability
Insurance (including but not limited to Incidental Medical Malpractice and Host
Liquor Liability) and Business Automobile Liability Insurance (including
Non-Owned and Hired Automobile Liability) against claims for personal and
bodily injury, death or property damage occurring on, in or as a result of the
use of the Leased Premises, in an amount not less than $15,000,000 per
occurrence/annual aggregate and all other coverage extensions that are usual
and customary for properties of this size and type provided, however, that the
Landlord shall have the right to require such higher limits as may be
reasonable and customary for properties of this size and type.
<PAGE> 21
(iii) Worker's compensation insurance
covering all persons employed by Tenant in connection with any work done on or
about any of the Leased Premises for which claims for death, disease or bodily
injury may be asserted against Landlord, Tenant or any of the Leased Premises
or, in lieu of such Worker's Compensation Insurance, a program of
self-insurance complying with the rules, regulations and requirements of the
appropriate agency of the State or States in which the Leased Premises are
located.
(iv) Comprehensive Boiler and Machinery
Insurance on any of the Equipment or any other equipment on or in the Leased
Premises in an amount not less than $15,000,000 per accident for damage to
property. Such policies shall include at least $2,500,000 per incidence for
Off-Premises Service Interruption, Expediting Expenses, Ammonia Contamination,
and Hazardous Materials Clean-up Expense and may contain a deductible not to
exceed $50,000.
(v) Business Interruption and Extra
Expense Insurance at limits to cover 100% of losses and/or expenses incurred
over the period of indemnity not less than one year from time of loss. Such
insurance shall name Landlord as loss payee solely with respect to Rent payable
to or for the benefit of the Landlord under this Lease.
(vi) During any period in which
substantial Alterations at any Related Premises are being undertaken, builder's
risk insurance covering the total completed value including any "soft costs"
with respect to the Improvements being altered or repaired (on a completed
value, non-reporting basis), replacement cost of work performed and equipment,
supplies and materials furnished in connection with such construction or repair
of Improvements or Equipment, together with such "soft cost" endorsements and
such other endorsements as Landlord may reasonably require and general
liability, worker's compensation and automobile liability insurance with
respect to the Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms
with respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee clause)
on or in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size, use and location
to the Leased Premises.
(b) The insurance required by Paragraph 16(a)
shall be written by companies which have a Best's rating of A:X or above and
are admitted in, and approved to write insurance policies by, the State
Insurance Department for the states in which the Leased Premises are located.
The insurance policies (i) shall be for such terms as Landlord may reasonably
approve and (ii) shall be in amounts sufficient at all times to satisfy any
coinsurance requirements thereof. The insurance referred to in Paragraphs
16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and Lender as
loss payee and Tenant as its interest may appear. The insurance referred to in
Paragraph 16(a)(ii) shall name Landlord and Lender as additional insureds, and
the insurance referred to in Paragraph 16(a)(v) shall name Landlord as insured
and Lender and Landlord as loss payee. If said insurance or any part thereof
shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall
immediately obtain new or additional insurance reasonably satisfactory to
Landlord.
(c) Each insurance policy referred to in clauses
(i), (iv), (v) and (vi) of Paragraph 16(a) shall contain standard
non-contributory mortgagee clauses in favor of and reasonably acceptable to
Lender. Each policy required by any provision of Paragraph 16(a), except
clause (iii) thereof, shall provide that it may not be canceled except after
sixty (60) days'
<PAGE> 22
prior notice to Landlord and Lender. Each such policy shall also provide that
any loss otherwise payable thereunder shall be payable notwithstanding (i) any
act or omission of Landlord or Tenant which might, absent such provision,
result in a forfeiture of all or a part of such insurance payment, (ii) the
occupation or use of any of the Leased Premises for purposes more hazardous
than those permitted by the provisions of such policy, (iii) any foreclosure or
other action or proceeding taken by Lender pursuant to any provision of the
Mortgage, Note, Assignment or other document evidencing or securing the Loan
upon the happening of an event of default therein or (iv) any change in title
to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all
premiums for the insurance required by Paragraph 16(a), shall renew or replace
each policy and deliver to Landlord evidence of the payment of the full premium
therefor or installment then due at least thirty (30) days prior to the
expiration date of such policy, and shall promptly deliver to Landlord all
original certificates of insurance.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such
"blanket" or umbrella policy or policies otherwise comply with the provisions
of this Paragraph 16 and provided further that Tenant shall provide to Landlord
a "Statement of Values" which shall be reviewed annually and amended as
necessary based on "Replacement Cost Valuations". The original or a certified
copy of each such "blanket" or umbrella policy shall promptly be delivered to
Landlord.
(f) Tenant shall have the replacement cost and
insurable value of the Improvements and Equipment determined from time to time
as required by the replacement cost and agreed amount endorsements and shall
deliver to Landlord the new replacement cost and agreed amount endorsement or
certificate evidencing such endorsement promptly upon Tenant's receipt thereof.
(g) Tenant shall promptly comply with and conform
to (i) all provisions of each insurance policy required by this Paragraph 16
and (ii) all requirements of the insurers thereunder applicable to Landlord,
Tenant or any of the Leased Premises or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration or repair of any of the Leased
Premises, even if such compliance necessitates Alterations or results in
interference with the use or enjoyment of any of the Leased Premises.
(h) Tenant shall not carry separate insurance
concurrent in form or contributing in the event of a Casualty with that
required in this Paragraph 16 unless (i) Landlord and Lender are included
therein as named insureds, with loss payable as provided herein, and (ii) such
separate insurance complies with the other provisions of this Paragraph 16.
Tenant shall immediately notify Landlord of such separate insurance and shall
deliver to Landlord the original policies or certified copies therefor.
(i) All policies shall contain effective waivers
by the carrier against all claims for insurance premiums against Landlord and
shall contain full waivers of subrogation against the Landlord and Tenant.
(j) All proceeds of any insurance required under
Paragraph 16(a) shall be payable as follows:
(i) Except for proceeds payable to a
Person other than Landlord, Tenant or Lender, all proceeds of insurance
required under clauses (ii), (iv), (v) and (vii) of Paragraph 16(a) and
proceeds attributable to the general liability coverage provisions of Builder's
<PAGE> 23
Risk insurance under clause (vi) of Paragraph 16(a) shall be payable to
Landlord or, if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required
under clause (i) of Paragraph 16(a) and proceeds attributable to Builder's Risk
insurance (other than its general liability coverage provisions) under clause
(vi) of Paragraph 16(a) shall be payable by Landlord (or Lender) and applied as
set forth in Paragraph 17. Tenant shall apply the Net Award to restoration of
the Leased Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
(a) If any Casualty to any of the Related
Premises occurs, Tenant shall give Landlord and Lender immediate notice
thereof. So long as no Event of Default shall have occurred and be continuing,
Tenant is hereby authorized to adjust, collect and compromise all claims under
any of the insurance policies required by Paragraph 16(a) (except public
liability insurance claims payable to a Person other than Tenant, Landlord or
Lender) and to execute and deliver on behalf of Landlord all necessary proofs
of loss, receipts, vouchers and releases required by the insurers and Landlord
shall have the right to join with Tenant therein. Any final adjustment,
settlement or compromise of any such claim shall be subject to the prior
written approval of Landlord (not to be unreasonably withheld, delayed or
conditioned) and Landlord shall have the right to prosecute or contest, or to
require Tenant to prosecute or contest, any such claim, adjustment, settlement
or compromise. If an Event of Default shall have occurred and be continuing,
Tenant shall not be entitled to adjust, collect or compromise any such claim or
to participate with Landlord in any adjustment, collection and compromise of
the Net Award payable in connection with a Casualty. Tenant agrees to sign,
upon the request of Landlord, all such proofs of loss, receipts, vouchers and
releases reasonably requested by Landlord. Each insurer is hereby authorized
and directed to make payment under said policies (subject to the provisions of
Paragraph 17(c) and Paragraph 19 hereof) directly to Landlord or, if required
by the Mortgage, to Lender instead of to Landlord and Tenant jointly. The
rights of Landlord under this Paragraph 17(a) shall be extended to Lender if
and to the extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a
Condemnation Notice, shall notify Landlord and Lender thereof. So long as no
Event of Default shall have occurred and be continuing, Tenant is authorized to
collect, settle and compromise the amount of any Net Award and Landlord shall
have the right to join with Tenant herein. If an Event of Default exists,
Landlord shall be authorized to collect, settle and compromise the amount of
any Net Award and Tenant shall not be entitled to participate with Landlord in
any Condemnation proceeding or negotiations under threat thereof or to contest
the Condemnation or the amount of the Net Award therefor. No agreement with
any condemnor in settlement or under threat of any Condemnation shall be made
by Tenant without the written consent of Landlord (not to be unreasonably
withheld, delayed or conditioned). Subject to the provisions of this Paragraph
17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to
which Tenant is or may be entitled by reason of any Condemnation, whether the
same shall be paid or payable for Tenant's leasehold interest hereunder or
otherwise; but nothing in this Lease shall impair Tenant's right to any award
or payment on account of Tenant's trade fixtures, equipment or other tangible
property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.
<PAGE> 24
(c) If any Partial Casualty (whether or not
insured against) or Partial Condemnation shall occur to any Related Premises,
this Lease shall continue, notwithstanding such event, and there shall be no
abatement or reduction of any Monetary Obligations; provided that, to the
extent Landlord receives the proceeds of any business interruption insurance,
Tenant shall be entitled to an appropriate reduction or total abatement of
Basic Rent, as applicable. Promptly after such Partial Casualty or Partial
Condemnation, Tenant, as required in Paragraph 12(a), shall commence and
diligently continue to restore the Leased Premises as nearly as possible to
their value, condition and character immediately prior to such event (assuming
the Leased Premises to have been in the condition required by this Lease). So
long as no Event of Default shall have occurred and be continuing, any Net
Award up to and including $250,000 per Related Premises shall be paid by
Landlord to Tenant and Tenant shall restore the Leased Premises in accordance
with the requirements of Paragraph 13(b) of this Lease. Any Net Award in
excess of $250,000 per Related Premises shall (unless such Casualty resulting
in the Net Award is a Termination Event) be made available by Landlord (or
Lender if the terms of the Mortgage require disbursement to Lender, to be held
and disbursed in accordance with the provisions of Paragraph 19 hereof) to
Tenant for the restoration of any of the Leased Premises pursuant to and in
accordance with and subject to the provisions of Paragraph 19 hereof. If any
Casualty or Condemnation which is not a Partial Casualty or Partial
Condemnation shall occur, Tenant shall comply with the terms and conditions of
Paragraph 18.
18. Termination Events.
(a) If (i) all of any Related Premises shall be
taken by a Taking or (ii) any substantial portion of any Related Premises shall
be taken by a Taking or all or any substantial portion of any Related Premises
shall be totally damaged or destroyed by a Casualty and, in any such case,
Tenant elects (instead of restoring the Related Premises) to send a notice to
Landlord that certifies and covenants to Landlord that it will forever abandon
operations at the Related Premises, (any one or all of the Related Premises
described in the above clauses (i) and (ii) above being hereinafter referred to
as the "Affected Premises" and each of the events described in the above
clauses (i) and (ii) shall hereinafter be referred to as a "Termination
Event"), then (x) in the case of (i) above, Tenant shall be obligated, within
thirty (30) days after Tenant receives a Condemnation Notice and (y) in the
case of (ii) above, Tenant shall have the option, within thirty (30) days after
Tenant receives a Condemnation Notice or thirty (30) days after the Casualty,
as the case may be, to give to Landlord written notice (a "Termination Notice")
of the Tenant's option to terminate this Lease as to the Affected Premises in
the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice
of Tenant's intention to terminate this Lease as to the Affected Premises on
the first Basic Rent Payment Date which occurs at least thirty (30) days after
the date of the Termination Notice (the "Termination Date"), (ii) a binding and
irrevocable offer of Tenant to pay the Termination Amount and (iii) if the
Termination Event is an event described in Paragraph 18(a)(ii), the
certification and covenant described therein and a certified resolution of the
Board of Directors of Tenant authorizing the same.
(c) If Landlord shall reject such offer to
terminate this Lease as to the Affected Premises by written notice to Tenant (a
"Rejection"), which Rejection must contain the written consent of Lender if a
Lender exists, not later than thirty (30) days following the date Landlord
receives the Termination Notice, then this Lease shall terminate as to the
Affected Premises on the Termination Date; provided that, if Tenant has not
satisfied all Monetary Obligations and all other obligations and liabilities
under this Lease which have arisen as to the Affected Premises (collectively,
"Remaining Obligations") on or prior to the Termination Date, then Landlord
may, at its option, extend the date on which this Lease may terminate as to the
Affected Premises to a date which is no later than the date on which Tenant has
satisfied all
<PAGE> 25
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder as to the Affected Premises shall terminate except for any Surviving
Obligations, (ii) Tenant shall immediately vacate and shall have no further
right, title or interest in or to any of the Affected Premises and (iii) the
Net Award shall be retained by Landlord. Notwithstanding anything to the
contrary hereinabove contained, if Tenant shall have received a Rejection and,
on the date when this Lease would otherwise terminate as provided above,
Landlord, through no fault of its own, shall not have received the full amount
of the Net Award payable by reason of the applicable Termination Event, then
the date on which this Lease is to terminate automatically shall be extended to
date of the receipt by Landlord of the full amount of the Net Award provided
that, if Tenant has not satisfied all Remaining Obligations on such date, then
Landlord may, at its option, extend the date on which this Lease may terminate
to a date which is no later than the date on which Tenant has satisfied all
such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection
not later than the thirtieth (30th) day following the date Landlord receives
the Termination Notice, Landlord shall be conclusively presumed to have
accepted such offer. If such offer is accepted by Landlord then, on the
Termination Date, Tenant shall pay to Landlord the Termination Amount and all
Remaining Obligations and, if requested by Tenant, Landlord shall convey to
Tenant or its designee, together with the Net Award, the Affected Premises or
the remaining portion thereof, if any, all in accordance with Paragraph 20.
(e) In the event of the termination of this Lease
as to the Affected Premises as hereinabove provided, this Lease shall remain in
full force and effect as to the Remaining Premises; provided, that the Basic
Rent for the Remaining Premises to be paid after such termination shall be the
Basic Rent otherwise payable hereunder with respect to the Leased Premises
multiplied by a percentage equal to the sum of the percentages set forth on
Exhibit "F" for the Remaining Premises.
19. Restoration.
(a) Landlord (or Lender if required by any
Mortgage) shall hold any Net Award in excess of $250,000 in a fund (the
"Restoration Fund") and disburse amounts from the Restoration Fund only in
accordance with the following conditions:
(i) prior to commencement of
restoration, (A) the architects, contracts, contractors, plans and
specifications for the restoration shall have been approved by Landlord, which
approval shall not be unreasonably withheld, delayed or conditioned, (B)
Landlord and Lender shall be provided with mechanics' lien insurance (if
available) and (C) if permitted by applicable Law, appropriate waivers of
mechanics' and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no
Event of Default shall exist and no mechanics' or materialmen's liens shall
have been filed against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from
time to time in an amount not exceeding the cost of the work completed since
the last disbursement, upon receipt of (A) reasonably satisfactory evidence,
including architects' certificates, of the stage of completion, the estimated
total cost of completion and performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans and specifications,
(B) waivers of liens, (C) contractors' and subcontractors' sworn statements as
to completed work and the cost thereof for which payment is requested, (D) a
reasonably satisfactory bring down of title insurance and (E) other reasonably
satisfactory evidence of cost and payment so that Landlord
<PAGE> 26
and Lender can verify that the amounts disbursed from time to time are
represented by work that is completed, in place and free and clear of
mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall
be accompanied by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is requested,
stating the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the work,
also stating that the work has been fully completed and complies with the
applicable requirements of this Lease;
(v) Landlord may retain ten percent
(10%) of the Restoration Fund until the restoration is fully completed;
(vi) the Restoration Fund shall not be
commingled with Landlord's other funds and shall bear interest at a rate agreed
to by Landlord and Tenant; and
(vii) such other reasonable conditions as
Landlord or Lender may impose provided same are consistent with prudent
commercial lending practices in the area where the Affected Premises are
located.
(b) Prior to commencement of restoration and at
any time during restoration, if the estimated cost of completing the
restoration work free and clear of all liens, as determined by Landlord,
exceeds the amount of the Net Award available for such restoration, the amount
of such excess shall, upon demand by Landlord, be paid by Tenant to Landlord to
be added to the Restoration Fund; provided, that if (i) Tenant shall provide
evidence reasonably satisfactory to Landlord as to the availability and
earmarking of funds equal to the amount of such excess for the purpose of
completing such restoration and (ii) Tenant's creditworthiness at the time in
question is reasonably acceptable to Landlord, then Tenant shall be permitted
to hold such funds in its own account for such purpose and to draw upon such
funds as and when needed. Any sum so added by Tenant which remains in the
Restoration Fund upon completion of restoration shall be refunded to Tenant.
For purposes of determining the source of funds with respect to the disposition
of funds remaining after the completion of restoration, the Net Award shall be
deemed to be disbursed prior to any amount added by Tenant. If any sum remains
in the Restoration Fund after completion of the restoration and any refund to
Tenant pursuant to this subparagraph (b), such remaining sum shall be paid to
Tenant or, if required by a Note or Mortgage, paid by Landlord to the Lender
and, if so paid to the Lender, Basic Rent hereunder shall be equitably adjusted
to the extent of (and to reflect any reduction in debt service as a result of)
the reamortization, if any, of the Loan.
20. Procedures Upon Purchase.
(a) If the Leased Premises or any of the Related
Premises are purchased by Tenant pursuant to any provision of this Lease,
Landlord need not convey any better title thereto than that which was conveyed
to Landlord, and Tenant or its designee shall accept such title, subject,
however, to the Permitted Encumbrances and to all other liens, exceptions and
restrictions on, against or relating to any of the Leased Premises or the
applicable Related Premises and to all applicable Laws, but free of the lien of
and security interest created by any Mortgage or Assignment and liens,
exceptions and restrictions on, against or relating to the Leased Premises or
the applicable Related Premises which have been created by or resulted solely
from acts of Landlord after the date of this Lease, unless the same are
Permitted Encumbrances or customary utility easements benefiting the Leased
Premises or were created with the concurrence of Tenant.
<PAGE> 27
(b) Upon the date fixed for any such purchase of
the Leased Premises or any of the Related Premises pursuant to any provision of
this Lease (any such date the "Purchase Date"), Tenant shall pay to Landlord,
or to any Person to whom Landlord directs payment, the Relevant Amount therefor
specified herein, in Federal Funds, less any credit of the Net Award received
and retained by Landlord or a Lender allowed against the Relevant Amount, and
Landlord shall deliver to Tenant (i) a special warranty deed which describes
the premises being conveyed and conveys the title thereto as provided in
Paragraph 20(a), (ii) such other instruments as shall be necessary to transfer
to Tenant or its designee any other property (or rights to any Net Award not
yet received by Landlord or a Lender) then required to be sold by Landlord to
Tenant pursuant to this Lease and (iii) any Net Award received by Landlord, not
credited to Tenant against the Relevant Amount and required to be delivered by
Landlord to Tenant pursuant to this Lease; provided, that if any Monetary
Obligations remain outstanding on such date, then Landlord may deduct from the
Net Award the amount of such Monetary Obligations. If on the Purchase Date any
Monetary Obligations remain outstanding and no Net Award is payable to Tenant
by Landlord or the amount of such Net Award is less than the amount of the
Monetary Obligations, then Tenant shall pay to Landlord on the Purchase Date
the amount of such Monetary Obligations. Upon the completion of such purchase,
this Lease and all obligations and liabilities of Tenant hereunder with respect
to the applicable Related Premises (but not with respect to the Remaining
Premises) shall terminate, except any Surviving Obligations.
(c) If the completion of such purchase shall be
delayed after (i) the Termination Date or (ii) such other date scheduled for
such purchase, then (x) Rent shall continue to be due and payable until
completion of such purchase and (y) with respect to a purchase resulting from
the occurrence of an Event of Default, at Landlord's sole option, Fair Market
Value shall be redetermined and the Relevant Amount payable by Tenant pursuant
to the applicable provision of this Lease shall be adjusted to reflect such
redetermination.
(d) Any prepaid Monetary Obligations paid to
Landlord shall be prorated as of the Purchase Date, and the prorated unapplied
balance shall be deducted from the Relevant Amount due to Landlord; provided,
that no apportionment of any Impositions shall be made upon any such purchase.
21. Assignment and Subletting; Prohibition against Leasehold
Financing.
(a) Tenant shall have the right, upon thirty (30)
days prior written notice to Landlord and Lender, with no consent of Landlord
or Lender being required or necessary ("Preapproved Assignment") to assign this
Lease, whether by operation of law of otherwise, to any Person ("Preapproved
Assignee") that immediately following such assignment will have a publicly
traded unsecured senior debt rating of Baa2 or better from Moody's Investors
Services, Inc. or a rating of "BBB" or better from Standard & Poor's
Corporation and in the event all of such rating agencies cease to furnish such
ratings, then a comparable rating by any rating agency reasonably acceptable to
Landlord and Lender. Upon any assignment to a Preapproved Assignee and
compliance by the Preapproved Assignee with the provisions of Paragraph 21(c),
the Tenant shall be released from all of its rights obligations and liabilities
hereunder except for Surviving Obligations.
(b) If Tenant (or either of them) desires to
assign this Lease or its interest hereunder, whether by operation of law of
otherwise (a "Non-approved Assignment") to a Person who would not be a
Preapproved Assignee (a "Non-Preapproved Assignee"), then Tenant shall, not
less than thirty (30) days prior to the date on which it desires to make a
Non-Preapproved Assignment, submit to Landlord and Lender information regarding
the following with respect to the Non-Preapproved Assignee (collectively, the
"Review Criteria"): (A) credit; (B) capital structure (e.g., debt to equity
ratio and fixed charges coverage ratio), (C)
<PAGE> 28
management, (D) operating history, (E) proposed use of the Leased Premises and
(F) risk factors associated with the proposed use of the Leased Premises by the
Non-Preapproved Assignee, taking into account factors such as environmental
concerns, product liability and the like. Landlord (and Lender to the extent
required under the applicable Loan documents) shall review such information and
shall approve or disapprove the Non-Preapproved Assignee no later than the
fifteenth (15) day following receipt of all such information, and Landlord and
Lender shall be deemed to have acted reasonably in granting or withholding
consent if such grant or disapproval is based on their review of the Review
Criteria applying prudent business judgment.
(c) If Landlord or Lender withhold consent to the
Non-Preapproved Assignment in accordance with the provisions of Paragraph 21 (b)
above and Tenant desires to complete the Non-Preapproved Assignment, Tenant
shall make a rejectable offer (the "Intended Assignment Offer") to purchase the
Leased Premises for a purchase price equal to the Offer Amount and to consummate
the purchase on the first Basic Rent Payment Date occurring after the
determination of Fair Market Value (the "Intended Assignment Purchase Date").
Notwithstanding the foregoing, if the Intended Assignment Offer is accepted by
Landlord and the Non-Preapproved Assignment occurs on a date (the "Assignment
Date") that is prior to the Intended Assignment Purchase Date, then, no later
than the Assignment Date, Tenant shall deposit in escrow with Landlord an amount
(the "Deposit Amount") equal to one hundred percent (100%) of the sum of the
Acquisition Cost and any Prepayment Premium in the form of cash or an
irrevocable letter or credit issued by a bank, and in form and substance,
acceptable to Landlord. The Deposit Amount shall be held by and invested by
Landlord and the Deposit Amount, together with any interest earned thereon,
shall be applied on the Intended Assignment Purchase Date to payment of the
Offer Amount.
(d) If Landlord shall reject the Intended
Assignment Offer by notice to Tenant, such notice to contain the written
consent of Lender to such rejection, no later than the thirtieth (30th) day
following receipt of the Intended Assignment Offer by Landlord, then this Lease
shall remain in full force and effect and Landlord and Lender shall be deemed
to have consented to the Non-Preapproved Assignment. Nothing provided herein
shall constitute a waiver by Landlord of the obligation of Tenant to comply
with the requirements of this Paragraph 21 if a subsequent Non-Preapproved
Assignment arises. No rejection of the Intended Assignment Offer shall be
effective for any purpose unless consented to in writing by Lender.
(e) Unless Landlord shall have rejected the
Intended Assignment Offer by the foregoing notice to Tenant not later than the
thirtieth (30th) day following receipt of information described in the
foregoing Paragraph 21(b), Landlord shall be conclusively presumed to have
accepted the Intended Assignment Offer. If the Intended Assignment Offer is
accepted by Landlord, Tenant shall pay to Landlord the Offer Amount (less the
Deposit Amount and interest thereon paid to Landlord) on the Intended
Assignment Purchase Date and, provided that no Rent or any other charge is due
and unpaid under this Lease as of the Intended Assignment Purchase Date and
Tenant is otherwise in compliance with the terms of this Lease, Landlord shall
convey to Tenant the Leased Premises in accordance with the provisions of
Paragraph 20 of this Lease.
(f) Tenant shall have the right, upon not less
than thirty (30) days prior written notice to Landlord and Lender, to enter
into one or more subleases that demise, in the aggregate, up to but not in
excess of twenty-five percent (25%) of the gross space in the Improvements with
no consent or approval of Landlord being required or necessary ("Preapproved
Sublet"). Other than pursuant to a Preapproved Sublet, no portion of the
Leased Premises shall be subleased during the Term to any other Person without
prior written consent of Landlord and Lender, which consent shall not be
unreasonably withheld or delayed, and which consent shall be granted or
withheld based on a review of the Review Criteria. Landlord and
<PAGE> 29
Lender shall be deemed to have acted reasonably in granting or withholding
consent if such grant or disapproval is based on their reasonable review of the
Review Criteria.
(g) If Tenant (or either of them) assigns all its
rights and interest under this Lease, the assignee under such assignment shall
expressly assume all the obligations of Tenant hereunder, actual or contingent,
including obligations of Tenant which may have arisen on or prior to the date
of such assignment, by a written instrument delivered to Landlord at the time
of such assignment. Each sublease of any of the Related Premises shall be
subject and subordinate to the provisions of this Lease. Except as provided in
Paragraph 21(a) above, no assignment or sublease shall affect or reduce any of
the obligations of Tenant hereunder, and all such obligations shall continue in
full force and effect as obligations of a principal and not as obligations of a
guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.
(h) Tenant shall, within ten (10) days after the
execution and delivery of any assignment or sublease consented to by Landlord,
deliver a duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(i) As security for performance of its
obligations under this Lease, Tenant hereby grants, conveys and assigns to
Landlord all right, title and interest of Tenant in and to all subleases now in
existence or hereafter entered into for any or all of the Leased Premises, any
and all extensions, modifications and renewals thereof and all rents, issues
and profits therefrom. Landlord hereby grants to Tenant a license to collect
and enjoy all rents and other sums of money payable under any sublease of any
of the Leased Premises, provided, however, that Landlord shall have the
absolute right at any time upon notice to Tenant and any subtenants or at any
time following the occurrence of an Event of Default to revoke said license and
to collect such rents and sums of money and to retain the same. Tenant shall
not consent to, cause or allow any modification or alteration of any of the
terms, conditions or covenants of any of the subleases or the termination
thereof, without the prior written approval of Landlord which consent shall not
be unreasonably withheld, conditioned or delayed except that any modification,
alteration, addition or termination shall be permitted without the written
approval of Landlord with respect to any Pre-Approved Sublet, so long as the
Review Criteria have not changed (and will not be changed, as a result of any
such modification, alteration, addition or termination) in any material respect
as to such Pre-Approved Sublet. Tenant shall not accept any rents more than
thirty (30) days in advance of the accrual thereof nor do nor permit anything
to be done, the doing of which, nor omit or refrain from doing anything, the
omission of which, will or could be a breach of or default in the terms of any
of the subleases.
(j) Tenant (or either of them) shall not have the
power to mortgage, pledge or otherwise encumber its interest under this Lease
or any sublease of any of the Related Premises, and any such mortgage, pledge
or encumbrance made in violation of this Paragraph 21 shall be void and of no
force and effect.
(k) Subject to the provisions of Paragraph 36
hereof, Landlord may sell or transfer the Leased Premises at any time without
Tenant's consent to any third party (each a "Third Party Purchaser"). In the
event of any such transfer, Tenant shall attorn to any Third Party Purchaser so
long as such Third Party Purchaser assumes Landlord's obligations under this
Lease in writing and provided that such Third Party Purchaser and Landlord
notify Tenant in writing of such transfer. At the request of Landlord, Tenant
will execute such documents confirming the agreement referred to above and such
other agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.
<PAGE> 30
22. Events of Default.
(a) The occurrence of any one or more of the following
(after expiration of any applicable cure period as provided in Paragraph 22(b))
shall, at the sole option of Landlord, constitute an "Event of Default" under
this Lease:
(i) a failure by Tenant (or either of them) to
make any payment of any Monetary Obligation, regardless of the reason for such
failure;
(ii) a failure by Tenant (or either of them) duly
to perform and observe, or a violation or breach of, any other provision hereof
not otherwise specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant
(or either of them) herein or in any certificate, demand or request made
pursuant hereto proves to be incorrect, now or hereafter, in any material
respect;
(iv) a default beyond any applicable cure period
or at maturity by Tenant (or either of them) in any payment of principal or
interest on any obligations for borrowed money having an original principal
balance of $10,000,000 or more in the aggregate, or in the performance of any
other provision contained in any instrument under which any such obligation is
created or secured (including the breach of any covenant thereunder), (x) if
such payment is a payment at maturity or a final payment, or (y) if an effect
of such default is to cause such obligation to be declared due prior to its
stated maturity; provided that the foregoing shall not constitute an Event of
Default unless and until such obligee shall commence the exercise of its
remedies in connection therewith and Tenant shall not have, within thirty (30)
days thereafter (a) caused such obligation to be paid in full or (b) cured such
default or caused the original maturity date to be otherwise reinstated;
(v) a default by Tenant (or either of them)
beyond any applicable cure period in the payment of rent under, or in the
performance of any other material provision of, any other lease or leases that
have, in the aggregate, rental obligations over the terms thereof of
$10,000,000 or more if the Landlord under any such lease or leases successfully
completes the exercise of any of its remedies thereunder;
(vi) [intentionally omitted],
(vii) Tenant (or either of them) shall (A)
voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the
appointment of a receiver or trustee for itself or for any of the Related
Premises, (C) file a petition seeking relief under the bankruptcy or other
similar laws of the United States, any state or any jurisdiction, (D) make a
general assignment for the benefit of creditors, or (E) be unable to pay its
debts as they mature;
(viii) a court shall enter an order, judgment or
decree appointing, without the consent of Tenant (or either of them), a
receiver or trustee for it or for any of the Related Premises or approving a
petition filed against Tenant (or either of them) which seeks relief under the
bankruptcy or other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain undischarged or
unstayed sixty (60) days after it is entered;
(ix) Except as provided under Paragraph 37 hereof,
any of the Related Premises (a) shall have been abandoned or (b) shall have
been vacated; provided that, with respect to the 200 S. Jackson St. Premises,
the 275 S. Jackson St. Premises or the 207 S. Jackson St. Premises, the
foregoing clause (b) shall not constitute an Event of Default if Tenant
<PAGE> 31
shall have given Landlord thirty (30) days prior notice of Tenant's intent to
vacate and shall have instituted appropriate security measures designed to
protect the applicable above Related Premises from theft and/or vandalism;
(x) Tenant (or either of them) shall be
liquidated or dissolved or shall begin proceedings towards its liquidation or
dissolution;
(xi) the estate or interest of Tenant (or either
of them) in any of the Related Premises shall be levied upon or attached in any
proceeding and such estate or interest is about to be sold or transferred or
such process shall not be vacated or discharged within sixty (60) days after it
is made;
(xii) a failure by Tenant (or either of them) to
perform or observe, or a violation or breach of, or a misrepresentation by
Tenant (or either of them) under, any provision of any Assignment or any other
document between Tenant and Lender, if such failure, violation, breach or
misrepresentation gives rise to a default beyond any applicable cure period
with respect to any Loan; or
(xiii) Tenant shall fail to be in compliance with
the provisions of Exhibit G annexed hereto if an effect of such default is to
cause such underlying obligation to be declared due prior to its stated
maturity; provided that the foregoing shall not constitute an Event of Default
unless and until such obligee shall commence the exercise of its remedies in
connection therewith and Tenant shall not have, within thirty (30) days
thereafter (a) caused such underlying obligation to be paid in full or (b)
cured such default or caused the original maturity date to be otherwise
reinstated.
(b) No notice or cure period shall be required in any one
or more of the following events: (A) the occurrence of an Event of Default
under clause (i) (except as otherwise set forth below), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (x), (xi), (xii) or (xiii) of Paragraph 22(a); (B) the
default consists of a failure to pay Basic Rent, a failure to provide any
insurance required by Paragraph 16 or an assignment or sublease entered into in
violation of Paragraph 21; or (C) the default is such that any delay in the
exercise of a remedy by Landlord could reasonably be expected to cause
irreparable harm to Landlord. If the default consists of the failure to pay
any Monetary Obligation under clause (i) of Paragraph 22(a), the applicable
cure period shall be three (3) days from the date on which notice is given, but
Landlord shall not be obligated to give notice of, or allow any cure period
for, any such default more than twice within any consecutive twelve (12) month
period. If the default consists of a default under clause (ii) of Paragraph
22(a), other than the events specified in clauses (B) and (C) of the first
sentence of this Paragraph 22(b), the applicable cure period shall be thirty
(30) days from the date on which notice is given or, if the default cannot be
cured within such thirty (30) day period and delay in the exercise of a remedy
would not (in Landlord's reasonable judgment) cause any irreparable harm to
Landlord or any of the Leased Premises, the cure period shall be extended for
the period required to cure the default; provided that Tenant shall commence to
cure the default within the said thirty-day period and shall actively,
diligently and in good faith proceed with and continue the curing of the
default until it shall be fully cured.
<PAGE> 32
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon
such date, this Lease, the estate hereby granted and all rights of Tenant
hereunder shall expire and terminate. Upon such termination, Tenant shall
immediately surrender and deliver possession of the Leased Premises to Landlord
in accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of all of the Leased Premises, Landlord may re-enter and repossess
any of the Leased Premises not surrendered, with or without legal process, by
peaceably entering any of the Leased Premises and changing locks or by summary
proceedings, ejectment or any other lawful means or procedure. Upon or at any
time after taking possession of any of the Leased Premises, Landlord may, by
peaceable means or legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any such entry,
repossession or removal. Notwithstanding such entry or repossession, Landlord
may (A) exercise the remedy set forth in and collect the damages permitted by
Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(i)
or 23(b)(ii).
(ii) After repossession of any of the Leased
Premises pursuant to clause (i) above, Landlord shall have the right to relet
any of the Leased Premises to such tenant or tenants, for such term or terms,
for such rent, on such conditions and for such uses as Landlord in its sole
discretion may determine, and collect and receive any rents payable by reason
of such reletting. Landlord may make such Alterations in connection with such
reletting as it may deem advisable in its sole discretion. Notwithstanding any
such reletting, Landlord may collect the damages set forth in Paragraph
23(b)(ii).
(iii) Landlord may, upon notice to Tenant, require
Tenant to make an irrevocable offer to terminate this Lease in its entirety for
an amount (the "Default Termination Amount") specified in the next sentence.
The "Default Termination Amount" shall be the greatest of (A) the Fair Market
Value of the Leased Premises or (B) the sum of the Acquisition Cost and
Prepayment Premium which Landlord will be required to pay in prepaying any Loan
with proceeds of the Default Termination Amount or (C) an amount equal to the
Present Value of the entire Basic Rent from the date of such purchase to the
date on which the then Term would expire, assuming that the Term has been
extended for all extension periods, if any, provided for in this Lease. Upon
such notice to Tenant, Tenant shall be deemed to have made such offer and
shall, if requested by Landlord, within ten (10) days following such request,
deposit with Landlord as payment against the Default Termination Amount the
amount described in (B) above, Landlord and Tenant shall promptly commence to
determine Fair Market Value. Within thirty (30) days after the Fair Market
Value Date, Landlord shall accept or reject such offer. If Landlord accepts
such offer then, on the tenth (10th) business day after such acceptance, Tenant
shall pay to Landlord the Default Termination Amount and, at the request of
Tenant, Landlord will convey the Leased Premises to Tenant or its designee in
accordance with Paragraph 20. Any rejection by Landlord of such offer shall
have no effect on any other remedy Landlord may have under this Lease.
(iv) Landlord may declare by notice to Tenant the
entire Basic Rent (in the amount of Basic Rent then in effect) for the
remainder of the then current Term to be immediately due and payable. Tenant
shall immediately pay to Landlord all such Basic Rent discounted to its Present
Value, all accrued Rent then due and unpaid, all other Monetary
<PAGE> 33
Obligations which are then due and unpaid and all Monetary Obligations which
arise or become due by reason of such Event of Default (including any Costs of
Landlord). Upon receipt by Landlord of all such accelerated Basic Rent and
Monetary Obligations, this Lease shall remain in full force and effect and
Tenant shall have the right to possession of the Leased Premises from the date
of such receipt by Landlord to the end of the Term, and subject to all the
provisions of this Lease, including the obligation to pay all increases in
Basic Rent and all Monetary Obligations that subsequently become due, except
that (A) no Basic Rent which has been prepaid hereunder shall be due thereafter
during the said Term, (B) Tenant shall have no option to extend or renew the
Term.
(b) The following constitute damages to which Landlord
shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i)
or 23(A)(II):
(i) If Landlord exercises its remedy under
Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to
exercise such remedy and is unsuccessful in reletting the Leased Premises)
then, upon written demand from Landlord, Tenant shall pay to Landlord, as
liquidated and agreed final damages for Tenant's default and in lieu of all
current damages beyond the date of such demand (it being agreed that it would
be impracticable or extremely difficult to fix the actual damages), an amount
equal to the Present Value of the excess, if any, of (A) all Basic Rent from
the date of such demand to the date on which the Term is scheduled to expire
hereunder in the absence of any earlier termination, re-entry or repossession
over (B) the then fair market rental value of the Leased Premises for the same
period. Tenant shall also pay to Landlord all of Landlord's Costs in
connection with the repossession of the Leased Premises and any attempted
reletting thereof, including all customary brokerage commissions, , reasonable
attorneys' fees and expenses, reasonable employees' expenses, and reasonable
costs of Alterations and expenses in preparation for reletting.
(ii) If Landlord exercises its remedy under
Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then
Tenant shall, until the end of what would have been the Term in the absence of
the termination of the Lease, and whether or not any of the Leased Premises
shall have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages on the date on which the same are due and
payable under the terms of this Lease all Monetary Obligations which would be
payable under this Lease by Tenant in the absence of such termination less the
net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after
deducting from such proceeds all of Landlord's Costs (including the items
listed in the last sentence of Paragraph 23(b)(i) hereof) incurred in
connection with such repossessing and reletting; provided, that if Landlord has
not relet the Leased Premises, such Costs of Landlord shall be considered to be
Monetary Obligations payable by Tenant. Tenant shall be and remain liable for
all sums aforesaid, and Landlord may recover such damages from Tenant and
institute and maintain successive actions or legal proceedings against Tenant
for the recovery of such damages. Nothing herein contained shall be deemed to
require Landlord to wait to begin such action or other legal proceedings until
the date when the Term would have expired by its own terms had there been no
such Event of Default.
(c) Notwithstanding anything to the contrary herein
contained, in lieu of or in addition to any of the foregoing remedies and
damages, Landlord may exercise any remedies and collect any damages available
to it at law or in equity. If Landlord is unable to obtain full satisfaction
pursuant to the exercise of any remedy, it may pursue any other remedy which it
has hereunder or at law or in equity.
(d) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Laws of the State. If any
Law shall limit the amount of any damages provided for herein to an amount
which is less than the amount agreed to herein, Landlord shall be entitled to
the maximum amount available under such Laws.
<PAGE> 34
(e) No termination of this Lease, repossession or
reletting of any of the Leased Premises, exercise of any remedy or collection
of any damages pursuant to this Paragraph 23 shall relieve Tenant of any
Surviving Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT, TO THE FULLEST EXTENT PERMITTED BY THE LAWS OF THE STATE,
(i) WAIVES THE SERVICE OF ANY ADDITIONAL NOTICE WHICH MAY BE REQUIRED BY ANY
APPLICABLE LAW AND (ii) WAIVES ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence and during the continuance of any
Event of Default, Landlord shall have the right (but no obligation) to perform
any act required of Tenant hereunder and, if performance of such act requires
that Landlord enter the Leased Premises, Landlord may enter the Leased Premises
for such purpose.
(h) No failure of Landlord (i) to insist at any time upon
the strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any
sum in satisfaction of any Monetary Obligation with knowledge of the breach of
any provision hereof shall not be deemed a waiver of such breach, and no waiver
by Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and
all those claiming under it, including creditors of all kinds, (i) any right
and privilege which it or any of them may have under any present or future Law
to redeem any of the Leased Premises or to have a continuance of this Lease
after termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent, except to the extent Landlord shall have executed a
landlord's waiver with respect to such property.
(j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be
exhausted by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or
permitted to be given pursuant to the provisions of this Lease shall be in
writing and shall be deemed to have been given and received for all purposes
when delivered in person or by Federal Express or other reliable 24-hour
delivery service or five (5) business days after being deposited in the United
States mail, by registered or certified mail, return receipt requested, postage
prepaid, addressed to the other party at its address stated above or when
delivery is refused. A copy of any notice given by Landlord to Tenant shall
simultaneously be given by Landlord to Liner Yankelevitz Sunshine Weinhart
Riley & Regenstreif LLP, Attention: Mitchell C. Regenstreif, Esq. A copy of
any notice given by Tenant to Landlord shall simultaneously be given by Tenant
to Reed Smith Shaw & McClay LLP, 2500 One Liberty Place, Philadelphia, PA
19103, Attention: Chairman, Real Estate Department. For the purposes of this
Paragraph, any party may substitute another address stated above (or
substituted by a previous notice) for its address by giving fifteen (15) days'
notice of the new address to the other party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten (10)
days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the
<PAGE> 35
"Responding Party"), the Responding Party shall deliver to the Requesting Party
a statement in writing, executed by an authorized officer of the Responding
Party having sufficient knowledge of this Lease and the Leased Premises,
certifying (a) that, except as otherwise specified, this Lease is unmodified
and in full force and effect, (b) the dates to which Basic Rent, Additional
Rent and all other Monetary Obligations have been paid, (c) that, to the
knowledge of the signer of such certificate and except as otherwise specified,
no default by either Landlord or Tenant exists hereunder, (d) such other
matters as the Requesting Party may reasonably request, and (e) if Tenant is
the Responding Party that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened, against
Tenant before or by an court or administrative agency which, if adversely
decided, would materially and adversely affect the financial condition and
operations of Tenant. Any such statements by the Responding Party may be
relied upon by the Requesting Party, any Person whom the Requesting Party
notifies the Responding Party in its request for the Certificate is an intended
recipient or beneficiary of the Certificate, any Lender or their assignees and
by any prospective purchaser or mortgagee of any of the Leased Premises.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The
cost of removing and disposing of such property and repairing any damage to any
of the Leased Premises caused by such removal shall be paid by Tenant to
Landlord upon demand. Landlord shall not in any manner or to any extent be
obligated to reimburse Tenant for any such property which becomes the property
of Landlord pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of
account with respect to the finances and business of Tenant generally and with
respect to the Leased Premises, in accordance with generally accepted
accounting principles ("GAAP") consistently applied, and shall permit Landlord
and Lender by their respective agents, accountants and attorneys, upon
reasonable prior written notice to Tenant, to visit and inspect the Leased
Premises and examine (and make copies of) the records and books of account and
to discuss the finances and business with the officers of Tenant, at such
reasonable times as may be requested by Landlord. Upon the request of Lender
or Landlord (either telephonically or in writing), Tenant shall provide the
requesting party with copies of any information to which such party would be
entitled in the course of a personal visit.
(b) Tenant shall deliver to Landlord and to Lender within
ninety (90) days of the close of each fiscal year, annual audited
"consolidating" financial statements of Tenant prepared by nationally
recognized independent certified public accountants. Tenant shall
<PAGE> 36
also furnish to Landlord within forty-five (45) days after the end of each of
the three remaining quarters unaudited financial statements and all other
quarterly reports of Tenant, certified by Tenant's chief financial officer, and
all filings, if any, of Form 10-K, Form 10-Q and other required filings with
the Securities and Exchange Commission pursuant to the provisions of the
Securities Exchange Act of 1934, as amended, or any other Law. All financial
statements of Tenant shall be prepared in accordance with GAAP consistently
applied. All annual financial statements shall be accompanied (i) by an
opinion of said accountants stating that (A) there are no qualifications as to
the scope of the audit and (B) the audit was performed in accordance with GAAP
and (ii) by the affidavit of the president or a vice president of Tenant, dated
within five (5) days of the delivery of such statement, stating that (C) the
affiant knows of no Event of Default, or event which, upon notice or the
passage of time or both, would become an Event of Default which has occurred
and is continuing hereunder or, if any such event has occurred and is
continuing, specifying the nature and period of existence thereof and what
action Tenant has taken or proposes to take with respect thereto and (D) except
as otherwise specified in such affidavit, that Tenant has fulfilled all of its
obligations under this Lease which are required to be fulfilled on or prior to
the date of such affidavit.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is
required pursuant to any provision of this Lease, such Fair Market Value shall
be determined in accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree
upon such Fair Market Value within thirty (30) days after the date (the
"Applicable Initial Date") on which (A) Tenant provides Landlord with notice of
its intention to terminate this Lease and purchase the Leased Premises under
Paragraph 21(c), (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c) or (C) Landlord
provides Tenant with notice of Landlord's intention to require Tenant to make
an offer to purchase the Leased Premises pursuant to Paragraph 23(a)(iii) or
the Abandonment Premises under Paragraph 37(g). Upon reaching such agreement,
the parties shall execute an agreement setting forth the amount of such Fair
Market Value.
(ii) If the parties shall not have signed such
agreement within twenty (20) days after the Applicable Initial Date, Tenant
shall within forty (40) days after the Applicable Initial Date select an
appraiser and notify Landlord in writing of the name, address and
qualifications of such appraiser. Within ten (10) days following Landlord's
receipt of Tenant's notice of the appraiser selected by Tenant, Landlord shall
select an appraiser and notify Tenant of the name, address and qualifications
of such appraiser. Such two appraisers shall endeavor to agree upon Fair
Market Value based on a written appraisal made by each of them as of the
Relevant Date (and given to Landlord by Tenant). If such two appraisers shall
agree upon a Fair Market Value, the amount of such Fair Market Value as so
agreed shall be binding and conclusive upon Landlord and Tenant.
(iii) If such two appraisers shall be unable to
agree upon a Fair Market Value within fifteen (15) days after the selection of
an appraiser by Landlord, then such appraisers shall advise Landlord and Tenant
of their respective determination of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The selection of the
third appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to
agree upon the designation of a third appraiser within ten (10) days after the
expiration of the fifteen (15) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value
within fifteen (15) days after his selection, then such third appraiser or a
<PAGE> 37
substituted third appraiser, as applicable, shall, at the request of either
party hereto, be appointed by the President or Chairman of the American
Arbitration Association in Chicago, Illinois. The determination of Fair Market
Value made by the third appraiser appointed pursuant hereto shall be made
within fifteen (15) days after such appointment.
(v) If a third appraiser is selected, Fair
Market Value shall be the average of the determination of Fair Market Value
made by the third appraiser and the determination of Fair Market Value made by
the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose
determination of Fair Market Value is nearest to that of the third appraiser.
Such average shall be binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed
pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI
appraisers (B) have no right, power or authority to alter or modify the
provisions of this Lease, (C) utilize the definition of Fair Market Value
hereinabove set forth above, and (D) be registered in the State if the State
provides for or requires such registration.
(vii) The Cost of the procedure described in
this Paragraph 29(a) above shall be borne by Tenant.
(b) If, by virtue of any delay, Fair Market Value
is not determined by the expiration or termination of the then current Term,
then the date on which the Term would otherwise expire or terminate shall be
extended with respect to the Leased Premises or the Affected Premises, as
applicable, to the date specified for termination in the particular provision
of this Lease pursuant to which the determination of Fair Market Value is being
made.
(c) In determining Fair Market Value as defined
in clause (b) of the definition of Fair Market Value, the appraisers shall add
(i) the present value of the Rent for the remaining Term (assuming the Term has
been extended only for any exercised extension periods) using a discount rate
(which may be determined by an investment banker retained by each appraiser)
based on the creditworthiness of Tenant and (ii) the present value of the
Leased Premises as of the end of such Term (having assumed the Term has been
extended for all extension periods provided herein). The appraisers shall
further assume that no default then exists under the Lease, that Tenant has
complied (and will comply) with all provisions of the Lease, and that Tenant
has not violated (and will not violate) any of the Covenants.
30. Non-Recourse as to Landlord. Anything contained
herein to the contrary notwithstanding, any claim based on or in respect of any
liability of Landlord under this Lease shall be enforced only against the
Leased Premises and the rents, issues and profits derived therefrom, and not
against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord, or any general partner of Landlord, any of its general partners or
shareholders (or any legal representative, heir, estate, successor or assign of
any thereof), (c) any predecessor or successor partnership or corporation (or
other entity) of Landlord, or any of its general partners, either directly or
through Landlord or its general partners or any predecessor or successor
partnership or corporation or their shareholders, officers, directors,
employees or agents (or other entity), or (d) any other Person (including Carey
Property Advisors, Carey Fiduciary Advisors, Inc., W. P. Carey & Co., Inc., W.
P. Carey Incorporated and any Person affiliated with any of the foregoing, or
any director, officer, employee or agent of any thereof).
31. Financing.
(a) Tenant agrees to pay, within ten (10) days
following written request from Landlord, all reasonable costs and expenses
incurred by Landlord in connection
<PAGE> 38
with the purchase and leasing of the Leased Premises and the financing of the
initial Loan (excluding "points" or commitment fees), including, without
limitation, expenses of Landlord's and Lender's counsel, the cost of
appraisals, environmental reports, title insurance, premiums and costs, and
survey costs and expenses (not to exceed, with respect to Lender's legal fees
and expenses, $25,000 in the aggregate).
(b) Tenant agrees to pay, within three (3)
business days of written demand thereof, any cost, charge or expense (other
than the principal of the Note and interest thereon at the contract rate of
interest specified therein) imposed upon Landlord by Lender pursuant to the
Note, the Mortgage or the Assignment which caused by any act or omission of
Tenant and which is not otherwise reimbursed by Tenant to Landlord pursuant to
any other provision of this Lease.
(c) If Landlord desires to obtain or refinance
any Loan, Tenant shall negotiate in good faith with Landlord concerning any
request made by any Lender or proposed Lender for changes or modifications in
this Lease so long as the same do not materially adversely affect any right,
benefit or privilege of Tenant under this Lease or materially increase Tenant's
obligations under this Lease. In particular, Tenant shall agree, upon request
of Landlord, to supply any such Lender with such notices and information as
Tenant is required to give to Landlord hereunder and to impart the rights of
Landlord hereunder to any such Lender and to consent to such financing if such
consent is requested by such Lender. Tenant shall provide any other consent or
statement and shall execute any and all other documents that such Lender
reasonably requires in connection with such financing, including any
environmental indemnity agreement and subordination, non-disturbance and
attornment agreement, so long as the same (i) with respect to any financing
other than the with the initial Lender, are at no cost to Tenant, (ii) do not
materially adversely affect any right, benefit or privilege of Tenant under
this Lease and (iii) do not increase any of Tenant's monetary obligations or
materially increase any of Tenant's non-monetary obligations under this Lease.
Such subordination, nondisturbance and attornment agreement shall be in form
and substance reasonably satisfactory to Tenant and Lender and may require
Tenant to confirm that (a) Lender and its assigns will not be liable for any
misrepresentation, act or omission of Landlord and (b) Lender and its assigns
will not be subject to any counterclaim, demand or offsets which Tenant may
have against Landlord.
32. Subordination, Non-Disturbance and Attornment. This
Lease and Tenant's interest hereunder shall be subordinate to any Mortgage or
other security instrument hereafter placed upon the Leased Premises by
Landlord, and to any and all advances made or to be made thereunder, to the
interest thereon, and all renewals, replacements and extensions thereof,
provided that any such Mortgage or other security instrument (or a separate
instrument of subordination, non-disturbance and attornment in recordable form
duly executed by the holder of any such Mortgage or other security instrument
executed and delivered to Tenant) shall provide for the recognition of this
Lease and all Tenant's rights hereunder unless and until an Event of Default
exists beyond any applicable notice and cure period and Landlord shall have the
right to terminate this Lease pursuant to any applicable provision hereof.
Landlord covenants that so long as Tenant shall have paid all Basic Rent then
due and payable and no other Event of Default shall have occurred and then be
continuing hereunder, Landlord shall timely pay the debt service payments due
Lender in connection with the Loan; provided that, the foregoing shall not
obligate Landlord to make any payment to Lender during the pendency of any good
faith dispute between Landlord and Lender.
33. Financial Covenants. Tenants hereby covenants and
agrees to comply with all the covenants and agreements described in Exhibit "G"
hereto.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true lease for state
law purposes and shall report this
<PAGE> 39
transaction as a Lease for Federal income tax purposes. For Federal income tax
purposes each shall report this Lease as a true lease with Landlord as the
owner of the Leased Premises and Equipment and Tenant as the lessee of such
Leased Premises and Equipment including: (1) treating Landlord as the owner of
the property eligible to claim depreciation deductions under Section 167 or 168
of the Internal Revenue Code of 1986 (the "Code") with respect to the Leased
Premises and Equipment, (2) Tenant reporting its Rent payments as rent expense
under Section 162 of the Code, and (3) Landlord reporting the Rent payments as
rental income.
35. Right of First Refusal.
(a) Except as otherwise provided in Paragraph
35(g), and provided an Event of Default does not then exist, if Landlord shall
enter into a contract (the "Sale Contract") for the sale of the entire Leased
Premises with a Third Party Purchaser, such Sale Contract shall be conditioned
upon Tenant's failure to exercise its right under this Paragraph 35(a), then
promptly following the execution thereof, Landlord shall give written notice to
Tenant, together with a copy of the executed Sale Contract.
(b) For a period of thirty (30) days following
receipt of such notice, Tenant shall have the right and option, exercisable by
written notice to Landlord given within said thirty (30) day period, to elect
to purchase the Leased Premises at the purchase price and upon all the terms
and conditions set forth in the Sale Contract, except that no contingencies
contained in such Sale Contract as to environmental assessments, engineering
studies, inspection of the Leased Premises, sale of other property, state of
the title to or encumbrances on the Leased Premises, or any other condition or
contingency to the Third Party Purchaser's obligation to purchase the Leased
Premises which pertains to the condition of the Leased Premises (other than any
such condition caused or permitted by Landlord in violation of this Lease), the
Third Party Purchaser's ability to take certain action or any other factor
beyond the control of Landlord, shall apply to Tenant's obligation to purchase
the Leased Premises under this Paragraph 35, and Tenant shall be obligated to
purchase the Leased Premises without any such condition or contingency.
(c) If at the expiration of the aforesaid thirty
(30) day period Tenant shall have failed to exercise the aforesaid option,
Landlord may sell the Leased Premises to such Third Party Purchaser upon the
terms set forth in such contract.
(d) Except as otherwise specifically provided
herein, the closing date for any purchase of the Leased Premises by Tenant
pursuant to this Paragraph 35 shall be the later to occur of (i) ninety (90)
days after the date of Tenant's notice to Landlord of its intention to purchase
the Leased Premises upon the terms of a Sale Contract with a Third Party
Purchaser but no later than the expiration date of the date of this Lease or
(ii) the closing date provided in such Sale Contract. At such closing Landlord
shall convey the Leased Premises to Tenant in accordance with, and Tenant shall
pay to Landlord the purchase price and other consideration set forth in, the
applicable Sale Contract.
(e) Tenant shall have the right to exercise the
foregoing right of first refusal upon each proposed sale of the Leased Premises
prior to the expiration of this Lease. IF THE TERM OF THIS LEASE SHALL
TERMINATE OR EXPIRE, SUCH RIGHTS OF FIRST REFUSAL GRANTED PURSUANT TO THIS
PARAGRAPH 35 SHALL TERMINATE AND BE NULL AND VOID AND OF NO FURTHER FORCE AND
EFFECT. IN SUCH EVENT TENANT SHALL EXECUTE A QUITCLAIM DEED AND SUCH OTHER
DOCUMENTS AS LANDLORD SHALL REASONABLY REQUEST EVIDENCING THE TERMINATION OF
ITS RIGHT OF FIRST REFUSAL.
<PAGE> 40
(f) If Tenant does not exercise its right of
first refusal to purchase the Leased Premises and the Leased Premises are
transferred to a Third Party Purchaser, Tenant will attorn to any Third Party
Purchaser as Landlord hereunder so long as such Third Party Purchaser assumes
in writing the obligations of Landlord under this Lease and such Third Party
Purchaser and Landlord notify Tenant in writing of such transfer. At the
request of Landlord, Tenant will execute such documents confirming the
agreement referred to above and such other agreements as Landlord may
reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder.
(g) Tenant's right of first refusal set forth in
the provisions of this Paragraph 35 shall not be exercisable upon the
occurrence of, or prohibit (but shall continue in effect after), (i) any
mortgaging, subjection to deed of trust or other hypothecation of Landlord's
interest in the Leased Premises, (ii) any sale of the Leased Premises pursuant
to a private power of sale under or judicial foreclosure of any Mortgage or
other security instrument or device to which Landlord's interest in the Leased
Premises is now or hereafter subject, (iii) any transfer of Landlord's interest
in the Leased Premises to a Lender, beneficiary under deed of trust or other
holder of a security interest therein or their designees by deed in lieu of
foreclosure, (iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer of the
Leased Premises to any affiliate of Landlord, Corporate Property Associates 12,
W. P. Carey & Co., Inc. or Carey Diversified L. L. C. or (vi) any sale of all
or substantially all of Landlord's assets.
36. Baraboo Premises Expansion.
(a) Should Tenant, at any time during the period
prior to the tenth (10th) anniversary of the Commencement Date, desire to
expand the Baraboo Premises (an "Expansion"), which Expansion shall consist of
the construction of permanent improvements not readily removable from the
Baraboo Premises without causing material damage to the Baraboo Premises, then,
provided that (i) no Event of Default shall have occurred and be continuing,
(ii) there shall have been no adverse change in the financial condition of
Tenant and (iii) Basic Rent is increased by an amount provided for in
subparagraph (d)(i) below, Landlord shall (A) pay the cost of such Expansion if
the cost thereof is $2,500,000 or less and (B) not unreasonably withhold its
consent to pay the cost of such Expansion to the extent the cost thereof is in
excess of $2,500,000 if Landlord is satisfied with the creditworthiness and
management of Tenant.
(b) To the extent that the terms of the Mortgage
or any other document encumbering any of the Leased Premises shall require the
consent of Lender and/or the holder or holders of any encumbrance on any of the
Leased Premises (the "Encumbrancers") to the Expansion or to the financing
thereof by Landlord, the rights and obligations of Landlord and Tenant under
Paragraph 12 and this Paragraph 36 are expressly conditioned upon Tenant's
obtaining, prior to the commencement of any construction, the Encumbrancers'
written consent to such construction and to such financing. Landlord agrees to
reasonably cooperate with Tenant, at Tenant's sole cost and expense, with
respect to obtaining such consent.
(c) Should Landlord not agree to finance or
otherwise reimburse Tenant for the costs of the Expansion, or should Landlord
and Tenant be unable in good faith to agree upon the terms of the modification
of this Lease, Tenant shall, subject to the provisions of Paragraph 13 of this
Lease and any required Lender consent, have the right to construct the
Expansion at Tenant's sole cost and expense. In any event, the construction of
the Expansion shall be performed in accordance with the provisions of Paragraph
12 hereof and the Expansion shall be the property of Landlord and part of the
Leased Premises subject to all of the terms and conditions of this Lease.
<PAGE> 41
(d) Should Landlord agree to finance or otherwise
reimburse Tenant for the costs of such Expansion, Landlord and Tenant shall
enter into good faith negotiations regarding the execution and delivery of a
written agreement of modification of this Lease, which agreement shall provide
for the following:
(i) an increase in the annual Basic Rent
payable during the Amortization Period (as hereinafter defined) equal to the
greater of (A) an amount sufficient to amortize the cost of such Expansion over
a period (the "Amortization Period") which shall be equal to the remainder of
the then current Term (exclusive of any Renewal Term not yet exercised) at a
rate of interest equal to the ten (10) year Treasury Rate plus 300 basis
points, and (B) a rate of return to Landlord on Landlord's equity investment in
the Leased Premises equal to that enjoyed by Landlord hereunder immediately
prior to such proposed increase in Basic Rent and upon such other terms as
shall be agreed upon between Landlord and Tenant, but which other terms shall
be no less favorable to Landlord than the prevailing terms for first unsecured
loans for borrowers with credit ratings equivalent to that of Tenant's at that
time; and
(ii) such other changes and amendments to
this Lease as may be necessary and appropriate in view of such payment of the
costs of such Expansion by Landlord to Tenant.
(e) Tenant shall pay all Costs incurred by Landlord
in connection with any such modification to this Lease and such financing,
including closing costs, brokerage fees, taxes, recording charges and legal
fees and expenses.
(f) Nothing contained in this Paragraph 36 shall
be construed to modify Paragraphs 11 and 12 hereof and the provisions of
Paragraph 11 and 12 shall apply to all Alterations made or constructed
hereunder, including the requirement for Landlord's consent to Alterations.
37. Economic Abandonment.
(a) Provided that an Event of Default shall not have occurred
and then be continuing, Tenant shall have the right at any time after the
fifth (5) year of the Term (but in no event earlier than January 1, 2003) to
terminate this Lease with respect to one of the Related Premises that Tenant
shall have determined shall not be used for at least seven (7) years in its
business operations (such Related Premises, an "Abandonment Premises"). In the
event Tenant elects to exercise such right, Tenant shall give notice (the
"Abandonment Notice") to Landlord (with a copy to Lender) of its intention so to
terminate this Lease as to the Abandonment Premises, no later than three (3)
months prior to the date (the "Abandonment Date") of such intended termination,
which notice shall specify the Abandonment Date and shall contain (a) an
irrevocable offer of Tenant to terminate this Lease as to the Abandonment
Premises on the Abandonment Date for the Abandonment Offer Amount (as defined
below) and (b) a certificate of Tenant (i) stating that the Abandonment Premises
are no longer economic for Tenant's continued use and occupancy in its business
operations, (ii) specifying in reasonable detail the reasons therefor and (iii)
certifying that Tenant then intends to abandon its operations at the Abandonment
Premises for at least seven (7) years, which certificate shall be conclusively
binding upon Landlord and Tenant, and (c) a resolution of the Board of Directors
of Tenant (and each of them) authorizing such notice.
(b) Tenant may exercise its rights under this Paragraph
37 only one time and only with respect to one of the Related Premises.
(c) The "Abandonment Offer Amount" shall be the sum of
(A) 110 % of the Acquisition Costs with respect to the Abandonment Premises
determined in accordance with the
<PAGE> 42
percentage allocations specified in Exhibit "F" attached hereto and made a part
hereof and (B) any Prepayment Premium which Landlord will be required to pay in
prepayment of any Loan with proceeds of the Abandonment Offer Amount.
(d) Landlord shall accept or reject such offer by notice
to Tenant given not later than ninety (90) days prior to the Abandonment Date.
If Landlord shall reject such offer, which rejection shall not be valid unless
accompanied by the written consent thereto by Lender, if any, then upon (i)
payment of all Rent and any other sums due and unpaid hereunder as of the
Abandonment Date and (ii) compliance by Tenant with all other obligations and
liabilities under the Lease which have arisen on or prior to the Abandonment
Date, this Lease shall terminate as to the Abandonment Premises on the
Abandonment Date and Tenant shall immediately vacate and have no further rights,
title or interest in or to any of the Abandonment Premises.
(e) After the Abandonment Date, whether or not Landlord
shall have accepted or rejected Tenant's offer, the terms of this Lease will
remain in full force and effect with respect to the remaining Related Premises
except that the Basic Rent will be that percentage of the then Basic Rent which
is allocated to the remaining Related Premises as set forth in Exhibit "F"
attached hereto and made a part hereof.
(f) Unless Landlord shall have rejected such offer by the
foregoing notice to Tenant not later than the thirtieth (30th) day prior to the
Abandonment Date, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Abandonment Offer Amount on the Abandonment Date and, provided an Event of
Default does not exist hereunder, at the request of Tenant, Landlord shall
convey to Tenant the Abandonment Premises in accordance with the provisions of
Paragraph 20.
(g) Landlord shall have the right, at Landlord's sole
option, to treat any vacating or abandonment of the Abandonment Premises which
is prohibited pursuant to Paragraph 22 (a) hereof as constituting an election by
Tenant of its rights under this Paragraph 37 and as a irrevocable offer of
Tenant to purchase the Abandonment Premises at the price and upon the terms
hereinabove more specifically provided.
38. Miscellaneous.
(a) The paragraph headings in this Lease are
used only for convenience in finding the subject matters and are not part of
this Lease or to be used in determining the intent of the parties or otherwise
interpreting this Lease.
(b) As used in this Lease, the singular shall
include the plural and any gender shall include all genders as the context
requires and the following words and phrases shall have the following meanings:
(i) "including" shall mean "including without limitation"; (ii) "provisions"
shall mean "provisions, terms, agreements, covenants and/or conditions"; (iii)
"lien" shall mean "lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to
perform under this Lease may be performed at any time and from time to time by
Landlord or any person or entity designated by Landlord. Except as otherwise
specifically provided herein, Landlord shall have
<PAGE> 43
the right, at its sole option, to withhold its consent whenever such consent is
required under this Lease for any reason or no reason. Time is of the essence
with respect to the performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for
any purpose to be a partner, joint venturer or associate of Tenant or of any
subtenant, operator, concessionaire or licensee of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be
executed by Tenant on or about the effective date hereof at Landlord's request
constitute the entire agreement between the parties and supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the Leased Premises and the transactions provided for
herein. Landlord and Tenant are business entities having substantial
experience with the subject matter of this Lease and have each fully
participated in the negotiation and drafting of this Lease. Accordingly, this
Lease shall be construed without regard to the rule that ambiguities in a
document are to be construed against the drafter.
(f) This Lease may be modified, amended,
discharged or waived only by an agreement in writing signed by the party against
whom enforcement of any such modification, amendment, discharge or waiver is
sought.
(g) The covenants of this Lease shall run with
the land and shall be binding upon, and shall inure to the benefit of, Landlord
and Tenant and their respective successors and assigns and all present and
subsequent encumbrancers and subtenants of any of the Leased Premises. If there
is more than one Tenant, the obligations of each shall be joint and several.
(h) Notwithstanding any provision in this Lease
to the contrary, all Surviving Obligations of Tenant shall survive the
expiration or termination of this Lease with respect to any Related Premises.
(i) If any one or more of the provisions
contained in this Lease shall for any reason be held to be invalid, illegal or
unenforceable in any respect under the Laws of the State, then such provisions
shall be given no force or effect and shall be severed from the remaining terms
and provisions of this Lease, and such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein.
(j) All exhibits attached hereto are incorporated
herein as if fully set forth.
(k) This Lease shall be governed by and
construed and enforced in accordance with the Laws of the State.
<PAGE> 44
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
PRINT (WI) QRS 12-40, INC.,
a Wisconsin corporation
By:
----------------------------------
Title:
-------------------------------
ATTEST: TENANT:
PERRY GRAPHIC COMMUNICATIONS,
INC., a Delaware corporation
By: By:
------------------------------ ----------------------------------
Title: Title:
--------------------------- -------------------------------
JUDD'S, INCORPORATED,
a Maryland corporation
By: By:
------------------------------- ----------------------------------
Title: Title:
---------------------------- -------------------------------
<PAGE> 45
EXHIBIT A
PREMISES
<PAGE> 46
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing
and ventilating systems, devices and machinery and all engines, pipes, pumps,
tanks (including exchange tanks and fuel storage tanks), motors, conduits,
ducts, steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment (including, without limitation Tenant's
printing equipment) which are not necessary to the operation, as buildings, of
the buildings which constitute part of the Leased Premises.
<PAGE> 47
EXHIBIT C
PERMITTED ENCUMBRANCES
<PAGE> 48
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for
in Paragraph 2 below, Basic Rent payable in respect of the Term shall be
$1,888,875 per annum, payable quarterly in advance on each Basic Rent Payment
Date, in equal installments of $472,218.75 each.
2. Effective Dates of Rent Increases.
(a) Basic Rent shall be increased as set forth in
the succeeding sentence, commencing on the fifth (5th) anniversary of the date
(the "First Full Basic Rent Payment Date"). on which the first full quarterly
installment of Basic Rent shall be due and payable. As of the fifth (5th)
anniversary of the First Full Basic Rent Payment Date and thereafter on the
tenth (10th) on the fifteenth (15th), and, if the initial Term is extended,
twentieth (20th), twenty-fifth (25th) and thirtieth (30th) anniversaries of the
First Full Basic Rent Payment Date, Basic Rent shall be increased by ten
percent (10%) over the Basic Rent in effect immediately preceding each of the
foregoing dates (each such date being hereinafter referred to as the "Basic
Rent Adjustment Date").
(a) Effective as of a given Basic Rent Adjustment
Date, Basic Rent payable under this Lease until the next succeeding Basic Rent
Adjustment Date shall be the Basic Rent in effect after the adjustment provided
for as of such Basic Rent Adjustment Date.
(b) Notice of the new annual Basic Rent shall be
delivered to Tenant on or before the tenth (10th) day preceding each Basic Rent
Adjustment Date, but any failure to do so by Landlord shall not be or be deemed
to be a waiver by Landlord of Landlord's rights to collect such sums. Tenant
shall pay to Landlord, within ten (10) days after a notice of the new annual
Basic Rent is delivered to Tenant, all amounts due from Tenant, but unpaid,
because notice of the stated amount as set forth above was not delivered to
Tenant at least ten (10) days preceding the Basic Rent Adjustment Date in
question.
<PAGE> 49
EXHIBIT E
ACQUISITION COST
<TABLE>
<S> <C>
Baraboo Premises $ 9,787,267
161 N. Jackson St. Premises $ 4,831,689
575 W. Madison St. Premises $ 2,849,457
200 S. Jackson St. Premises;
207 S. Jackson St. Premises; and
275 S. Jackson St. Premises $ 1,641,535
TOTAL $19,109,948
===========
</TABLE>
<PAGE> 50
EXHIBIT F
PERCENTAGE ALLOCATION OF BASIC RENT
<TABLE>
<S> <C>
Baraboo Premises 51.22%
161 N. Jackson St. Premises 25.28%
575 W. Madison St. Premises 14.91%
200 S. Jackson St. Premises;
207 S. Jackson St. Premises; and
275 S. Jackson St. Premises 9.00%
TOTAL 100%
</TABLE>
If any of the Related Premises ceases to be subject to this Lease, the
percentage shown on this Exhibit F for each of the Related Premises which
remains subject to this Lease shall be adjusted proportionately so that the
total of such percentages shall be 100%.
<PAGE> 51
EXHIBIT G
FINANCIAL COVENANTS
1. Tenant shall, and shall cause its respective
subsidiaries to, comply (A) with the covenants set forth in Article 7 and
Article 8 of that certain Amended and Restated Credit Agreement, dated as of
December 16, 1997 by and among Perry Graphic Communications, Inc., Shenandoah
Valley Press, Inc. and Port City Press, Inc., as borrower, and BT Commercial
Corporation, as agent, and the other lenders that are parties thereto
(collectively, the "Lender") (as the same may be further amended, restated or
modified, the "Credit Agreement"), in the same manner and to the same effect as
if the terms of Article 7 and Article 8 of the Credit Agreement were set forth
in full herein and (B) upon refinancing of the debt described in the Credit
Agreement, with the covenants set forth in the credit agreement that replaces
the Credit Agreement (any such replacement credit agreement or other bond
financing, the "Senior Credit Agreement") pertaining to the matters addressed
in Article 7 and Article 8. of the Credit Agreement in the same manner and to
the same effect as if the terms of such covenants of the Senior Credit
Agreement were set forth herein, after giving effect to any modification,
amendment or waiver of the Credit Agreement or Senior Credit Agreement, as the
case may be, a copy of which has been delivered to Landlord, and for such
purpose such terms of Article 7 and Article 8 of the Credit Agreement or Senior
Credit Agreement, as the case may be, and such other relevant provisions and
definitions of the Credit Agreement or Senior Credit Agreement, as the case may
be, as are expressly referenced therein and amendments, modifications, and
waivers thereto are incorporated herein by reference.
2. A copy of the relevant provisions of Article 7 and
Article 8 of the Credit Agreement, and the amendments thereto, as the same are
in effect on the date hereof, are attached hereto.
<PAGE> 52
EXHIBIT H
MEMORANDUM OF LEASE
