SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
COMMISSION FILE NUMBER 1-13792
GLOBAL DIRECTMAIL CORP
(Exact name of registrant as specified in its charter)
Delaware 11-3262067
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
22 Harbor Park Drive
Port Washington, New York 11050
(Address of registrant's principal executive offices)
(516) 625-1555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
The number of shares outstanding of the registrant's Common Stock as of May 10,
1999 was 35,856,790.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
GLOBAL DIRECTMAIL CORP
Condensed Consolidated Balance Sheets
(IN THOUSANDS)
March 31, December 31,
1999 1998
---------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 45,667 $ 42,029
Short term investments 798 5,050
Accounts receivable, net 175,892 154,516
Inventories 133,694 129,966
Prepaid expenses and other current assets 29,823 28,382
---------- -----------
Total current assets 387,292 359,943
PROPERTY, PLANT AND EQUIPMENT, net 34,753 33,988
GOODWILL, net 71,263 56,612
OTHER ASSETS 3,942 3,896
--------- ----------
TOTAL $ 495,832 $ 454,439
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 200,214 $ 162,636
Current portion of long term debt 2,574 2,681
--------- ----------
Total current liabilities 202,788 165,317
--------- ----------
LONG TERM DEBT 2,308 2,493
--------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock -- --
Common stock, par value $.01 per share, issued 38,231,990 shares,
outstanding 35,856,790 and 36,128,090 shares 382 382
Additional paid-in capital 176,743 176,743
Common stock in treasury at cost - 2,375,200 and 2,103,900 shares (32,693) (28,604)
Accumulated other comprehensive income (2,915) (348)
Retained earnings 149,219 138,456
--------- ----------
Total shareholders' equity 290,736 286,629
--------- ----------
TOTAL $ 495,832 $ 454,439
========= ==========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL DIRECTMAIL CORP
Condensed Consolidated Statements of Income
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- ----------------------------------------------------------------------------------
Three Month
Periods ended
March 31,
1999 1998
(Unaudited)
<S> <C> <C>
NET SALES $ 421,651 $ 358,358
COST OF SALES 342,339 282,989
--------- ---------
GROSS PROFIT 79,312 75,369
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 62,141 55,291
--------- ---------
INCOME FROM OPERATIONS 17,171 20,078
INTEREST AND OTHER INCOME 330 842
--------- ---------
INCOME BEFORE INCOME TAXES 17,501 20,920
PROVISION FOR INCOME TAXES 6,738 8,055
--------- ---------
NET INCOME $ 10,763 $ 12,865
========= =========
Net income per common share:
Basic $ .30 $ .34
========= =========
Diluted $ .30 $ .34
========= =========
Common and common equivalent shares outstanding:
Basic 36,064 38,232
========= =========
Diluted 36,117 38,351
========= =========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
GLOBAL DIRECTMAIL CORP
Condensed Statement of Consolidated Shareholders' Equity
(IN THOUSANDS)__________________________________________________________________
Accumulated
COMMON STOCK Additional Other Treasury
Number of Paid-in Retained Comprehensive Stock
SHARES AMOUNT CAPITAL EARNINGS INCOME AT COST
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1998 36,128 $ 382 $ 176,743 $ 138,456 $ (348) (28,604)
Change in cumulative translation adjustment (2,567)
Purchase of treasury shares (271) (4,089)
Net income 10,763
-------- ------- ---------- --------- -------- --------
BALANCES, MARCH 31, 1999 35,857 $ 382 $ 176,743 $149,219 $ (2,915) $ (32,693)
======== ======= ========== ========= ======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL DIRECTMAIL CORP
Condensed Statements of Consolidated Cash Flows
(IN THOUSANDS)
THREE-MONTH PERIOD
ENDED MARCH 31,
1999 1998
----------------------------
(UNAUDITED)
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 10,763 $ 12,865
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization, net 2,393 1,882
Provision for returns and doubtful accounts 1,820 1,943
Changes in certain assets and liabilities:
Accounts receivable (19,506) (18,254)
Inventories (654) (2,631)
Prepaid catalog and other prepaid expenses (1,078) (3,499)
Accounts payable and accrued expenses 19,634 22,867
----------- ----------
Net cash provided by operating activities 13,372 15,173
----------- ----------
CASH FLOWS PRIVIDED BY (USED IN) INVESTING ACTIVITIES:
Net change in short-term investments 4,252 922
Investments in property, plant and equipment (2,443) (3,089)
Acquisitions, net of cash acquired (8,398) (895)
---------- ------------
Net cash used in investing activities (6,589) (3,062)
---------- ------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repayments of long-term borrowings (160)
Purchase of treasury shares (4,089)
----------- -----------
Net cash used in financing activities (4,249)
---------- -----------
EFFECTS OF EXCHANGE RATES ON CASH 1,104 418
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,638 12,529
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 42,029 43,432
---------- ------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 45,667 $ 55,961
========== =============
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
GLOBAL DIRECTMAIL CORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
The accompanying consolidated financial statements include the accounts of
Global DirectMail Corp and its wholly-owned subsidiaries (collectively, the
"Company" or "Global"). The Company is a corporate supplier of personal
computers (PCs), notebook computers, computer related products, industrial
products and office products in North America and Europe. Global markets
these products through an integrated system of direct mail catalogs, a
network of major account sales representatives and proprietary "e-commerce"
Internet sites.
2. BASIS OF PRESENTATION
Net income per common share - basic was calculated based upon the weighted
average number of common shares outstanding during the respective periods
presented. Net income per common share - diluted was calculated based upon
the weighted average number of common shares outstanding and included the
equivalent shares for dilutive options outstanding during the respective
periods.
All intercompany accounts have been eliminated in consolidation.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all normal and recurring
adjustments necessary to present fairly the financial position of the
Company as of March 31,1999 and the results of operations for the three
months ended March 31, 1999 and 1998, cash flows for the three months ended
March 31, 1999 and 1998 and changes in stockholders' equity for the three
months ended March 31, 1999. The December 31, 1998 consolidated balance
sheet has been extracted from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
These condensed consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial statements as
of December 31, 1998 and for the period then ended. The results for the
three months ended March 31, 1999 are not necessarily indicative of the
results for an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31,
1998
Net sales for the three months increased 18% to $421.7 million compared to
$358.4 million in the year ago quarter. The increase of $63.3 million was
primarily attributable to the purchase of Simply Computers Ltd. ("Simply")
in February 1999, increased demand for PCs and increased sales generated by
the Company's Internet sites. The number of orders increased 8% to 1.1
million compared to the year ago quarter, with a 9% increase in the average
order value to $380. Sales during the quarter from North American
operations increased 9% to $303.9 million compared to $278.9 million in the
first quarter of 1998. European sales increased 48% to $117.7 million
(including approximately $21 million for Simply) compared to $79.4 million
in the year ago quarter. There was negligible effect on European sales due
to changes in exchange rates.
Gross profit increased by $3.9 million or 5% to $79.3 million compared to
$75.4 million in the year ago quarter, with gross profit as a percentage of
net sales decreasing to 18.8% compared to 21.0% a year ago. The decrease in
the gross profit percentage was primarily due to a shift in the Company's
product mix, continuing the recent trend of large increases in the sales of
PCs, notebook computers and brand name products, which generally have a
lower gross profit percentage, and a relatively lower sales contribution
from higher-margin industrial products.
Selling, general and administrative expenses for the quarter increased by
$6.9 million or 12% to $62.1 million compared to $55.3 million in the first
quarter of 1998. This increase was primarily the result of continuing
investments for expansion of the relationship marketing sales
organizations, investments in the Company's "e- commerce" Internet business
and the inclusion of Simply. This was partially offset by decreased catalog
spending, increased vendor supported advertising and the overall leveraging
of selling, general and administrative expenses over the larger sales base.
Selling, general and administrative expenses as a percentage of sales
improved to 14.7% compared to 15.4% in the year ago quarter.
Income from operations for the quarter decreased by $2.9 million to $17.2
million from $20.1 million in the year ago quarter. Income from operations
as a percentage of net sales decreased to 4.1% from 5.6% in the year ago
quarter. Operating income in North America decreased by 19% to $13.2
million from $16.3 million in the year ago quarter. Income from operations
in Europe increased to 5% to $4.0 million from $3.8 million in the year ago
quarter.
Net income for the quarter was $10.8 million, or $.30 per basic and diluted
share, compared to $12.9 million, or $.34 per basic and diluted share in
the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs are to finance working capital for
sales growth, investments in property, equipment and information technology
and business acquisitions. Operating cash flow financed the Company's
working capital, acquisition and capital expenditure needs. For the quarter
ended March 31, 1999, the Company generated cash from operating activities
of $13.4 million compared to $15.2 million for the year ago quarter. The
decrease resulted from lower net income in 1999. Cash was used in investing
activities, primarily for the purchase of Simply, and was also used in
financing activities for the purchase of treasury shares. For the three
months ended March 31, 1999, cash and cash equivalents increased by $3.6
million. The Company has access to adequate funds from short-term and
long-term borrowing facilities.
YEAR 2000 COMPLIANCE/EUROPEAN COMMON CURRENCY
For information regarding the Company's Year 2000 compliance plans and the
implications to the Company from the adoption of a European common
currency, reference is made to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations.
FORWARD LOOKING STATEMENTS
This report contains forward looking statements within the meaning of that
term in the Private Securities Litigation Reform Act of 1995 (Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934). Additional written or oral forward looking statements may be
made by the Company from time to time, in filings with the Securities
Exchange Commission or otherwise. Statements contained in this report that
are not historical facts are forward looking statements made pursuant to
the safe harbor provisions referenced above. Forward looking statements may
include, but are not limited to, projections of revenue, income or loss and
capital expenditures, statements regarding future operations, financing
needs, compliance with financial covenants in loan agreements, plans for
acquisition or sale of assets or businesses and consolidation of operations
of newly acquired businesses, and plans relating to products or services of
the Company, assessments of materiality, predictions of future events and
the effects of pending and possible litigation, as well as assumptions
relating to the foregoing. In addition, when used in this discussion, the
words "anticipates", "believes", "estimates", "expects", "intends", "plans"
and variations thereof and similar expressions are intended to identify
forward looking statements.
Forward looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified based on
current expectations. Consequently, future events and actual results could
differ materially from those set forth in, contemplated by, or underlying
the forward looking statements contained in this report. Statements in this
report, particularly in "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations", and the Notes to
Consolidated Financial Statements describe certain factors, among others,
that could contribute to or cause such differences. Other factors that
could contribute to or cause such differences include, but are not limited
to, unanticipated developments in any one or more of the following areas:
(i) the Company's ability to manage rapid growth as a result of internal
expansion and strategic acquisitions, (ii) the effect on the Company of
volatility in the price of paper and periodic increases in postage rates,
(iii) the operation of the Company's management information systems
including the costs and effects associated with the year 2000 date change
problem, (iv) the general risks attendant to the conduct of business in
foreign countries, including currency fluctuations associated with sales
not denominated in United States dollars, (v) significant changes in the
computer products retail industry, especially relating to the distribution
and sale of such products, (vi) competition in the PC, notebook computer,
computer related products, office products and industrial products markets
from superstores, direct response (mail order) distributors, mass
merchants, value added resellers, the Internet and other retailers, (vii)
the potential for expanded imposition of state sales taxes, use taxes, or
other taxes on direct marketing companies, (viii) the continuation of key
vendor relationships including the ability to continue to receive vendor
supported advertising, (ix) timely availability of existing and new
products, (x) risks due to shifts in market demand and/or price erosion of
owned inventory, (xi) borrowing costs, (xii) changes in taxes due to
changes in the mix of U.S. and non-U.S. revenue, (xiii)pending or
threatened litigation and investigations and (xiv) the availability of key
personnel, as well as other risk factors which may be detailed from time to
time in the Company's Securities and Exchange Commission filings.
Readers are cautioned not to place undue reliance on any forward looking
statements contained in this report, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result
of any revisions to these forward looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unexpected events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company is exposed to market risks, which include changes in U.S. and
international interest rates as well as changes in currency exchange rates
as measured against the U.S. dollar and each other. Global attempts to
reduce these risks by utilizing certain derivative financial instruments.
The value of the U.S. dollar affects the Company's financial results.
Changes in exchange rates may positively or negatively affect Global's
sales (as expressed in U.S. dollars), gross margins, operating expenses and
retained earnings. The Company may engage in hedging programs aimed at
limiting in part the impact of certain currency fluctuations. Using
primarily forward exchange and foreign currency option contracts, Global,
from time to time, hedges certain of its assets that, when remeasured
according to generally accepted accounting principles, may impact the
Statement of Consolidated Income. These hedging activities provide only
limited protection against currency exchange risks. Factors that could
impact the effectiveness of the Company's hedging programs include accuracy
of sales forecasts, volatility of the currency markets, availability of
hedging instruments and the credit-worthiness of the parties which have
entered into such contracts with the Company. All currency contracts that
are entered into by Global are for the sole purpose of hedging an existing
or anticipated currency exposure, not for speculative or trading purposes.
In spite of Global's hedging efforts to reduce the effect of changes in
exchange rates against the U.S. dollar, the Company sales or costs could
still be adversely affected by changes in those exchange rates.
As of March 31,1999, the Company had no outstanding forward exchange
contracts.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
The Board of Directors of the Company has adopted a resolution proposing to
the Company's stockholders that the corporate name of the Company be
changed to Systemax Inc. The Board of Directors has recommended the name
change to better reflect the Company's current status as a marketer of
computers and computer products and to enhance awareness of the Company and
its Systemax(TM) brand of build-to-order PCs. Under Delaware law, a change
in the corporate name requires an amendment to the Company's Certificate of
Incorporation which can be effectuated only upon a resolution of the Board
of Directors and a vote in favor of the amendment by the holders of a
majority of the outstanding shares of the Common Stock entitled to vote
thereon. Accordingly, a motion will be presented at the Company's annual
meeting of stockholders on May 18, 1999 to amend Article FIRST of the
Company's Certificate of Incorporation to read "The name of the corporation
is "Systemax Inc."".
ITEM 6. EXHIBITS
(a) Exhibits.
3.1 Certificate of Incorporation. (Incorporated herein by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1, File
No. 33-92052).
3.2 By-laws. (Incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1, File No. 33-92052).
4.1 Stockholders Agreement. (Incorporated herein by reference to the
Company's quarterly report on Form 10-Q for the quarterly period ended
June 30, 1995).
4.2 Specimen Stock Certificate. (Incorporated herein by reference to
Exhibit 4.2 to the Company's Registration Statement on Form S-1, File
No. 33-92052).
10.1 Lease Agreement dated as of April 20, 1999 between the Company and The
Shawnee Ridge Joint Venture (new Georgia facility).
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the three
months ended March 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBAL DIRECTMAIL CORP
Date: May 14, 1999 By: /S/ RICHARD LEEDS
------------------------------------
Richard Leeds
Chairman and Chief Executive Officer
By: /S/ STEVEN GOLDSCHEIN
-----------------------------------
Steven Goldschein
Senior Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
10.1 Lease Agreement dated as of April 20, 1999 between the Company and The
Shawnee Ridge Joint Venture (new Georgia facility)
27 Financial Data Schedule
VERSION 6/98
BUILD TO SUIT
INDUSTRIAL LEASE AGREEMENT
BETWEEN
THE SHAWNEE RIDGE JOINT VENTURE
AS LANDLORD
AND
SYSTEMAX, INC.
AS TENANT
<PAGE>
LEASE INDEX
SECTION SUBJECT
1 Basic Lease Provisions
2 Demised Premises
3 Term
4 Base Rent
5 Intentionally Omitted
6 Additional Rent
7 Use of Demised Premises
8 Insurance
9 Utilities
10 Taxes and Other Impositions
11 Maintenance and Repairs
12 Tenants' Personal Property; Indemnity
13 Tenant's Fixtures
14 Signs
15 Intentionally Omitted
16 Governmental Regulations
17 Environmental Matters
18 Construction of Demised Premises
19 Tenant Alterations and Additions
20 Services by Landlord
21 Fire and Other Casualty
22 Condemnation
23 Tenant's Default
24 Landlord's Right of Entry
25 Lender's Rights
26 Estoppel Certificate
27 Landlord Liability
28 Notices
29 Brokers
30 Assignment and Subleasing
31 Termination or Expiration
32 Late Payments
33 Rules and Regulations
34 Dispute Resolution Procedure
35 Miscellaneous
36 Special Stipulations
37 Lease Date
38 Authority
39 No Offer Until Executed
Exhibit "A" Legal Description
Exhibit "A-1" Site Plan
Exhibit "A-2" Floor Plan
Exhibit "A-3" Elevation Plan
Exhibit "A-4" Preliminary Construction Specifications
Exhibit "B" Intentionally Omitted
Exhibit "C" Rules and Regulations
Exhibit "D" Protective Covenants
Exhibit "E" Special Stipulations
Exhibit "F" Certificate of Authority
<PAGE>
BUILD TO SUIT
INDUSTRIAL LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is made as of the Lease Date (as
defined in Section 37) by and between THE SHAWNEE RIDGE JOINT VENTURE, a Georgia
joint venture ("Landlord"), and SYSTEMAX, INC., a New York corporation, d/b/a
Global Computer Supplies ("Tenant") (the words "Landlord" and "Tenant" to
include their respective legal representatives, successors and permitted assigns
where the context requires or permits).
W I T N E S S E T H:
1. BASIC LEASE PROVISIONS. The following constitute the "Basic Lease
Provisions" of this Lease:
(a) Demised Premises: EXHIBIT "A" attached hereto
(b) Building Square Footage: approximately 360,675 sq. ft.
(c) Annual Base Rent:
Lease Years 1 - 5: $1,009,890.00
Lease Years 6 - 10: $1,161,374.00
(d) Monthly Base Rent Installments:
Lease Years 1 -5: $84,157.50
Lease Years 6 - 10: $96,781.17
(e) Lease Commencement Date: The later to occur of Substantial
Completion, as defined in Section 3(a), and December 1, 1999.
(f) Base Rent Commencement Date: December 1, 1999
(g) Primary Term: 10 years
(h) Security Deposit: $0.00
(i) Intentionally Omitted
(j) Permitted Use: warehouse and distribution, and office,
administrative and retail uses reasonably incidental or
ancillary thereto.
(k) Addresses for notice:
Landlord: The Shawnee Ridge Joint Venture
c/o Industrial Developments
International, Inc.
3424 Peachtree Road, N.E., Suite 1500
Atlanta, Georgia 30326
Attn: Vice President - Operations
Tenant: Systemax, Inc.
22 Harbor Park Drive
Port Washington, New York 11050
Attn: Alan Schaeffer
With a copy to: Global Direct Mail Corporation
22 Harbor Park Drive
Port Washington, New York 11050
Attn: Curt Rush, Esq.
(l) Address for rental payments:
The Shawnee Ridge Joint Venture
c/o IDI Services Group, Inc.
3424 Peachtree Road, N.E.
Suite 1500
Atlanta, Georgia 30326
(m) Broker(s): None
(n) Guarantor: Global Direct Mail Corporation
2. DEMISED PREMISES. For and in consideration of the rent hereinafter
reserved and the mutual covenants hereinafter contained, Landlord does hereby
lease and demise unto Tenant, and Tenant does hereby hire, lease and accept,
from Landlord, that certain parcel of real property more particularly described
in EXHIBIT "A" attached hereto and by this reference made a part hereof (the
"Land") situated in Shawnee Ridge (the "Project"), located in Gwinnett County,
Georgia, together with and including all buildings, structures, driveways,
parking lots, walkways, landscaping and other appurtenances thereto and all
other improvements, with the consent of Tenant, at anytime during the term of
this Lease erected, or situated thereon including specifically, but, without
limitation, a building (the "Building") to be constructed containing
approximately 360,675 square feet of office and warehouse space, of which
approximately 43,000 square feet shall be office and warehouse office space and
to be located on the Land as shown on EXHIBIT "A-1" attached hereto, and all
other improvements including all driveways, parking lots, walkways, landscaping
and other appurtenances thereto and whatever right, title and interest Landlord
may have to any public sidewalks and the center line of any public street, and
the non-exclusive benefits of any easements, rights of way or licenses Landlord
may have over other properties (collectively, the "Demised Premises") subject
only to (i) taxes for the year in which the Lease Date occurs and all subsequent
years, (ii) all matters of record as of the Lease Date , and (iii) all matters
that would be disclosed by an accurate survey of the Demised Premises as of the
Lease Date (herein referred to as "Permitted Encumbrances"), all upon the terms
and conditions hereinafter set forth. The Demised Premises including the
Building shall be developed and constructed by Landlord substantially in
accordance with the Preliminary Drawings prepared by MacGregor Associates
Architects, Inc., attached hereto as EXHIBIT "A-1" (herein, the "Site Plan");
EXHIBIT "A-2" (herein, the "Floor Plan") and EXHIBIT "A-3" (herein, the
"Elevation Plan"), and the construction specifications attached hereto as
EXHIBIT "A-4" (herein "Preliminary Construction Specifications"), (the plans and
specifications as shown on Exhibits "A-l" through "A-4" are herein, collectively
the "Preliminary Plans"), in accordance with the terms of Section 18 hereof,
and, to Landlord's actual knowledge, in material compliance with all applicable
laws in effect as of the Lease Date. Except to the extent required to cause
compliance with the provisions of applicable law, the Building and improvements
comprising the Demised Premises shall be located substantially as shown on the
Site Plan. Tenant shall be given prior notice of any changes to the Site Plan
required to cause such compliance.
3. TERM.
(a) To have and to hold the Demised Premises for
(i) a preliminary term (the "Preliminary Term") which shall
commence on the Lease Date and shall expire on the Lease Commencement Date, as
defined herein; and
(ii) a primary term (the "Primary Term") which shall commence on
the Lease Commencement Date and shall expire one hundred twenty (120)
calendar months thereafter (the Preliminary Term, the Primary Term, and any and
all extensions thereof, herein referred to as the "Term"). The Term shall end on
the final day thereof without the requirement of notice from either party to the
other.
(b) For purposes of this Lease, the term "Substantial Completion" or
any grammatical variation thereof shall mean sufficient completion of
construction of the Demised Premises in accordance with the Plans and
Specifications (as defined in Section 18), so that Tenant can lawfully occupy
the Demised Premises, as evidenced by the delivery by Landlord to Tenant of (i)
a Certificate of Occupancy or its equivalent (or Temporary Certificate of
Occupancy or its equivalent) for the Building issued by the appropriate
governmental authority if so required by applicable law, and (ii) a Certificate
of Substantial Completion on standard AIA Form G-704 certified by the project
architect, MacGregor Associates Architects, Inc. (the "Architect"). In the event
completion to such extent is delayed because of Tenant Delay, as defined herein,
then Substantial Completion shall be deemed to mean the date when the Demised
Premises would have been completed to such extent but for such Tenant Delay, as
determined by the Architect. In the event Tenant shall dispute the determination
of such date by the Architect, the parties shall utilize the Dispute Resolution
Procedure as defined in Section 34, with Qualified Architects serving as
Officials. For purposes of this Lease, the Architect shall be deemed a
"Qualified Architect" for Landlord and David Billow A.I.A. shall be deemed a
"Qualified Architect" for Tenant.
(c) The Lease Commencement Date and the Expiration Date, when
determined as herein provided, shall be evidenced by a supplemental agreement to
be executed upon the request of either party to the other party hereto.
(d) For purposes of this Lease, the term "Lease Year" shall mean each
twelve (12) month period during the Term (or portion thereof if the last Lease
Year of the Term is less than twelve (12) full months) with the first Lease Year
beginning on the Lease Commencement Date and ending twelve (12) months
thereafter.
4. BASE RENT. Tenant shall pay to Landlord at the address set forth in
Section 1(l) as base rent for the Demised Premises, commencing on the Base Rent
Commencement Date and continuing throughout the Term, in lawful money of the
United States, the annual amount set forth in Section 1(c) payable in equal
monthly installments as set forth in Section 1(d) (the "Base Rent"), payable in
advance, without demand and without abatement, reduction, set-off or deduction
(except as hereinafter set forth), on the first day of each calendar month
during the Term. If the Base Rent Commencement Date shall fall on a day other
than the first day of a calendar month, the Base Rent shall be apportioned pro
rata on a per diem basis (i) for the period between the Base Rent Commencement
Date and the first day of the following calendar month (which pro rata payment
shall be due and payable on the Base Rent Commencement Date), and (ii) for the
last partial month of the Term, if applicable. No payment by Tenant or receipt
by Landlord of rent hereunder shall be deemed to be other than on account of the
amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of rent shall be deemed an accord and
satisfaction, and Landlord may accept such check as payment without prejudice to
Landlord's right to recover the balance of such installment or payment of rent
or pursue any other remedies available to Landlord.
5. Intentionally Omitted
6. ADDITIONAL RENT. Any amounts required to be paid by Tenant under this
Lease (in addition to Base Rent) hereunder and any charges or expenses incurred
by Landlord on behalf of Tenant under the terms of this Lease, including,
without limitation, any expenses incurred for taxes, insurance, maintenance,
repairs, replacements, owner's association dues and assessments, utilities and
other charges assessed against or attributed to the Demised Premises which are
the obligation of Tenant hereunder, shall be considered additional rent (herein,
"Additional Rent") payable in the same manner and upon the same terms and
conditions as Base Rent reserved hereunder except as expressly set forth herein
to the contrary. Without limiting the foregoing, Tenant shall and does hereby
agree to pay directly, or to reimburse Landlord upon demand for, as Landlord may
direct, and Additional Rent shall include, any and all owner's association dues
and assessments, utilities and charges assessed against or attributed to the
Demised Premises pursuant to any applicable easements, covenants, restrictions,
agreements, declaration of protective covenants or development standards paid by
Landlord with respect to or imposed or assessed upon or against the Demised
Premises from time to time throughout that portion of the Term (and any
extension thereof) commencing with the Lease Commencement Date. Any failure on
the part of Tenant to pay such Additional Rent when due shall entitle Landlord
to the remedies available to it for non-payment of Base Rent, including, without
limitation, late charges and interest thereon at the Interest Rate (as herein
defined) pursuant to Section 32 hereof. Tenant's obligations for payment of
Additional Rent shall begin to accrue on the Lease Commencement Date regardless
of the Base Rent Commencement Date.
7. USE OF DEMISED PREMISES.
(a) The Demised Premises shall be used for the Permitted Use set forth
in Section 1(j) and for no other purpose.
(b) Tenant will permit no liens to attach or exist against the Demised
Premises, and shall not commit any waste.
(c) The Demised Premises shall not be used for any illegal purposes,
and Tenant shall not allow, suffer, or permit any vibration, noise, odor, light
or other effect to occur within or around the Demised Premises that could
constitute a nuisance or trespass for any tenant of Landlord occupying an
adjoining building, its customers, agents, licensees or invitees. Upon notice by
Landlord to Tenant that any of the aforesaid prohibited uses are occurring,
Tenant agrees to promptly remove or control the same. Without limiting the
foregoing, Landlord agrees to use reasonable efforts to execute any special use
permits, special exception, variance or waiver sought by Tenant, all at no cost
or expense to Landlord, provided that Tenant's use of the Demised Premises
remains at all times in compliance with the provisions of this Section 7.
(d) Tenant shall not in any way violate any law, ordinance or any
restrictive covenant affecting the Demised Premises as shown by and included in
the Permitted Encumbrances, including specifically, but without limitation, the
Protective Covenants (as defined in Section 33), and shall not in any manner use
the Demised Premises so as to cause cancellation of, or prevent the use of the
fire and extended coverage insurance policy required hereunder. Landlord makes
no (and does hereby expressly disclaim any) covenant, representation or warranty
as to the Permitted Use being allowed by or being in compliance with any
applicable laws, rules, ordinances or restrictive covenants now or hereafter
affecting the Demised Premises, and any zoning letters, copies of zoning
ordinances or other information from any governmental agency or other third
party provided to Tenant by Landlord or any of Landlord's agents or employees
shall be for informational purposes only, Tenant hereby expressly acknowledging
and agreeing that Tenant shall conduct and rely solely on its own due diligence
and investigation with respect to the compliance of the Permitted Use with all
such applicable laws, rules, ordinances and restrictive covenants, including
specifically, but without limitation, the Protective Covenants, and not on any
such information provided by Landlord or any of its agents or employees.
8. INSURANCE.
(a) Tenant covenants and agrees that from and after the Lease
Commencement Date or any earlier date upon which Tenant enters or occupies the
Demised Premises or any portion thereof, Tenant will carry and maintain, at its
sole cost and expense, the following types of insurance, in the amounts
specified and in the form hereinafter provided for:
(i) Liability insurance in the Commercial General Liability form
(or reasonable equivalent thereto) covering the Demised Premises and Tenant's
use thereof against claims for bodily injury or death, property damage and
product liability occurring upon, in or about the Demised Premises, such
insurance to be written on an occurrence basis (not a claims made basis), to be
in combined single limits amounts not less than Three Million Dollars
($3,000,000.00) and to have general aggregate limits of not less than Ten
Million Dollars ($10,000,000.00) for each policy year. The insurance coverage
required under this Section 8(a)(i) shall, in addition, extend to any liability
of Tenant arising out of the indemnities provided for in Section 12 and, if
necessary, the policy shall contain a contractual endorsement to that effect.
(ii) (A) insurance on the "All-Risk" or equivalent form on a
Replacement Cost Basis against loss or damage to the Building and all other
improvements now or hereafter located on the Land (including, without in any
manner limiting the generality of the foregoing, flood insurance if the Demised
Premises are located in a flood hazard area), having a deductible not greater
than Fifty Thousand Dollars ($50,000.00); and in an amount sufficient to prevent
Landlord or Tenant from becoming a co-insurer of any loss, but in any event in
amounts not less than 100% of the actual replacement value of such Building and
improvements other than foundations and footings. Landlord shall have the right
to require from Tenant, not more often than once every twenty-four (24) months,
reasonable evidence of the value of the Building.
(B) insurance on the "All-Risk" or equivalent form against
abatement or loss of rental by reason of the occurrences covered by the
insurance described in clause (A) above and by reason of any service
interruptions in an amount equal to Base Rent and all Additional Rent for at
least twelve (12) months following the occurrence of such casualty;
(C) boiler and machinery insurance covering losses to or
from any steam boilers, pressure vessels or similar apparatus requiring
inspection under applicable state or municipal laws or regulations which are
located at the Demised Premises or on any other building systems for which such
coverage is available, in amounts determined by Tenant to be appropriate or for
such higher amounts as may at any time be reasonably required by Landlord and
having a deductible of not more than Fifty Thousand Dollars ($50,000.00);
coverage shall be on a broad form comprehensive basis including loss of income
with a limit of at least an amount which is reasonably acceptable to Landlord;
and
(D) worker's compensation insurance to the extent required
by the laws of the state in which the Demised Premises are located and
employer's liability insurance in the amount of at least $1,000,000.00.
(b) All policies of the insurance provided for in Section 8(a) shall
be issued in form acceptable to Landlord by insurance companies with a rating of
not less than "A+," and financial size of not less than Class XII, in the most
current available "Best's Insurance Reports", and licensed to do business in the
state in which the Building is located. Tenant shall have the right to increase
the deductible amounts under the policies of insurance required by Sections
8(a)(ii)(A) and (C) above, subject to the approval of Landlord, such approval
not to be unreasonably withheld; PROVIDED, HOWEVER, that Landlord shall be
entitled to withhold such approval unless Tenant is able to demonstrate that the
requested increase in any such deductible is commercially reasonable for
improvements comparable to the Building. Each and every such policy:
(i) (other than the coverage described in Section 8(a)(ii)(D))
shall name Landlord as well as Landlord's Lender, as defined in Section 25, and
any other party reasonably designated by Landlord, as an additional insured. In
addition, the coverage described in Section 8(a)(ii)(A), (B) and (C) shall also
name Landlord as "loss payee";
(ii) shall be delivered to Landlord, in the form of an insurance
certificate acceptable to Landlord as evidence of such policy, prior to delivery
of possession of the Demised Premises to Tenant and thereafter within thirty
(30) days prior to the expiration of each such policy, and, as often as any such
policy shall expire or terminate. Renewal or additional policies shall be
procured and maintained by Tenant in like manner and to like extent;
(iii) shall contain a provision that the insurer waives any right
of subrogation against Landlord on account of any loss or damage occasioned to
Tenant, its property, the Demised Premises or its contents arising from any risk
covered by all risks fire and extended coverage insurance of the type and amount
required to be carried hereunder;
(iv) shall contain a provision that the insurer will give to
Landlord and such other parties in interest at least thirty (30) days notice in
writing in advance of any material change, cancellation, termination or lapse,
or the effective date of any reduction in the amounts of insurance; and
(v) shall be written as a primary policy which does not
contribute to and is not in excess of coverage which Landlord may carry.
(c) Any insurance provided for in Section 8(a) may be maintained by
means of a policy or policies of blanket insurance, covering additional items or
locations or insureds; PROVIDED, HOWEVER, that:
(i) Landlord and any other parties in interest from time to time
designated by Landlord to Tenant shall be named as an additional insured
thereunder as its interest may appear;
(ii) the coverage afforded Landlord and any such other parties in
interest will not be reduced or diminished by reason of the use of such blanket
policy of insurance;
(iii) any such policy or policies shall specify therein the
amount of the total insurance allocated to the Tenant's improvements and
property; and
(iv) the requirements set forth in this Section 8 are otherwise
satisfied.
(d) In the event that either party (the "Defaulting Party") shall fail
to carry and maintain the insurance coverages set forth in this Section 8, the
other party (the "Procuring Party") may upon thirty (30) days notice to the
Defaulting Party (unless such coverages will lapse in which event no such notice
shall be necessary) procure such policies of insurance and the Defaulting Party
shall promptly reimburse the Procuring Party therefor.
(e) Each party may, at any time, but not more than one (1) time in any
twenty-four (24) month period, require a review of the insurance coverage and
limits of liability set forth in Section 8 to determine whether the coverage and
the limits are reasonable and adequate in the then existing circumstances. The
review shall be undertaken on a date and at a time set forth in a party's notice
requesting a review and shall be conducted at the Demised Premises. If the
parties are, after a review, unable to agree on either the coverage or the
limits, then the parties shall employ the Dispute Resolution Procedure (as
defined in Section 34) with insurance advisors having at least ten (10) years
experience in insurance for commercial and industrial properties serving as
Officials. In rendering the decision the Officials shall consider the
requirements of Section 8, the cost of the insurance to be obtained, inflation,
changes in condition, and the insurance then being carried by similar industrial
use developments in the area of the Project.
9. UTILITIES. Commencing on the Lease Commencement Date and continuing
through the remainder of the Term, Tenant shall be responsible for maintaining
the portion of the utility lines located between the Land boundary line and the
Building and shall promptly pay as billed to Tenant all rents and charges for
water and sewer services and all costs and charges for gas, steam, electricity,
fuel, light, power, telephone, heat and any other utility or service used or
consumed in or servicing the Demised Premises and all other costs and expenses
involved in the care, management and use thereof to the extent charged by the
applicable utility companies. If Tenant fails to pay any utility bills or
charges, Landlord may, at its option and upon reasonable notice to Tenant, pay
the same and in such event, the amount of such payment, together with interest
thereon at the Interest Rate as defined in Section 32 from the date of such
payment by Landlord, will be added to Tenant's next due payment, as Additional
Rent.
10. TAXES AND OTHER IMPOSITIONS.
(a) Commencing on the Lease Commencement Date and continuing through
the remainder of the Term, Tenant shall be solely obligated for the costs of all
real estate taxes and other impositions for the Demised Premises, including the
Building and the Land, and Tenant agrees to pay all installments of such
imposition which accrue during the Term. Landlord agrees to pay all Taxes due on
the Demised Premises for all periods prior to the Lease Commencement Date, as
well as all "hook up", building permit or other fees and charges levied by any
municipal body in connection with the construction of the Building and other
improvements, whether or not assessed or payable prior to the Lease Commencement
Date, specifically excluding, however, all costs associated with permits or
other fees incurred as a result of Tenant's particular use of the Demised
Premises (e.g. racking permits). If any real estate taxes or other impositions
for the Demised Premises are payable in arrears, Tenant agrees to pay to
Landlord Tenant's share of such taxes attributable to the last year of the Term
within thirty (30) days after Tenant receives from Landlord evidence of the
actual amount due for such last year. This provision shall expressly survive the
expiration or termination of this Lease in order to settle up Tenant's pro rata
share of such taxes for the final Lease Year of the Term.
(b) Real estate taxes and other impositions shall mean all ad valorem
taxes, water and sanitary taxes, assessments, liens, licenses and permit fees or
any other taxes imposed, assessed or levied against the Land and the Demised
Premises, and all other charges, impositions or burdens of whatever kind and
nature, whether or not particularized by name, and whether general or special,
ordinary or extraordinary, foreseen or unforeseen, which at any time during the
Term may be created, assessed, confirmed, adjudged, imposed or charged upon or
with respect to the Demised Premises, the Land, or any improvements made
thereto, or on any part of the foregoing or any appurtenances thereto, or
directly upon this Lease or the rent payable hereunder or amounts payable by any
subtenants or other occupants of the Demised Premises, or upon this transaction
or any documents to which Tenant is a party or successor-in-interest, or against
Landlord because of Landlord's estate or interest herein, by any governmental
authority, or under any law, including among others, all rental, sales, use,
inventory or other similar taxes and any special tax bills and general, special
or other assessments and liens or charges made on local or general improvements
or any governmental or public power or authority whatsoever.
(c) Notwithstanding the foregoing, if any imposition shall be created,
levied, assessed, adjudged, imposed, charged or become a lien with respect to a
period of time which commences before the Lease Commencement Date or ends after
the expiration date of the Term (other than an expiration date of the Term by
reason of breach of any of the terms hereof by Tenant), then Tenant shall only
be required to pay that portion of such imposition which is equal to the
proportion of said period which falls within the Term. If Tenant is permitted to
pay (by the assessing and collecting authorities) and elects to pay any
imposition in installments, Tenant shall nevertheless pay any and all
installments thereof which are due prior to the expiration of the Term or sooner
termination of the Term. Nothing contained in this Lease shall require Tenant to
pay any income or excess profits or taxes assessed against Landlord, or any
corporation, capital stock and franchise taxes imposed upon Landlord. Landlord
agrees to deliver to Tenant copies of all such notices of real estate taxes and
impositions which Landlord receives.
(d) Landlord shall forward tax bills related to the Demised Premises
to Tenant promptly after Landlord's receipt thereof. Tenant shall furnish
Landlord evidence of the payment of all real estate taxes and impositions
related to the Demised Premises at least ten (10) days before the last day upon
which they may be paid without any fine, penalty, interest or additional cost.
If Tenant fails to pay the real estate taxes and impositions related to the
Demised Premises when due and Landlord elects to pay the real estate taxes and
impositions related to the Demised Premises, Tenant agrees to pay Landlord such
real estate taxes and impositions attributable to the Demised Premises so paid
by Landlord, within thirty (30) days after receipt of written notice from
Landlord.
11. MAINTENANCE AND REPAIRS.
(a) GENERAL. From and after the Lease Commencement Date and throughout
the Term, Tenant shall, at its own cost and expense, maintain the Demised
Premises, exterior and interior, in good condition and repair, including,
without limitation, repair and maintenance of the exterior walls of the Building
and the interior of the Building, including but not limited to the electrical
systems, heating, air conditioning and ventilation systems, plate glass, windows
and doors, sprinkler and plumbing systems, EXCLUDING, HOWEVER, the roof,
foundation and structural frame of the Building, which shall be the
responsibility of Landlord. In addition, Landlord shall be responsible for
damage to the floor caused by a defect in the foundation or structural frame of
the Building, specifically excluding, however, damage caused by Tenant's use of
the floor or the Demised Premises. During the Term, Tenant shall maintain in
full force and effect a service contract for the heating, ventilation and air
conditioning systems with an entity reasonably acceptable to Landlord. Tenant
shall deliver to Landlord (i) a copy of said service contract prior to the Lease
Commencement Date, and (ii) thereafter, a copy of a renewal or substitute
service contract within thirty (30) days prior to the expiration of the existing
service contract. Tenant's obligations to repair and maintain the Demised
Premises shall also include, without limitation, repair, maintenance and
replacement of all plumbing and sewage facilities within and about the Demised
Premises (including, specifically, but without limitation, the portion of water
and sewer lines between the boundary of the Land and Building), fixtures,
interior walls, floors, ceilings, windows, doors, storefronts, painting and
caulking, plate glass, skylights, all electrical facilities and equipment
including, without limitation, lighting fixtures, lamps, fans and any exhaust
equipment and systems, electrical motors, and all other appliances and equipment
of every kind and nature located in, upon or about the Demised Premises
including, without limitation, exterior lighting and fencing, and any sidewalks,
parking areas and access ways (including, without limitation, curbs and
striping) upon the Demised Premises and the landscaping and grounds surrounding
the Building. All glass, both interior and exterior, is at the sole risk of
Tenant; and any broken glass shall be promptly replaced at Tenant's expense by
glass of like kind, size and quality. Unless the same is caused solely by the
negligent action or inaction of Landlord, Landlord shall not be liable to Tenant
or to any other person for any damage occasioned by failure in any utility
system or by the bursting or leaking of any vessel or pipe in or about the
Demised Premises, or for any damage occasioned by water coming into the Demised
Premises or arising from the acts or neglects of occupants of adjacent property
or the public.
(b) LANDSCAPING. Tenant shall also be responsible for maintaining a
landscape service contract for the Demised Premises during the Term. For the
first Lease Year, Tenant shall maintain a landscape service contract with the
original landscape company which installed the landscaping at the Demised
Premises.
12. TENANT'S PERSONAL PROPERTY; INDEMNITY. All of Tenant's personal
property in the Demised Premises shall be and remain at Tenant's sole risk, and
Landlord shall not be liable for, and Tenant hereby releases Landlord from, any
and all liability for theft thereof or any damage thereto occasioned by any acts
or negligence of any third persons, or any act of God. As to bodily injury or
property damage (including personal property of Tenant), Landlord shall not be
liable for any injury to the person or property of Tenant or other persons in or
about the Demised Premises, Tenant expressly agreeing to indemnify and save
Landlord harmless in all such cases, except to the extent occasioned by any
negligence of Landlord, its agents, employees or contractors. Tenant further
agrees to reimburse Landlord for any reasonable costs or expenses, including
without limitation, attorneys' fees which Landlord may actually and reasonably
incur in investigating, handling or litigating any such claim against Landlord
by a third person, unless Landlord is determined to have been negligent. Tenant
shall have the option to defend Landlord with counsel selected by Tenant and
reasonably acceptable to Landlord. The provisions of this Section 12 shall
survive the expiration or termination of this Lease with respect to any damage,
injury, or death occurring before such expiration or termination.
13. TENANT'S FIXTURES. Without requiring compliance with Article 19 hereof,
Tenant shall have the right to install in the Demised Premises trade fixtures
required by Tenant or used by it in its business, and if installed by Tenant, to
remove any or all such trade fixtures from time to time during and upon
termination or expiration of this Lease; PROVIDED, HOWEVER, that Tenant shall
repair and restore any damage or injury to the Demised Premises (to no worse
condition than existed prior to such installation) caused by the installation
and/or removal of any such trade fixtures.
14. SIGNS. No sign, advertisement or notice shall be inscribed, painted,
affixed, or displayed on the windows or exterior walls of the Demised Premises
or on any public area of the Building, except in such places, numbers, sizes,
colors and styles as are approved in advance in writing by Landlord, which
approval shall not be unreasonably withheld or delayed and which conform to all
applicable laws and/or ordinances and the Protective Covenants. Any and all
signs installed or constructed by or on behalf of Tenant pursuant hereto shall
be installed, maintained and removed by Tenant, at Tenant's sole cost and
expense.
15. Intentionally Omitted
16. GOVERNMENTAL REGULATIONS. Tenant shall promptly comply throughout the
Term of this Lease, at Tenant's sole cost and expense, with all present and
future laws, ordinances and regulations of all applicable governing authorities
relating to all or any part of the Demised Premises, foreseen or unforeseen,
ordinary as well as extraordinary, or to the use or manner of use of the Demised
Premises or to the sidewalks, parking areas, curbs and access ways adjoining the
Demised Premises. In the event that such law, ordinance or regulation requires a
renovation, improvement or replacement to the Demised Premises, then Tenant
shall be required to make such renovation, improvement or replacement at
Tenant's sole cost and expense. Tenant shall also observe and comply with the
requirements of all policies of public liability, fire and other policies of
insurance at any time in force with respect to the Demised Premises.
17. ENVIRONMENTAL MATTERS.
(a) For purposes of this Lease:
(i) "Contamination" as used herein means the uncontained or
uncontrolled presence of or release of Hazardous Substances (as hereinafter
defined) into any environmental media from, upon, within, below, into or on
any portion of the Demised Premises, the Building, or the Project so as to
require remediation, cleanup or investigation under any applicable
Environmental Law (as hereinafter defined).
(ii) "Environmental Laws" as used herein means all federal,
state, and local laws, regulations, orders, permits, ordinances or other
requirements, which exist now or as may exist hereafter, concerning
protection of human health, safety and the environment, all as may be
amended from time to time.
(iii) "Hazardous Substances" as used herein means any hazardous
or toxic substance, material, chemical, pollutant, contaminant or waste as
those terms are defined by any applicable Environmental Laws (including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. 9601 et seq. ("CERCLA") and the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq. ["RCRA"]) and any
solid wastes, polychlorinated biphenyls, urea formaldehyde, asbestos,
radioactive materials, radon, explosives, petroleum products and oil.
(b) Landlord represents that, except as set forth in environmental
reports delivered by Landlord to Tenant (i) to Landlord's actual knowledge,
Landlord has not treated, stored or disposed of any Hazardous Substances upon or
within the Demised Premises and (ii) to Landlord's actual knowledge, no
Hazardous Substances are present on or under the Land as of the date of this
Lease.
(c) Tenant represents that all its activities on the Demised Premises
or the Project during the course of this Lease will be conducted in compliance
with Environmental Laws. Tenant warrants that to its actual knowledge it is
currently in compliance with all applicable Environmental Laws and that there
are no pending or threatened notices of deficiency, notices of violation,
orders, or judicial or administrative actions involving alleged violations by
Tenant of any Environmental Laws. Tenant, at Tenant's sole cost and expense,
shall be responsible for obtaining all permits or licenses or approvals under
Environmental Laws necessary for Tenant's operation of its business on the
Demised Premises and shall make all notifications and registrations required by
any applicable Environmental Laws. Tenant, at Tenant's sole cost and expense,
shall at all times comply with the terms and conditions of all such permits,
licenses, approvals, notifications and registrations and with any other
applicable Environmental Laws affecting in any way the Demised Premises. Tenant
warrants that it will obtain all such permits, licenses or approvals and make
all such notifications and registrations required by any applicable
Environmental Laws necessary for Tenant's operation of its business on the
Demised Premises.
(d) Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept, stored or used in or about the Demised Premises, the
Building, or the Project, other than in compliance with applicable Environmental
Laws, without the prior written consent of Landlord, which consent may be
granted or withheld in the absolute discretion of Landlord; PROVIDED, HOWEVER,
that the consent of Landlord shall not be required for the use at the Demised
Premises of cleaning supplies, toner for photocopying machines and other similar
materials, in containers and quantities reasonably necessary for and consistent
with normal and ordinary use by Tenant, at the Demised Premises, in the routine
operation or maintenance of Tenant's office equipment or in the routine
janitorial service, cleaning and maintenance for the Demised Premises.
(e) Tenant shall not cause or permit the release of any Hazardous
Substances by Tenant or Tenant's agents, contractors, employees or invitees
(collectively, "Tenant's Affiliates") into any environmental media such as air,
water or land, or into or on the Demised Premises, the Building or the Project
in any manner that violates any Environmental Laws. If such release shall occur,
Tenant shall (i) take all steps reasonably necessary to contain and control such
release and any associated Contamination, (ii) clean up or otherwise remedy such
release and any associated Contamination to the extent required by, and take any
and all other actions required under, applicable Environmental Laws and (iii)
notify and keep Landlord reasonably informed of such release and response.
(f) Regardless of any consents granted by Landlord pursuant to Section
17(d) allowing Hazardous Substances upon the Demised Premises, Tenant shall
under no circumstances whatsoever cause or permit (i) any activity on the
Demised Premises which would cause the Demised Premises to become subject to
regulation as a hazardous waste treatment, storage or disposal facility under
RCRA or the regulations promulgated thereunder; (ii) the discharge of Hazardous
Substances into the storm sewer system serving the Project; or (iii) the
installation any underground storage tank or underground piping on or under the
Demised Premises.
(g) Tenant shall and hereby does indemnify Landlord and hold and
defend Landlord harmless from and against any and all reasonable and actual
expense, loss, and liability suffered by Landlord (except to the extent that
such expenses, losses, and liabilities arise out of Landlord's own negligence or
willful act), by reason of the storage, generation, handling, treatment,
transportation, disposal, or arrangement for transportation or disposal, of any
Hazardous Substances (whether accidental, intentional, or negligent) by Tenant
or Tenant's Affiliates or by reason of Tenant's breach of any of the provisions
of this Section 17. Such expenses, losses and liabilities shall include, without
limitation, (i) any and all expenses that Landlord may incur to comply with any
Environmental Laws; (ii) any and all costs that Landlord may incur in studying
or remedying any Contamination at or arising from the Demised Premises; (iii)
any and all costs that Landlord may incur in studying, removing, disposing or
otherwise addressing any Hazardous Substances; (iv) any and all fines, penalties
or other sanctions assessed upon Landlord; and (v) any and all reasonable legal
and professional fees and costs incurred by Landlord in connection with the
foregoing. The indemnity contained herein shall survive the expiration or
earlier termination of this Lease.
18. CONSTRUCTION OF DEMISED PREMISES.
(a) Within thirty (30) days after the date hereof, Landlord shall
prepare, at Landlord's sole cost and expense, and submit to Tenant a set of
plans and specifications (collectively, the "Plans and Specifications") based
upon the Preliminary Plans, covering all work to be performed by Landlord in
constructing the Building and other improvements which shall be a part of the
Demised Premises. Tenant shall have ten (10) days after receipt of the Plans and
Specifications in which to review and to give to Landlord written notice of its
approval of the Plans and Specifications or its requested changes to the Plans
and Specifications. Tenant shall have no right to request any changes to the
Plans and Specifications which would materially alter either the Demised
Premises or the exterior appearance or basic nature of the Building, as the same
are contemplated by the Preliminary Plans. If Tenant fails to approve or request
changes to the Plans and Specifications by ten (10) days after its receipt
thereof, then Tenant shall be deemed to have approved the Plans and
Specifications and the same shall thereupon be final. If Tenant requests any
changes to the Plans and Specifications, Landlord shall make those changes which
are reasonably requested by Tenant and shall within ten (10) days of its receipt
of such request submit the revised portion of the Plans and Specifications to
Tenant. Tenant may not thereafter disapprove the revised portions of the Plans
and Specifications unless Landlord has unreasonably failed to incorporate
reasonable comments of Tenant and, subject to the foregoing, the Plans and
Specifications, as modified by said revisions, shall be deemed to be final upon
the submission of said revisions to Tenant. Each party shall at all times in the
preparation and review of the Plans and Specifications, and of any revisions
thereto, act reasonably and in good faith. After Tenant has approved the Plans
and Specifications or the Plans and Specifications have otherwise been finalized
pursuant to the procedures set forth hereinabove, any subsequent changes to the
Plans and Specifications requested by Tenant (herein referred to as a "Change
Order") shall be at Tenant's sole cost and expense and subject to Landlord's
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed. If after the Plans and Specifications have been finalized pursuant
to the procedures set forth hereinabove Tenant requests any Change Order and, as
a result thereof, completion of construction of the Improvements is delayed
beyond the Lease Commencement Date, the Term and Tenant's obligation to pay Base
Rent hereunder shall nevertheless begin on the Lease Commencement Date. Tenant
may by Change Order replace the materials called for in the Plans and
Specifications with comparable materials, or with materials of a higher grade,
but Tenant shall have no right to change the materials to materials which, in
Landlord's sole opinion, are of an inferior grade or quality to those called for
in the Plans and Specifications. The aggregate cost of all such Change Orders in
excess of the costs reflected in the Plans and Specifications shall be paid in
cash by Tenant to Landlord within fifteen (15) days of Landlord's submission to
Tenant of written request for payment of such additional cost. The cost to
Tenant for Change Orders shall be Landlord's cost plus ten percent (10%) of such
amount as Landlord's overhead. In the event that Change Orders result in a
reduction of the costs reflected in the Plans and Specifications, Tenant shall
be entitled to a reduction in the first Monthly Base Rent Installment equal to
the amount of such savings realized.
(b) Landlord shall, at its sole cost and expense, construct the
Building and other improvements pursuant to the Plans and Specifications, and in
accordance with the terms and conditions of this Lease ("Landlord's Work").
Landlord shall make no changes to the Plans and Specifications without Tenant's
written consent, with the exception of immaterial details which will not affect
Tenant's use and occupancy of the Building and other improvements. Landlord
shall have the final Plans and Specifications sealed by the Architect, obtain
all required building permits, certificates and licenses and thereafter, in
accordance with all applicable law and insurance requirements, perform
Landlord's Work in a diligent and good workmanlike manner, subject to Ordinary
Delay and Tenant Delay (as those terms are defined below).
(c) Landlord shall use reasonable speed and diligence to achieve
Substantial Completion, at Landlord's sole cost and expense, on or before
December 1, 1999, provided that Landlord shall not be liable to Tenant in any
way for achieving Substantial Completion after such target date.
(d) No later than the date which is forty-five (45) days prior to the
estimated date of Substantial Completion, Landlord shall give Tenant written
notice that Landlord estimates Substantial Completion will occur approximately
forty-five (45) days thereafter. Upon receipt of such notice, Tenant may
commence construction and installation of Tenant's improvements and fixtures
within the Demised Premises (herein referred to as "Tenant's Work"). Landlord
and Tenant shall cause their respective workmen to work in cooperation with each
other.
(e) The Substantial Completion target date of December 1, l999 shall
be extended for one (1) day for each day that Substantial Completion is delayed:
(i) as a result of the failure by Tenant to timely approve or
disapprove the Plans and Specifications, or as a result of Change Orders or
other changes requested by Tenant in the Plans and Specifications after the
Tenant's approval thereof (collectively referred to herein as "Tenant Delay");
or
(ii) due to strikes or other labor troubles not specific to the
Demised Premises, governmental restrictions and limitations, war or other
national emergency, non-availability of materials or supplies, delay in
transportation, accidents, floods, fire, damage or other casualties, weather or
acts or omissions of Tenant, or delays by utility companies in bringing utility
lines to the Demised Premises, and other circumstances beyond the reasonable
control of Landlord (collectively referred to herein as "Ordinary Delay"). The
inability or refusal of Landlord to make any monetary payment shall not
constitute or result in an Ordinary Delay.
(f) On or prior to the date of Substantial Completion of the Demised
Premises, a representative of Landlord and a representative of Tenant together
shall inspect the Demised Premises and, within fifteen (15) days thereafter,
generate a punchlist of defective or uncompleted items relating to the
completion of construction of the improvements within the Demised Premises (the
"Punchlist"), which Punchlist shall indicate the estimation by the parties of
the cost of each item. Landlord shall, within fifteen (15) days (or such other
reasonable time) after the Punchlist is prepared and agreed upon by Landlord and
Tenant, complete such incomplete work and remedy such defective work as are set
forth on the Punchlist.
(g) Upon the Lease Commencement Date, Tenant shall execute and deliver
to Landlord a letter confirming (i) the Lease Commencement Date, the Base Rent
Commencement Date and the Expiration Date of this Lease, (ii) that Tenant
accepts the Demised Premises subject only to Landlord's completion of the items
listed on the Punchlist.
(h) Landlord hereby warrants to Tenant that the materials and
equipment furnished by Landlord's contractors in the completion of Landlord's
Work will be of good quality and new, that during the one (1) year period
following the date of Substantial Completion of Landlord's Work, such materials
and equipment and the work of such contractors shall be free from defects not
inherent in the quality required or permitted hereunder, and that such work will
conform to the Plans and Specifications (the foregoing referred to herein as
"Landlord's Warranty"). This warranty shall exclude damages or defects caused by
abuse by Tenant and Tenant's Affiliates, improper or insufficient maintenance,
improper operation, or normal wear and tear under normal usage.
19. TENANT ALTERATIONS AND ADDITIONS.
(a) Except as to any nonstructural alterations, improvements, or
additions to the Demised Premises (collectively a "Tenant Change"), which Tenant
Changes individually cost less than $50,000 and in the aggregate over the Term
total less than $200,000, Tenant shall not make or permit to be made any other
Tenant Change without first obtaining on each occasion Landlord's prior written
consent (which consent Landlord agrees not to unreasonably withhold, delay or
condition) and Lender's prior written consent (if such consent is required).
With respect to any such Tenant Change requiring Landlord's prior written
consent, Tenant shall furnish Landlord with a full set of plans and
specifications for any such Tenant Change prior to the commencement thereof
together with an original builder's risk policy of insurance in form and amount
of coverage reasonably acceptable to Landlord, showing Tenant as named insured,
and Landlord and Lender (if applicable) as loss payees. If Landlord, at the time
of giving its approval to any Tenant Change, notifies Tenant that approval is
conditioned upon restoration, then upon written request of Landlord, Tenant
shall, at its sole cost and expense and upon the termination of this Lease,
remove the same and restore the Demised Premises to its condition prior to such
Tenant Change.
(b) All Tenant Changes shall be performed in accordance with all legal
requirements applicable thereto and in a good and workmanlike manner with
first-class materials and, upon completion of any Tenant Change, Tenant shall
furnish to Landlord "as-built" drawings showing the location and type thereof.
No Tenant Change shall impair the structural strength of the Building or reduce
its value, Tenant shall take or cause to be taken all steps that are required or
permitted by law in order to avoid the imposition of any materialmen's or
mechanics' liens upon the Building or the Demised Premises, and Tenant shall pay
the full cost of any Tenant Change. Except as otherwise provided herein and in
Section 12 hereof, all Tenant Changes and all repairs and all other property
attached to or installed on the Demised Premises by or on behalf of Tenant shall
immediately upon completion or installation thereof be and become part of the
Demised Premises and the property of Landlord without payment therefor by
Landlord and shall be surrendered to Landlord upon the expiration or earlier
termination of the Term. With respect to any Tenant Change, whether or not
requiring Landlord's prior consent, Landlord shall have no duty or obligation to
make any replacement or repair thereto, whether interior or exterior, structural
or non-structural, ordinary or extraordinary or as required to comply with any
law.
(c) To the extent permitted by law, all of Tenant's contracts and
subcontracts for such Tenant Changes shall provide that no lien shall attach to
or be claimed against the Demised Premises or any interest therein other than
Tenant's leasehold interest in the Demised Premises, and that all subcontracts
let thereunder shall contain the same provision. Whether or not Tenant furnishes
the foregoing, Tenant agrees to hold Landlord harmless against all liens, claims
and liabilities of every kind, nature and description which may arise out of or
in any way be connected with such work. Tenant shall not permit the Demised
Premises to become subject to any mechanics', laborers' or materialmen's lien on
account of labor, material or services furnished to Tenant or claimed to have
been furnished to Tenant in connection with work of any character performed or
claimed to have been performed for the Demised Premises by, or at the direction
or sufferance of Tenant and if any such liens are filed against the Demised
Premises, Tenant shall promptly discharge the same; provided, however, that
Tenant shall have the right to contest, in good faith and with reasonable
diligence, the validity of any such lien or claimed lien if Tenant shall give to
Landlord, within fifteen days after demand, such security as may be reasonably
satisfactory to Landlord to assure payment thereof and to prevent any sale,
foreclosure, or forfeiture of Landlord's interest in the Demised Premises by
reason of non-payment thereof; provided further that on final determination of
the lien or claim for lien, Tenant shall immediately pay any judgment rendered,
with all proper costs and charges, and shall have the lien released and any
judgment satisfied. If Tenant fails to post such security or does not diligently
contest such lien, Landlord may, without investigation of the validity of the
lien claim, discharge such lien and Tenant shall reimburse Landlord upon demand
for all reasonable costs and expenses incurred in connection therewith, which
expenses shall include any attorneys' fees, paralegals' fees and any and all
costs associated therewith, including litigation through all trial and appellate
levels and any costs in posting bond to effect a discharge or release of the
lien. Nothing contained in this Lease shall be construed as a consent on the
part of Landlord to subject the Demised Premises to liability under any lien law
now or hereafter existing of the state in which the Demised Premises are
located.
20. SERVICES BY LANDLORD. From and after the Lease Commencement Date,
Landlord shall be responsible for providing no services to the Demised Premises
whatsoever, except for the services for which Landlord is specifically obligated
pursuant to Section 11(a), 18 (f) and (h).
21. FIRE AND OTHER CASUALTY.
(a) If the Building or other improvements on the Land shall be damaged
or destroyed by fire or other casualty, Tenant, at Tenant's sole cost and
expense, shall promptly and diligently proceed to adjust the loss with the
insurance companies (subject to the approval of the Lender (if applicable) and
of Landlord) and arrange for the disbursement of insurance proceeds, and repair,
rebuild or replace such Building and other improvements, so as to restore the
Demised Premises to the condition in which they were immediately prior to such
damage or destruction. The net proceeds of any insurance recovered by reason of
such damage or destruction in excess of the cost of adjusting the insurance
claim and collecting the insurance proceeds (such excess being referred to
herein as the "Net Insurance Proceeds") shall be held by the Lender (provided
that such Lender is a bank, savings association, insurance company or other
similar institutional lender; herein called "Institutional Lender"), or, if no
Institutional Lender then holds a Mortgage on the Demised Premises, by any
national or state chartered bank which is reasonably acceptable to Landlord and
Tenant; and the Net Insurance Proceeds shall be released for the purpose of
paying the fair and reasonable cost of restoring such Building and other
improvements. Such Net Insurance Proceeds shall be released to Tenant, or to
Tenant's contractors, from time to time as the work progresses, pursuant to such
requirements and limitations as may be reasonably acceptable to Landlord and
Lender (if the Lender so requires), including, without limitation, lien waivers
from each of the contractors, subcontractors, materialmen and suppliers
performing the work. If the Net Insurance Proceeds (less any applicable
deductible) are insufficient to restore the Demised Premises, Tenant shall be
obligated to pay such deficiency and the amount of any such deductible.
Notwithstanding the foregoing, if the Net Insurance Proceeds are less than
Twenty-Five Thousand Dollars ($25,000.00), such Net Insurance Proceeds may be
held by Tenant and used by Tenant to pay the fair and reasonable cost of
restoring such Demised Premises and other improvements. If the Net Insurance
Proceeds exceed the full cost of the repair, rebuilding or replacement of the
damaged Building or other improvements, then the amount of such excess Net
Insurance Proceeds shall be paid to Tenant upon the completion of such repair,
rebuilding or replacement. Landlord agrees not unreasonably to withhold,
condition or delay any approvals required to be obtained by Tenant from Landlord
pursuant to the provisions of this Section 21(a).
(b) Whenever Tenant shall be required to carry out any work or repair
and restoration pursuant to this Section 21, Tenant, prior to the commencement
of such work, shall deliver to Landlord for Landlord's prior approval (which
shall not be unreasonably withheld, conditioned or delayed) a full set of the
plans and specifications therefor, together with a copy of all approvals and
permits which shall be required from any governmental authority having
jurisdiction. After completion of any major repair or restoration, Tenant shall,
as soon as reasonably possible, obtain and deliver to Landlord a Certificate of
Substantial Completion from the inspecting architect and a permanent Certificate
of Occupancy (or amended Certificate of Occupancy), if required by applicable
laws, issued by the appropriate authority with respect to the use of the Demised
Premises, as thus repaired and restored. Any such work or repair and
restoration, in all cases, shall be carried out by Tenant in a good and
workmanlike manner with materials at least equal in quality to the original
materials used therefor prior to the damage or destruction. If, after a default
by Tenant, Landlord shall carry out any such work or repair and restoration
pursuant to the provisions of this Section 21, then Landlord shall be entitled
to withdraw monies held for application to the costs of such work from time to
time as such costs are incurred.
22. CONDEMNATION.
(a) If all of the Demised Premises is taken or condemned for a public
or quasi-public use, this Lease shall terminate as of the earlier of the date
title to the condemned real estate vests in the condemnor and the date on which
Tenant is deprived of possession of all of the Demised Premises. In such event,
the Base Rent herein reserved and all Additional Rent and other sums payable
hereunder shall be apportioned and paid in full by Tenant to Landlord to that
date, all Base Rent, Additional Rent and other sums payable hereunder prepaid
for periods beyond that date shall forthwith be repaid by Landlord to Tenant,
and neither party shall thereafter have any liability hereunder, except that any
obligation or liability of either party, actual or contingent, under this Lease
which has accrued on or prior to such termination date shall survive.
(b) In the event of a taking of "Substantially All of the Demised
Premises" (as herein defined), Tenant may, at its option, upon thirty (30) days'
written notice to Landlord, which shall be given no later than sixty (60) days
following the taking, have the right to terminate this Lease. All Base Rent and
other sums payable by Tenant hereunder shall be apportioned and paid through and
including the date of taking, and neither Landlord nor Tenant shall have any
rights in any compensation or damages payable to the other in connection with
such condemnation. For purposes of this provision, "Substantially All of the
Demised Premises" shall mean (i) so much of the Demised Premises as, when taken,
leaves the untaken portion unsuitable, in the reasonable opinion of Tenant and
Landlord, for the continued feasible and economic operation of the Demised
Premises by Tenant for the same purposes as immediately prior to such taking or
as contemplated herein, (ii) so many of the parking spaces on the Land as
reduces the parking ratio below that which is required by the zoning ordinance
applicable to the Project, and Landlord's failure to provide substantially
similar alternative parking reasonably acceptable to Tenant within sixty (60)
days after such taking, or (iii) so much of the Demised Premises that access to
the Demised Premises is materially impeded, as reasonably determined by Landlord
and Tenant.
(c) If only part of the Demised Premises is taken or condemned for a
public or quasi-public use and this Lease does not terminate pursuant to Section
22(b) above, Tenant, to the extent of Net Condemnation Proceeds (as hereinafter
defined) actually received by it, shall restore, using all reasonable speed and
diligence, the Demised Premises to a condition and to a size as nearly
comparable as reasonably possible to the condition and size thereof immediately
prior to the taking and Landlord, to the extent of the award it receives in
excess of the costs of collecting the award and value of the Land taken (herein,
the "Net Condemnation Proceeds"), shall release the Net Condemnation Proceeds to
Tenant for that purpose and Tenant shall have the right to participate in any
proceeding relating to the awarding of restoration damages. There shall be an
equitable abatement of the Base Rent and Additional Rent based on the actual
loss of use of the Demised Premises suffered by Tenant from the taking.
Determination of such loss of use of the Demised Premises after a partial taking
shall be mutually agreed to by the parties within sixty (60) days from the date
of the taking and if the parties can not so agree, then such loss of use shall
be determined in accordance with the Dispute Resolution Procedure (as defined in
Section 34), with real estate appraisers having at lease ten (10) years
experience appraising commercial real estate, including build-to-suit leases,
serving as Officials. Pending such determination, Tenant shall continue to pay
the Base Rent and Additional Rent as herein originally specified, and upon such
determination, if Tenant is entitled to a refund because of an overpayment of
Base Rent or Additional Rent, Landlord shall make the same promptly, or in lieu
thereof credit the amount thereof to future installments of Base Rent or
Additional Rent as they become due.
(d) Landlord shall be entitled to receive the entire award in any
proceeding with respect to any taking provided for in this Section 22, without
deduction therefrom for any estate vested in Tenant by this Lease, and Tenant
shall receive no part of such award. Nothing herein contained shall be deemed to
prohibit Tenant from making a separate claim, against the condemnor, to the
extent permitted by law, for the value of the unamortized tenant improvements
(installed in accordance with Section 19 at Tenant's expense), Tenant's moveable
trade fixtures, machinery and moving expenses, provided that, in any case, the
making of such claim shall not and does not adversely affect or diminish
Landlord's award.
23. TENANT'S DEFAULT.
(a) The occurrence of any one or more of the following events shall
constitute an event of default (herein referred to as an "Event of Default") of
Tenant under this Lease:
(i) if Tenant fails to pay Base Rent or any Additional Rent
hereunder as and when such rent becomes due and such failure shall continue for
more than five (5) days (for Base Rent) or ten (10) days (for Additional Rent)
after receipt of written notice from Landlord of such failure;
(ii) if Tenant fails to pay Base Rent or any Additional Rent on
time more than three (3) times in any period of twelve (12) months,
notwithstanding that such payments have been made within the applicable cure
period;
(iii) if the Demised Premises become deserted, or abandoned for
more than ten (10) consecutive days or if Tenant fails to take possession of the
Demised Premises on the Lease Commencement Date (or within a reasonable time
thereafter);
(iv) if Tenant permits to be done anything which creates a lien
upon the Demised Premises and fails either (A) to discharge, (B) bond such lien,
or (C) post security with Landlord acceptable to Landlord, within thirty (30)
days after receipt by Tenant of written notice thereof;
(v) if Tenant violates the provisions of Section 30 of this Lease
by attempting to make an unpermitted assignment or sublease;
(vi) if Tenant fails to maintain in force all policies of
insurance required by this Lease and such failure shall continue for more than
ten (10) days after Landlord gives Tenant notice of such failure;
(vii) if any petition is filed by or against Tenant or any
guarantor of this Lease under any present or future section or chapter of the
Bankruptcy Code, or under any similar law or statute of the United States or any
state thereof (which, in the case of an involuntary proceeding, is not
permanently discharged, dismissed, stayed, or vacated, as the case may be,
within sixty (60) days of commencement), or if any order for relief shall be
entered against Tenant or any guarantor of this Lease in any such proceedings;
(viii) if Tenant or any guarantor of this Lease becomes insolvent
or makes a transfer in fraud of creditors or makes an assignment for the benefit
of creditors;
(ix) if a receiver, custodian, or trustee is appointed for the
Demised Premises or for all or substantially all of the assets of Tenant or of
any guarantor of this Lease, which appointment is not vacated within sixty (60)
days following the date of such appointment; or
(x) if Tenant fails to perform or observe any other term of this
Lease and such failure shall continue for more than thirty (30) days after
Landlord gives Tenant notice of such failure, or, if such failure cannot be
corrected within such thirty (30) day period, if Tenant does not commence to
correct such default within said thirty (30) day period and thereafter
diligently prosecute the correction of same to completion within a reasonable
time and in any event prior to the time a failure to complete such correction
could cause Landlord to be subject to prosecution for violation of any law,
rule, ordinance or regulation or causes, or could cause a default under any
mortgage or other Permitted Encumbrance.
(b) Upon the occurrence of any one or more of the aforesaid Events of
Default, or upon the occurrence of any other default or defaults by Tenant under
this Lease, Landlord may, at Landlord's option, without any demand or notice
whatsoever (except as expressly required in this Section 23):
(i) Terminate this Lease by giving Tenant notice of termination,
in which event this Lease shall expire and terminate on the date specified in
such notice of termination with the same force and effect as though the date so
specified were the date herein originally fixed as the termination date of the
Term, and all rights of Tenant under this Lease and in and to the Demised
Premises shall expire and terminate and Tenant shall remain liable for all
obligations under this Lease arising up to the date of such termination, and
Tenant shall surrender the Demised Premises to Landlord on the date specified in
such notice, and if Tenant fails to so surrender Landlord shall have the right,
without notice, to enter upon and take possession of the Demised Premises and to
expel or remove Tenant and its effects without being liable for prosecution or
any claim for damages therefor; or
(ii) Terminate this Lease as provided in Section 23(b)(i) hereof
and recover from Tenant all damages Landlord may incur by reason of Tenant's
default, including, without limitation, a sum which, at the date of such
termination, is calculated as follows: (1) the value of the excess, if any, of
(A) the Base Rent, Additional Rent and all other sums which would have been
payable hereunder by Tenant for the period commencing with the day following the
date of such termination and ending with the expiration date of the original
Term (or any applicable extension or renewal term then in effect) had this Lease
not been terminated (the "Remaining Term"), over (B) the aggregate reasonable
rental value of the Demised Premises for the Remaining Term (which excess, if
any, shall be discounted to present value at the "Treasury Yield" [as defined
below] rate for the Remaining Term), PLUS (2) the costs of recovering possession
of the Demised Premises and all other expenses incurred by Landlord due to
Tenant's default, including, without limitation, reasonable attorney's fees,
PLUS (3) the unpaid Base Rent and Additional Rent earned as of the date of
termination plus any interest and late fees due hereunder, plus other sums of
money and damages owing on the date of termination by Tenant to Landlord under
this Lease or in connection with the Demised Premises, all of which excess sum
shall be deemed immediately due and payable; PROVIDED, HOWEVER, that such
payments shall not be deemed a penalty but shall merely constitute payment of
liquidated damages, it being understood and acknowledged by Landlord and Tenant
that actual damages to Landlord are extremely difficult, if not impossible, to
ascertain. "Treasury Yield" shall mean the rate of return in percent per annum
of Treasury Constant Maturities for the length of time specified as published in
document H.15(519) (presently published by the Board of Governors of the U.S.
Federal Reserve System titled "Federal Reserve Statistical Release") for the
calendar week immediately preceding the calendar week in which the termination
occurs. If the rate of return of Treasury Constant Maturities for the calendar
week in question is not published on or before the business day preceding the
date of the Treasury Yield in question is to become effective, then the Treasury
Yield shall be based upon the rate of return of Treasury Constant Maturities for
the length of time specified for the most recent calendar week for which such
publication has occurred. If no rate of return for Treasury Constant Maturities
is published for the specific length of time specified, the Treasury Yield for
such length of time shall be the weighted average of the rates of return of
Treasury Constant Maturities most nearly corresponding to the length of the
applicable period specified. If the publishing of the rate of return of Treasury
Constant Maturities is ever discontinued, then the Treasury Yield shall be based
upon the index which is published by the Board of Governors of the U.S. Federal
Reserve System in replacement thereof or, if no such replacement index is
published, the index which, in Landlord's reasonable determination, most nearly
corresponds to the rate of return of Treasury Constant Maturities. In
determining the aggregate reasonable rental value pursuant to subparagraph
(ii)(1)(B) above, the parties hereby agree that, at the time Landlord seeks to
enforce this remedy, all relevant factors should be considered, including, but
not limited to, (a) the length of time remaining in the Term, (b) the then
current market conditions in the general area in which the Building is located,
(c) the likelihood of reletting the Demised Premises for a period of time equal
to the Remaining Term, (d) the net effective rental rates then being obtained by
landlords for similar type space of similar size in similar type buildings in
the general area in which the Building is located, (e) the vacancy levels in the
general area in which the Building is located, (f) current levels of new
construction that will be completed during the remainder of the Term and how
this construction will likely affect vacancy rates and rental rates and (g)
inflation; or
(iii) Without terminating this Lease, declare immediately due and
payable the sum of the following: (1) the present value (calculated using the
"Treasury Yield") of all Base Rent and Additional Rent due and coming due under
this Lease for the entire Remaining Term (as if by the terms of this Lease they
were payable in advance), plus (2) the cost of recovering and reletting the
Demised Premises and all other expenses incurred by Landlord in connection with
Tenant's default, plus (3) any unpaid Base Rent, Additional Rent and other
rentals, charges, assessments and other sums owing by Tenant to Landlord under
this Lease or in connection with the Demised Premises as of the date this
provision is invoked by Landlord, plus (4) interest on all such amounts from the
date due at the Interest Rate, and Landlord may immediately proceed to distrain,
collect, or bring action for such sum, or may file a proof of claim in any
bankruptcy or insolvency proceedings to enforce payment thereof; provided,
however, that such payment shall not be deemed a penalty or liquidated damages,
but shall merely constitute payment in advance of all Base Rent and Additional
Rent payable hereunder throughout the Term, and provided further, however, that
upon Landlord receiving such payment, Tenant shall be entitled to receive from
Landlord all rents received by Landlord from other assignees, tenants and
subtenants on account of said Demised Premises during the remainder of the Term
(provided that the monies to which Tenant shall so become entitled shall in no
event exceed the entire amount actually paid by Tenant to Landlord pursuant to
this subparagraph (iii)), less all costs, expenses and attorneys' fees of
Landlord incurred but not yet reimbursed by Tenant in connection with recovering
and reletting the Demised Premises; or
(iv) Without terminating this Lease, and with or without notice
to Tenant, Landlord may in its own name but as agent for Tenant enter into and
upon and take possession of the Demised Premises or any part thereof, and, at
Landlord's option, remove persons and property therefrom and such property, if
any, may be removed and stored in a warehouse or elsewhere at the cost of, and
for the account of Tenant, all without being deemed guilty of trespass or
becoming liable for any loss or damage which may be occasioned thereby, and
Landlord may rent the Demised Premises or any portion thereof as the agent of
Tenant with or without advertisement, and by private negotiations and for any
term upon such terms and conditions as Landlord may deem necessary or desirable
in order to relet the Demised Premises. Landlord shall in no way be responsible
or liable for any failure to rent the Demised Premises or any part thereof, or
for any failure to collect any rent due upon such reletting. Upon each such
reletting, all rentals received by Landlord from such reletting shall be
applied: first, to the payment of any indebtedness (other than any rent due
hereunder) from Tenant to Landlord; second, to the payment of any costs and
expenses of such reletting, including, without limitation, brokerage fees and
attorney's fees and costs of alterations and repairs; third, to the payment of
rent and other charges then due and unpaid hereunder; and the residue, if any,
shall be held by Landlord to the extent of and for application in payment of
future rent, if any becomes owing, as the same may become due and payable
hereunder. In reletting the Demised Premises as aforesaid, Landlord may grant
rent concessions and Tenant shall not be credited therefor. If such rentals
received from such reletting shall at any time or from time to time be less than
sufficient to pay to Landlord the entire sums then due from Tenant hereunder,
Tenant shall pay any such deficiency to Landlord. Such deficiency shall, at
Landlord's option, be calculated and paid monthly. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect to
terminate this Lease for any such previous default provided same has not been
cured and proceed under subsections 23(b)(i) or 23(b)(ii) above; or
(v) Without terminating this Lease, and with or without notice to
Tenant, Landlord may enter into and upon the Demised Premises and without being
liable for prosecution or any claim for damages therefor, maintain the Demised
Premises and repair or replace any damage thereto or do anything or make any
payment for which Tenant is responsible hereunder. Tenant shall reimburse
Landlord immediately upon demand for any expenses which Landlord incurs in thus
effecting Tenant's compliance under this Lease, and Landlord shall not be liable
to Tenant for any damages with respect thereto; or
(vi) intentionally omitted
(vii) Allow the Demised Premises to remain unoccupied and collect
rent from Tenant as it comes due; or
(viii) intentionally omitted
(ix) Pursue such other remedies as are available at law or in
equity.
(c) If this Lease shall terminate as a result of or while there exists
a default hereunder, any funds of Tenant held by Landlord may be applied by
Landlord to any damages payable by Tenant (whether provided for herein or by
law) as a result of such termination or default.
(d) Neither the commencement of any action or proceeding, nor the
settlement thereof, nor entry of judgment thereon shall bar Landlord from
bringing subsequent actions or proceedings from time to time, nor shall the
failure to include in any action or proceeding any sum or sums then due be a bar
to the maintenance of any subsequent actions or proceedings for the recovery of
such sum or sums so omitted.
(e) If any statute or rule of law shall limit any of Landlord's
remedies as hereinabove set forth, Landlord shall nonetheless be entitled to any
and all other remedies hereinabove set forth.
(f) No agreement to accept a surrender of the Demised Premises and no
act or omission by Landlord or Landlord's agents during the Term shall
constitute an acceptance or surrender of the Demised Premises unless made in
writing and signed by Landlord. No re-entry or taking possession of the Demised
Premises by Landlord shall constitute an election by Landlord to terminate this
Lease unless a written notice of such intention is given to Tenant.
(g) No provision of this Lease shall be deemed to have been waived by
either party unless such waiver is in writing and signed by the party making
such waiver. Landlord's acceptance of Base Rent or Additional Rent following an
Event of Default hereunder shall not be construed as a waiver of such Event of
Default. No custom or practice which may grow up between the parties in
connection with the terms of this Lease shall be construed to waive or lessen
either party's right to insist upon strict performance of the terms of this
Lease, without a written notice thereof the other party.
(h) The rights granted to Landlord in this Section 23 shall be
cumulative of every other right or remedy provided in this Lease or which
Landlord may otherwise have at law or in equity or by statute, and the exercise
of one or more rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of other rights or remedies or constitute a forfeiture or
waiver of Base Rent, Additional Rent or damages accruing to Landlord by reason
of any Event of Default. If an Event of Default shall occur, Tenant shall pay to
Landlord, on demand, all expenses incurred by Landlord as a result thereof,
including reasonable attorneys' fees, court costs and expenses. Other than in
connection with a claim arising from the negligence or intentional misconduct of
Landlord, its employees, agents or representatives, if Landlord shall be made a
party to any litigation commenced against Tenant as a result of this Lease,
Landlord's ownership of the Demised Premises or the relationship of Landlord and
Tenant arising by virtue of this Lease, Tenant shall pay all costs and
reasonable attorneys' fees incurred by Landlord in connection with such
litigation. Notwithstanding anything to the contrary contained herein, in the
event any third party prevails in any action to which Landlord is made a party
and it is ultimately determined that there was no negligence or intentional
misconduct on the part of Landlord, Tenant shall pay all costs and reasonable
attorneys' fees incurred by Landlord in connection with such litigation.
24. LANDLORD'S RIGHT OF ENTRY. Tenant agrees to permit Landlord and the
authorized representatives of Landlord and of the Lender to enter upon the
Demised Premises at all reasonable times during Tenant's business hours (unless
in the event of emergency) for the purposes of inspecting them and making any
necessary repairs thereto and performing any work therein that may be necessary
by reason of Tenant's failure to make such repairs or perform any such work
required of Tenant under this Lease; provided that, except in the case of an
emergency, Landlord shall give the Tenant reasonable prior written notice not
less than two (2) days in advance of Landlord's intended entry upon the Demised
Premises. Nothing herein shall imply any duty upon the part of Landlord to do
any such work, and the performance thereof by Landlord shall not constitute a
waiver of Tenant's default in failing to perform it. Landlord shall not be
liable for inconvenience, annoyance, disturbance or other damage to Tenant by
reason of making such repairs or the performance of such work in the Demised
Premises or on account of bringing materials, supplies and equipment into or
through the Demised Premises during the course thereof, and the obligations of
Tenant under this Lease shall not thereby be affected; PROVIDED, HOWEVER, that
Landlord shall use reasonable efforts not to disturb or otherwise interfere with
Tenant's operations in the Demised Premises in making such repairs or performing
such work. Landlord also shall have the right to enter the Demised Premises at
all reasonable times during Tenant's business hours to exhibit the Demised
Premises to any prospective purchaser, mortgagee or tenant.
25. LENDER'S RIGHTS.
(a) For purposes of this Lease:
(i) "Lender" as used herein means the current holder of a
Mortgage;
(ii) "Mortgage" as used herein means any or all mortgages, deeds
to secure debt, deeds of trust or other instruments in the nature thereof which
may now or hereafter affect or encumber Landlord's title to the Demised
Premises, and any amendments, modifications, extensions or renewals thereof.
(b) This Lease and all rights of Tenant hereunder are and shall be
subject and subordinate to the lien and security title of any Mortgage. Tenant
recognizes and acknowledges the right of Lender to foreclose or exercise the
power of sale against the Demised Premises under any Mortgage.
(c) Tenant shall, in confirmation of the subordination set forth in
Section 25(b) and notwithstanding the fact that such subordination is
self-operative, and no further instrument or subordination shall be necessary,
upon demand, at any time or times, execute, acknowledge, and deliver to Landlord
or to Lender any and all instruments requested by either of them to evidence
such subordination.
(d) If requested by Lender, Tenant shall, upon demand, at any time or
times, execute, acknowledge, and deliver to Lender, any and all instruments that
may be necessary to make this Lease superior to the lien of Lender's Mortgage.
(e) If Lender (or Lender's nominee, or other purchaser at foreclosure)
shall hereafter succeed to the rights of Landlord under this Lease, whether
through possession or foreclosure action or delivery of a new lease, Tenant
shall, if requested by such successor, attorn to and recognize such successor as
Tenant's landlord under this Lease without change in the terms and provisions of
this Lease, and Tenant shall promptly execute and deliver any instrument that
may be necessary to evidence such attornment, provided that such successor shall
not be bound by (i) any payment of Base Rent or Additional Rent for more than
one month in advance, except prepayments in the nature of security for the
performance by Tenant of its obligations under this Lease, and then only if such
prepayments have been deposited with and are under the control of such
successor, or (ii) any provision of any amendment to the Lease to which Lender
has not consented, (iii) the defaults of any prior landlord under this Lease,
(iv) any offset rights arising out of the defaults of any prior landlord under
this Lease. Upon such attornment, this Lease shall continue in full force and
effect as a direct lease between each successor landlord and Tenant, subject to
all of the terms, covenants and conditions of this Lease.
26. ESTOPPEL CERTIFICATE. Tenant agrees, at any time, and from time to
time, within fifteen (15) days after Landlord's written request, to execute,
acknowledge and deliver to Landlord, a statement in writing in recordable form
to Landlord and/or its designee certifying that: (i) this Lease is unmodified
and in full force and effect (or, if there have been modifications, that the
same is in full force and effect, as modified) and (ii) the dates to which Base
Rent, Additional Rent and other charges have been paid, (iii) whether or not, to
the best knowledge of the signer of such certificates, there exists any failure
by Landlord to perform any term, covenant or condition contained in this Lease,
and, if so, specifying each such failure of which the signer may have knowledge,
(iv) (if such be the case) the Tenant has unconditionally accepted the Demised
Premises and is conducting its business therein, (v) and as to such additional
matters as may be reasonably requested by Landlord, it being intended that any
such statement delivered pursuant hereto may be relied upon by Landlord and by
any purchaser of title to the Demised Premises or by any Lender or any assignee
thereof or any party to any sale- leaseback of the Demised Premises, or the
landlord under a ground lease affecting the Demised Premises.
27. LANDLORD LIABILITY. No owner of the Demised Premises, whether or not
named herein, shall have liability hereunder after it ceases to hold title to
the Demised Premises. Neither Landlord nor any officer, director, shareholder,
partner or principal of Landlord, whether disclosed or undisclosed, shall be
under any personal liability with respect to any of the provisions of this
Lease, and if Landlord is in breach or default with respect to Landlord's
obligations or otherwise under this Lease, Tenant shall look solely to the
equity of Landlord in the Demised Premises for the satisfaction of Tenant's
remedies. It is expressly understood and agreed that Landlord's liability under
the terms, covenants, conditions, warranties and obligations of this Lease shall
in no event exceed the loss of Landlord's equity interest in the Demised
Premises.
28. NOTICES. Any notice required or permitted to be given or served by
either party to this Lease shall be deemed given when made in writing and either
(i) personally delivered, (ii) deposited with the United States Postal Service,
postage prepaid, by registered or certified mail, return receipt requested, or
(iii) delivered by overnight delivery service providing proof of delivery,
properly addressed to the address set forth in Section 1(k) (as the same may be
changed by giving written notice of the aforesaid in accordance with this
Section 28). If any notice mailed is properly addressed with appropriate postage
but returned for any reason, such notice shall be deemed to be effective notice
and to be given on the date of mailing.
29. BROKERS. Landlord and Tenant represent and warrant to each other that,
except for those parties set forth in Section 1(m) (the "Brokers"), neither
party has engaged or had any conversations or negotiations with any broker,
finder or other third party concerning the leasing of the Demised Premises to
Tenant who would be entitled to any commission or fee based on the execution of
this Lease. Landlord and Tenant hereby further represent and warrant to each
other that neither is receiving nor is entitled to receive any rebate, payment
or other remuneration, either directly or indirectly, from the Brokers, and that
it is not otherwise sharing in or entitled to share in any commission or fee
paid to the Brokers by Landlord or any other party in connection with the
execution of this Lease, either directly or indirectly. Landlord and Tenant
hereby indemnify each other against and from any claims for any brokerage
commissions (except those payable to the Broker, all of which are payable by
Landlord pursuant to a separate agreement) and all costs, expenses and
liabilities in connection therewith, including, without limitation, reasonable
attorneys' fees and expenses, for any breach of the foregoing. The foregoing
indemnification shall survive the expiration or termination of the Lease for any
reason.
30. ASSIGNMENT AND SUBLEASING.
(a) Tenant may not assign, mortgage, pledge, encumber or otherwise
transfer this Lease, or any interest hereunder, or sublet the Demised Premises,
in whole or in part, without on each occasion first obtaining the prior express
written consent of Landlord, which consent may not be unreasonably withheld,
delayed or conditioned. Permitted subtenants or assignees shall become liable
directly to Landlord for all obligations of Tenant hereunder, without, however,
relieving Tenant of any of its liability hereunder. No assignment, mortgaging,
subletting or use or occupancy by others shall in any way be construed to
relieve Tenant from any of its liability hereunder to pay Base Rent, Additional
Rent and all other sums payable by Tenant hereunder or to perform its
obligations hereunder (which shall in every instance continue as the liability
and obligation of a principal and not a surety) or from thereafter obtaining the
express consent of Landlord to any other or further assignment, mortgaging or
subletting of this Lease.
(b) Notwithstanding Section 30(a), provided that there is not an Event
of Default under this Lease which remains uncured, Tenant shall have the right,
upon ten (10) days' prior written notice to Landlord, (i) to sublet all or part
of the Demised Premises to any related corporation or entity which controls
Tenant, is controlled by Tenant or is under common control with Tenant; or (ii)
to assign this Lease to a successor corporation into which or with which Tenant
is merged or consolidated or which acquired substantially all of Tenant's assets
and property, provided that (x) such successor corporation assumes substantially
all of the obligations and liabilities of Tenant and shall have assets,
capitalization, net worth and creditworthiness at least equal to the assets,
capitalization, net worth and creditworthiness of Tenant as of the date of this
Lease as determined by generally accepted accounting principles and (y) Tenant
shall provide in its notice to Landlord the information required in Section
30(c) below. For the purpose hereof "control" shall mean ownership of not less
than fifty percent (50%) of all the voting stock or legal and equitable interest
in such corporation or entity.
(c) If Tenant should desire to assign this Lease or sublet the Demised
Premises (or any part thereof), Tenant shall give Landlord written notice no
later than thirty (30) days in advance of the proposed effective date of any
proposed assignment or sublease, specifying (i) the name and business of the
proposed assignee or sublessee, (ii) the amount and location of the space within
the Demised Premises proposed to be so subleased, (iii) the proposed effective
date and duration of the assignment or subletting, and (iv) the proposed rent or
consideration to be paid to Tenant by such assignee or sublessee. Tenant shall
promptly supply Landlord with financial statements and other information as
Landlord may reasonably request to evaluate the proposed assignment or sublease.
(d) Landlord shall have a period of twenty (20) days following receipt
of such notice and other information requested by Landlord within which to
notify Tenant in writing that Landlord elects: (i) to permit Tenant to assign or
sublet such space; or (ii) to refuse, in Landlord's sole and absolute
discretion, to consent to Tenant's assignment or subleasing of such space and to
continue this Lease in full force and effect as to the entire Demised Premises.
If Landlord should fail to notify Tenant in writing of such election within the
aforesaid twenty (20) day period, Landlord shall be deemed to have elected
option (ii) above. Tenant agrees to reimburse Landlord for reasonable legal fees
and any other reasonable costs incurred by Landlord in connection with any
requested assignment or subletting. Tenant shall deliver to Landlord copies of
all documents executed in connection with any permitted assignment or
subletting, which documents shall be in form and substance reasonably
satisfactory to Landlord and which shall require such assignee to assume
performance of all terms of this Lease on Tenant's part to be performed. No
acceptance by Landlord of any rent or any other sum of money from any assignee,
sublessee or other category of transferee shall be deemed to constitute
Landlord's consent to any assignment, sublease, or transfer.
(e) Any attempted assignment or sublease by Tenant in violation of the
terms and provisions of this Section 30 shall be void and such act shall
constitute a material breach of this Lease. In no event shall any assignment,
subletting or transfer, whether or not with Landlord's consent, relieve Tenant
of its primary liability under this Lease for the entire Term, and Tenant shall
in no way be released from the full and complete performance of all the terms
hereof. Any assignment or sublease allowed hereunder or consented to by Landlord
shall not relieve Tenant (or its assignee) from obtaining Landlord's consent to
any subsequent assignment or sublease if required by this Section 30. If
Landlord takes possession of the Demised Premises before the expiration of the
Term, Landlord shall have the right, at its option to take over any sublease of
the Demised Premises or any portion thereof and such subtenant shall attorn to
Landlord, as its landlord, under all the terms and obligations of such sublease
occurring from and after such date, but excluding previous acts, omissions,
negligence or defaults of Tenant and any repair or obligation in excess of
available net insurance proceeds or condemnation award.
(f) The liability of Tenant under this Lease shall be continuing and
unconditional and shall not be released, affected or limited by: (i) the release
or discharge of the assignee, sublessee or other transferee (collectively
"Transferee") in bankruptcy or other creditors' proceeding; (ii) any waiver,
agreement, exercise or refrain from exercise of rights, or other actions of
Landlord, (iii) repossession of the Demised Premises by Landlord, (iv) any
application of any security or other deposit posted by Tenant or Transferee
under the Lease; (v) any further transfer or consent to transfer of Tenant's or
Transferee's interest under the Lease or in the Demised Premises; (vi) the
assignment of Landlord's interest under the Lease; or (vii) any amendment,
modification, waiver or concession of or under the Lease entered between
Landlord and Transferee, regardless of notice to or consent of Tenant.
(g) Landlord shall have the right to sell, transfer, assign, pledge,
and convey all or any part of the Demised Premises and any and all of Landlord's
rights under this Lease. In the event Landlord assigns or otherwise conveys its
rights under this Lease, Landlord shall be entirely freed and released from any
obligations accruing thereafter under this Lease, and Tenant agrees to look
solely to Landlord's successor in interest for performance of such obligations.
31. TERMINATION OR EXPIRATION.
(a) No termination of this Lease prior to the normal ending thereof,
by lapse of time or otherwise, shall affect Landlord's right to collect rent for
the period prior to termination thereof.
(b) At the expiration or earlier termination of the Term, Tenant shall
surrender the Demised Premises and all improvements, alterations and additions
thereto, and keys therefor to Landlord, clean and neat, and in the same
condition as at the commencement of the Term, ordinary wear and tear only
excepted.
(c) If Tenant remains in possession of the Demised Premises after
expiration of the Term, with or without Landlord's acquiescence and without any
express agreement of the parties, Tenant shall be a tenant-at-sufferance at the
greater of (i) one hundred fifty percent (150%) of the Base Rent in effect at
the end of the Term or (ii) one hundred fifty percent (150%) of the then current
fair market rental value of the Demised Premises. Tenant shall also continue to
pay all other Additional Rent due hereunder, and there shall be no renewal of
this Lease by operation of law. In addition to the foregoing, Tenant shall be
liable for all damages, direct and consequential, incurred by Landlord as a
result of such holdover. No receipt of money by Landlord from Tenant after the
termination of this Lease or Tenant's right of possession of the Demised
Premises shall reinstate, continue or extend the Term or Tenant's right of
possession.
32. LATE PAYMENTS. In the event any installment of rent, inclusive of Base
Rent, or Additional Rent or other sums due hereunder, if any, is not paid (i)
within five (5) days after Tenant's receipt of written notice of such failure to
pay on the first occasion during any twelve (12) month period, or (ii) as and
when due with respect to any subsequent late payments in any twelve (12) month
period, Tenant shall pay an administrative fee equal to five percent (5%) of
such past due amount, plus interest on the amount past due at a rate equal to
the lesser of (X) the prime rate of interest charged by Chase Manhattan Bank
from time to time or (Y) the maximum interest rate allowed under applicable law
(the "Interest Rate") to defray the additional expenses incurred by Landlord in
processing such payment.
33. RULES AND REGULATIONS. Tenant agrees to abide by the Rules and
Regulations set forth on EXHIBIT "C" attached hereto, as well as other rules and
regulations reasonably promulgated by the Landlord from time to time and the
declaration of protective covenants for the Project, attached hereto as EXHIBIT
"D", as it may be amended from to time (herein, the "Protective Covenants"),
which Protective Covenants shall be recorded against the Land after Tenant
approves the Title Report as defined in the Special Stipulations and which shall
run with the Land and be binding on Tenant, its successors and assigns.
34. DISPUTE RESOLUTION PROCEDURE.
(a) In the event that a dispute arises between Landlord and Tenant
under the Lease, and the Lease specifically provides that the dispute resolution
procedure outlined in this Section 34 (herein referred to as the "Dispute
Resolution Procedure") shall be utilized, the parties shall proceed as follows:
(i) The party electing to proceed under the procedures outlined
herein (the "Electing Party") shall give written notice of such election to the
other party (the "Other Party"), and shall designate in writing the Electing
Party's selection of an individual with the qualifications outlined in the
section of the Lease giving rise to this remedy (the "Official") who shall act
on the Electing Party's behalf in determining the disputed fact.
(ii) Within twenty (20) days after the Other Party's receipt of
the Electing Party's selection of an Official, the Other Party, by written
notice to the Electing Party, shall designate an Official who shall act on the
Other Party's behalf in determining the disputed fact.
(iii) Within twenty (20) days of the selection of the Other
Party's Official, the two (2) Officials shall render a joint written
determination of the disputed fact. If the two (2) Officials are unable to agree
upon a joint written determination within such twenty (20) day period, each
Official shall render his or her own written determination and the two Officials
shall select a third Official within such twenty (20) day period. In the event
the two Officials are unable to select a third Official within such twenty (20)
day period, then either party may apply to a court of original jurisdiction in
Gwinnett County, Georgia for appointment by such court of such third Official.
(iv) Within twenty (20) days after the appointment of the third
Official, the third Official shall select one of the determinations of the two
(2) Officials originally selected, WITHOUT modification or qualification.
(v) If either Landlord or Tenant fails or refuses to select an
Official, the Official selected shall alone determine the disputed fact.
Landlord and Tenant agree that they shall be bound by the determination of
disputed fact pursuant to this subsection. Landlord shall bear the fee and
expenses of its Official, Tenant shall bear the fee and expenses of its
Official, and Landlord and Tenant shall share equally the fee and expense of the
third Official, if any.
35. MISCELLANEOUS.
(a) The parties hereto hereby covenant and agree that any present or
future law to the contrary notwithstanding, this Lease shall not terminate,
except as herein specifically provided, and Landlord shall receive the Base Rent
and Additional Rent and all other sums payable by Tenant hereinabove provided as
net income from the Demised Premises, without any abatement, reduction, set-off,
counterclaim, defense or deduction and not diminished by (i) any imposition of
any public authority of any nature whatsoever during the Term, notwithstanding
any changes in the method of taxation or raising, levying or assessing any
imposition, or any changes in the name of any imposition, or (ii) any expenses
or charges required to be paid by Tenant to maintain, restore or replace the
Demised Premises or to protect Landlord's ownership of the Demised Premises,
other than payments under any Mortgage now existing or hereafter created by
Landlord or the satisfaction of any judgments or liens encumbering the Demised
Premises which exist as a result of Landlord's activities. The obligations of
Tenant hereunder shall not be affected by reason of any damage to or destruction
of the Demised Premises except as expressly otherwise provided to the contrary
in this Lease. Tenant shall remain obligated under this Lease in accordance with
its terms and shall not take any action to terminate, rescind or void this
Lease, solely as a result of any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting Landlord or any assignee
of Landlord.
(b) If any clause or provision of this Lease is determined to be
illegal, invalid or unenforceable under present or future laws effective during
the Term, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and that in lieu of
such illegal, invalid or unenforceable clause or provision there shall be
substituted a clause or provision as similar in terms to such illegal, invalid
or unenforceable clause or provision as may be possible and be legal, valid and
enforceable. If such invalidity is essential to the rights of either or both
parties, then the affected party shall have the right to terminate this Lease on
written notice to the other.
(c) All rights, powers, and privileges conferred hereunder upon the
parties hereto shall be cumulative, but not restrictive to those given by law.
(d) TIME IS OF THE ESSENCE OF THIS AGREEMENT.
(e) No failure of Landlord or Tenant to exercise any power given
Landlord or Tenant hereunder or to insist upon strict compliance by Landlord or
Tenant with its obligations hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a waiver of Landlord's or
Tenant's rights to demand exact compliance with the terms hereof.
(f) This Lease contains the entire agreement of the parties hereto as
to the subject matter of this Lease and no representations, inducements,
promises or agreements, oral or otherwise, between the parties not embodied
herein shall be of any force and effect. The masculine (or neuter) pronoun,
singular number shall include the masculine, feminine and neuter gender and the
singular and plural number.
(g) This contract shall create the relationship of landlord and tenant
between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has a
usufruct, not subject to levy and sale, and not assignable by Tenant except as
expressly set forth herein.
(h) Landlord and Tenant agree to execute, upon request of the other, a
short form memorandum of this Lease in recordable form and the requesting party
shall pay the costs and charges for the recording of such short form memorandum
of lease. Under no circumstances shall Tenant have the right to record this
Lease (other than a short form memorandum of Lease, as approved by Landlord),
and should Tenant do so, Tenant shall be in default hereunder.
(i) The captions of this Lease are for convenience only and are not a
part of this Lease, and do not in any way define, limit, describe or amplify the
terms or provisions of this Lease or the scope or intent thereof.
(j) This Lease may be executed in multiple counterparts, each of which
shall constitute an original, but all of which taken together shall constitute
one and the same agreement.
(k) This Lease shall be interpreted under the laws of the State in
which the Demised Premises is located.
(l) The parties acknowledge that this Lease is the result of
negotiations between the parties, and in construing any ambiguity hereunder no
presumption shall be made in favor of either party. No inference shall be made
from any item which has been stricken from this Lease other than the deletion of
such item.
(m) All of the covenants, agreements, conditions and undertakings
contained in this Lease shall extend and inure to and be binding upon the
parties hereto and their permitted successors and assigns.
(n) None of the covenants, terms or conditions of this Lease to be
kept and performed by either party shall in any manner be altered, waived,
modified, changed or abandoned, except by a written instrument, duly signed and
delivered by both parties.
(o) To the extent permitted by law, each of Tenant and Landlord hereby
expressly waives any right to trial by jury of any action, cause of action,
claim, demand, or proceeding arising under or with respect to this Lease, or in
any way connected with, related to, or incidental to the dealings of Landlord
and Tenant with respect to this Lease, in each case whether now existing or
hereafter arising, and whether sounding in contract, tort, or otherwise. To the
extent permitted by law, each of Tenant and Landlord hereby agrees that any such
action, cause of action, claim, demand or proceeding shall be decided by a court
trial without a jury and that Tenant or Landlord may file a copy of this Lease
with any court or other tribunal as written evidence of the consent of each of
Tenant and Landlord to the waiver of its right to trial by jury.
36. SPECIAL STIPULATIONS. The Special Stipulations, if any, attached hereto
as EXHIBIT E, are incorporated herein and made a part hereof, and to the extent
of any conflict between the foregoing provisions and the Special Stipulations,
the Special Stipulations shall govern and control.
37. LEASE DATE. For purposes of this Lease, the terms "Lease Date", "date
of this Lease" or similar terms used herein shall mean the later date upon which
this Lease is signed by Landlord and Tenant.
38. AUTHORITY. If Tenant is not a natural person, Tenant shall cause its
corporate secretary or general partner, as applicable, to execute the
certificate attached hereto as EXHIBIT F. Tenant is authorized by all required
corporate or partnership action to enter into this Lease and the individual(s)
signing this Lease on behalf of Tenant are each authorized to bind Tenant to its
terms.
39. NO OFFER UNTIL EXECUTED. The submission of this Lease to Tenant for
examination or consideration does not constitute an offer to lease the Demised
Premises and this Lease shall become effective, if at all, only upon the
execution and delivery thereof by Landlord and Tenant.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seals, the day and year first above written.
LANDLORD:
Date: 5-3-99 THE SHAWNEE RIDGE JOINT VENTURE, a
Georgia joint venture
By: Industrial Developments International, Inc.,
a Delaware corporation, its managing
venturer
By /s/ TIMOTHY J. GUNTER
-------------------------
Name: TIMOTHY J. GUNTER
Title: SECRETARY
Attest: /s/ GREGORY J. RYAN
----------------------
Name: GREGORY J. RYAN
Title ASSISTANT SECRETARY
[CORPORATE SEAL]
TENANT:
Date: 4/20/99 SYSTEMAX, INC., a New York corporation
By: /s/ STEVEN GOLDSCHEIN
---------------------------
Name: STEVEN GOLDSCHEIN
Title: TREASURER
Attest: /s/ CURT RUSH
-----------------------
Name: CURT RUSH
Title SECRETARY
[CORPORATE SEAL]
<PAGE>
ATTESTATION
LANDLORD:
STATE OF GEORGIA
COUNTY OF FULTON
BEFORE ME, a Notary Public in and for said County, personally appeared
TIMOTHY J. GUNTER and GREG J. RYAN, known to me to be the person(s) who, as
Secretary and Assistant Secretary, respectively, of Industrial Developments
International, Inc., a Delaware corporation, the corporation which executed the
foregoing instrument in its capacity as managing venturer of Landlord, signed
the same, and acknowledged to me that they did so sign said instrument in the
name and upon behalf of said corporation, in its capacity as general partner of
Landlord, that the same is their free act and deed and they were duly authorized
thereunto by the corporation and the partnership.
IN TESTIMONY WHEREOF, I have hereunto subscribed
my name, and affixed my official seal, this 3rd day of May, 1999.
/s/ Charlotte Robinson
-----------------------
Notary Public
My Commission Expires: 10-06-01
TENANT:
STATE OF NEW YORK
COUNTY OF NASSAU
BEFORE ME, a Notary Public in and for said County, personally appeared
STEVEN GOLDSCHEIN and CURT RUSH, known to me to be the person(s) who, as
TREASURER and SECRETARY, respectively, of Systemax, Inc., the corporation which
executed the foregoing instrument in its capacity as Tenant, signed the same,
and acknowledged to me that they did so sign said instrument in the name and
upon behalf of said corporation as officers of said corporation, that the same
is their free act and deed as such officers, respectively, and they were duly
authorized thereunto by its board of directors; and that the seal affixed to
said instrument is the corporate seal of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my
official seal, this 20th day of April, 1999.
/s/ Mary Kearney
-----------------------------
Notary Public
My Commission Expires:8/14/99
<PAGE>
EXHIBIT A
Legal Description
The Land is generally shown on Exhibit A-1 attached hereto. This Exhibit shall
be amended pursuant to Special Stipulation 9 to this Lease.
<PAGE>
EXHIBIT B
Intentionally Omitted
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
These Rules and Regulations have been adopted by Landlord for the mutual benefit
and protection of all the tenants of Buildings in the Project in order to insure
the safety, care and cleanliness of the Project and the preservation of order
therein.
1. The sidewalks, entrances, passages, corridors or halls shall not be
obstructed or used for any purpose other than ingress and egress. No tenant and
no employees of any tenant shall go upon the roof of any Building without the
consent of Landlord.
2. No awnings or other projections shall be attached to the outside walls
of any Building.
3. The wash room partitions, mirrors, wash basins and other plumbing
fixtures shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags or other substances, including
Hazardous Substances shall be thrown therein.
4. No tenant shall cause or permit any objectionable or offensive odors to
be emitted from any Building.
5. No Building, or any portion thereof, shall be used for lodging or
sleeping or for any immoral or illegal purposes.
6. No tenant of any Building shall make, or permit to be made any unseemly
or disturbing noises, sounds or vibrations or disturb or interfere with tenants
of this or neighboring buildings or premises or those having business with them.
7. Each tenant must, upon the termination of this tenancy, restore to the
Landlord all keys of stores, offices, and rooms, either furnished to, or
otherwise procured by, such tenant, and in the event of the loss of any keys so
furnished, such tenant shall pay to the Landlord the cost of replacing the same
or of changing the lock or locks opened by such lost key if Landlord shall deem
it necessary to make such change.
8. If any tenant shall employ one or more persons to do janitorial or other
similar work in its demised premises, that tenant shall, while such persons are
in the Building and outside the Demised Premises, follow such directions as the
manager of the Building may prescribe with respect to the control of such
persons, and such tenant shall be responsible for all acts of such persons.
9. Canvassing, soliciting and peddling in the Project are prohibited and
each tenant shall cooperate to prevent such activity.
10. Landlord will direct electricians as to where and how telephone or
telegraph wires are to be introduced. No boring or cutting for wires or
stringing of wires will be allowed without written consent of Landlord. The
location of telephones, call boxes and other office equipment affixed to any
portion of any building within the Project shall be subject to the approval of
Landlord.
11. Parking spaces associated with any Building are intended for the
exclusive use of passenger automobiles. Except for intermittent deliveries, no
vehicles other than passenger automobiles may be parked in a parking space
without the express written permission of Landlord. Trucks and tractor trailers
may only be parked at designated areas of the Building. Trucks and tractor
trailers shall not block access to the Building.
12. No tenant shall use any area of the Project for storage purposes other
than the interior of its Demised Premises.
<PAGE>
EXHIBIT D
PROTECTIVE COVENANTS
Restated Declaration of Protective Covenants for Shawnee Ridge dated October 30,
1997, recorded in Book 14964, page 38 Gwinnett County, Georgia records, a copy
of which has been delivered to Tenant.
<PAGE>
EXHIBIT E
SPECIAL STIPULATIONS
The Special Stipulations set forth herein are hereby incorporated into the
body of the lease to which these Special Stipulations are attached (the
"Lease"), and to the extent of any conflict between these Special Stipulations
and the preceding language, these Special Stipulations shall govern and control.
1. OPTION TO PURCHASE.
(a) Landlord hereby grants to Tenant the exclusive option and right
(the "Purchase Option") to purchase the Demised Premises from Landlord upon the
terms and conditions set forth herein. The Purchase Option may not be exercised
by Tenant if an Event of Default is then continuing at the time of exercise of
the Purchase Option .
(b) The Purchase Option shall be exercisable at any time from the
Lease Date through 5:00 p.m. Eastern time on October 1, 1999 (the "Option
Date").
(c) The purchase price (the "Purchase Price") of the Demised Premises
in the event the Purchase Option is properly and timely exercised shall be the
sum of (i) $11,675,000.00, (ii) all accrued and unpaid interest together with
the unamortized portion of the cost of any Change Orders or other additional
tenant improvements paid for by Landlord which Landlord has agreed to amortize
over all or any portion of the Term in the form of increased Base Rent;
PROVIDED, HOWEVER, this subsection (ii) shall in no way impose an obligation on
Landlord to amortize such costs, and (iii) any additional sums owed by Tenant to
Landlord under the terms of the Lease. The Purchase Price (less the Earnest
Money, as hereinafter defined) shall be payable in cash or immediately available
funds at Closing (as hereinafter defined).
(d) The Purchase Option may be exercised by Tenant, on or before the
Option Date, by (i) giving written notice (the "Option Notice") to Landlord of
such exercise and (ii) simultaneously delivering to Chicago Title Insurance
Company ("Escrow Agent") the sum of $250,000.00 as security for Tenant's
faithful performance of its obligations hereunder (the "Earnest Money"), which
amount, together with any interest earned thereon, shall be applied as a credit
against the Purchase Price in the event of a Closing hereunder or otherwise
disbursed by Escrow Agent pursuant to the terms of this Special Stipulation 1.
If Tenant shall fail to exercise the Purchase Option by the Option Date, the
Purchase Option shall terminate.
(e) In the event that Tenant timely exercises the Purchase Option,
Tenant and its agents shall have the right, from time to time prior to the
Closing, to examine the Demised Premises and the condition thereof, and to
conduct such surveys and to make such engineering and other inspections, tests
and studies as Tenant shall determine to be reasonably necessary, all at
Tenant's sole cost and expense; PROVIDED, HOWEVER, Tenant shall not conduct any
environmental investigations of the Land beyond a Phase I environmental site
assessment (i.e. no sampling or drilling) without first obtaining Landlord's
prior written consent, which consent shall not be unreasonably withheld, delayed
or conditioned. Tenant agrees to give Landlord reasonable advance notice of such
examinations or surveys and to conduct such examinations or surveys during
normal business hours. Unless Landlord waives such right in writing, a
representative of Landlord must be present with Tenant during all examinations
or surveys of the Demised Premises conducted by Tenant. Tenant agrees to conduct
all examinations and surveys of the Demised Premises in a manner that will not
harm or damage the Demised Premises, and agrees to restore the Demised Premises
to its condition prior to any such examinations or surveys immediately after
conducting the same. Tenant hereby indemnifies and holds Landlord harmless from
and against any claims for injury or death to persons, damage to property or
other losses, damages or claims, including, in each instance, attorneys' fees
and litigation costs, arising out of any action of any person or firm entering
the Demised Premises on Tenant's behalf as aforesaid, which indemnity shall
survive the Closing or any termination of this Purchase Option or the Lease
without the Closing having occurred.
(f) Notwithstanding Tenant's right of inspection contained in sub-
paragraph (e) above, Tenant shall have until November 1, 1999 (the "Inspection
Date") in which to make such investigations and studies with respect to the
Demised Premises as Tenant deems appropriate, and to terminate the Purchase
Option, by written notice to Landlord, to be received on or before the
Inspection Date, if Tenant is not, for any reason satisfied with the Demised
Premises. If Tenant fails to give notice of such termination to be received by
Landlord on or before the Inspection Date, then Tenant's rights under this
sub-paragraph (f) shall be deemed to have been waived by Tenant and the Purchase
Option shall remain in full force and effect without any longer being subject to
this sub- paragraph (f). If Tenant does give notice of termination, $100 of the
Earnest Money shall be paid to Landlord for the rights granted Tenant hereunder
and the balance of the Earnest Money shall be refunded to Tenant by Escrow
Agent, and the parties shall have no further rights or obligations under this
Special Stipulation 1, except for those which expressly survive any such
termination, and thereafter, Tenant shall promptly provide to Landlord, without
charge, copies of any reports, surveys, drawings, tests or other written
documents obtained by Tenant with respect to the Demised Premises.
(g) Provided that all of the conditions set forth herein are
theretofore fully satisfied, and provided that Tenant has not previously
terminated this Purchase Option pursuant to the terms of sub-paragraph (f)
above, the closing or settlement ("Closing") of the sale of the Demised Premises
contemplated hereby shall be held at the offices of Landlord's attorney, during
regular business hours on or before the date which is thirty (30) calendar days
following Substantial Completion. The exact time and date of Closing shall be
selected by Tenant by written notice given to Landlord at least five (5) days
prior to the date so specified. If Tenant shall fail to close by such date, the
Purchase Option shall terminate and Landlord shall be entitled, as its sole and
exclusive remedy hereunder, to receive the Earnest Money as full liquidated
damages for such default, whereupon this Purchase Option shall terminate and the
parties shall have no further rights or obligations hereunder, except for those
which expressly survive any such termination. The parties hereby acknowledge the
difficulty of ascertaining Landlord's actual damages in such circumstance and
agree, after discussion, that the Earnest Money represents a good faith estimate
thereof and is not intended as a penalty, but as full liquidated damages
pursuant to O.C.G.A. Section 13-6-7. Tenant covenants not to bring any action or
suit challenging the amount of liquidated damages provided hereunder in the
event of such default. This provision shall expressly survive the termination of
this Special Stipulation 1 and the Lease.
(h) At Closing, Landlord shall convey fee simple title to the Demised
Premises to Tenant by limited warranty deed, which shall expressly be made
subject to all matters of record except for past due monetary liens created by
Landlord and any security deeds, mortgages, deeds of trust or other financing
created by Landlord, which Landlord shall be obligated to pay off and discharge
at Closing. Landlord shall execute and deliver reasonable evidence of authority
and existence, evidence of non-foreign status required by the Internal Revenue
Code (without which tax will be withheld as required by law), a closing
statement, an owner's affidavit of title (in substantially the form required by
Lawyers Title Insurance Company, Chicago Title Insurance Company, Commonwealth
Land Title Insurance Company or another national title insurance company
reasonably approved by Landlord (the "Title Company"), a state transfer tax
declaration and other documents which are customarily required by the Title
Company at the time of Closing to issue its owner's title insurance policy.
Landlord shall pay the State transfer tax payable in connection with conveyance
of the Demised Premises. All other costs of Closing, including, without
limitation, all title insurance costs, survey, recording and other due diligence
expenses shall be paid by Tenant. Ad valorem taxes assessed against the Demised
Premises for the year in which the Closing occurs shall be prorated as of the
day of Closing.
(i) At Closing, Landlord shall warrant to Tenant that the materials
and equipment furnished by Landlord's contractors in the completion of
Landlord's Work will be of good quality and new, that during the one period
following the date of Substantial Completion of Landlord's Work, such materials
and equipment and the work of such contractors shall be free from defects not
inherent in the quality required or permitted under the Lease, and that such
work will conform to the Plans and Specifications described in the Lease. This
warranty shall exclude damages or defects caused by abuse by Tenant and Tenant's
Affiliates, improper or insufficient maintenance, improper operation, or normal
wear and tear under normal usage. Upon the expiration of the aforementioned one
year warranty, Landlord shall grant to Tenant, without recourse or warranty, a
non-exclusive right to exercise Landlord's rights under any warranties obtained
with respect to the roof, heating, ventilation and air conditioning system, or
any other portions of the Demised Premises. Landlord shall obtain a minimum ten
(10) year roof warranty
(j) Landlord and Tenant each warrant and represent to the other that
neither has employed or otherwise engaged a real estate broker or agent in
connection with the sale of the Demised Premises pursuant to the Purchase
Option, and the parties agree to execute an affidavit to that effect at the
Closing. Landlord and Tenant covenant and agree, each to the other, to indemnify
the other against any loss, liability, costs (including reasonable attorneys'
fees), claims, demands, causes of action and suits arising out of the alleged
employment or engagement by the indemnifying party of any real estate broker or
agent in connection with the Purchase Option. The indemnities contained in this
subsection (j) shall survive Closing and any termination of this Lease.
(k) Notwithstanding anything contained in this Special Stipulation 1
to the contrary, in the event the Lease is terminated prior to the exercise of
the Purchase Option by Tenant, then the Purchase Option shall terminate. This
Purchase Option is personal to [Systemax, Inc.] and those permitted assignees
under Section 30(b) hereof, and shall automatically terminate and be of no
further force and effect if Systemax, Inc. assigns or sublets all or any portion
of its interest in this Lease except as set forth in that Section. This Purchase
Option may not be assigned by Systemax, Inc., regardless of whether Systemax,
Inc. is the Tenant under this Lease.
(l) In the event that Tenant fails to timely exercise the Purchase
Option by the Option Date or if this Purchase Option should otherwise terminate,
Landlord and Tenant agree to enter into an Amended and Restated Build To Suit
Industrial Lease Agreement, on all the same terms and conditions as this Lease,
except for the omission of this Special Stipulation 1 and any other reference to
the Purchase Option contained in this Lease.
2. OPTION TO EXTEND TERM.
(a) Landlord hereby grants to Tenant two (2) consecutive options to
extend the Term for a period of five (5) years each time, each option to be
exercised by Tenant giving written notice of its exercise to Landlord in the
manner provided in this Lease at least one hundred eighty (180) days prior to
(but not more than two hundred ten (210) days prior to) the expiration of the
Term, as it may have been previously extended. No extension option may be
exercised by Tenant if an Event of Default has occurred and is then continuing
or any facts or circumstances then exist which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default either at the
time of exercise of the option or at the time the applicable Term would
otherwise have expired if the applicable option had not been exercised.
(b) If Tenant exercises its first option to extend the Term, then,
during the first Extension Term, Tenant shall pay to Landlord, in addition to
Additional Rent, Annual Base Rent in the amount of $3.71 per square foot of
space then contained in the Demised Premises.
(c) If Tenant exercises its second option to extend the Term, Landlord
shall, within thirty (30) days after the receipt of Tenant's notice of exercise,
notify Tenant in writing of Landlord's reasonable determination of the Base Rent
for the Demised Premises during the second Extension Term, which amount shall
not be less than the Base Rent for the prior Term (as previously extended),
taking into account all relevant factors for space of this type in the Suwanee,
Georgia area. Tenant shall have thirty (30) days from its receipt of Landlord's
notice to notify Landlord in writing that Tenant does not agree with Landlord's
determination of the Base Rent and therefore that Tenant elects to retract its
second option to extend the Term, in which case the Term, as it may have been
previously extended, shall expire on its scheduled expiration date and Tenant's
second option to extend the Term shall be void and of no further force and
effect. If Tenant does not notify Landlord of such retraction within thirty (30)
days of its receipt of Landlord's notice, Base Rent for the Demised Premises
during the second Extension Term shall be the Base Rent set forth in Landlord's
notice to Tenant.
(d) Except for the Base Rent, which shall be determined as set forth
in subparagraphs (b) and (c) above, leasing of the Demised Premises by Tenant
for the applicable extended term shall be subject to all of the same terms and
conditions set forth in this Lease, including Tenant's obligation to pay
Tenant's share of Operating Expenses as provided in this Lease; provided,
however, that any improvement allowances, rent abatements or other concessions
applicable to the Demised Premises during the initial Term shall not be
applicable during any such extended term, nor shall Tenant have any additional
extension options unless expressly provided for in this Lease. Landlord and
Tenant shall enter into an amendment to this Lease to evidence Tenant's exercise
of its renewal option. If this Lease is guaranteed, it shall be a condition of
Landlord's granting the renewal that Tenant deliver to Landlord a reaffirmation
of the guaranty in which the guarantor acknowledges Tenant's exercise of its
renewal option and reaffirms that the guaranty is in full force and effect and
applies to said renewal.
3. ENVIRONMENTAL MATTERS. Landlord shall indemnify Tenant and hold Tenant
harmless from and against any and all expenses, losses and liabilities actually
suffered by Tenant (with the sole exception of any and all consequential
damages, including but not limited to the loss of use of the Demised Premises,
lost profits and loss of business, and those expenses, losses, and liabilities
arising from Tenant's own negligence or willful act) as a result of a
governmental authority having jurisdiction ordering a cleanup, removal or other
remediation by Tenant of any Hazardous Substances located on, under or about the
Demised Premises caused by Landlord.
4. LANDLORD INSURANCE. During the initial construction of the Building,
Landlord shall maintain, with such deductible as Landlord in its sole judgment
determines advisable, insurance on the "Builders All-Risk" or equivalent form on
a Replacement Cost Basis against loss or damage to the Building. Such insurance
shall be in the amount of 100% of the replacement value of the Building
(excluding all fixtures and property required to be insured by Tenant under this
Lease).
5. LENDER'S RIGHTS. Notwithstanding anything to the contrary contained in
Section 25 of this Lease, this Lease and all rights of Tenant hereunder are and
shall be subject and subordinate to the lien and security title of any Mortgage
created after the Lease Date IF AND ONLY IF the holder of said Mortgage agrees
not to disturb Tenant's possession of the Demised Premises so long as Tenant is
not in default hereunder, as evidenced by a subordination and non-disturbance
agreement signed by said holder which agreement may include (a) the conditions
contained in Section 25(e) of this Lease, (b) a requirement that said holder be
given notice and opportunity to cure a landlord default and (c) other provisions
customarily required by lenders. Tenant shall promptly execute such a
subordination and non-disturbance agreement upon Landlord's request. Landlord
represents and warrants to Tenant that there is no Mortgage that encumbers the
Demised Premises as of the Lease Date.
6. ASSIGNMENT OF WARRANTIES. Upon the expiration of the one year Landlord's
Warranty described in Section 18(h) of the Lease, Landlord shall grant to
Tenant, until the expiration or earlier termination of the Term, without
recourse or warranty, a non-exclusive right during the Term to exercise
Landlord's rights under any warranties obtained with respect to the roof,
heating, ventilation and air conditioning system, or any other portions of the
Demised Premises. Landlord shall obtain a minimum ten (10) year roof warranty.
7. CONSTRUCTION OF DEMISED PREMISES. Notwithstanding the provisions of
Section 18(c) of this Lease, in the event that Landlord is unable to
substantially complete the Demised Premises for occupancy by Tenant on or before
the date which is two hundred eighty-five (285) days after the Lease Date, as
extended by Delay as defined below (the "Possession Date"), Tenant shall,
beginning on the Lease Commencement Date, be entitled to a credit against Base
Rent equal to one and one-half days of Base Rent payable under the Lease for
each day after the Possession Date that the Demised Premises are not
substantially complete. In the event that Landlord is unable to substantially
complete the Demised Premises for occupancy by Tenant on or before the date
which is three hundred forty-five (345) days after the Lease Date, as extended
by Delay as defined below, may, at its option and as its sole remedy, terminate
this Lease by written notice to Landlord given within thirty (30) days following
the expiration of such three hundred forty-five (345) day period (provided that
substantial completion has not occurred prior to Landlord's receipt of said
termination notice), and thereafter neither Landlord nor Tenant shall have any
further obligation hereunder. For purposes of this Lease, "Delay" shall mean
delays incurred by reason of (a) Tenant's failure to approve the Plans and
Specifications as set forth in Section 18(a) or changes requested by Tenant in
the Plans and Specifications after Tenant's approval thereof, and (b) time lost
by Landlord or Landlord's contractors or suppliers in connection with the
performance of Landlord's work and/or the construction of the Building and
related improvements due to strikes or other labor troubles, governmental
restrictions and limitations, war or other national emergency, non-availability
of materials or supplies, delay in transportation, accidents, floods, fire,
damage or other casualties, weather or other conditions, acts or omissions of
Tenant, or (c) delays by utility companies in bringing utility lines to the
Demised Premises or (d) the time necessary for Landlord to cure any Tenant
objection to a Title Defect as more particularly described in Special
Stipulation 8 below.
8. TITLE TO DEMISED PREMISES. Notwithstanding anything to the contrary
contained herein, Landlord has ordered a title report on the Demised Premises
and a survey of the Land. Landlord shall cause the title report, together with a
copy of all title exceptions listed thereon and a survey of the Land
(collectively, the "Title Report"), to be delivered to Tenant. Tenant shall have
ten (10) days after receipt of the Title Report to give written notice to
Landlord of any objections to Title Defects (as defined hereafter), which notice
must (a) include a copy of the Title Report, (b) refer to the specific title
matter in dispute and (c) specifically describe the reason why Tenant believes
said matter is a Title Defect (as defined hereafter) and what actions must be
taken by Landlord to cure the Title Defect. The term "Title Defects" shall mean
matters of title which render title to the Demised Premises unmarketable, or
which materially interferes with Tenant's intended use of the Demised Premises;
provided, however, the following matters shall not constitute a Title Defect:
(i) utility easements which are not located under the Building, (ii) matters
shown on the Site Plan, (iii) an Easement Agreement between Landlord and BSW
Corporate Center, L.P. ("BSW") dated February 18, 1997, recorded in Deed Book
13822, page 001, Gwinnett County, Georgia records (the "BSW Easement Agreement")
granting access across the existing driveway along the eastern boundary of the
Land to serve the property contiguous to the eastern boundary of the Land and
owned by BSW (the "BSW Driveway") (all as depicted on the Site Plan), (iv) a
reciprocal access easement agreement which will be recorded against the Demised
Premises granting access across the driveway to be installed along the western
boundary of the Land to serve the Demised Premises and the property contiguous
to the western boundary of the Land, with the cost of maintenance and repair
thereof to be shared 50/50 between Tenant and the contiguous property owner, and
(v) the metes and bounds description of the Land as shown on the survey
delivered to tenant by landlord, provided that the legal description does not
materially vary from the area shown on the Site Plan. If Tenant fails to give
any notice to Landlord by such date objecting to Title Defects, Tenant shall be
deemed to have waived such right to object to any Title Defects. If Tenant does
give Landlord timely notice of objection to any Title Defect, Landlord shall
then use its reasonable, good faith efforts, for a period of thirty (30) days
after such notice, to reasonably cure or satisfy such objection; provided,
however, Landlord shall not be required to spend more than $10,000.00 in the
aggregate to cure the Title Defects. If such objection is not so timely and
reasonably cured or satisfied by Landlord, then Tenant shall, within five (5)
days thereafter, elect, by written notice to be received by Landlord on or
before such fifth (5th) day, either to (a) terminate this Lease, and the parties
shall have no further rights or obligations hereunder, except for those which
expressly survive any such termination, or (b) waive its objections hereunder
and proceed with the Lease, in which case, this provision shall be of no further
force and effect. If Tenant fails to give Landlord notice of its election by
such time, it shall be deemed to have elected the option contained in
subparagraph (b) above. If Tenant elects to terminate this Lease, Tenant shall
reimburse Landlord for all of Landlord's actual out-of-pocket expenditures
related to civil and architectural plans and building permits. If Landlord does
so reasonably cure or satisfy such objection, then this Lease shall continue in
full force and effect. Tenant hereby agrees that if this Lease is not terminated
pursuant to the terms of this Special Stipulation 8, Tenant shall assume, during
the Term of the Lease, all maintenance and repair obligations of Landlord
associated with the BSW Driveway, as such obligations are more particularly
described in paragraph 3 of the BSW Easement Agreement.
9. LEGAL DESCRIPTION OF LAND. Upon Tenant's and Landlord's approval of the
survey of the Land to be delivered and reviewed by Tenant as set forth in
Special Stipulation 8, the parties shall execute an amendment to the Lease and
replace Exhibit A with the metes and bounds legal description as contained on
the approved survey.
<PAGE>
EXHIBIT F
CERTIFICATE OF AUTHORITY
CORPORATION
The undersigned, Secretary of Systemax, Inc., a New York corporation
("Tenant"), hereby certifies as follows to The Shawnee Ridge Joint Venture, a
Georgia joint venture ("Landlord"), in connection with Tenant's proposed lease
of a 360,675 square foot building, at Shawnee Ridge, Gwinnett County, Georgia
(the "Premises"):
1. Tenant is duly organized, validly existing and in good standing under
the laws of the State of New York, and duly qualified to do business in the
State of Georgia.
2. That the following named persons, acting individually, are each
authorized and empowered to negotiate and execute, on behalf of Tenant, a lease
of the Premises and that the signature opposite the name of each individual is
an authentic signature:
- -------------------- --------------------- ---------------------
(name) (title) (signature)
- -------------------- -------------------- ---------------------
(name) (title) (signature)
- -------------------- -------------------- ---------------------
(name) (title) (signature)
3. That the foregoing authority was conferred upon the person(s) named
above by the Board of Directors of Tenant, at a duly convened meeting held
_____________, 19___.
--------------------------------
Secretary
[CORPORATE SEAL]
<PAGE>
GUARANTY
THIS GUARANTY (this "Guaranty"), made and entered into this 20th day of
________, 1999, by GLOBAL DIRECT MAIL CORPORATION, a Delaware corporation
(hereinafter referred to as "Guarantor") in favor of THE SHAWNEE RIDGE JOINT
VENTURE, a Georgia joint venture (hereinafter called "Landlord") and any
subsequent owner or holder of the Lease (as hereinafter defined).
R E C I T A L S :
Landlord has entered into a Build to Suit Industrial Lease Agreement
("Lease") with SYSTEMAX, INC., a New York corporation ("Tenant"), in
which Guarantor has a direct or indirect financial interest or
affiliation, which Lease was executed by Tenant on April 20, 1999,
and provides for the leasing to Tenant of approximately 360,675 square
feet of space in a building located in Shawnee Ridge, in Gwinnett
County, Georgia; and
Landlord will not enter into the Lease unless Guarantor guarantees the
obligations of Tenant under the Lease as set forth herein; and
Guarantor derives benefits from the Lease to Tenant.
NOW THEREFORE, as a material inducement to Landlord to enter into the
Lease with Tenant, and for other good and valuable consideration, the receipt
and sufficiency of all of which are hereby acknowledged and confessed, Guarantor
does hereby, irrevocably and unconditionally, warrant and represent unto and
covenant and agree with Landlord as follows:
1. GUARANTY - Guarantor hereby unconditionally guarantees the full,
faithful and punctual payment of all rent, additional rent and other amounts due
to Landlord under the Lease by Tenant and the full, faithful and punctual
performance by Tenant of all the terms, provisions and conditions of the Lease,
together with interest or late charges on all of the foregoing as provided in
the Lease and all other costs and expenses of collection (all of the foregoing
sometimes hereinafter referred to as the "Obligations").
2. NO DISCHARGE - This Guaranty by Guarantor shall continue for the
benefit of Landlord notwithstanding (a) any extension, modification, amendment
or alteration of the Lease, (b) any assignment of the Lease, with or without the
consent of Landlord, (c) any bankruptcy, reorganization, or insolvency of Tenant
or any successor or assignee thereof, or (d) any release, extension or
modification of the liability of Tenant or any other party liable under the
Lease or any other guaranty of the Lease. This Guaranty shall in all respects be
a continuing, absolute and unconditional guaranty of payment and performance and
shall remain in full force and effect notwithstanding, without limitation, the
death or incompetency of Guarantor or Tenant, or any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership, reorganization,
liquidation or arrangement of Guarantor or Tenant or by any defense which Tenant
may have by reason of the order, decree or decision of any court or
administrative body resulting from any such proceeding.
3. PRIMARILY LIABLE - This Guaranty is a guaranty of payment and not
of collection. The liability of Guarantor under this Guaranty shall be joint and
several and primary and direct and in any right of action which shall accrue to
Landlord under the Lease. Landlord shall have the right, at its option, to
proceed against Guarantor (or any one or more parties constituting Guarantor)
without having commenced any action, or having obtained any judgment, against
Tenant or any other party liable under the Lease or any other guaranty of the
Lease.
4. DEFAULT - In the event of a default by Tenant under the Lease,
Landlord shall have the right to enforce its rights, powers and remedies under
the Lease, any other guaranty of the Lease, and under this Guaranty and all
rights, powers and remedies available to Landlord shall be non-exclusive and
cumulative of all other rights, powers and remedies under the Lease, any other
guaranty of the Lease or under this Guaranty or by law or in equity. The
obligations of Guarantor hereunder are independent of the obligations of Tenant
or any other guarantor, and Landlord may proceed directly to enforce all rights
under this Guaranty without proceeding against or joining Tenant, any other
guarantor or any other person or entity. Until all of the Obligations have been
performed and paid in full, Guarantor shall have no right of subrogation to
Landlord or to enforce any remedy which Landlord may have against Tenant.
5. WAIVERS - Guarantor expressly waives and agrees not to assert or
take advantage of: (a) the defense of the statute of limitations in any action
hereunder or in any action for collection of the Obligations, (b) any defense
that may arise by reason of the failure of the Landlord to file or enforce a
claim against Guarantor or Tenant in bankruptcy or in any other proceeding, (c)
any defense based on the failure of Landlord to give notice of the creation,
existence or incurring of any new obligations or on the action or non-action of
any person or entity in connection with the Obligations, (d) any duty on the
part of Landlord to disclose to Guarantor any facts it may know or may hereafter
acquire regarding Tenant, (e) any defense based on lack of diligence on the part
of Landlord in the collection of any and all of the Obligations, or (f) any
demand for payment, presentment, notice of protest or dishonor, notice of
acceptance of this Guaranty and any and all other notices or demands to which
Guarantor might otherwise be entitled by law.
6. SUBORDINATION; WAIVER OF SUBROGATION; PREFERENCE AND FRAUDULENT
TRANSFER INDEMNITY. Any indebtedness (including, without limitation, interest
obligations) of Tenant to Guarantor now or hereafter existing shall be, and such
indebtedness hereby is, deferred, postponed and subordinated to the Obligations.
Guarantor hereby unconditionally and irrevocably agrees that (a) until all of
the Obligations have been performed and paid in full, Guarantor will not at any
time assert against Tenant (or Tenant's estate in the event Tenant becomes
bankrupt or becomes the subject of any case or proceeding under the bankruptcy
laws of the United States of America) any right or claim to indemnification,
reimbursement, contribution or payment for or with respect to any and all
amounts Guarantor may pay or be obligated to pay Landlord, including, without
limitation, any and all Obligations which Guarantor may perform, satisfy or
discharge, under or with respect to this Guaranty; (b) until all of the
Obligations have been performed and paid in full, Guarantor waives and releases
all such rights and claims and any other rights and claims to indemnification,
reimbursement, contribution or payment which Guarantor, or any of them, may have
now or at any time against Tenant (or Tenant's estate in the event Tenant
becomes bankrupt or becomes the subject of any case or proceeding under any
bankruptcy laws); (c) until all of the Obligations have been performed and paid
in full, Guarantor shall have no right of subrogation, and Guarantor waives any
right to enforce any remedy which Landlord now has or may hereafter have against
Tenant; (d) Guarantor waives any benefit of, and any right to participate in,
any security now or hereafter held by Landlord; and (e) Guarantor waives any
defense based upon an election of remedies by Landlord which destroys or
otherwise impairs any subrogation rights of Guarantor or the right of Guarantor
to proceed against Tenant for reimbursement. The waivers under subsections (d)
and (e) above shall continue and survive after the payment and satisfaction of
the Obligations, and the termination or discharge of Guarantor's obligations
under this Guaranty. Guarantor further hereby unconditionally and irrevocably
agrees and guarantees (on a joint and several basis) to make full and prompt
payment to Landlord of any of the Obligations or other sums paid to Landlord
pursuant to the Lease which Landlord is subsequently ordered or required to pay
or disgorge on the grounds that such payments constituted an avoidable
preference or a fraudulent transfer under applicable bankruptcy, insolvency or
fraudulent transfer laws; and Guarantor shall fully and promptly indemnify
Landlord for all costs (including, without limitation, attorney's fees) incurred
by Landlord in defense of such claims of avoidable preference or fraudulent
transfer.
7. CHOICE OF LAW - This Guaranty is to be performed in the State of
Georgia and shall be governed by and construed in accordance with the laws of
the State of Georgia, without regard to its conflicts laws or choice of law
rules.
8. TIME OF ESSENCE - Time is of the essence of this Guaranty.
9. NOTICES - Wherever any notice or other communication is required or
permitted hereunder, such notice or other communication shall be in writing and
shall be delivered by hand, or by nationally-recognized overnight express
delivery service, by U. S. registered or certified mail, return receipt
requested, postage prepaid to the addresses set out below or at such other
addresses as are specified by written notice delivered in accordance herewith:
Landlord: THE SHAWNEE RIDGE JOINT VENTURE
c/o IDI Services Group, Inc.
3424 Peachtree Road, N.E.
Suite 1500
Atlanta, Georgia 30326
Guarantor: GLOBAL DIRECT MAIL CORPORATION
22 Harbor Park Drive
Port Washington, New York 11050
Attn: Alan Schaeffer
Attn: Curt Rush, Esq.
Any notice or other communication mailed as hereinabove provided shall be deemed
effectively given (a) on the date of delivery, if delivered by hand; or (b) on
the date mailed if sent by overnight express delivery or if sent by U.S. mail.
Such notices shall be deemed received (a) on the date of delivery, if delivered
by hand or overnight express delivery service; or (b) on the date indicated on
the return receipt if mailed. If any notice mailed is properly addressed but
returned for any reason, such notice shall be deemed to be effective notice and
to be given on the date of mailing.
10. AUTHORITY - If Guarantor is not a natural person, Guarantor shall
cause its corporate secretary or general partner, as applicable, to execute the
certificate attached hereto as EXHIBIT A. Guarantor is authorized by all
required corporate or partnership action to enter into this Guaranty and the
individual(s) signing this Guaranty on behalf of Guarantor are each authorized
to bind Guarantor to its terms.
11. SUCCESSORS AND ASSIGNS - This Guaranty shall be binding upon and
inure to the benefit of the parties hereto and their heirs, legal
representatives, successors and assigns.
IN WITNESS WHEREOF, Guarantor has executed under seal and delivered
this Guaranty to Landlord on the date and year above first written.
GUARANTOR:
GLOBAL DIRECT MAIL CORPORATION,
a Delaware corporation
By: /s/ STEVEN GOLDSCHEIN
----------------------------
Name: STEVEN GOLDSCHEIN
Title: CFO
Attest: /s/ CURT RUSH
------------------------
Name: CURT RUSH
Title: SECRETARY
[CORPORATE SEAL]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1999 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31,
1999 (UNAUDITED) OF GLOBAL DIRECTMAIL CORP AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 45,667
<SECURITIES> 798
<RECEIVABLES> 175,892
<ALLOWANCES> 0
<INVENTORY> 133,694
<CURRENT-ASSETS> 385,292
<PP&E> 34,753
<DEPRECIATION> 0
<TOTAL-ASSETS> 495,832
<CURRENT-LIABILITIES> 202,788
<BONDS> 2,308
382
0
<COMMON> 0
<OTHER-SE> 290,354
<TOTAL-LIABILITY-AND-EQUITY> 495,832
<SALES> 421,651
<TOTAL-REVENUES> 421,651
<CGS> 342,339
<TOTAL-COSTS> 342,339
<OTHER-EXPENSES> 62,141
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (330)
<INCOME-PRETAX> 17,501
<INCOME-TAX> 6,738
<INCOME-CONTINUING> 10,763
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,763
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
