Exhibit 10.HH
LEASE
OF
28 ▇▇▇▇▇▇ DRIVE, CRANSTON, RHODE ISLAND
BY
TAURUS CRANSTON LLC, AS LANDLORD
TO
POLY-FLEX CIRCUITS, INC.
TABLE OF CONTENTS
Page
ARTICLE I - Fundamental Lease Provisions 4
1.1 Reference Subjects 4
ARTICLE II - Premises and Term 5
2.1 Premises 5
2.2 Existing Conditions; "As-Is" 6
2.3 Term 6
ARTICLE III - Rent 6
3.1 Annual Base Rent 6
3.2 Additional Rent 7
3.3 Method of Payment 7
ARTICLE IV - Net Lease, True Lease 7
4.1 Net Lease 7
4.2 Non-Terminability; No Offset or Abatement 8
4.3 True Lease 9
4.4 Quiet Enjoyment 9
ARTICLE V - Tenant's Covenants 9
5.1 Tenant Work 9
5.1.1 General 9
5.1.2 Construction Documents 9
5.1.3 Performance 10
5.1.4 Payment 11
5.2 Utilities and Services 11
5.3 Maintenance and Repairs 11
5.4 Use and Compliance with Law 13
5.5 Taxes and Impositions 13
5.6 Indemnity 15
5.7 Landlord's Entry Right 15
5.8 Signs 16
5.9 Personal Property 16
5.10 Damage and Hazardous Materials 16
5.11 Liens 18
5.12 Condition on Expiration 18
5.13 Holding Over 18
5.15 Financial Reporting 19
ARTICLE VI - Assignment and Subletting 20
6.1 Landlord's Consent Required 21
6.2 Intentionally Omitted 21
6.3 Right of Termination or Recapture 21
6.4 Procedures 21
6.5 Profits 22
6.6 No Release 23
ARTICLE VII - Insurance, Casualty, Taking 23
7.1 Insurance 23
7.2 Damage or Destruction of Premises 25
7.3 Eminent Domain 26
ARTICLE VIII - Default 28
8.1 Events of Default 28
8.2 Remedies for Default 29
8.2.1 Reletting Expenses Damages 29
8.2.2 Termination Damages 30
8.2.3 Lump Sum Liquidated Damages 30
8.3 Remedies Cumulative; Jury Waiver; Late Performance 30
8.4 Waivers of Default; Accord and Satisfaction 31
8.5 Landlord's Curing 31
8.6 Security Deposit 31
ARTICLE IX - Protection of Lenders 33
9.1 Subordination and Superiority of Lease 33
9.2 Rent Assignment 34
9.3 Other Instruments 34
ARTICLE X - Miscellaneous Provisions 34
ii
10.1 Notice 34
10.2 Landlord's Default 35
10.3 Limitation of Landlord's Liability 35
10.4 Excusable Delay 36
10.5 Applicable Law and Construction 36
10.6 Estoppel Certificate 37
10.7 Notice of Lease 37
10.8 Brokers 37
10.9 Tenant and Landlord as Business Entity 37
ARTICLE XI - Purchase Option 38
11.1 Term of Option and Exercise 38
ARTICLE XII - Index of Defined Terms 39
EXHIBITS
--------
Exhibit A - Land
Exhibit B - Annual Base Rent
Exhibit C - Permitted Exceptions
Exhibit D - Tenant Work Insurance Requirements
Exhibit E - Reporting Requirements
Exhibit F - Minimum Insurance Requirements
Exhibit G - Subordination, Non-Disturbance and Attornment Agreement Form
Exhibit H - Capital Expenditure Items
iii
LEASE
ARTICLE I
---------
Fundamental Lease Provisions
----------------------------
1.1 Reference Subjects Each reference in this Lease to any of the
following subjects shall incorporate the following information. Other
terms are defined throughout this Lease and are indexed in the last
Article.
DATE OF LEASE EXECUTION: As of June __, 2003
PROPERTY: The land known and numbered as 28
▇▇▇▇▇▇ Drive, Cranston, Rhode Island,
more particularly described in Exhibit
A.
PREMISES: The Property, including all buildings,
structures, and all improvements
thereon.
LANDLORD: Taurus Cranston LLC
ORIGINAL ADDRESS OF LANDLORD: c/o Taurus New England Investment
Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇. ▇▇▇▇▇ ▇.
▇▇▇▇▇
TENANT: Poly-Flex Circuits, Inc., a duly
organized Rhode Island corporation
ORIGINAL ADDRESS OF TENANT: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Island, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
President
TERM: The term of this Lease shall commence
on the Commencement Date and end on the
Expiration Date
COMMENCEMENT DATE: The Date of Lease Execution. (See
Section 2.3)
LEASE YEAR: Each Lease Year shall consist of twelve
(12) calendar months beginning with the
Commencement Date, except that if the
Commencement Date is not the first day
of a calendar month, then Lease Year 1
shall include the partial month at the
beginning of the Term in addition to
the following twelve (12) calendar
months, and the Annual Base Rent for
Lease Year 1 shall be proportionately
increased.
EXPIRATION DATE: The last day of the fifth (5th) Lease
Year, unless extended pursuant to the
provisions of Section 2.3.1 or earlier
terminated pursuant to the provisions
of Article 11
4
ANNUAL BASE RENT: The amounts set forth on Exhibit B.
(See Article III.)
PERMITTED USES: (i) Office, warehouse, distribution and
manufacturing; and (ii) such other
lawful uses as may be reasonably
approved in writing by Landlord. (See
Section 5.4)
SECURITY DEPOSIT: $250,000
GUARANTOR: Parlex Corporation, a Massachusetts
Corporation
TENANT WORK THRESHOLD AMOUNT: $250,000 (See Section 5.1.1)
BROKERS: ▇▇▇▇▇▇▇ & Wakefield of Massachusetts,
Inc. (See Section 11.8)
EXHIBITS A Land
B Annual Base Rent
C Permitted Exceptions
D Tenant Work Insurance Requirements
E Reporting Requirements
F Minimum Insurance Requirements
G Subordination, Non-Disturbance and Recognition Agreement Form
H Capital Expenditure Items
ARTICLE II
----------
Premises and Term
-----------------
2.1 Premises. Landlord leases the Premises to Tenant and Tenant
leases the Premises from Landlord, subject to matters of record and matters
referred to below.
(a) Title and Condition. The Premises are demised and leased
subject to (i) the existing state of the title as of the Commencement Date,
including without limitation the Permitted Exceptions set forth on Exhibit
C hereto and that certain Environmental Land Usage Restriction dated April
9, 2003, granted by Tenant (the "Usage Restriction"), a copy of which is
recorded at Book 2112, Page 260 of the Cranston, Rhode Island land records,
and (ii) the "as is" condition of the buildings, structures, and other
improvements located thereon, as of the Commencement Date, without
representation or warranty by Landlord. Tenant covenants to comply with
each and every term and condition of the Usage Restriction, including but
not limited to the preparation and filing, at its sole cost and expense, of
any annual compliance reports required thereby.
(b) Reservations. Landlord reserves the right from time to time to
grant and relocate easements, to alter and diminish the shape and size of
the Land and to alter driveways, walkways, parking areas, and utilities
serving the Premises, all of which may be done by Landlord so long as the
same do not adversely interfere with Tenant's use of the Land and
improvements constituting the Premises.
5
(c) No Merger. There shall be no merger of this Lease or the
leasehold estate hereby created with the fee estate in the Premises or any
part thereof by reason of the same person acquiring or holding, directly or
indirectly, this Lease or the leasehold estate hereby created or any
interest in this Lease or in such leasehold estate as well as the fee
estate in the Premises or any portion thereof.
2.2 Existing Conditions; "As-Is. Tenant acknowledges that Tenant
or its affiliates owned and occupied the Premises prior to the Commencement
Date and that it has inspected the Premises and accepts the same in the
condition they are in on the Commencement Date, it being expressly agreed
that Landlord shall have no obligation, liability, or risk whatsoever with
respect to the Premises or their condition. Landlord shall have no
obligation to provide any tenant improvement allowance or to perform any
work or improvements in the Premises, except as expressly set forth in
Section 5.18. Tenant further acknowledges that neither Landlord nor any
person acting under Landlord has made or implied any representations or
warranties concerning this Lease, the Premises, or their condition or
suitability for Tenant's use. To the extent permitted by applicable law,
Tenant waives any right or remedy otherwise accruing to Tenant on account
of the condition or suitability of the Premises, or title to the Premises,
and Tenant agrees that it takes the Premises "as-is," with all faults and
without any such representation or warranty, including any implied
warranties.
2.3 Term. The Term of the Lease shall commence at 12:01 a.m. on
the Commencement Date and end at 12:00 midnight on the Expiration Date set
forth in Section 1.1.
2.3.1 Extension Option. Subject to the terms and conditions
below, Tenant shall have the option to extend the Term for two (2)
additional five (5) year extension terms (each an "Extension Term") by
notice given to Landlord at least one (1) year before the then applicable
Expiration Date (any such notice, "Tenant's Option Exercise Notice").
Tenant's election shall be exercised, and Annual Base Rent for the
Extension Term determined, as set forth below. If Tenant fails timely to
exercise its option for any Extension Term, Tenant shall have no further
extension rights hereunder.
Tenant's option so to extend the Term shall be void, at Landlord's
election, if Tenant is in monetary or other material default at the time
Tenant elects to extend the Term or at the time the Term would expire but
for such extension. The extension of the Term shall be applicable to the
entire Premises and Tenant shall have no right to extend the Term for only
a portion of the Premises. During the Extension Term, all provisions of
this Lease shall apply except that Tenant shall have no further option to
extend the Term after the last Extension Term.
For each Lease Year during each Extension Term, Tenant shall pay
Annual Base Rent equal to One Hundred Two and One-Half Percent (102.5%) of
the Annual Base Rent for the immediately preceding Lease Year.
ARTICLE III
-----------
Rent
----
3.1 Annual Base Rent. Commencing on the Commencement Date and by
the first day of each subsequent calendar month during the Term, Tenant
shall pay to Landlord the Annual Base Rent set forth in Section 1.1,
together with any and all Additional Rent due to Landlord in accordance
with this Lease, all as set forth in this Article III.
6
3.2 Additional Rent. All taxes, costs, expenses, charges, amounts
and other sums that Tenant assumes, agrees or is required to pay pursuant
to this Lease (other than Annual Base Rent), together with every fine,
penalty, interest and cost that may be added for non-payment or late
payment thereof, shall constitute additional rent ("Additional Rent"). All
Additional Rent shall be paid directly by Tenant to the party to whom such
Additional Rent is due. If Tenant shall fail to pay any such Additional
Rent or any other sum due hereunder when the same shall become due,
Landlord shall have all rights, powers and remedies with respect thereto as
are provided herein or by law in the case of non-payment of any Annual Base
Rent and shall, except as expressly provided herein, have the right, but
not the obligation, to pay the same on behalf of Tenant pursuant to Section
8.5. The term "rent" shall mean Annual Base Rent and Additional Rent.
3.3 Method of Payment. Tenant agrees to pay the Annual Base Rent
to Landlord in advance in equal monthly installments by the first day of
each calendar month during the Term. Tenant shall make a ratable payment of
Annual Base Rent and Additional Rent (to the extent applicable) for any
period of less than a month at the beginning or end of the Term. Unless
Landlord and Tenant otherwise agree in writing, all payments of Annual Base
Rent, and all payments of Additional Rent and other sums due and payable to
Landlord, shall be paid by wire transfer of immediately available funds in
accordance with such wire instructions as Landlord may from time to time
provide, without demand (except as otherwise expressly set forth in Section
8.1(i) of this Lease), set-off or other deduction.
ARTICLE IV
----------
Net Lease; True Lease
---------------------
4.1 Net Lease. This Lease is an absolutely triple net lease to
Landlord. It is the intent of the parties hereto that the Annual Base Rent
payable under this Lease shall be an absolutely net return to Landlord and
that Tenant shall pay all costs and expenses relating to the Premises as
set forth in this Lease, except as expressly set forth in Section 5.18, and
the business carried on therein. Without limiting the generality of the
preceding sentence, Tenant shall at its sole cost and expense be
responsible for payment of all real estate taxes, all electricity, gas,
water, sewer, telephone, refuse disposal, and other charges for utilities
and services supplied to the Premises, all costs (except as expressly set
forth in Section 5.18) of cleaning, maintaining, repairing, and replacing
the Premises (including all costs of cleaning, maintaining, repairing, and
replacing the roof, windows, walls, foundation, floors, and structural
elements, mechanical, electrical and plumbing systems, HVAC systems, and
the sidewalks, parking areas, and other exterior areas), all amounts
payable from time to time by the owner of the Premises under any Title
Documents (defined below), a property management fee equal to 1.75% of the
rent due under this Lease (which may be paid to Landlord or an affiliate of
Landlord) and all costs of insurance. Any amount or obligation herein
relating to the Premises that is not expressly declared to be that of
Landlord shall be deemed to be an obligation of Tenant to be performed by
Tenant at Tenant's expense and Tenant shall indemnify Landlord against, and
hold Landlord harmless from, the same in the manner provided in Section
5.6, and Tenant's liability for the payment of any of the same which shall
become payable after the Term is hereby expressly provided to survive the
Term. Annual Base Rent, Additional Rent, and all other sums payable
hereunder by Tenant, shall be paid without notice or demand, and without
set off, counterclaim, recoupment, abatement, suspension, deduction, or
defense (other than payment) whatsoever, so that this Lease shall yield net
to Landlord the Annual Base Rent under all circumstances and conditions
whether now or hereinafter existing and whether or not within the
contemplation of the parties. As used herein, the term "Title Documents"
means any and all easements, covenants, conditions, and restrictions,
industrial park association agreements, and other agreements, encumbrances,
and restrictions of record affecting all or part of the Premises, as the
same may now exist, or as the same may
7
hereafter be created or amended without materially expanding the
obligations of Tenant without Tenant's approval (which approval shall not
be unreasonably withheld), but excluding any mortgage; provided that any
future ground lease shall be a Title Document if reasonably approved by
Tenant as aforesaid (and does not require Tenant to pay any ground rent or
additional charges) and the parties thereto enter into a subordination,
nondisturbance, and recognition agreement that complies with the provision
of Section 9.1.
4.2 Non-Terminability; No Offset or Abatement. Tenant's obligation
to pay rent shall not be discharged or otherwise affected by any law or
regulation now or hereafter applicable to the Premises, or any other
restriction on Tenant's use, or any casualty or taking (except as otherwise
expressly provided for in Section 7.2(b) and Section 7.3(f)), or any
failure by Landlord to perform any obligation or other occurrence, event or
circumstance; and Tenant waives all rights now or hereafter existing to
quit or surrender this Lease or the Premises or any part thereof
(including, without limitation, any rights under Rhode Island General Laws,
Section 34-18.1-8), or to assert any defense in the nature of constructive
eviction to any action seeking to recover rent. Without limiting the
generality of the foregoing, this Lease shall not terminate, nor shall
Tenant have any right to terminate this Lease, nor shall Tenant be entitled
to any set-off or abatement of rent, nor shall the obligations of Tenant
under this Lease be affected, by reason of (i) any damage to or destruction
of all or any part of the Premises from whatever cause (except as otherwise
expressly provided for in Section 7.2(b)); (ii) the taking of the Premises
or any portion thereof by condemnation, requisition, or otherwise (except
as otherwise expressly provided for in Section 7.3(f)); (iii) the
prohibition, limitation, cessation, restriction or prevention of Tenant's
use, occupancy or enjoyment of all or any part of the Premises, or any
interference with such use, occupancy or enjoyment, or any insufficiency of
condition, design, operation or fitness for use, occupancy or enjoyment of
the Premises or any portion thereof or any failure of the Premises to
comply with applicable laws; (iv) any eviction by paramount title or
otherwise; (v) any default on the part of Landlord under this Lease, or
under any other agreement to which Landlord and Tenant (or their respective
affiliates) may be parties; (vi) any interruption of utilities or services
to the Premises, (vii) any litigation, claim, or other proceeding affecting
the use or occupancy of the Premises, whether arising before or after the
Commencement Date (Tenant agreeing to be solely responsible for defending,
and to indemnify and hold harmless Landlord from and against, any and all
claims, liabilities, damages, or expenses, including reasonable attorneys'
fees, arising from such matters), (viii) the impossibility or illegality of
performance by Landlord, Tenant or both, (ix) any action of any
governmental authority (including changes in laws), or (x) any other cause
whether similar or dissimilar to the foregoing. The preceding sentence
shall apply to the maximum extent now or hereafter permitted by law, it
being acknowledged and agreed that Tenant or its affiliate is the former
owner of the Premises, that Landlord would not have agreed to purchase the
Premises absent Tenant's agreement to enter into this Lease, and that the
provisions of this Article IV reflect the parties' express agreement as to
the allocation of certain risks relating to the Premises and its use and
are a material part of the economic inducements for Landlord to enter into
this Lease. It is the intention of the parties hereto that the obligations
of Tenant hereunder shall be separate and independent covenants and
agreements, that the Annual Base Rent, the Additional Rent, and all other
sums payable by Tenant hereunder shall continue to be payable in all
events, and that the obligations of Tenant hereunder shall continue
unaffected, unless the requirement to pay or perform the same shall have
been terminated pursuant to an express provision of this Lease.
Notwithstanding anything to the contrary contained above, in the event that
Tenant does bring a separate and independent action against Landlord, any
judgment in favor of Tenant shall not ▇▇▇▇▇ Annual Base Rent or Additional
Rent or terminate the Tenant's obligations hereunder.
4.3 True Lease. Landlord and Tenant agree that the parties intend
this Lease to constitute a lease and not a financing arrangement, joint
venture or any other type of relationship other than that of landlord and
tenant. Each party shall reflect the transaction represented hereby in all
applicable books, records and reports (including income tax filings) in a
manner consistent with "true lease" treatment
8
rather than "financing" treatment, subject to future modifications of
accounting or tax rules or guidelines and subject to contrary
determinations or positions by governmental agencies or the like.
4.4 Quiet Enjoyment. Upon performing all covenants of this Lease,
Tenant may peaceably and quietly enjoy the Premises during the Term free
from any claim by Landlord or persons claiming under Landlord, subject
always to the terms of this Lease, provisions of law, and matters of record
to which this Lease is or may become subordinate. Except as otherwise
expressly provided herein, this covenant of quiet enjoyment is in lieu of
any other covenant of quiet enjoyment, express or implied.
ARTICLE V
---------
Tenant's Covenants
------------------
Tenant agrees during the Term and such further time as Tenant (or any
person acting under it) occupies any part of the Premises to perform the
following, all at Tenant's cost.
5.1 Tenant Work
5.1.1 General . As used in this Lease, the term "Tenant Work"
shall mean all work, including demolition, improvements, additions and
alterations, in or to the Premises. Without limitation, Tenant Work
includes any apertures in the walls, partitions, ceilings or floors and all
attached carpeting, all signs visible from the exterior of the Premises,
and any change in the exterior appearance of the Premises. All Tenant Work
shall be subject to Landlord's prior written approval, not to be
unreasonably withheld, conditioned or delayed, and shall be arranged and
paid for by Tenant all as provided herein; provided that any interior, non-
structural Tenant Work (including any series of related Tenant Work
projects) that costs less than the Tenant Work Threshold Amount and does
not affect any mechanical, electrical, plumbing, or telecommunications
systems of the Premises (collectively, the "Building Systems") shall not
require Landlord's prior approval if Tenant delivers the Construction
Documents for such work to Landlord at least five (5) business days' prior
to commencing such work and such work does not require the approval of
Landlord's mortgagee. Whether or not Landlord's approval is required,
Tenant shall neither propose nor effect any Tenant Work that would in
Landlord's reasonable judgment (i) adversely affect any structural
component of the Premises, (ii) is incompatible with the Building Systems,
(iii) affects the exterior appearance of the Premises or areas around the
Building or other property than the Premises, (iv) diminishes the value of
the Premises, or (v) requires any unusual expense to readapt the Premises.
Title to all additions, alterations, improvements and replacements made to
the Premises, including all Tenant Work, shall vest in Landlord and remain
part of the realty subject to this Lease, except to the extent provided in
Section 5.12, without any obligation to pay any compensation therefor to
Tenant.
5.1.2 Construction Documents. No Tenant Work shall be effected
except in accordance with complete, coordinated construction drawings and
specifications ("Construction Documents"). For interior cosmetic Tenant
Work that does not require Landlord's approval under Section 5.1.1, the
"Construction Documents" may constitute only sketches accompanied by a
reasonably detailed description of the Tenant Work. Before commencing any
Tenant Work requiring Landlord's approval under Section 5.1.1, Tenant shall
obtain Landlord's prior written approval of the Construction Documents for
such work, which approval shall not be unreasonably withheld. Landlord
shall use reasonable efforts to respond to Tenant's submission of
Construction Documents within 5 business days, or within such longer period
as is required in order for Landlord to obtain any approval needed from
Landlord's mortgagee. The Construction Documents shall be prepared by an
architect ("Tenant's Architect") experienced in the construction of
improvements in and to comparable buildings in the area where the Premises
are located and, if such
9
work will exceed the Tenant Work Threshold Amount or involve matters other
than interior, non-structural alterations, the identity of such Architect
shall be subject to Landlord's approval in advance, such approval not to be
unreasonably withheld. Tenant shall be solely responsible for the
liabilities associated with and expenses of all architectural and
engineering services relating to Tenant Work and for the adequacy,
accuracy, and completeness of the Construction Documents even if approved
by Landlord (and even if Tenant's Architect has been otherwise engaged by
Landlord in connection with the Premises). The Construction Documents
shall set forth in detail the requirements for construction of the Tenant
Work and shall show all work necessary to complete the Tenant Work
including all cutting, fitting, and patching and all connections to the
Building Systems. Submission of the Construction Documents to Landlord for
approval shall be deemed a warranty that all Tenant Work described in the
Construction Documents (i) complies with all applicable laws, regulations,
building codes, and high design standards, (ii) does not materially and
adversely affect any structural component of the Premises (including
exterior walls, exterior windows, core walls, roofs or floor slabs), (iii)
is compatible with and does not materially and adversely affect the
Building Systems, (iv) does not affect any property other than the
Premises, (v) conforms to floor loading limits, (vi) and with respect to
all materials, equipment and special designs, processes or products, does
not infringe on any patent or other proprietary rights of others.
Landlord's approval of Construction Documents shall only signify Landlord's
consent to the Tenant Work shown and shall not result in any responsibility
of Landlord concerning compliance of the Tenant Work with laws,
regulations, or codes, or coordination or compatibility with any component
or system of the Premises, or the feasibility of constructing the Tenant
Work without damage or harm to the Premises, all of which shall be the sole
responsibility of Tenant. Within thirty (30) days after substantial
completion of any Tenant Work, whether or not the same costs less than the
Tenant Work Threshold Amount or otherwise requires Landlord's approval,
Tenant shall furnish to Landlord "as built" plans showing the Tenant Work
and adjoining portions of the Premises. Tenant's construction contract(s)
for Tenant Work shall provide that any and all warranties thereunder shall
inure to the benefit of Landlord (and its successors and assigns) as well
as Tenant, and Tenant shall furnish Landlord with copies of such warranties
promptly after the completion of Tenant Work. To the extent Landlord's
approval is required hereunder (but not otherwise), Tenant shall pay to
Landlord, within ten (10) days after Landlord's demand therefor, the
reasonable direct third-party costs and expenses of reviewing Construction
Documents incurred by Landlord, not to exceed $3,000.
5.1.3 Performance. The identity of any person or entity (including
any employee or agent of Tenant) performing any Tenant Work ("Tenant's
Contractor") shall, if the cost of such work in any instance is in excess
of the Tenant Work Threshold Amount or involves any work other than
interior, nonstructural alterations, be approved in advance by Landlord,
such approval not to be unreasonably withheld or delayed. Once any
Tenant's Contractor has been approved, then the same Contractor may
thereafter be used by Tenant for the same type of work until Landlord
notifies Tenant that such Tenant's Contractor is no longer approved.
Tenant shall procure at Tenant's expense all necessary permits and licenses
before undertaking any Tenant Work. Tenant shall perform all Tenant Work
at Tenant's risk in compliance with all applicable laws and in a good and
workmanlike manner employing new materials of good quality and producing a
result at least equal in quality to the other parts of the Premises. When
any Tenant Work is in progress, Tenant shall cause to be maintained
insurance as described in the Tenant Work Insurance Schedule attached as
Exhibit D and such other insurance as may be reasonably required by
Landlord covering any additional hazards due to such Work, and, if the cost
of such Work exceeds the Tenant Work Threshold Amount also such bonds or
other assurances as Landlord may reasonably require that the work will be
satisfactorily completed and the costs thereof timely paid, in each case
for the benefit of Landlord. If the Tenant Work in any instance requires
Landlord's approval hereunder, Tenant shall reimburse Landlord's reasonable
costs of inspecting installation of the Tenant Work not to exceed $1,000
per inspection. At all times while performing Tenant Work, Tenant shall
require any Tenant's Contractor to comply with all applicable laws,
regulations, permits and Landlord's rules and regulations
10
relating to such work, including use of loading areas, elevators and
lobbies. Each Tenant's Contractor shall work on the Premises without
causing labor disharmony, coordination difficulties, or delay to or
impairing of any guaranties, warranties or the work of any other
contractor. Each Tenant's Contractor shall, by entry into the Premises, be
deemed to have agreed to indemnify and hold the Indemnitees (as defined in
Section 5.6) harmless from any claim, loss or expense arising in whole or
in part out of any act or neglect committed by or under such person while
on or about the Premises to the same extent as Tenant has so agreed in this
Lease, the indemnities of Tenant and Tenant's Contractor being joint and
several.
5.1.4 Payment. Tenant shall pay the entire cost of all Tenant Work
and shall keep the Premises, free of liens for labor or materials relating
to such Tenant Work. If any such lien or notice of contract is filed that
is claimed to be attributable to Tenant or persons acting under Tenant,
then Tenant shall promptly (and always within thirty (30) days) discharge
or record a bond (in form and substance reasonably acceptable to Landlord
and Landlord's title insurer and acceptable to Landlord's mortgagee from
time to time) over the same; provided, however, that Tenant shall not be
entitled to bond over the same in any circumstance in which the failure to
pay and discharge such lien could cause a default under any loan secured by
the Premises.
5.2 Utilities and Services. Tenant shall arrange, provide and pay
directly (and assume all risk of service interruptions) for all water,
sewer, steam, oil, gas, telecommunications, electricity and other energy or
utility services that serve the Premises and deposits or bonds in
connection therewith. It is understood and agreed that Landlord shall be
under no obligation whatsoever to furnish any utilities or services
(including snow removal, cleaning or security) to the Premises, and in no
event shall Landlord be liable for (or suffer any reduction in any rent on
account of) any interruption or failure in the supply of the same.
5.3 Maintenance and Repairs. (a) Tenant shall, in a commercially
reasonable manner, manage, maintain, repair, replace, clean, secure,
protect, defend and keep in good condition, repair and appearance and in
compliance with all governmental requirements and laws the Premises and all
improvements and appurtenances and all utilities, facilities, installations
and equipment used in connection therewith, except as expressly provided in
Section 5.18, including the structural elements of all walls, roof decks,
floor slabs and foundations, all floor coverings, roof waterproofing and
membranes, glass, windows, doors, partitions, exterior lighting, elevators,
electrical, telecommunications, plumbing, heating, ventilating and other
building systems, pipes, drains, water and sewage systems and other
fixtures or equipment serving the Premises. Without limitation, Tenant
shall provide all cleaning, painting, janitorial services, security,
rubbish disposal, periodic exterior waterproofing treatments to the
Premises, window caulking, maintenance of all gas, water, electric,
telecommunications and other utility lines from surrounding ways to the
Premises, and shall repair and maintain the grounds and landscaping, roads,
parking areas (including periodic resurfacing), and walkways appurtenant to
the Premises, and shall provide landscaping and snowplowing services
thereto, keeping the Premises and all improvements and appurtenances in at
least as good condition as on the Commencement Date, reasonable wear and
tear excepted, except as expressly provided in Section 5.18. Tenant shall
not injure, overload, deface, or commit waste in the Premises nor use or
permit any use of the Premises that is improper or offensive or that
constitutes a nuisance. Except as expressly provided in Section 5.18,
Tenant shall make promptly all structural and nonstructural, foreseen and
unforeseen, ordinary and extraordinary changes and repairs of every kind
that may be required to be made to keep and maintain the Premises in good
condition, repair, and appearance, reasonable wear and tear excepted.
Tenant shall keep the Premises orderly and free and clear of rubbish.
Tenant shall keep the Premises equipped with fire extinguishers and other
safety appliances as are required by applicable laws and the insurance
required to be carried by Tenant hereunder and as otherwise reasonably
appropriate for Tenant's use. Tenant covenants to perform or
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observe all terms, covenants or conditions of any Title Documents or any
maintenance agreement to which it may at any time be a party or to which
the Premises may be subject and Landlord shall have no obligations
whatsoever thereunder. Tenant shall, at its expense, use reasonable
efforts to enforce compliance with any provisions of any Title Documents or
maintenance agreement having a material effect on the value or use of the
Premises by any other person subject to such agreement. Landlord shall not
be required to maintain, repair or rebuild, or to make any alterations,
replacements, or renewals of any nature to the Premises, or any part
thereof, whether ordinary or extraordinary, structural or nonstructural,
foreseen or not foreseen to maintain the Premises or any part thereof in
any way, except as expressly provided in Section 5.18. Tenant hereby
expressly waives the right to make repairs at the expense of Landlord that
may be provided for in any law. To the maximum extent permitted by law,
Tenant assumes all risk of damage or injury to any person or property
located in, on, or about the Premises and Landlord shall not be liable for
any loss or damage to person or property resulting from any accident,
theft, vandalism, or other occurrence on the Premises. Tenant shall, in
all events, make all repairs, replacements and perform maintenance and
other work for which it is responsible hereunder promptly, in a good,
proper and workmanlike manner at its sole cost and expense.
(b) If Landlord believes that Tenant has failed to comply with its
maintenance, repair and related obligations under this Lease, Landlord may
send a notice thereof to the Tenant (the "Property Condition Notice").
Promptly following the issuance of any Property Condition Notice, Landlord
and Tenant will meet and attempt to agree in writing upon a mutually
acceptable plan of action by the Tenant to address the matters set forth in
the Property Condition Notice. If, for any reason, Landlord and Tenant
have not agreed in writing on a plan of action within thirty (30) days from
the date of the Property Condition Notice, Landlord shall be entitled to
send Tenant a notice (the "Landlord Notice") naming a third-party
engineering firm (such third-party engineering firm, the "Landlord's
Designated Consultant") to investigate the matters described in the
Property Condition Notice. Tenant may, within twenty (20) days from the
date of the Landlord Notice, provide Landlord with written notice (the
"Tenant Notice") stating that Tenant disapproves of Landlord's Designated
Consultant and naming another proposed third-party engineering firm (such
third-party engineering firm, the "Tenant's Designated Consultant") to
investigate the matters described in the Property Condition. If Tenant
fails to send a Tenant Notice to Landlord within twenty (20) days following
the Landlord Notice, and if the Landlord Notice contained the following
words at the top of the notice, "TENANT MUST RESPOND TO THIS REQUEST WITHIN
20 DAYS FROM THE DATE OF THIS LANDLORD NOTICE OR TENANT SHALL BE DEEMED TO
HAVE APPROVED AND AGREED TO THE LANDLORD NOTICE," then Tenant shall be
deemed to have agreed to the use of Landlord's Designated Consultant and
Landlord's Designated Consultant shall promptly issue a written report to
Landlord and Tenant (the "Property Condition Report") setting forth the
results of its investigation and outlining the steps, if any, that should
be taken by Tenant in order to address those matters. If Tenant issues a
Tenant Notice to Landlord within twenty (20) days following the Landlord
Notice, the Landlord's Designated Consultant and the Tenant's Designated
Consultant shall, within ten (10) days from the Tenant Notice, send a
written notice to Landlord and Tenant designating a third-party engineering
firm (which shall not be either the Landlord's Designated Consultant nor
the Tenant's Designated Consultant) to issue the Property Condition Report.
Promptly following the issuance of the Property Condition Report, Tenant
shall commence the work described in the Property Condition Report and
shall complete the same as soon as reasonably practicable in a good and
workmanlike manner and in compliance with all applicable laws. If the
Landlord's Designated Consultant and the Tenant's Designated Consultant
fail to name a third party engineering firm within ten (10) days from the
date of the Tenant Notice, either Landlord or Tenant may apply to the
Boston office of the American Arbitration Association for appointment of a
single arbitrator to select such third party engineering firm. Any such
arbitration shall be conducted in accordance with the Fast-Track Commercial
Arbitration Rules and the decision of the arbitrator shall be binding on
Landlord and Tenant. The third party costs of all engineering firms
engaged under this Section 5.3(b), as well as costs payable
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to any arbitration association or arbiter, shall be borne equally by
Landlord and Tenant. If at any time the American Arbitration Association
shall cease to provide arbitration services for commercial disputes in the
Greater Boston area, the arbitrator shall be appointed by any successor
organization providing substantially the same services and, in the absence
of any such successor organization, by a court of competent jurisdiction.
5.4 Use and Compliance with Law. Tenant shall occupy the Premises
continuously only for the Permitted Uses, and only as and to the extent
permitted under present and future laws, ordinances and bylaws and all
regulations, land use restrictions, soil management plans and the like
thereunder (including those regulating the production, use, and disposal of
hazardous materials, occupational health and safety laws, and access to
persons with disabilities) and all permits, orders and other governmental
approvals ("laws") applicable from time to time to the Premises or Tenant
or both, foreseen or unforeseen, and whether or not the same necessitate
structural or other extraordinary changes or improvements to the Premises
or interfere with Tenant's use. Tenant shall, at its expense, except as
expressly provided in Section 5.18, comply with all changes required in
order to obtain the insurance required by it to be carried and with the
provisions of all Title Documents and any contracts, agreements,
instruments, and restrictions to which Tenant is or hereafter becomes a
party or by which Tenant is or becomes bound affecting the Premises or any
part thereof or the ownership, occupancy, or use thereof. Tenant shall not
initiate or acquiesce in any change in any zoning or other law or
regulation or land use restriction affecting the Premises without the prior
consent of Landlord. Tenant shall procure all appropriate approvals,
licenses and permits relating to the Premises or its occupancy, in each
case promptly giving Landlord true and complete copies of the same and all
applications therefor. Tenant shall, in any event, in the manner provided
in Section 5.6 indemnify and save Landlord harmless on account of Tenant's
failure so to comply with the obligations of this Section. It is intended
that Tenant bear the sole risk of all present and future laws affecting the
Premises and appurtenances, and Landlord shall not be liable for (nor
suffer any reduction in any rent on account of) the enforcement of laws.
Anything herein to the contrary notwithstanding, Tenant shall not use or
permit the use of the Premises or any part thereof for any unlawful or
illegal purposes or in violation of any certificate of occupancy or Title
Documents, or for any extra-hazardous purpose or in such manner as to
create or constitute a nuisance of any kind.
5.5 Taxes and Impositions. Tenant shall pay or discharge all Taxes
and Impositions, for each fiscal period wholly included in the Term (and a
ratable amount for the partial fiscal years included in the Term at the
beginning and the end of the Term).
As used in this Lease, the term "Taxes and Impositions" means: (a)
all taxes, assessments, betterments, excises, levies, user fees, water and
sewer rents and charges, and all other governmental charges and fees of any
kind or nature, or impositions or agreed payments in lieu thereof or
voluntary payments made in connection with the provision of governmental
services or improvements of benefit to the Premises (including any so-
called linkage, impact or voluntary betterment payments), and all penalties
and interest thereon (if due to Tenant's failure to make timely payments),
assessed or imposed against (i) the Premises or any portion of the Premises
(including any personal property taxes levied on such property or on
fixtures or equipment or other personal property used in connection
therewith), (ii) any Annual Base Rent and Additional Rent reserved or
payable hereunder (other than a federal or state income tax of general
application), and (iii) this Lease or the leasehold estate hereby created,
or which arise in respect of the operation, possession, occupancy or use of
the Premises, ordinary and extraordinary, whether or not the same shall
have been within the express contemplation of the parties hereto, other
than a federal or state income tax of general application; (b) all sales
(including those imposed on lease rentals), value added, ad valorem, single
business, gross receipts, use and similar taxes at any time levied,
assessed or payable on account of the leasing, operation, possession or use
of the Premises by Tenant; (c) any transfer, recording, stamp and real
property gain taxes incurred upon the sale,
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transfer, foreclosure or other disposition of any interest in the Premises
by Tenant; (d) all claims and demands of mechanics, laborers, materialmen
and others which, if unpaid, might create a lien on the Premises; (e) all
charges of utilities, communications and similar services serving the
Premises; (f) charges with respect to police protection, fire protection,
street and highway maintenance, construction and lighting, sanitation and
water supply, if any; and (g) fines, penalties and other similar or like
governmental charges applicable to the foregoing and any interest or costs
with respect thereto. If during the Term the present system of ad valorem
taxation of property shall be changed so that, in lieu of or in addition to
the whole or any part of such ad valorem tax there shall be assessed,
levied or imposed on such property or Premises or on Landlord any kind or
nature of federal, state, county, municipal or other governmental capital
levy, income, sales, franchise, excise or similar tax, assessment, levy,
charge or fee (as distinct from the federal and state income tax in effect
on the Date of Lease Execution) measured by or based in whole or in part
upon Premises valuation, mortgage valuation, rents, services or any other
incidents, benefits or measures of real property or real property
operations, then any and all of such taxes, assessments, levies, charges
and fees shall be included within the term of Taxes and Impositions. In no
event shall the provisions of this paragraph obligate Tenant to pay any
federal or state income tax of general application due from Landlord.
Tenant shall pay any Taxes and Impositions directly to the
appropriate governmental authority at least ten (10) days before the same
are due, and by such time Tenant shall provide Landlord (and if requested
also any Landlord's mortgagee) evidence of such payment. (If any tax ▇▇▇▇
is sent to Landlord, then Landlord shall promptly deliver such tax ▇▇▇▇ to
Tenant. If such tax ▇▇▇▇ is not so delivered, then Tenant shall not be
deemed to have failed to perform timely its obligations so long as Tenant
pays such Taxes and Impositions within fifteen (15) days after receipt of
such ▇▇▇▇). If: (A) Tenant fails to perform timely its obligations under
this Section 5.5 (if such failure continues for more than ten (10) days
after notice from Landlord of such failure, or if such failure occurs two
(2) times within any twelve (12) month period), or (B) tax escrows are
required by Landlord's mortgagee, Landlord may require, among its other
rights and remedies, that the Taxes and Impositions be paid to Landlord in
monthly installments on the first day of each month in amounts reasonably
estimated from time to time by Landlord to provide for the full payment of
Tenant's obligation with respect to the Taxes and Impositions thirty (30)
days prior to the date the same are due. Unless such funds are held by
Landlord's mortgagee, they shall be deposited into an interest-bearing
account held by Landlord and Landlord will apply the escrowed funds
(including the interest thereon) to the payment of the Taxes and
Impositions as they become due or release the funds to Tenant for such
payment. Tenant shall furnish to Landlord true, correct, and complete
copies of all bills relating to any Taxes and Impositions within ten (10)
days after Tenant's receipt thereof.
Tenant shall have the right to seek, at its own cost, to reduce,
maintain the existing level of, or resist increases in (collectively,
"abatements") Taxes and Impositions for any fiscal tax period wholly or
partially within the Term for which Tenant has paid. If Tenant fails to
notify Landlord that it intends to prosecute an abatement at least twenty
(20) days prior to the date abatements may be filed without loss of rights,
then Landlord shall have such right. (If Tenant does prosecute an
abatement, it will not thereafter compromise or terminate such prosecution
without giving Landlord at least twenty (20) days' prior notice and
opportunity to assume such prosecution.) If Landlord elects to prosecute
any abatement not prosecuted by Tenant, Landlord shall notify Tenant and
Tenant shall, within ten (10) days, elect by notice to Landlord whether
Tenant desires to receive the benefits of such abatement proceeding.
(Tenant's failure timely to make such election shall be deemed an election
not to receive the benefits of such abatement). If Tenant elects to
receive the benefits of the abatement proceeding prosecuted by Landlord,
Tenant shall pay to Landlord as Additional Rent Landlord's reasonable costs
(including fees of attorneys, appraisers and other consultants) incurred in
seeking such abatement whether or not successful and whether or not such
efforts involve filing actual abatement applications or initiation of other
formal proceedings; and in such case Landlord shall pay to Tenant the net
proceeds received from any abatement
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allocable to Taxes and Impositions that Tenant has theretofore paid. If
Tenant elects (or is deemed to elect) not to receive the benefits of any
abatement proceeding prosecuted by Landlord, Taxes and Impositions shall
not include Landlord's costs in prosecuting such abatement; but Landlord
shall be entitled to retain the entire proceeds of such abatement even if
allocable to Taxes and Impositions that Tenant has theretofore paid. Both
Landlord and Tenant shall reasonably cooperate with the moving party in
prosecuting any abatement.
5.6 Indemnity. Subject only to those rights expressly reserved to
Landlord under this Lease, Tenant shall have exclusive control of the
Premises and all areas pertaining thereto including all appurtenances,
improvements, utilities, water bodies, grounds, sidewalks, walkways,
driveways and parking facilities on the Land, and Tenant shall bear the
sole risk of all related tort liabilities. To the maximum extent permitted
by applicable law, Tenant shall indemnify, save harmless and defend
Landlord, its beneficiaries and affiliates, all Landlord's mortgagees, any
ground lessors, and the officers, directors, stockholders, members,
managers, trustees, partners, agents, and employees of any of the foregoing
and any other persons reasonably designated by Landlord from time to time
as having a relationship to the Premises ("Indemnitees") from all
liability, claim, damage, cost or loss (including reasonable fees of legal
counsel of the Indemnitees' choice) arising in whole or in part out of, or
in any manner connected with (i) any injury (including death), loss, theft
or damage to any person or property while on or about the Premises, except
to the extent caused directly by Landlord's gross negligence or willful
misconduct, or (ii) any condition of the Premises, except to the extent
caused directly by Landlord's gross negligence or willful misconduct, or
the possession and use thereof or any activity permitted or suffered
thereon (including hazardous materials or hazardous materials activities),
or (iii) any breach of any covenant, representation or certification by
Tenant or persons acting under Tenant, and the consequences of any such
breach (including for failure to timely pay Taxes and Impositions and third
party claims), or (iv) any liability imputed to any Indemnitees because of
Landlord's ownership of the Premises, or (v) any act or omission anywhere
by Tenant or persons acting under Tenant, in each case paying the same to
Landlord on demand as Additional Rent. Without implying that other
covenants do not survive, the covenants of this Section shall survive the
Term.
5.7 Landlord's Entry Right. Landlord and persons acting under
Landlord may upon such notice and in such manner as is reasonable under the
circumstance enter the Premises during business hours but in no event less
than 24 hours notice (and in case of emergency, at any time and without
prior notice) to exercise of any rights reserved to Landlord, or to inspect
the Premises (including testing or sampling with respect to hazardous
materials), or to take measurements of the Premises, or to secure or
protect the Premises, or to remove any improvements, alterations or
additions made without any required consent hereunder; and similarly at any
time may show the Premises to prospective purchasers and lenders, and may
show the Premises to prospective tenants and during the last two years of
the Term may keep affixed in suitable places notices for letting as long as
it does not materially interfere with Tenant's use of the Premises and its
business operations. Except in case of emergency, Landlord shall be subject
in entering the Premises to reasonable security conditions, if any, set
forth in a notice by Tenant to Landlord.
5.8 Signs. Subject to providing Landlord with plans and
specifications therefor in advance, to any approval rights of Landlord's
mortgagee, and to complying with all applicable laws, Tenant may erect
signs on the Premises identifying Tenant. At the end or earlier
termination of the Term, Tenant will remove all signs (whether existing at
the Commencement Date or later erected) and repair any damage of such
removal.
5.9 Personal Property. Tenant shall be solely responsible for
paying all personal property taxes assessed on all furnishings, trade
fixtures, equipment, inventory, or other personal property of Tenant or any
person holding under Tenant on the Premises ("Tenant Property") or any
personal property
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of any other person at the Premises. Tenant shall use reasonable efforts
to have Tenant Property taxed separately from the Premises. All Tenant
Property at the Premises shall be at the sole risk of Tenant. To the
maximum extent permitted by applicable law, Landlord shall not be liable
for any loss or damage to person or property resulting from any accident,
theft, vandalism or other occurrence on the Premises, including damage
resulting from water, wind, ice, steam, explosion, fire, smoke, chemicals,
the rising of water or leaking or bursting of pipes or sprinklers, defect,
structural or non-structural failure, or any other cause.
5.10 Damage and Hazardous Materials. Tenant shall not itself, or
permit or suffer persons to, either with or without negligence, injure,
overload, deface, damage or otherwise harm the Premises or any part or
component thereof; commit any nuisance; permit the existence, emission,
discharge, release or other escape of any oil or petroleum products,
asbestos, polychlorinated biphenyls or any biologically or chemically
active or other hazardous or toxic materials, substances or wastes whether
in solid, liquid or gaseous state, whether existing or released prior to or
after the Commencement Date (collectively, "hazardous materials," but
excluding common office products such as copy machine toner and the like
that are used in compliance with applicable laws) so as to impregnate,
impair or in any manner affect, even temporarily, any element or part of
the Premises or the property or person of others, or allow the storage,
generation, disposal or use of such (collectively "hazardous materials
activities") in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such
materials; nor shall Tenant permit to be brought onto the Premises any such
materials except to use in the ordinary course of Tenant's business; permit
any noise or odors to emanate beyond the Premises; or permit any waste
whatsoever to the Premises. Landlord may inspect the Premises from time to
time as long as it does not materially interfere with Tenant's use of the
Premises and its business operations, and Tenant will cooperate with such
inspections. Tenant shall, promptly following Landlord's written request,
provide Landlord with true and complete copies of any filings or reports
submitted by Tenant to any governmental agency relating to hazardous
materials or hazardous materials activities. If required by Landlord's
mortgagee or governmental agency or if Landlord has a good faith reason to
believe a release may have occurred or a threat of release exists on or
about the Premises or hazardous materials activities do not conform to all
laws, then Landlord may, but need not, perform appropriate testing in a
commercially reasonable manner and the reasonable costs thereof shall be
reimbursed to Landlord by Tenant upon demand as additional rent.
Notwithstanding the foregoing, Landlord shall notify Tenant if such testing
is required by Landlord's mortgagee or by a governmental agency and, except
in the case of an emergency or to the extent contrary to applicable laws or
Landlord's obligations under loan documents, Landlord shall use good faith
efforts to provide Tenant with a reasonable opportunity to provide
information relevant to Landlord's mortgagee or the governmental agency's
determination whether such testing is necessary, so long as no waiver of
any Landlord rights or other material liability or cost to Landlord may
result, Tenant indemnifies Landlord in connection therewith in the manner
provided in Section 5.6, and Landlord's mortgagee and governmental agency
confirm in writing that no such testing is necessary. Without limitation,
hazardous materials shall include all substances described in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. 9601 et seq.; in the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq.; in the Hazardous
Materials Transportation Act; and all other federal, state and local laws,
rules, regulations, and ordinances governing similar matters as they may be
enacted and amended from time to time. In addition, Tenant shall execute
affidavits, representations and the like from time to time at Landlord's
request concerning Tenant's best knowledge and belief regarding the
presence or absence of hazardous materials on the Premises or Landlord's
property. Without limiting the foregoing, if any hazardous material is
ever found to be present in, on, at, under or about the Premises (except as
permitted as set forth above), whether caused or permitted by Tenant or
persons acting under Tenant, then Tenant shall promptly take all actions at
its sole expense as are necessary to return the Premises to the condition
existing prior to the introduction of any such hazardous materials. In all
events, and without limitation,
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Tenant shall indemnify Indemnitees in the manner elsewhere provided in this
Lease with respect to hazardous materials and hazardous materials
activities whether or not consented to by Landlord or otherwise lawful (and
for these purposes, the loss indemnified shall include any costs of
investigation or remediation, any claim of personal injury or property
damage to any person and any claimed decrease in value of or adverse impact
on marketability to the Premises or any part of Landlord's property
including the Premises). Tenant's indemnifications in the preceding
sentence shall not extend to hazardous materials that Tenant conclusively
demonstrates were first brought to the Premises by parties other than
Tenant (or anyone acting by, through or under Tenant) after the expiration
or earlier termination of the Term, vacating of the Premises and removal of
all of Tenant's property from the Premises. Without implying that other
covenants do not survive, the covenants of this Section shall survive the
Term. Tenant shall from time to time at reasonable intervals upon
Landlord's request confirm all of the foregoing covenants directly to
Landlord's mortgagee, and in that connection shall execute and deliver to
such Landlord's mortgagee hazardous materials indemnities in such form and
substance as such lenders then require of borrowers.
If Tenant or any person acting under Tenant has used hazardous
materials or conducted hazardous materials activities on the Premises, then
not less than six (6) months prior to vacating the Premises at the
expiration or earlier termination of the Term, Tenant at its sole cost
shall provide Landlord with an environmental report by a qualified third
party environmental assessment firm reasonably approved by Landlord, which
report shall include such testing as the third party environmental
assessment firm deems prudent under the circumstances. Tenant shall take
such action as may be necessary in order to allow the third party
environmental assessment firm to conclude in such report either that the
Premises are free from any hazardous materials, or that hazardous materials
are present in compliance with all applicable laws (and in such case such
report shall identify the hazardous materials and contain recommendations
for removing or remediating the hazardous materials). At the expiration or
earlier termination of the Term, Tenant shall cause the Premises to be free
of any material amounts of hazardous materials. Nothing herein contained
shall be construed to limit or impair Tenant's obligation regardless of the
results of any such report.
It is the intent of the parties that Tenant, and not Landlord, assume
all of the risks and liabilities of hazardous materials released on, at, or
under the Premises before or after the Commencement Date or coming onto the
Premises from any source whatsoever during the Term; provided that Tenant
shall have no liability to Landlord for hazardous materials that migrate
onto the Property from an adjacent property after the Commencement Date if
Tenant conclusively proves that such hazardous materials so migrated onto
the Premises after the Commencement Date from a source outside of the
Premises for which Tenant bears no responsibility. Landlord, which
purchased the Premises from Tenant, shall have no liability to Tenant for
any hazardous materials (if any) released or existing on, at, or under the
Premises prior to the Commencement Date.
5.11 Liens. Tenant shall not, directly or indirectly, create or
permit to be created or to remain, and shall promptly discharge by bonding
or otherwise, any lien on Landlord's fee interest in the Premises, the
Annual Base Rent and/or Additional Rent, other than the mortgage(s) held by
Landlord's mortgagee (and any assignment of leases or rents collateral
thereto), the Permitted Exceptions in existence on the Commencement Date
and any mortgage, lien, encumbrance or other charge created by or resulting
from any act or omission by Landlord or those claiming by, through or under
Landlord other than Tenant. Nothing contained in this Lease shall be
construed as constituting the consent or request of Landlord, express or
implied, to or for the performance by any contractor, laborer, materialman,
or vendor of any labor or services or for the furnishing of any materials
for any construction, alteration, addition, repair or demolition of or to
the Premises or any part thereof. Notice is hereby given that Landlord
will not be liable for any labor, services or materials furnished or to be
furnished to Tenant, or to anyone holding an
17
interest in the Premises or any part thereof through or under Tenant, and
that no mechanic's or other liens for any such labor, services or materials
shall attach to or affect the fee interest of Landlord in and to the
Premises.
5.12 Condition on Expiration. At the expiration or earlier
termination of the Term, Tenant (and all persons claiming through Tenant)
shall without the necessity of notice vacate and surrender the Premises
broom-clean and in good and tenantable condition reasonable wear and tear
excepted. As part of such delivery, Tenant shall also provide all keys (or
lock combinations, codes or electronic passes) to the Premises; remove all
signs regardless of date of installation wherever located and all Tenant
Work except for any items of such Work that Landlord in its sole discretion
may direct Tenant to surrender; remove all Tenant Property and other
personal property whether or not bolted or otherwise attached; and remove
all of Tenant's signs wherever located. If requested in writing, Landlord
shall advise Tenant at the time of Landlord's approval of Tenant Work (or
for Tenant Work not requiring Landlord's approval, within thirty (30) days
of Tenant's written request) whether Landlord requires removal of such
Tenant Work at the expiration or earlier termination of the Term. Tenant
shall repair all damage that results from such removal and restore the
Premises substantially to a fully functional and tenantable condition
(including the filling of all floor and wall holes, the removal of all
disconnected wiring back to junction boxes, the replacement of all damaged
ceiling tiles and the repair of any damage caused by the removal of any
bolted or anchored equipment). Any property not so removed shall be deemed
abandoned, shall (if Landlord so elects) become the property of Landlord,
and may be disposed of in such manner as Landlord shall see fit; and Tenant
shall pay the cost of removal and disposal to Landlord upon demand.
Notwithstanding anything to the contrary contained herein, upon expiration
or earlier termination of this Lease, all fixtures regardless of date of
installation that are integral to the operation of the Premises and are not
"trade fixtures" of Tenant, including the heating, ventilation and air
conditioning systems, shall remain on the Premises and be the property of
Landlord; provided, however, that at Landlord's election, Tenant shall, at
its expense and in compliance with all applicable laws, remove any piping,
venting systems and other similar equipment or fixtures not representing
standard HVAC and potable water equipment or fixtures. Without implying
that other covenants do not survive, the covenants of this Section shall
survive the Term.
5.13 Holding Over. If Tenant (or anyone claiming through Tenant)
shall remain in occupancy of the Premises or any part thereof after the
expiration or early termination of the Term without a written agreement
therefor executed and delivered by Landlord, then without limiting
Landlord's other rights and remedies the person remaining in possession
shall be deemed a tenant at sufferance, and Tenant shall thereafter pay
monthly rent (pro rated for such portion of any partial month as Tenant
shall remain in possession) at a rate equal to the Holdover Rate (defined
below) times the greater of (a) fair market rent, or (b) the amount payable
as Annual Base Rent for the twelve-month period immediately preceding such
expiration or termination, and in either case with all Additional Rent also
payable as provided in this Lease. The Holdover Rate shall be 110% for the
first month of holding over, 120% for the second month of holding over,
130% for the third month of holding over and 150% for each month
thereafter. After Landlord's acceptance of the full amount of such rent
for the first month of such holding over, the person remaining in
possession shall be deemed a tenant at will at such rent and otherwise
subject to all of the provisions of this Lease. Notwithstanding the
foregoing, if Landlord desires to regain possession of the Premises
promptly after the termination or expiration hereof and prior to acceptance
of rent for any period thereafter, Landlord may, at its option, forthwith
re-enter and take possession of the Premises or any part thereof without
process or by any legal process in force in the state where the Property is
located. In any case, Tenant shall remain liable to Landlord for all
damages, including consequential damages, resulting from any failure by
Tenant to vacate the Premises or any portion thereof when required
hereunder.
5.14 Intentionally Omitted.
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5.15 Financial Reporting. Tenant shall provide Landlord with
accurate and complete copies of each Form 10Q and Form 10K filed with the
Securities and Exchange Commission for Parlex Corporation ("Parlex")
simultaneously with the filing thereof. If at any time (i) Parlex's stock
is not listed on the NYSE or the NASDAQ or (ii) Tenant's financial
statements are no longer consolidated with those of Parlex, Tenant shall
provide Landlord with the reports set forth on Exhibit E.
5.16 Capital Expenditures. Tenant shall make third party
expenditures (in calendar year 2003) in the amount of Twenty-Thousand
dollars ($20,000.00) on the Capital Expenditure items set forth in Exhibit
H hereto (the "Capital Expenditure Items"). On or before 5 p.m. on
December 30, 2003, Tenant shall deliver to Landlord a statement certified
by Tenant's third party consultant as to which Capital Expenditure Items
have been completed and the actual costs thereof.
5.17 Intentionally Omitted.
5.18 Landlord Repair.
(a) Beginning in Lease Year 11, subject to Article VII, and
except for damage caused by any act or omission of Tenant, or Tenant's
employees, agents, contractors or invitees, Landlord shall be responsible
for the reasonable repair (and if and as necessary, the replacement) of the
foundations, exterior walls, structural walls and roof of the Premises in
the manner set forth in Section 5.18(c). Landlord shall not be obligated
to repair and replace other portions of the Premises, including glass,
windows, doors, parking lots, loading bays, Building Systems or the
surfaces of walls, whether interior or exterior (all of which
responsibility shall be Tenant's), or to repair or maintain any part of the
Tenant Work performed by Tenant under Section 5.1, or for any repair or
replacement arising from any overburdening of the Premises by Tenant, any
failure by the Tenant to care for, inspect and maintain the Premises and
Building Systems in accordance with this Lease and otherwise in a
commercially reasonable manner or any other act or omission of Tenant or
its agents, contractors or invitees. Tenant shall promptly report in
writing to Landlord any defective condition known to it that Tenant
believes Landlord is required to repair.
(b) Beginning in Lease Year 11, subject to Article VII, if a
legal requirement first effective after the commencement of Lease Year 11
shall render the Premises to be in material violation of law (other than a
violation arising from any work performed by or for Tenant at the Premises,
Tenant's layout or manner of use or business or otherwise arising from the
acts or omissions of Tenant or Tenant's employees, agents, contractors or
invitees) and requires a capital expenditure to cure such violation of law,
then (i) Tenant shall so notify Landlord in a written report describing the
nature and causes of such failure or violation, the alternative corrective
measures, and the Tenant's recommendation for replacement or correction of
such violation, and (ii) Landlord shall repair the affected item in the
manner set forth in Section 5.18(c). Notwithstanding anything to the
contrary in this paragraph, (A) subject to Section 7.2(b) in the case of a
casualty, Tenant shall be solely responsible for the cost to repair,
replace or upgrade any alterations, additions, improvements, repairs, or
replacements that are performed by or on behalf of Tenant in the Premises;
and (B) Landlord shall have no responsibility for any capital expenditures
under this paragraph until such time as the aggregate amount spent by
Tenant from and after the commencement of Lease Year 11 on capital
expenditures under this paragraph, exclusive of expenditures arising from
any work performed by or for Tenant at the Premises, Tenant's layout or
manner of use or business or otherwise arising from the acts or omissions
of Tenant or Tenant's employees, agents, contractors or invitees, equals or
exceeds $250,000.
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(c) In the event that Landlord has a repair obligation under
Section 5.18(a) or Section 5.18(b), and Landlord receives written notice
from Tenant thereof as required by Section 5.18(a) and Section 5.18(b),
then Landlord at its election may (i) repair the affected item if Landlord
determines that such repairs can be effected; and/or (ii) replace all or
parts of such items (or in the case of a violation requiring a capital
expenditure under Section 5.18(b), install such capital item); or (iii)
require that Tenant perform such work in accordance with Section 5.1. In
any case under clauses (i), (ii) and (iii) in the preceding sentence, the
costs of such work shall be allocated and paid as follows. If Landlord
elects to perform any work or replacements required under this Section
5.18, then, prior to the commencement of such work or replacement, Tenant
shall pay to Landlord Tenant's Share (defined below) thereof; provided,
however, that Landlord may elect to give Tenant the option to pay Tenant's
Share during the balance of the Term through a monthly payment equal to the
monthly amount necessary to amortize Tenant's Share, with interest at a
rate equal to 1% over the prime rate of interest published in the Wall
Street Journal, in equal monthly installments over the remainder of the
Term (with such monthly payments being due on the first day of each month).
If Landlord elects to have Tenant perform such work or replacement, then
Landlord's Share (defined below) shall be paid within thirty (30) days
after Landlord receives reasonably acceptable evidence that the work has
been completed and paid in full, after deducting any amounts due and owing
Landlord by Tenant. For the purposes of this Section 5.18, the term
"Tenant's Share" shall mean the portion of the cost of any such work or
replacement, amortized over the useful life of such items determined by
Landlord in accordance with generally accepted accounting principles,
allocable to the remainder of the Term. The term "Landlord's Share" shall
mean the portion of the cost of any such work or replacement, amortized
over the useful life of such items, allocable to the period between the
date the Term of this Lease is scheduled to expire and the date that
represents the end of the useful life of such items determined by Landlord
in accordance with generally accepted accounting principles. Landlord
shall reasonably determine the amortization of such costs in accordance
with generally accepted accounting principles and the calculation of
Tenant's Share and Landlord's Share. If any item of repair or replacement
is necessary due to casualty or condemnation, Landlord shall not be
obligated to make repairs or restoration in excess of the proceeds of
insurance or eminent domain award recovered net of Landlord's reasonable
costs of collection. To the extent Landlord has any repair obligations
under Section 5.18, the performance of any such work shall take priority
over any Tenant Work in Landlord's reasonable judgment.
ARTICLE VI
----------
Assignment and Subletting
-------------------------
6.1 Landlord's Consent Required. Except for Permitted Transfers,
Tenant shall not assign this Lease, or sublet or license the Premises or
any portion thereof, or advertise the Premises for assignment or subletting
or permit the occupancy of all or any portion of the Premises by any person
other than Tenant (each of the foregoing actions are collectively referred
to as a "transfer") without obtaining, on each occasion, the prior written
consent of Landlord in accordance with Section 6.4 below. A transfer shall
include any transfer of Tenant's interest in this Lease by operation of
law, merger or consolidation of Tenant into any other firm or corporation,
and the transfer or sale of a controlling interest in Tenant, whether by
sale of its capital stock or otherwise or any sale of a substantial part of
Tenant's assets. As used in this Lease, the term "Permitted Transfer"
means: (1) a sublease to any subsidiary in which Tenant owns substantially
all voting stock and control or to any parent owning substantially all
voting stock and control of Tenant, (2) any assignment incident to the sale
of substantially all of Tenant's assets or its stock, or (3) a statutory
merger, or to any corporation resulting from the consolidation, of Tenant
with any other entity where in either case of clause (2) or (3) the person
succeeding to Tenant's interest immediately thereafter has a net worth
equal to or in excess of that of Tenant as of the Commencement
20
Date. Any transfer shall be subject to this Lease, all of the provisions
of which shall be conditions to such transfer and be binding on any
transferee. No transferee shall have any right further to transfer its
interest in the Premises except back to Tenant, and nothing herein shall
impose any obligation on Landlord to consider any request for a further
transfer.
6.2 Intentionally Omitted.
6.3 Right of Termination or Recapture. Except for Permitted
Transfers, if Tenant proposes a transfer of the entire Premises or of more
than fifty percent of the rentable floor area of the Premises, in Tenant's
request for consent under Section 6.4 (the "Tenant Request") Tenant shall
offer to Landlord in writing the right to terminate this Lease as to the
area in question as of the date specified in the offer. If Landlord shall
elect in writing to accept the offer to terminate within thirty days after
receipt of such offer ("Landlord's Termination Acceptance"), this Lease
shall so terminate as to the area in question as of the date specified in
such offer, and all of the provisions of this Lease governing termination
shall apply, unless Tenant, within thirty days from its receipt of
Landlord's Termination Acceptance, provides Landlord with a written notice
in which Tenant unconditionally revokes the Tenant Request. If Landlord
does not timely issue a Landlord Termination Acceptance, Tenant shall then
comply with the provisions of this Article applicable to a transfer.
6.4 Procedures. (a) Tenant's request for consent under this
Article VI shall set forth the details of the proposed transfer (and at
least ten days prior to any Permitted Transfer Tenant shall deliver to
Landlord the details of the proposed transfer), including: (i) the name,
business and financial condition of the prospective transferee, together
with a reasonably detailed description of the manner in which the
prospective transferee will use the Premises; (ii) a true and complete copy
of the proposed instrument containing all of the terms and conditions of
such transfer, (iii) a written agreement of the assignee, subtenant or
licensee, in form reasonably approved by Landlord, agreeing with Landlord
to perform and observe all of the terms, covenants, and conditions of this
Lease and agreeing that there are no obligations from Landlord to such
transferee whatsoever, and (iv) any other information Landlord reasonably
requests. Subject to the foregoing provisions of this Article VI,
Landlord's consent to a proposed transfer of all or part of the Premises
shall not be unreasonably withheld or delayed. Tenant hereby acknowledges
that the creditworthiness and experience of Tenant was a material
inducement to Landlord in connection with the consummation of this Lease,
and accordingly, in determining whether to approve a proposed transfer,
Landlord may take into account the financial capacity of such proposed
transferee and the experience of such party in operating similarly situated
properties. Tenant shall pay to Landlord, as Additional Rent, Landlord's
reasonable attorneys' fees in reviewing any transfer requiring Landlord's
consent, whether or not Landlord consents, in an amount not to exceed
$5,000.
(b) With respect to any request for Landlord's approval of a
Transfer, Landlord must respond to a request from Tenant within ten (10)
business days after Landlord's receipt of the items specified in Section
6.4(a)(i)-(iv) above or Landlord's right to approve the request is deemed
waived, if the request from Tenant complies with the following requirements
(the "Special Notice Provisions"):
(1) The request must be in writing, and copies of the request must
be sent to both Landlord and Landlord's counsel in accordance with
the notice provisions of Section 10.1 below; and
(2) The request must contain a blank sheet on the top of it with
only the following language appearing in the middle of the sheet:
LANDLORD MUST RESPOND TO THIS REQUEST WITHIN 10 BUSINESS DAYS FROM
THE DATE OF LANDLORD'S RECEIPT OF THIS NOTICE OR LANDLORD'S RIGHT TO
CONSENT TO OR APPROVE THIS REQUEST WILL BE DEEMED WAIVED.
21
In the event Tenant fails to comply with the Special Notice Provisions, (i)
Landlord shall not be required to respond within the specific period of
time, (ii) Landlord's right to consent to or approve the request will not
be deemed waived if Landlord fails to respond within the specific period of
time, and (iii) Landlord shall not be deemed to have consented to or
approved the request if Landlord fails to respond with the specific period
of time. If the proposed Transfer would require the consent of Landlord's
lender, Landlord's response shall state that any approval given by Landlord
is conditioned upon the approval of the proposed Transfer by Landlord's
lender.
(c) Notwithstanding the foregoing provisions of this Article VI,
Tenant may enter into subleases without the Landlord's prior consent
provided that each of the following conditions is satisfied: (i) there is
no then existing Event of Default by Tenant and no uncured notice of any
facts or circumstances has been given to Tenant that, if not cured within
an applicable cure period, will become an Event of Default; (ii) the
cumulative total of the Premises subject to subleases does not exceed
15,000 square feet; (iii) the aggregate amount of space subject to
subleases does not exceed 25% of the total rentable space at the Premises;
(iv) at least ten (10) days before executing any such sublease, Tenant
shall deliver to Landlord the information described in Section 6.4(a)(i)-
(iv) together with a certification by Tenant that the conditions set forth
in this Section 6.4(c)(i)-(iii) are satisfied with respect to the
prospective sublease; (v) Landlord shall determine, in its reasonable
business judgment, that the manner in which the prospective subtenant will
use the Premises will not materially and adversely affect the condition or
safety of the Premises; and (vi) Tenant shall provide Landlord with a fully
executed copy of such sublease within ten (10) days of its execution.
6.5 Profits. Except for Permitted Transfers and whether or not
Landlord's consent is required, if the consideration, rent, or other
charges payable to Tenant under such transfer exceed the rent and other
charges to be paid hereunder and Tenant's Transfer Expenses (pro rated
based (a) on floor area in the case of a subletting, license or other
occupancy of less than the entire area of the Premises and (b) over the
remaining Term), then Tenant shall pay to Landlord, as Additional Rent,
fifty percent of the amount of such excess when and as received. Tenant's
Transfer Expenses shall mean Tenant's reasonable and necessary payments to
third parties in connection with such a transfer on account of brokerage,
legal and fit-up costs. Without limiting the generality of the foregoing,
any lump-sum payment or series of payments (including for the purchase or
use of so-called leasehold improvements but excluding any Permitted
Transfers as referred to in Section 6.1 above) on account of any transfer
shall be deemed to be in excess of rent and other charges in its or their
entirety.
6.6 No Release. Notwithstanding any transfer and whether or not
the same is a Permitted Transfer or is consented to, Tenant's (and any
guarantor's) liability to Landlord shall remain direct and primary. Any
transferee of all or substantially all of Tenant's interest in the
Premises, including any such transferee by virtue of a Permitted Transfer,
shall be deemed to have agreed directly with Landlord to be jointly and
severally liable with Tenant for the performance of all of Tenant's
covenants under this Lease; and such assignee shall upon request execute
and deliver such instruments as Landlord reasonably requests in
confirmation thereof (and agrees that its failure to do so shall be a
default). Tenant hereby irrevocably authorizes Landlord to collect rent
and other charges from any transferee (and upon notice any transferee shall
pay directly to Landlord) and apply the net amount collected to the rent
and other charges reserved under this Lease. No transfer shall be deemed a
waiver of the provisions of this Section, or the acceptance of the
transferee as a tenant, or a release of Tenant or any guarantor from direct
and primary liability for the performance of all of the covenants of this
Lease. The consent by Landlord to any transfer shall not relieve Tenant or
any transferee from the obligation of obtaining the express consent of
Landlord to any modification of such transfer or a further transfer by
Tenant or such transferee. Notwithstanding anything to the contrary in the
documents effecting the transfer, Landlord's consent shall
22
not alter in any manner whatsoever the terms of this Lease, to which any
transfer at all times shall be subject and subordinate. The breach by
Tenant or any transferee of any covenant in this Article shall be an Event
of Default for which there is no cure period. Failure by Landlord to
consent to a proposed transfer shall never cause a termination of this
Lease or subject Landlord to any damages beyond Tenant's direct costs of
establishing its entitlement to such consent.
ARTICLE VII
-----------
Insurance; Casualty; Taking
---------------------------
7.1 Insurance. (a) Tenant shall maintain, or cause to be
maintained, at its sole expense, the insurance for the Premises specified
on Exhibit F hereto (or such greater amount or additional insurance as
Landlord's mortgagee may from time to time request during the Term). If:
(A) Tenant fails to perform timely its obligations under this Section 7.1,
or (B) insurance escrows are required by Landlord's mortgagee, Landlord may
require, among its other rights and remedies, that the insurance premiums
be paid by Tenant to Landlord in monthly installments on the first day of
each month in amounts reasonably estimated from time to time by Landlord to
provide for the full payment of Tenant's obligation with respect to
insurance thirty (30) days prior to the date the same are due. Unless such
funds are held by Landlord's mortgagee, they shall be deposited into an
interest-bearing account held by Landlord and Landlord will apply the
escrowed funds (including the interest thereon) to the payment of the
premiums as they become due or release the funds to Tenant for such
payment.
(b) Certificates of insurance shall be delivered to Landlord prior
to the commencement date of the Term and annually thereafter at least
thirty (30) days prior to the expiration date of the old policy. Tenant
shall have the right to provide insurance coverage which it is obligated to
carry pursuant to the terms hereof in a blanket policy, provided such
blanket policy expressly affords coverage to the Premises and to Landlord
and Landlord's mortgagee as required by this Lease. Each policy of
insurance shall provide notification to Landlord and Landlord's mortgagee
at least thirty (30) days prior to any cancellation or modification to
reduce the insurance coverage. Tenant shall provide Landlord with a copy
of any such policy, promptly after request. Each policy of insurance shall
state that any loss shall be payable in accordance with the policy terms
notwithstanding any act or neglect of Tenant or Landlord. Each policy of
insurance shall include an endorsement waiving the insurer's rights of
subrogation against Landlord. Without limiting any other provisions of
this Lease, Tenant hereby waives any rights of recovery against Landlord
for injury or loss due to hazards covered by such insurance. The amount
and coverage of any insurance required to be carried by Tenant hereunder
shall not limit Tenant's liability to Landlord for its obligations to
Landlord under this Lease.
(c) (i) Provided that there is no monetary or other material
default by Tenant under this Lease, insurance claims by reason of damage to
or destruction of any portion of the Premises shall be adjusted by Tenant;
provided, however, that no settlement on account of any loss or damage in
excess of $50,000 shall be made with any insurers without the prior written
consent of Landlord (which consent shall not be unreasonably withheld or
delayed) and Landlord's mortgagee, and provided further that, with respect
to any loss or damage giving rise to any Landlord repair obligation under
Section 5.18, Landlord shall have the right at its option to settle on
account of such loss and adjust any such claim. Tenant shall, promptly
after such damage or destruction, advise Landlord and Landlord's mortgagee
of such occurrence and consult with Landlord and Landlord's mortgagee
throughout the process of adjusting any such claim, and both Landlord and
Landlord's mortgagee shall be fully advised as to all matters on a current
basis. Landlord shall not be required to prosecute any claim against, or
to contest any settlement proposed by, an insurer. Tenant may, at its
expense, prosecute any such claim or contest any such settlement in the
23
name of Landlord, Tenant or both, except to the extent Landlord has elected
to settle losses and adjust claims as set forth above, and Landlord will
join therein at Tenant's written request upon the receipt by Landlord of an
indemnity from Tenant against all costs, liabilities and expenses in
connection therewith.
(c) (ii) Subject to the provisions of Section 7.2, and except to
the extent Landlord has elected to settle losses and adjust claims as set
forth above, proceeds from the property insurance policy shall be placed by
Landlord or Landlord's mortgagee with a third-party institutional
depository (such as a title insurance company) reasonably acceptable to
Landlord, Tenant and Landlord's mortgagee and made available by such
institutional depository to Tenant and/or Landlord, as appropriate, for the
cost of repair or restoration, but only against certificates of Tenant
delivered to Landlord or Landlord's mortgagee from time to time as such
work or repair progresses, each such certificate describing the work or
repair for which Tenant is requesting payment and the cost incurred by
Tenant in connection therewith and stating that Tenant has not theretofore
received payment for such work and has sufficient funds remaining to
complete the work free of liens or claims. (Notwithstanding the foregoing,
but subject to the consent of Landlord's mortgagee, and so long as Landlord
has no repair obligations under Section 5.18, proceeds in a total amount of
less than $50,000 shall be made directly available to Tenant for such
repair or restoration without the need for a third-party institutional
depository.) At the request of Landlord or Landlord's mortgagee, such
certificates will be accompanied by appropriate evidence with respect to
the completion of such work or repair to date (including an architect's or
engineer's certificate), the amount of funds required to complete the work,
payment for labor and materials to date and/or the absence of liens or
encumbrances arising from the work, and compliance with the requirements of
Section 5.1. Prior to the release of any such proceeds, and at any time
thereafter upon notice from Landlord, Tenant shall provide Landlord with
reasonable evidence of the availability of such additional sums (beyond any
insurance proceeds) as may be required, in Landlord's reasonable
estimation, to complete the work. Subject to the provisions of Section
7.2, any proceeds remaining after Tenant has repaired the Premises pursuant
to Section 7.2 shall be delivered to Tenant. No payment shall be made to
Tenant pursuant to this Section 7.1(c) if there shall exist an Event of
Default under the terms of this Lease. Notwithstanding the foregoing,
excess insurance proceeds shall not be delivered to Tenant if Landlord has
had repair obligations under Section 5.18.
Until completion of the repair, if and so long as an Event of Default
exists, business interruption insurance proceeds shall be paid to Landlord
(or Landlord's mortgagee) to the extent of Base Rent and Additional Rent
(to the extent the same is payable to Landlord, not to a third party), when
due and payable. The balance, if any, of such proceeds shall be paid to
Tenant or as Tenant may direct. If there is no Event of Default, then
business interruption insurance shall be payable to Tenant.
(d) In the event Tenant does not purchase the insurance required by
this Lease or keep the same in full force and effect, Landlord may, but
shall not be obligated, to purchase the necessary insurance and pay the
premium. Tenant shall repay to Landlord, as Additional Rent, the amount so
paid promptly upon demand. In addition, Landlord may recover from Tenant
and Tenant agrees to pay, as Additional Rent, any and all expenses
(including reasonable attorneys' fees) and damages that Landlord may
sustain by reason of the failure of Tenant to obtain and maintain such
insurance.
(e) Landlord or Landlord's mortgagee shall not be limited in the
proof of any damages which Landlord or Landlord's mortgagee may claim
against Tenant arising out of or by reason of Tenant's failure to provide
and keep in force insurance, as provided above, to the amount of the
insurance premium or premiums not paid or incurred by Tenant and which
would have been payable under such insurance; but Landlord and Landlord's
mortgagee shall also be entitled to recover as damages for such breach, the
uninsured amount of any loss, and costs and expenses of suit suffered or
incurred by reason of or damage to, or destruction of the Premises,
occurring during any period when the Tenant shall have failed or
24
neglected to obtain the insurance required to be carried by Tenant
hereunder. Tenant shall indemnify and hold harmless Landlord and
Landlord's mortgagee in the manner set forth in Section 5.6 for any
liability incurred by Landlord or Landlord's mortgagee arising out of any
deductibles for insurance required to be carried by Tenant hereunder.
(f) Tenant shall obtain insurance for all Tenant Property for its
full replacement cost. In addition, during the performance of any Tenant
Work, Tenant shall also maintain insurance as provided in the Tenant Work
Insurance Requirements attached in Exhibit D.
(g) Landlord shall not be required to maintain any insurance under
this Lease. To the extent that Landlord, in its sole discretion and
(except as provided in Section 7.1(d)) at its sole cost and expense, elects
to maintain any insurance for its own account, such insurance shall not be
contributory and shall be excess over any insurance maintained by Tenant.
7.2 Damage or Destruction of Premises. (a) Except as otherwise
expressly provided in Section 7.2(b) below, if all or a part of the
Premises shall be damaged or destroyed by casualty, and if the estimated
cost of rebuilding, replacing and repairing the same shall be or exceed
$50,000, or in any case giving rise to Landlord's obligation to repair
under Section 5.18, Tenant shall promptly notify Landlord thereof; and
(whether or not such estimated cost shall be or exceed $50,000) Tenant
shall, with reasonable promptness and diligence whether or not any
insurance proceeds are available or adequate for such purpose, except to
the extent Landlord's mortgagee does not make insurance proceeds available
for such purpose, and regardless of the dollar amount or cause of such
damage or destruction, rebuild, replace and repair any damage or
destruction to the Premises, at its expense, in conformity with the
requirements of Section 5.1, and subject to Section 5.18, in such manner as
to restore the same to the same condition, as nearly as possible, as
existed prior to such casualty and there shall be no abatement of Base Rent
or Additional Rent. Notwithstanding the foregoing, if (i) a part of the
Premises shall be damaged or destroyed by casualty, (ii) such casualty was
not caused, in whole or in part, by the intentional act or gross negligence
of Tenant or Tenant's employees, agents, invitees, affiliates or
contractors, (iii) Tenant's obligation to rebuild, replace and repair is
excused under this Section 7.2(a) because Landlord's mortgagee does not
make insurance proceeds available therefor but instead applies the same
toward the obligations of Landlord under its loan, and (iv) such
unavailability of insurance proceeds results in the permanent loss of
rentable floor area of any building, then Annual Base Rent shall be
proportionally abated in a manner reasonably acceptable to Landlord and
Tenant. If the conditions described in the preceding sentence are met, and
if Landlord has elected in its sole discretion not to pay for or perform
any repairs, then the actual, third-party costs paid for by Tenant shall be
taken into account in the determination of the equitable abatement of rent
under the preceding sentence, but only to the extent such costs were
necessary to render the Premises safe and legally occupiable.
Notwithstanding anything herein to the contrary, if there shall have been
an Event of Default under the terms of this Lease and if Landlord has
terminated the term of this Lease pursuant to Article VIII, Landlord, in
the exercise of its sole and absolute discretion, shall have the right to
settle claims relating to any insurance proceeds from any casualty and (if
Landlord has terminated the term of this Lease pursuant to Article VIII) to
receive the same and to apply same toward payment of any indebtedness owed
to Landlord's mortgagee instead of allowing such proceeds to be used by
Tenant for the rebuilding or restoration of the damaged portion of the
Premises.
(b) Notwithstanding the provisions of Section 7.2(a), if a Major
Casualty (defined below) occurs, Tenant and Landlord may, by written notice
to the other within sixty (60) days of the occurrence of such Major
Casualty, terminate this Lease effective as of the first day of the
calendar month that is not less than thirty (30) days nor more than sixty
(60) days following the date of such notice of termination (the "Casualty
Termination Date"). If this Lease is so terminated, (i) then,
notwithstanding anything to
25
the contrary in this Lease, Landlord shall have the exclusive right to deal
with the applicable insurance companies and to settle all claims, (ii) all
insurance proceeds (other than any proceeds attributable solely to any
personal property of Tenant that Tenant is required or allowed to remove
from the Premises upon the termination of this Lease) shall be paid to
Landlord or Landlord's mortgagee; and (iii) on the Casualty Termination
Date, Tenant shall pay to Landlord all Annual Base Rent and Additional Rent
accrued through and including the Casualty Termination Date and all other
amounts then accrued or due and payable by Tenant under this Lease. As
used in this Lease, the term "Major Casualty" means a casualty that: (1) is
not caused, in whole or in part, by the intentional act or gross negligence
of Tenant or Tenant's employees, agents, invitees, affiliates or
contractors; (2) causes more than 50% of the Premises to be untenantable;
and (3) in the written opinion of a third party engineer reasonably
acceptable to Landlord, cannot reasonably be expected to be restored to
substantially the same condition that they were in before such casualty
before the date (the "Outside Restoration Date") that is twelve months from
the date of such casualty. In the event that (A) there is a casualty that
would be a Major Casualty but for the fact that the estimated completion
date for restoration established under subsection (3) above is on or before
the Outside Completion Date, (B) in accordance with Section 5.18(c),
Landlord elects to undertake the restoration itself rather than require
that Tenant undertake such restoration, and (C) the restoration is not
substantially completed by the Outside Restoration Date, Tenant may, by
written notice to Landlord within ten days from the Outside Restoration
Date, terminate this Lease effective as of the first day of the calendar
month that is not less than thirty (30) days nor more than sixty (60) days
following the Outside Restoration Date; provided, however, that
notwithstanding the foregoing provision, Tenant shall have no right to so
terminate this Lease if the failure to complete the restoration by the
Outside Restoration Date results in whole or in part from the acts or
omissions of Tenant or from any other cause beyond Landlord's control or if
Landlord otherwise is using commercially reasonable efforts to complete the
restoration as soon as reasonably practicable.
7.3 Eminent Domain. (a) Tenant hereby irrevocably assigns to
Landlord any award or payment to which Tenant may be or become entitled
with respect to the taking of the Premises or any part thereof, by
condemnation or other eminent domain proceedings pursuant to any law,
general or special, or by reason of the temporary taking of the use or
occupancy of the Premises or any part thereof, by any governmental
authority, civil or military, whether the same shall be paid or payable in
respect of Tenant's leasehold interest hereunder or otherwise. Tenant
shall have no claim against Landlord for the value of the unexpired lease
term or otherwise. Nothing herein shall be deemed to assign, waive,
release, or limit Tenant's right to seek a separate award from the
condemning authority specifically for its costs to relocate all or part of
its business operations to new premises and for personal property and
equipment belonging to Tenant, as and to the extent such amounts are
recoverable under Rhode Island law, provided that any such award for
relocation costs shall not reduce the award otherwise payable to Landlord
for the Premises. Any award for Tenant's relocation costs shall not be
deemed part of the "Net Award" for purposes of this Section.
(b) Except as otherwise expressly provided for in Section 7.3(f),
in the event of any taking of the Premises or any part thereof, this Lease
shall be and remain unaffected thereby and rent shall not ▇▇▇▇▇; provided,
however, that if any portion of the rentable floor area of any building is
permanently taken and restoration is not possible, Annual Base Rent shall
be proportionally abated in a manner reasonably acceptable to Landlord and
Tenant.
(c) If during the Term the Premises or a portion of the Premises
shall be taken by condemnation or other eminent domain proceedings, or the
use or occupancy of the Premises or any part thereof shall be taken by any
governmental authority; then, except as otherwise expressly provided for in
Section 7.3(f), this Lease shall continue in full effect without abatement
or reduction of Base Rent, Additional Rent or other sums payable by Tenant
hereunder notwithstanding such taking. Tenant shall,
26
except to the extent Landlord has a repair obligation under Section 5.18,
and except to the extent that Landlord's mortgagee does not permit the use
of any Net Award (as defined in Section 7.3(d)) therefor, promptly after
any such taking ceases, at its expense, repair to the extent reasonably
possible any damage caused thereby in conformity with the requirements of
Section 5.1 so that, thereafter, the Premises shall be, as nearly as
possible, in a condition as good as the condition thereof immediately prior
to such taking. Subject to the consent of Landlord's mortgagee, in the
event of any taking, Landlord shall make the Net Award (as defined in
Section 7.3(d)) available to Tenant to make such repair or, if such Net
Award shall be in excess of $50,000, shall place the Net Award with a
third-party institutional depository (such as a title insurance company)
reasonably acceptable to Landlord, Tenant and Landlord's mortgagee and such
institutional depository shall make the same available to Tenant, only as
such work or repair progresses as requisitioned by Tenant in accordance
with good construction management practices reasonably acceptable to
Landlord and acceptable to Landlord's mortgagee. Except for any damages
for disruption of Tenant's business, Landlord reserves to itself, and
Tenant releases and assigns to Landlord, all rights to damages accruing on
account of any taking or by reason of any act of any public authority for
which damages are payable. Tenant agrees to execute such further
instruments of assignment as may be reasonably requested by Landlord, and
to turn over to Landlord any damages that may be recovered in any
proceeding or otherwise; and Tenant irrevocably appoints Landlord as its
attorney-in-fact with full power of substitution so to execute and deliver
in Tenant's name, place and stead all such further instruments if Tenant
shall fail to do so after ten (10) days notice. Subject to the consent of
Landlord's mortgagee, any Net Award remaining after repairs have been made
by Tenant, shall be delivered to Tenant; but only to the extent that the
aggregate amount of such Net Award so remaining and all amounts theretofore
paid to Tenant pursuant to this sentence do not exceed $25,000. If such
amounts exceed $25,000, the excess may be retained by Landlord and applied
in reduction of the principal amount of the indebtedness to any Landlord's
mortgagee then outstanding at Landlord's sole option. If Landlord retains
any such amount the Base Rent payable on or after the second month
occurring after such retention shall be reduced equitably but in no event
shall the Base Rent be reduced lower than the monthly debt payments due to
any Landlord's mortgagee. Notwithstanding the foregoing, no excess amount
of Net Award shall be payable to Tenant if Landlord has had a repair
obligation under Section 5.18. In the event of such temporary requisition,
Tenant shall be entitled to receive the entire Net Award payable by reason
of such temporary requisition or portion of such temporary requisition
occurring during the Term hereof, less any out-of-pocket necessary and
reasonable costs incurred by Landlord in connection therewith. Landlord
and Tenant shall not be obligated to make repairs under Section 5.18 and
this Section 7.3(c), respectively, if the amount of the Net Award, in the
case of Tenant, or the amount retained by Landlord under Section 7.3(d) net
of Landlord's cost of collecting such amounts, in the case of Landlord
shall exceed the cost of repairs to be made by Landlord or Tenant, as the
case may be. Notwithstanding anything herein to the contrary, no payments
shall be made to Tenant pursuant to this Section 7.3(c) if any Event of
Default shall exist under this Lease.
(d) For the purposes of this Lease the term "Net Award" shall mean:
(i) all amounts payable as a result of any condemnation or other eminent
domain proceeding, less all out-of-pocket necessary and reasonable expenses
for such proceeding paid by Landlord in the collection of such amounts plus
(ii) all amounts payable pursuant to any agreement with any condemning
authority (which agreement shall be deemed to be a taking) which has been
made in settlement of or under threat of any condemnation or other eminent
domain proceeding affecting the Premises, less all out-of-pocket necessary
and reasonable expenses incurred by Landlord as a result thereof in the
collection of such amounts; provided, however, that the term "Net Award"
shall not include any amounts described in Section 7.3(d)(i) or (ii)
required by Landlord to satisfy any repair obligation under Section 5.18.
(e) Any minor condemnation or taking of the Premises for the
construction, widening, or maintenance of streets or highways shall not be
considered a condemnation or taking for
27
purposes of this Section 7.3 so long as the Premises shall not be
materially adversely affected, ingress and egress for the remainder of the
Premises shall be adequate for the business of Tenant and the provisions of
any documents evidencing loans given by Landlord's mortgagee relating
thereto shall be complied with. Tenant agrees that it will notify Landlord
of any such condemnation.
(f) Notwithstanding the provisions of Section 7.3(b)-(c), if a
Major Taking (defined below) occurs, Tenant and Landlord may, by written
notice to the other within sixty (60) days of the occurrence of such Major
Taking, terminate this Lease effective as of the first day of the calendar
month that is not less than thirty (30) days nor more than sixty (60) days
following the date of such notice of termination (the "Taking Termination
Date"). If this Lease is so terminated, (i) then, notwithstanding anything
to the contrary in this Lease, the Net Award shall be paid to Landlord or
Landlord's mortgagee; and (ii) on the Taking Termination Date, Tenant shall
pay to Landlord all Annual Base Rent and Additional Rent accrued through
and including the Taking Termination Date and all other amounts then
accrued or due and payable by Tenant under this Lease. As used in this
Lease, the term "Major Taking" means a taking that : (a) renders more than
50% of the Premises untenantable or (b) eliminates a sufficient number of
parking spaces at the Premises such that (1) the loss of parking renders
Tenant's operations at the Premises legally prohibited, (2) replacement
parking that would render Tenant's operations at the Premises legally
permitted cannot be supplied, and (3) despite its reasonable efforts,
Tenant is unable to obtain a waiver or approval from the appropriate
governmental authority that would render Tenant's operations at the
Premises legally permitted.
ARTICLE VIII
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Default
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8.1 Events of Default. Any of the following shall constitute an
"Event of Default" under this Lease: (i) if Tenant fails to pay Annual
Base Rent, Additional Rent or any other sum when due and such default
continues for five days after notice, or if more than two default notices
are properly given in any twelve-month period, (ii) if Tenant vacates
substantially all of the Premises, (iii) if Tenant (or any transferee of
Tenant) makes any transfer of the Premises in violation of this Lease, (iv)
if a petition is filed by Tenant (or any transferee or guarantor) for
insolvency or for appointment of a receiver, trustee or assignee or for
adjudication, reorganization or arrangement under any bankruptcy act, or if
any similar petition is filed against Tenant (or any transferee or
guarantor) and such petition filed against is not dismissed within thirty
days thereafter, (v) if any representation or warranty made by Tenant is
untrue, false or misleading in any material respect when made, (vi) if
Tenant (or any transferor or guarantor) shall make a general assignment for
the benefit of its creditors or admit in writing its inability to pay its
debts as they become due, (vii) if any event occurs that, under the terms
of this Lease, is an automatic Event of Default; (viii) Tenant or any
guarantor shall dissolve or liquidate; (ix) if Tenant fails to perform any
other covenant or condition hereunder and such default continues longer
than any period expressly provided for the correction thereof (and if no
period is expressly provided then for 30 days after notice is given,
provided, however, that such 30-day period shall be reasonably extended in
the case of any non-monetary default if the matter complained of can be
cured but the cure cannot be completed within such period and Tenant begins
promptly and thereafter diligently completes the cure; but if such matters
cannot be cured then there will be no cure period and in no event shall
such cure period exceed 180 days after the initial notice to Tenant); or
(x) a default occurs by the tenant under the Methuen Lease and such default
is not cured within any applicable notice and cure period, then, and in any
such case, Landlord and its agents lawfully may, in addition to any
remedies for any preceding breach, immediately or at any time thereafter
without demand or notice and with or without process of law, enter upon any
part of the Premises in the name of the whole or mail or deliver a notice
of termination of the Term of this Lease addressed to Tenant
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at the Premises or any other address herein, and thereby terminate the Term
and repossess the Premises as of Landlord's former estate. At Landlord's
election such notice of termination may be included in any notice of
default. Upon such entry or mailing the Term shall terminate, all
executory rights of Tenant and all obligations of Landlord will immediately
cease, and Landlord may expel Tenant and all persons claiming under Tenant
and remove their effects without any trespass and without prejudice to any
remedies for arrears of rent or prior breach; and Tenant waives all
statutory and equitable rights to its leasehold (including rights in the
nature of further cure or redemption, if any). If any payment of Annual
Base Rent, Additional Rent, or other sum is not paid when due, Landlord may
at its option and in addition to all other remedies hereunder impose an
administrative late charge on Tenant equal to 3% of the amount in question,
which late charge will be due on demand as Additional Rent. If Landlord
engages attorneys in connection with any failure to perform by Tenant
hereunder, Tenant shall reimburse Landlord for the fees of such attorneys
on demand as Additional Rent. Without implying that other provisions do
not survive, the provisions of this Article shall survive the Term or
earlier termination of this Lease. Landlord shall have the right, in its
absolute discretion, to delete Subsection 8.1(x) from this Lease by giving
written notice of such deletion to Tenant. If Landlord gives such written
notice to Tenant, Subsection 8.1(x) above shall thereupon automatically,
and without need for any further amendment or confirmation, be deemed
deleted from this Lease and shall have no further force or effect.
8.2 Remedies for Default
8.2.1 Reletting Expenses Damages If the Term is terminated for
default, the Tenant covenants, as an additional cumulative obligation after
such termination, to pay all of Landlord's reasonable costs, including
reasonable attorneys fees, related to Tenant's default and in collecting
amounts due and all reasonable expenses in connection with reletting,
including tenant inducements to new tenants, brokerage commissions, fees
for legal services, expenses of preparing the Premises for reletting and
the like together with an administrative charge of 10% of all the foregoing
costs ("Reletting Expenses"). It is agreed that Landlord may (i) relet the
Premises or part or parts thereof for a term or terms that may be equal to,
less than or exceed the period that would otherwise have constituted the
balance of the Term, and may grant such tenant inducements, including free
rent, as Landlord in its sole discretion considers advisable, and (ii) make
such alterations to the Premises as Landlord in its sole discretion
considers advisable, and no failure to relet or to collect rent under any
reletting shall operate to reduce Tenant's liability. Any obligation to
relet imposed by law will be subject to Landlord's reasonable objectives of
leasing the Premises to a creditworthy Tenant with financial capacity at
least equal to that of Tenant at the Commencement Date and of developing
its property in a harmonious manner with appropriate mixes of tenants,
uses, floor areas, terms and the like. Landlord's Reletting Expenses
together with all other sums provided for whether incurred prior to or
after such termination will be due upon demand.
8.2.2 Termination Damages If the Term of this Lease is terminated
for default, unless and until Landlord elects lump sum liquidated damages
described in the next paragraph, Tenant covenants, as an additional,
cumulative obligation after any such termination, to pay punctually to
Landlord all the sums and perform all of its obligations in the same manner
as if the Term had not been terminated. In calculating such amounts Tenant
will be credited with the net proceeds of any rent then actually received
by Landlord from a reletting of the Premises after deducting all sums to be
paid by Tenant under Section 8.2.1 that have not then been paid by Tenant,
provided that, although it shall be entitled to such credit, Tenant shall
never be entitled to receive any portion of the re-letting proceeds, even
if the same exceed the rent originally due hereunder.
8.2.3 Lump Sum Liquidated Damages. If this Lease is terminated for
default, Tenant covenants, as an obligation after termination that is an
additional, cumulative obligation to the obligations in the foregoing
paragraphs, to pay forthwith to Landlord at Landlord's election made by
written notice at
29
any time after termination, as liquidated damages a single lump sum payment
equal to the sum of (i) all sums to be paid by Tenant and not then paid at
the time of such election, plus either, as Landlord elects, (ii) the excess
of the present value of all of the rent reserved for the residue of the
Term over the present value of the aggregate fair market rent and
Additional Rent payable (if less than the rent payable hereunder) on
account of the Premises during such period, which fair market rent shall be
reduced by reasonable projections of vacancies and by Landlord's Reletting
Expenses described above to the extent not theretofore paid to Landlord, or
(iii) an amount equal to the sum of all of the rent and other sums due
under the Lease with respect to the twelve (12)-month period next following
the date of termination. (The Federal Reserve discount rate (or
equivalent) shall be used in calculating such present values under clause
(ii), and in the event the parties are unable to agree on such fair market
rent, the matter shall be submitted, upon the demand of either party, to
the office of the American Arbitration Association (or successor) in
Boston, Massachusetts, with a request for arbitration in accordance with
the rules of the Association by a single arbitrator who shall be a licensed
real estate broker with at least 10 years experience in the leasing of
1,000,000 or more square feet of floor area of commercial buildings similar
in character and location to the Premises, whose decision shall be
conclusive and binding on the parties.)
8.3 Remedies Cumulative; Jury Waiver; Late Performance. The
remedies to which Landlord may resort under this Lease, and all other
rights and remedies of Landlord are cumulative, and any two or more may be
exercised at the same time. Nothing in this Lease shall limit the right of
Landlord to prove and obtain in proceedings for bankruptcy or insolvency an
amount equal to the maximum allowed by any statute or rule of law in effect
at the time; and Tenant agrees that the fair value for occupancy of all or
any part of the Premises at all times shall never be less than the Annual
Base Rent and all Additional Rent payable from time to time. Tenant shall
also indemnify and hold Landlord harmless in the manner provided in Section
5.6 if Landlord shall become or be made a party to any claim or action (a)
instituted by Tenant against any third party, or by any third party against
Tenant, or by or against any person claiming through Tenant; (b) for
foreclosure of any lien for labor or material furnished to or for Tenant or
such other person; (c) otherwise arising out of or resulting from any act
or transaction of Tenant or such other person; or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended. LANDLORD
AND TENANT WAIVE TRIAL BY JURY IN ANY ACTION TO WHICH THEY ARE PARTIES, and
further agree that any action arising out of this Lease (except an action
for possession by Landlord, which may be brought in whatever manner or
place provided by law) shall be brought in the Trial Court, Superior Court
Department, in the county where the Premises are located. Any sum due from
Tenant under this Lease shall bear interest from the date due at the rate
of one and one-half (1 1/2%) percent for each month (or ratable portion
thereof) the same remains unpaid, but never more than the maximum rate
allowed by law.
8.4 Waivers of Default; Accord and Satisfaction. No consent by
Landlord or Tenant to any act or omission that otherwise would be a default
shall be construed to permit other similar acts or omissions. Neither
party's failure to seek redress for violation or to insist upon the strict
performance of any covenant, nor the receipt by Landlord of rent with
knowledge of any breach of covenant, shall be deemed a consent to or waiver
of such breach. No breach of covenant shall be implied to have been waived
unless such is in writing, signed by the party benefiting from such
covenant and delivered to the other party; and no acceptance by Landlord of
a lesser sum than the Annual Base Rent, Additional Rent or any other sum
due shall be deemed to be other than on account of the earliest installment
of such rent or other sum due. Nor shall any endorsement or statement on
any check or in any letter accompanying any check or payment be deemed an
accord and satisfaction; and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such
installment or pursue any other right or remedy. The delivery of keys (or
any similar act) to Landlord shall not operate as a termination of the Term
or an acceptance or surrender of the Premises. The acceptance by Landlord
of
30
any rent following the giving of any default and/or termination notice
shall not be deemed a waiver of such notice.
8.5 Landlord's Curing If Tenant fails to perform any covenant
within any applicable cure period, then Landlord at its option may (without
waiving any right or remedy for Tenant's non-performance) at any time
thereafter perform the covenant for the account of Tenant. Tenant shall
reimburse Landlord's cost (including reasonable attorneys' fees) of so
performing, together with an administrative charge equal to 10% of such
cost on demand as Additional Rent. Notwithstanding any other provision
concerning cure periods, Landlord may cure any non-performance for the
account of Tenant after such notice to Tenant, if any, as is reasonable
under the circumstances if curing prior to the expiration of the applicable
cure period is reasonably necessary to prevent likely damage to the
Premises or possible injury to persons, or to protect Landlord's interest
in the Premises.
8.6 Security Deposit On the execution of this Lease, Tenant shall
deliver to Landlord as security for the performance of the obligations of
Tenant hereunder, a letter of credit (as renewed, replaced, and/or
increased pursuant to this Lease, and all proceeds thereof, the "Letter of
Credit") in the initial amount specified therefor in Section 1.1, subject
to adjustment as set forth below, in accordance with this Section (as
renewed, replaced, and/or increased pursuant to this Lease, and all
proceeds thereof, the "Security Deposit"). Tenant's failure to timely
deliver the Security Deposit to Landlord shall constitute a default under
this Lease, without any notice or cure period under Article VIII.
The Letter of Credit (i) shall be irrevocable and shall be issued by
a commercial bank reasonably acceptable to Landlord that has an office in
Boston, Massachusetts, (ii) shall require only the presentation to the
issuer of a certificate of the holder of the Letter of Credit stating that
either a default has occurred under this Lease after the expiration of any
applicable notice and cure period (or that Tenant has failed to timely pay
rent or is otherwise in default under the Lease and transmittal of a
default notice is barred by applicable law) or that Tenant has become the
subject of a bankruptcy, insolvency or similar proceeding, (iii) shall be
payable to Landlord or its successors in interest as the Landlord and shall
be freely transferable without cost to any such successor or any lender
holding a collateral assignment of Landlord's interest in the Lease, (iv)
shall be for an initial term of not less than one year and contain a
provision that such term shall be automatically renewed for successive one-
year periods unless the issuer shall, at least 45 days prior to the
scheduled expiration date, give Landlord written notice of such nonrenewal,
and (v) shall otherwise be in form and substance reasonably acceptable to
Landlord. Notwithstanding the foregoing, the term of the Letter of Credit
for the final period shall be for a term ending not earlier than the date
sixty (60) days after the last day of the Term or, if applicable, any
Extension Term.
Landlord shall be entitled to draw upon the Security Deposit for its
full amount (a) if Tenant shall be in default under the Lease, after the
expiration of any applicable notice or cure period (or if Tenant has failed
to timely pay rent or is otherwise in default under the Lease and
transmittal of a default notice is barred by applicable law), or (b) in the
case of the Letter of Credit if, not less than 30 days before the scheduled
expiration of the Letter of Credit, Tenant has not delivered to Landlord a
new Letter of Credit in accordance with this Section (which failure shall
be deemed a default without notice or cure period). All amounts so drawn
shall be the exclusive property of Landlord and Landlord may, but shall not
be obligated to, apply the amount so drawn to the extent necessary to cure
Tenant's default under the Lease.
The Security Deposit may be commingled with other funds of Landlord
and shall not constitute an asset of Tenant, and no fiduciary relationship
shall be created with respect to such deposit, nor shall Landlord be liable
to pay Tenant interest thereon. If Tenant shall fail to perform any of its
obligations under this Lease, Landlord may, but shall not be obliged to,
apply the Security Deposit to the extent
31
necessary to cure the default. After any such application by Landlord of
the Security Deposit, Tenant shall reinstate the Letter of Credit to the
amount originally required to be maintained hereunder, upon demand. If
Landlord has drawn on the Letter of Credit under Section 8.6(b), and to the
extent Landlord has not applied amounts to cure Tenant defaults, then after
acceptance of a replacement Letter of Credit, Landlord shall restore to
Tenant the remaining amount of such funds. Within sixty (60) days after
the expiration or sooner termination of the Term, and provided that no
default exists under this Lease, the Letter of Credit, to the extent not
applied, shall be returned to the Tenant, without interest.
In the event of a sale of the Premises or lease, conveyance or
transfer of the Premises, Landlord shall have the right to transfer the
Security Deposit to the transferee and Landlord shall thereupon be released
by Tenant from all liability for the return of such Security Deposit; and
subject to Article IX, Tenant agrees to look to the transferee solely for
the return of said Security Deposit. The provisions hereof shall apply to
every transfer or assignment made of the Security Deposit to such a
transferee. Tenant further covenants that it will not assign or encumber
or attempt to assign or encumber the Letter of Credit or the monies
deposited herein as security, and that neither Landlord nor its successors
or assigns shall be bound by any assignment, encumbrance, attempted
assignment or attempted encumbrance. Tenant will enter into such
agreements as Landlord's lender may request with respect to the assignment
of the Security Deposit to such lender. In connection with any transfer of
the Premises, Tenant shall cooperate with Landlord in the assignment of the
Letter of Credit to the transferee and, if requested by the transferee,
Tenant shall, within ten (10) business days from such request, cause a
substitute Letter of Credit to be issued to the transferee that complies
with the requirements of this Section.
The amount of the Security Deposit required under Section 1.1 shall
be increased as set forth in Section 5.16 hereof and may be reduced as
hereinafter set forth. Such increase (or reduction) shall be effectuated
by the delivery to Landlord of a substitute Letter of Credit in the
increased amount that otherwise complies with the requirements of this
Section.
The amount of the Security Deposit may be reduced by Fifty Thousand
Dollars ($50,000) as of the first day of each of the thirteenth (13th),
twenty-fifth (25th), and thirty-seventh (37th) months after the
Commencement Date if, and only if, Tenant is not in monetary or other
material default and Parlex accomplishes the following milestones (as
calculated in accordance with Generally Accepted Accounting Principles and
certified by Parlex's outside auditors):
(a) Parlex shall have gross revenues for each fiscal year
beginning in fiscal year 2003 on a consolidated basis of at least One
Hundred Million Dollars ($100,000,000) and Parlex's earnings before taxes
shall not be less than $1.00;
(b) The current ratio of Parlex's current assets to its
current liabilities, determined on a consolidated basis, shall be not less
than 1.05 to 1;
(c) Parlex's current debt to equity ratio shall not be
greater than 0.5:1;
(d) No monetary or other material defaults shall exist under
any of Parlex's or Tenant's then current loan agreements with its lending
institutions and Tenant and Parlex each shall certify the same to Landlord;
and
(e) Tenant continues to be a wholly owned subsidiary of Parlex.
ARTICLE IX
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32
Protection of Lenders
---------------------
9.1 Subordination and Superiority of Lease Tenant agrees that this
Lease and the rights of Tenant hereunder will be subject and subordinate to
any lien of the holder of any existing or future mortgage, and to the
rights of any lessor under any ground or improvements lease of the Premises
(all mortgages and ground or improvements leases of any priority are
collectively referred to in this Lease as "mortgage," and the holder(s) or
lessor(s) thereof from time to time as "mortgagee"), and to all advances
and interest thereunder and all modifications, renewals, extensions and
consolidations thereof; provided, however, that with respect to future
liens of any mortgage hereafter granted the mortgagee executes and delivers
to Tenant an agreement (in the form of Exhibit G or in such other form as
such mortgagee may request) in which the mortgagee agrees that such
mortgagee shall not disturb Tenant in its possession of the Premises upon
Tenant's attornment to such mortgagee as Landlord and performance of its
Lease covenants (both of which conditions Tenant agrees with all mortgagees
to perform). Tenant agrees that any present or future mortgagee may at its
option unilaterally elect to subordinate, in whole or in part and by
instrument in form and substance satisfactory to such mortgagee alone, the
lien of its mortgagee (or the priority of its ground lease) to some or all
provisions of this Lease. Tenant and Lender's mortgagee are executing
simultaneously with the execution of this Lease the Subordination,
Nondisturbance and Attornment Agreement in the form attached as Exhibit G.
Tenant agrees that this Lease shall survive the merger of estates of
ground (or improvements) lessor and lessee. Until a mortgagee (either
superior or subordinate to this Lease) forecloses Landlord's equity of
redemption (or terminates in the case of a ground or improvements lease) no
mortgagee shall be liable for failure to perform any of Landlord's
obligations (and such mortgagee shall thereafter be liable only after it
succeeds to and holds Landlord's interest and then only as limited herein).
No mortgagee shall be bound by any payment of rent more than one month in
advance. Tenant shall, if requested by Landlord or any mortgagee, give
notice of any alleged non-performance on the part of Landlord to any such
mortgagee provided that an address for such mortgagee has been designated
pursuant to Section 10.1, and Tenant agrees that such mortgagee shall have
a separate, consecutive reasonable cure period of no less than 30 days (to
be reasonably extended in the same manner Landlord's cure period is to be
extended) following Landlord's cure period during which such mortgagee may,
but need not, cure any non-performance by Landlord. The agreements in this
Lease with respect to the rights and powers of a mortgagee constitute a
continuing offer to any person that may be accepted by taking a mortgage
(or entering into a ground or improvements lease) of the Premises.
9.2 Rent Assignment If from time to time Landlord assigns this
Lease or the rents payable hereunder to any person, whether such assignment
is conditional in nature or otherwise, such assignment shall not be deemed
an assumption by the assignee of any obligations of Landlord; but the
assignee shall be responsible only for non-performance of Landlord's
obligations that occur after it succeeds to and only while it holds
Landlord's interest in the Premises. Tenant shall pay rent directly to
Landlord's mortgagee, or to any other party entitled to collect rent due
hereunder, upon written direction from Landlord.
9.3 Other Instruments The provisions of this Article shall be
self-operative; nevertheless, Tenant agrees to execute, acknowledge and
deliver any subordination, attornment or priority agreements or other
instruments conforming to the provisions of this Lease (and being otherwise
commercially reasonable) from time to time requested by Landlord or any
mortgagee, and further agrees that its failure to do so within ten days
after written request shall be a default for which this Lease may be
terminated without further notice. Without limitation, where Tenant in
this Lease indemnifies or otherwise covenants for the benefit of
mortgagees, such agreements are for the benefit of mortgagees as third
party
33
beneficiaries; and at the request of Landlord, Tenant from time to time
will confirm such matters directly with such mortgagee.
ARTICLE X
---------
Miscellaneous Provisions
------------------------
10.1 Notice. All notices, consents, approvals and the like shall
be in writing and shall be delivered in hand by any courier service
providing receipts, by a nationally recognized overnight courier providing
receipts, or mailed by certified mail addressed to Landlord or Tenant as
set forth below. If requested, Tenant shall deliver copies of all notices
in like manner to Landlord's mortgagees and other persons having a
relationship to the Premises at such address within the United States as
designated from time to time by Landlord or such mortgagee. Any notice so
addressed shall be deemed duly given on the second business day following
the day of mailing if so mailed by registered or certified mail, return
receipt requested, whether or not accepted, or if by hand or by overnight
courier upon actual receipt by any person reasonably appearing to be an
agent or employee working in the executive offices of the addressee.
If to Tenant:
Poly-Flex Circuits, Inc.
c/o Parlex Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Kutchin & ▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Landlord:
Taurus Cranston, LLC
c/o Taurus New England Investments Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
34
Any address or name specified above may be changed by notice given to
the addressee by the other party in accordance with this Section 10.1. The
inability to deliver notice because of a changed address of which no notice
was given as provided above, or because of rejection or other refusal to
accept any notice, shall be deemed to be the receipt of the notice as of
the date of such inability to deliver or rejection or refusal to accept.
Any notice to be given by any party hereto may be given by the counsel for
such party.
10.2 Landlord's Default. Landlord shall use due diligence in
performing its covenants under this Lease. In no event shall Landlord be
in default unless notice thereof has been given to Landlord (and all
mortgagees of which Tenant has notice) and Landlord (or any such mortgagees
at its sole discretion) fails to perform within 30 days (provided, however,
that such 30 day period shall be reasonably extended if such performance
begins within such period and thereafter is diligently pursued, or if such
mortgagee notifies Tenant within such period that it intends to cure on
behalf of Landlord and thereafter begins and diligently pursues curing with
reasonable promptness).
10.3 Limitation of Landlord's Liability. Tenant agrees that
Landlord shall be liable only for breaches of its covenants occurring while
it is owner of the Premises (provided, however, that if Landlord from time
to time is lessee of the ground or improvements constituting the Premises,
then Landlord's period of ownership of the Premises shall be deemed to mean
only that period while Landlord holds such leasehold interest). Tenant
(and each person acting under Tenant) agrees to look solely to Landlord's
interest from time to time in the Premises for satisfaction of any claim
against Landlord. No trustee, beneficiary, partner, member, manager, agent
or employee of Landlord (or of any mortgagee or any ground or improvements
lessor) shall ever be personally or individually liable; nor shall it or
they ever be answerable or liable in any equitable judicial proceeding or
order beyond the extent of their interest in the Premises. Any lien
obtained to enforce any judgment against Landlord shall be subject and
subordinate to any mortgage encumbering the Premises. In no event shall
Landlord (or any such persons) ever be liable to Tenant for indirect or
consequential damages.
10.4 Excusable Delay. If either party is delayed in performing
(other than paying Annual Base Rent, Additional Rent or any other charge,
which may never be delayed) by causes beyond such party's reasonable
control, including war, civil commotion, acts or regulations of government,
moratoria and the like, weather, fire, casualty, theft, labor difficulties,
or the unavailability of labor, materials, equipment or utilities from
customary sources upon customary terms, or by acts, neglects or delays of
the other party (or persons acting under such other party), then such delay
shall not be counted in determining the time during which such performance
is to be completed.
10.5 Applicable Law and Construction This Lease may be executed in
counterparts, shall be construed as a sealed instrument, and shall be
governed exclusively by the provisions hereof and by the laws of the State
of Rhode Island. Time is of the essence of all obligations of Tenant and
Landlord under this Lease. The covenants of Landlord and Tenant are
independent, and such covenants shall be construed as such in accordance
with the laws of the State of Rhode Island. If any provisions shall to any
extent be invalid, the remainder shall not be affected. Other than
contemporaneous instruments executed and delivered of even date, if any,
this Lease contains all of the agreements between Landlord and Tenant
relating in any way to the Premises and supersedes all prior agreements and
dealings between them. There are no oral agreements between Landlord and
Tenant relating to this Lease or the Premises. Except as otherwise
provided in the last sentence of Section 8.1, this Lease may be amended
only by instrument in writing executed and delivered by both Landlord and
Tenant. The provisions of this Lease shall bind Landlord and Tenant and
their respective successors and assigns, and shall inure to the benefit of
Landlord and its successors and assigns and of Tenant and its permitted
successors and assigns. Where the phrases "persons acting under" Landlord
or Tenant or "persons claiming through" Landlord or Tenant
35
or similar phrases are used, the persons included shall be assignees,
sublessees, licensees or other transferees or successors of Landlord or
Tenant as well as invitees or independent contractors of Landlord or
Tenant, and all of the respective employees, servants, contractors, agents
and invitees of Landlord, Tenant and any of the foregoing. The term
"including" and "include" shall not be restrictive and shall be interpreted
as if followed by the words "without limitation." The titles are for
convenience only and shall not be considered a part of the Lease. If
Tenant is granted any extension or other option, to be effective the
exercise (and notice thereof) shall be unconditional; and if Tenant
purports to condition the exercise of any option or to vary its terms in
any manner, then the option granted shall be void and the purported
exercise shall be ineffective. The enumeration of specific examples of a
general provision shall not be construed as a limitation of the general
provision. Unless a party's approval or consent is required by the express
terms of this Lease not to be unreasonably withheld, such approval or
consent may be withheld in the party's sole discretion. The submission of
a form of this Lease or any summary of its terms shall not constitute an
offer by Landlord to Tenant; but a leasehold shall only be created and the
parties bound when this Lease is executed and delivered by both Landlord
and Tenant and approved by the holder of any mortgage of the Premises
having the right to approve this Lease. Nothing herein shall be construed
as creating the relationship between Landlord and Tenant of principal and
agent, or of partners or joint venturers or any relationship other than
landlord and tenant. This Lease and all consents, notices, approvals and
all other related documents may be reproduced by any party by any
electronic means or by facsimile, photographic, microfilm, microfiche or
other reproduction process and the originals may be destroyed; and each
party agrees that any reproductions shall be as admissible in evidence in
any judicial or administrative proceeding as the original itself (whether
or not the original is in existence and whether or not reproduction was
made in the regular course of business), and that any further reproduction
of such reproduction shall likewise be admissible. If any payment in the
nature of interest provided for in this Lease shall exceed the maximum
interest permitted under controlling law, as established by final judgment
of a court, then such interest shall instead be at the maximum permitted
interest rate as established by such judgment. As used in this Lease, the
term "business day" shall mean any day excluding a Saturday, Sunday and any
other day on which (1) there is no scheduled trading on the New York Stock
Exchange, or (2) banks in Boston, Massachusetts are authorized by law or
executive action to be closed for normal banking business.
10.6 Estoppel Certificate. Within twenty (20) days of either
party's request, the other agrees to execute, acknowledge and deliver a
statement in writing certifying whether this Lease is in full effect (or if
there has been any amendment whether the same is in full effect as amended
and stating the amendment or amendments), the Commencement Date, the amount
of and the dates to which the Annual Base Rent (and Additional Rent and all
other charges) have been paid and, as of its best knowledge and belief, any
other information concerning performance, construction, tenancy, possession
or other matters of reasonable interest to prospective lenders or
purchasers. Both parties agree that any such statement may be relied upon
by any person to whom the same is delivered. Tenant acknowledges that
prompt execution and delivery of such statements, and of instruments
referred to in Section 9.3, in connection with any proposed financings or
sales constitute essential requirements of Landlord's financings or sales;
and any failure by Tenant to perform under this Section within the time
provided will be a default for which the Lease may be terminated following
notice if the default is not cured within ten days. Tenant will indemnify
Landlord in the manner elsewhere provided in this Lease against all loss
(expressly including consequential damages in the nature of increased
financing costs, forfeited financing fees and attorneys' fees) directly or
indirectly resulting from Tenant's failure to comply herewith.
10.7 Notice of Lease. Neither party shall record this Lease, but
each party will, upon request of the other, execute a recordable notice of
lease in form reasonably approved by Landlord and which notice shall
contain the provisions of this Section), and upon termination of the Term
for whatever reason a like notice of termination of lease. Tenant appoints
Landlord as its attorney-in-fact (which appointment
36
shall survive termination of the Term) with full power of substitution
following any termination, to execute, acknowledge and deliver a notice of
termination of lease in Tenant's name if Tenant fails so to do within one
week of any request.
10.8 Brokers. Each party warrants and represents to the other that
it has not dealt with any broker in connection with this Lease or the
Premises except for the Broker, if any, listed in Section 1.1, whose
commission will be paid by Tenant pursuant to a separate agreement; and
each agrees to indemnify and save the other harmless in the manner
elsewhere provided in this Lease from any breach of this warranty and
representation, which will survive the termination of the Term.
10.9 Tenant and Landlord as Business Entities
(a) Tenant warrants and represents that (i) Tenant is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which such entity was organized; (ii) Tenant has the
authority to own its property and to carry on its business as contemplated
under this Lease; (iii) Tenant is in compliance with all laws and orders of
public authorities applicable to Tenant; (iv) Tenant has duly executed and
delivered this Lease; (v) the execution, delivery and performance by Tenant
of this Lease (w) are within the powers of Tenant, (x) have been duly
authorized by all requisite action, and (y) will not violate any provision
of law or any order of any court or agency of government, or any agreement
or other instrument to which Tenant is a party or by which it or any of its
property is bound, or (z) will not result in the imposition of any lien or
charge on any of Tenant's property, except by the provisions of this Lease;
and (vi) the Lease is a valid and binding obligation of Tenant in
accordance with its terms. Tenant agrees that breach of the foregoing
warranty and representation shall at Landlord's election be a default under
this Lease for which there shall be no cure. This warranty and
representation shall survive the termination of the Term. Simultaneously
with the execution of the Lease, Tenant shall deliver to Landlord (y) a
certificate of legal existence and good standing and (z) a certified copy
of a resolution of Tenant's directors, manager, or general partner
authorizing the execution of this Lease or other evidence of such authority
reasonably acceptable to Landlord.
(b) Landlord warrants and represents that (i) Landlord is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which such entity was organized; (ii) Landlord has the
authority to own the Premises; (iii) Landlord has duly executed and
delivered this Lease; (iv) the execution, delivery and performance by
Landlord of this Lease (x) are within the powers of Landlord, (y) have been
duly authorized by all requisite action, and (z) will not violate any
provision of law or any order of any court or agency of government, or any
agreement or other instrument to which Landlord is a party or by which it
or any of its property is bound; (v) the Lease is a valid and binding
obligation of Landlord in accordance with its terms; and (vi) as of the
date of this Lease, ▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇ manages the day to day
operations of Landlord. Landlord will own no assets other than the Property
(and property ancillary thereto) and will incur no indebtedness other than
the Loan (or any new mortgage loan obtained to refinance the Loan), other
indebtedness reasonably related to Landlord's ownership and operation of
the Property or indebtedness to Tenant. Without limiting the generality of
the foregoing, in no event will Landlord guarantee the obligations of any
other person or entity nor allow the Premises to serve as security for any
indebtedness not related directly and solely to the Property.
10.10 Reasonable Cooperation in Refinancing and Sale. Tenant
agrees to cooperate with Landlord in all reasonable respects in connection
with Landlord's sale, refinancing and/or any of Landlord's efforts to
effectuate a secondary market transaction relating to a loan which is
secured by the Premises and this Lease. In connection with the foregoing,
Tenant shall, (i) provide accurate and complete copies of each Form 10Q and
Form 10K filed with the Securities and Exchange Commission for Parlex and,
if at any time (a) Parlex's stock is not listed on the NYSE or the NASDAQ
or (b) Tenant's
37
financial statements are no longer consolidated with those of Parlex,
Tenant shall provide Landlord with financial information relating to Tenant
and/or the Premises which is reasonably required by the prospective
purchaser, lender and/or the rating agencies involved in any such secondary
market transaction, (ii) permit site inspections and other similar due
diligence investigation of the Premises (at mutually agreeable times and
provided that the same shall be conducted so as to minimize interruption of
Tenant's conduct of business at the Premises), and (iii) provide updated
certificates of insurance naming purchaser, Landlord's Lender as a "loss
payee" and/or additional named insured as required by this Lease.
10.11 Security Deposit Delivery. At the election of Landlord, this
Lease shall not be effective unless the Security Deposit has delivered to
Landlord.
ARTICLE XI
----------
Early Termination Option
------------------------
Landlord grants to Tenant a one-time option to terminate this Lease
prior to the expiration hereof (the "Termination Option") upon each and all
of the following terms and conditions:
11.1 Exercise. The Termination Option may be exercised by Tenant
on or before the last day of the third (3rd) month of the second (2nd)
Lease Year by delivering to Landlord written notice of such exercise (the
"Termination Notice") together with immediately available federal funds in
the amount Three Hundred Fifty-Two Thousand Six Hundred Sixty Dollars and
Fifty Cents ($352,660.50) (the "Termination Payment"). The Termination
Option shall, at Landlord's election in its sole discretion, be void, of no
further force or effect and deemed deleted from this Lease if (i) there is
a default by Tenant under this Lease that continues beyond any applicable
notice and cure periods, (ii) Tenant fails to timely deliver the
Termination Notice, or (iii) Tenant fails to deliver the Termination
Payment simultaneously with the Termination Notice.
11.2 Termination Date. If Tenant timely delivers the Termination
Notice and otherwise complies with the requirements of Section 11.1 above,
this Lease shall terminate as of the last day of the third (3rd) Lease Year
(the "Termination Date"), as if the Lease had then expired and Tenant shall
vacate and surrender the Property to Landlord as set forth in Section 5.12
of this Lease.
ARTICLE XII
-----------
Index of Defined Terms
----------------------
The definitions for the following terms are set forth in the Section
of the Lease indicated below. Certain other defined terms are set forth in
Section 1.1.
"abatements" Section 5.5
"business day" Section 10.5
"Capital Expenditure Items" Section 5.16
"Casualty Termination Date" Section 7.2(b)
"Construction Documents": Section 5.1.2
38
"hazardous materials": Section 5.10
"hazardous materials activities": Section 5.10
"Holdover Rate": Section 5.13
"Indemnitees": Section 5.6
"Landlord Notice" Section 5.3(b)
"Landlord's Designated Consultant: Section 5.3(b)
"Landlord's Share" Section 5.18(c)
"Landlord's Termination Acceptance" Section 6.3
"late charge" Section 8.1
"laws": Section 5.4
"Lease Year": Exhibit B
"Loan Release Amounts" Section 5.17
"Major Casualty" 7.2(b)
"Major Taking" Section 7.3(f)
"mortgage": Section 9.1
"mortgagee": Section 9.1
"Net Award" Section 7.3(d)
"Outside Restoration Date" Section 7.2(b)
"Parlex" Section 5.15
"Permitted Exceptions" Exhibit C
"Permitted Transfer" Section 6.1
"Property Condition Notice" Section 5.3(b)
"Property Condition Report" Section 5.3(b)
"reletting expenses" Section 8.2.1
"rent" Section 3.2
"Special Notice Provisions" Section 6.4(b)
"Taking Termination Date" Section 7.3(f)
"Taxes and Impositions": Section 5.5
"Tenant Notice" Section 5.3(b)
"Tenant Property": Section 5.9
"Tenant Work": Section 5.1.1
"Tenant's Architect": Section 5.1.2
"Tenant's Contractor": Section 5.1.3
39
"Tenant's Designated Consultant" Section 5.3(b)
"Tenant's Request" Section 6.3
"Tenant's Share" Section 5.18(c)
"Termination Date" Section 11.2
"Termination Notice" Section 11.1
"Termination Option" Article XI
"Termination Payment" Section 11.1
"Title Documents" Section 4.1
"transfer" Section 6.1
40
Executed under seal as of the date first written above.
TENANT: LANDLORD:
Poly-Flex Circuits, Inc., a duly Taurus Cranston, LLC, a Delaware
organized Rhode Island corporation limited liability company
By: Taurus Cranston/Methuen Limited
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partnership, a Massachusetts
---------------------------- limited partnership, its
Its President sole member and manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: Taurus-New England XXIV
---------------------------- Limited Partnership, a
Its Treasurer Massachusetts limited
partnership, its sole
general partner
By: Taurus Cranston/
Methuen LLC, a
Massachusetts limited
liability company,
its sole general
partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director
GUARANTOR:
PARLEX CORPORATION, a duly organized
Massachusetts Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Its President
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Its Treasurer
41
Exhibit A
Land
----
That certain tract or parcel of land, with any buildings or improvements
thereon, situated on the northeasterly side of ▇▇▇▇▇▇ Drive in the City of
Cranston, County of Providence and State of Rhode Island and bounded and
described as follows:
Beginning at point in the northeasterly line of said ▇▇▇▇▇▇ Drive
354.02 feet northwesterly from a granite bound in the ground 30 feet
northeasterly of baseline station 30+81.83 on said ▇▇▇▇▇▇ Drive as
measured along the northeasterly line of said ▇▇▇▇▇▇ Drive;
thence running northeasterly bounding southwesterly on said ▇▇▇▇▇▇
Drive three hundred thirty seven and 13/100 (337.13) feet to a
corner;
thence turning an interior angle of 85 degrees-38'-23" and running
northeasterly bounding northwesterly on land now or formerly of
Diversified Containers, Inc. five hundred fifty two and 29/100
(552.29) feet to a corner;
thence turning an interior angle of 91 degrees-58'-20" and running
southeasterly bounding northeasterly on land of the State of Rhode
Island (Department of Corrections) two hundred ninety five and 42/100
(295.42) feet to a corner;
thence turning an interior angle of 92 degrees-23'-17" and running
southwesterly bounding southeasterly on land now or formerly of MM
Realty Associates II five hundred thirty eight and 39/100 (538.39)
feet to the point of beginning.
Containing 172,283 square feet or 3.9551 acres of land, more or less.
Said last course forming an interior angle of 90 degrees-00'-00" with
said first course.
Subject to an easement, twenty (20) feet in width, from said ▇▇▇▇▇▇ Drive
to said land of the State of Rhode Island (Department of Corrections) and
bounded and described as follows:
Beginning at a point in the northeasterly line of said ▇▇▇▇▇▇ Drive
at the most westerly corner of the parcel herein above described;
thence running northeasterly bounding northwesterly on land now or
formerly of Diversified Containers, Inc. five hundred fifty two and
29/100 (552.29) feet to a corner;
thence turning an interior angle of 91 degrees-58'-20" and running
southeasterly bounding northeasterly on said land of the State of
Rhode Island (Department of Corrections) twenty and 01/100 (20.01)
feet to a corner;
thence turning an interior angle of 88 degrees-01'-40" and running
southwesterly bounding southeasterly on the remaining portion of the
above described parcel five hundred fifty one and 46/100 (551.46)
feet to a corner;
thence turning an interior angle of 94 degrees-21'-37" and running
northwesterly bounding southwesterly on said ▇▇▇▇▇▇ Drive twenty and
06/100 (20.06) feet to the point of beginning and containing 11,038
square feet or 0.2534 acres of land, more or less.
42
Exhibit B
Annual Base Rent
----------------
Annual Base Rent shall be as set forth below. "Lease Year" shall
mean the twelve-month period following the Commencement Date and each
successive twelve-month period during the Term (provided that, if the
Commencement Date is not the first day of a calendar month, the first
"Lease Year" shall mean the last twelve-month period plus the partial month
at the end of the Term).
Lease Year Annual Monthly
----------------------------------------------
1 $436,640 $36,364
2 $447,556 $37,296
3 $458,745 $38,229
4 $470,214 $39,185
5 $481,969 $40,164
43
Exhibit C
Permitted Exceptions
--------------------
1. Any state of facts that an accurate survey or physical inspection
thereof might show;
2. All laws, including without limitation zoning regulations,
restrictions, rules and ordinances, and building restrictions, and
all other statutes, laws, and regulations now in effect or hereafter
adopted by any governmental authority having jurisdiction;
3. The rights of any tenants, subtenants, and any other parties in
possession of, or claiming rights of possession to, the Premises as
of the Commencement Date;
4. Title Documents;
5. Any facts, rights, interest, or claims which are not shown by the
public records, but which could be ascertained by an inspection of
said land or by making inquiry of persons in possession thereof.
6. Survey entitled "Taurus Investments Poly-Flex Circuits, Inc., 28
▇▇▇▇▇▇ Drive, Cranston, Rhode Island, ALTA/ACSM Land Title Survey;
Property Line & Existing Conditions Plan, Assessor's ▇▇▇▇ ▇▇ ▇▇▇ ▇▇",
dated March 17, 2003, as revised through May 9, 2003, by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Professional Land Surveyor, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Brustlin,
Inc., ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
7. Any lien, or rights to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by
the public records.
8. Liens for municipal taxes and assessments as may be shown as due and
payable on a current Certificate of Municipal Liens and liens for
such municipal taxes and assessments as become due and payable
hereafter.
9. All matters disclosed in ▇▇▇▇▇▇▇ Title Guaranty Company Commitment
for Title Insurance No. C-9912-2429214 (File No. 03-07-0051) revised
as of March 20, 2003, and Policy No. 0-9993-Proforma issued in
connection therewith.
44
Exhibit D
Tenant Work Insurance Requirements
----------------------------------
1. Tenant shall purchase or shall cause each Tenant's Contractor
to purchase, in a company or companies against which the Landlord has no
reasonable objection, such insurance as will protect him from claims set
forth below that may arise out of or result from the contractor's
operations on the Premises.
1.1 claims under workers' or workmen's compensation,
disability benefit and other similar employee benefit acts;
1.2 claims for damages because of bodily injury, occupational
sickness or disease, or death of his employees;
1.3 claims for damages because of bodily injury, sickness or
disease, or death of any person other than his employees;
1.4 claims for damages insured by personal injury liability
coverage that are sustained (1) by any person as a result of an offense
directly or indirectly related to the employment of such person by the
Contractor, or (2) by any other person;
1.5 claims for damages, other than the Tenant Work itself,
because of injury to or destruction of tangible property, including loss of
use resulting therefrom;
1.6 claims for damages because of bodily injury or death of
any person or property damage arising out of the ownership, maintenance or
use of any motor vehicle; and
1.7 claims for contractual liability (both oral and written)
under this undertaking with Tenant.
2. The insurance required by Section 1 of this Schedule shall
include all major divisions of coverage, and shall be on a comprehensive
general basis. Such insurance shall be written for not less than any
limits of liability required by law or those set forth below, whichever is
greater.
2.1 Workmen's Compensation - as required by law.
2.2 Public Liability - Single Limit (Combined) Per
Occurrence.
Bodily & Personal Injury $1,000,000
Property Damage $1,000,000 Occurrence/Aggregate.
2.3 Automobile Liability - Single Limit (Combined) Per
Occurrence.
Bodily Injury $1,000,000
Property Damage $1,000,000 per Occurrence
2.4 Independent Contractors - $1,000,000 Per Occurrence.
2.5 Products and Completed operations - $1,000,000 Per
Occurrence, covering liability for claims made within applicable statutes
of limitations following issuance of final Certificate of Payment.
45
2.6 Broad Form Blanket Contractual Liability (both oral and
written) - $1,000,000 Per Occurrence.
2.7 Excess Liability Umbrella covering all above items
$5,000,000 per Occurrence.
46
Exhibit E
Financial Reporting
-------------------
Tenant shall keep adequate books and records of account in accordance
with generally accepted accounting principles or in accordance with other
methods of accounting acceptable to Landlord in its sole discretion,
consistently applied ("Approved Accounting Method") and shall furnish to
Landlord the following, which shall be prepared, dated and certified by
Borrower's chief financial officer as true, correct and complete in the
form required by Landlord, unless otherwise specified below:
(A) Within 120 days after the end of each fiscal year for Tenant, a
detailed, analytical financial report prepared in accordance with the
Approved Accounting Method, including, without limitation, a balance sheet,
income and expense statements, and a statement of change in financial
position covering the full and complete operations of the Tenant, all
prepared by an independent accountant reasonably acceptable to Landlord
(Tenant's financial reports must be audited);
(B) Promptly after filing and in no event later than one hundred
twenty (120) days after the end of each fiscal year for Tenant (or, if
Tenant obtains an extension of its filing date, within thirty (30) days
from the date such returns are filed), a copy of such Tenant's signed
federal income tax return for such fiscal year;
(C) Within 30 days of Landlord's request, a detailed budget in a
format and with content reasonably acceptable to Landlord, to include,
without limitation, a comparison showing corresponding information for
Tenant's preceding fiscal year;
(D) Within thirty (30) days after the end of each fiscal quarter of
Tenant, the reports described in Section (A) and (C) above, which may be
internally prepared by Tenant;
(E) In connection with a bona fide proposed sale or financing of
the Premises to a third party or a direct or indirect equity investment in
Landlord, Tenant will provide audited annual balance sheets, income
statements, and statements of cash flow of Tenant for each of Tenant's last
three full fiscal years, delivered within thirty (30) days after such
request by Landlord; and
(F) Such other financial statements, and such other information and
reports as may, from time to time, be reasonably required by Landlord and
as may be reasonably prepared by or available to Tenant; provided, however,
that as long as there is no then existing Event of Default by Tenant and no
uncured notice of any facts or circumstances has been given to Tenant that,
if not cured within an applicable cure period, will become an Event of
Default, Landlord shall not be entitled to request additional information
under this paragraph (F) except to the extent such information is requested
by Landlord's lender or third party investor.
47
Exhibit F
Minimum Insurance Requirements
------------------------------
(i) Property insurance insuring the building and Improvements for
perils covered by the causes of loss - special form (all risk) and in
addition, flood and/or earthquake (if applicable). Coverage shall include
boiler and machinery insurance on a comprehensive basis. Such insurance
shall be written on a replacement cost basis with an agreed value equal to
the full insurable replacement value of the foregoing. The policy shall
name Landlord additional named insured and loss payee and Landlord's
mortgagee as additional insureds and loss payees.
(ii) Commercial general liability insurance naming Landlord as
additional named insured and Landlord's mortgagee as additional insureds
against any and all claims as are customarily covered under a standard
policy form routinely accepted by Landlord's mortgagee, for bodily injury
and property damage occurring in or about the Premises arising out of
Tenant's use and occupancy of the Premises. Such insurance shall have a
combined single limit of no less than One Million Dollars ($1,000,000) per
occurrence with a Two Million Dollar ($2,000,000) aggregate limit and
excess umbrella liability insurance in the amount of at least Ten Million
Dollars ($10,000,000). Such liability insurance shall be primary and not
contributing to any insurance available to Landlord and Landlord's
insurance shall be in excess thereto. In no event shall the limits of such
insurance be considered as limiting the liability of Tenant under this
Lease. No deductible shall apply to this coverage.
(iii) Workers' compensation insurance in accordance with statutory
law and employers' liability insurance with a limits of not less than
$100,000 each accident, $500,000 disease - policy limit, $100,000 disease -
each employee.
(iv) Builders risk insurance insuring perils covered by the causes
of loss - special form (all risk) shall be purchased for the value of the
alteration and/or additions made to the Premises when the work is not
insured under Tenant's property insurance policy.
(v) Business interruption insurance in an amount at least equal to
one year's gross rents, naming Landlord and Landlord's mortgagee as loss
payees.
(vi) Such other insurance which may, from time to time, be
reasonably required by Landlord's mortgagee in each case so long as such
other insurance is customarily required by the institutional investors or
lenders to be carried on similar properties in the Greater Providence,
Rhode Island metropolitan area or similar areas.
The policies required to be maintained by Tenant shall be with
companies having an A.M. Best rating of A-/VII or higher or such higher
rating as may be a acceptable to the Securities Valuation Office of the
National Association of Insurance Commissioners. Insurers shall be
licensed to do business in the state in which the Premises are located and
domiciled in the United States. Any deductible amounts under any insurance
policies required hereunder shall not exceed $50,000 (except that, provided
that so long as Tenant's net worth shall be $50 million or more, the
general liability deductible may be as high as $250,000 and the workmen's
compensation deductible for the Tenant originally named herein may be as
high as $500,000).
48
Exhibit G
Subordination, Non-Disturbance and Attornment Agreement Form
------------------------------------------------------------
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
("Agreement") is entered into as of ________________, 200_ (the "Effective
Date") by and between __________________________________________ (together
with its successors and assigns, the "Mortgagee"), and
___________________________, a __________________ (hereinafter,
collectively the "Tenant"), with reference to the following facts:
A. _______________________, a ___________________, whose
address is ______________________________ (the "Landlord") owns fee simple
title or a leasehold interest in the real property described in Exhibit "A"
attached hereto (the "Property").
B. Mortgagee [has made] [intends to make] a loan to Landlord
in the original principal amount of ______________________ Dollars
($______________) (the "Loan").
C. To secure the Loan, Landlord [has encumbered] [intends to
encumber] [all] [a certain portion of] the Property by entering into that
certain Mortgage [to be] dated _____________, ___ in favor of Mortgagee (as
amended, increased, renewed, extended, spread, consolidated, severed,
restated, or otherwise changed from time to time, the "Mortgage") to be
recorded in the [Recorder of Deeds' Office] in and for the County of
______________, State of ________________.
D. Pursuant to the Lease effective ______________, (the
"Lease"), Landlord demised to Tenant [all] [a portion] of the Property
consisting of the following (the "Leased Premises"):
______________________________________________.
E. Tenant and Mortgagee desire to agree upon the relative
priorities of their interests in the Property and their rights and
obligations if certain events occur.
NOW, THEREFORE, for good and sufficient consideration, Tenant and Mortgagee
agree:
1. Definitions. The following terms shall have the following
meanings for purposes of this Agreement.
(a) Foreclosure Event. A "Foreclosure Event" means: (i)
foreclosure under the Mortgage; (ii) any other exercise by Mortgagee
of rights and remedies (whether under the Mortgage or under
applicable law, including bankruptcy law) as holder of the Loan
and/or the Mortgage, as a result of which a Successor Landlord
becomes owner of the Property; or (iii) delivery by Landlord to
Mortgagee (or its designee or nominee) of a deed or other conveyance
of Landlord's interest in the Property in lieu of any of the
foregoing.
(b) Former Landlord. A "Former Landlord" means Landlord and
any other party that was landlord under the Lease at any time before
the occurrence of any attornment under this Agreement.
(c) Offset Right. An "Offset Right" means any right or
alleged right of Tenant to any offset, defense (other than one
arising from actual payment and performance, which payment and
performance would bind a Successor Landlord pursuant to this
Agreement), claim, counterclaim, reduction, deduction, or abatement
against Tenant's payment of Rent or performance of Tenant's
49
other obligations under the Lease, arising (whether under the Lease
or under applicable law) from Landlord's breach or default under the
Lease.
(d) Rent. The "Rent" means any fixed rent, base rent or
additional rent under the Lease.
(e) Successor Landlord. A "Successor Landlord" means any
party that becomes owner of the Property as the result of a
Foreclosure Event.
(f) Termination Right. A "Termination Right" means any right
of Tenant to cancel or terminate the Lease or to claim a partial or
total eviction arising (whether under the Lease or under applicable
law) from Landlord's breach or default under the Lease.
(g) Other Capitalized Terms. If any capitalized term is used
in this Agreement and no separate definition is contained in this
Agreement, then such term shall have the same respective definition
as set forth in the Lease.
2. Subordination. The Lease, as the same may hereafter be
modified, amended or extended, shall be, and shall at all times remain,
subject and subordinate to the terms conditions and provisions of the
Mortgage, the lien imposed by the Mortgage, and all advances made under the
Mortgage.
3. Nondisturbance, Recognition and Attornment.
(a) No Exercise of Mortgage Remedies Against Tenant. So long
as the Tenant is not in default under this Agreement or under the
Lease beyond any applicable grace or cure periods (an "Event of
Default"), Mortgagee (i) shall not terminate or disturb Tenant's
possession of the Leased Premises under the Lease, except in
accordance with the terms of the Lease and this Agreement and (ii)
shall not name or join Tenant as a defendant in any exercise of
Mortgagee's rights and remedies arising upon a default under the
Mortgage unless applicable law requires Tenant to be made a party
thereto as a condition to proceeding against Landlord or prosecuting
such rights and remedies. In the latter case, Mortgagee may join
Tenant as a defendant in such action only for such purpose and not to
terminate the Lease or otherwise adversely affect Tenant's rights
under the Lease or this Agreement in such action.
(b) Recognition and Attornment. Upon Successor Landlord
taking title to the Property (i) Successor Landlord shall be bound to
Tenant under all the terms and conditions of the Lease (except as
provided in this Agreement); (ii) Tenant shall recognize and attorn
to Successor Landlord as Tenant's direct landlord under the Lease as
affected by this Agreement; and (iii) the Lease shall continue in
full force and effect as a direct lease, in accordance with its terms
(except as provided in this Agreement), between Successor Landlord
and Tenant. Tenant hereby acknowledges notice that pursuant to the
Mortgage and assignment of rents, leases and profits, Landlord has
granted to the Mortgagee an absolute, present assignment of the Lease
and Rents which provides that Tenant continue making payments of
Rents and other amounts owed by Tenant under the Lease to the
Landlord and to recognize the rights of Landlord under the Lease
until notified otherwise in writing by the Mortgagee. After receipt
of such notice from Mortgagee, the Tenant shall thereafter make all
such payments directly to the Mortgagee or as the Mortgagee may
otherwise direct, without any further inquiry on the part of the
Tenant. Landlord consents to the foregoing and waives any right,
claim or demand which Landlord may have against Tenant by reason of
such payments to Mortgagee or as Mortgagee directs.
50
(c) Further Documentation. The provisions of this Article 3
shall be effective and self-operative without any need for Successor
Landlord or Tenant to execute any further documents. Tenant and
Successor Landlord shall, however, confirm the provisions of this
Article 3 in writing upon request by either of them within ten (10)
days of such request.
4. Protection of Successor Landlord. Notwithstanding anything to
the contrary in the Lease or the Mortgage, Successor Landlord shall not be
liable for or bound by any of the following matters:
(a) Claims Against Former Landlord. Any Offset Right that
Tenant may have against any Former Landlord relating to any event or
occurrence before the date of attornment, including any claim for
damages of any kind whatsoever as the result of any breach by Former
Landlord that occurred before the date of attornment. The foregoing
shall not limit either (i) Tenant's right to exercise against
Successor Landlord any Offset Right otherwise available to Tenant
because of events occurring after the date of attornment or (ii)
Successor Landlord's obligation to correct any conditions that
existed as of the date of attornment and violate Successor Landlord's
obligations as landlord under the Lease.
(b) Prepayments. Any payment of Rent that Tenant may have
made to Former Landlord more than thirty (30) days before the date
such Rent was first due and payable under the Lease with respect to
any period after the date of attornment other than, and only to the
extent that, the Lease expressly required such a prepayment.
(d) Payment; Security Deposit; Work. Any obligation: (i) to
pay Tenant any sum(s) that any Former Landlord owed to Tenant unless
such sums, if any, shall have been actually delivered to Mortgagee by
way of an assumption of escrow accounts or otherwise; (ii) with
respect to any security deposited with Former Landlord, unless such
security was actually delivered to Mortgagee; (iii) to commence or
complete any initial construction of improvements in the Leased
Premises or any expansion or rehabilitation of existing improvements
thereon; (iv) to reconstruct or repair improvements following a fire,
casualty or condemnation; or (v) arising from representations and
warranties related to Former Landlord.
(e) Modification, Amendment or Waiver. Any modification or
amendment of the Lease, or any waiver of the terms of the Lease, made
without Mortgagee's written consent.
(f) Surrender, Etc. Any consensual or negotiated surrender,
cancellation, or termination of the Lease, in whole or in part,
agreed upon between Landlord and Tenant, unless effected unilaterally
by Tenant pursuant to the express terms of the Lease.
5. Exculpation of Successor Landlord. Notwithstanding anything to
the contrary in this Agreement or the Lease, Successor Landlord's
obligations and liability under the Lease shall never extend beyond
Successor Landlord's (or its successors' or assigns') interest, if any, in
the Leased Premises from time to time, including insurance and condemnation
proceeds, security deposits, escrows, Successor Landlord's interest in the
Lease, and the proceeds from any sale, lease or other disposition of the
Property (or any portion thereof) by Successor Landlord (collectively, the
"Successor Landlord's Interest"). Tenant shall look exclusively to
Successor Landlord's Interest (or that of its successors and assigns) for
payment or discharge of any obligations of Successor Landlord under the
Lease as affected by this Agreement. If Tenant obtains any money judgment
against Successor Landlord with respect to the Lease or the relationship
between Successor Landlord and Tenant, then Tenant shall look solely to
Successor Landlord's Interest (or that of its successors and assigns) to
collect such judgment. Tenant shall not collect or attempt to collect any
such judgment out of any other assets of Successor Landlord.
51
6. Mortgagee's Right to Cure. Notwithstanding anything to the
contrary in the Lease or this Agreement, before exercising any Offset Right
or Termination Right:
7. Notice to Mortgagee. Tenant shall provide Mortgagee with
notice of the breach or default by Landlord giving rise to same (the
"Default Notice") and, thereafter, the opportunity to cure such breach or
default as provided for below.
8. Mortgagee's Cure Period. After Mortgagee receives a Default
Notice, Mortgagee shall have a period of thirty (30) days beyond the time
available to Landlord under the Lease in which to cure the breach or
default by Landlord. Mortgagee shall have no obligation to cure (and shall
have no liability or obligation for not curing) any breach or default by
Landlord, except to the extent that Mortgagee agrees or undertakes
otherwise in writing. In addition, as to any breach or default by Landlord
the cure of which requires possession and control of the Property, provided
that Mortgagee undertakes by written notice to Tenant to exercise
reasonable efforts to cure or cause to be cured by a receiver such breach
or default within the period permitted by this paragraph, Mortgagee's cure
period shall continue for such additional time (the "Extended Cure Period")
as Mortgagee may reasonably require to either: (i) obtain possession and
control of the Property with due diligence and thereafter cure the breach
or default with reasonable diligence and continuity; or (ii) obtain the
appointment of a receiver and give such receiver a reasonable period of
time in which to cure the default.
9. Miscellaneous.
(a) Notices. Any notice or request given or demand made
under this Agreement by one party to the other shall be in writing,
and may be given or be served by hand delivered personal service, or
by depositing the same with a reliable overnight courier service or
by deposit in the United States mail, postpaid, registered or
certified mail, and addressed to the party to be notified, with
return receipt requested or by telefax transmission, with the
original machine- generated transmit confirmation report as evidence
of transmission. Notice deposited in the mail in the manner
hereinabove described shall be effective from and after the
expiration of three (3) days after it is so deposited; however,
delivery by overnight courier service shall be deemed effective on
the next succeeding business day after it is so deposited and notice
by personal service or telefax transmission shall be deemed effective
when delivered to its addressee or within two (2) hours after its
transmission unless given after 3:00 p.m. on a business day, in which
case it shall be deemed effective at 9:00 a.m. on the next business
day. For purposes of notice, the addresses and telefax number of the
parties shall, until changed as herein provided, be as follows:
If to the Mortgagee, at:
If to the Tenant, at:
Attn:
Telecopy No.: (___)
52
(b) Successors and Assigns. This Agreement shall bind and
benefit the parties, their successors and assigns, any Successor
Landlord, and its successors and assigns. If Mortgagee assigns the
Mortgage, then upon delivery to Tenant of written notice thereof
accompanied by the assignee's written assumption of all obligations
under this Agreement, all liability of the assignor shall terminate.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between Mortgagee and Tenant regarding the subordination of
the Lease to the Mortgage and the rights and obligations of Tenant
and Mortgagee as to the subject matter of this Agreement.
(d) Interaction with Lease and with Mortgage. If this
Agreement conflicts with the Lease, then this Agreement shall govern
as between the parties and any Successor Landlord, including upon any
attornment pursuant to this Agreement. This Agreement supersedes,
and constitutes full compliance with, any provisions in the Lease
that provide for subordination of the Lease to, or for delivery of
nondisturbance agreements by the holder of, the Mortgage.
(e) Mortgagee's Rights and Obligations. Except as expressly
provided for in this Agreement, Mortgagee shall have no obligations
to Tenant with respect to the Lease. If an attornment occurs
pursuant to this Agreement, then all rights and obligations of
Mortgagee under this Agreement shall terminate, without thereby
affecting in any way the rights and obligations of Successor Landlord
provided for in this Agreement.
(f) Interpretation; Governing Law. The interpretation,
validity and enforcement of this Agreement shall be governed by and
construed under the internal laws of the State in which the Leased
Premises are located, excluding such State's principles of conflict
of laws.
(g) Amendments. This Agreement may be amended, discharged or
terminated, or any of its provisions waived, only by a written
instrument executed by the party to be charged.
(h) Due Authorization. Tenant represents to Mortgagee that
it has full authority to enter into this Agreement, which has been
duly authorized by all necessary actions. Mortgagee represents to
Tenant that it has full authority to enter into this Agreement, which
has been duly authorized by all necessary actions.
(i) Execution. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
53
IN WITNESS WHEREOF, the Mortgagee and Tenant have caused this
Agreement to be executed as of the date first above written.
MORTGAGEE:
TENANT:
____________________________
a __________________________
By:_________________________
Name:
Title:
54
LANDLORD'S CONSENT
------------------
Landlord consents and agrees to the foregoing Agreement, which was
entered into at Landlord's request. The foregoing Agreement shall not
alter, waive or diminish any of Landlord's obligations under the Mortgage
or the Lease. The above Agreement discharges any obligations of Mortgagee
under the Mortgage and related loan documents to enter into a
nondisturbance agreement with Tenant. Landlord is not a party to the above
Agreement.
LANDLORD:
_____________________________
By:__________________________
Name:
Title:
Dated: __________________, ____
55
MORTGAGEE'S ACKNOWLEDGMENT
--------------------------
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On the ___ day of _______ in the year _______ before me, the
undersigned, a Notary Public in and for said state, personally appeared
________________________, proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or
the person upon behalf of which the individual acted, executed the
instrument.
____________________________________
Signature of Notary Public
56
TENANT'S ACKNOWLEDGMENT
-----------------------
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On the ___ day of _______ in the year _______ before me, the
undersigned, a Notary Public in and for said state, personally appeared
________________________, proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or
the person upon behalf of which the individual acted, executed the
instrument.
____________________________________
Signature of Notary Public
57
LIST OF EXHIBITS
----------------
If any exhibit is not attached hereto at the time of execution of
this Agreement, it may thereafter be attached by written agreement of the
parties, evidenced by initialing said exhibit.
Exhibit "A" - Legal Description of the Land
58
Capital Expenditure Items
See the attached letter dated April 23, 2003 from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Taurus
Investment Holdings, LLC to ▇▇▇ ▇▇▇▇▇▇▇ of Parlex Corporation
59
TAURUS INVESTMENT HOLDINGS, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TEL: ▇▇▇.▇▇▇.▇▇▇▇ FAX: ▇▇▇.▇▇▇.▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇
April 23, 2003
▇▇. ▇▇▇ ▇▇▇▇▇▇▇
CFO
Parlex Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇, ▇▇ and Cranston, RI
Dear ▇▇▇:
The purpose of this letter is to enumerate the required capital
improvements to be completed by Parlex during 2003 at the above two
facilities. Parlex will contractually commit to the completion of these
items and the expenditures of these amounts. These repairs and associated
costs are derived from the EBI Property Condition Reports and our
experience in operating buildings of this nature.
Methuen
-------
Groundwater Infiltration Repair $ 7,500
Roof Repairs/Drainage $ 15,000
Full Depth Asphalt Repairs $ 15,000
New Asphalt Overlay $ 35,000
HVAC Replacement $ 44,688
Total - Methuen $117,185
Cranston
--------
Parking Lot Repairs $ 20,000
Total - Cranston $ 20,000
Grand Total $137,185
These items are to be completed to our reasonable satisfaction. Any unspent
funds will be contributed by Parlex to the Security Deposit for the
respective facilities.
Sincerely,
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
BOSTON DALLAS MUNICH ORLANDO TORONTO WASHINGTON DC