EXHIBIT 10.JJ
LEASE AGREEMENT
by and between
DELAWARE COMP LLC,
a Delaware limited liability company
as LANDLORD
and
COMPUCOM SYSTEMS, INC.,
a Delaware corporation,
as TENANT
Premises: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
Dated as of: March 31, 1999
TABLE OF CONTENTS
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Page
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Parties..................................................................... 1
1. Demise of Premises..................................................... 1
2. Certain Definitions.................................................... 1
3. Title and Condition.................................................... 7
4. Use of Leased Premises; Quiet Enjoyment................................ 8
5. Term................................................................... 8
6. Basic Rent............................................................. 9
7. Additional Rent........................................................ 9
8. Net Lease; Non-Terminability........................................... 10
9. Payment of Impositions................................................. 11
10. Compliance with Laws and Easement Agreements; Environmental Matters.... 12
11. Liens; Recording....................................................... 13
12. Maintenance and Repair................................................. 14
13. Alterations and Improvements........................................... 15
14. Permitted Contests..................................................... 15
15. Indemnification........................................................ 16
16. Insurance.............................................................. 17
17. Casualty and Condemnation.............................................. 19
18. Termination Events..................................................... 20
19. Restoration............................................................ 21
20. Procedures Upon Purchase............................................... 23
21. Assignment and Subletting; Prohibition against Leasehold Financing..... 24
22. Events of Default...................................................... 25
23. Remedies and Damages Upon Default...................................... 27
24. Notices................................................................ 30
25. Estoppel Certificate................................................... 30
26. Surrender.............................................................. 30
27. No Merger of Title..................................................... 30
28. Books and Records...................................................... 31
29. Determination of Value................................................. 31
30. Non-Recourse as to Landlord............................................ 33
31. Financing.............................................................. 33
32. Subordination, Non-Disturbance and Attornment.......................... 33
33. Financial Covenants.................................................... 34
34. Tax Treatment; Reporting............................................... 34
35. Restrictive Covenant Issues............................................ 34
36. Excess Land............................................................ 35
37. Miscellaneous.......................................................... 35
EXHIBITS
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Exhibit "A-1" - Premises
Exhibit "A-2" - Excess Land
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Financial Covenants
Exhibit "F" - Post-Closing Obligations
-i-
LEASE AGREEMENT, made as of this 31/st/ day of March, 1999, between
DELAWARE COMP LLC, a Delaware limited liability company ("Landlord"), with an
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address c/o W. P. ▇▇▇▇▇ & Co., Inc., ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and COMPUCOM SYSTEMS, INC., a Delaware corporation ("Tenant"),
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with an address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
In consideration of the rents and provisions herein stipulated to be paid
and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant, and
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Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit
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"A-1" hereto, together with the Appurtenances (collectively, the "Land");
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(b) the buildings, structures and other improvements now or hereafter
constructed on the Land (collectively, the "Improvements"); and (c) the
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fixtures, machinery, equipment and other property described in Exhibit "B"
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hereto (collectively, the "Equipment ").
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2. Certain Definitions.
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"Acquisition Cost" shall mean $39,790,500.
"Additional Rent" shall mean Additional Rent as defined in Paragraph
7.
"Adjoining Property" shall mean all sidewalks, driveways, curbs, gores
and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals, replacements or removals
of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, privileges in and to the Land, including (a) easements
over other lands granted by any Easement Agreement and (b) any streets, ways,
alleys, vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as
defined in Paragraph 6.
"Casualty" shall mean any injury to or death of any person or any loss
of or damage to any property (including the Leased Premises) included within or
related to the Leased Premises or arising from the Adjoining Property.
"Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified transaction shall
mean all reasonable out-of-pocket costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"Covenants" shall mean the covenants and agreements described on
Exhibit "E".
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"CPI" shall mean CPI as defined in Exhibit "D" hereto.
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"Default Termination Amount" shall mean the Default Termination
Amount as defined in Paragraph 23(a)(iii).
"Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).
"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or promulgated,
any applicable federal, state, foreign and local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup thereof), or the
protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.
"Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased Premises, or from the
Leased Premises to the environment, in violation of any Environmental
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Law or in excess of any reportable quantity established under any Environmental
Law or which is likely to result in any liability to Landlord, Tenant or Lender,
any Federal, state or local government or any other Person for the costs of any
removal or remedial action or natural resources damage or for bodily injury or
property damage, (b) any deposit, storage, dumping, placement or use of any
Hazardous Substance at, upon, under or within the Leased Premises or which
extends to any Adjoining Property in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which is likely to result in any liability to any Federal, state or local
government or to any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (c)
the abandonment or discarding of any barrels, containers or other receptacles
containing any Hazardous Substances in violation of any Environmental Laws, (d)
any activity, occurrence or condition which is likely to result in any
liability, cost or expense to Landlord or Lender or any other owner or occupier
of the Leased Premises, or which is likely to result in a creation of a lien on
the Leased Premises under any Environmental Law, or (e) any violation of or
noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).
"Excess Land" shall mean that portion of the Land described in Exhibit
"A-2".
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"Excess Land Price" shall mean Excess Land Price as defined in
Paragraph 36(a)(iii).
"Fair Market Value" shall mean the higher of (a) the fair market value
of the Leased Premises (including the Excess Land) or the Excess Land, as the
case may be, as of the Relevant Date as if-unaffected and unencumbered by this
Lease or (b) the fair market value of the Leased Premises as of the Relevant
Date as affected and encumbered by this Lease and assuming (i) that the term
shall terminate on the Expiration Date (or if the term has been extended for any
extension period provided for herein, on the next Renewal Date) in the event
Fair Market Value is determined in accordance with Paragraph 18 or (ii) that the
Term has been extended for all extension periods provided for herein in the
event Fair Market Value is being determined in accordance with Paragraph 23. For
all purposes of this Lease, Fair Market Value shall be determined in accordance
with the procedure specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair Market
Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of public
and private debts in the United States of America.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
regulated quantities of Hazardous Substance; (ii) causes or results in (or
threatens to cause or result in) the release, seepage, spill, leak, flow,
discharge or emission of regulated quantities of any Hazardous Substance into
the environment (including the air, ground water, watercourses or water
systems), (iii) involves the containment or storage of any regulated quantities
of a Hazardous Substance; or (iv) would cause the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.
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"Hazardous Condition" means any condition which would support any
claim or liability under any Environmental Law, including the presence of
underground storage tanks.
"Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in Paragraph 9(a).
"Improvements" shah mean the Improvements as defined in Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.
"Insurance Requirements" shall mean the requirements of all insurance
policies required to be maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first Lease Year, the
period commencing on the Commencement Date and ending at midnight on the last
day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean the requirements of all present and
future Laws (including but not limited to Environmental Laws and Laws relating
to accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or hereafter of
record which may be applicable to Tenant or to any of the Leased Premises, or to
the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or restoration of any of the Leased Premises, even if
compliance therewith necessitates structural changes or improvements or results
in interference with the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any person or entity (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or is the holder of any Note.
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"Loan" shall mean any loan made by one or more Lenders to Landlord,
which loan is secured by a Mortgage and an Assignment and evidenced by a Note.
"Monetary Obligations" shall mean Rent and all other sums payable by
Tenant under this Lease to Landlord, to any third party on behalf of Landlord or
to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from Landlord to a
Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred by
Landlord and Lender in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing Landlord's obligation
to repay a Loan, as the same may be amended, supplemented or modified.
"Partial Casualty" shall mean any Casualty which does not constitute a
Termination Event.
"Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions and easements and other encumbrances, other than
any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing
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shall not be deemed to revive any such encumbrances that have expired or
terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prepayment Premium" shall mean any payment (other than a payment of
principal and/or interest which Landlord is required to make under a Note or a
Mortgage) by reason of any prepayment by Landlord of any principal due under a
Note or Mortgage, and which may be (in lieu of such prepayment premium or
prepayment penalty) a "make whole" or yield maintenance clause requiring a
prepayment premium or a defeasance deposit (such defeasance deposit to be an
amount equal to the positive difference between (a) the total amount required to
defease a Loan and (b) the outstanding principal balance of the Loan as of the
date of such defeasance, in either case in an amount sufficient to compensate
the Lender for the loss of the benefit of the Loan due to a prepayment.
"Present Value" of any amount shall mean such amount discounted by a
rate per annum which is the lower of (a) the Prime Rate at the time such present
value is determined or (b) eight percent (8%) per annum.
"Prime Rate" shall mean the annual interest rate as published, from
time to time, in The Wall Street Journal as the "Prime Rate" in its column
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entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event The Wall Street
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Journal ceases publication or ceases to publish the "Prime Rate" as described
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above, the Prime Rate shall be the average per annum discount rate (the
"Discount
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Rate") on ninety-one (91) day bills ("Treasury Bills") issued from time to time
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by the United States Treasury at its most recent auction, plus three hundred
(300) basis points. If no such 91-day Treasury Bills are then being issued, the
Discount Rate shall be the discount rate on Treasury Bills then being issued for
the period of time closest to ninety-one (91) days.
"Relevant Amount" shall mean the Termination Amount, the Default
Termination Amount or the Excess Land Price, as the case may be.
"Relevant Date" shall mean (a) the date immediately prior to the date
on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a termination offer under Paragraph
23(a)(iii), or (e) the date on which Landlord elects to convey to Tenant the
Excess Land under Paragraph 36(a)(iii).
"Renewal Term" shall mean Renewal Term as defined in Paragraph 5.
"Rent" shall mean, collectively, Basic Rent and Additional Rent.
"Requisition" shall mean any temporary requisition or confiscation of
the use or occupancy of any of the Leased Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of Texas.
"Surviving Obligations" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the expiration or
prior termination of this Lease or which survive such expiration or termination
by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a portion of
any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a) Fair Market Value
or (b) the sum of the Acquisition Cost and any Prepayment Premium which Landlord
will be required to pay in prepaying any Loan with proceeds of the Termination
Amount.
"Termination Date" shall mean Termination Date as defined in Paragraph
18.
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"Termination Event" shall mean a Termination Event as defined in
Paragraph 18.
"Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).
3. Title and Condition.
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(a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment presently in effect, (ii) the rights of any Persons in
possession of the Leased Premises, (iii) the existing state of title of any of
the Leased Premises, including any Permitted Encumbrances, (iv) any state of
facts which an accurate survey or physical inspection of the Leased Premises
might show, (v) all Legal Requirements, including any existing violation of any
thereof, and (vi) the condition of the Leased Premises as of the commencement of
the Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises is in good condition
and repair at the inception of this Lease. LANDLORD LEASES AND WILL LEASE AND
TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT
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LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT
MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN
OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT,
(iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS,
(vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY,
(xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi)
COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE
LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE
LEASED PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE
BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the title
to the Leased Premises prior to the execution and delivery of this Lease and has
found the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that (i) fee simple title (both legal and equitable) is in Landlord
and that Tenant has only the leasehold right of possession and use of the Leased
Premises as provided herein, (ii) the Improvements conform to all material Legal
Requirements and all material Insurance Requirements, (iii) to the best
knowledge of Tenant, all easements necessary or appropriate for the use or
operation of the
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Leased Premises have been obtained, (iv) to the best knowledge of Tenant, all
contractors and subcontractors who have performed work on or supplied materials
to the Leased Premises have been fully paid, and all materials and supplies have
been fully paid for, (v) the Improvements have been fully completed in all
material respects in a workmanlike manner of first class quality, and (vi) all
Equipment necessary or appropriate for the use or operation of the Leased
Premises has been installed and is presently fully operative in all material
respects.
(d) Landlord hereby assigns to Tenant, without recourse or warranty
whatsoever, all assignable warranties, guaranties, indemnities and similar
rights (collectively, "Warranties") which Landlord may have against any
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manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this Lease,
whereupon such assignment shall cease and all of Warranties, guaranties,
indemnities and other rights shall automatically revert to Landlord. Tenant
shall enforce the Warranties in accordance with their respective terms.
4. Use of Leased Premises, Quiet Enjoyment.
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(a) Tenant may occupy and use the Leased Premises for general office
use and for no other purpose. Tenant shall not use or occupy or permit any of
the Leased Premises to be used or occupied, nor do or permit anything to be done
in or on any of the Leased Premises, in a manner which would or might (i)
violate any Law or Legal Requirement in any material respect, (ii) make void or
voidable or cause any insurer to cancel any insurance required by this Lease, or
make it difficult or impossible to obtain any such insurance at commercially
reasonable rates, (iii) make void or voidable, cancel or cause to be cancelled
or release any warranty, guaranty or indemnity, (iv) cause structural injury to
any of the Improvements or (v) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of Default
has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the
Leased Premises throughout the Term, without any hindrance, ejection or
molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord or its agents may, in a manner which does not
unreasonably interrupt or otherwise interfere with Tenant's business, enter upon
and examine any of the Leased Premises at such reasonable times as Landlord may
select and upon reasonable notice to Tenant (except in the case of an emergency,
in which no notice shall be required) for the purpose of inspecting the Leased
Premises, verifying compliance or non-compliance by Tenant with its obligations
hereunder and the existence or non-existence of an Event of Default or event
which with the passage of time and/or notice would constitute an Event of
Default, showing the Leased Premises to prospective Lenders and purchasers and
taking such other action with respect to the Leased Premises as is permitted by
any provision hereof.
5. Term.
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(a) Subject to the provisions hereof, Tenant shall have and hold
the Leased Premises for an initial term (such term, as extended or renewed in
accordance with the provisions hereof, being called the "Term") commencing on
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the date hereof (the "Commencement Date") and ending on the last day of the two
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hundred fortieth (240th) calendar month next following the date hereof with
respect to the Leased Premises, (the "Expiration Date").
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(b) Provided that if, on or prior to the Expiration Date or any other
Renewal Date (as hereinafter defined) this Lease shall not have been terminated
pursuant to any provision hereof, then on the Expiration Date and on the fifth
(5th) anniversary of the Expiration Date (the Expiration Date and the
anniversary being a "Renewal Date"), Tenant, at Tenant's sole
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8
option, may extend the Term for an additional period of five (5) years, at any
time until notice from Tenant to Landlord of Tenant's election to extend
delivered to Landlord no more than eighteen (18) months prior to the next
Renewal Date or (ii) the currently scheduled Expiration Date. Any such extension
of the Term shall be subject to all of the provisions of this Lease, as the same
may be amended, supplemented or modified.
(c) If Tenant fails to exercise its option to extend or further
extend the Term, or if an Event of Default occurs, then Landlord shall have the
right during the remainder of the Term then in effect and, in any event,
Landlord shall have the right during the last year of the Term, (i) to advertise
the availability of the Leased Premises for sale or reletting and to erect upon
the Leased Premises signs indicating such availability and (ii) to show, in a
manner that does not unreasonably interrupt or interfere with Tenant's business,
the Leased Premises to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may select.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
----------
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent commencing on the first day of April, 1999, and
----------- ----------
continuing on the first day of each July, October, January and April thereafter
during the Term (each such day being a "Basic Rent Payment Date"). Each such
-------------------------
rental payment shall be made, at Landlord's sole discretion, (a) to Landlord at
its address set forth above and/or to one other Person, at such addresses and in
such proportions as Landlord may direct by fifteen (15) days' prior written
notice to Tenant (in which event Tenant shall give Landlord notice of each such
payment concurrent with the making thereof), and (b) by a check hand delivered
at least five (5) business days before or mailed at least ten (10) days before
the applicable Basic Rent Payment Date, or in Federal Funds. Delivery to such
other Person shall be deemed for all purposes to be proper delivery to Landlord
of any amounts so delivered. Pro rata Basic Rent for the period from the date
hereof through the last day of the month hereof shall be paid on the date
hereof.
7. Additional Rent.
---------------
(a) Tenant shall pay and discharge, as additional rent (collectively,
"Additional Rent"):
---------------
(i) except as otherwise specifically provided herein, all
costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or, to the extent provided in this
Lease, restoration of any of the Leased Premises, (B) the performance of any of
Tenant's obligations under this Lease, (C) any sale or other transfer of any of
the Leased Premises to Tenant under this Lease, (D) any Condemnation
proceedings, (E) the adjustment, settlement or compromise of any insurance
claims involving or arising from any of the Leased Premises, (F) the
prosecution, defense or settlement of any litigation involving or arising from
any of the Leased Premises, this Lease, or the sale of the Leased Premises to
Landlord, (G) the exercise or enforcement by Landlord, its successors and
assigns, of any of its rights under this Lease, (H) any amendment to or
modification or termination of this Lease made at the request of Tenant, (I)
reasonable Costs of Landlord's counsel and reasonable internal Costs of Landlord
incurred in connection with any act undertaken by Landlord (or its counsel) at
the request of Tenant, or incurred in connection with any act of Landlord
performed on behalf of Tenant permitted under this Lease, (J) the reasonable
internal Costs of Landlord incurred in connection with any act undertaken by
Landlord at the request of Tenant or Tenant's failure to act promptly in an
emergency situation, (K) costs of appraisals and inspections required by Lender
in connection with an Event of Default or if required by banking regulations or
Laws applicable to
9
Lender and reasonable costs of maintaining any depository account for the
payment of Rent and (L) any other items specifically required to be paid by
Tenant under this Lease;
(ii) after the date all or any portion of any installment of
Basic Rent is due and not paid, an amount equal to five percent (5%) of the
amount of such unpaid installment or portion thereof, provided, however, that
with respect to the first late payment of all or any portion of any installment
of Basic Rent in any Lease Year, the Late Charge shall not be due and payable
unless the Basic Rent has not been paid within five (5) days following the due
date thereof.
(iii) a sum equal to any additional sums (including any late
charge, default penalties, interest and fees of Lender's counsel) which are
payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate (the "Default Rate") of four percent
------------
(4%) over the Prime Rate per annum on the following sums until paid in full: (A)
all overdue installments of Basic Rent from the respective due dates thereof,
provided, however, that with respect to the first late payment of all or any
portion of any installment of Basic Rent in any Lease Year the late installment
of Basic Rent shall not bear interest at the Default Rate until the sixth
(6/th/) day following the date on which such installment was due, (B) all
overdue amounts of Additional Rent relating to obligations which Landlord shall
have paid on behalf of Tenant, from the date of payment thereof by Landlord, and
(C) all other overdue amounts of Additional Rent, from the date when any such
amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent referred
to in Paragraph 7(a)(i) when the same shall become due, provided that amounts
which are billed to Landlord or any third party, but not to Tenant, shall be
paid within ten (10) days after Landlord's demand for payment thereof, which
demand for payment shall include the applicable supporting materials, and (ii)
any other Additional Rent, within ten (10) days after Landlord's written demand
for payment thereof, which demand for payment shall include the applicable
supporting materials.
(c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii)
and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease: Non-Terminability.
----------------------------
(a) This is a net lease and except as otherwise expressly provided
all Monetary Obligations shall be paid without notice or demand and without set-
off, counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense (collectively, a "Set-Off").
---------
(b) Except as otherwise expressly provided herein, this Lease and the
rights of Landlord and the obligations of Tenant hereunder shall not be affected
by any event or for any reason, including the following: (i) any damage to or
theft, loss or destruction of any of the Leased Premises, (ii) any Condemnation,
(iii) Tenant's acquisition of ownership of any of the Leased Premises other than
pursuant to an express provision of this Lease, (iv) any default on the part of
Landlord hereunder or under any Note, Mortgage, Assignment or any other
agreement, (v) any latent or other defect in any of the Leased Premises, (vi)
the breach of any warranty of any seller or manufacturer of any of the
Equipment, (vii) any violation of any provision of this Lease by Landlord,
(viii) the bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution or winding-up of, or other proceeding affecting
Landlord, (ix) the exercise of any remedy, including foreclosure, under any
Mortgage or Assignment, (x) any
10
action with respect to this Lease (including the disaffirmance hereof) which may
be taken by Landlord, any trustee, receiver or liquidator of Landlord or any
court under the Federal Bankruptcy Code or otherwise, (xi) any interference with
Tenant's use of the Leased Premises, (xii) market or economic changes or (xiii)
any other cause, whether similar or dissimilar to the foregoing, any present or
future Law to the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. The obligation to pay Rent or
amounts equal thereto shall not be affected by any collection of rents by any
governmental body pursuant to a tax lien or otherwise, even though such
obligation results in a double payment of Rent. All Rent payable by Tenant
hereunder shall constitute "rent" for all purposes (including Section 502(b)(6)
of the Federal Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant shall have
no right and hereby waives all rights which it may have under any Law (i) to
quit, terminate or surrender this Lease or any of the Leased Premises, or (ii)
to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
----------------------
(a) Tenant shall, before interest or penalties are due thereon, pay
and discharge all taxes (including real and personal property, franchise, sales
and rent taxes), all charges for any easement or agreement maintained for the
benefit of any of the Leased Premises, all assessments and levies, all permit,
inspection and license fees, all rents and charges for water, sewer, utility and
communication services relating to any of the Leased Premises, all ground rents
and all other public charges whether of a like or different nature, even if
unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii)
Tenant's leasehold interest in the Leased Premises, (iii) any of the Leased
Premises, (iv) Landlord as a result of or arising in respect of the acquisition,
ownership, occupancy, leasing, use, possession or sale of any of the Leased
Premises, any activity conducted on any of the Leased Premises, or the Rent, or
(v) any Lender by reason of any Note, Mortgage, Assignment or other customary
document evidencing or securing a Loan and which (as to this clause (v))
Landlord has agreed to pay (collectively, the "Impositions"); provided, that
-----------
nothing herein shall obligate Tenant to pay (A) income, excess profits or other
taxes of Landlord (or Lender) which are determined on the basis of Landlord's
(or Lender's) net income or net worth (unless such taxes are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
the Leased Premises which, if it were in effect, would be payable by Tenant
under the provisions hereof or by the terms of such tax, assessment or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed on
Landlord or (C) any capital gains tax imposed on Landlord in connection with the
sale of the Leased Premises to any Person. If any Imposition may be paid in
installments without interest or penalty, Tenant shall have the option to pay
such Imposition in installments; in such event, Tenant shall be liable only for
those installments which accrue or become due and payable during the Term.
Tenant shall prepare and file all tax reports required by governmental
authorities which relate to the Impositions. Tenant shall deliver to Landlord
(1) copies of all settlements and notices pertaining to the Impositions which
may be issued by any governmental authority within ten (10) days after Tenant's
receipt thereof, (2) receipts for payment of all taxes required to be paid by
Tenant hereunder within thirty (30) days after the due date thereof and (3)
receipts for payment of all other Impositions within ten (10) days after
Landlord's request therefor.
11
(b) Landlord shall have the right at any time following the
occurrence of an Event of Default or if required by Lender to require Tenant to
pay to Landlord an additional monthly sum (each an "Escrow Payment") sufficient
--------------
to pay the Escrow Charges (as hereinafter defined) as they become due. As used
herein, "Escrow Charges" shall mean real estate taxes on the Leased Premises or
--------------
payments in lieu thereof and premiums on any insurance required by this Lease.
Landlord shall determine the amount of the Escrow Charges and of each Escrow
Payment. As long as the Escrow Payments are being held by Landlord the Escrow
Payments shall not be commingled with other funds of Landlord or other Persons
and interest thereon shall accrue for the benefit of Tenant from the date such
monies are received and invested until the date such monies are disbursed to pay
Escrow Charges. Landlord shall apply the Escrow Payments to the payment of the
Escrow Charges in such order or priority as Landlord shall determine or as
required by law. If at any time the Escrow Payments theretofore paid to Landlord
shall be insufficient for the payment of the Escrow Charges, Tenant, within ten
(10) days after Landlord's demand therefor, shall pay the amount of the
deficiency to Landlord.
10. Compliance with Laws and Easement Agreements, Environmental Matters.
-------------------------------------------------------------------
(a) Tenant shall, at its expense, comply with and conform to, and
cause the Leased Premises and any other Person occupying any part of the Leased
Premises to comply with and conform to, all Insurance Requirements and Legal
Requirements (including all applicable Environmental Laws). Tenant shall not at
any time (i) cause, permit or suffer to occur any Environmental Violation or
(ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation and, at the request of Landlord or Lender, Tenant shall
promptly remediate or undertake any other appropriate response action to correct
any existing Environmental Violation, however immaterial. Any and all reports
prepared for or by Landlord with respect to the Leased Premises shall be for the
sole benefit of Landlord and Lender and no other Person shall have the right to
rely on any such reports. Notwithstanding the foregoing, Tenant shall have the
right, at Tenant's sole cost and expense, to contest any covenants enforceable
against Tenant by any third parties provided that the Lease shall remain in full
force and effect.
(b) Tenant, at its sole cost and expense, will at all times promptly
and faithfully abide by, discharge and perform all of the covenants, conditions
and agreements contained in any Easement Agreement on the part of Landlord or
the occupier to be kept and performed thereunder. Subject to Paragraph 35
hereof, Tenant will not alter, modify, amend or terminate any Easement
Agreement, give any consent or approval thereunder, or enter into any new
Easement Agreement without, in each case, the prior written consent of Landlord,
such consent not to be unreasonably withheld or delayed.
(c) Upon prior written notice from Landlord, Tenant shall permit such
persons as Landlord may designate ("Site Reviewers") to visit the Leased
--------------
Premises and perform, as agents of Tenant, in a manner which does not
unreasonably interfere with Tenant's business, environmental site
investigations and assessments ("Site Assessments") on the Leased Premises for
----------------
the purpose of determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in any Environ-
mental Violation. Such Site Assessments may include both above and below the
ground testing for Environmental Violations and such other tests as may be
necessary, in the opinion of the Site Reviewers, to conduct the Site
Assessments. Any such investigations, assessments and testing should be
performed in a good and workmanlike manner in compliance with all applicable
Legal Requirements and in a manner which does not unreasonably interfere with
Tenant's business on the Leased Premises. Tenant shall supply to the Site
Reviewers such historical and operational information regarding the Leased
Premises as may be reasonably requested by the Site Reviewers to facilitate the
Site Assessments, and shall make available for meetings with the Site Reviewers
appropriate
12
personnel having knowledge of such matters. The cost of performing and reporting
any Site Assessments shall be paid by Tenant.
(d) If an Environmental Violation occurs or is found to exist and, in
Landlord's reasonable judgment, the cost of remediation of, or other response
action with respect to, the same is likely to exceed $500,000, Tenant shall
provide to Landlord, within ten (10) days after Landlord's request therefor,
adequate financial assurances that Tenant will effect such remediation in
accordance with applicable Environmental Laws. Such financial assurances shall
be a bond or letter of credit reasonably satisfactory to Landlord in form and
substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c),
of the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire and either (1) as a result of the Environmental Violation
the Landlord, after good faith efforts is unable to lease the Leased Premises at
its fair market rental value absent such Environmental Violation or (2) the
Environmental Violation causes a diminution in the value of the Premises, then,
at the option of Landlord, the Term shall be automatically extended beyond the
date of termination or expiration and this Lease shall remain in full force and
effect beyond such date until the earlier to occur of (i) the completion of all
remedial action in accordance with applicable Environmental Laws or (ii) the
date specified in a written notice from Landlord to Tenant terminating this
Lease.
(f) If Tenant fails to correct any Environmental Violation which
occurs or is found to exist, Landlord shall have the right (but no obligation)
to take any and all actions as Landlord shall deem necessary or advisable in
order to cure such Environmental Violation.
(g) Tenant shall notify Landlord immediately after becoming aware of
any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord immediately upon receipt thereof copies of all orders,
reports, notices, permits, applications or other communications relating to any
such violation or noncompliance.
(h) All future leases, subleases or concession agreements relating to
the Leased Premises entered into by Tenant shall contain covenants of the other
party not to at any time (i) cause any Environmental Violation to occur or (ii)
permit any Person occupying the Leased Premises through said subtenant or
concessionaire to cause any Environmental Violation to occur.
11. Liens; Recording.
-----------------
(a) Tenant shall not, directly or indirectly, create or permit to be
created or to remain and shall promptly discharge or remove any lien, levy or
encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
13
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY
OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
------
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this
Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.
12. Maintenance and Repair.
----------------------
(a) Tenant shall at all times maintain the Leased Premises and the
Adjoining Property in as good repair and appearance as they are in on the date
hereof and fit to be used for their intended use in accordance with the better
of the practices generally recognized as then acceptable by other companies in
its industry or observed by Tenant with respect to the other real properties
owned or operated by it, and, in the case of the Equipment, in as good
mechanical condition as it was on the later of the date hereof or the date of
its installation, except for ordinary wear and tear. Tenant shall take every
other action necessary or appropriate for the preservation and safety of the
Leased Premises. Tenant shall promptly make all Alterations of every kind and
nature, whether foreseen or unforeseen, which may be required to comply with the
foregoing requirements of this Paragraph 12(a). Such Alterations shall include
Alterations required in order to insure that the Improvements are "year 2000"
compliant (that is capable of correctly and accurately processing, providing
and/or receiving date data from, into and between the 20/th/ and 2l/st/
centuries, and the years 1999 and 2000 and beyond, including recognizing that
the year 2000 is a leap year; and does not operate abnormally or inaccurately or
cease to operate as a result of the inability to correctly and accurately
process, provide and/or receive date data from, into, and between the 20/th/ and
21/st/ centuries and the years 1999 and 2000 and beyond). Landlord shall not be
required to make any Alteration, whether foreseen or unforeseen, or to maintain
any of the Leased Premises or Adjoining Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or hereafter
in effect to make Alterations at the expense of Landlord or to require Landlord
to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12
shall be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall (i)
encroach upon any setback or any property, street or right-of-way adjoining the
Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting the Leased Premises, (iii) hinder or obstruct any easement or right-
of-way to which any of the Leased Premises is subject or (iv) impair the rights
of others in, to or under any of the foregoing, Tenant shall, promptly after
receiving notice or otherwise acquiring knowledge thereof, either (A) obtain
from all necessary parties waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance, obstruction
or impairment, whether the same shall affect Landlord, Tenant or both, or (B)
take such action as shall be necessary to remove all such encroachments,
hindrances or obstructions and to end all such violations or impairments,
including, if necessary, making Alterations.
(c) Tenant covenants and agrees that it shall perform the post-
closing obligations described in Exhibit "F" within the timeframe specified
-----------
therein.
14
13. Alterations and Improvements.
----------------------------
(a) Tenant shall have the right, without having obtained the prior
written consent of Landlord and Lender and provided that no Event of Default
then exists, to make (i) Alterations or a series of related Alterations that, as
to any such Alterations or series of related Alterations, do not cost in excess
of $500,000 and (ii) to install Equipment in the Improvements or accessions to
the Equipment that, as to such Equipment or accessions, do not cost in excess of
$500,000, so long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value and utility of
the Leased Premises is not diminished thereby. If the cost of any Alterations,
series of related Alterations, Equipment or accessions thereto is in excess of
$500,000, the prior written approval of Landlord and Lender shall be required,
such approval not to be unreasonably withheld or delayed. Tenant shall not
construct upon the Land any additional buildings without having first obtained
the prior written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph 13 or
as required by Paragraph 12 or 17 (such Alterations and actions being
hereinafter collectively referred to as "Work"), whether or not Landlord's
----
consent is required, then (i) the market value of the Leased Premises shall not
be lessened by any such Work or its usefulness impaired, (ii) all such Work
shall be performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal Requirements,
(iv) all such Work shall comply with the Insurance Requirements, (v) if any such
Work involves the replacement of Equipment or parts thereto, all replacement
Equipment or parts shall have a value and useful life equal to the greater of
(A) the value and useful life on the date hereof of the Equipment being replaced
or (B) the value and useful life of the Equipment being replaced immediately
prior to the occurrence of the event which required its replacement, (vi) Tenant
shall promptly discharge or remove all liens filed against any of the Leased
Premises arising out of such Work, (vii) Tenant shall procure and pay for all
permits and licenses required in connection with any such Work, (viii) all such
Work shall be the property of Landlord and shall be subject to this Lease, and
Tenant shall execute and deliver to Landlord any document requested by Landlord
evidencing the assignment to Landlord of all estate, right, title and interest
(other than the leasehold estate created hereby) of Tenant or any other Person
thereto or therein, and (ix) Tenant shall comply, to the extent requested by
Landlord or required by this Lease, with the provisions of Paragraph 19(a),
whether or not such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
------------------
this Lease, Tenant shall not be required to (a) pay any Imposition, (b)
discharge or remove any lien referred to in Paragraph 11 or 13 or (c) take any
action with respect to any encroachment, violation, hindrance, obstruction or
impairment referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as "Permitted Violations"), so
--------------------
long as at the time of such contest no Event of Default exists and so long as
Tenant shall contest, in good faith, the existence, amount or validity thereof,
the amount of the damages caused thereby, or the extent of its or Landlord's
liability therefor by appropriate proceedings which shall operate during the
pendency thereof to prevent or stay (i) the collection of, or other realization
upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of
any of the Leased Premises or any Rent to satisfy or to pay any damages caused
by any Permitted Violation, (iii) any interference with the use or occupancy of
any of the Leased Premises, (iv) any interference with the payment of any Rent,
or (v) the cancellation or increase in the rate of any insurance policy or a
statement by the carrier that coverage will be denied. If the Cost of the
Permitted Violation is in excess of $ 100,000 or if required by Lender or
applicable Law irrespective of the Cost, Tenant shall provide Landlord security
which is satisfactory, in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected, including all Costs, interest and penalties
that may be incurred or become due in connection therewith. While any
proceedings which comply with the requirements of this Paragraph 14 are pending
and the required security is held by
15
Landlord, Landlord shall not have the right to correct any Permitted Violation
thereby being contested unless Landlord is required by law to correct such
Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.
15. Indemnification.
---------------
(a) Except with respect to an act of gross negligence or willful
misconduct by the Indemnitee seeking indemnification, Tenant shall pay, protect,
indemnify, defend, save and hold harmless Landlord, Lender and all other Persons
described in Paragraph 30 (each an "Indemnitee") from and against any and all
----------
liabilities, losses, damages (including punitive damages), penalties, Costs
(including attorneys' fees and costs), causes of action, suits, claims, demands
or judgments of any nature whatsoever, howsoever caused, without regard to the
form of action and whether based on strict liability, negligence or any other
theory of recovery at law or in equity, arising from (i) any matter pertaining
to the acquisition (or the negotiations leading thereto), ownership, use, non-
use, occupancy, operation, condition, design, construction, maintenance, repair
or restoration of the Leased Premises or Adjoining Property, (ii) any casualty
in any manner arising from the Leased Premises or Adjoining Property, whether or
not Indemnitee has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant of any
provision of this Lease, any contract or agreement to which Tenant is a party,
any Legal Requirement or any Permitted Encumbrance or any encumbrance Tenant
consented to or the Mortgage or Assignment or (iv) any alleged, threatened or
actual Environmental Violation, including (A) liability for response costs and
for costs of removal and remedial action incurred by the United States
Government, any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to Section 107 of CERCLA, or any successor section or act or provision
of any similar state or local Law, (B) liability for costs and expenses of
abatement, correction or clean-up, fines, damages, response costs or penalties
which arise from the provisions of any of the other Environmental Laws and (C)
liability for personal injury or property damage arising under any statutory or
common-law tort theory, including damages assessed for the maintenance of a
public or private nuisance or for carrying on of a dangerous activity.
(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may, at Landlord's sole expense
and without pass-through as Additional Rent, employ counsel of its choice to
monitor the defense of any such action) and (ii) such Indemnitee shall notify
Tenant to resist or defend such action or proceeding by retaining counsel
reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate
and assist in the defense of such action or proceeding if reasonably requested
so to do by Tenant. In the event of a conflict of interest or dispute or during
the continuance of an Event of Default, Landlord shall have the right to select
counsel, and the reasonable cost of such counsel shall by paid by Tenant.
16
(c) The obligations of Tenant under this Paragraph 15 shall survive
any termination, expiration or rejection in bankruptcy of this Lease.
16. Insurance.
---------
(a) Tenant shall maintain the following insurance on or in connection
with the Leased Premises except as otherwise approved or consented to by
Landlord:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood and earthquake (if the Leased Premises
is in a flood zone and/or earthquake zone, as applicable) and earthquake
coverage in amounts not less than the actual replacement cost of the
Improvements and Equipment. Such policies shall contain Replacement Cost and
Agreed Amount Endorsements and shall contain deductibles not more than $50,000
per occurrence.
(ii) Commercial General Liability Insurance (including but not
limited to Incidental Medical Malpractice and Host Liquor Liability) and
Business Automobile Liability Insurance (including Non-Owned and Hired
Automobile Liability) against claims for personal and bodily injury, death or
property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $15,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and type.
(iii) Workers' compensation insurance covering all persons
employed by Tenant in connection with any work done on or about any of the
Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Workers' Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on any of the
Equipment or any other equipment on or in the Leased Premises, in an amount not
less than $5,000,000 per accident for damage to property. Such policies shall
include at least $5,000,000 per accident for Off-Premises Service Interruption,
Expediting Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up
Expense and may contain a deductible not to exceed $50,000.
(v) Business Income/Extra Expense Insurance at limits
sufficient to cover 100% of the period of indemnity not less than one year from
time of loss. Such insurance shall name Landlord as loss payee solely with
respect to Rent payable to or for the benefit of Landlord as its interest
appears under this Lease.
(vi) During any period in which substantial Alterations at the
Leased Premises are being undertaken, builder's risk insurance covering the
total completed value including any "soft costs" with respect to the
Improvements being altered or repaired (on a completed value, non-reporting
basis), replacement cost of work performed and equipment, supplies and materials
furnished in connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such other
endorsements as Landlord may reasonably require and general liability, worker's
compensation and automobile liability insurance with respect to the Improvements
being constructed, altered or repaired.
17
(vii) Such other insurance (or other terms with respect to any
insurance required pursuant to this Paragraph 16, including without limitation
amounts of coverage, deductibles, form of mortgagee clause) on or in connection
with any of the Leased Premises as Landlord or Lender may reasonably require,
which at the time is usual and commonly obtained in connection with properties
similar in type of building size, use and location to the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written by
companies which have a Best's rating of A:X or above and are admitted in, and
approved to write insurance policies by, the State Insurance Department for the
State. The insurance policies shall be in amounts sufficient at all times to
satisfy any coinsurance requirements thereof. The insurance referred to in
Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and
Lender as loss payee and Tenant as its interest may appear. The insurance
referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional
insureds, and the insurance referred to in Paragraph 16(a)(v) shall name
Landlord as insured and Lender and Landlord as loss payee. If said insurance or
any part thereof shall expire, be withdrawn, become void, voidable, unreliable
or unsafe for any reason, including a breach of any condition thereof by Tenant
or the failure or impairment of the capital of any insurer, Tenant shall
immediately obtain new or additional insurance reasonably satisfactory to
Landlord.
(c) Each insurance policy referred to in clauses (i), (iv), (v) and
(vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee
clauses in favor of and acceptable to Lender. Each policy required by any
provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it
may not be cancelled, substantially modified or allowed to lapse on any renewal
date except after fifteen (15) days' prior notice to Landlord and Lender. Each
such policy shall also provide that any loss otherwise payable thereunder shall
be payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of such
insurance payment, (ii) the occupation or use of any of the Leased Premises for
purposes more hazardous than those permitted by the provisions of such policy,
(iii) any foreclosure or other action or proceeding taken by Lender pursuant to
any provision of the Mortgage, Note, Assignment or other document evidencing or
securing the Loan upon the happening of an event of default therein or (iv) any
change in title to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord evidence of the payment of the full premium therefor or
installment then due at least thirty (30) days prior to the expiration date of
such policy, and shall promptly deliver to Landlord all original certificates of
insurance.
(e) Anything in this Paragraph 16 to the contrary notwithstanding,
any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may
be carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16 and
provided further that Tenant shall provide to Landlord a Statement of Values
which shall be reviewed annually and amended as necessary based on Replacement
Cost Valuations. The original or a certified copy of each such "blanket" or
umbrella policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
requirements of the insurers thereunder applicable to Landlord, Tenant or any of
the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the
18
Leased Premises, even if such compliance necessitates Alterations or results in
interference with the use or enjoyment of any of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
thereof.
(h) All policies shall contain effective waivers by the carrier
against all claims for insurance premiums against Landlord and shall contain
full waivers of subrogation against the Landlord.
(i) All proceeds of any insurance required under Paragraph 16(a)
shall be payable as follows:
(i) Proceeds of insurance payable under clauses (ii), and
(iii) of Paragraph 16(a) and proceeds attributable to the general liability
coverage of Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall
be payable to the Person entitled to receive such proceeds.
(ii) All proceeds of insurance payable under clauses (iv) and
(vii) of Paragraph 16(a) shall be payable to Landlord or, if required by the
Mortgage, to Lender and that portion of any proceeds of insurance payable under
clause (v) of Paragraph 16(a) to which Landlord is entitled to hereunder shall
be payable to Landlord or, if required by the Mortgage, to Lender.
(iii) Proceeds of insurance required under clause (i) of
Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16(a) shall be payable to Landlord (or Lender) and applied as set forth in
Paragraph 17. Tenant shall apply the Net Award to restoration of the Leased
Premises in accordance with the applicable provisions of this Lease.
17. Casualty and Condemnation.
-------------------------
(a) If any Casualty in excess of $50,000 occurs to the Leased
Premises occurs, Tenant shall give Landlord and Lender immediate notice thereof.
Landlord and Lender are hereby authorized to adjust, collect and compromise, in
their discretion and upon notice to Tenant (except that no notice to Tenant
shall be required if an Event of Default has occurred and is continuing), all
claims under any of the insurance policies required by Paragraph 16(a) (except
public liability insurance claims payable to a Person other than Tenant,
Landlord or Lender) and to execute and deliver on behalf of Tenant all necessary
proofs of loss, receipts, vouchers and releases required by the insurers.
Provided that no Event of Default has occurred and is continuing, Tenant shall
be entitled to participate with Landlord and Lender in any adjustment,
collection and compromise of the Net Award payable in connection with a
Casualty. Tenant agrees to sign, upon the request of Landlord and Lender, all
such proofs of loss, receipts, vouchers and releases. If Landlord or Lender so
requests, Tenant shall adjust, collect and compromise any and all such claims,
and Landlord and Lender shall have the right to join with Tenant therein. Any
adjustment, settlement or compromise of any such claim shall be subject to the
prior written approval of Tenant (so long as no Event of Default exists),
Landlord and Lender, and Landlord and Lender shall have the right to prosecute
or contest, or to require Tenant to prosecute or contest, any such claim,
adjustment, settlement or compromise. Each insurer is hereby authorized and
directed to make payment under said policies, including return
19
or unearned premiums, directly to Landlord or, if required by the Mortgage, to
Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints
each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft
therefor. The rights of Landlord under this Paragraph 17(a) shall be extended to
Lender if and to the extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation Notice, shall
notify Landlord and Lender thereof. Landlord and Lender are authorized to
collect, settle and compromise, in their discretion (and, if no Event of Default
exists, upon notice to Tenant), the amount of any Net Award. Provided that no
Event of Default has occurred and is continuing, Tenant shall be entitled to
participate with Landlord and Lender in any Condemnation proceeding or
negotiations under threat thereof and to contest the Condemnation or the amount
of the Net Award therefor. No agreement with any condemnor in settlement or
under threat of any Condemnation shall be made by Tenant without the written
consent of Landlord and Lender. Subject to the provisions of this Paragraph
17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to
which Tenant is or may be entitled by reason of any Condemnation, whether the
same shall be paid or payable for Tenant's leasehold interest hereunder or
otherwise; but nothing in this Lease shall impair Tenant's right to any award or
payment on account of Tenant's trade fixtures, equipment or other tangible
property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.
(c) If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations. Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraphs 12(a) and 13(b), shall commence and diligently
continue to restore the Leased Premises as nearly as possible to their value,
condition and character immediately prior to such event (assuming the Leased
Premises to have been in the condition required by this Lease). So long as no
Event of Default exists, any Net Award up to and including $250,000 shall be
paid by Landlord to Tenant and Tenant shall restore the Leased Premises in
accordance with the requirements of Paragraphs 12(a) and 13(b) of this Lease.
Any Net Award in excess of $250,000 shall (unless such Casualty resulting in the
Net Award is a Termination Event) be made available by Landlord (or Lender, if
required by the terms of any Mortgage) to Tenant for the restoration of any of
the Leased Premises pursuant to and in accordance with the provisions of
Paragraph 19 hereof. If any Casualty or Condemnation which is not a Partial
Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms
and conditions of Paragraph 18.
18. Termination Events.
-------------------
(a) If (i) the entire Leased Premises shall be taken by a Taking or
(ii) any substantial portion of the Leased Premises shall be taken by a Taking
or all or any substantial portion of the Leased Premises shall be damaged or
destroyed by a Casualty and, in such case, Tenant certifies and covenants to
Landlord that it will forever abandon operations at the Leased Premises (each of
the events described in the above clauses (i) and (ii) shall hereinafter be
referred to as a "Termination Event"), then (x) in the case of (i) above, Tenant
-----------------
shall be obligated, within thirty (30) days after Tenant receives a Condemnation
Notice and (y) in the case of (ii) above, Tenant shall have the option, within
thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days
after the Casualty, as the case may be, to give to
20
Landlord written notice of the Tenant's option to terminate this Lease (a
"Termination Notice") in the fonn described in Paragraph 18(b).
------------------
(b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date which
occurs at least sixty (60) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay to
----------------
Landlord the Termination Amount and (iii) if the Termination Event is an event
described in Paragraph 18(a)(ii), the certification and covenants described
therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine the Fair Market Value.
(c) If Landlord shall reject such offer to terminate this Lease
pursuant to Paragraph 18(b) above by written notice to Tenant (a "Rejection"),
---------
which Rejection shall contain the written consent of Lender, not later than
thirty (30) days following the Fair Market Value Date, then this Lease shall
terminate on the Termination Date; provided that, if Tenant has not satisfied
all Monetary Obligations and all other obligations and liabilities under this
Lease which have arisen on or prior to the Termination Date (collectively,
"Remaining Obligations") on the Termination Date, then Landlord may, at its
---------------------
option, extend the date on which this Lease may terminate to a date which is no
later than the first Basic Rent Payment Date after the Termination Date on which
Tenant has satisfied all Remaining Obligations. Upon such termination (i) all
obligations of Tenant hereunder shall terminate except for any Surviving
Obligations, (ii) Tenant shall immediately vacate and shall have no further
right, title or interest in or to any of the Leased Premises and (iii) the Net
Award shall be retained by Landlord. Notwithstanding anything to the contrary
hereinabove contained, if Tenant shall have received a Rejection and, on the
date when this Lease would otherwise terminate as provided above, Landlord shall
not have received the full amount of the Net Award payable by reason of the
applicable Termination Event, then the date on which this Lease is to terminate
automatically shall be extended to the first Basic Rent Payment Date after the
receipt by Landlord of the full amount of the Net Award provided that, if Tenant
has not satisfied all Remaining Obligations on such date, then Landlord may, at
its option, extend the date on which this Lease may terminate to a date which is
no later than the first Basic Rent Payment Date after such date on which Tenant
has satisfied all such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not later than
the thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is accepted by
Landlord then, on the Termination Date, Tenant shall pay to Landlord the
Termination Amount and all Remaining Obligations and, if requested by Tenant,
Landlord shall (i) convey to Tenant the Leased Premises or the remaining portion
thereof, if any, and (ii) pay to or assign to Tenant Landlord's entire interest
in and to the Net Award, all in accordance with Paragraph 20.
19. Restoration.
-----------
(a) Landlord (or Lender if required by any Mortgage) shall hold Net
Award in excess of $250,000 in a fund (the "Restoration Fund") and disburse
----------------
amounts from the Restoration Fund only in accordance with the following
conditions:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the restoration shall have
been approved by Landlord, such approval not to be unreasonably withheld or
delayed, (B) Landlord and Lender shall be provided with mechanics' lien
insurance (if available) and acceptable performance and payment bonds which
insure satisfactory completion of and payment for the restoration, are in an
21
amount and form and have a surety acceptable to Landlord, and name Landlord and
Lender as additional dual obligees;
(ii) at the time of any disbursement, no Event of Default shall
exist and no mechanics' or materialmen's liens shall have been filed against any
of the Leased Premises and remain undischarged or unbonded unless the title
company insuring Landlord's title is willing to insure over such lien;
(iii) disbursements shall be made from time to time in an amount
not exceeding the cost of the work completed since the last disbursement, upon
receipt of (A) satisfactory evidence, including architects' certificates, of the
stage of completion, the estimated total cost of completion and performance of
the work to date in a good and workmanlike manner in accordance with the
contracts, plans and specifications, (B) waivers of liens, (C) contractors' and
subcontractors' sworn statements as to completed work and the cost thereof for
which payment is requested, (D) a satisfactory bringdown of title insurance and
(E) other evidence of cost and payment so that Landlord can verify that the
amounts disbursed from time to time are represented by work that is completed,
in place and free and clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by an authorized officer of Tenant, describing the
work for which payment is requested, stating the cost incurred in connection
therewith, stating that Tenant has not previously received payment for such work
and, upon completion of the work, also stating that the work has been fully
completed and complies with the applicable requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the Restoration
Fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other funds and shall
bear interest at a rate agreed to by Landlord and Tenant; and
(vii) such other reasonable conditions as Landlord or Lender
may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as determined by Landlord, exceeds the amount of the Net
Award available for such restoration, the amount of such excess shall, upon
demand by Landlord, be paid by Tenant to Landlord to be added to the Restoration
Fund. Any sum so added by Tenant which remains in the Restoration Fund upon
completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after completion of
the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum
shall be retained by Landlord or, if required by a Note or Mortgage, paid by
Landlord to a Lender.
20. Procedures Upon Purchase.
------------------------
(a) If the Leased Premises is purchased by Tenant pursuant to any
provision of this Lease, Landlord need not convey any better title thereto than
that which was conveyed to Landlord, and Tenant shall accept such title,
subject, however, to the Permitted
22
Encumbrances and to all other liens, exceptions and restrictions on, against or
relating to any of the Leased Premises and to all applicable Laws, but free of
the lien of and security interest created by any Mortgage or Assignment and
liens, exceptions and restrictions on, against or relating to the Leased
Premises which have been created by or resulted solely from acts of Landlord
after the date of this Lease, unless the same are Permitted Encumbrances or
customary utility easements benefiting the Leased Premises or were created with
the concurrence of Tenant or as a result of a default by Tenant under this
Lease.
(b) Upon the date fixed for any such purchase of the Leased Premises
pursuant to any provision of this Lease (any such date the "Purchase Date"),
-------------
Tenant shall pay to Landlord, or to any Person to whom Landlord directs payment,
the Relevant Amount therefor specified herein, in Federal Funds, less any credit
of the Net Award received and retained by Landlord or a Lender allowed against
the Relevant Amount, and Landlord shall deliver to Tenant (i) a special warranty
deed which describes the premises being conveyed and conveys the title thereto
as provided in Paragraph 20(a), (ii) such other instruments as shall be
necessary to transfer to Tenant or its designee any other property (or rights to
any Net Award not yet received by Landlord or a Lender) then required to be sold
by Landlord to Tenant pursuant to this Lease and (iii) any Net Award received by
Landlord, not credited to Tenant against the Relevant Amount and required to be
delivered by Landlord to Tenant pursuant to this Lease; provided, that if any
Monetary Obligations remain outstanding on such date, then Landlord may deduct
from the Net Award the amount of such Monetary Obligations; and further
provided, that if any event has occurred which, in Landlord's reasonable
judgment, is likely to subject any Indemnitee to any liability which Tenant is
required to indemnify against pursuant to Paragraph 15, then an amount shall be
deducted from the Net Award which, in Landlord's reasonable judgment, is
sufficient to satisfy such liability, which amount shall be deposited in an
interest-bearing escrow account for the benefit of Tenant with a financial
institution reasonably satisfactory to Landlord and Tenant pending resolution of
such matter. If on the Purchase Date any Monetary Obligations remain outstanding
and no Net Award is payable to Tenant by Landlord or the amount of such Net
Award is less than the amount of the Monetary Obligations, then Tenant shall pay
to Landlord on the Purchase Date the amount of such Monetary Obligations. Upon
the completion of such purchase, this Lease and all obligations and liabilities
of Tenant hereunder shall terminate, except any Surviving Obligations.
(c) If the completion of such purchase shall be delayed after (i)
the Termination Date, in the event of a purchase pursuant to Paragraph 18 or,
(ii) the date scheduled for such purchase, in the event of a purchase under any
other provision of this Lease then (x) Rent shall continue to be due and payable
until completion of such purchase if such purchase is delayed for more than six
(6) months after the date scheduled for such purchase and (y) at Landlord's sole
option, Fair Market Value shall be redetermined and the Relevant Amount payable
by Tenant pursuant to the applicable provision of this Lease shall be adjusted
to reflect such redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.
21. Assignment and Subletting; Prohibition against Leasehold Financing.
-------------------------------------------------------------------
(a) (i) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, with no consent of Landlord or Lender
being required or necessary ("Preapproved Assignment") to assign this Lease by
----------------------
operation of law or otherwise to any Person ("Preapproved Assignee") that
--------------------
immediately following such assignment will have a publicly traded unsecured
senior debt rating of "Baal" or better from Moody's Investors
23
Services, Inc. or a rating of "BBB+" or better from Standard & Poor's
Corporation, and in the event all of such rating agencies cease to furnish such
ratings, then a comparable rating by any rating agency reasonably acceptable to
Landlord and Lender.
(ii) If Tenant desires to assign this Lease, whether by
operation of law or otherwise, to a Person ("Non-Preapproved Assignee") who
------------------------
would not be a Preapproved Assignee ("Non-Preapproved Assignment") then Tenant
--------------------------
shall, not less than ninety (90) days prior to the date on which it desires to
make a Non-Preapproved Assignment submit to Landlord and Lender information
regarding the following with respect to the Non-Preapproved Assignee
(collectively, the "Review Criteria"): (A) credit, (B) capital structure, (C)
---------------
management, (D) operating history, (E) proposed use of the Leased Premises and
(F) risk factors associated with the proposed use of the Leased Premises by the
Non-Preapproved Assignee, taking into account factors such as environmental
concerns, product liability and the like. Landlord and Lender shall review such
information and shall approve or disapprove the Non-Preapproved Assignee no
later than the thirtieth (30th) day following receipt of all such information,
and Landlord and Lender shall be deemed to have acted reasonably in granting or
withholding consent if such grant or disapproval is based on their review of the
Review Criteria applying prudent business judgment.
(b) (i) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, to enter into one or more subleases that
demise, in the aggregate, up to but not in excess of ten percent (10%) of the
gross space in the Improvements with no consent or approval of Landlord being
required or necessary ("Preapproved Sublet"). Other than pursuant to
------------------
Preapproved Sublets, at no time during the Term shall subleases for more than
ten percent (10%) of the gross space in the Leased without the prior written
consent of Landlord which consent shall be granted or withheld based on a review
of the Review Criteria as they relate to the proposes sublessee and the terms of
the proposed sublease. Landlord and Lender shall be deemed to have acted
reasonably in granting or withholding consent if such grant or disapproval is
based on their review of the Review Criteria using prudent business judgment.
(c) If Tenant assigns all its rights and interest under this Lease,
the assignee under such assignment shall expressly assume all the obligations of
Tenant hereunder, actual or contingent, including obligations of Tenant which
may have arisen on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment. Each sublease
of any of the Leased Premises shall be subject and subordinate to the provisions
of this Lease. No assignment or sublease shall affect or reduce any of the
obligations of Tenant hereunder, and all such obligations shall continue in full
force and effect as obligations of a principal and not as obligations of a
guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.
(d) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease consented to by Landlord, deliver a
duplicate original copy thereof to Landlord which, in the event of an
assignment, shall be in recordable form.
(e) As security for performance of its obligations under this Lease,
Tenant hereby grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all subleases now in existence or hereafter entered
into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises,
provided, however, that Landlord shall have the absolute right to revoke said
license and to collect such rents and sums of money and to retain the same with
all such amounts being applied against any Monetary Obligation otherwise payable
by Tenant. Tenant shall not consent to, cause or allow any modification or
alteration of any of the terms, conditions or covenants of any of the
24
subleases or the termination thereof, without the prior written approval of
Landlord, which consent shall not be unreasonably withheld, nor shall Tenant
accept any rents more than thirty (30) days in advance of the accrual thereof
nor do nor permit anything to be done, the doing of which, nor omit or refrain
from doing anything, the omission of which, will or could be a breach of or
default in the terms of any of the subleases.
(f) Tenant shall not have the power to mortgage, pledge or otherwise
encumber its interest under this Lease or any sublease of the Leased Premises,
and any such mortgage, pledge or encumbrance made in violation of this Paragraph
21 shall be void and of no force and effect. Notwithstanding the foregoing, in
the event Tenant pledges or encumbers any of its personal property and/or
equipment to any lender, Landlord, at the request of such lender, shall enter
into a lien waiver agreement with such lender in form reasonably satisfactory to
Landlord.
(g) Landlord may sell or transfer the Leased Premises at any time
without Tenant's consent to any third party (each a "Third Party Purchaser").
----------------------
In the event of any such transfer, Tenant shall attorn to any Third Party
Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify
Tenant in writing of such transfer and such Third Party Purchaser shall assume
all of the obligations of Landlord under this Lease. At the request of Landlord,
Tenant will execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.
22. Events of Default.
-----------------
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:
(i) a failure by Tenant to make any payment of any Monetary
Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant herein or in
any certificate, demand or request made pursuant hereto proves to be incorrect,
now or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or at maturity
by Tenant in any payment of principal or interest on any obligations for
borrowed money having an original principal balance of $500,000 or more in the
aggregate, or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment, or (y) if an effect of such default is to cause such
obligation to become due prior to its stated maturity;
(v) a default by Tenant beyond any applicable cure period in
the payment of rent under, or in the performance of any other material provision
of, any other lease or leases that have, in the aggregate, rental obligations
over the terms thereof of $500,000 or more;
25
(vi) a final, non-appealable judgment or judgments for the
payment of money in excess of $500,000 in the aggregate shall be rendered
against Tenant and the same shall remain undischarged for a period of sixty (60)
consecutive days unless Tenant's insurance carrier advises Landlord in writing
that it is obligated to pay such judgment or judgments;
(vii) The breach of any Covenant shall occur;
(viii) Tenant shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a receiver or trustee for
itself or for the Leased Premises, (C) file a petition seeking relief under the
bankruptcy or other similar laws of the United States, any state or any
jurisdiction, (D) make a general assignment for the benefit of creditors, or (E)
be unable to pay its debts as they mature;
(ix) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed ninety (90) days after it is entered;
(x) the Leased Premises shall have been vacated or abandoned;
(xi) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its total or substantial liquidation or towards dissolution;
(xii) the estate or interest of Tenant in any of the Leased
Premises shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be vacated
or discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant to perform or observe, or a violation
or breach of, or a misrepresentation by Tenant under any provision of any
Assignment or any other document between Tenant and Lender, if such failure,
violation, breach or misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan;
(xiv) a failure by Tenant to maintain in effect any other
license or permit necessary for the use, occupancy or operation of the Leased
Premises.
(b) No notice or cure period shall be required in any one or more of
the following events: (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth below), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii) or (xiv) of Paragraph 22(a); (B) the default
consists of a failure to pay Basic Rent, a failure to provide any insurance
required by Paragraph 16 or an assignment or sublease entered into in violation
of Paragraph 21; or (C) the default is such that any delay in the exercise of a
remedy by Landlord could reasonably be expected to cause irreparable harm to
Landlord. If the default consists of the failure to pay any Basic Rent under
clause (i) of Paragraph 22(a), the applicable cure period shall be three (3)
days from the date on which notice is given, but Landlord shall not be obligated
to give notice of, or allow any cure period for, any such default more than one
(1) time within any Lease Year. If the default consists of the failure to pay
any Monetary Obligation under clause (i) of Paragraph 22(a) other than Basic
Rent, the applicable cure period shall be three (3) days from the date on which
notice is given, but Landlord shall not be obligated to give notice of, or allow
any cure period for, any such default more than three (3) times within any Lease
Year. If the default consists of a default under clause (ii) of Paragraph 22(a),
other than the events specified in clauses (B) and (C) of the first sentence of
this Paragraph 22(b), the applicable cure period shall
26
be thirty (30) days from the date on which notice is given, or, if the default
cannot be cured within such thirty (30) day period, or such longer cure period
as provided to Landlord by Lender, and delay in the exercise of a remedy would
not (in Landlord's reasonable judgment) cause any material adverse harm to
Landlord or any of the Leased Premises, the cure period shall be extended for
the period required to cure the default (but such cure period, including any
extension, shall not in the aggregate exceed such period as is provided to
Landlord by Lender), provided that Tenant shall commence to cure the default
within the said thirty-day period, and shall actively, diligently and in good
faith proceed with and continue the curing of the default until it shall be
fully cured.
23. Remedies and Damages Upon Default.
---------------------------------
(a) If an Event of Default shall have occurred and is continuing,
Landlord shall have the right, at its sole option, then or at any time
thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's intention to
terminate this Lease on a date specified in such notice. Upon such date, this
Lease, the estate hereby granted and all rights of Tenant hereunder shall expire
and terminate. Upon such termination, Tenant shall immediately surrender and
deliver possession of the Leased Premises to Landlord in accordance with
Paragraph 26. If Tenant does not so surrender and deliver possession of the
Leased Premises, Landlord may re-enter and repossess the Leased Premises, upon
obtaining a judicial order to such effect or by summary proceedings, ejectment
or any other lawful means or procedure through order of a court of competent
jurisdiction. Upon or at any time after taking possession of the Leased
Premises, Landlord may, by peaceable means or legal judicial process, remove any
Persons or property therefrom. Landlord shall be under no liability for or by
reason of any such entry, repossession or removal. Notwithstanding such entry or
repossession, Landlord, may (A) exercise the remedy set forth in and collect the
damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth
in Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises pursuant to
clause (i) above, Landlord shall have the right to relet any of the Leased
Premises to such tenant or tenants, for such term or terms, for such rent, on
such conditions and for such uses as Landlord in its sole discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may, upon notice to Tenant, require Tenant to
make an irrevocable offer to terminate this Lease upon payment to Landlord of an
amount (the "Default Termination Amount") specified in the next sentence. The
--------------------------
"Default Termination Amount" shall be the greatest of (A) the Fair Market Value
of the Leased Premises, (B) the sum of the Acquisition Cost and Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Default Termination Amount or (C) an amount equal to the Present
Value of the entire Basic Rent from the date of such purchase to the date on
which the Term would expire, assuming that the Term has been extended for all
extension periods, if any, provided for in this Lease. Upon such notice to
Tenant, Tenant shall be deemed to have made such offer and shall, if requested
by Landlord, within ten (10) days following such request deposit with Landlord
as payment against the Default Termination Amount the amount described in (B)
above and Landlord and Tenant shall promptly commence to determine Fair Market
Value. Within thirty (30) days after the Fair Market Value Date, Landlord shall
accept or reject
27
such offer. If Landlord accepts such offer then, on the tenth (1Oth) business
day after such acceptance, Tenant shall pay to Landlord the Default Termination
Amount and, at the request of Tenant, Landlord will convey the Leased Premises
to Tenant or its designee in accordance with Paragraph 20. Any rejection by
Landlord of such offer shall have no effect on any other remedy Landlord may
have under this Lease.
(iv) Landlord may declare by notice to Tenant the entire Basic
Rent (in the amount of Basic Rent then in effect) for the remainder of the then
current Term to be immediately due and payable. Tenant shall immediately pay to
Landlord all such Basic Rent discounted to its Present Value, all accrued Rent
then due and unpaid, all other Monetary Obligations which are then due and
unpaid and all Monetary Obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has been prepaid
hereunder shall be due thereafter during the said Term, and (B) Tenant shall
have no option to extend or renew the Term.
(b) The following constitute damages to which Landlord shall be
entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):
(i) If Landlord exercises its remedy under Paragraph 23(a)(i)
but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such
remedy and is unsuccessful in reletting the Leased Premises) then, upon written
demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed
final damages for Tenant's default and in lieu of all current damages beyond the
date of such demand (it being agreed that it would be impracticable or extremely
difficult to fix the actual damages), an amount equal to the Present Value of
the excess, if any, of (A) all Basic Rent from the date of such demand to the
date on which the Term is scheduled to expire hereunder in the absence of any
earlier termination, re-entry or repossession over (B) the then fair market
rental value of the Leased Premises for the same period. Tenant shall also pay
to Landlord all of Landlord's Costs in connection with the repossession of the
Leased Premises and any attempted reletting thereof, including all brokerage
commissions, reasonable legal expenses, attorneys' fees, employees' expenses,
costs of Alterations and expenses and preparation for reletting, including the
installation of a sprinkler system for office use.
(ii) If Landlord exercises its remedy under Paragraph 23(a)(i)
or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until
the end of what would have been the Term in the absence of the termination of
the Lease, and whether or not any of the Leased Premises shall have been relet,
be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages all Monetary Obligations which would be payable under this Lease
by Tenant in the absence of such termination less the net proceeds, if any, of
any reletting pursuant to Paragraph 23(a)(ii), after deducting from such
proceeds all of Landlord's Costs (including the items listed in the last
sentence of Paragraph 23(b)(i) hereof) incurred in connection with such
repossessing and reletting; provided, that if Landlord has not relet the Leased
Premises, such Costs of Landlord shall be considered to be Monetary Obligations
payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and
Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by its own terms had there been no such Event of Default.
28
(c) Notwithstanding anything to the contrary herein contained, in
lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.
(d) Landlord shall not be required to mitigate any of its damages
hereunder unless required to by applicable Law. If any Law shall validly limit
the amount of any damages provided for herein to an amount which is less than
the amount agreed to herein, Landlord shall be entitled to the maximum amount
available under such Law.
(e) No termination of this Lease, repossession or reletting of the
Leased Premises, exercise of any remedy or collection of any damages pursuant to
this Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD HEREUNDER,
LANDLORD AND TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord shall
have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and all those
claiming under it, including creditors of all kinds, (i) any right and privilege
which it or any of them may have under any present or future Law to redeem any
of the Leased Premises or to have a continuance of this Lease after termination
of this Lease or of Tenant's right of occupancy or possession pursuant to any
court order or any provision hereof, and (ii) the benefits of any present or
future Law which exempts property from liability for debt or for distress for
rent.
(j) Except as otherwise provided herein, all remedies are cumulative
and concurrent and no remedy is exclusive of any other remedy. Each remedy may
be exercised at any time an Event of Default has occurred and is continuing and
may be exercised from time to time. No remedy shall be exhausted by any exercise
thereof.
24. Notices. All notices, demands, requests, consents, approvals, offers,
-------
statements and other instruments or communications required or permitted to be
given pursuant to the provisions of this Lease shall be in writing and shall be
given and received for all purposes either (a) upon actual receipt when
delivered in person or by Federal Express or other reliable 24-hour delivery
service or by registered or certified mail, return receipt requested, postage
prepaid, addressed to the other party at its address stated above or (b) when
delivery is refused. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chairman, Real Estate
Department and an additional copy to Landlord, Attention: Director, Asset
Management. A copy of any notice given by Landlord to Tenant shall
simultaneously be
29
given by Landlord to ▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq. For the purposes of this
Paragraph, any party may substitute another address stated above (or substituted
by a previous notice) for its address by giving fifteen (15) days' notice of
the new address to the other party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten (1O) days'
--------------------
prior written request by either Landlord or Tenant (the "Requesting Party")
----------------
to the other party (the "Responding Party"), the Responding Party shall
----------------
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by any court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchaser or mortgagee of any
of the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier termination of this
---------
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The cost
of removing and disposing of such property and repairing any damage to any of
the Leased Premises caused by such removal shall be paid by Tenant to Landlord
upon demand. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
------------------
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
-----------------
(a) Tenant shall keep adequate records and books of account with
respect to the finances and business of Tenant generally and with respect to the
Leased Premises, in accordance with generally accepted accounting principles
("GAAP") consistently applied, and
----
30
shall permit Landlord and Lender by their respective agents, accountants and
attorneys, upon reasonable notice to Tenant, to visit and inspect the Leased
Premises and examine (and make copies of) the records and books of account
relating to the Leased Premises and to discuss the finances and business with
the officers of Tenant, at such reasonable times as may be requested by
Landlord. Upon the request of Lender or Landlord (either telephonically or in
writing), Tenant shall provide the requesting party with copies of any
information to which such party would be entitled in the course of a personal
visit.
(b) Tenant shall make available to Landlord and to Lender within
ninety-one (91) days of the close of each fiscal year, annual audited financial
statements of Tenant prepared by a nationally recognized firm of independent
certified public accountants. Tenant shall also make available to Landlord
within forty-six (46) days after the end of each of the three remaining quarters
unaudited financial statements and all other quarterly reports of Tenant,
certified by Tenant's chief financial officer, and all filings, if any, of Form
1O-K, Form 1O-Q and other required filings with the Securities and Exchange
Commission pursuant to the provisions of the Securities Exchange Act of 1934, as
amended, or any other Law. All annual financial statements shall be accompanied
(i) by an opinion of said accountants stating that (A) there are no
qualifications as to the scope of the audit and (B) the audit was performed in
accordance with GAAP and (ii) by the affidavit of the president or a vice
president of Tenant, dated within five (5) days of the delivery of such
statement, stating that (C) the affiant knows of no Event of Default, or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (D) except as otherwise specified in such affidavit, that Tenant has
fulfilled all of its obligations under this Lease which are required to be
fulfilled on or prior to the date of such affidavit.
29. Determination of Value.
----------------------
(a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:
(i) Landlord and Tenant (or Third Party Purchaser with respect
to a determination under clause (D) below) shall endeavor to agree upon such
Fair Market Value within thirty (30) days after the date (the "Applicable
----------
Initial Date") on which (A) Tenant provides Landlord with notice of its
------------
intention to terminate this Lease and purchase the Leased Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c), (C) Landlord provides
Tenant with notice of Landlord's intention to require Tenant to make an offer to
terminate this Lease pursuant to Paragraph 23(a)(iii), or (D) Landlord elects to
convey to Tenant the Excess Land under Paragraph 36(a)(iii). Upon reaching such
agreement, the parties shall execute an agreement setting forth the amount of
such Fair Market Value.
(ii) If the parties shall not have signed such agreement within
thirty (30) days after the Applicable Initial Date, Landlord and Tenant shall
within fifty (50) days after the Applicable Initial Date each select an
appraiser and notify the other party in writing of the name, address and
qualifications of such appraiser. Such two appraisers shall endeavor to agree
upon Fair Market Value based on a written appraisal made by each of them (and
given to Landlord by Tenant) as of the Relevant Date. If such two appraisers
shall agree upon a Fair Market Value, the amount of such Fair Market Value as so
agreed shall be binding and conclusive upon Landlord and Tenant.
31
(iii) If such two appraisers shall be unable to agree upon a
Fair Market Value within twenty (20) days after the selection of both
appraisers, then such appraisers shall advise Landlord and Tenant of their
respective determination of Fair Market Value and shall select a third appraiser
to make the determination of Fair Market Value. The selection of the third
appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree upon the
designation of a third appraiser within ten (10) days after the expiration of
the twenty (20) day period referred to in clause (iii) above, or if such third
appraiser does not make a determination of Fair Market Value within twenty (20)
days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto, be
appointed by the President or Chairman of the American Arbitration Association
in New York, New York. The determination of Fair Market Value made by the third
appraiser appointed pursuant hereto shall be made within twenty (20) days after
such appointment.
(v) If a third appraiser is selected, Fair Market Value shall
be the average of the determination of Fair Market Value made by the third
appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Value is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to this
Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no
right, power or authority to alter or modify the provisions of this Lease, (C)
utilize the definition of Fair Market Value hereinabove set forth above, and (D)
be registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a) above
shall be borne entirely by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not determined
by the expiration or termination of the then current Term, then the date on
which the Term would otherwise expire or terminate shall be extended to the date
specified for termination in the particular provision of this Lease pursuant to
which the determination of Fair Market Value is being made.
(c) In determining Fair Market Value as defined in clause (b) of the
definition of Fair Market Value, the appraisers shall add (a) the present value
of the Rent for the remaining Term, provided, however, that in the event Fair
Market Value is being determined in accordance with Paragraph 23 the Term shall
be assumed to have been extended for all extension periods provided herein,
(with assumed increases in the CPI to be determined by the appraisers) using a
discount rate (which may be determined by an investment banker retained by each
appraiser) based on the creditworthiness of Tenant and (b) the present value of
the Leased Premises as of the end of such Term, provided, however, that in the
event Fair Market Value is being determined in accordance with Paragraph 23 the
Term shall be assumed to have been extended for all extension periods provided
herein. The appraisers shall further assume that no default then exists under
the Lease, that Tenant has complied (and will comply) with all provisions of the
Lease, and that Tenant has not violated (and will not violate) any of the
Covenants.
30. Non-Recourse as to Landlord. Anything contained herein to the contrary
---------------------------
notwithstanding, any claim based on or in respect of any liability of Landlord
under this Lease shall be enforced only against the Leased Premises and not
against any other assets, properties or funds of (i) Landlord, (ii) any
director, officer, member, general partner, shareholder, limited partner,
beneficiary, employee or agent of Landlord or any general partner of Landlord or
any of its members or general partners (or any legal representative, heir,
estate, successor or assign of
32
any thereof), (iii) any predecessor or successor partnership or corporation (or
other entity) of Landlord or any of its general partners, shareholders,
officers, directors, members, employees or agents, either directly or through
Landlord or its general partners, shareholders, officers, directors, employees
or agents or any predecessor or successor partnership or corporation (or other
entity), or (iv) any Person affiliated with any of the foregoing, or any
director, officer, employee or agent of any thereof.
31. Financing.
---------
(a) Tenant agrees to pay all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the purchase, leasing and
initial financing of the Leased Premises including, without limitation, the cost
of appraisals, environmental reports, title insurance, transfer and recording
fees and taxes, surveys, legal fees and expenses, Lender's commitment fees and
any "points" charged by Lender which "points" shall not exceed the
amount of $125,000. In no event shall Tenant be obligated to pay costs and
expenses incurred by Landlord in the refinancing of any Loan.
(b) Tenant agrees to pay, within ten (10) business days of written
demand therefor, any cost, charge or expense (other than the principal of the
Note and interest thereon at the contract rate of interest specified therein)
imposed upon Landlord by Lender pursuant to the Note, the Mortgage or the
Assignment which is not caused solely by the gross negligence or willful
misconduct of Landlord and which is not otherwise reimbursed by Tenant to
Landlord pursuant to any other provision of this Lease.
(c) If Landlord desires to obtain or refinance any Loan, Tenant
shall negotiate in good faith with Landlord concerning any request made by any
Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not in any
material respect adversely affect any right, benefit or privilege of Tenant
under this Lease or in any material respect increase Tenant's obligations under
this Lease. Such subordination, nondisturbance and attornment agreement may
require Tenant to confirm that (a) Lender and its assigns will not be liable for
any misrepresentation, act or omission of Landlord and (b) Lender and its
assigns will not be subject to any counterclaim, demand or offset which Tenant
may have against Landlord.
32. Subordination, Non-Disturbance and Attornment. Provided that a
----------------------------------------------
suitable non-disturbance agreement is entered into by any Lender, in a form
reasonably acceptable to Tenant, this Lease and Tenant's interest hereunder
shall be subordinate to any Mortgage or other security instrument hereafter
placed upon the Leased Premises by Landlord, and to any and all advances made or
to be made thereunder, to the interest thereon, and all renewals, replacements
and extensions thereof, provided that any such Mortgage or other security
instrument (or a separate instrument in recordable form duly executed by the
holder of any such Mortgage or other security instrument and delivered to
Tenant) shall provide for the recognition of this Lease and all Tenant's rights
hereunder unless and until an Event of Default exists or Landlord shall have the
right to terminate this Lease pursuant to any applicable provision hereof.
33. Financial Covenants. Tenants hereby covenants and agrees to comply
-------------------
with all the covenants and agreements described in Exhibit "E" hereto.
-----------
33
34. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that
------------------------
each shall treat this transaction as a true lease for state law purposes and
shall report this transaction as a Lease for Federal income tax purposes. For
Federal income tax purposes each shall report this Lease as a true lease with
Landlord as the owner of the Leased Premises and Equipment and Tenant as the
lessee of such Leased Premises and Equipment including: (1) treating Landlord as
the owner of the property eligible to claim depreciation deductions under
Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
35. Restrictive Covenant Issues. One of the Permitted Encumbrances
-----------------------------
encumbering the Leased Premises is the Amended and Restated Declaration of
Covenants, Conditions, Restrictions, Easements, Charges and Liens on and for
Lake Forest Addition filed by Forest/Hillcrest Partners dated effective April
16, 1998 (such instrument, as amended from time to time, being the
"Declaration"), which is recorded at Volume 98148, Page 3823 of the Real Estate
Records of Dallas County, Texas. The terms, "Association," "Board," "Class B
Member," "Member," "Office Tract," "Owner," and "OTARC" shall have the same
meanings as are set forth in the Declaration. The parties agree that, so long as
this Lease remains in force and effect:
(a) All monetary obligations of Landlord as the Class B Member and
Owner of the Office Tract pursuant to the Declaration shall constitute Monetary
Obligations hereunder and shall be borne by Tenant;
(b) Landlord shall upon the execution of this Lease and thereafter
as and when requested by Tenant to do so, give irrevocable instructions to the
Association and the Board that all written notices to which the Class B Member
and Owner of the Office Tract are entitled to receive pursuant to the
Declaration shall be given jointly to Tenant and Landlord. In addition, Landlord
will promptly furnish Tenant with copies of all notices it receives pursuant to
the Declaration;
(c) shall have the right: As long as no Event of Default hereunder is
continuing, Tenant
(i) to serve as the Class B Member on the Board, as the Class
B Member on the committee known as OTARC, and on all such other committees as
the Class B Member and/or Owner of the Office Tract is entitled to have
representation pursuant to the Declaration,
(ii) to vote as the Class B Member in person or by proxy at
meetings of Members, and
(iii) to exercise all rights of every nature (including without
limitation voting rights and the rights of approval, consent, review and
inspection) which are accorded to the Class B Member and to Owner of the Office
Tract pursuant to the Declaration.
In furtherance of the foregoing, Landlord hereby grants to Tenant an irrevocable
proxy coupled with an interest to exercise, as long as no Event of Default
hereunder is continuing, all of the rights, powers and remedies of the Class B
Member and Owner of the Office Tract under the Declaration, and the proxy herein
granted shall continue during the Term of this Lease and all renewals; provided,
however, that in no event shall the grant of such proxy and the exercise thereof
by Tenant be deemed, in any way, to modify any of the terms of this Lease.
Landlord shall promptly execute and deliver to Tenant, the Association and/or
the Board such proxies and other designations as Tenant, the Association or the
Board may from time to time request in order to effectuate the foregoing.
34
36. Excess Land.
------------
In the event Tenant desires to construct additional improvements on
the Excess Land, and no Event of Default then exists, Landlord, at its sole
option, (i) shall construct or cause to be constructed such improvements and
lease such improvements to Tenant upon terms and conditions reasonably
satisfactory to Landlord and subject to this Lease or (ii) shall cause the
Excess Land to be released from the terms of this Lease and conveyed to an
affiliate of Landlord who shall construct or cause to be constructed such
improvements and lease such improvements to Tenant upon terms and conditions
reasonably satisfactory to Landlord, or (iii) shall convey the Excess Land to
Tenant for a price ("Excess Land Price") equal to the greater of $2,052,356 plus
-----------------
the applicable Prepayment Premium or the sum of the Fair Market Value of the
Excess Land (as Fair Market Value is defined in clause (a) of the definition
thereof) plus the applicable Prepayment Premium provided that the following
conditions are satisfied: (A) the Leased Premises shall have been subdivided in
compliance with all applicable subdivision laws, Legal Requirements and Easement
Agreements so that the Excess Land and the remainder of the Leased Premises (the
"Retained Premises") are separate tracts, (B) after such sale both the Excess
-------------------
Land and the Retained Premises shall comply with all applicable Laws, Legal
Requirements and Easement Agreements, (C) the release of the Excess Land does
not materially impact the functional use, legal use or viability of the Retained
Premises, (D) Tenant shall have complied with all requirements of Lender set
forth in the Mortgage with respect to the release of the Excess Land, (E) all
parking located on the Excess Land as of the Commencement Date has been
relocated to the Retained Premises in a manner satisfactory to Landlord and (F)
all Costs of Landlord, Lender and Tenant in connection with the conveyance of
the Excess Land and in complying with the above conditions, including reasonable
attorneys' fees, shall be borne solely by Tenant. Landlord, as record title
holder to the Excess Land, shall cooperate with Tenant in obtaining a lawful
subdivision of the Leased Premises with separate parcels consisting of the
Excess Land and the Retained Premises, at no cost to Landlord. If Landlord
conveys the Excess Land under clauses (ii) or (iii) above, then, except for
Surviving Obligations this Lease shall terminate with respect to the Excess
Land, but shall remain in full force and effect with respect to the Retained
Premises, provided, however, that in no event will the release of the Excess
Land from this Lease amend, reduce or modify any of the obligations and
liabilities of Tenant hereunder, including the obligations to pay Basic Rent in
the amount set forth in Exhibit "D" hereto.
-----------
37. Miscellaneous.
--------------
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
(b) As used in this Lease, the singular shall include the plural and
any gender shall include all genders as the context requires and the following
words and phrases shall have the following meanings: (i) "including" shall mean
"including without limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge,
encumbrance, title retention agreement, pledge, security interest, mortgage
and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest therein"; (viii) "any of the Equipment" shall
mean "the Equipment or any part thereof or interest therein"; and (ix) "any of
the Adjoining Property" shall mean "the Adjoining Property or any part thereof
or interest therein".
35
(c) Any act which Landlord is permitted to perform under this Lease
may be performed at any time and from time to time by Landlord or any person or
entity designated by Landlord. Each appointment of Landlord as attomey-in-fact
for Tenant hereunder shall be effective as long as an Event of Default has
occurred and is continuing and is irrevocable and coupled with an interest.
Except as otherwise specifically provided herein, Landlord shall not
unreasonably withhold or delay its consent whenever such consent is required
under this Lease, provided, however, with respect to ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇
shall be deemed to act reasonably if such consent is governed by the terms set
forth in Paragraph 21. Time is of the essence with respect to the performance by
each of Tenant and Landlord of its respective obligations under this Lease.
(d) Landlord shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by Tenant
on or about the effective date hereof at Landlord's request constitute the
entire agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without regard to the
rule that ambiguities in a document are to be construed against the drafter.
(f) This Lease may be modified, amended, discharged or waived only
by an agreement in writing signed by the party against whom enforcement of any
such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrancers
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and enforced in
accordance with the Laws of the State.
36
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
DELAWARE COMP LLC,
a Delaware limited liability company
By: COMP (TX) QRS 11-42, INC.,
Managing Member '
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
TENANT:
COMPUCOM SYSTEMS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, Finance-Treasurer
[SIGNATURE PAGE TO LEASE AGREEMENT]
EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2, 3
----------
and 4 below, Basic Rent payable in respect of the Term shall be $3,914,000 per
annum, payable quarterly in advance on each Basic Rent Payment Date, in equal
installments of $978,500 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, Dallas-Fort Worth, Texas, All Items, (1982-84=100) ("CPI") or the
---
successor index that most closely approximates the CPI. If the CPI shall be
discontinued with no successor or comparable successor index, Landlord and
Tenant shall attempt to agree upon a substitute index or formula, but if they
are unable to so agree, then the matter shall be determined by arbitration in
accordance with the rules of the American Arbitration Association then
prevailing in New York City. Any decision or award resulting from such
arbitration shall be final and binding upon Landlord and Tenant and judgement
thereon may be entered in any court of competent jurisdiction. In no event will
the Basic Rent as adjusted by the CPI adjustment be less than the Basic Rent in
effect for the three (3) year period immediately preceding such adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted
----------------------------------
to reflect changes in the CPI until the third (3rd) anniversary of the Basic
Rent Payment Date on which the first full quarterly installment of Basic Rent
shall be due and payable (the "First Full Basic Rent Payment Date"). As of the
-----------------------------------
third (3rd) anniversary of the First Full Basic Rent Payment Date and thereafter
on the sixth (6th), ninth (9th), twelfth (12th), fifteenth (15th), eighteenth
(18th) and, if the initial Term is extended, on the twenty-first (21st), twenty-
forth (24th), and twenty-seventh (27th) anniversaries of the First Full Basic
Rent Payment Date, Basic Rent shall be adjusted to reflect increases in the CPI
during the most recent three (3) year period immediately preceding each of the
foregoing dates (each such date being hereinafter referred to as the " Basic
-----
Rent Adjustment Date").
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4. Method of Adjustment for CPI Adjustment
---------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be the difference between (i) the average CPI for the three (3) most
recent calendar months (the "Prior Months") ending prior to such Basic Rent
------------
Adjustment Date for which the CPI has been published on or before the forty-
fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. An
amount equal to the lesser of (x) the product of such multiplication or 13.30%
of the Basic Rent in effect immediately prior to such Basic Rent Adjustment Date
shall be added to the Basic Rent in effect immediately prior to such Basic Rent
Adjustment Date. As used herein, "Beginning CPI" shall mean the average CPI for
-------------
the three (3) calendar months corresponding to the Prior Months, but occurring
three (3) years earlier. If the average CPI determined in clause (i) is the same
or less than the Beginning CPI, the Basic Rent will remain the same for the
ensuing three (3) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic Rent
payable under this Lease until the next succeeding Basic Rent Adjustment Date
shall be the Basic Rent in effect after the adjustment provided for as of such
Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to Tenant
on or before the tenth (10th) day preceding each Basic Rent Adjustment Date, but
any failure to
1
do so by Landlord shall not be or be deemed to be a waiver by Landlord of
Landlord's rights to collect such sums. Tenant shall pay to Landlord, with ten
(10) days after a notice of the new annual Basic Rent is delivered to Tenant,
all amounts due from Tenant, but unpaid, because the stated amount as set forth
above was not delivered to Tenant at least (10) days preceding the basic Rent
Adjustment Date in question.
2