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EXHIBIT 10.5
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of August
11, 1998, by ▇▇▇▇▇▇ Development Corp., a Minnesota corporation ("Landlord" and
CWC Incorporated, a Minnesota corporation ("Tenant").
RECITALS:
A. Landlord is the owner of the Project.
B. Tenant desires to lease from Landlord and Landlord desires to lease to
Tenant the Premises subject to and in accordance, with the terms and conditions
set forth herein.
AGREEMENTS:
NOW, THEREFORE, for good, fair and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant hereby covenant
and agree as follows as of the Commencement Date:
ARTICLE 1.
DEFINITIONS
Defined terms utilized in this Lease are set forth on SCHEDULE "1" attached
hereto. As used herein, such terms shall have such meanings to be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE 2.
DEMISE; COMMON AREAS; TERM; LEASE YEAR
2.1 DEMISE. Subject to the terms and conditions of this Lease, Landlord
leases to Tenant and Tenant hereby leases from Landlord, the Premises. Landlord
reserves unto itself the right to grant easements across, under or through the
Land, which do not materially interfere with Tenant's access to or use of the
Premises. Landlord also reserves unto itself the use of the exterior walls and
the roof and, subject to the provisions of Section 13.19 hereof, the right to
install, maintain, use, repair and replace pipes, ducts, conduits, wires and
appurtenant fixtures existing in or leading through or under the Premises.
2.2 USE OF COMMON AREAS. Use by Tenant of the Premises shall include the
nonexclusive use, in common with others, of the Common Areas, and such use shall
be subject to the provisions of this Lease.
2.3 CONTROL OF COMMON AREAS. The Common Areas shall be subject to the
exclusive control and management of Landlord. Landlord shall have the right to
establish,
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modify and enforce the Rules. Landlord shall have the right to alter the Common
Areas and to construct additions to or additional buildings in the Project
resulting in a diminution of Common Areas. Landlord shall have the right to
construct and operate lighting and signs on all the Common Areas and
improvements, to police the same, to change the area and location of parking
areas and other common facilities, to restrict parking by Tenant, its agents and
employees, to close temporarily or permanently the parking areas or facilities,
and to perform other acts in and to the areas and improvements as Landlord may
deem advisable in its sole discretion, provided such actions do not materially
interfere with Tenant's access to or use of the Premises.
2.4 LEASE TERM. The initial term of this Lease shall be for the Lease Term,
unless terminated sooner pursuant to any of the provisions hereof. The Lease
Term and Tenant's obligation to pay Rent shall commence on the Commencement
Date.
2.5 LEASE YEAR. The first Lease Year shall begin on the Commencement Date
and shall end on December 31, 1998. The second Lease Year shall begin on January
1, 1999, and each Lease Year thereafter during the Lease Term shall consist of a
full calendar year, provided that if the Lease Term expires on a date other than
December 31, the period of time from January 1 of that calendar year until such
expiration date shall be construed as a Lease Year.
ARTICLE 3.
RENT AND OTHER CHARGES
3.1 BASE RENT. Tenant shall pay in advance as base rent (the "Base Rent")
the monthly amounts set forth in EXHIBIT "B" attached hereto commencing on the
Commencement Date and continuing thereafter on the first day of each subsequent
calendar month. Base Rent for any period during the Lease Term which is less
than one (1) month shall be a pro-rata portion of the applicable monthly
installment.
3.2 PAYMENT OF IMPOSITIONS.
(a) Tenant shall deposit with Landlord monthly (as a deposit and
not a payment) commencing on the Commencement Date and continuing
thereafter on the first day of each subsequent calendar month an
amount equal to Tenant's Share of one-twelfth of the annual
Impositions estimated by Landlord and communicated by Landlord to
Tenant in writing so that Landlord shall have sufficient funds to pay
the Impositions on the first day of the month preceding the month in
which they become due. To the extent within Tenant's control, Tenant
further agrees to cause all bills, statements or other documents
relating to Impositions to be sent or mailed directly to Landlord.
Provided Tenant has deposited sufficient funds with Landlord pursuant
to this Section 3.2(a), Landlord shall pay, when due, such Impositions
as may be due out of the funds so deposited with Landlord. If at any
time and for any reason the funds deposited with Landlord are or will
be insufficient to pay such Impositions as may then or subsequently be
due, Landlord
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shall notify Tenant and Tenant shall deposit an amount equal to such
deficiency with Landlord within seven (7) days after such notice.
Notwithstanding the foregoing, nothing contained herein shall cause
Landlord to be obligated to pay any amounts in excess of the amount of
funds deposited with Landlord pursuant to this Section 3.2(a). If
amounts collected by Landlord under this Section 3.2(a) exceed amounts
necessary in order to pay Impositions, Landlord shall retain such
excess payments and Tenant shall receive a credit for such excess
amount toward the next payments due for such Impositions, unless
within 30 days following any Lease Year Tenant notifies Landlord to
reimburse Tenant for the amount of such excess, in which event
Landlord, following receipt of such notice, shall promptly reimburse
such excess to Tenant. Should Tenant fail to deposit with Landlord
sums sufficient to pay such Impositions in full at least ten (10) days
before delinquency thereof Landlord may, at Landlord's election, but
without any obligation so to do, advance any amounts required to make
up the deficiency, which advances, if any, shall be treated as
Additional Rent. Upon expiration of the Lease Term or earlier
termination of this Lease in accordance with Section 13.28 hereof, the
sums held by Landlord under this Section 3.2(a) shall be allocated
between Landlord and Tenant as of such expiration date based upon the
periods with respect to which such sums are due and payable, and
Landlord shall be entitled to retain such portion as represents
amounts due and payable up through such expiration date, and the
balance shall be returned to Tenant. In the event this Lease is
terminated due to an Event of Default, all sums held by Landlord under
this Section 3.2(a) shall be retained by Landlord.
(b) Subject to the following conditions, Tenant shall have the
right, at Tenant's sole cost and expense, to contest or object in good
faith to any Imposition, but such right shall not be deemed or
construed in any way as relieving, modifying or extending Tenant's
covenant to pay any such Imposition at the time and in the manner
provided in this Section 3.2: (i) Tenant has given prior written
notice to Landlord of Tenant's intent so to contest or object to an
Imposition; (ii) Tenant shall demonstrate to Landlord's satisfaction
that the legal proceedings shall operate conclusively to prevent the
sale of the Project, or any part thereof; (iii) if Tenant has not
deposited with Landlord all amounts required to be deposited under
Section 3.2(a) hereof, Tenant shall furnish evidence reasonably
satisfactory to Landlord of Tenant's ability to pay such Impositions
which are being contested plus any interest and penalty which may be
imposed thereon and which could become a lien against the Project or
any part thereof; (iv) no Default or Event of Default has occurred;
(v) Tenant covenants and agrees that any increase in Impositions
resulting from such contest or objection shall be paid by Tenant upon
demand; and (vi) the Premises comprise 100% of the Improvements.
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(c) Subject to any Legal Requirement, Landlord shall use all
reasonable efforts to obtain the benefit of any statute or ordinance
permitting any real property assessment for public betterments or
improvements to be paid over the maximum period of time allowed by the
relevant taxing authority.
3.3 UTILITIES; OPERATING EXPENSES.
(a) Tenant shall pay or cause to be paid when due, all charges,
fees, assessments and related costs for public utility services
(including, without limitation, gas, water, sewer, electricity, light,
power, telephone, cable and other communication services and refuse
and garbage collection) used, rendered or supplied in connection with
the Premises throughout the Lease Term.
(b) Tenant shall deposit with Landlord monthly (as a deposit and
not as a payment) an amount equal to Tenant's Share of one-twelfth of
the annual Operating Expenses estimated by Landlord and communicated
by Landlord to Tenant in writing so that Landlord will have sufficient
funds to pay Operating Expenses on the first day of the month
preceding the month in which they become due. Provided Tenant has
deposited sufficient funds with Landlord pursuant to this Section
3.3(b), Landlord shall pay, when due, Tenant's Share of such Operating
Expenses as may be due out of the funds so deposited with Landlord. If
at any time and for any reason the funds deposited with Landlord are
or will be insufficient to pay such amounts as may then or
subsequently be due, Landlord shall notify Tenant and Tenant shall
within seven (7) days after such notice deposit an amount equal to
such deficiency with Landlord. Notwithstanding the foregoing, nothing
contained herein shall cause Landlord to be obligated to pay any
amounts in excess of the amount of funds deposited with Landlord
pursuant to this Section 3.3(b). If amounts collected by Landlord
under this Section 3.3(b) exceed amounts necessary in order to pay
Operating Expenses, Landlord shall retain such excess payments and
Tenant shall receive a credit for such excess amount toward the next
payments due for such Operating Expenses, unless within 30 days
following any Lease Year Tenant notifies Landlord to reimburse Tenant
for the amount of such excess, in which event Landlord, following
receipt of such notice, shall promptly reimburse such excess to
Tenant. Should Tenant fail to deposit with Landlord sums sufficient to
pay such Operating Expenses in full at least ten (10) days before
delinquency thereof Landlord may, at Landlord's election, but without
any obligation so to do, advance any amounts required to make up the
deficiency, which advances if any, shall be treated as Additional
Rent. Upon expiration of the Lease Term or earlier termination of this
Lease in accordance with Section 13.28 hereof, the sums held by
Landlord under this Section 3.3(b) shall be allocated between Landlord
and Tenant as of such date based upon the
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periods with respect to which such sums are incurred, and Landlord
shall be entitled to retain such portion as represents amounts
incurred through such date, and the balance shall be returned to
Tenant. In the event this Lease is terminated due to an Event of
Default, all sums held by Landlord under this Section 3.3(b) shall be
retained by Landlord.
(c) Within one hundred twenty (120) days after the end of each
Lease Year, Landlord shall provide Tenant with a detailed statement of
the actual Operating Expenses for the preceding Lease Year, and if
Tenant has overpaid or underpaid its share of the actual Operating
Expenses for the preceding Lease Year, Tenant or Landlord shall pay
the other, as appropriate, the amount of such overpayment or
underpayment, as the case may be, within thirty (30) days after the
statement of actual Operating Expenses is delivered.
(d) After Landlord has provided Tenant with a statement of the
actual Operating Expenses for any calendar year, Tenant, at its
expense, shall have the right for a period of 180 days after receipt
of such statement, to audit Landlord's books and records relating to
the actual Operating Expenses for the period covered by such
statement. If Tenant fails to exercise its audit rights within said
180 day period, Landlord's statement of actual Operating Expenses
shall be deemed binding on Tenant. Any such audit shall be concluded
by Tenant within 60 days following the commencement thereof. If any
audit shall prove that Tenant has overpaid its share of Operating
Expenses, the amount of such overpayment shall be promptly refunded to
Tenant. Tenant shall bear the costs of any audit conducted for or by
it. Tenant may not request such an audit more than once for any Lease
Year. If such audit determines that Landlord has overstated Operating
Expenses by more than 3%, Landlord agrees to pay the costs of Tenant's
audit.
3.4 SALES TAXES. Tenant shall also pay directly or reimburse to Landlord,
upon demand, for the full amount of any and all taxes, assessments, fees and
other governmental charges, general and special, ordinary or extraordinary, of
every kind and nature whatsoever (other than Landlord's income taxes), levied,
assessed, imposed or otherwise payable with respect to Base Rent or Additional
Rent. The provisions of this Section shall survive the expiration of the Lease
Term or the earlier termination hereof.
3.5 PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency, any and
all taxes levied or assessed during the Lease Term upon Tenant's personal
property. In the event any or all of the personal property shall be assessed and
taxed with the real property, Tenant shall pay to Landlord such taxes within
thirty (30) days after written notice from Landlord setting forth the amount of
such taxes applicable to personal property together with a copy of the tax ▇▇▇▇
and other evidence documenting that such tax is properly payable by Tenant.
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3.6 LOCATION OF PAYMENTS. Tenant shall for the entire Lease Term pay Rent
to Landlord as herein provided at the address for Landlord set forth in Section
13.8 hereof or at such other place as Landlord may from time to time in writing
designate.
3.7 NO SETOFF. All amounts due by Tenant to Landlord hereunder, including
Base Rent and Additional Rent, shall be paid without any setoff, counterclaim or
deduction whatsoever or any prior demand. The covenant to pay Rent, whether Base
Rent or Additional Rent, is hereby declared to be an independent covenant on the
part of Tenant to be kept and performed and no act or circumstance whatsoever
shall release, relieve or otherwise excuse Tenant of the obligation to pay Rent.
ARTICLE 4.
ALTERATIONS AND ADDITIONS
4.1 ALTERATIONS.
(a) Tenant will not make or allow to be made any alterations,
additions or deletions in or to the Premises without the prior written
consent of Landlord, which consent shall not be unreasonably withheld
by Landlord, except as set forth in Section 4.1(b) hereof. Such
alterations, physical additions, or improvements shall become part of
the Premises and the property of the Landlord.
(b) Tenant may, at its sole cost and expense, make alterations or
additions to the Premises without Landlord's prior consent, provided
(i) such alterations or additions do not affect the structural
integrity of the Improvements comprising the Premises, adversely
affect any of the mechanical or electrical systems of the Improvements
comprising the Premises, or alter in any way the intended or current
use of the Premises; (ii) the cost of any such alteration or addition
does not exceed $50,000 in any one instance or $100,000 in any single
Lease Year; (iii) such alterations or additions are performed by duly
licensed and qualified contractors in accordance with all Legal
Requirements and in a good and workmanlike manner; (iv) such
alterations or additions are completed prior to the expiration of the
Lease Term; (v) such alterations or improvements do not reduce the
value of the Project or the Premises; (vi) such alterations and
improvements are made pursuant to plans and specifications delivered
to Landlord in advance; (vii) no Default or Event of Default has
occurred and is continuing, and (viii) no such alteration or addition
is made or commenced within the last twelve (12) months of the Lease
Term.
4.2 CONSTRUCTION LIENS. Tenant shall pay when due, and indemnify, protect,
defend and hold Landlord harmless from, all claims for labor or materials
furnished or alleged to have been furnished to Tenant for use in the Premises,
which claims are or may be secured by any lien against the Premises or any
interest therein in accordance with applicable law. Tenant shall not permit any
liens to be filed against the Premises or any
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interest therein and shall immediately obtain a release from any lien so filed
or remove the same by bond in form and content satisfactory to Landlord. Nothing
in the Lease shall be construed in any way as constituting the consent or
request of Landlord to any contractor, subcontractor, laborer, or materialman
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to the Premises, nor as giving
Tenant any right, power or authority to contract for or permit the rendering of
services or the furnishing of materials that would give rise to the filing of a
lien against the Premises.
4.3 REMOVAL OF IMPROVEMENTS. All alterations, additions and other
improvements by Tenant shall become the property of Landlord and shall not be
removed from the Premises, unless request is made by Landlord to Tenant to
remove those alterations, additions and other improvements which were made
without Landlord's approval where such approval was required under this Lease.
All moveable trade fixtures, furniture, furnishings and signs installed in the
Premises by Tenant and paid for by Tenant, shall remain the property of Tenant
and may be removed upon the expiration of the term of this Lease; provided that
any of such items as are affixed to the Premises and require severance may be
removed only if Tenant repairs any damage caused by such removal and that Tenant
shall otherwise comply with all of the terms, conditions and covenants to be
performed by Tenant under this Lease with respect to such removal. If Tenant
fails to remove such items from the Premises by the expiration of the Lease Term
or earlier termination of this Lease, all such trade fixtures, furniture,
furnishings and signs shall become the property of Landlord, unless Landlord
elects to require their removal, in which case Tenant shall, at its sole cost
and expense, promptly remove the same and restore the Premises to its condition
on the date of this Lease. The covenants contained in this Section shall survive
the expiration of the Lease Term or earlier termination hereof.
4.4 SIGNS. Tenant covenants and agrees that it shall not, without the prior
written consent of Landlord, paint, erect or install any signs, lettering or
placards or make any additions, alterations or changes to the exterior of the
Premises. Landlord hereby consents to all signs identifying Tenant and currently
located on the Premises. Upon expiration of the Lease Term, the earlier
termination of the Lease, a Put Date or a Recapture Date, Tenant shall at the
request of Landlord remove such signs and shall promptly restore the surfaces to
which the signs were affixed to their former condition, except with regard to
the Put Premises or Recapture Premises, and any awnings on the Building. The
obligation set forth in the preceding sentence shall survive the expiration of
the Lease Term or the earlier termination hereof.
ARTICLE 5.
REPAIRS AND MAINTENANCE
5.1 LANDLORD'S OBLIGATIONS. From and after the earlier to occur of a Put
Date or a Recapture Date, Landlord shall:
(a) maintain, repair and replace as needed all heating,
ventilating, air conditioning, mechanical, electrical and plumbing
systems, facilities and equipment which are located in or serve the
Premises;
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(b) replace Project standard fluorescent electric lamps and
ballasts used in the Premises;
(c) furnish Tenant: (i) hot and cold water, at those points of
supply provided for general use of tenants; (ii) heat and refrigerated
air conditioning in season at such times as Landlord normally
furnishes these services to all tenants of the Project, and at such
temperatures and in such amounts as are in accordance with any
applicable statutes, rules or regulations and are considered to be
standard, including the standard for computer rooms, such service at
other times and on Saturdays, Sundays, and holidays ("Additional
Service") to be made available from Landlord (Landlord hereby reserves
the right to charge Tenant for any such Additional Service requested
by Tenant at Landlord's cost). If any repairs are needed to the
heating, air conditioning and ventilation system servicing Tenant's
system network room, Landlord hereby agrees that Tenant may contact
Landlord's service provider directly for such service and Landlord
shall pay the cost thereof; (iii) janitor service to the Premises on
weekdays other than holidays; and (iv) such window washing as may from
time to time in the Landlord's judgment be reasonably required;
(d) operate, maintain, repair and replace the Common Areas in a
clean, safe and sanitary condition and state of repair in accordance
with all Legal Requirements; and
(e) keep the parking lot, driveways and sidewalks within the
Common Areas free from snow, ice and debris.
Failure to any extent to furnish, or any stoppage or interruption of these
defined services, shall not render Landlord liable in any respect for
damages to any person, property, or business, nor be construed as an
eviction of Tenant or work an abatement of Rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof unless caused by the
negligent or intentional acts or omission of Landlord. Should any equipment
or machinery furnished by Landlord cease to function properly, Landlord
shall use reasonable diligence to repair the same promptly upon receipt of
notice of the same, but Tenant shall have no claim for an abatement of Rent
or damages on account of any interruptions in service occasioned thereby or
resulting therefrom unless caused by the negligent or intentional acts or
omissions of Landlord. Whenever heat generating machines or equipment are
used by Tenant in the Premises which disproportionately affect the
temperature otherwise maintained by the air conditioning equipment,
Landlord reserves the right to install supplementary air conditioning units
in the Premises (or for the use of the Premises) and the reasonable expense
of such purchase, installation, maintenance, operation and repair shall be
paid by Tenant upon 15 days prior notice as Additional Rent
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5.2 TENANT'S OBLIGATIONS. Except to the extent Landlord is specifically
responsible therefor under Section 5.1 hereof, Tenant is solely responsible for
causing the Premises to be kept in a clean, safe, sanitary and first class
condition and state of repair in accordance with all Legal Requirements required
as a result solely of Tenant's specific use. As used in this Section, the term
"repairs" shall include replacements and other improvements as are necessary to
maintain the Premises as is required under this Lease. If Landlord is required
to make repairs by reason of Tenant's acts or omissions or those of Tenant's
employees, agents, invitees, licensees or contractors, Landlord shall have the
right, but shall not be obligated, to make such repairs or replacements on
behalf of and for the account of Tenant. In such event, such work shall be paid
for in full by Tenant as Additional Rent. Notwithstanding any provision in this
Lease to the contrary, throughout the term of this Lease, Landlord shall be
responsible for any and all necessary major repairs (major is defined as cost of
$10,000.00 or more in the aggregate for one project or series of projects) or
replacements of the roof, or any other components or systems of the Project
and/or parking lot, driveways and landscaping, including but not limited to
repaving of the parking lot, replacement of HVAC systems or roof. To the extent
allowed under Section 3.3 hereof, Landlord may charge Tenant a portion of such
costs, as amortized over the useful life of the improvement or replacement as
Operating Expenses, but only to the extent allowed under Section 3.3 hereof.
Notwithstanding any provision in this Lease to the contrary, throughout the term
of this Lease, all repairs, replacements and improvements to the structural
components of the Project and all improvements to the Project shall be made by
Landlord, at Landlord's sole cost and expense and not be charged to Tenant.
5.3 SURRENDER. On the last day of the Lease Term, or on any sooner
termination of this Lease, Tenant shall surrender the Premises in the same
condition as the Premises existed on the Commencement Date, ordinary wear and
tear and damage by an Insured Casualty excepted, with such additions,
replacements, betterments, alterations and improvements thereto as permitted or
required hereunder, broom clean, and shall surrender all keys and access cards,
to Landlord in the condition required to be maintained by Tenant under this
Lease. The covenants contained in this Section shall survive the expiration of
the Lease Term or earlier termination hereof.
5.4 RIGHT OF ENTRY. Landlord and its authorized representatives shall have
the right to enter the Premises (a) upon at least 48 hours prior written notice
to Tenant at all reasonable times to inspect the Project or to show the Premises
to prospective lenders, purchasers or tenants, provided any such entry is done
in a manner such as to avoid interference with the operation of the Premises,
and, (b) in the event of the existence of an Event of Default hereunder, to
conduct testing and to make repairs, alterations, improvements or additions as
Landlord may reasonably deem necessary, including those to be performed by
Tenant, without the same constituting an eviction of Tenant in whole or in part,
and Rent shall not ▇▇▇▇▇ as a result of such entry. Nothing herein shall imply
any duty upon the part of Landlord to conduct any test or do any work which the
Tenant may be required to perform under this Lease, and the performance thereof
by Landlord shall not constitute a waiver of Tenant's default in failing to
perform it. If Tenant is not present to permit entry into the Premises, Landlord
may, in case of emergency, enter by master key.
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Landlord may place upon the Premises "For Rent" signs and notices, specifying
the portion of the Building that is for rent.
ARTICLE 6.
HAZARDOUS SUBSTANCES
6.1 NO HAZARDOUS SUBSTANCES. Tenant shall not bring into or permit the
existence of any Hazardous Substance on the Premises other than as permitted by
applicable Environmental Regulations. If Tenant discovers the presence of any
Hazardous Substance on or in the Premises which is in violation of any
Environmental Regulation, Tenant shall promptly give Landlord notice thereof. If
during Tenant's occupancy or at any time throughout the Lease Term the existence
of a Hazardous Substance in violation of any Environmental Regulation exists
within the Premises or, as a result of any action or inaction by Tenant, within
the Project, (a) Tenant shall remove such Hazardous Substance and dispose of it
as required by any and all applicable Environmental Regulations, or (b)
Landlord, if it is advised to remove such Hazardous Substance itself to protect
or minimize against any liability to Landlord as a result of the presence of any
Hazardous Substance by no less than five (5) days' notice to Tenant, may elect
to remove any Hazardous Substance and dispose of it as required by any
Environmental Regulation, in which case Tenant shall pay the entire cost of such
disposal within ten (10) days after receipt of a statement for such cost by
Landlord, such amount to be treated as Additional Rent. If any Governmental
Authority shall require any remedial action or other response with respect to
the Project as the result of any Hazardous Substance brought into or permitted
by Tenant on or in the Project, Tenant shall notify Landlord of such action or
response and shall, with the prior written approval of Landlord, be responsible
for satisfying the requirements of the applicable Governmental Authority.
6.2 TENANT INDEMNITY. Tenant shall indemnify, defend (with counsel
satisfactory to Landlord), protect and hold Landlord and its members, managers,
officers, employees and agents harmless from and against any and all claims,
causes of action, damages, penalties, costs and expenses (including attorneys'
fees, consultant fees and related expenses) which may be asserted against or
incurred by Landlord and its members, managers, officers, employees and agents,
or any of them, resulting from the failure by Tenant to fulfill its obligations
under Section 6.1 hereof or resulting from the presence of Hazardous Substances
within the Premises or, as a result of any action or inaction by Tenant, within
the Project. Tenant's duty to indemnify, defend, protect and hold harmless
includes, but is not limited to, proceedings or actions commenced by any
Governmental Authority.
6.3 SURVIVAL. The foregoing covenants and indemnifications shall be deemed
continuing covenants and indemnifications for the benefit of Landlord and its
successors and assigns and shall survive the expiration of the Lease Term or
earlier termination of this Lease.
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ARTICLE 7.
COVENANTS OF TENANT
7.1 USE OF PREMISES. Tenant covenants and agrees that from and after the
Commencement Date, it shall use and occupy the Premises solely for the purpose
of the Permitted Use and for no other purpose.
7.2 CONTINUING COVENANTS. Tenant covenants and agrees with Landlord to:
(a) maintain the Premises in a good condition and state of
repair;
(b) promptly make all of repairs, renewals, replacements and
additions, to the Premises which may be necessary, required under any
Legal Requirement or otherwise required under the terms of this Lease;
(c) not commit or suffer waste with respect to the Premises;
(d) not remove, demolish or in any respect alter any of the
Improvements comprising the Premises, provided that Tenant may make
alterations in accordance with Section 4.1 hereof;
(e) subject to any Legal Requirement, not make, install or permit
to be made or installed, any alterations or additions to the Premises
if doing so will violate the terms and conditions of this Lease unless
approved by Landlord in writing;
(f) not make, suffer or permit any nuisance to exist on the
Premises;
(g) keep the Premises neat and clean at all times and to keep any
refuse in proper containers out of sight until the same is removed;
(h) neither do nor suffer anything to be done or kept in or about
the Premises which contravenes Landlord's insurance policies or
increases the premiums therefor;
(i) promptly comply with, or cause to be complied with, and
conform to all Legal Requirements with regard to Tenant's specific use
solely; and
(j) from and after the earlier of a Put Date or a Recapture Date,
comply with all of the Rules.
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ARTICLE 8.
INSURANCE AND INDEMNITIES
8.1 INSURANCE COVERAGES.
(a) Landlord shall obtain beginning on the Commencement Date and
shall maintain throughout the Lease Term, as an Operating Expense, the
following insurance coverages:
(i) A policy of commercial general liability insurance
(including "Insurance Service Office" (ISO) forms and
endorsements or their equivalent) to insure against
injury to property, person or loss of life arising out
of the ownership, use, occupancy or maintenance of the
Project with limits of general liability not less than
$10,000,000 for death and/or bodily injury, personal
injury, advertising injury and property damage. The
policy shall contain supplemental endorsements covering
contractual liability as provided in an ISO liability
policy under the definition of insured contract.
(ii) A policy providing commercial property insurance on the
entire Project for the full replacement cost of the
Project. An "Agreed Amount Clause" waiving the
coinsurance clause must be included, as well as flood
and earthquake coverage, to the extent available, at
limits equal to the maximum foreseeable loss at the
location of the Premises. Coverage must also include an
"Ordinances or Law Regulations" insuring agreement
governing the construction, use or repair of property.
Such coverage must include the expense of tearing down
any property, including the cost of removing its
debris. Increased cost of construction coverage must
also be included.
(b) Tenant shall obtain, at Tenant's expense, beginning on the
Commencement Date and shall maintain through the Lease Term, the
following insurance coverages:
(i) A policy of commercial general liability insurance
(including "Insurance Service Office" (ISO) forms and
endorsements or their equivalent) naming Landlord,
Tenant and any other party designated by Landlord as an
additional insured, to insure against injury to
property, person or loss of life arising out of the
ownership, use, occupancy or maintenance of the
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Premises with limits of general liability not less than
$ 10,000,000 for death and/or bodily injury, personal
injury, advertising injury and property damage. The
policy shall contain supplemental endorsements covering
contractual liability as provided in an ISO liability
policy under the definition of insured contract.
(ii) A policy providing commercial property insurance
containing the insuring agreement "Cause of
Loss-Special Form" or its equivalent, together with
such endorsements as may be deemed advisable by
Landlord to insure the Improvements comprising the
Premises, Tenant's leasehold improvements, merchandise,
trade fixtures, furnishings, equipment and personal
property. Such policy shall provide coverage in an
amount not less than the full replacement cost of the
Improvements comprising the Premises. An "Agreed Amount
Clause" waiving the coinsurance clause must be
included, as well as flood and earthquake coverage, to
the extent available, at limits equal to the maximum
foreseeable loss at the location of the Premises.
Coverage must also include an "Ordinances or Law
Regulations" insuring agreement governing the
construction, use or repair of property. Such coverage
must include the expense of tearing down any property,
including the cost of removing its debris. Increased
cost of construction coverage must also be included.
(iii) A policy of workers' compensation insurance must be
provided that insures the benefits required by the
State law and includes coverage B Employer's Liability.
The Employer's liability limits must be:
Bodily Injury By Accident - $1,000,000 Each Accident
Bodily Injury By Disease - $1,000,000 Policy Limit
Bodily Injury By Disease - $1,000,000 Each Employee
Landlord does not, by requiring such insurance or by any other act or
event, assume or undertake liability for any work-related injuries or
death to Tenant or Tenant's employees.
(iv) If Tenant commits or permits any activity or the
placing or operation of any equipment on or about the
Premises creating unusual hazards, Tenant shall
promptly upon notice or demand from Landlord,
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procure and maintain in force, during such activity or
operation, insurance sufficient to cover the risks
created thereby. Landlord's demand for unusual hazard
insurance shall not constitute a waiver of any right
Landlord may have to demand the removal or cessation of
such activity or operation.
(v) A policy of business interruption insurance with an
"Extra Expense" insuring agreement naming Landlord and
any other party designated by Landlord as an additional
insured providing coverage of not less than twelve (12)
months of Rent and other business income. Such policy
must include an endorsement providing an extended
period of indemnity for 180 days.
(vi) All other insurance, if any, customarily maintained by
businesses of like type, or required by any Legal
Requirement to be carried or maintained by Tenant.
8.2 INSURANCE POLICIES. Insurance required under Section 8.1 shall be
written by companies duly qualified to do business in the State and shall be
satisfactory in all respects to Landlord and the holder of any mortgage against
the Project. The companies providing such insurance shall deliver to Tenant and
Landlord copies of such policies or certificates evidencing the existence and
amount of such insurance with loss payable clauses satisfactory to Landlord,
including, specifically, the holder of the first mortgage on the Project as a
loss payee. No such policy shall be cancelable or subject to reduction of
coverage or modification except after thirty (30) days prior written notice to
Landlord and such other persons designated by Landlord. At least ten (10) days
prior to the expiration of such policies, Landlord may order such insurance and
charge the cost to Tenant as Additional Rent. Tenant shall not do or permit
anything to be done which will invalidate the insurance policies furnished
pursuant to Section 8.1 or otherwise by Landlord and shall comply with all
requirements imposed by such insurers, unless such compliance is expressly
waived in writing by Landlord. Landlord may from time to time reasonably require
that the policy limits of any or all such insurance be increased to reflect the
effects of inflation and changes in normal commercial insurance practices.
Landlord agrees that Tenant may carry the above-described insurance in the form
of a blanket policy covering the Premises and other properties.
8.3 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby agrees that
Landlord shall not be liable and Tenant hereby waives all claims against
Landlord for injury to Tenant's business or any loss of income or other
consequential damages or for damage to the inventory, fixtures, furnishings,
improvements or other property of Tenant, Tenant's employees, invitees,
customers, sublessees, agents, occupants, contractors, or injury to the person
of Tenant, Tenant's employees, agents, contractors, occupants, invitees,
customers, sublessees, or any other person in or about the Premises, whether
such damage or injury is caused by or results from fire, steam, electricity,
gas, water or rain, or from the breakage,
15
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air-conditioning or lighting fixtures, or from any other cause
whatsoever, whether said damage or injury results from conditions arising upon
the Premises, or from other sources or places, and regardless of whether the
cause of such damage or injury or the means of repairing the same is
inaccessible to Tenant unless caused by the negligent or intentional acts or
omissions of Landlord. Landlord shall not be liable to Tenant for any damages
arising from any act or neglect of any other tenant of the Project.
8.4 INDEMNIFICATION. Tenant shall indemnify, defend, protect and hold
harmless Landlord from and against any and all claims arising from Tenant's use
of the Premises, or from the conduct of Tenant's business or from any activity,
work or things done, permitted or suffered by Tenant in or about the Premises or
elsewhere unless caused by the negligent or intentional acts or omissions of
Landlord, and shall further indemnify, defend, protect and hold harmless
Landlord from and against any and all claims arising from any breach or default
in the performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or arising from any negligence of the Tenant, or any of
Tenant's sublessees, agents, customers, invitees, contractors, occupants, or
employees, and from and against all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice from Landlord,
shall defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons, in, upon or about
the Premises, and Tenant hereby waives all claims in respect thereof against
Landlord unless caused by the negligent or intentional acts or omissions of
Landlord. The provisions of this Section shall survive expiration of the Lease
Term or the earlier termination hereof
8.5 MUTUAL WAIVER OF SUBROGATION. Nothing in this Lease shall be construed
so as to authorize or permit any insurer of Landlord or Tenant to be subrogated
to any right of Landlord or Tenant against the other party arising under this
Lease. Landlord and Tenant each hereby release the other to the extent of any
loss required to be insured against by either of the parties under the terms of
this Lease, whether or not such insurance has actually been secured, to the
extent such loss is insurable, whether or not such insurance has actually been
secured, even if such incidents shall be brought about by the fault or
negligence of either party or persons for whose acts or negligence the other
party is responsible. Landlord and Tenant shall, to the extent permitted by
their respective insurers, each obtain appropriate waivers of subrogation from
their respective insurance carriers giving effect to this Section.
ARTICLE 9.
DAMAGE OR DESTRUCTION
In the event (a) the Improvements are damaged by fire, explosion or other
casualty insured under the fire and extended coverage insurance policy required
hereunder (an "INSURED CASUALTY") to the extent of fifty percent (50%) or more
of the insurable value thereof immediately preceding the casualty, (b) the
Improvements are damaged by a casualty or occurrence other than an Insured
Casualty, (c) such damage occurs at anytime
16
within the last twelve (12) months of the Lease Term, or (d) the Premises or any
portion thereof is damaged by fire, explosion or other casualty and the Premises
cannot be repaired, rebuilt or restored to substantially the same condition,
under any Legal Requirement or other governmental order or under any other
agreement to which the Premises is subject (a "PROHIBITED CASUALTY"), then in
such event Landlord may terminate this Lease by giving Tenant written notice of
termination within thirty (30) days after the happening of the event causing the
damage. In the event the damage is not extensive enough to give rise to
Landlord's option to terminate this Lease, a Prohibited Casualty has not
occurred, or Landlord does not elect to terminate this Lease, Landlord shall
promptly and with all due diligence repair and replace the damage to the
Improvements to the condition that existed immediately preceding such fire,
explosion or other casualty. Upon completion of such repairs and replacements by
Landlord, Tenant shall promptly repair or replace all portions of the Premises
not repaired or replaced by Landlord to the condition existing immediately
preceding such fire, explosion or other casualty. All work by Tenant shall
comply with the requirements and limitations imposed by Landlord. During any
period of reconstruction or repair of the Premises, Tenant shall operate its
business in the Premises to the extent practicable. Base Rent shall be abated
during the period of such repair and restoration to the extent the Premises is
not tenantable. If such damage or destruction cannot be repaired or completed
within one year after the date such damage or destruction occurred, Tenant shall
have the right to terminate this Lease by giving notice to Landlord.
ARTICLE 10.
CONDEMNATION
10.1 TAKING OF WHOLE. In the event (a) the whole of the Premises shall be
taken or condemned for a public or quasi-public use or purpose by a competent
authority or sold by Landlord in lieu thereof, (b) such a portion of the
Premises shall be taken, condemned or sold in lieu thereof so that the balance
cannot be used for the same purpose and with substantially the same utility to
Tenant as immediately prior to such taking, or (c) the Premises or any portion
thereof shall be taken or condemned for a public or quasi-public use or purpose
by a competent authority or sold by Landlord in lieu thereof and Landlord is
unable to repair, rebuild or restore the same under the terms of any agreement
to which it is a party, or under any Legal Requirement or other governmental
order to which Landlord or the Premises is subject (a "PROHIBITED TAKING"), this
Lease shall terminate upon delivery of possession to the condemning authority or
its assignee, and, subject to the provisions of Section 10.3 hereof, any award,
compensation or damage (the "AWARD") shall be paid to and be the sole property
of Landlord whether the Award shall be made as compensation for diminution of
the value of the leasehold estate or the fee of the Land or otherwise, and
Tenant hereby assigns to Landlord all of Tenant's right, title and interest in
and to any and all of the Award. Tenant shall have no claim against Landlord by
reason of such taking or termination and, subject to the provisions of Section
10.3 hereof, shall not have any claim or right to any portion of the Award to be
paid to Landlord. Tenant shall continue to pay Rent and other charges hereunder
until the Lease is terminated.
10.2 PARTIAL TAKING. In the event (a) only a part of the Premises is taken
or condemned but the Premises or the part remaining can still be used for the
same purpose
17
and with substantially the same utility to Tenant as immediately prior to such
taking, or (b) a Prohibited Taking has not occurred, this Lease shall not
terminate and Landlord shall repair and restore the remaining Improvements
comprising the Premises provided the cost and expense of such repair and
restoration does not exceed the amount of the Award. If the cost of such repair
and restoration exceeds the amount of the Award, Landlord may terminate this
Lease by giving Tenant written notice of termination to Tenant within thirty
(30) days of the delivery of possession to the condemning authority. If Landlord
is obligated to repair and restore the remaining Improvements comprising the
Premises, as herein provided, there shall be no abatement or reduction in any
Rent or other charges payable by Tenant under this Lease because of such taking
or condemnation, provided however that all Rent payable or other charges
hereunder shall be abated during the period of such repair and restoration to
the extent the Premises is not tenantable.
10.3 TENANT'S AWARD. Subject to the rights of Landlord's lenders,
termination of this Lease because of condemnation shall be without prejudice to
the rights of either Landlord or Tenant to recover from the condemning authority
compensation and damages for the injury and loss sustained by them as a result
of the taking, and Tenant shall have the right to make a claim against the
condemning authority for the unamortized value of Tenant's leasehold
improvements; interruption or dislocation of business in the Premises; loss of
good will and for moving and remodeling expenses. Tenant shall not have the
right to make a claim for diminution in value of Tenant's leasehold estate. If
this Lease is terminated as a result of a condemnation, Tenant shall, subject to
the rights of Landlord's lenders, make a separate claim to the condemning
authority for the above-mentioned items. If the condemning authority refuses to
allocate the award between Landlord's and Tenant's claims for damages and
instead grants a single, lump sum award to Landlord, Landlord and Tenant shall
use reasonable, good-faith efforts to determine that portion of the award which
is attributable to Tenant's leasehold improvements (but only the extent such
leasehold improvements were paid for by Tenant).
ARTICLE 11.
DEFAULTS; REMEDIES
11.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease by Tenant and each such
event shall be referred to herein as an "EVENT OF DEFAULT":
(a) The failure of Tenant to make any payment of Rent or any
other payment required to be made by Tenant under this Lease, within
ten (10) days after written notice from Landlord, provided that
Landlord shall not be required to provide written notice of such
non-payment more than twice in any Lease Year.
(b) The failure by Tenant to observe or perform any of the terms,
covenants or conditions of this Lease to be observed or performed by
Tenant (other than those described in Sections 11.1(a), (c), (d) or
(e) hereof) where such failure shall continue for a period of thirty
(30) days after written notice thereof from Landlord to Tenant;
provided,
18
however, that if the nature of such default is such that more than 30
days are required for its cure, then Landlord shall not be in default
if Tenant commences performance within said 30 day period and
thereafter diligently prosecutes the same to completion within 90 days
after such notice.
(c) (i) The making by Tenant or any entity holding a controlling
interest in Tenant of any general assignment, or general arrangement
for the benefit of creditors; (ii) the filing by or against Tenant or
any entity holding a controlling interest in Tenant of a petition to
have Tenant or such controlling entity adjudged a bankrupt or a
petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant or
such controlling entity, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where possession is
not restored to Tenant within sixty (60) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease
or in the Premises, where such seizure is not discharged within sixty
(60) days.
(d) An assignment shall occur in violation of Article 12 hereof.
11.2 LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or equity, or elsewhere in this Lease or in any other
agreement related to this Lease, to which Landlord may resort cumulatively or in
the alternative:
(a) Landlord may, at Landlord's election, terminate this Lease
upon the delivery of written notice of such termination to Tenant. On
the delivery of such notice, all Tenant's rights in the Premises and
the Project, in all improvements located at the Premises, to revenues
from the Premises, and to amounts which may otherwise be due from
Landlord to Tenant under this Lease, shall terminate. Promptly after
notice of termination, Tenant shall fulfill its obligations under
Section 5.2 hereof and surrender and vacate the Premises in a broom
clean condition, and Landlord may reenter and take possession of the
Premises and eject all parties in possession or eject some and not
others or eject none. Termination under this Subsection shall not
relieve Tenant from the payment of any sum then due to Landlord or
from any claim for damages previously accrued or then accruing against
Tenant. Upon such termination, Landlord shall also be entitled to
recover from Tenant (i) unpaid Rent or such other amounts which have
been earned or are payable at the time of termination, and (ii) as
liquidated damages and not as a penalty, a sum of money equal to the
Rent and such other
19
amounts and rental costs to be paid by Tenant to Landlord for the
remainder of the Lease Term (the "ACCELERATED AMOUNT").
(b) Landlord may, at Landlord's election, terminate Tenant's
right to possession only, without terminating the Lease. Upon
termination of Tenant's right to possession without termination of the
Lease, Tenant shall surrender possession and vacate the Premises
immediately and deliver possession of the Premises to Landlord, and
Tenant hereby grants to Landlord the immediate right to enter into the
Premises, remove Tenant's signs and other evidences of tenancy, and
take and hold possession of the Premises with or without process of
law, and to dispossess the others who may be occupying or within the
Premises, without being deemed in any manner guilty of trespass,
eviction, or forcible entry or detainer, without incurring any
liability for any damage resulting therefrom, without such entry and
possession terminating the Lease or releasing Tenant from Tenant's
obligation to pay Rent and to fulfill all other of Tenant's
obligations under this Lease for the full Lease Term. Landlord shall
be entitled to recover from Tenant (i) unpaid Rent or such other
amounts which have been earned or are payable at the time of
termination, and (ii) as liquidated damages and not as a penalty, the
Accelerated Amount.
(c) Landlord may, at Landlord's election, store Tenant's personal
property, if any, for the account and at the cost of Tenant.
(d) Whether or not Landlord elects to terminate the Lease,
Landlord may, but shall be under no obligation to, relet all or any
part of the Premises for such rent and upon such terms as shall be
satisfactory to Landlord (including the right to relet the Premises as
a part of a larger area, the right to change the character or use of
the Premises and the right to restrict prospective tenants to those
whose business is compatible with the nature and character of the
Premises). For the purpose of such reletting, Landlord may decorate or
may make any repairs, changes, alterations or additions in or to the
Premises that may be necessary or convenient. If the Lease is not
terminated and if the Premises is not relet, or if it is relet and a
sufficient sum shall not be realized from such reletting after paying
all of the expenses of any such decorations, repairs, changes,
alterations and additions, the expenses of such reletting and the
collection of the rent accruing therefrom (including, but not limited
to, attorneys' fees and brokers' commissions), to satisfy the Rent and
other charges herein provided to be paid for remainder of the term of
this Lease, Tenant shall pay to Landlord promptly any deficiency, and
Tenant agrees that Landlord may file suit to recover and recover any
sum falling due under the terms of this Subsection from time to time.
20
(e) The term "RENTAL COSTS" as used in this Lease shall be deemed
to include, but shall not be limited by implication, all repossession
costs, brokerage commissions, legal expenses, attorneys' fees,
alteration costs, and expenses of preparation of the Premises or parts
thereof for reletting.
(f) For purposes of Sections 11.2(a) and (b) above, the present
value (the "PRESENT VALUE") of the Accelerated Amount shall be
computed by discounting the Accelerated Amount to the date of
determination applying the rate on the United States Treasury
obligation having a maturity equal to the balance of the Lease Term
and having an asking price closest to par, as quoted by the Federal
Reserve Bank of New York as published in the Federal Reserve
Statistical Release H. 15 (519) on the date of determination (or the
closest preceding date on which such rate is published), or any
successor publication thereto. Landlord and Tenant agree that in the
event of the exercise by Landlord of its remedy under Sections 11.2(a)
or (b) hereof and the payment by Tenant of the Present Value of the
Accelerated Amount, the cost to Landlord will be difficult to
ascertain and that the Present Value of the Accelerated Amount
constitutes a reasonable estimate of such cost and is not a penalty.
Accordingly, if Tenant defaults, the parties agree that, except as may
be otherwise expressly set forth herein to the contrary, the Present
Value of the Accelerated Amount shall be the amount due from Tenant
upon such default and Landlord shall not be obligated to mitigate its
cost below such amount. Notwithstanding anything to the contrary
contained herein, Tenant acknowledges and agrees that if Tenant fails
to pay to Landlord the Present Value of the Accelerated Amount within
thirty (30) days after notice of termination, then Tenant shall
forfeit any right to have the Accelerated Amount discounted to Present
Value pursuant to the provisions of this Section 11.2(f).
(g) Landlord may, at Landlord's election, retain any or all
amounts on deposit pursuant to Sections 3.2(a) and 3.3(b) hereof or
otherwise and apply such amounts to Tenant's obligations hereunder.
(h) In the event Landlord elects to terminate Tenant's right to
possession only without terminating the Lease and without pursuing
recovery of the Accelerated Amount, Landlord shall use "commercially
reasonable efforts" to relet the Premises as the agent of Tenant and
receive the rent therefor; and in the event of such reletting, Tenant
shall pay Landlord the cost of reletting including brokerage and
reasonable attorneys' fees and commissions, renovating, repairing and
altering the Premises for a new tenant or tenants and any deficiency
that may arise by reason of such reletting, on demand; provided,
however, the failure of Landlord to relet the Premises shall not
release or affect Tenant's liability for Rent or for damages and such
Rent and damages shall be paid by Tenant on the dates specified
herein. For purposes hereof,
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"commercially reasonable efforts" shall mean that Landlord has listed
the Premises as available for leasing with a recognized brokerage firm
and if Landlord has so listed the Premises, Landlord shall not be
required to take any other action with respect to reletting the
Premises nor shall Landlord be liable in any manner for failure to
relet the Premises. The Rent payable by Tenant hereunder shall be
reduced by the rent received by Landlord from such reletting.
11.3 LANDLORD MAY PERFORM. Landlord shall have the right at any time, after
not less than thirty (30) days notice to Tenant (or without notice with respect
to matters described in Article 8, and in case of emergency or a hazardous
condition or in case any fine, penalty, interest or cost may otherwise be
imposed or incurred), to make any payment or perform any act required of Tenant
under any provision in this Lease, and in exercising such right, to incur
necessary and incidental costs and expenses, including reasonable attorneys'
fees. Nothing herein shall obligate Landlord to make any payment or perform any
act required of Tenant, and this exercise of the right to so do shall not
constitute a release of any obligation or a waiver of any default. All payments
made and all costs and expenses incurred in connection with any exercise of such
right shall be reimbursed to Landlord by Tenant as Additional Rent.
ARTICLE 12.
ASSIGNMENT AND SUBLETTING
12.1 ASSIGNMENT BY TENANT. Tenant shall not voluntarily or by operation of
law assign, transfer, mortgage, lease, sublet, grant, license or otherwise
transfer or encumber all or any part of Tenant's interest in this Lease or in
the Premises, or permit the use or occupancy of the Premises or any part thereof
by anyone other than Tenant, without Landlord's prior written consent, which
consent shall not be unreasonably withheld or delayed at any time.
12.2 TENANT OWNERSHIP. If Tenant is a corporation (except a corporation
whose stock is traded on a nationally recognized exchange), a limited liability
company, a partnership, limited, limited liability or general, or a business
trust and if at any time during the Lease Term, any part or all of the shares of
the corporation, membership interests in the limited liability company, general
partnership interest of the partnership, or beneficial interests of the trust
shall be transferred by sale, issuance, assignment, bequest, operation or law or
otherwise so as to result in a direct or indirect change in the present control
of Tenant, such transfer shall constitute an assignment within the meaning of
Section 12.2 hereof. The acceptance by Landlord of payment after notice of such
a transfer shall not constitute a waiver of Landlord's right at any time to
treat such transfer as an Event of Default.
12.3 RELATED ENTITY TRANSFERS. Notwithstanding anything contained in
Sections 12.1 and 12.2 hereof to the contrary, Tenant may, without the consent
of Landlord but with advance notice to Landlord, and without releasing or
relieving Tenant of or from its obligations hereunder, from time to time and at
any time (a) assign or otherwise transfer this Lease to or (b) sublet or
otherwise permit the use of all or any portion of the Premises
22
by, any of the following (each, a "RELATED ENTITY"): (i) any parent, subsidiary
or affiliate corporation or entity; (ii) any corporation resulting from the
consolidation or merger of Tenant into or with any other entity; or (iii) to or
by any person, firm, entity or corporation acquiring a majority of Tenant's
issued and outstanding capital stock or a substantial part of Tenant's physical
assets. As used herein, the term "SUBSIDIARY" shall mean an entity of which
Tenant owns one hundred percent (100%) of the capital stock thereof and an
"AFFILIATE CORPORATION OR ENTITY" shall mean a person or business entity,
corporate or otherwise, that, through one or more intermediaries, controls or is
controlled by, or is under common control with Tenant or is purchasing the
business which Tenant conducts at the Premises. The word "CONTROL" means the
right and power to direct or cause the direction of the management and policies
of a person or business entity, corporation or otherwise, through ownership of
voting securities, by contract or otherwise.
12.4 ASSIGNMENT DUE TO BANKRUPTCY.
(a) In the event a petition is filed by or against Tenant under
the Bankruptcy Code, Tenant, as debtor and debtor in possession, and
any trustee who may be appointed, agree to adequately protect Landlord
as follows:
(i) to pay monthly in advance on the first day of each
month as reasonable compensation for use and occupancy
of the Premises an amount equal to all Rent due
pursuant to this Lease; and
(ii) to perform each and every obligation of Tenant under
this Lease until such time as this Lease is either
rejected or assumed by order of a court of competent
jurisdiction; and
(iii) to determine within sixty (60) days after the filing
of such petition whether to assume or reject this
Lease; and
(iv) to give Landlord at least thirty (30) days prior
written notice, unless a shorter notice period is
agreed to in writing by the parties, of any proceeding
relating to any assumption of this Lease; and
(v) to do all other things of benefit to Landlord otherwise
required under the Bankruptcy Code.
Tenant shall be deemed to have rejected this Lease in
the event of the failure to comply with any of the
above.
(b) If Tenant or a trustee elects to assume this Lease subsequent
to the filing of a petition under the Bankruptcy Code, Tenant, as
debtor
23
and as debtor in possession, and any trustee who may be appointed
agree as follows:
(i) to cure each and every breach by Tenant within not more
than thirty (30) days of assumption of this Lease; and
(ii) to compensate Landlord for any actual pecuniary loss
resulting from any existing breach, including without
limitation, Landlord's reasonable costs, expenses and
attorney's fees incurred as a result of the breach, as
determined by a court of competent jurisdiction, within
thirty (30) days of assumption of this Lease; and
(iii) in the event of an existing breach, to provide
adequate assurance of Tenant's future performance,
including without limitation:
(1) the deposit of an additional sum equal to Rent for
the remainder of the Lease Term to be held
(without any allowance for interest thereon) to
secure Tenant's obligations under the Lease; and
(2) the production to Landlord of written
documentation establishing that Tenant has
sufficient present and anticipated financial
ability to perform each and every obligation of
Tenant under this Lease; and
(3) assurances, in form acceptable to Landlord, as may
be required under any applicable provision of the
Bankruptcy Code; and
(iv) the assumption will not breach any provision of this
Lease; and
(v) the assumption will be subject to all of the provisions
of this Lease unless the prior written consent of
Landlord is obtained; and
(vi) the prior written consent to the assumption of any
mortgagee to which this Lease has been assigned as
collateral security is obtained.
(c) If Tenant assumes this Lease and proposes to assign the same
pursuant to the provisions of the Bankruptcy Code to any person or
24
entity who shall have made a bona fide offer to accept any assignment
of this Lease on terms acceptable to Tenant, then notice of such
proposed assignment shall be furnished by Tenant to Landlord, setting
forth:
(i) the name and address of such person; and
(ii) all the terms and conditions of such offer; and
(iii) the adequate assurance to be provided Landlord to
assure such person's future performance under the
Lease, including without limitation, the assurances
referred to in any applicable provision of the
Bankruptcy Code, shall be given to Landlord by Tenant
no later than twenty (20) days after receipt by Tenant,
but in any event no later than ten (10) days prior to
the date that Tenant shall make application to a court
of competent jurisdiction for authority and approval to
enter into such assignment and assumption, and Landlord
shall thereupon have the prior right and option, to be
exercised by notice to Tenant given at any time prior
to the effective date of such proposed assignment, to
accept (or to cause its designee to accept) an
assignment of this Lease upon the same terms and
conditions and for the same consideration, if any, as
the bona fide offer made by such person, less any
brokerage commissions which may be payable out of the
consideration to be paid by such person for the
assignment of this Lease. The adequate assurance to be
provided Landlord to assure the assignee's future
performance under the Lease shall include without
limitation:
(1) the deposit of a sum equal to Rent for the
remainder of the Lease Term to be held (without
any allowance for interest thereon) as security
for performance hereunder; and
(2) a written demonstration that the assignee meets
all reasonable financial and other criteria of
Landlord as did Tenant and its business at the
time of execution of this Lease, including the
production of the most recent audited financial
statement of the assignee prepared by a certified
public accountant; and
25
(3) the assignee's use of the Premises will be a Permitted
Use; and
(4) assurances, in form acceptable to Landlord, as to all
matters identified in any applicable provision of the
Bankruptcy Code.
12.5 NO RELEASE OF TENANT. Notwithstanding anything to the contrary
contained in this Lease, and regardless of Landlord's consent, no assignment,
encumbrance, subletting, transfer, lease or other permission for the use or
occupancy of all or any part of the Premises shall, unless otherwise agreed by
Landlord, release Tenant of Tenant's obligation to pay the Rent and other
charges and to perform all other obligations to be performed by Tenant under
this Lease. The acceptance of Rent and other charges by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision hereof.
Consent to one assignment shall not be deemed consent to any subsequent
assignment.
12.6 TRANSFER OF LANDLORD'S RIGHTS. Landlord shall have the right to
transfer and assign, in whole or in part, all and every feature of its rights
and obligations hereunder and in the Premises. Such transfers or assignments,
howsoever made, are to be fully binding upon and recognized by Tenant. Upon such
transfer or assignment and the assumption of Landlord's obligations by the
transferee, and subject to the provisions of Section 13.2 hereof, Landlord shall
be relieved of all obligations under the Lease accruing subsequent to the date
of transfer.
ARTICLE 13.
GENERAL PROVISIONS
13.1 ESTOPPEL CERTIFICATE. Tenant shall at any time, upon not less than ten
(10) days after the giving of written notice by Landlord, execute, acknowledge
and deliver to Landlord or to such person designated by Landlord, a statement in
writing (a) certifying that this Lease is unmodified and in full force and
effect (or if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, (b) acknowledging
that there are not, to the best of Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specify such defaults if they are claimed,
(c) acknowledging that there are no offsets, counterclaims or defenses to the
obligations of Tenant under the Lease, and (d) certifying as to any other
matters as may be reasonably requested by Landlord. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises. If Tenant does not execute, acknowledge and deliver the statement
referred to in this Section within time set forth above, the information set
forth therein shall be deemed true and correct.
13.2 LANDLORD'S LIABILITY. The term "LANDLORD," as used in this Lease,
shall mean only the owner or owners at the time in question of fee title to the
Premises. In the event of any transfer of such title or interest, Landlord shall
be released from all liability as
26
respects Landlord's obligations thereafter to be performed, provided that
Landlord's obligations are assumed by Landlord's transferee.
13.3 SEVERABILITY. The invalidity of any provision of this Lease, or of its
application to any person or circumstance as determined by a court of competent
jurisdiction, shall in no way affect the validity of any other provision hereof
and each term, covenant, condition and provision of this Lease shall be valid
and be enforced to the fullest extent permitted by law.
13.4 TIME OF ESSENCE. Time is of the essence hereof.
13.5 CAPTIONS. Article and Section captions are not a part of this Lease.
13.6 INCORPORATION OF PRIOR AGREEMENTS. This Lease and the attached
exhibits set forth all the agreements, terms, covenants and conditions between
Landlord and Tenant concerning the Premises and, except as aforesaid, there are
no agreements, terms, covenants or conditions, oral or written, between them
other than those herein contained. Except as otherwise provided herein, no
amendment, change or addition to this Lease shall be binding upon Landlord or
Tenant unless it is in writing and signed by each party.
13.7 LANDLORD DEFAULT; TENANT'S REMEDIES.
(a) In the event of any default by Landlord in the observance or
performance of any obligation on Landlord's part to be observed or
performed under this Lease, Tenant shall give Landlord written notice
specifying such default with particularity and Landlord shall
thereupon have thirty (30) days in which to cure any such default;
provided, however, that if the nature of such default is such that
more than thirty (30) days are required for its cure, then Landlord
shall not be in default if Landlord commences performance within said
thirty (30) day period and thereafter diligently prosecutes the same
to completion within ninety (90) days of such notice. If Landlord
fails to cure any such default after such notice and cure period,
Tenant may, as its sole and exclusive remedy, commence an action
against Landlord for specific performance and/or damages.
(b) If Landlord shall fail to perform any covenant, term or
condition of this Lease required to be performed by Landlord, if any,
and if as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out
of the proceeds of sale received upon execution of such judgment and
levied thereon against the right, title and interest of Landlord in
the Premises and out of Rent receivable by Landlord, or out of the
consideration received by Landlord from the sale or other disposition
of all or any part of Landlord's right, title and interest in the
Premises, and neither Landlord nor its members, partners, officers,
directors, managers,
27
shareholders and lenders, nor their respective successors and assigns,
shall be personally liable for any deficiency.
13.8 NOTICES. All notices and demands hereunder shall be in writing, and
shall be deemed to have been properly given or served as of (a) the date of
personal delivery with acknowledgment of receipt; (b) three (3) business days
after the same is deposited in the United States mail, prepaid, for delivery by
registered or certified mail, return receipt requested; or (c) the first
business day after the date delivered to a reputable overnight courier service
providing proof of delivery. The initial addresses of Landlord and Tenant are
set forth below:
If to Landlord: ▇▇▇▇▇▇ Development Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
3100 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Tenant: CWC Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇, Plant, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
3400 City Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed at any time or from time to time or additional
notice parties added, by notice as above provided.
13.9 WAIVERS. No waiver by Landlord of any provision of this Lease shall be
implied and, in order to be enforceable, all waivers by Landlord shall be in a
written
28
instrument duly executed by Landlord. No waiver by Landlord of any provision of
this Lease shall be deemed a waiver of any other provision hereof or of any
subsequent breach by Tenant of the same or any other provision. Landlord's
consent to or approval of any act shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act by Tenant.
No payment by Tenant or receipt by Landlord of a lesser amount than the amount
then due shall be deemed to be other than on account of the earliest rent due,
nor shall any endorsement or statement on any check or any letter accompanying
any check or payment as payment be deemed an accord and satisfaction, and
Landlord shall accept such check or payment without prejudice to Landlord's
right to recover the balance of such payment or pursue any other remedy in this
Lease provided.
13.10 RECORDING. Tenant shall not record this Lease or any indicia hereof
in any public record.
13.11 HOLDING OVER. Tenant shall surrender the Premises upon the expiration
of the Lease Term or earlier termination of the Lease. Any holdover not
consented to by Landlord in writing shall not result in a new tenancy or
interest and, in such case, Landlord may treat Tenant as a trespasser. If Tenant
remains in possession of the Premises or any part thereof after the expiration
of the Lease Term or the earlier termination hereof without the express written
consent of Landlord, Tenant shall pay rent (for such holdover period) equal to
the amount of one hundred fifty percent (150%) of the amount of Rent and other
charges actually paid by Tenant under this Lease during the last full Lease
Year.
13.12 CUMULATIVE REMEDIES. Except as expressly provided herein, no remedy
or election hereunder shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity or otherwise available to
Landlord.
13.13 COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.
13.14 BINDING EFFECT. This Lease shall bind and inure to the benefit of
Landlord and Tenant and their respective permitted successors and assigns.
13.15 SUBORDINATION; ATTORNMENT AND NON-DISTURBANCE.
(a) This Lease, at the option of Landlord or any of its lenders,
shall be subordinate to any ground lease, mortgage or any other
hypothecation for security and any renewals, future advances,
modifications, consolidations, replacements and extensions thereof,
provided Tenant's rights hereunder continue to be recognized so long
as no Event of Default exists.
(b) Provided Tenant's rights hereunder continue to be recognized
so long as no Event of Default exists, Tenant shall execute any
documents required to effectuate such subordination or to make this
Lease prior to the lien of any mortgage, ground lease or other
security device, as the case may be.
29
(c) In the event of (i) a sale, assignment, ground lease,
mortgage or other transfer of Landlord's interest in the Premises or
any portion thereof or in this Lease; or (ii) any proceedings brought
for the foreclosure of, the granting of a deed in lieu of foreclosure
of or the exercise of the power of sale under any mortgage or security
agreement made by Landlord covering the Premises or any portion
thereof, and provided that such mortgagee or other transferee shall
agree to recognize Tenant's rights hereunder so long as an Event of
Default has not occurred, Tenant shall attorn to the mortgagee or
other transferee and recognize such mortgagee or other transferee as
Landlord under this Lease.
(d) In the event Landlord desires to convey the Premises pursuant
to a sale/leaseback transaction, Tenant shall upon Landlord's request
agree to terminate this Lease and enter into a new lease upon the same
terms and conditions as set forth herein.
13.16 ATTORNEY'S FEES. If Landlord retains an attorney to enforce the terms
of or determine rights under this Lease, Landlord shall be entitled to recover
reasonable costs, attorneys' fees and expenses, including those incurred at the
appellate level. In the event that Landlord fails to fulfill its obligations
hereunder and Tenant commences an action against Landlord under Section 13.7(a)
hereof, the party prevailing in such action shall be entitled to its reasonable
attorneys' fees and expenses.
13.17 CORPORATE AUTHORITY. Each individual executing this Lease on behalf
of Tenant represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of Tenant, in accordance with a duly adopted
resolution, and that this Lease is binding upon Tenant in accordance with its
terms. Tenant shall, contemporaneous with the execution of this Lease, deliver
to Landlord a certified copy of a resolution of the Board of Directors of Tenant
authorizing or ratifying the execution and delivery of this Lease.
13.18 NO JOINT VENTURE. Landlord and Tenant, by entering into this Lease or
consummating the transactions contemplated hereby, shall not be considered
partners or joint venturers.
13.19 QUIET ENJOYMENT. Provided Tenant pays the Rent herein recited and
performs all of Tenant's other covenants and agreements herein contained,
Landlord covenants that Tenant shall peacefully have, hold and enjoy the
Premises, subject to all the other provisions herein contained.
13.20 MORTGAGE FINANCING. In the event Landlord desires to obtain mortgage
financing and Landlord's mortgagee or mortgagees reasonably request certain
modifications or amendments to this Lease, then Tenant, on not less than twenty
(20) days advance notice, agrees to execute such modifications or amendments as
required. Notwithstanding the foregoing, Tenant shall not be required to execute
any modifications or amendments to this Lease which shall modify the provisions
of this Lease relating to the amount of Rent or other charges or costs to be
paid by Tenant, Tenant's rights or
30
obligations under the Lease, the size of the Premises, notice periods, notice
requirements, cure periods, the duration of the term of this Lease, or otherwise
subject Tenant to additional cost, expense, risk, liability or obligations.
Tenant agrees to cooperate with Landlord's efforts in obtaining said mortgage
financing provided there is no cost or expense to Tenant.
13.21 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute and be construed as one and the same instrument.
13.22 BROKERS. Each party hereto does hereby indemnify and agree to hold
the other harmless from and against any and all claims, fees, commissions and
suits of any real estate broker or agent with respect to services claimed to
have been rendered at the request of or through or under such party in
connection with the execution of this Lease or the transactions set forth
herein.
13.23 FINANCIAL STATEMENTS. Tenant shall deliver to Landlord (a) within 120
days after the end of each calendar year annual audited operating statements for
Tenant and a copy of the balance sheet of Tenant as of the end of such year, and
related statements of income and retained earnings and changes in financial
position for such year, and (b) such other information as Landlord may from time
to time reasonably request. All financial statements of Tenant delivered to
Landlord shall be true and correct in all respects, shall be prepared in
accordance with GAAP, and fairly present the financial condition of the subject
thereof as of the dates thereof. None of the aforesaid financial statements, or
any certificate or statement furnished to Landlord by or on behalf of Tenant in
connection with the transactions contemplated hereby, shall contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein or herein not misleading. All financial
statements of Tenant delivered to Landlord under this Section shall be treated
confidentially by Landlord and its lenders and all parties that have access to
such information shall execute a confidentiality agreement in form and content
satisfactory to Tenant, in its sole discretion, prior to having access of such
information.
13.24 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Lease is or will be
made and delivered in the State and shall be governed by and construed and
interpreted in accordance with the laws of the United States of America and the
State, without regard to principles of conflict of laws. All judicial actions,
suits or proceedings brought by or against Landlord or Tenant with respect to
its rights, obligations, liabilities or any other matter under or arising out of
or in connection with this Lease or any transaction contemplated hereby or for
recognition or enforcement of any judgment rendered in any such proceedings
shall be brought in any state or federal court in the State. By execution and
delivery of this Lease, Landlord and Tenant accept, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agree to be bound by any final judgment rendered thereby in
connection with this Lease or any transaction contemplated hereby from which no
appeal has been taken or is available. Tenant and Landlord each hereby
irrevocably waive any objections, including without limitation any objection to
the laying of venue or based on the grounds of FORUM NON CONVENIENS, which
31
either may now or hereafter have to the bringing of any such action or
proceeding in any such jurisdiction. Tenant and Landlord acknowledge that final
judgment against it in any action, suit or proceeding referred to in this
Section shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the same.
13.25 "AS IS" LEASE. Notwithstanding anything to the contrary herein
contained, Tenant expressly understands, acknowledges and agrees that the lease
of the Premises shall be made by Landlord to Tenant on an "as is, where is"
basis, and "with all faults," and Tenant acknowledges that Tenant has agreed to
lease the Premises in its present condition and that Tenant is relying solely on
its own examination and inspections of the Premises and not on any statements or
representations made by Landlord or any agents or representatives of Landlord.
Additionally, Tenant hereby acknowledges that, Landlord makes no warranty or
representation, express or implied, or arising by operation of law, including,
but in no way limited to, any warranty of condition, habitability,
merchantability, or fitness for a particular purpose of the Project, the
Premises or any portion thereof. Landlord hereby specifically disclaims any
warranty, guaranty or representation, oral or written, past, present or future,
of, as to, or concerning: (a) the nature and condition of the Project, the
Premises or any part thereof, including but not by way of limitation, as to its
water, soil or geology, or the suitability thereof, for any and all activities
and uses which Tenant may elect to conduct thereon, or any improvements Tenant
may elect to construct thereon, or any income to be derived therefrom or
expenses to be incurred with respect thereto, or any obligations or any other
matter or thing relating to or affecting the same; (b) the absence of any
Hazardous Substances on, in or under the Project on, in or under any land
adjacent to or abutting the Land; (c) the manner of construction or condition or
state of repair or lack of repair of the Project; (d) the nature or extent of
any easement, restrictive covenant, right-of-way, lease, possession, lien,
encumbrance, license, reservation, condition or other similar matter pertaining
to the Project, the Premises or any portion thereof; and (e) the compliance of
the Project, the Premises or the operation of the Project, the Premises or
portion thereof with any Legal Requirements.
13.26 THIRD PARTY BENEFICIARY. There are no third party beneficiaries of
this Lease, intended or otherwise.
13.27 TENANT PUT. Provided no Event of Default shall exist on the first
anniversary of the Commencement Date, Tenant shall have the right to elect to
terminate this Lease with respect to a portion of the Premises, the size of
which Tenant may specify, not to exceed fifty percent (50%) of the Premises
(exclusive of the Common Areas) with notice of its election, but, subject to the
conditions herein, the location of which Landlord shall specify. Provided no
Event of Default shall exist on the second anniversary of the Commencement Date,
Tenant shall have the right to elect to terminate this Lease with respect to a
portion of the Premises, the size of which Tenant may specify, not to exceed
fifty percent (50%) of the Premises (exclusive of the Common Areas) with notice
of its election, but, subject to the conditions herein, the location of which
Landlord shall specify. The applicable location specified by Landlord is
referred to herein as the "PUT PREMISES". In specifying the applicable Put
Premises under this Section, Landlord shall not include in
32
the Put Premises that portion of the Premises that is cross-hatched in Exhibit
"D-2" attached hereto and shall consult with Tenant, shall act reasonably and in
good faith and shall endeavor to take into account concerns regarding
contiguity, leasehold improvements, Tenant's operational needs, a balance of
interior and exterior space and a balance of finished and unfinished space. In
specifying the Put Premises with respect to the second election by Tenant under
this Section, if any, Landlord may not specify any portion of the Improvements
which are not on, the date of such election, included within the Premises; shall
include the systems network room in the Put Premises and shall consult with
Tenant, shall act reasonably and in good faith and shall endeavor to take into
account concerns regarding contiguity, leasehold improvements, Tenant's
operational needs, a balance of interior and exterior space and a balance of
finished and unfinished space. In addition, if, at the time of the second
election, Tenant has not exercised the first election, the Put Premises shall
not include that portion of the Premises that is cross-hatched on Exhibit "D-2."
The first election under this Section, if made by Tenant, shall be delivered to
Landlord in writing prior to the first anniversary of the Commencement Date and
shall be effective on the second anniversary of the Commencement Date. The
second election under this Section, if made by Tenant shall be delivered to
Landlord in writing prior to the second anniversary of the Commencement Date and
shall be effective on the third anniversary of the Commencement Date. The
applicable effective date of an election under this Section is referred to
herein as the "PUT DATE". Such elections, once made by Tenant by the delivery of
notice, as aforesaid, shall be irrevocable. Such elections may only be made once
by Tenant and if such elections are not, or may not be, made, as aforesaid,
Tenant shall have no further rights under this Section. In the event Tenant does
not, or may not, make the first election under this Section, Tenant shall
continue to be entitled to make the second election under this Section. On or
before the applicable Put Date, Tenant shall remove itself from possession of
the applicable Put Premises and, with respect to such Put Premises, comply with
all other provisions of this Lease applicable upon the expiration of the Lease
Term. From and after the applicable Put Date, the term "Premises" shall mean the
Premises other than the applicable Put Premises. On the applicable Put Date,
Landlord shall adjust the amount of Base Rent to be paid by Tenant and Tenant's
Share to properly reflect the reduction in the size of the Premises by the size
of the applicable Put Premises. Following the applicable Put Date, Landlord
shall have the right, at its sole cost and expense, to enter the Premises for
purposes of constructing demising walls, doors, corridors and related work which
Landlord determines to be necessary to properly separate and divide the
applicable Put Premises.
13.28 TENANT TERMINATION. Provided no Event of Default shall exist on the
fourth anniversary of the Commencement Date, Tenant shall have the right to
elect to terminate this Lease. Such election, if made by Tenant, shall be
delivered to Landlord in writing prior to the fourth anniversary of the
Commencement Date and shall be effective on the fifth anniversary of the
Commencement Date. Such election, once made by Tenant by delivery of notice, as
aforesaid, shall be irrevocable. If such election is not, or may not be, made,
as aforesaid, Tenant shall have no further rights under this Section.
13.29 RECAPTURE. Upon not less than twelve (12) months notice to Tenant,
Landlord shall have the right to elect to recapture and terminate this Lease
with respect to all or any portion of the Premises cross-hatched on Exhibit
"D-1" attached hereto which
33
Landlord may specify. Upon not less than 120 days notice to Tenant, Landlord
shall have the right to elect to recapture and terminate this Lease with respect
to all or any portion of the Premises cross-hatched on Exhibit "D-2" attached
hereto which Landlord may specify. At any time on or after the fourth
anniversary of the Commencement Date, upon not less than twelve (12) months
notice to Tenant, Landlord shall have the right to elect to recapture and
terminate this Lease with respect to all or any portion of the Premises
cross-hatched on Exhibit "D-3" attached hereto which Landlord may specify. Any
portion of the Premises which Landlord may specify for recapture under this
Section is referred to herein as the "RECAPTURED PREMISES". In the event that
the Recaptured Premises are less than the Premises, in specifying the Recaptured
Premises, Landlord shall consult with Tenant, shall act reasonably and in good
faith and shall endeavor to take into account concerns regarding contiguity,
leasehold improvements, Tenant's operational needs, a balance of interior and
exterior space and a balance of finished and unfinished space. Such election, if
made by Landlord, shall be delivered to Tenant in writing. Such election may be
made by Landlord from time to time and as often as Landlord shall determine. In
the event Landlord elects to recapture and terminate this Lease as provided in
this Section, such election shall be effective on the date specified by Landlord
(such effective date is referred to herein as a "RECAPTURE DATE"). On or before
the applicable Recapture Date, Tenant shall remove itself from possession of the
Recaptured Premises and, with respect to the Recaptured Premises, comply with
all other provisions of this Lease applicable upon the expiration of the Lease
Term. In the event that the Recaptured Premises are less than the Premises, from
and after the Recapture Date, the term "Premises" shall mean the Premises other
than the Recaptured Premises, on the applicable Recapture Date Landlord shall
adjust the amount of Base Rent to be paid by Tenant and Tenant's Share to
properly reflect the reduction in the size of the Premises by the size of the
Recaptured Premises and following the applicable Recapture Date, Landlord shall
have the right, at its sole cost and expense, to enter the Premises for purposes
of constructing demising walls, doors, corridors and related work which Landlord
determines to be necessary to properly separate and divide the Recaptured
Premises.
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IN WITNESS WHEREOF, Tenant and Landlord have executed this Lease as of the
date set forth above.
"LANDLORD"
▇▇▇▇▇▇ DEVELOPMENT CORP.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Its President
------------------------
"TENANT"
CWC INCORPORATED,
a Minnesota corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Its VP Corporate Services
------------------------
35
SCHEDULE "1"
DEFINITIONS
-----------
For purposes of this Lease, the following words and terms shall have the
following meanings ascribed to them:
(a) "ACCELERATED AMOUNT" shall have the meaning ascribed to such term in
Section 11.2(a) hereof.
(b) "ADDITIONAL RENT" shall mean all costs, expenses, charges and other amounts
owed by Tenant to Landlord hereunder, other than Base Rent. Additional Rent
shall include Tenant's Share of Impositions and Operating Expenses, as well
as any cost incurred by Landlord in fulfilling Tenant's obligations
hereunder. Additional Rent shall be due and payable on the earlier of the
date Landlord advances funds or demand, unless specifically provided to the
contrary in this Lease.
(c) "AWARD" shall have the meaning ascribed to such term in Section 10.1
hereof.
(d) "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as amended.
(e) "BASE RENT" shall have the meaning ascribed to such term in Section 3.1
hereof.
(f) "COMMENCEMENT DATE" shall mean the date of this Lease.
(g) "COMMON AREAS" shall mean, to the extent applicable, all parking areas,
driveways, entrances, exits, loading docks, pick-up stations, sidewalks,
ramps, landscaped areas, exterior stairways, public elevators, escalators,
hallways, lobbies, and other areas and improvements provided by Landlord
for the common use of tenants of the Project, the guests, customers, and
employees of tenants of the Project, and all other portions of the Project
that are not leased to Tenant or other tenants of the Project or otherwise
leasable, including mechanical rooms and bathrooms available to more than
one tenant.
(h) "DEFAULT" shall mean an event which but for the giving of notice or passage
of time, or both, would constitute an Event of Default hereunder.
(i) "DEFAULT RATE" shall mean the annual rate of interest of fifteen percent
(15%), or such lesser amount as may be the maximum amount permitted by
applicable law. In the event that Rent is not paid when due, the amount of
Rent not so paid shall bear interest at the Default Rate from the date due
until the date paid.
(j) "ENVIRONMENTAL REGULATION(S)" means any law, rule, regulation or permit
relating to the environment, human health or safety now existing or
hereafter enacted.
(k) "EVENT OF DEFAULT" shall have the meaning ascribed to such term in Section
11.1 hereof .
36
(l) "GAAP" shall mean generally accepted accounting principles as in effect in
the United States on the Commencement Date applied on a consistent basis.
(m) "GOVERNMENTAL AUTHORITY" means any federal, state, or local governmental
body including elected bodies, departments, agencies, commissions, boards
or instrumentalities having or purporting to have jurisdiction over
Landlord, Tenant, the Project, the Premises or the business conducted or to
be conducted from the Project or the Premises.
(n) "HAZARDOUS SUBSTANCES" means any substance, pollutant or contaminant, as
those terms are now or hereafter defined in any Environmental Regulation,
and specifically includes, but is not limited to, lead oxide, asbestos,
asbestos-containing materials, petroleum, or petroleum-based products,
formaldehyde, and polychlorinated biphenyls.
(o) "IMPOSITIONS" shall mean all real estate taxes of every kind and nature
imposed upon or assessed of or against Landlord with respect to the
Project, Tenant or any portion of the Project or interest therein, all
charges for any easement or agreement maintained for the benefit of any
portion of the Project, all installments of general and special assessments
(payable over the longest period allowed by the assessing authority),
levies, permits, inspection and license fees, all water and sewer rents and
charges and all other public charges, levies or taxes, whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or
assessed of or against Landlord with respect to the Project, Tenant or any
portion of the Project or interest therein, together with any penalties or
interest on any of the foregoing to the extent Tenant has not provided
Landlord with funds with respect to the payment of such taxes and charges
under Section 3.2(a) hereof.
(p) "IMPROVEMENTS" shall mean all buildings, structures and improvements now
located or hereafter constructed on the Land and all fixtures and equipment
attached to, forming a part of and necessary for the operation of such
buildings, structures and improvements.
(q) "INSURED CASUALTY" shall have the meaning ascribed to such term in Article
9 hereof.
(r) "LAND" shall mean that certain real property located in Blue Earth County,
Minnesota and legally described on EXHIBIT "A" attached hereto, together
with all easements and rights benefitting or appurtenant to such real
property.
(s) "LANDLORD" shall mean Galt Investments, L.L.C., a Nevada limited liability
company, and its successors and assigns.
(t) "LEASE" shall mean this Lease Agreement.
(u) "LEASE TERM" shall mean the period from the Commencement Date through and
including a date ten (10) years thereafter.
37
(v) "LEASE YEAR" shall mean a full calendar year, provided that the first and
last Lease Years shall be determined in accordance with Section 2.5 hereof.
(w) "LEGAL REQUIREMENTS" shall mean all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees, injunctions, agreements,
rules, regulations and requirements pertaining to the Project including any
applicable insurance, environmental, zoning or building, use and land use
laws, ordinances, rules or regulations and all covenants, restrictions and
conditions now or hereafter of record which may be applicable to any of the
Project, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, construction, repair or reconstruction of any of
the Project.
(x) "OPERATING EXPENSES" shall mean all costs and expenses of owning,
operating, maintaining repairing, restoring and replacing all or any
portion of the Project. Operating Expenses shall include all costs and
expenses of protecting, operating, managing the Project (including
attorneys' and other professional fees, except those related to negotiation
or enforcement of leases), repairing, repaving, lighting, cleaning,
painting, striping, insuring, removing of snow, ice and debris, police
protection, security and security patrol, fire protection, regulating
traffic, inspecting, repairing and maintaining of machinery and equipment
used in the operation of the Common Areas, including heating, ventilating
and air conditioning machinery and equipment, depreciation of machinery and
equipment providing heating, ventilating and air conditioning for the
interior Common Areas, cost and expense of inspecting, maintaining,
repairing and replacing storm and sanitary drainage systems, sprinkler and
other fire protection systems, electrical, gas, water, telephone and
irrigation systems, cost and expense of repairing and replacing the Project
and the exterior of the buildings in the project, including, but not
limited to floors, roofs, skylights, elevators, walls, stairs and signs,
cost and expense of installing, maintaining and repairing burglar or fire
alarm systems, if installed, cost and expense of landscaping and shrubbery,
expense of utilities, reasonable property management costs. The following
shall not be included in Operating Expenses: (a) interest or payments on
any financing for the Project; (b) any expenses resulting from the gross
negligence of the Landlord, its agents or employees; (c) any items for
which Landlord is reimbursed by insurance; (d) the cost of providing
improvements within or services to or allowances for the benefit of the
premises and for the individual use of any other tenants in the Project at
any time, and any improvements to the common areas; (e) any other cost or
expense otherwise paid by Tenant under the Lease; (f) leasing commissions;
(g) fines and penalties incurred other than as a result of a Default; (h)
prior to the earlier to occur of a Put Date or a Recapture Date, property
management fees; (i) legal expenses incident to the enforcement by Landlord
of any terms of any lease; (j) compensation paid to any employee of
Landlord, other than compensation paid to employees of Landlord in
connection with the Project; (k) costs of travel, entertainment and
promotion; (l) any costs associated with dividing the Premises; and (m)
capital expenditures and other expenditures for improvements, except (a)
the amortized amount of those made to reduce operating expenses, provided
the savings achieved is the same as or greater than the amortized capital
expenditure, and (b) the amortized amount of
38
those made to comply with governmental laws, or ordinances, regulations or
orders applicable to the Project.
(y) "PERMITTED USE" shall mean the use of the Premises as an office, warehouse
and light industrial facility in compliance with all Legal Requirements and
the terms and conditions of this Lease.
(z) "PREMISES" shall mean that portion of the Project depicted as such on
EXHIBIT "C" attached hereto, consisting of approximately 63,259 square
feet. Prior to the earlier to occur of a Put Date or a Recapture Date, the
Premises shall be deemed to include the Common Areas. As such, until such
date, the provisions of Sections 2.2 and 2.3 hereof shall have no force or
effect.
(aa) "PRESENT VALUE" shall have the meaning ascribed to such term in Section
11.2(f) hereof.
(bb) "PROHIBITED CASUALTY" shall have the meaning ascribed to such term in
Article 9 hereof.
(cc) "PROHIBITED TAKING" shall have the meaning ascribed to such term in Section
10.1 hereof.
(dd) "PROJECT" shall mean the collective reference to the Land and Improvements,
which are located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ consisting of
one building which contains approximately 63,259 square feet.
(ee) "PUT DATE" shall have the meaning ascribed to such term in Section 13.27
hereof.
(ff) "PUT PREMISES" shall have the meaning ascribed to such term in Section
13.27 hereof.
(gg) "RECAPTURE DATE" shall have the meaning ascribed to such term in Section
13.29 hereof.
(hh) "RECAPTURED PREMISES" shall have the meaning ascribed to such term in
Section 13.29 hereof.
(ii) "RELATED ENTITY" shall have the meaning ascribed to such term in Section
12.3 hereof.
(jj) "RENT" shall mean the sum of Base Rent and Additional Rent.
(kk) "RULES" shall mean those reasonable rules and regulations adopted for all
tenants within the Project from time to time by Landlord with respect to
the use and care of the Project.
(ll) "STATE" shall mean the State in which the Project is located.
39
(mm) "TENANT" shall mean CWC Incorporated, a Minnesota corporation.
(nn) "TENANT'S SHARE" shall mean 100%, until the occurrence of a Put Date or
Recapture Date, at which time Tenant's share shall be reduced as provided
in Sections 13.27 or 13.29 hereof.
40
Exhibit 10.5
EXHIBIT "A"
LEGAL DESCRIPTION OF LAND
-------------------------
▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇.
41
EXHIBIT "B"
BASE RENT
---------
Monthly Amount
Dates of Base Rent
----- ------------
[months 1-60] [$45,833.33]
[months 61-120] [$48,124.99]
42
EXHIBIT "C"
DEPICTION OF PREMISES
---------------------
[This Exhibit consists of a two dimensional floor plan for the leased premises
of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇. The floor plan shows a cross
sectional view of room divisions within the premises.]
43
EXHIBIT D-1
-----------
[20% PROTECTED/12 MONTHS NOTICE]
--------------------------------
[This Exhibit depicts the same floor plan of the premises as shown in exhibit C
of Exhibit 10.1 with the southwest 20% of the premises shaded by diagonal
lines.]
44
EXHIBIT D-2
-----------
[55% UNPROTECTED/120 DAY NOTICE]
--------------------------------
-
[This exhibit depicts the same floor plan of the premises as shown in Exhibit C
of Exhibit 10.1 with the northern 55% of the premises shaded by diagonal lines
to indicate the 55% unprotected area.]
45
EXHIBIT D-3
-----------
[25% PROTECTED/12 MONTHS NOTICE AFTER 4 YEARS]
----------------------------------------------
[This exhibit depicts the same floor plan of the premises as shown in
Exhibit C of Exhibit 10.1 with the southwest 25% of the premises shaded by
diagonal lines to indicate the 25% protected area.]