Exhibit 99.1
LEASE AGREEMENT
by and between
PEM (MN) QRS 15-39, INC.,
a Delaware corporation
as LANDLORD
and
PEMSTAR, INC.,
a Minnesota corporation,
as TENANT
Premises: Rochester, Minnesota
Dated as of: March 28, 2003
Table of Contents
Page
1. Demise of Premises 1
2. Certain Definitions 1
3. Title and Condition. 8
4. Use of Leased Premises; Quiet Enjoyment 9
5. Term 10
6. Basic Rent 11
7. Additional Rent 11
8. Net Lease; Non-Terminability 13
9. Payment of Impositions 14
10. Compliance with Laws and Easement Agreements, Environmental Matters 15
11. Liens; Recording 17
12. Maintenance and Repair 17
13. Alterations and Improvements 18
14. Permitted Contests. 19
15. Indemnification 19
16. Insurance 20
17. Casualty and Condemnation 23
18. Termination Events 25
19. Restoration 26
20. Procedures Upon ▇▇▇▇▇▇▇▇ ▇▇
▇▇. Assignment and Subletting, Prohibition Against Leasehold Financing 28
22. Events of ▇▇▇▇▇▇▇ ▇▇
▇▇. Remedies and Damages upon Default 32
24. Notices 35
25. Estoppel Certificate 36
26. Surrender. 36
27. No Merger of Title 36
28. Books and Records 37
29. Determination of Value 37
30. Non-Recourse as to Landlord. 39
31. Financing 39
32. Subordination, Non-Disturbance and Attornment. 40
33. Tax Treatment; Reporting 40
34. Option to ▇▇▇▇▇▇▇▇ ▇▇
▇▇. Right of First Refusal 41
36. Security Deposit 45
37. Alternative Dispute Resolution. 46
38. Miscellaneous 47
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TABLE OF CONTENTS
Page
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EXHIBITS
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Exhibit "A" - Premises 50
Exhibit "B" - Machinery and Equipment 51
Exhibit "C" - Schedule of Permitted Encumbrances 52
Exhibit "D" - Rent Schedule 53
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LEASE AGREEMENT, made as of this 28th day of March, 2003, between PEM (MN)
QRS 15-39, INC., a Delaware corporation ("Landlord"), with an address c/o W.P.
▇▇▇▇▇ & Co. LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and
PEMSTAR, INC., a Minnesota corporation ("Tenant"), with an address at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
In consideration of the rents and provisions herein stipulated to be paid
and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant, and Tenant
hereby takes and leases from Landlord, for the term and upon the provisions
hereinafter specified, the following described property (collectively, the
"Leased Premises"): (a) the land described in Exhibit "A attached hereto
together with the Appurtenances (collectively, the "Land"); (b) the building
containing approximately 260,000 square feet, structures and other improvements
now or hereafter constructed on the Land (collectively, the "Improvements"); and
(c) the fixtures, machinery, equipment and other property described in Exhibit
"B" hereto (collectively, the "Equipment").
2. Certain Definitions.
"Acquisition Cost" shall mean $12,565,445.00.
"Additional Rent" shall mean Additional Rent as defined in Paragraph 7.
"Adjoining Property" shall mean all sidewalks, driveways, curbs, gores and
vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions, improvements or repairs
to, all alterations, reconstructions, renewals, replacements or removals of and
all substitutions or replacements for any of the Improvements or Equipment, both
interior and exterior, structural and non-structural, and ordinary and
extraordinary.
"Appurtenances" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, privileges in and to the Land, including (a) easements
over other lands granted by any Easement Agreement and (b) any streets, ways,
alleys, vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases from Landlord to
a Lender which (a) encumbers any of the Leased Premises and (b) secures
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as
defined in Paragraph 6.
"Casualty" shall mean any damage to or destruction of or which affects
the Leased Premises or Adjoining Property or which arises from the Adjoining
Property.
"Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.
"Condemnation" shall mean a Taking.
"Condemnation Notice" shall mean notice or knowledge of the institution
of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified transaction shall
mean all reasonable costs and expenses incurred by such Person or associated
with such transaction, including without limitation, reasonable attorneys' fees
and expenses related to those attorneys' fees, court costs, customary and
reasonable brokerage fees, escrow fees, title insurance premiums, recording fees
and transfer taxes, as the circumstances require.
"Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).
"Default Termination Amount" shall mean the Default Termination Amount
as defined in Paragraph 23(a)(iii).
"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or promulgated, any
applicable federal, state and local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, consent, court order, judgment,
decree, injunction, code, requirement or agreement with any governmental entity,
(x) relating to pollution (or the cleanup thereof), or the protection of air,
water vapor, surface water, groundwater, drinking water supply, land (including
land surface or subsurface), plant, aquatic and animal life from injury caused
by a Hazardous Substance or (y) concerning exposure to, or the use, containment,
storage, recycling, reclamation, reuse, treatment, generation, discharge,
transportation, processing, handling, labeling, production, disposal or
remediation of Hazardous Substances or Hazardous Conditions, in each case as
amended and as now or hereafter in effect, and (ii) any common law or equitable
doctrine (including, without limitation, injunctive relief and tort doctrines
such as negligence, nuisance, trespass and strict liability) that may impose
liability or obligations or injuries or damages due to or threatened as a result
of the presence of, exposure to, or ingestion of, any Hazardous Substance. The
term Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials
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Transportation Act, each as amended and as now or hereafter in effect and any
similar state or local Law.
"Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased Premises, or from the
Leased Premises to the environment, in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which is likely to result in any liability to Landlord, Tenant or Lender, any
Federal, state or local government or any other Person for the costs of any
removal or remedial action or natural resources damage or for bodily injury or
property damage, (b) any deposit, storage, dumping, placement or use of any
Hazardous Substance at, upon, under or within the Leased Premises or which
extends to any Adjoining Property in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which is likely to result in any liability to any Federal, state or local
government or to any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (c)
the abandonment or discarding of any barrels, containers or other receptacles
containing any Hazardous Substances in violation of any Environmental Laws, (d)
any activity, occurrence or condition which could result in any liability, cost
or expense to Landlord or Lender or any other owner or occupier of the Leased
Premises, or which could result in a creation of a lien on the Leased Premises
under any Environmental Law, or (e) any violation of or noncompliance with any
Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).
"Fair Market Value" shall mean the higher of (a) the fair market value
of the Leased Premises as of the Relevant Date as if unaffected and unencumbered
by this Lease or (b) the fair market value of the Leased Premises as of the
Relevant Date as affected and encumbered by this Lease and considering all of
Tenant's options to extend the Term hereof that Tenant has, at such time,
exercised or has been deemed to have exercised. For all purposes of this Lease,
Fair Market Value shall be determined in accordance with the procedure specified
in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair Market Value
is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately available funds
which at the time of payment are legal tender for the payment of public and
private debts in the United States of America.
"First Option" shall mean the First Option as defined in Paragraph
34(a).
"GAAP" shall mean GAAP as defined in Paragraph 28.
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"Hazardous Condition" means any condition which would support any claim
or liability under any Environmental Law, including the presence of underground
storage tanks.
"Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.
"Initial Loan" shall mean that Loan made on the date hereof from Column
Financial, Inc., its successors and/or assigns.
"Insurance Requirements" shall mean the requirements of all insurance
policies required to be maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the first Lease Year, the
period commencing on the Commencement Date and ending at midnight on the last
day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean the requirements of all present and
future Laws (including but not limited to Environmental Laws and Laws relating
to accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or hereafter of
record which may be applicable to Tenant or to any of the
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Leased Premises, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or restoration of any of the Leased Premises,
even if compliance therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the Leased Premises
or requires Tenant to carry insurance other than as required by this Lease. The
term "Legal Requirements" shall not, however, include any private covenants,
restrictions or conditions agreed to in writing by Landlord as owner not
approved in writing by Tenant.
"Lender" shall mean any person or entity (and its respective successors
and assigns) which may, on or after the date hereof, make a Loan to Landlord or
be the holder of a Note.
"Level 1 Requirements" shall mean Level 1 Requirements as defined in
Paragraph 36.
"Loan" shall mean any loan made by one or more Lenders to Landlord,
which loan is secured by a Mortgage and an Assignment and evidenced by a Note.
"Monetary Obligations" shall mean Rent and all other sums payable by Tenant
under this Lease to Landlord, to any third party on behalf of Landlord or to any
Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from Landlord to a
Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any reasonable expenses
incurred by Landlord and Lender in collecting such award or proceeds.
"Note" shall mean any promissory note evidencing Landlord's obligation
to repay a Loan, as the same may be amended, supplemented or modified.
"Offer Amount" shall mean (i) with respect to the First Option, the
greater of (a) the sum of 115% of the Fair Market Value of the Leased Premises
as of the Relevant Date and the applicable Prepayment Premium which Landlord
will be required to pay in prepaying any Loan with the proceeds of the Offer
Amount and (b) the sum of 115% of the Acquisition Cost and the applicable
Prepayment Premium which Landlord will be required to pay in prepaying any Loan
with the proceeds of the Offer Amount, and (ii) with respect to the Second
Option, the greater of (x) the Fair Market Value of the Leased Premises as of
the Relevant Date and (y) the Acquisition Cost.
"Option Exercise Notice" shall mean Option Exercise Notice as defined
in Paragraph 34.
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"Partial Casualty" shall mean any Casualty which does not constitute a
Termination Event.
"Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions and easements and other encumbrances, other than
any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall
not be deemed to revive any such encumbrances that have expired or terminated or
are otherwise invalid or unenforceable), or other encumbrances which are
reasonably approved by Landlord and Tenant in writing.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prepayment Premium" shall mean any payment required to be made by
Landlord to a Lender under a Note or any other document evidencing or securing a
Loan (other than payments of principal and/or interest which Landlord is
required to make under a Note or a Mortgage) solely by reason of any prepayment
or defeasance by Landlord of any principal due under a Note or Mortgage arising
in connection with or as a result of an Event of Default under this Lease or in
connection with any transfer of the fee simple title of the Leased Premises to
Tenant, and which may without limitation take the form of (i) a "make whole" or
yield maintenance clause requiring a prepayment premium or (ii) a defeasance
payment (such defeasance payment to be an amount equal to the positive
difference between (a) the total amount required to defease a Loan and (b) the
outstanding principal balance of the Loan as of the date of such defeasance plus
reasonable Costs of Landlord and Lender.
"Purchase Price" shall mean the Purchase Price as defined in Paragraph
34.
"Present Value" of any amount shall mean such amount discounted by a
rate per annum which is the lower of (a) the Prime Rate at the time such present
value is determined or (b) six percent (6%) per annum.
"Prime Rate" shall mean the annual interest rate as published, from
time to time, in The Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event The Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.
"Relevant Amount" shall mean the Termination Amount or the Default
Termination Amount, as the case may be.
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"Relevant Date" shall mean (a) the date immediately prior to the date
on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a termination offer under Paragraph
23(a)(iii) or (e) the date on which Landlord receives an Option Exercise Notice.
"Renewal Term" shall mean Renewal Term as defined in Paragraph 5.
"Rent" shall mean, collectively, Basic Rent and Additional Rent.
"Sales Contract" shall mean Sales Contract as defined in Paragraph
35(a).
"Second Option" shall mean the Second Option as defined in Paragraph
34(a).
"Security Deposit" shall mean Security Deposit as defined in Paragraph
36.
"Site Assessment" shall mean a Site Assessment as defined in Paragraph
10(c).
"State" shall mean the State of Minnesota.
"Surviving Obligations" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the expiration or
prior termination of this Lease or which survive such expiration or termination
by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a portion of
any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a) the sum of the Fair
Market Value and the applicable Prepayment Premium which Landlord will be
required to pay in prepaying or defeasing, as applicable, any Loan with proceeds
of the Termination Amount or (b) the sum of the Acquisition Cost and the
applicable Prepayment Premium which Landlord will be
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required to pay in prepaying or defeasing in whole or in part, as applicable,
any Loan with proceeds of the Termination Amount.
"Termination Date" shall mean Termination Date as defined in Paragraph
18.
"Termination Event" shall mean a Termination Event as defined in
Paragraph 18.
"Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).
"Trade Fixtures" shall mean all furniture, fixtures, equipment,
machinery, and all items of personal property (whether or not attached to the
Improvements) which are owned by Tenant or which Tenant leases from an entity
other than Landlord and are used in the operation of the business which Tenant
conducts on or in the Leased Premises
"Warranties" shall mean Warranties as defined in Paragraph 3(d).
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the Mortgage and
Assignment presently in effect, (ii) the rights of any Persons in possession of
the Leased Premises, (iii) the existing state of title of any of the Leased
Premises, including any Permitted Encumbrances, (iv) any state of facts which an
accurate survey or physical inspection of the Leased Premises might show, (v)
all Legal Requirements, including any existing violation of any thereof, and
(vi) the condition of the Leased Premises as of the commencement of the Term,
without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises is in good condition and
repair at the inception of this Lease. LANDLORD LEASES AND WILL LEASE AND TENANT
TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv)
LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii)
LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii)
DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi)
COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT EXCEPT WHEN CAUSED BY
LANDLORD'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. TENANT ACKNOWLEDGES THAT THE
LEASED PREMISES
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IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAS
BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT
OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR
PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT
LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED,
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY
LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR
HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the title to the
Leased Premises prior to the execution and delivery of this Lease and has found
the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that (i) fee simple title (both legal and equitable) is in Landlord
and except as provided in Paragraphs 34 and 35 hereof with respect to an option
and certain rights of refusal to purchase the Leased Premises that Tenant has
only the leasehold right of possession and use of the Leased Premises, as
provided herein, (ii) the Improvements conform to all material Legal
Requirements and all Insurance Requirements, (iii) all easements necessary or
appropriate for the use or operation of the Leased Premises have been obtained,
(iv) all contractors and subcontractors who have performed work on or supplied
materials to the Leased Premises have been fully paid, and all materials and
supplies have been fully paid for, (v) the Improvements have been fully
completed in all material respects in a workmanlike manner of good quality, and
(vi) all Equipment necessary or appropriate for the use or operation of the
Leased Premises has been installed and is presently fully operative in all
material respects.
(d) Landlord hereby assigns to Tenant, without recourse or warranty
whatsoever, all assignable warranties, guaranties, indemnities and similar
rights (collectively, "Warranties") which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until the expiration or
earlier termination of this Lease, whereupon such assignment shall cease and all
of the Warranties, guaranties, indemnities and other rights shall automatically
revert to Landlord. In confirmation of such reversion Tenant shall execute and
deliver promptly any certificate or other document reasonably required by
Landlord. Landlord shall also retain the right to enforce any guaranties upon
the occurrence of an Event of Default. Tenant shall enforce the Warranties in
accordance with their respective terms.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for offices, manufacturing
and related warehousing, research and development, and storage, and for no other
purpose without the prior written consent of Landlord which shall not be
unreasonably withheld or delayed. Tenant shall not use or occupy or permit any
of the Leased Premises to be used or occupied, nor do or permit anything to be
done in or on any of the Leased Premises, in a manner which would or might (i)
violate any Law, Legal Requirement or Permitted Encumbrance, (ii) make void or
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voidable or cause any insurer to cancel any insurance required by this Lease, or
make it difficult or impossible to obtain any such insurance at commercially
reasonable rates, (iii) make void or voidable, cancel or cause to be cancelled
or release any of the Warranties, (iv) cause structural injury to any of the
Improvements or (v) constitute a public or private nuisance or waste.
(b) So long as no Event of Default has occurred and is continuing, Tenant
shall quietly hold, occupy and enjoy the Leased Premises throughout the Term,
without any hindrance, ejection or molestation by Landlord with respect to
matters that arise after the date hereof, provided that Landlord or its agents
may enter upon and examine any of the Leased Premises at such reasonable times
as Landlord may select and upon reasonable notice to Tenant (except in the case
of an emergency, in which no notice shall be required) for the purpose of
inspecting the Leased Premises, verifying compliance or non-compliance by Tenant
with its obligations hereunder and the existence or non-existence of an Event of
Default, showing the Leased Premises to prospective Lenders and purchasers and
taking such other action with respect to the Leased Premises as is permitted by
any provision hereof, but Landlord will use reasonable efforts not to interfere
with Tenant's use and occupancy of the Leased Premises.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and hold the Leased
Premises for an initial term (such term, as extended or renewed in accordance
with the provisions hereof, being called the "Term") commencing on the date
hereof (the "Commencement Date") and ending on the last day of the two hundred
fortieth (240th) calendar month next following the date hereof (the "Expiration
Date").
(b) Provided that if, on or prior to the Expiration Date or any other
Renewal Date (as hereinafter defined) this Lease shall not have been terminated
pursuant to any provision hereof, then on the Expiration Date and on the tenth
(10th) anniversary of the Expiration Date (the Expiration Date and such
anniversary being a referred to herein as a "Renewal Date"), the Term shall be
deemed to have been automatically extended for an additional period of ten (10)
years (each such extension, a "Renewal Term"), unless Tenant shall notify
Landlord in writing in recordable form at least eighteen (18) months prior to
the next Renewal Date that Tenant is terminating this Lease as of the next
Renewal Date. Any such extension of the Term shall be subject to all of the
provisions of this Lease, as the same may be amended, supplemented or modified
(except that Tenant shall not have the right to any additional Renewal Terms).
(c) If Tenant exercises its option not to extend or further extend the Term,
or if an Event of Default occurs, then Landlord shall have the right during the
remainder of the Term then in effect and, in any event, Landlord shall have the
right during the last year of the Term, to (i) advertise the availability of the
Leased Premises for sale or reletting and to erect upon the Leased Premises
signs indicating such availability and (ii) after a reasonable time following
the giving of oral or written notice to Tenant, show the Leased Premises to
prospective purchasers or tenants or their agents at such reasonable times as
Landlord may select, as long as Landlord uses reasonable efforts not to
interfere with Tenant's use and occupancy of the Leased Premises.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto
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("Basic Rent"), commencing on the fifth day of April, 2003, and thereafter on
the same day of each July, October, January and April during the Term (each such
day being a "Basic Rent Payment Date"). Each such rental payment shall be made,
in Federal Funds (a) to Landlord pursuant to wire transfer instructions
delivered to Tenant from time to time and/or to such one or more other Persons,
pursuant to wire transfer instructions delivered to Tenant from time to time at
such addresses and in such proportions as Landlord may direct by fifteen (15)
days' prior written notice to Tenant (in which event Tenant shall give Landlord
notice of each such payment concurrent with the making thereof), and (b) no
later than the applicable Basic Rent Payment Date. If Landlord specifies that
any component of Rent is to be paid to a Person other than to Landlord, upon
Tenant's making the payment of such component of Rent, Tenant shall be deemed to
have made the payment to Landlord under this Lease.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent (collectively,
"Additional Rent"):
(i) except as otherwise specifically provided herein, all costs and
expenses of Tenant, Landlord and any other Persons specifically referenced
herein which are incurred in connection or associated with (A) the ownership,
use, non-use, occupancy, monitoring, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance by Landlord of any of Tenant's obligations
under this Lease, (C) any sale or other transfer of any of the Leased Premises
to Tenant under this Lease, (D) any Condemnation proceedings, (E) the
adjustment, settlement or compromise of any insurance claims involving or
arising from any of the Leased Premises, (F) the prosecution, defense or
settlement of any litigation involving or arising from any of the Leased
Premises due to any action or inaction of Tenant, this Lease, or the sale of the
Leased Premises to Landlord, (G) the exercise or enforcement by Landlord, its
successors and assigns, of any of its rights under this Lease, (H) any amendment
to or modification or termination of this Lease made at the request of Tenant,
(I) reasonable Costs of Landlord's counsel and reasonable internal Costs of
Landlord incurred in connection with any act undertaken by Landlord (or its
counsel) at the request of Tenant, or incurred in connection with any act of
Landlord performed on behalf of Tenant in the case of an Event of Default, (J)
the reasonable internal Costs of Landlord incurred in connection with any act
undertaken by Landlord at the request of Tenant or Tenant's failure to act
promptly in an emergency situation, (K) all costs and fees associated with the
wire transfers of Rent payments, and (L) any other items specifically required
to be paid by Tenant under this Lease; Notwithstanding the foregoing, Tenant is
not responsible for the following Costs:
(A) Interest and any increase in the rate of interest payable by Landlord with
respect to any Loan, Mortgage or Note.
(B) Amortization or other payments on loans to Landlord.
(C) Depreciation of the Leased Premises or any part thereof.
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(D) Leasing commissions or brokerage commissions of any kind, except as
specifically set forth herein.
(E) Income, excess profits or franchise taxes measured by the net income of
Landlord.
(F) The amount of rent or other charges payable under and pursuant to any
ground lease relating to the Leased Premises
(G) Any advertising or promotional expenses.
(H) Any cost representing an amount paid to an entity related to Landlord which
is in excess of competitive costs charged by others.
(I) Management fees and administrative fees for a calendar year.
(J) Except as may be required to be paid in accordance with Paragraph 9(b),
reserve of any kind, including but not limited to reserves for replacement,
bad debts, lost rent, or similar charges.
(K) Charitable, political or trade association contributions.
(L) Costs associated with the operation of the business of the entity which
constitutes the Landlord, as distinguished from the costs of operation of
the Leased Premises, including accounting, tax and legal costs.
(M) Landlord's general overhead and administrative expenses.
(ii) Tenant may request an audit of any Person's Costs paid directly by
such Person by an independent certified public accountant chosen by Landlord
from a list of not fewer than three submitted by Tenant in conjunction with the
request. If Landlord does not make the choice with fifteen (15) days, Tenant may
do so. The auditor shall have access to those records of Landlord pertaining to
Costs for the year in question. The auditor shall report to the parties within
thirty (30) days after being chosen. The report of the auditor shall be final
and binding on both parties with respect to the year in question unless Landlord
disputes the audit by notice to Tenant within fifteen (15) days after receiving
the report. If the report is disputed by Landlord, the parties shall select a
mutually acceptable auditor to review the report, and the determination of the
mutually acceptable reviewing auditor shall be final and binding on both
parties. If the actual Costs differ from those charged to Tenant, payments
required to make adjustments in Additional Rent conform to the final report
shall be made within thirty (30) days after receipt of the final report. All
expenses of the audit shall be borne by Tenant unless the audit, or the final
determination by the reviewing auditor if Tenant's audit is disputed by
Landlord, discloses an overstatement of Costs of 3% or more, in which case all
reasonable expenses of Tenant's audit and the reviewing audit resolving a
disputed audit shall be borne by Landlord, and payment of Costs shall be
adjusted accordingly. If Tenant's audit is disputed by Landlord and the
reviewing auditor determines that no adjustment is required, Tenant will pay all
costs of its audit and all costs of the reviewing auditor. If the final
resolution of a disputed audit requires an adjustment
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in favor of Tenant, but the adjustment is less than 3%, Tenant shall pay cost of
the initial audit, and each party will pay one-half of the cost of the reviewing
auditor.
(iii) after the date all or any portion of any installment of Basic
Rent is due and not paid by the applicable Basic Rent Payment Date, an amount
(the "Late Charge") equal to five percent (5%) of the amount of such unpaid
installment or portion thereof, provided, however, that with respect to the
first late payment of all or any portion of any installment of Basic Rent in any
Lease Year the Late Charge shall not be due until three (3) days after the date
Landlord gives Tenant written notice that such installment is past due; and
(iv) interest at the rate (the "Default Rate") of five percent (5%)
over the Prime Rate per annum on the following sums until paid in full: (A) all
overdue installments of Basic Rent from the respective due dates thereof
provided, however, that with respect to the first late payment of all or any
portion of any installment of Basic Rent in any Lease Year, no default interest
shall accrue until three (3) days after the date Landlord gives Tenant written
notice that such installment is past due, (B) all overdue amounts of Additional
Rent relating to Tenant's obligations hereunder which Landlord shall have paid
on behalf of Tenant, from the date of payment thereof by Landlord, and (C) all
other overdue amounts of Additional Rent, from the date when any such amount
becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent referred to in
Paragraph 7(a)(i) when the same shall become due, provided that amounts which
are billed to Landlord or any third party, but not to Tenant, shall be paid
within fifteen (15) days after the date set forth in Landlord's invoice
therefor, and (ii) any other Additional Rent, within fifteen (15) days after
Tenant receives Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and
(iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations shall be paid without
notice or demand and without set-off, counterclaim, recoupment, abatement,
suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off").
(b) This Lease and the rights of Landlord and the obligations of Tenant
hereunder shall not be affected by any event or for any reason or cause
whatsoever foreseen or unforeseen.
(c) The obligations of Tenant hereunder shall be separate and independent
covenants and agreements, all Monetary Obligations shall continue to be payable
in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and
the obligations of Tenant hereunder shall continue unaffected unless the
requirement to pay or perform the same shall have been terminated pursuant to an
express provision of this Lease. The obligation to pay Rent or amounts equal
thereto shall not be affected by any collection of rents by any governmental
body pursuant to a tax lien or otherwise, even though such obligation results in
a double payment of
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Rent. All Rent payable by Tenant hereunder shall constitute "rent" for all
purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant shall have no
right and hereby waives all rights which it may have under any Law (i) to quit,
terminate or surrender this Lease or any of the Leased Premises, or (ii) to any
Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due thereon, pay and
discharge all taxes (including real and personal property, franchise, sales,
use, gross receipts and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's leasehold interest in the Leased Premises,
(iii) any of the Leased Premises, or (iv) Landlord as a result of or arising in
respect of the acquisition, ownership, occupancy, leasing, use, possession or
sale of any of the Leased Premises, any activity conducted on any of the Leased
Premises, or the Rent, (collectively, the "Impositions"); provided, that nothing
herein shall obligate Tenant to pay (A) income, excess profits or other taxes of
Landlord which are determined on the basis of Landlord's (or Lender's) net
income or net worth (unless such taxes are in lieu of or a substitute for any
other tax, assessment or other charge upon or with respect to the Leased
Premises which, if it were in effect, would be payable by Tenant under the
provisions hereof or by the terms of such tax, assessment or other charge), (B)
any estate, inheritance, succession, gift or similar tax imposed on Landlord or
(C) any capital gains tax imposed on Landlord in connection with the sale of the
Leased Premises to any Person. If any Imposition may be paid in installments
without interest or penalty, Tenant shall have the option to pay such Imposition
in installments; in such event, Tenant shall be liable only for those
installments which accrue or become due and payable during the Term. Tenant
shall prepare and file all tax reports required by governmental authorities
which relate to the Impositions. Tenant shall deliver to Landlord (1) copies of
all settlements and notices pertaining to the Impositions which may be issued by
any governmental authority within ten (10) days after Tenant's receipt thereof,
(2) receipts for payment of all taxes required to be paid by Tenant hereunder
within thirty (30) days after the due date thereof and (3) receipts for payment
of all other Impositions within ten (10) days after Landlord's request therefor.
(b) Following the occurrence of an Event of Default, Tenant shall pay to
Landlord or Lender such amounts (each an "Escrow Payment") monthly or as
required by such Lender (but not more often than monthly) so that there shall be
in an escrow account an amount sufficient to pay the Escrow Charges (as
hereinafter defined) as they become due. As used herein, "Escrow Charges" shall
mean real estate taxes and assessments on or with respect to the Leased Premises
or payments in lieu thereof and premiums on any insurance required by this Lease
and any reserves for capital improvements, deferred maintenance repair and/or
tenant improvements and leasing commissions required by any Lender. Landlord
shall determine the amount of the Escrow Charges (it being agreed that if
required by a Lender, such amounts shall equal any corresponding escrow
installments required to be paid by Landlord) and the amount of each
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Escrow Payment. As long as the Escrow Payments are being held by Landlord the
Escrow Payments shall not be commingled with other funds of Landlord or other
Persons and interest thereon shall accrue for the benefit of Tenant from the
date such monies are received and invested until the date such monies are
disbursed to pay Escrow Charges. Landlord shall apply the Escrow Payments to the
payment of the Escrow Charges in such order or priority as Landlord shall
determine or as required by law. If at any time the Escrow Payments theretofore
paid to Landlord shall be insufficient for the payment of the Escrow Charges,
Tenant, within ten (10) days after Landlord's demand therefor, shall pay the
amount of the deficiency to Landlord. If at any time after escrows are required
to be paid by Tenant pursuant to this Paragraph 9(b) no Event of Default exists
for twelve consecutive months, Tenant shall not be required to continue to pay
such escrows unless and until another Event of Default occurs. However, if
escrows are so reinstituted, Tenant shall be required to pay the escrows
described in this Paragraph 9(b) for the balance of the Term. At the end of the
Term, the balance remaining in any escrow account (less any sums expended by
Landlord or Lender) shall be returned to Tenant after deducting any sums then
due and owing Landlord under this Lease.
10. Compliance with Laws and Easement Agreements, Environmental
Matters.
(a) Tenant shall, at its expense, comply with and conform to, and cause
the Leased Premises and any other Person occupying any part of the Leased
Premises to comply with and conform to, all Insurance Requirements and Legal
Requirements (including all applicable Environmental Laws). Tenant shall not at
any time (i) cause, permit or suffer to occur any Environmental Violation or
(ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
Environmental Violation and, at the request of Landlord, Tenant shall promptly
remediate or undertake any other appropriate response action to correct any
existing Environmental Violation, however immaterial. Any and all reports
prepared for or by Landlord with respect to the Leased Premises shall be for the
sole benefit of Landlord and Lender and no other Person shall have the right to
rely on any such reports.
(b) Tenant, at its sole cost and expense, will at all times promptly and
faithfully abide by, discharge and perform all of the covenants, conditions and
agreements contained in any Easement Agreement on the part of Landlord or the
occupier to be kept and performed thereunder, including but not limited to the
obligation to build a sidewalk if such construction is required pursuant to that
certain Pedestrian Facilities Agreement by and between Tenant and the City of
Rochester dated as of May 15, 2001 and recorded with the Office of the County
Recorder of Olmsted County on December 28, 2001 as document A899570. Tenant will
not alter, modify, amend or terminate any Easement Agreement, give any consent
or approval thereunder, or enter into any new Easement Agreement without, in
each case, the prior written consent of Landlord, which consent Landlord shall
not unreasonably withhold, condition or delay.
(c) Upon prior written notice from Landlord, Tenant shall permit such
persons as Landlord may designate ("Site Reviewers") to visit the Leased
Premises and perform, as agents of Tenant, environmental site investigations and
assessments ("Site Assessments") on the Leased Premises (i) in connection with
any sale, financing or refinancing of the Leased Premises, (ii) within the six
month period prior to the expiration of the Term, (iii) if required by Lender or
the
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terms of any credit facility to which Landlord is bound, (iv) if an Event of
Default exists, or (v) at any other time that, in the reasonable opinion of
Landlord, a reasonable basis exists to believe that an Environmental Violation
or any condition that could reasonably be expected to result in any
Environmental Violation exists. Such Site Assessments may include both above and
below the ground testing for Environmental Violations and such other tests as
may be necessary, in the reasonable opinion of the Site Reviewers, to conduct
the Site Assessments. Tenant shall supply to the Site Reviewers such historical
and operational information in Tenant's possession regarding the Leased Premises
as may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The cost of performing
and reporting any Site Assessments performed pursuant to clause "(v)" above
shall be paid by Tenant, but the costs of all other Site Assessments will be
paid by Landlord.
(d) If an Environmental Violation occurs or is found to exist and, in
Landlord's reasonable judgment, the cost of remediation of, or other response
action with respect to, the same is likely to exceed $250,000, Tenant shall
provide to Landlord, within ten (10) days after Landlord's request therefor,
adequate financial assurances that Tenant will effect such remediation in
accordance with applicable Environmental Laws. Such financial assurances shall
be a bond or letter of credit reasonably satisfactory to Landlord in form and
substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire and Landlord has been unable, despite good faith efforts, to
relet the Lease Premises at market terms solely due to the Environmental
Violation, then, at the option of Landlord, the Term shall be automatically
extended beyond the date of termination or expiration and this Lease shall
remain in full force and effect beyond such date until the earlier to occur of
(i) the completion of all remedial action in accordance with applicable
Environmental Laws or (ii) the date specified in a written notice from Landlord
to Tenant terminating this Lease.
(f) If Tenant fails to promptly correct any Environmental Violation which
occurs or is found to exist, Landlord shall have the right (but no obligation)
to take any and all actions as Landlord shall deem necessary or advisable in
order to cure such Environmental Violation.
(g) Tenant shall notify Landlord immediately after becoming aware of any
Environmental Violation (or alleged Environmental Violation) or noncompliance
with any of the covenants contained in this Paragraph 10 and shall forward to
Landlord immediately upon receipt thereof copies of all orders, reports,
notices, permits, applications or other communications relating to any such
violation or noncompliance.
(h) All future leases, subleases or concession agreements relating to the
Leased Premises entered into by Tenant shall contain covenants of the other
party not to at any time (i) cause any Environmental Violation to occur or (ii)
permit any Person occupying the Leased Premises through said subtenant or
concessionaire to cause any Environmental Violation to occur.
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11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit to be
created or to remain and shall promptly discharge or remove any lien, levy or
encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL PROMPTLY, POST
ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this
Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased Premises and the
Adjoining Property in as good repair and appearance as they are in on the date
hereof and fit to be used for their intended use in accordance with the better
of the practices generally recognized as then acceptable by other companies in
its industry or observed by Tenant with respect to the other real properties
owned or operated by it, and, in the case of the Equipment, in as good
mechanical condition as it was on the later of the date hereof or the date of
its installation, except for ordinary wear and tear and damage by Casualty that
results in a Termination Offer; Tenant shall take every other commercially
reasonable action necessary or appropriate for the preservation and safety of
the Leased Premises. Tenant shall promptly make all Alterations of every kind
and nature, whether foreseen or unforeseen, which may be required to comply with
the foregoing requirements of this Paragraph 12(a). Landlord shall not be
required to make any Alteration, whether foreseen or unforeseen, or to maintain
any of the Leased Premises or Adjoining Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or hereafter
in effect to make Alterations at the expense of Landlord or to require Landlord
to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12
shall be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall (i) encroach
upon any setback or any property, street or right-of-way adjoining the Leased
Premises, (ii) violate the provisions of any restrictive covenant affecting the
Leased Premises, (iii) hinder or obstruct any
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easement or right-of-way to which any of the Leased Premises is subject or (iv)
impair the rights of others in, to or under any of the foregoing, Tenant shall,
promptly after receiving notice or otherwise acquiring knowledge thereof, either
(A) obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the prior
written consent of Landlord and Lender and provided that no Event of Default
then exists, (i) to make non-structural Alterations or a series of related
non-structural Alterations that, as to any such Alterations or series of related
Alterations, do not cost in excess of $250,000 and (ii) to install Equipment in
the Improvements or accessions to the Equipment that, as to such Equipment or
accessions, do not cost in excess of $250,000, so long as at the time of
construction or installation of any such Equipment or Alterations no Event of
Default exists and the value and utility of the Leased Premises is not
diminished thereby. If the cost of any non structural Alterations, series of
related non-structural Alterations, Equipment or accessions thereto is in excess
of $250,000, or if Tenant desires to make structural Alterations to the Leased
Premises, the prior written approval of Landlord shall be required, which
approval Landlord will not unreasonably withheld, conditioned, or delayed.
Notwithstanding the foregoing, as long as Tenant complies with all applicable
governmental laws and regulations, Tenant may install, repair, and replace its
Trade Fixtures within the Leased Premises, but Tenant must remove such Trade
Fixtures and any Alterations except for those Alterations required by Law or for
which Landlord has agreed in writing that removal will not be required upon the
expiration or earlier termination of this Lease and repair any damage caused by
such removal, provided, however, that Tenant shall not be required to remove any
Alterations in or on the Leased Premises that exist as of the date hereof.
Landlord agrees that within thirty (30) days of receipt of a written request
from Tenant requesting Landlord's agreement that certain proposed Alterations
not be required to be removed upon the expiration or earlier termination of the
Lease, Landlord shall notify Tenant in writing of its approval or denial of such
request.
(b) If Tenant makes any Alterations pursuant to this Paragraph 13 or as
required by Paragraph 12 or 17 (such Alterations and actions being hereinafter
collectively referred to as "Work"). whether or not Landlord's consent is
required, then (i) the market value of the Leased Premises shall not be lessened
by any such Work or its usefulness impaired, (ii) all such Work shall be
performed by Tenant in a good and workmanlike manner, (iii) all such Work shall
be expeditiously completed in compliance with all Legal Requirements, (iv) all
such Work shall comply with the Insurance Requirements, (v) if any such Work
involves the replacement of Equipment or parts thereto, all replacement
Equipment or parts shall have a value and useful life equal to the greater of
(A) the value and useful life on the date hereof of the Equipment being replaced
or (B) the value and useful life of the Equipment being replaced immediately
prior to the occurrence of the event which required its replacement (assuming
such replaced Equipment was then in the condition required by this Lease), (vi)
Tenant shall promptly discharge or remove all liens filed against any of the
Leased Premises arising out of such Work, (vii) Tenant shall
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procure and pay for all permits and licenses required in connection with any
such Work, (viii) all such Work shall be the property of Landlord and shall be
subject to this Lease, and Tenant shall execute and deliver to Landlord any
document requested by Landlord evidencing the assignment to Landlord of all
estate, right, title and interest (other than the leasehold estate created
hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall
comply, to the extent requested by Landlord or required by this Lease, with the
provisions of Paragraphs 12(a) and 19(a), whether or not such Work involves
restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or
remove any lien referred to in Paragraph 11 or 13 or (d) take any action with
respect to any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) (such non-compliance with the terms hereof being
hereinafter referred to collectively as "Permitted Violations") and may dispute
or contest the same, so long as at the time of such contest no Event of Default
exists and so long as Tenant shall contest, in good faith, the existence, amount
or validity thereof, the amount of the damages caused thereby, or the extent of
its or Landlord's liability therefor by appropriate proceedings which shall
operate during the pendency thereof to prevent or stay (i) the collection of, or
other realization upon, the Permitted Violation so contested, (ii) the sale,
forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to
pay any damages caused by any Permitted Violation, (iii) any interference with
the use or occupancy of any of the Leased Premises, (iv) any interference with
the payment of any Rent, or (v) the cancellation or increase in the rate of any
insurance policy or a statement by the carrier that coverage will be denied.
Tenant shall provide Landlord security which is satisfactory, in Landlord's
reasonable judgment, to assure that such Permitted Violation is corrected,
including all Costs, interest and penalties that may be incurred or become due
in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend, save and hold harmless
Landlord, Lender and all other Persons described in Paragraph 30 (each an
"Indemnitee") from and against any and all liabilities, losses, damages
(including punitive damages), penalties, Costs (including attorneys' fees and
costs), causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused (unless caused by the gross negligence or willful
misconduct of Landlord or its agents), without regard to the form of action and
whether based on strict liability,
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negligence or any other theory of recovery at law or in equity arising from (i)
any matter pertaining to the acquisition (or the negotiations leading thereto),
ownership, use, non-use, occupancy, operation, condition, design, construction,
maintenance, repair or restoration of the Leased Premises or Adjoining Property,
(ii) any casualty in any manner arising from the Leased Premises or Adjoining
Property, whether or not Indemnitee has or should have knowledge or notice of
any defect or condition causing or contributing to said casualty, (iii) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance or
any encumbrance Tenant consented to or the Mortgage or Assignment or (iv) any
alleged, threatened or actual Environmental Violation, including (A) liability
for response costs and for costs of removal and remedial action incurred by the
United States Government, any state or local governmental unit or any other
Person, or damages from injury to or destruction or loss of natural resources,
including the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or act or
provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C) liability for personal injury or property damage arising under any
statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity.
(b) In case any action or proceeding is brought against any Indemnitee by
reason of any such claim, (i) Tenant may, except in the event of a conflict of
interest or a dispute between Tenant and any such Indemnitee or during the
continuance of an Event of Default, retain its own counsel and defend such
action (it being understood that Landlord may employ counsel of its choice to
monitor the defense of any such action, the cost of which shall be paid by
Tenant) and (ii) such Indemnitee shall notify Tenant to resist or defend such
action or proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense of such
action or proceeding if reasonably requested so to do by Tenant. In the event of
a conflict of interest or during the continuance of an Event of Default,
Landlord shall have the right to select counsel, and the cost of such counsel
shall by paid by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall survive any
termination, expiration or rejection in bankruptcy of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in connection
with the Leased Premises:
(i) Insurance against risk of physical loss or damage to the
Improvements and Equipment as provided under "Special Causes of Loss" form
coverage, and including customarily excluded perils of hail, windstorm, flood
coverage, earthquake and, to the extent required by Lender, terrorism insurance,
in amounts no less than the actual replacement cost of the Improvements and
Equipment; provided that, if Tenant's insurance company is unable or unwilling
to include any of all of such excluded perils, Tenant shall have the option of
purchasing coverage against such perils from another insurer on a "Difference in
Conditions" form or through a stand-alone policy. Such policies shall contain
Replacement Cost and Agreed
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ and "Law and Ordinance" coverage (at full replacement cost).
Such policies and endorsements shall contain deductibles not more than $50,000
per occurrence.
(ii) Commercial General Liability Insurance and Business Automobile
Liability Insurance (including Non-Owned and Hired Automobile Liability) against
claims for personal and bodily injury, death or property damage occurring on, in
or as a result of the use of the Leased Premises, in an amount not less than
$15,000,000 per occurrence/annual aggregate, on a claims occurrence basis.
(iii) Workers' compensation and employers' liability insurance
covering all persons employed by Tenant in connection with any work done on or
about any of the Leased Premises or, in lieu of such Workers' Compensation
Insurance, a program of self-insurance complying with the rules, regulations and
requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on any of the
Equipment or any other equipment on or in the Leased Premises, in an amount not
less than $5,000,000 per accident for damage to property (and which may be
carried as part of the coverage required under clause (i) above or pursuant to a
separate policy or endorsement). Either such Boiler and Machinery policy or the
Special Causes of Loss policy required in clause (i) above shall include at
least $3,000,000 per incidence for Off-Premises Service Interruption, Expediting
Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up Expense and
may contain a deductible not to exceed $50,000.
(v) Business Income/Extra Expense Insurance at limits sufficient to
cover 100% of the period of indemnity not less than eighteen (18) months from
time of loss.
(vi) During any period in which substantial Alterations at the Leased
Premises are being undertaken, builder's risk insurance covering the total
completed value, including all hard and soft costs (which shall include business
interruption coverage) with respect to the Improvements being constructed,
altered or repaired (on a completed value, non-reporting basis), replacement
cost of work performed and equipment, supplies and materials furnished in
connection with such construction, alteration or repair of Improvements or
Equipment, together with such other endorsements as Landlord may reasonably
require, and general liability, worker's compensation and automobile liability
insurance with respect to the Improvements being constructed, altered or
repaired.
(vii) Such other insurance (or other terms with respect to any
insurance required pursuant to this Paragraph 16, including without limitation
amounts of coverage, deductibles, form of mortgagee clause) on or in connection
with any of the Leased Premises as Landlord or Lender may require so long as
such requirement for additional insurance is commercially reasonable.
(b) The insurance required by Paragraph 16(a) shall be written by
companies having a Best's rating of A:X or above and a claims paying ability
rating of AA or better by Standard & Poor's Rating Services, a division of the
McGraw Hill Companies, Inc. or equivalent rating agency approved by Landlord in
its sole discretion and are authorized to write insurance policies by, the State
Insurance Department (or its equivalent) for the State. The insurance policies
(i)
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shall be for such terms as Landlord may reasonably approve and (ii) shall be in
amounts sufficient at all times to satisfy any coinsurance requirements thereof.
If said insurance or any part thereof shall expire, be withdrawn, become void,
voidable, unreliable or unsafe for any reason, including a breach of any
condition thereof by Tenant or the failure or impairment of the capital of any
insurer, or if for any other reason whatsoever said insurance shall become
reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or
additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of
Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in
favor of and acceptable to Lender. Each policy required by any provision of
Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be
cancelled, substantially modified or allowed to lapse on any renewal date except
after thirty (30) days' prior written notice to Landlord and Lender.
(d) Tenant shall pay as they become due all premiums for the insurance
required by Paragraph 16(a), shall renew or replace each policy and deliver to
Landlord evidence of the payment of the full premium therefor or installment
then due at least ten (10) days prior to the expiration date of such policy, and
shall promptly deliver to Landlord all original certificates of insurance or, if
required by Lender, original or certified policies. All certificates of
insurance (including liability coverage) provided to Landlord and Lender shall
be on ▇▇▇▇▇ Form 27 (or its equivalent).
(e) Anything in this Paragraph 16 to the contrary notwithstanding, any
insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be
carried under a "blanket" policy or policies covering other properties of Tenant
or under an "umbrella" policy or policies covering other liabilities of Tenant,
as applicable; provided that, such blanket or umbrella policy or policies
otherwise comply with the provisions of this Paragraph 16, and upon request,
Tenant shall provide to Landlord within a reasonable time after such request a
Statement of Values which may be reviewed annually and shall be amended to the
extent determined necessary by Landlord based on revised Replacement Cost
Valuations. The original or a certified copy of each such blanket or umbrella
policy shall promptly be delivered to Landlord.
(f) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
or certified copies thereof.
(g) Each policy (other than workers' compensation coverage ) shall contain
an effective waiver by the carrier against all claims for payment of insurance
premiums against Landlord and shall contain a full waiver of subrogation against
the Landlord.
(h) The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and
16(a)(vi) shall name Landlord as loss payee and Lender as loss payee and
mortgagee as their interests may appear. The insurance referred to in Paragraph
16(a)(ii) shall name Landlord and Lender as additional insureds, and the
insurance referred to in Paragraph 16(a)(v) shall name Landlord as
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insured and Lender and Landlord as loss payee to the extent of the Rent payable
to or for the benefit of Landlord as its interest appears under the Lease. The
proceeds of any insurance required under Paragraph 16(a) shall be payable as
follows:
(i) proceeds payable under clauses (ii), (iii) and (iv) of Paragraph
16(a) and proceeds attributable to the general liability coverage of Builder's
Risk insurance under clause (vi) of Paragraph 16(a) shall be payable to the
Person entitled to receive such proceeds and applied as set forth in Paragraph
17 or Paragraph 18, as the case may be; and
(ii) proceeds of insurance required under clause (i) of Paragraph
16(a) and proceeds attributable to Builder's Risk insurance (other than its
general liability coverage provisions) under clause (vi) of Paragraph 16(a)
shall be payable to Landlord or Lender and applied as set forth in Paragraph 17
or, if applicable, Paragraph 18. Subject to the terms of this Lease, the
proceeds of any Net Award shall be applied to restoration of the Leased Premises
in accordance with the applicable provisions of this Lease unless a Termination
Event shall have occurred and Tenant has given a Termination Notice.
17. Casualty and Condemnation.
(a) If any Casualty to the Leased Premises occurs, Tenant shall give
Landlord and Lender immediate notice thereof. Landlord and Lender are hereby
authorized to adjust, collect and compromise, in their discretion and upon
notice to Tenant (except that no notice to Tenant shall be required if an Event
of Default has occurred and is continuing), all claims under any of the
insurance policies required by Paragraph 16(a) (except public liability
insurance claims payable to a Person other than Tenant, Landlord or Lender) and
to execute and deliver on behalf of Tenant all necessary proofs of loss,
receipts, vouchers and releases required by the insurers. Provided that no Event
of Default exists, Tenant shall be entitled to participate with Landlord and
Lender in any adjustment, collection and compromise of the Net Award payable in
connection with a Casualty. Tenant agrees to sign, upon the request of Landlord
and Lender, all such proofs of loss, receipts, vouchers and releases. If
Landlord or Lender so requests, Tenant shall adjust, collect and compromise any
and all such claims, and Landlord and Lender shall have the right to join with
Tenant therein. Any adjustment, settlement or compromise of any such claim shall
be subject to the prior written approval of Landlord and Lender, which approval
Landlord and Lender shall not unreasonably withhold, condition, or delay, and
Landlord shall have the right to prosecute or contest, or to require Tenant to
prosecute or contest, any such claim, adjustment, settlement or compromise. Each
insurer is hereby authorized and directed to make payment under said policies,
including return or unearned premiums, directly to Landlord or, if required by
the Mortgage, to Lender instead of to Landlord and Tenant jointly. The rights of
Landlord under this Paragraph 17(a) shall be extended to Lender if and to the
extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation Notice, shall notify
Landlord and Lender thereof. Landlord and Lender are authorized to collect,
settle and compromise, in their discretion (and, if no Event of Default exists,
upon notice to Tenant), the amount of any Net Award. Provided that no Event of
Default exists, Tenant shall be entitled to participate with Landlord and Lender
in any Condemnation proceeding or negotiations under threat thereof and to
contest the Condemnation or the amount of the Net Award therefor. No
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agreement with any condemnor in settlement or under threat of any Condemnation
shall be made by Tenant without the written consent of Landlord. Subject to the
provisions of this Paragraph 17(b), Tenant hereby irrevocably assigns to
Landlord any award or payment to which Tenant is or may be entitled by reason of
any Condemnation, whether the same shall be paid or payable for Tenant's
leasehold interest hereunder or otherwise; but nothing in this Lease shall
impair Tenant's right to any award or payment on account of Tenant's Trade
Fixtures, equipment or other tangible property which is not part of the
Equipment, moving expenses or loss of business, if available, to the extent that
and so long as (i) Tenant shall have the right to make, and does make, a
separate claim therefor against the condemnor and (ii) such claim does not in
any way reduce either the amount of the award otherwise payable to Landlord for
the Condemnation of Landlord's fee interest in the Leased Premises or the amount
of the award (if any) otherwise payable for the Condemnation of Tenant's
leasehold interest hereunder. The rights of Landlord under this Paragraph 17(b)
shall also be extended to Lender if and to the extent that any Mortgage so
provides.
(c) If any Partial Casualty (whether or not insured against) or Partial
Condemnation shall occur, this Lease shall continue, notwithstanding such event,
and there shall be no abatement or reduction of any Monetary Obligations.
Promptly after such Partial Casualty or Partial Condemnation, Tenant, as
required in Paragraphs 12(a) and 13(b), shall commence and diligently continue
to restore the Leased Premises as nearly as possible to their value, condition
and character immediately prior to such event (assuming the Leased Premises to
have been in the condition required by this Lease). So long as no Event of
Default exists, any Net Award up to and including $100,000 shall be paid by
Landlord to Tenant and Tenant shall restore the Leased Premises in accordance
with the requirements of Paragraphs 12(a) and 13(b) of this Lease. Any Net Award
in excess of $100,000 shall (unless such Casualty resulting in the Net Award is
a Termination Event) be made available by Landlord (or Lender, if required by
the terms of any Mortgage) to Tenant for the restoration of any of the Leased
Premises pursuant to and in accordance with the provisions of Paragraph 19
hereof. If any Casualty or Condemnation which is not a Partial Casualty or
Partial Condemnation shall occur, Tenant shall comply with the terms and
conditions of Paragraph 18.
(d) Notwithstanding anything to the contrary in Paragraph 17(c), if the
Term has not been extended for the first Renewal Term prior to the applicable
Casualty or Condemnation, then, during the term of the Initial Loan Landlord
shall not be required to make any Net Award in excess of $100,000 available to
Tenant for restoration of the Leased Premises if such restoration cannot be
completed by October 11, 2022.
If (i) a Net Award is not made available to Tenant in accordance with the
preceding sentence and (ii) Tenant has not given Landlord an Option Exercise
Notice by the date (the "Early Option Exercise Notice Date") that is earlier of
(x) thirty (30) days after such Casualty or Condemnation or (y) the date Tenant
is required to give an Option Exercise Notice pursuant to Paragraph 34, then
Tenant shall pay to Landlord on or before the Early Termination Date (1) all
Basic Rent that would come due through the originally scheduled end of the Term
and (2) all Additional Rent accruing through Early Termination Date. Upon such
timely payment, the Term of this Lease, including any purchase options and
rights of first refusal, shall, unless extended pursuant to Paragraph 10(e),
automatically terminate on the Early Termination Date, subject to any Surviving
Obligations. As used in this Paragraph 17(d), the term "Early Termination Date"
-24-
shall mean the date that is thirty (30) days after the date Landlord gives
Tenant notice that it will not make available to Tenant a Net Award pursuant to
this Paragraph 17(d).
If a Net Award is not made available to Tenant pursuant to this Paragraph
17(d) and Tenant has given Landlord an Option Exercise Notice by the Early
Option Exercise Notice Date, then Tenant shall purchase the Leased Premises in
accordance with the terms and conditions set forth in Paragraph 34, provided,
however, that the Purchase Price shall be reduced by the amount of the Net Award
not made available to Tenant pursuant to this Paragraph 17(d).
18. Termination Events.
If either (i) the entire Leased Premises shall be taken by a Taking or (ii)
any substantial portion of the Leased Premises shall be taken by a Taking or all
or any substantial portion of the Leased Premises shall be damaged or destroyed
by a Casualty and, in such case, Tenant certifies and covenants to Landlord that
it will forever abandon operations at the Leased Premises (each of the events
described in the above clauses (i) and (ii) shall hereinafter be referred to as
a "Termination Event"), then (x) in the case of (i) above, Tenant shall be
obligated, within thirty (30) days after Tenant receives a Condemnation Notice
and (y) in the case of (ii) above, Tenant shall have the option, within thirty
(30) days after Tenant receives a Condemnation Notice or thirty (30) days after
the Casualty, as the case may be, to give to Landlord written notice in the form
described in Paragraph 18(b) of the Tenant's election to terminate this Lease (a
"Termination Notice"). If Tenant elects under clause (y) above not to give
Landlord a Termination Notice, then Tenant shall rebuild or repair the Leased
Premises in accordance with Paragraphs 17 and 19.
(a) A Termination Notice shall contain (i) notice of Tenant's intention to
terminate this Lease on the first Basic Rent Payment Date which occurs at least
sixty (60) days after the Fair Market Value Date (the "Termination Date"), (ii)
a binding and irrevocable offer of Tenant to pay to Landlord the Termination
Amount and (iii) if the Termination Event is an event described in Paragraph
18(a)(ii), the certification and covenants described therein and a certified
resolution of the Board of Directors of Tenant authorizing the same. Promptly
upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall
commence to determine the Fair Market Value.
(b) If Landlord shall reject such offer by Tenant to pay to Landlord the
Termination Amount pursuant to Paragraph 18(b) above by written notice to Tenant
(a "Rejection"), which Rejection shall contain the written consent of Lender to
Landlord's rejection of Tenant's offer to pay the Termination Amount, not later
than thirty (30) days following the Fair Market Value Date, then this Lease
shall terminate on the Termination Date. Upon such termination (i) all
obligations of Tenant hereunder shall terminate except for any Surviving
Obligations, any Monetary Obligations and all other obligations and liabilities
under this Lease which have arisen on or prior to the Termination Date
(collectively, "Remaining Obligations"), (ii) Tenant shall immediately vacate
and shall have no further right, title or interest in or to any of the Leased
Premises and (iii) the Net Award shall be retained by Landlord.
(c) Unless Tenant shall have received a Rejection not later than the
thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have
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accepted such offer from Tenant to pay the Termination Amount. If such offer
from Tenant to pay the Termination Amount is accepted by Landlord then, on the
Termination Date, Tenant shall pay to Landlord the Termination Amount and all
Remaining Obligations and, if requested by Tenant, Landlord shall (i) convey to
Tenant the Leased Premises or the remaining portion thereof, if any, and (ii)
pay to or assign to Tenant Landlord's entire interest in and to the Net Award,
all in accordance with Paragraph 20.
19. Restoration.
(a) If any Net Award is in excess of $100,000, Landlord (or Lender if
required by any Mortgage) shall hold the entire Net Award in a fund (the
"Restoration Fund") and disburse amounts from the Restoration Fund only in
accordance with the following conditions:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications and a budget for the
restoration shall have been approved by Landlord, (B) unless Tenant provides
Landlord with other security reasonably acceptable to Landlord to ensure the
completion of the restoration, Landlord shall be provided with mechanics' lien
insurance (if available) and acceptable performance and payment bonds which
insure satisfactory completion of and payment for the restoration, are in an
amount and form and have a surety acceptable to Landlord, and name Landlord and
Lender as additional dual obligees, and (C) appropriate waivers of mechanics'
and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no Event of Default shall exist
and no mechanics' or materialmen's liens shall have been filed against any of
the Leased Premises and remain undischarged;
(iii) disbursements shall be made within thirty (30) days (in an
amount not exceeding the cost of the work completed since the last disbursement)
after Landlord's receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Landlord can
verify that the amounts disbursed from time to time are represented by work that
is completed, in place and free and clear of mechanics' and materialmen's lien
claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of Tenant,
describing the work for which payment is requested, stating the cost incurred in
connection therewith, stating that Tenant has not previously received payment
for such work and, upon completion of the work, also stating that the work has
been fully completed and complies with the applicable requirements of this
Lease;
(v) Landlord may retain ten percent (10%) of the restoration fund
until the restoration is fully completed;
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(vi) if the Restoration Fund is held by Landlord, the Restoration
Fund shall not be commingled with Landlord's other funds and shall bear interest
at a rate agreed to by Landlord and Tenant such interest to be used toward the
costs of restoration of the Leased Premises; and
(vii) such other reasonable conditions that are customary for
restorations of similar size and scope as Landlord or Lender may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as reasonably determined by Landlord, exceeds the amount of
the Net Award available for such restoration, the amount of such excess shall,
upon demand by Landlord, be paid by Tenant to Landlord to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after completion of the
restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum shall
be retained by Landlord or, if required by a Note or Mortgage, paid by Landlord
to a Lender.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to any
provision of this Lease, Landlord need not convey any better title thereto than
that which was conveyed to Landlord, and Tenant shall accept such title,
subject, however, to the Permitted Encumbrances and to all other liens,
exceptions and restrictions on, against or relating to any of the Leased
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises which have been
created by or resulted solely from acts of Landlord after the date of this
Lease, unless the same are Permitted Encumbrances or customary utility easements
benefiting the Leased Premises or were created with the concurrence of Tenant or
as a result of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased Premises
pursuant to any provision of this Lease (any such date the "Purchase Date"),
Tenant shall pay to Landlord, or to any Person to whom Landlord directs payment,
the Relevant Amount therefor specified herein, in Federal Funds, less any credit
of the Net Award received and retained by Landlord allowed against the Relevant
Amount, and Landlord shall deliver to Tenant (i) a limited warranty deed which
describes the premises being conveyed and conveys the title thereto as provided
in Paragraph 20(a), (ii) such other instruments as shall be necessary to
transfer to Tenant or its designee any other property (or rights to any Net
Award not yet received by Landlord or a Lender) then required to be sold by
Landlord to Tenant pursuant to this Lease and (iii) any Net Award received by
Landlord, not credited to Tenant against the Relevant Amount and required to be
delivered by Landlord to Tenant pursuant to this Lease; provided, that if any
Monetary Obligations remain outstanding on such date, then Landlord may deduct
from the Net Award the amount of such Monetary Obligations; and further
provided, that if any event has occurred
-27-
which, in Landlord's reasonable judgment, is likely to subject any Indemnitee to
any liability which Tenant is required to indemnify against pursuant to
Paragraph 15, then an amount shall be deducted from the Net Award which, in
Landlord's reasonable judgment, is sufficient to satisfy such liability, which
amount shall be deposited in an escrow account with a financial institution
reasonably satisfactory to Landlord and Tenant pending resolution of such
matter. If on the Purchase Date any Monetary Obligations remain outstanding and
no Net Award is payable to Tenant by Landlord or the amount of such Net Award is
less than the amount of the Monetary Obligations, then Tenant shall pay to
Landlord on the Purchase Date the amount of such Monetary Obligations. Upon the
completion of such purchase, this Lease and all obligations and liabilities of
Tenant hereunder shall terminate, except any Surviving Obligations.
(c) If the completion of such purchase shall be delayed after (i) the
Termination Date, in the event of a purchase pursuant to Paragraph 18 or, (ii)
the date scheduled for such purchase, in the event of a purchase under any other
provision of this Lease, and such delay is solely caused by Landlord or Lender
and occurs after the determination of Fair Market Value then (x) Rent shall
continue to be due and payable until completion of such purchase and (y) at
Landlord's sole option, Fair Market Value shall be redetermined and the Relevant
Amount payable by Tenant pursuant to the applicable provision of this Lease
shall be adjusted to reflect such redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord shall be prorated as
of the Purchase Date, and the prorated unapplied balance shall be deducted from
the Relevant Amount due to Landlord; provided, that no apportionment of any
Impositions shall be made upon any such purchase.
21. Assignment and Subletting, Prohibition Against Leasehold Financing.
(a) Except as expressly set forth below, Tenant may not assign this Lease,
voluntarily or involuntarily, whether by operation of law or otherwise or sublet
any of the Leased Premises at any time to any other Person without the prior
written consent of Landlord, which consent, in the event of an assignment, may
be withheld by Landlord for any reason and any such purported sublease or
assignment shall be null and void.
(i) Notwithstanding the foregoing, Tenant shall have the right to
assign its rights under this Lease or to sublease the Leased Premises to (i) any
Person which is and continues to be for the balance of the Term controlling,
controlled by or under common control with Tenant or (ii) any Person acquiring
all or substantially all of Tenant's assets provided that immediately after said
acquisition and having given effect thereto, Tenant meets the Level 1
Requirements.
(ii) Tenant, on notice to Landlord (but without Landlord's consent),
may sublease up to an aggregate of twenty (20%) percent of the floor area of the
Leased Premises to any Person which is not an affiliate of Tenant but which
provides services to Tenant at the Leased Premises or was previously an
affiliate of Tenant.
(b) If Tenant assigns all its rights and interest under this Lease, the
assignee under such assignment shall expressly assume all the obligations of
Tenant hereunder, actual or
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contingent, including obligations of Tenant which may have arisen on or prior to
the date of such assignment, by a written instrument delivered to Landlord at
the time of such assignment. Any permitted sublease of the Leased Premises shall
(A) be expressly subject and subordinate to this Lease and any Mortgage
encumbering the Leased Premises; (B) not extend beyond the then current Term
minus one day; (C) terminate upon any termination of this Lease, unless Landlord
elects in writing, to cause the sublessee to attorn to and recognize Landlord as
the lessor under such sublease, whereupon such sublease shall continue as a
direct lease between the sublessee and Landlord upon all the terms and
conditions of such sublease; (D) bind the sublessee to all covenants contained
in Paragraphs 4(a), 10 and 12 with respect to subleased premises to the same
extent as if the sublessee were the Tenant; and (E) shall require such subtenant
to name Landlord as an additional insured on its liability insurance policy. No
assignment or sublease shall affect or reduce any of the obligations of Tenant
hereunder, and all such obligations of Tenant shall continue in full force and
effect as obligations of a principal and not as obligations of a guarantor, as
if no assignment or sublease had been made. No assignment or sublease shall
impose any additional obligations on Landlord under this Lease.
(c) Tenant shall, within ten (10) days after the execution and delivery of
any assignment or sublease, deliver a duplicate original copy thereof to
Landlord which, in the event of an assignment, shall be in recordable form.
(d) As security for performance of its obligations under this Lease, Tenant
hereby grants, conveys and assigns to Landlord all right, title and interest of
Tenant in and to all subleases now in existence or hereafter entered into for
any or all of the Leased Premises, any and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom. Landlord hereby
grants to Tenant a license to collect and enjoy all rents and other sums of
money payable under any sublease of any of the Leased Premises, provided,
however, that Landlord shall have the absolute right at any time upon notice to
Tenant and any subtenants to revoke said license and to collect such rents and
sums of money and to retain the same but such rents and sums of money so
collected will be credited toward any payments which Tenant owes under this
Lease. Tenant shall not consent to, cause or allow any modification or
alteration of any of the terms, conditions or covenants of any of the subleases
or the termination thereof, without the prior written approval of Landlord,
which consent shall not be unreasonably withheld, nor shall Tenant accept any
rents more than thirty (30) days in advance of the accrual thereof nor do nor
permit anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of any of the subleases by Tenant, as sublandlord.
(e) Tenant shall not have the power to mortgage, pledge or otherwise
encumber its interest under this Lease or any sublease of the Leased Premises,
and any such mortgage, pledge or encumbrance made in violation of this Paragraph
21 shall be void and of no force and effect.
(f) Subject to the provisions of Paragraphs 34 and 35 hereof, Landlord may
sell or transfer the Leased Premises at any time without Tenant's consent to any
third party (each a "Third Party Purchaser"). In the event of any such transfer,
Tenant shall attorn to any Third Party Purchaser as Landlord so long as such
Third Party Purchaser and Landlord notify Tenant in writing of such transfer and
such transferee of Landlord's interests takes the Leased Premises subject to
this Lease. At the request of Landlord, Tenant will execute such documents
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confirming Tenant's attornment and, at the request of Tenant, Landlord shall
cause Third Party Purchaser to confirm in writing to Tenant that it shall assume
Landlord's obligations under this Lease from and after the date of the sale or
transfer of the Leased Premises to Third Party Purchaser. Notwithstanding
anything to the contrary, Landlord or any transferee of Landlord may only
transfer all of the Leased Premises, and may not transfer separate components of
the Leased Premises except as part of the a transfer of the entire Leased
Premises.
22. Events of Default.
(a) The occurrence of any one or more of the following (after expiration
of any applicable cure period as provided in Paragraph 22(b)) shall, at the sole
option of Landlord, constitute an "Event of Default" under this Lease:
(i) a failure by Tenant to make any payment of any Monetary
Obligation on or prior to its due date, regardless of the reason for such
failure;
(ii) a failure by Tenant duly to perform and observe, or a violation
or breach of, any other provision hereof not otherwise specifically mentioned in
this Paragraph 22(a);
(iii) any representation or warranty made by Tenant herein or in any
certificate, demand or request made pursuant hereto proves to be incorrect, now
or hereafter, in any material respect;
(iv) a default beyond any applicable cure period or at maturity by
Tenant in any payment of principal or interest on any obligations for borrowed
money having an original principal balance of $1,000,000 or more in the
aggregate, or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment, or (y) if an effect of such default is to cause, or permit
any Person to cause, such obligation to become due prior to its stated maturity;
(v) a default by Tenant beyond any applicable cure period in the
payment of rent under, or in the performance of any other material provision of,
any other lease or leases that have, in the aggregate, rental obligations over
the terms thereof of $1,000,000 or more;
(vi) a final, non-appealable judgment or judgments for the payment
of money in excess of $1,000,000 in the aggregate shall be rendered against
Tenant and the same shall remain undischarged for a period of sixty (60)
consecutive days;
(vii) Tenant shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a receiver or trustee for
itself or for the Leased Premises, (C) file a petition seeking relief under the
bankruptcy or other similar laws of the United States, any state or any
jurisdiction, (D) make a general assignment for the benefit of creditors, or (E)
be unable to pay its debts as they mature;
(viii) a court shall enter an order, judgment or decree appointing,
without the consent of Tenant, a receiver or trustee for it or for any of the
Leased Premises or approving a petition filed against Tenant which seeks relief
under the bankruptcy or other similar laws of the
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇, any state or any jurisdiction, and such order, judgment or decree
shall remain undischarged or unstayed sixty (60) days after it is entered;
(ix) the Leased Premises shall have been vacated or abandoned;
(x) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution;
(xi) the estate or interest of Tenant in any of the Leased Premises
shall be levied upon or attached in any proceeding and such estate or interest
is about to be sold or transferred or such process shall not be vacated or
discharged within sixty (60) days after it is made;
(xii) a failure by Tenant to maintain in effect any license or permit
necessary for the use, occupancy or operation of the Leased Premises;
(xiii) Tenant shall fail to deliver the estoppel described in
Paragraph 25 within the time period specified therein;
(xiv) Tenant shall sell or transfer or enter into an agreement to
sell or transfer all or substantially all of its assets a single transaction or
a series of related transactions except as otherwise specifically permitted in
Paragraph 21(a)(i) and unless such purchaser or transferee assumes all of the
obligations of Tenant under this Lease; or
(xv) Tenant shall fail to replenish the Security Deposit in
accordance with the requirements of Paragraph 36.
(b) No notice or cure period shall be required in any one or more of the
following events: (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth below), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xiv), or (xv), of Paragraph 22(a); (B) the
default consists of a failure to pay Basic Rent, a failure to provide any
insurance required by Paragraph 16 or an assignment or sublease entered into in
violation of Paragraph 21; or (C) the default is such that any delay in the
exercise of a remedy by Landlord could reasonably be expected to cause
irreparable harm to Landlord. If the default consists of the failure to pay any
Monetary Obligation under clause (i) of Paragraph 22(a) the applicable cure
period shall be five (5) days from the date on which notice is given, but
Landlord shall not be obligated to give notice of, or allow any cure period for,
any such default more than one (1) time within any Lease Year. If the default
consists of a default under clause (ii) of Paragraph 22(a), other than the
events specified in clauses (B) and (C) of the first sentence of this Paragraph
22(b), the applicable cure period shall be thirty (30) days from the date on
which notice is given or, if the default cannot be cured within such thirty (30)
day period and delay in the exercise of a remedy would not (in Landlord's
reasonable judgment) cause any material adverse harm to Landlord or any of the
Leased Premises, the cure period shall be extended for the period required to
cure the default (but such cure period, including any extension, shall not in
the aggregate exceed ninety (90) days), provided that Tenant shall commence to
cure the default within the said twenty-day period and shall actively,
diligently and in good faith proceed with and continue the curing of the default
until it shall be fully cured.
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23. Remedies and Damages upon Default.
(a) If an Event of Default shall have occurred and is continuing, Landlord
shall have the right, at its sole option, then or at any time thereafter, to
exercise its remedies and to collect damages from Tenant in accordance with this
Paragraph 23, subject in all events to applicable Law, without demand upon or
notice to Tenant except as otherwise provided in Paragraph 22(b) and this
Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's intention to
terminate this Lease on a date specified in such notice. Upon such date, this
Lease, the estate hereby granted and all rights of Tenant hereunder shall expire
and terminate. Upon such termination, Tenant shall immediately surrender and
deliver possession of the Leased Premises to Landlord in accordance with
Paragraph 26. If Tenant does not so surrender and deliver possession of the
Leased Premises, Landlord may re-enter and repossess the Leased Premises, with
or without legal process, by peaceably entering the Leased Premises and changing
locks or by summary proceedings, ejectment or any other lawful means or
procedure. Upon or at any time after taking possession of the Leased Premises,
Landlord may, by peaceable means or legal process, remove any Persons or
property therefrom. Landlord shall be under no liability for or by reason of any
such entry, repossession or removal. Notwithstanding such entry or repossession,
Landlord may (A) exercise the remedy set forth in and collect the damages
permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth in
Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises pursuant to clause (i)
above, Landlord shall have the right to relet any of the Leased Premises to such
tenant or tenants, for such term or terms, for such rent, on such conditions and
for such uses as Landlord in its sole discretion may determine, and collect and
receive any rents payable by reason of such reletting, but all such rents so
collected shall, after deduction for the costs reasonably associated with such
re-letting, be credited to the amounts which Tenant owes hereunder. Landlord may
make such Alterations in connection with such reletting as it may deem advisable
in its sole discretion. Notwithstanding any such reletting, Landlord may collect
the damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may, upon notice to Tenant, require Tenant to make an
irrevocable offer to terminate this Lease upon payment to Landlord of an amount
(the "Default Termination Amount") specified in the next sentence. The "Default
Termination Amount" shall be the greatest of (A) the sum of the Fair Market
Value of the Leased Premises and the applicable Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of the
Default Termination Amount, (B) the sum of the Acquisition Cost and the
applicable Prepayment Premium which Landlord will be required to pay in
prepaying any Loan with proceeds of the Default Termination Amount or (C) an
amount equal to the Present Value of the entire Basic Rent from the date of such
purchase to the date on which the Term would expire, assuming that the Term has
been extended for all extension periods, if any, provided for in this Lease.
Upon such notice to Tenant, Tenant shall be deemed to have made such offer and
shall, if requested by Landlord, within ten (10) days following such request
deposit with Landlord as payment against the Default Termination Amount the
amount described in (B) above and Landlord and Tenant shall promptly commence to
determine Fair Market Value. Within thirty (30) days after the Fair Market Value
Date, Landlord shall accept or reject such
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offer. If Landlord accepts such offer then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the Default Termination
Amount and, at the request of Tenant, Landlord will convey the Leased Premises
to Tenant or its designee in accordance with Paragraph 20. Any rejection by
Landlord of such offer shall have no effect on any other remedy Landlord may
have under this Lease.
(iv) Landlord may declare by notice to Tenant the entire Basic Rent
(in the amount of Basic Rent then in effect) for the remainder of the then
current Term to be immediately due and payable. Tenant shall immediately pay to
Landlord all such Basic Rent discounted to its Present Value, all accrued Rent
then due and unpaid, all other Monetary Obligations which are then due and
unpaid and all Monetary Obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has been prepaid
hereunder shall be due thereafter during the said Term, (B) Tenant shall have no
option to extend or renew the Term and (C) Tenant shall have no further rights
under Paragraphs 34 or 35.
(b) The following constitute damages to which Landlord shall be entitled
if Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii):
(i) If Landlord exercises its remedy under Paragraph 23(a)(i) but not
its remedy under Paragraph 23(a)(ii) (or attempts to exercise such remedy and is
unsuccessful in reletting the Leased Premises) then, upon written demand from
Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages
for Tenant's default and in lieu of all current damages beyond the date of such
demand (it being agreed that it would be impracticable or extremely difficult to
fix the actual damages), an amount equal to the Present Value of the excess, if
any, of (A) all Basic Rent from the date of such demand to the date on which the
Term is scheduled to expire hereunder in the absence of any earlier termination,
re-entry or repossession over (B) the then fair market rental value of the
Leased Premises for the same period. Tenant shall also pay to Landlord all of
Landlord's Costs in connection with the repossession of the Leased Premises and
any attempted reletting thereof, including all brokerage commissions, legal
expenses attorneys' fees, employees' expenses, costs of Alterations and expenses
and preparation for reletting.
(ii) If Landlord exercises its remedy under Paragraph 23(a)(i) or its
remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the
end of what would have been the Term in the absence of the termination of the
Lease, and whether or not any of the Leased Premises shall have been relet, be
liable to Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages all Monetary Obligations which would be payable under this Lease
by Tenant in the absence of such termination less the net proceeds, if any, of
any reletting pursuant to Paragraph 23(a)(ii), after deducting from such
proceeds all of Landlord's Costs (including the items listed in the last
sentence of Paragraph 23(b)(i) hereof) incurred in connection with such
repossessing and reletting; provided, that if Landlord has not relet the Leased
Premises, such Costs of Landlord shall be considered to be Monetary Obligations
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payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and
Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by its own terms had there been no such Event of Default.
(c) Notwithstanding anything to the contrary herein contained, in lieu of
or in addition to any of the foregoing remedies and damages, Landlord may
exercise any remedies and collect any damages available to it at law or in
equity but, notwithstanding any provision herein to the contrary, in no event
will Tenant be liable for special, extraordinary, or consequential damages. If
Landlord is unable to obtain full satisfaction pursuant to the exercise of any
remedy, it may pursue any other remedy which it has hereunder or at law or in
equity, subject to the foregoing sentence.
(d) Landlord shall be required to make reasonable efforts to mitigate its
damages hereunder. In the context of this Paragraph 23(d), the term "reasonable
efforts" shall mean the listing of the Leased Premises with a commercial real
estate broker. If any Law shall validly limit the amount of any damages provided
for herein to an amount which is less than the amount agreed to herein, Landlord
shall be entitled to the maximum amount available under such Law.
(e) No termination of this Lease, repossession or reletting of the Leased
Premises, exercise of any remedy or collection of any damages pursuant to this
Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD OR TENANT
HEREUNDER, LANDLORD AND TENANT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord shall have the
right (but no obligation) to perform any act required of Tenant hereunder and,
if performance of such act requires that Landlord enter the Leased Premises,
Landlord may enter the Leased Premises for such purpose upon reasonable prior
oral or written notice to Tenant.
(h) No failure of Landlord (i) to insist at any time upon the strict
performance of any provision of this Lease or (ii) to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.
(i) Tenant hereby waives and surrenders, for itself and all those claiming
under it, including creditors of all kinds, (i) any right and privilege which it
or any of them may have under any present or future Law to redeem any of the
Leased Premises or to have a continuance of this Lease after termination of this
Lease or of Tenant's right of occupancy or possession pursuant to any court
order or any provision hereof, and (ii) the benefits of any present or future
Law which exempts property from liability for debt or for distress for rent.
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(j) Except as otherwise provided herein, all remedies are cumulative and
concurrent and no remedy is exclusive of any other remedy. Each remedy may be
exercised at any time an Event of Default has occurred and is continuing and may
be exercised from time to time. No remedy shall be exhausted by any exercise
thereof.
24. Notices. Unless specifically set forth herein, all notices, demands,
requests, consents, approvals, offers, statements and other instruments or
communications required or permitted to be given pursuant to the provisions of
this Lease shall be in writing and shall be deemed to have been given and
received for all purposes when delivered in person or by Federal Express or
other reliable 24-hour delivery service or five (5) business days after being
deposited in the United States mail, by registered or certified mail, return
receipt requested, postage prepaid, addressed to the other party at its address
stated on page one of this Lease or when delivery is refused. Notices sent to
Landlord shall be to the attention of Director, Asset Management, and notices to
Tenant shall be as follows:
Pemstar, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: Pemstar, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
▇▇▇▇▇▇ & Whitney LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇.
A copy of any notice given by Tenant to Landlord shall be addressed to the
attention of Director, Asset Management and shall simultaneously be given by
Tenant to ▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Chairman, Real Estate Department. For the purposes of this Paragraph,
any party may substitute another address stated above (or substituted by a
previous notice) for its address by giving fifteen (15) days' notice of the new
address to the other party, in the manner provided above.
25. Estoppel Certificate. At any time upon not less than ten (10) days' prior
written request by either Landlord or Tenant (the "Requesting Party") to the
other party (the "Responding Party"), the Responding Party shall deliver to the
Requesting Party a statement in writing, executed by an authorized officer of
the Responding Party, certifying (a) that, except as otherwise specified, this
Lease is unmodified and in full force and effect, (b) the dates to which Basic
Rent, Additional Rent and all other Monetary Obligations have been paid, (c)
that, to the knowledge of the signer of such certificate and except as otherwise
specified, no default by either
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Landlord or Tenant exists hereunder, (d) such other matters as the Requesting
Party may reasonably request, and (e) if Tenant is the Responding Party that,
except as otherwise specified, there are no proceedings pending or, to the
knowledge of the signer, threatened, against Tenant before or by any court or
administrative agency which, if adversely decided, would materially and
adversely affect the financial condition and operations of Tenant. Any such
statements by the Responding Party may be relied upon by the Requesting Party,
any Person whom the Requesting Party notifies the Responding Party in its
request for the Certificate is an intended recipient or beneficiary of the
Certificate, any Lender or their assignees and by any prospective purchaser or
mortgagee of any of the Leased Premises. Any certificate required under this
Paragraph 25 and delivered by Tenant shall state that, in the opinion of each
person signing the same, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to the subject matter
of such certificate, and shall briefly state the nature of such examination or
investigation.
26. Surrender. Upon the expiration or earlier termination of this Lease,
Tenant shall peaceably leave and surrender the Leased Premises to Landlord in
the same condition in which the Leased Premises was at the commencement of this
Lease, except as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased
Premises all property which is owned by Tenant or third parties other than
Landlord and Alterations required to be removed pursuant to Paragraph 13 hereof
and (b) repair any damage caused by such removal. Property not so removed shall
become the property of Landlord, and Landlord may thereafter cause such property
to be removed from the Leased Premises. The cost of removing and disposing of
such property and repairing any damage to any of the Leased Premises caused by
such removal shall be paid by Tenant to Landlord upon demand. Landlord shall not
in any manner or to any extent be obligated to reimburse Tenant for any such
property which becomes the property of Landlord pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold estate
created by this Lease with the fee estate in any of the Leased Premises by
reason of the fact that the same Person may acquire or hold or own, directly or
indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of account with respect to
the finances and business of Tenant generally and with respect to the Leased
Premises, in accordance with generally accepted accounting principles ("GAAP")
consistently applied, and shall permit Landlord and its respective agents,
accountants and attorneys, upon reasonable notice to Tenant, to visit and
inspect the Leased Premises and discuss the finances and business with the
officers of Tenant, at such reasonable times as may be requested by Landlord.
Upon the request of Lender or Landlord (either telephonically or in writing),
Tenant shall provide the requesting party with copies of any information to
which such party would be entitled in the course of a personal visit but, if
Tenant's securities are listed and traded on a national exchange
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located in the United States, Tenant shall not be required to disclose
information that is in excess of what Tenant has disclosed (or is required to
disclose to) the Securities and Exchange Commission.
(b) If at any time during the Term Tenant's securities are not listed and
traded on a national exchange located in the United States, Tenant shall deliver
to Landlord and to Lender within ninety (90) days of the close of each fiscal
year, annual audited financial statements of Tenant certified by a nationally
recognized firm of independent certified public accountants. If at any time
during the Term Tenant's securities are not listed and traded on a national
exchange located in the United States, Tenant shall also furnish to Landlord
within forty-five (45) days after the end of each of the three remaining
quarters unaudited financial statements and all other quarterly reports of
Tenant, certified by Tenant's chief financial officer, and all filings, if any,
of Form 10-K, Form 10-Q and other required filings with the Securities and
Exchange Commission pursuant to the provisions of the Securities Exchange Act of
1934, as amended, or any other Law. All financial statements shall be prepared
in accordance with GAAP consistently applied. All annual financial statements
shall be accompanied (i) by an opinion of said accountants stating that (A)
there are no qualifications as to the scope of the audit and (B) the audit was
performed in accordance with GAAP and (h) by the affidavit of the president or a
vice president of Tenant, dated within five (5) days of the delivery of such
statement, stating that (C) the affiant knows of no Event of Default, or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (D) except as otherwise specified in such affidavit, that Tenant has
fulfilled all of its obligations under this Lease which are required to be
fulfilled on or prior to the date of such affidavit.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is required pursuant to
any provision of this Lease, such Fair Market Value shall be determined in
accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such Fair Market
Value within thirty (30) days after the date (the "Applicable Initial Date") on
which (A) Tenant provides Landlord with notice of its intention to terminate
this Lease and purchase the Leased Premises pursuant to Paragraph 18, (B)
Landlord provides Tenant with notice of its intention to redetermine Fair Market
Value pursuant to Paragraph 20(c), (C) Landlord provides Tenant with notice of
Landlord's intention to require Tenant to make an offer to terminate this Lease
pursuant to Paragraph 23(a)(iii) or (D) Landlord receives an Option Exercise
Notice. Upon reaching such agreement, the parties shall execute an agreement
setting forth the amount of such Fair Market Value.
(ii) If the parties shall not have signed such agreement within thirty
(30) days after the Applicable Initial Date, Tenant shall within fifty (50) days
after the Applicable Initial Date select an appraiser and notify Landlord in
writing of the name, address and qualifications of such appraiser. Within twenty
(20) days following Landlord's receipt of Tenant's notice of the appraiser
selected by Tenant, Landlord shall select an appraiser and notify Tenant of the
name,
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address and qualifications of such appraiser. Such two appraisers shall endeavor
to agree upon Fair Market Value based on a written appraisal made by each of
them (and given to Landlord by Tenant) as of the Relevant Date. If such two
appraisers shall agree upon a Fair Market Value, the amount of such Fair Market
Value as so agreed shall be binding and conclusive upon Landlord and Tenant.
(iii) If such two appraisers shall be unable to agree upon a Fair Market
Value within twenty (20) days after the selection of an appraiser by Landlord,
then such appraisers shall advise Landlord and Tenant of their respective
determination of Fair Market Value and shall select a third appraiser to make
the determination of Fair Market Value. The selection of the third appraiser
shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree upon the
designation of a third appraiser within ten (10) days after the expiration of
the twenty (20) day period referred to in clause (iii) above, or if such third
appraiser does not make a determination of Fair Market Value within twenty (20)
days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto, be
appointed by the President or Chairman of the American Arbitration Association
in New York, New York. The determination of Fair Market Value made by the third
appraiser appointed pursuant hereto shall be made within twenty (20) days after
such appointment.
(v) If a third appraiser is selected, Fair Market Value shall be the
average of the determination of Fair Market Value made by the third appraiser
and the determination of Fair Market Value made by the appraiser (selected
pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair Market Value
is nearest to that of the third appraiser. Such average shall be binding and
conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to this Paragraph
29(a) shall (A) be independent qualified MAI appraisers (B) have no right, power
or authority to alter or modify the provisions of this Lease, (C) utilize the
definition of Fair Market Value hereinabove set forth above, and (D) be
registered in the State if such State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a) above
shall be borne entirely by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not determined by the
expiration or termination of the then current Term, then the date on which the
Term would otherwise expire or terminate shall be extended to the date specified
for termination in the particular provision of this Lease pursuant to which the
determination of Fair Market Value is being made.
(c) In determining Fair Market Value as defined in clause (b) of the
definition of Fair Market Value, the appraisers shall add (i) the present value
of the Rent for the remaining Term, including any extension periods that Tenant
has exercised or has been deemed to have exercised, using a discount rate (which
may be determined by an investment banker retained by each appraiser) based on
the creditworthiness of Tenant and (ii) the present value of the Leased Premises
as of the end of such Term, including any extension periods that Tenant has
exercised or has been deemed to have exercised. The appraisers shall further
assume that no default then
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exists under the Lease, that Tenant has complied (and will comply) with all
provisions of the Lease.
30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be limited to actual damages and shall be
enforced only against the Leased Premises and not against any other assets,
properties or funds of (i) Landlord, (ii) any director, officer, member, general
partner, shareholder, limited partner, beneficiary, employee or agent of
Landlord or any general partner of Landlord or any of its members or general
partners (or any legal representative, heir, estate, successor or assign of any
thereof), (iii) any predecessor or successor partnership or corporation (or
other entity) of Landlord or any of its general partners, shareholders,
officers, directors, members, employees or agents, either directly or through
Landlord or its general partners, shareholders, officers, directors, employees
or agents or any predecessor or successor partnership or corporation (or other
entity), or (iv) any Person affiliated with any of the foregoing, or any
director, officer, employee or agent of any thereof.
31. Financing.
(a) Tenant agrees to pay all costs and expenses incurred by Landlord in
connection with the purchase, leasing and initial financing of the Leased
Premises including, without limitation, the cost of appraisals, environmental
reports, title insurance, surveys, and legal fees and expenses, but, to the
extent reasonably acceptable to Lender, Landlord and Lender will use the
appraisal, environmental reports, title commitment, and survey which Tenant has
provided Landlord. Notwithstanding the foregoing, Tenant shall not be
responsible for any of Landlord's debt service payments to Lender or for the
principal or interest due under any Loan, Note, Mortgage, or Assignment, or for
any payments due from Landlord to Lender related to Landlord's default under any
agreement between Landlord and Lender.
(b) Tenant agrees to pay, within three (3) business days of written demand
therefor, any cost, charge or expense (other than the principal of the Note and
interest thereon at the contract rate of interest specified therein) imposed
upon Landlord by Lender pursuant to the Note, the Mortgage or the Assignment
which is not caused solely by the gross negligence or willful misconduct of
Landlord and which is not otherwise reimbursed by Tenant to Landlord pursuant to
any other provision of this Lease.
(c) If Landlord desires to obtain or refinance any Loan, Tenant shall
agree, upon request of Landlord, to supply any such Lender with such notices and
information as Tenant is required to give to Landlord hereunder and to extend
the rights of Landlord hereunder to any such Lender and to consent to such
financing if such consent is requested by such Lender. Tenant shall provide any
other consent or statement and shall execute any and all other documents that
such Lender requires in connection with such financing, including any
subordination, non-disturbance and attornment agreement, so long as the same do
not adversely affect any right, benefit or privilege of Tenant under this Lease
in any material respect or increase Tenant's obligations under this Lease in any
material respect. Such subordination, nondisturbance and attornment agreement
may require Tenant to confirm that (a) Lender and its assigns will not be liable
for any misrepresentation, act or omission of Landlord and (b) Lender
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and its assigns will not be subject to any counterclaim, demand or offset which
Tenant may have against Landlord.
32. Subordination, Non-Disturbance and Attornment. This Lease and
Tenant's interest hereunder shall be subordinate to any Mortgage or other
security instrument hereafter placed upon the Leased Premises by Landlord, and
to any and all advances made or to be made thereunder, to the interest thereon,
and all renewals, replacements and extensions thereof, provided that the holder
of any such Mortgage or other security instrument (or a separate instrument
reasonably acceptable to Tenant, in recordable form duly executed by the holder
of any such Mortgage or other security instrument and delivered to Tenant) shall
agree in writing not to disturb Tenant's quiet enjoyment of Premises under this
Lease as long as Tenant is not in default under this Lease beyond any applicable
cure period set forth herein.
33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that
each shall treat this transaction as a true lease for state law purposes and
shall report this transaction as a Lease for Federal income tax purposes. For
Federal income tax purposes each shall report this Lease as a true lease with
Landlord as the owner of the Leased Premises and Equipment and Tenant as the
lessee of such Leased Premises and Equipment including: (1) treating Landlord as
the owner of the property eligible to claim depreciation deductions under
Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
34. Option to Purchase.
(a) Landlord does hereby give and grant to Tenant the option (the "Option")
to purchase the Leased Premises (i) for a purchase price (the "Purchase Price")
equal to the Offer Amount, subject to reduction pursuant to Paragraph 17(c), and
(ii) on any date (the "Option Purchase Date") (A) within the thirty (30) day
period prior to the last day of the one hundred twentieth (120th) calendar month
following the Commencement Date (the "First Option") or, (B) if the First Option
is not exercised, within the thirty (30) day period prior to the last day of the
two hundred fortieth (240th) calendar month following the Commencement Date (the
"Second Option"), in either case if and only if this Lease is then in full force
and effect. The Option Purchase Date shall be mutually agreeable to Landlord and
Tenant. If Tenant intends to exercise either the First Option or the Second
Option, Tenant shall give written notice ("Option Exercise Notice") to Landlord
that it is making an irrevocable exercise not later than six (6) months prior to
the first day of the one hundred twentieth (120th) month following the
Commencement Date or, if the First Option is not exercised, six (6) months prior
to the first day of the two hundred fortieth (240th) month following the
Commencement Date. Promptly upon receipt of the Option Exercise Notice by
Landlord, the parties shall commence to determine Fair Market Value.
(b) If Tenant shall exercise the foregoing option to purchase the Leased
Premises, on the later to occur of (i) the Option Purchase Date or (ii) the date
when Tenant has paid the Offer Amount and has satisfied all other Monetary
Obligations, Landlord shall convey the Leased Premises to Tenant in accordance
with Paragraph 20 hereof; provided, that if an Event of Default has occurred and
is continuing on the Option Purchase Date, Landlord, at its sole option, may
terminate Tenant's option to purchase the Leased Premises hereunder. IF THIS
LEASE SHALL
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TERMINATE FOR ANY REASON PRIOR TO THE DATE ORIGINALLY FIXED HEREIN FOR THE
EXPIRATION OF THE TERM, OR IF TENANT SHALL FAIL TO GIVE THE AFORESAID NOTICE OF
INTENTION TO PURCHASE, TIME BEING OF THE ESSENCE, THE OPTION PROVIDED IN THIS
PARAGRAPH 34 AND ANY EXERCISE THEREOF BY TENANT SHALL CEASE AND TERMINATE AND
SHALL BE NULL AND VOID. IN SUCH EVENT TENANT SHALL EXECUTE A QUITCLAIM DEED AND
SUCH OTHER DOCUMENTS AS LANDLORD SHALL REASONABLY REQUEST EVIDENCING THE
TERMINATION OF ITS OPTIONS.
35. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this Paragraph 35, and
provided an Event of Default does not then exist if Landlord shall enter into a
contract for the sale (the "Sale Contract") of the Leased Premises with a Third
Party Purchaser (and which may include other property owned by Landlord so long
as a specific purchase price is allocated to the Leased Premises), which Sale
Contract must be conditioned upon Tenant's failure to exercise its right under
this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ shall give written notice to Tenant of the Sale
Contract, together with a copy of the executed Sale Contract and the name and
business address of the Third Party Purchaser.
(b) For a period of fifteen (15) days following receipt of such notice,
Tenant shall have a one time right, exercisable by written notice to Landlord
given within said fifteen (15) day period, to elect to purchase the Leased
Premises at the purchase price and upon all the terms and conditions set forth
in such Sale Contract except that no contingencies contained in such Sale
Contract as to environmental assessments, engineering studies, inspection of the
Leased Premises, availability of financing, sale of other property, state of the
title to or encumbrances on the Leased Premises, or any other condition or
contingency to the Third Party Purchaser's obligation to purchase the Leased
Premises which pertains to the condition of the Leased Premises, the Third Party
Purchaser's ability to take certain action or any other factor beyond the
control of Landlord, shall apply to Tenant's obligation to purchase the Leased
Premises under this Paragraph 35, and Tenant shall be obligated to purchase the
Leased Premises without any such condition or contingency, except that Landlord
shall transfer the Leased Premises to Tenant subject only to the Permitted
Encumbrances.
(c) If at the expiration of the aforesaid fifteen (15) day period Tenant
shall have failed to exercise the aforesaid option by written notice to
Landlord, Landlord may sell the Leased Premises to such Third Party Purchaser
upon the terms set forth in such contract.
(d) Except as otherwise specifically provided herein, the closing date for
any purchase of the Leased Premises by Tenant pursuant to this Paragraph 35
shall be the earlier to occur of (i) ninety (90) days after the date of Tenant's
notice to Landlord of its intention to purchase the Leased Premises upon the
terms of a Sale Contract with a Third Party Purchaser or (ii) the closing date
provided in such Sale Contract. At such closing Landlord shall convey the Leased
Premises to Tenant in accordance with, and Tenant shall pay to Landlord the
purchase price and other consideration set forth in, the applicable contract,
and Landlord shall convey the Leased Premises to Tenant free and clear of all
encumbrances except the Permitted Encumbrances.
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(e) NOTWITHSTANDING ANYTHING TO THE CONTRARY, IF TENANT FAILS TO EXERCISE
THE RIGHT OF FIRST REFUSAL GRANTED PURSUANT TO THIS PARAGRAPH 35, IF THIS LEASE
TERMINATES OR THE TERM EXPIRES, SUCH RIGHT SHALL TERMINATE AND BE NULL AND VOID
AND OF NO FURTHER FORCE AND EFFECT. IN SUCH EVENT TENANT SHALL EXECUTE A
QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS LANDLORD SHALL REASONABLY REQUEST
EVIDENCING THE TERMINATION OF ITS RIGHT OF FIRST REFUSAL.
(f) If Tenant does not exercise its right of first refusal to purchase the
Leased Premises and the Leased Premises are transferred to a Third Party
Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so long
as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer and the Third Party Purchaser takes the Leased Premises subject to this
Lease. At the request of Landlord, Tenant will execute such documents confirming
the agreement set forth in this subparagraph.
(g) The provisions of this Paragraph 35 shall not apply to or prohibit (i)
any mortgaging, subjection to deed of trust or other hypothecation of Landlord's
interest in the Leased Premises, (ii) any sale of the Leased Premises pursuant
to a private power of sale under or judicial foreclosure of any Mortgage or
other security instrument or device to which Landlord's interest in the Leased
Premises is now or hereafter subject, (iii) any transfer of Landlord's interest
in the Leased Premises to a Lender, beneficiary under deed of trust or other
holder of a security interest therein or their designees by deed in lieu of
foreclosure, (iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer of the
Leased Premises or any interest therein or in Landlord to any affiliate of or
holder of an interest in Landlord to any affiliate of Landlord or to any entity
for whom W.P. ▇▇▇▇▇ & Co. LLC or any of their affiliates or successors provides
advisory or management services or investment advice, (vi) any Person to whom
any shareholder of Landlord transfers or sells all or substantially all of its
assets, or (vii) any transfer of the Leased Premises to any of the successors or
assigns of any of the Persons referred to in the foregoing clauses (i) through
(iv).
36. Security Deposit.
(a) Concurrently with the execution of this Lease, Tenant shall deliver to
Landlord a security deposit (the "Security Deposit") in the amount of One
Million Nine Hundred Seventeen and xx/100 ($1,917,000) Dollars. The Security
Deposit shall be cash (at any time the Security Deposit is in the form of cash,
including the proceeds of any Letter of Credit as that term is defined below,
the "Cash Security Deposit") deposits into an escrow account (the "Escrow
Account") held by a financial institution selected by Landlord. Tenant shall
have the right to substitute the Cash Security Deposit with up to two
irrevocable letters of credit (each, a "Letter of Credit") that shall be issued
by a bank acceptable to Landlord and having a long-term unsecured debt rating of
not less than "A" from Standard and Poor's Corporation and in form and substance
satisfactory to Landlord, provided, however, that at any time the Security
Deposit required to be posted hereunder is greater than two quarters of Basic
Rent, then, Tenant may only substitute the Cash Security Deposit for two Letters
of Credit with one Letter of Credit in an amount equal to two quarterly
installments of Basic Rent and one Letter of Credit in an amount equal to the
balance of the Security Deposit required to be posted hereunder. Except as set
forth
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in Paragraph 36(d), the Security Deposit shall remain in full force and effect
during the Term (and any Cash Security Deposit shall be held in the Escrow
Account during the Term subject to any application thereof pursuant to the terms
of this Paragraph 36) as security for the payment by Tenant of the Rent and all
other charges or payments to be paid hereunder and the performance of the
covenants and obligations contained herein, and, if the Security Deposit is in
the form of one or more Letters of Credit, such Letters of Credit shall be
renewed at least thirty (30) days prior to the expiration thereof. If the
Security Deposit is in the form of one or more Letters of Credit, and Tenant
fails to renew any Letters of Credit by such date, time being of the essence,
Landlord shall have the right at any time after the thirtieth (30th) day before
such expiration date to draw on each such Letter of Credit and to deposit the
proceeds into an Escrow Account as a Cash Security Deposit. Any Cash Security
Deposit shall not be commingled with other funds of Landlord or other Persons
and shall earn interest at money market rates. So long as no Event of Default
exists the interest thereon shall be due and payable to Tenant within forty-five
(45) days after the end of each Lease Year, provided that at any time an Event
of Default exists, no interest shall be due Tenant.
(b) If at any time an Event of Default shall have occurred and be continuing,
Landlord shall be entitled, at its sole discretion, to draw on any Letters of
Credit or to withdraw the Cash Security Deposit from the Escrow Account and to
apply the proceeds in payment of (i) any Rent or other charges for the payment
of which Tenant shall be in default, (ii) leasing commissions and tenant
improvements if Tenant is not possession of the Leased Premises, (iii) any
expense incurred by Landlord in curing any default of Tenant, and/or (iii) any
other sums due to Landlord in connection with any default or the curing thereof,
including, without limitation, any actual and direct damages incurred by
Landlord by reason of such default, including any rights of Landlord under
Paragraph 23 or to do any combination of the foregoing, all in such order or
priority as Landlord shall so determine in its sole discretion and Tenant
acknowledges and agrees that such proceeds shall not constitute assets or funds
of Tenant or its estate, or be deemed to be held in trust for Tenant, but shall
be, for all purposes, the property of Landlord (or Lender, to the extent
assigned). Tenant further acknowledges and agrees that (1) Landlord's
application of the proceeds of any Letters of Credit or Cash Security Deposit
towards the payment of Basic Rent, Additional Rent or the reduction of any
damages due Landlord in accordance with Paragraph 23 of this Lease, constitutes
a fair and reasonable use of such proceeds, and (2) the application of such
proceeds by Landlord towards the payment of Basic Rent, Additional Rent or any
other sums due under this Lease shall not constitute a cure by Tenant of the
applicable default provided that an Event of Default shall not exist if Tenant
restores the Security Deposit to its full amount within ten (10) days and in
accordance with the requirements of this Paragraph 36, so that the amount of the
Security Deposit required under this Paragraph 36 shall be again on deposit with
Landlord.
(c) At the expiration of the Term and so long as no Event of Default exists the
Letters of Credit or the Cash Security Deposit, as the case may be, shall be
returned to Tenant.
(d) Notwithstanding anything to the contrary set forth herein, so long as no
Event of Default exists, (i) one-third of the Security Deposit shall be released
to Tenant if and when Tenant, commencing with the fiscal quarter ending March
31, 2003, has achieved for four consecutive fiscal quarters a Fixed Charge
Coverage Ratio of 1.75x and a Net Worth of at least $110,000,000 (collectively,
the "Level 1 Requirements") and (ii) after Tenant has achieved the
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Level 1 Requirements, one-third of the original amount of the Security Deposit
shall be released to Tenant if and when Tenant has achieved for four consecutive
quarters a Fixed Charge Coverage Ratio of 2.0x and Net Worth of greater than
$110,000,000, which four consecutive fiscal quarters must occur after the four
consecutive fiscal quarters during which Tenant achieved the Level 1
Requirements (collectively the "Level 2 Requirements"). If at any time after
Tenant achieves the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ no longer meets the ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall increase the Security Deposit to an amount equal to
six quarterly installments of the then current Basic Rent. If at any time after
Tenant achieves the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ no longer meets the Level 2
Requirements but still meets the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall increase the
Security Deposit to equal four quarterly installments of the then current Basic
Rent.
(e) Landlord shall have the right to designate Lender or any other holder
of a Mortgage as the beneficiary of any Letters of Credit or the Cash Security
Deposit during the term of the applicable Loan, and such Lender or other holder
of a Mortgage shall have all of the rights of Landlord under this Paragraph 36.
Tenant covenants and agrees to pay any fees imposed by the issuer of any Letter
of Credit in order to change the beneficiary to the Lender or any other holder
of a Mortgage and to execute such agreements, consents and acknowledgments as
may be requested by Landlord from time to time to change the holder of the
Security Deposit as hereinabove provided.
(f) The following terms shall have the following definitions as used in
this Paragraph 36:
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means the amount of the liability of any
Person which in accordance with GAAP should be capitalized or disclosed on the
balance sheet of such Person in respect of a Capital Lease.
"EBITDAR" means, with respect to any fiscal period, the Tenant's and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense, income taxes, depreciation and amortization, rental
expense, and non-cash charges related to restructuring or acquisition for such
period, as determined in accordance with GAAP.
"Fixed Charge Coverage Ratio" shall mean as of any date of determination
for the immediately preceding fiscal quarter, the ratio of (i) EBITDAR to (ii)
the sum of (a) rental expense paid during such period and (b) Interest Expense.
"Indebtedness" means (a) all obligations of Tenant or its Subsidiaries for
borrowed money, (b) all obligations of Tenant or its Subsidiaries evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations of Tenant or its Subsidiaries in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products,(c)all
obligations of Tenant or its Subsidiaries under Capital Leases (excluding this
Lease if same would be reclassified as a Capital Lease), (d) all obligations or
liabilities of others secured by a Lien on any asset of Tenant or its
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Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations of Tenant or its Subsidiaries for the deferred purchase
price of assets (other than trade debt incurred in the ordinary course of Tenant
or its Subsidiaries' business and repayable in accordance with customary trade
practices), and (f) any obligation of Tenant or its Subsidiaries guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse to a Tenant or its Subsidiaries) any
obligation of any other Person.
"Interest Expense" means, for any period, consolidated total interest
expense (including, without limitation, that portion of any Capitalized Lease
Obligations attributable to interest expense in conformity with GAAP and
amortization of capitalized interest) payable in cash during such period with
respect to all outstanding Indebtedness of Tenant and its Subsidiaries,
including all commissions, discounts and other fees and charges owed with
respect to letter of credit and bankers acceptance financing, prepayment
charges, agency fees, administrative fees, commitment fees, net payment owed
under any interest rate hedging, cap or similar agreement or arrangement, all as
determined for Tenant and its Subsidiaries on a consolidated basis for such
period in accordance with GAAP.
"Lien" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgagee, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Net Worth" means tangible net worth of Tenant and its consolidated
Subsidiaries as determined in accordance with GAAP.
"Real Property" means any estates or interests in real property now owned
or hereafter acquired by Tenant or any of its Subsidiaries and the improvements
thereto.
"Subsidiary(ies)" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
37. Alternative Dispute Resolution. Any dispute between the parties arising
out of any alleged non-monetary default by Tenant where the delay of a remedy,
in Landlord's reasonable opinion, would not reasonably be expected to cause
irreparable harm to Landlord shall be subject to the following provisions:
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(a) Any such dispute may, at the option of either party, first be submitted
for discussion and possible resolution by senior officers of Landlord and
Tenant, as designated by their respective chief executive officers. If either
party elects to have the dispute so submitted, the other party agrees to
designate senior officers to participate in such discussion.
(b) If either (i) neither party has elected to submit a dispute for
discussion in accordance with the preceding clause (a) within thirty (30) days
after both parties have been notified of such dispute, or (ii) within a period
of thirty (30) days after submission of a matter in accordance with such clause
(a) the respective senior officers are unable to agree upon a resolution of such
dispute, either party may, within thirty (30) days following the applicable
aforesaid 30-day period, elect to utilize a non-binding resolution procedure
whereby each party presents its case at a hearing held in Minneapolis, Minnesota
before a panel consisting of a senior executive officer of each party and a
mutually acceptable neutral advisor, who shall be selected from the CPR
Institute for Dispute Resolution's Panels of Distinguished Neutrals. If so
elected, the parties shall bear their respective costs in connection with this
procedure, including the fees and expenses of the neutral advisor. Prior to the
hearing, the parties and the neutral advisor shall use their best efforts to
agree on a set of ground rules for the hearing. At the conclusion of the
hearing, the senior executive officers of the respective parties shall meet and
attempt to resolve the matter. If the matter cannot be resolved at such meeting,
the neutral advisor may be called upon to render his or her opinion as to how
the matter would be resolved had the matter been on trial in a court of law.
After the opinion is received, the executives shall meet again and try to
resolve the matter. If the matter cannot be resolved at such meeting, any party
may give the other party notice of its intention to litigate.
(c) No litigation may be commenced hereunder concerning a matter in
dispute until the later of (i) the 60th day following the date on which the
litigating party has provided notice to the other party of such dispute
(assuming that neither party has then elected to submit a dispute for
discussion in accordance with the preceding clauses (a) or (b) or (ii) the
90th day following any sending of notice to utilize the non-binding
resolution procedures specified in the preceding clause (b) (such sixty (60)
or ninety (90) day period, as applicable, being referred to herein as the
"Cooling Off Period"); provided, however, that such litigation may be
commenced prior to completion of the Cooling Off Period if (x) the
applicable statute of limitations would run prior thereto or (y) the party
requires immediate equitable relief. Only after the foregoing procedure has
been exhausted shall either party resort to litigation as the final
adjudication of the dispute.
(d) All negotiations pursuant to the preceding clauses (a) or (b) are
confidential and shall be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence.
38. Miscellaneous.
(a) The paragraph headings in this Lease are used only for convenience in
finding the subject matters and are not part of this Lease or to be used in
determining the intent of the parties or otherwise interpreting this Lease.
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(b) As used in this Lease, the singular shall include the plural and any
gender shall include all genders as the context requires and the following words
and phrases shall have the following meanings: (i) "including" shall mean
"including without limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge,
encumbrance, title retention agreement, pledge, security interest, mortgage
and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest therein"; (viii) "any of the Equipment" shall
mean "the Equipment or any part thereof or interest therein"; and (ix) "any of
the Adjoining Property" shall mean "the Adjoining Property or any part thereof
or interest therein".
(c) Any act which Landlord is permitted to perform under this Lease may be
performed at any time and from time to time by Landlord or any person or entity
designated by Landlord. Landlord shall not unreasonably withhold or delay its
consent whenever such consent is required under this Lease, except as otherwise
specifically provided herein and except that with respect to any assignment of
this Lease or subletting of the Leased Premises not expressly permitted by the
terms of this Lease, Landlord may withhold its consent for any reason or no
reason. In any instance in which Landlord agrees not to act unreasonably, Tenant
hereby waives any claim for damages against or liability of Landlord which is
based upon a claim that Landlord has unreasonably withheld or unreasonably
delayed any consent or approval requested by Tenant, and Tenant agrees that its
sole remedy shall be an action for declaratory judgment. If with respect to any
required consent or approval Landlord is required by the express provisions of
this Lease not to unreasonably withhold or delay its consent or approval, and if
it is determined in any such proceeding referred to in the preceding sentence
that Landlord acted unreasonably, the requested consent or approval shall be
deemed to have been granted; however, Landlord shall have no liability
whatsoever to Tenant for its refusal or failure to give such consent or
approval. Tenant's sole remedy for Landlord's unreasonably withholding or
delaying, consent or approval shall be as provided in this Paragraph. Time is of
the essence with respect to the performance by Tenant of its obligations under
this Lease.
(d) Landlord shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by Tenant on or
about the effective date hereof at Landlord's request constitute the entire
agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without regard to the
rule that ambiguities in a document are to be construed against the drafter.
-47-
(f) This Lease may be modified, amended, discharged or waived only by an
agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and bind Landlord
and Tenant, their successors and assigns and all present and subsequent
encumbrancers and, in the case of Tenant, subtenants of any of the Leased
Premises, and shall inure to the benefit of Landlord and Tenant, as the case may
be,, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.
(h) If any one or more of the provisions contained in this Lease shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Lease, but this Lease shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(i) All exhibits attached hereto are incorporated herein as if fully set
forth.
(j) This Lease shall be governed by and construed and enforced in
accordance with the laws of the State.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed under seal as of the day and year first above written.
LANDLORD:
PEM (MN) 15-39, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: President
-------------------------
ATTEST: TENANT:
PEMSTAR, INC.
a Minnesota corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇
------------------------------ ----------------------------
Title: Senior Counsel Title: CFO
--------------------------- -------------------------
[Corporate Seal]
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EXHIBIT A
PREMISES
▇▇▇ ▇ ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Park, Rochester, Olmsted County,
Minnesota.
50
EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all personal property and all Trade Fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation
of the buildings which constitute part of the Leased Premises for the uses
permitted under Paragraph 4(a) of this Lease.
51
EXHIBIT C
PERMITTED ENCUMBRANCES
1. Utility Easement as shown on the recorded plat for Rochester Technology Park
and Rochester Technology Park Second.
2. Assessment Agreement made by and between the City of Rochester and Pemstar,
Inc., dated March 18, 1997, and recorded March 19, 1997, as Document No. 747554.
3. Redevelopment Assistance Agreement made by and between the City of Rochester
and Pemstar, Inc., dated March 3, 1997, and recorded March 19, 1997, as Document
No. 747553, as amended pursuant to an instrument recorded June 5, 1998, as
Document No. 781364, and as may be otherwise amended from time to time, as long
as such Redevelopment Assistance Agreement is subordinated to the mortgage given
by Buyer relating to its purchase of the Property. Portions of said instrument
as amended were subordinated to certain Mortgages given by Pemstar, Inc.,
pursuant to an instrument recorded June 5, 1998, as Document No. 781.
4. Pedestrian Facilities Agreement made by and between Pemstar, Inc., and the
City of Rochester dated May 15, 2001, and recorded December 28, 2001, as
Document No. 899570.
52
EXHIBIT D
BASIC RENT PAYMENTS
Basic Rent. Basic Rent payable in respect of the Term shall be the amounts
set forth below per annum, payable quarterly in advance on each Basic Rent
Payment Date in the installment amounts set forth below. Pro rata Basic Rent for
the period from the date hereof through the fourth day of April, 2003 shall be
paid on the date hereof, and pro rata Basic Rent for the period from the
twenty-fifth day of the last month of the Term through the last day of the last
month of the Term shall be paid with the final quarterly installment of Basic
Rent.
--------------------------------------------------------------------------------
Lease Year Annual Basic Rent Quarterly Installment
--------------------------------------------------------------------------------
1. $1,278,000 $319,500
--------------------------------------------------------------------------------
2. $1,303,560 $325,890
--------------------------------------------------------------------------------
3. $1,329,631 $332,408
--------------------------------------------------------------------------------
4. $1,356,224 $339,056
--------------------------------------------------------------------------------
5. $1,383,348 $345,837
--------------------------------------------------------------------------------
6. $1,411,015 $352,754
--------------------------------------------------------------------------------
7. $1,439,236 $359,809
--------------------------------------------------------------------------------
8. $1,468,020 $367,005
--------------------------------------------------------------------------------
9. $1,497,381 $374,345
--------------------------------------------------------------------------------
10. $1,527,328 $381,832
--------------------------------------------------------------------------------
11. $1,557,875 $389,469
--------------------------------------------------------------------------------
12. $1,589,032 $397,258
--------------------------------------------------------------------------------
13. $1,620,813 $405,203
--------------------------------------------------------------------------------
14. $1,653,229 $413,307
--------------------------------------------------------------------------------
15. $1,686,294 $421,573
--------------------------------------------------------------------------------
16. $1,720,020 $430,005
--------------------------------------------------------------------------------
17. $1,754,420 $438,605
--------------------------------------------------------------------------------
18. $1,789,509 $447,377
--------------------------------------------------------------------------------
19. $1,825,299 $456,325
--------------------------------------------------------------------------------
20. $1,861,805 $465,451
--------------------------------------------------------------------------------
21 $1,899,041 $474,760
--------------------------------------------------------------------------------
22 $1,937,022 $484,255
--------------------------------------------------------------------------------
23 $1,975,762 $493,941
--------------------------------------------------------------------------------
24 $2,015,277 $503,819
--------------------------------------------------------------------------------
25 $2,055,583 $513,896
--------------------------------------------------------------------------------
26 $2,096,694 $524,174
--------------------------------------------------------------------------------
27 $2,138,628 $534,657
--------------------------------------------------------------------------------
28 $2,181,401 $545,350
--------------------------------------------------------------------------------
29 $2,225,029 $556,257
--------------------------------------------------------------------------------
30 $2,269,530 $567,382
--------------------------------------------------------------------------------
31 $2,314,920 $578,730
--------------------------------------------------------------------------------
32 $2,361,219 $590,305
--------------------------------------------------------------------------------
33 $2,408,443 $602,111
--------------------------------------------------------------------------------
34 $2,456,612 $614,153
--------------------------------------------------------------------------------
35 $2,505,744 $626,436
--------------------------------------------------------------------------------
36 $2,555,859 $638,965
--------------------------------------------------------------------------------
37 $2,606,976 $651,744
--------------------------------------------------------------------------------
38 $2,659,116 $664,779
--------------------------------------------------------------------------------
39 $2,712,298 $678,074
--------------------------------------------------------------------------------
40 $2,766,544 $691,636
--------------------------------------------------------------------------------
53