Exhibit 10.1
AGREEMENT OF LEASE
Single Tenant Building
THIS AGREEMENT OF LEASE, dated as of May 14, 1999, by and between NORTH
POINT PARK, LLC, organized and existing under the laws of the State of South
Carolina (together with its heirs, successors and permitted assigns, the
"Landlord") and XXXXXXXXXX APPAREL HOLDINGS INC., organized and existing under
the laws of the State of South Carolina (together with its heirs, successors and
permitted assigns, the "Tenant").
WITNESSETH:
1. Premises. Landlord does hereby demise and let unto Tenant and Tenant
does hereby lease and take from Landlord for the term and upon the terms,
covenants, conditions and provisions set forth herein all that tract of land
located at Ashley Xxxxxxxxx Xxxxxxxxx, Xxxx xx Xxxxxxx, Xxxxxxxx Xxxxxx, Xxxxx
Xxxxxxxx (herein called the "Lot") which is outlined in red on Exhibit "A"
hereto, together with the building (herein called the "Building") and
improvements to be constructed thereon in accordance with Article 2 hereof and
the benefit of all rights, appurtenances, privileges, easements, rights of
ingress or egress, licenses or hereditaments now or hereafter belonging or
appertaining to any of the foregoing (the Lot, the Building, such benefits and
any other improvements thereon being herein collectively called the "Premises").
Tenant acknowledges that Landlord does not own the Lot as of the date hereof but
is a contract vendee for the purchase of the Lot. Landlord represents and
warrants that it has valid and enforceable contract rights to purchase the Lot.
Landlord's obligations hereunder are contingent upon Landlord's obtaining title
to the Lot on or before June 15, 1999. If Landlord has not obtained title to
the Lot on or before June 15, 1999, both Landlord and Tenant shall have the
right to terminate this Agreement by written notice, and upon such termination
neither party shall have any further obligations to each other whatsoever except
that Landlord shall return to Tenant any security deposit held by Landlord in
connection herewith and shall take all necessary action to cause the Letter of
Credit required by Section 31 of this Lease to be terminated. In the event that
Tenant requests Landlord to make application for a Fee in Lieu of Property Tax
as described in Section 6 hereof, it is understood and agreed that Landlord may
be required to convey title to all or part of the Premises to Berkeley County,
South Carolina in which event Landlord shall lease the Premises, or such part
thereof, from Berkeley County and this Lease shall automatically be converted
from a lease to a sublease between Landlord and Tenant.
2. Completion by Landlord.
(a) The Premises shall be completed in accordance with the plans, which
shall include but not be limited to civil, architectural, structural,
mechanical, electrical, plumbing and fire protection plans, attached hereto as
Exhibit "B" (herein called the "Plans") and the specifications attached hereto
as Exhibit "C" (herein called the "Specifications") (collectively, "Landlord's
Work"). All necessary construction shall be commenced promptly and shall be
Substantially Completed (as hereinafter defined) promptly and with due
diligence in accordance with the time periods set forth herein, ready for use
and occupancy by Tenant on the date set forth in Article 3. Provided, however,
that the time for Substantial Completion of the Premises shall be extended
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for additional periods of time equal to the time lost by Landlord or Landlord's
contractors, subcontractors or suppliers due to strikes or other labor troubles,
governmental restrictions and limitations, scarcity, unavailability or delays in
obtaining fuel, labor or materials, war or other national emergency, accidents,
floods, defective materials, fire damage or other casualties, adverse weather
conditions, or any cause similar or dissimilar to the foregoing beyond the
reasonable control of Landlord or Landlord's contractors, subcontractors or
suppliers (collectively, "Force Majeure Events"). All construction shall be done
in a good and workmanlike manner and shall comply at the time of completion with
all Permitted Encumbrances (as hereinafter defined), applicable and lawful laws,
ordinances, regulations and orders of the federal, state, county or other
governmental authorities having jurisdiction thereof. Tenant and its authorized
agents, employees and contractors shall have the right, at Tenant's own risk,
expense and responsibility at all reasonable times prior to the Commencement
Date as hereinafter defined, to enter the Premises for the purpose of taking
measurements, installing its furnishings and equipment and performing the work
described on Exhibit "D" attached hereto (collectively, "Tenant's Work");
provided that Tenant, in so doing, shall not unreasonably interfere with or
delay the work to be performed hereunder by Landlord, and Tenant shall use
contractors and workmen compatible with the contractors and workmen engaged in
the work to be performed hereunder by Landlord, and Tenant shall have obtained
Landlord's written consent prior to installing any fixtures not expressly
authorized hereby.
(b) Tenant may request changes to the Plans or Specifications. Landlord
shall have the right to approve or disapprove such requested changes in the
exercise of its reasonable discretion. In no event shall Landlord be required
to approve a requested change if, in Landlord's sole judgment, the requested
change will result in a construction delay in excess of forty-five (45) days.
Within fifteen (15) days after Tenant shall request a change to the Plans and
Specifications, Landlord shall notify Tenant in writing as to whether the change
requested by Tenant will, in Landlord's reasonable and good faith judgment,
entail additional construction costs and/or additional construction time. If,
in Landlord's reasonable and good faith judgment, such changes will entail
additional construction costs and/or additional construction time, such written
notice shall contain Landlord's reasonable estimate of the additional
construction costs and/or additional construction time that the same will
entail. If Landlord shall not so notify Tenant within such fifteen (15) day
period, then:
(i) the Plans and Specifications shall be changed as set forth in
Tenant's request ;
(ii) Tenant shall not be obligated to pay any additional construction
costs as a result of such changes; and
(iii) The scheduled completion date (as otherwise extended in
accordance with the terms hereof) shall not be modified as a result
thereof.
If Landlord shall so notify Tenant that the changes will entail additional
construction costs and/or additional construction time, Tenant shall notify
Landlord in writing within three (3) business days after such determination as
to whether Tenant wishes to make the changes in question. If Tenant shall not
so notify Landlord, it shall be conclusively deemed that Tenant has elected to
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withdraw the proposed change in the Plans and Specifications. If Tenant shall
notify Landlord that Tenant nonetheless wishes to make the change in question,
then:
(i) Landlord's Plans and Specifications shall be changed as set forth in
Tenant's request;
(ii) Tenant agrees to begin paying rent under this Lease as of the date,
reasonably determined by Landlord, that Substantial Completion would have
been achieved but for Tenant's requested changes;
(iii) to the extent that Landlord shall incur additional construction
costs resulting from such changes, Tenant shall pay to Landlord, as and
when Landlord incurs the same, the actual and direct amount of such
additional construction costs except to the extent they exceed Landlord's
original good faith estimate by more than fifteen percent (15%) in which
event Tenant shall only be responsible for the first fifteen percent (15%)
of the construction costs that are in excess of Landlord's good faith
estimate; and
(iv) to the extent that such changes shall entail additional
construction time, the Target Completion Date (as hereinafter defined and
as otherwise extended in accordance with the terms hereof) shall be
extended by the number of days of additional construction time actually
incurred in connection with such changes (even though such time may exceed
Landlord's original good faith estimate).
(c) The Landlord hereby agrees to provide Tenant with a notice (the
"Anticipated Completion Notice") that Tenant may begin the construction of
Tenant's Work, which notice shall be given by Landlord to Tenant upon the
earlier of: (i) ninety (90) days prior to the anticipated date of Substantial
Completion of the Building; or (ii) the earliest date that the progress of
Landlord's construction is such that the commencement of Tenant's Work will not
significantly interfere with the completion of Landlord's construction
obligations. Notwithstanding the delivery of the Anticipation Completion
Notice, Landlord reserves the right to revise the anticipated date of
Substantial Completion. Upon receipt of the Anticipated Completion Notice,
Tenant shall be permitted to install a mezzanine storage deck in the Premises
provided that Tenant installs the fire protection equipment required by
applicable law in connection with such improvement and that the Tenant otherwise
complies with all applicable laws and regulations in the conduct of Tenant's
Work.
(d) During the construction of the Building, Tenant and its consultants and
engineers shall have the right to attend all regularly scheduled contractor and
project construction meetings, to inspect all relevant construction documents
and records, to meet with construction personnel at reasonable times and to
inspect the construction site from time to time. The purpose of the foregoing
is to allow Tenant to monitor the course of construction, as well as to resolve
any questions or comments regarding whether Landlord's Work is progressing in a
good and workmanlike manner in accordance with the Plans and Specifications.
Without limiting any of Tenant's rights set forth herein, Tenant's
representatives shall have no voting or other decision rights at any meetings
they attend. Tenant acknowledges that Landlord may also invite other
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individuals, including, without limitation, representatives of Liberty Property
Trust, to attend all such meetings.
3. Term.
(a) The term of this lease shall commence on the later of January 30, 2000
or on the date when the Premises and the improvements required to be constructed
by Landlord under Article 2 hereof shall have been Substantially Completed
(herein called the "Commencement Date"). If the date of Substantial Completion
is delayed as a result of changes requested by Tenant and Tenant was notified,
in writing, that such changes would result in delays, the term of the lease and
the payment of rent shall commence as if the Premises were Substantially
Complete on the originally scheduled date but no earlier than March 1, 2000, as
extended for reasons other than those caused by Tenant. Unless sooner
terminated in accordance with the terms hereof, the term of this lease shall end
without the necessity for notice from either party to the other at 12:01 a.m.
local time on the fifteenth (15th) anniversary of the first day of the first
full calendar month following the date, which shall not occur until all free
rent periods provided for hereunder, if applicable, have expired, that Tenant is
first obligated to pay rent under the terms and conditions of this Lease (herein
called the "Expiration Date").
This Lease shall become effective upon the later to occur of both (i) the
execution of this Lease by Landlord and Tenant; and (ii) the delivery by Tenant
to Landlord of the initial Letter of Credit described in Section 31 of this
Lease.
(b) For purposes of this Lease, the Premises shall be "Substantially
Complete" on the day that Landlord obtains a certificate of occupancy for the
Building and the certification of: (i) an architect that: (A) to the best of the
architect's knowledge, information and belief, the Building was constructed in
general conformance with the plans and specifications; and (B) in the
architect's professional opinion, the Building is in compliance with applicable
laws, codes and ordinances; and (ii) the Landlord's general contractor that: (A)
the Building has been constructed in accordance with the plans and
specifications; and (B) the construction of the Building has been completed in a
good and workmanlike manner. Landlord and Tenant agree that any dispute as to
whether or not Substantial Completion has occurred shall be resolved as provided
in Section 23 hereof. The Premises shall be considered to be Substantially
Completed notwithstanding the fact that minor or insubstantial details of
construction, mechanical adjustment or decoration remain to be performed, which
details Landlord shall promptly thereafter perform at Landlord's sole cost and
expense. The Premises shall be considered to be Substantially Complete if
Landlord is unable to obtain the required certificate of occupancy or
architect's certification (or general contractor's certification) due to
Tenant's failure to complete any aspect of Tenant's Work. Without limiting any
of the foregoing, Landlord and Tenant acknowledge and agree that the Premises
shall be considered Substantially Complete notwithstanding the fact that: (i)
gravity feed sanitary sewer service for the Premises may not have been completed
by the Berkeley County Water and Sewer Authority in which event the Premises
shall be deemed Substantially Complete if Landlord, at its expense, has
constructed or caused the construction of a temporary septic tank sanitary sewer
system to serve the Premises which shall (A) be in the form of either a
temporary septic tank or "pump and haul" system that is approved by the South
Carolina Department of Health and Environmental Control; and (B)
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provide the same level of service as would be provided by the permanent gravity
feed sanitary sewer (it being agreed that Landlord will bear all costs related
to the operation, maintenance, repair and hauling charges of any temporary sewer
system); or (ii) the road that connects the Premises to North Xxxxx Avenue shall
not have been accepted for dedication by Berkeley County, in which event the
Premises shall be deemed Substantially Complete if Landlord has obtained a
private access easement for Tenant's use which road shall (A) be paved; (B)
allow vehicular (including truck) ingress and egress over the private road area
not yet dedicated; and (C) be maintained at Landlord's cost and expense.
(c) Landlord also agrees to provide Tenant with a notice of Substantial
Completion of the Building (the "Substantial Completion Notice"). Tenant shall,
within ten (10) days of the Substantial Completion Notice, provide Landlord with
a list of "punch list" items and Landlord agrees to promptly complete such punch
list items; provided, however, that the term of this Lease, and Tenant's
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obligation to pay rent hereunder, shall commence upon Substantial Completion
notwithstanding the existence of any "punch list" items. Subject to Tenant's
rights under Section 23, Tenant agrees that it shall execute and deliver the
Acceptance Certificate, subject to "punch-list" items, required by Section 23(c)
of this Lease notwithstanding the existence of any "punch-list" items.
(d) Landlord and Tenant agree that the target completion date for the
Building (excluding Tenant work) is February 29, 2000 (as extended by Force
Majeure Events, by the provisions of Section 2 of this Lease, or as otherwise
provided herein, the "Target Completion Date"). In the event that the Building
shall not be Substantially Complete on or prior to the date (as extended by any
Force Majeure or as provided in Section 2(b), the "Rent Penalty Date") that is
sixty (60) days after the Target Completion Date, the Commencement Date shall be
the date on which Substantial Completion actually occurs and Tenant shall be
given a credit against rent which would otherwise have been payable from and
after the date of Substantial Completion equal to one (1) day of free rent for
each one (1) day that the Commencement Date occurs after the Rent Penalty Date
(such number of days of free rent, the "Rent Penalty"). Tenant shall have no
right to terminate this Lease on account of any delay in Landlord's Substantial
Completion of the Premises except that Tenant shall have the right to terminate
this Lease upon five (5) days advance written notice to Landlord if Substantial
Completion does not occur prior to the date that is four (4) months after the
Rent Penalty Date. Notwithstanding the fact that the Target Completion Date and
Rent Penalty Date may be extended by reason of Force Majeure or as otherwise
provided in this Lease, Landlord and Tenant agree that Tenant shall, regardless
of the occurrence of any Force Majeure event, have the right to terminate this
Lease if the Building is not Substantially Completed on or prior to August 31,
2000. At any time prior to the repayment in full of Landlord's initial
construction loan for the Building where Tenant has the right to exercise a
termination right, Landlord may request from Tenant and Tenant shall provide to
Landlord, within five (5) business days of a Landlord request, a written notice
stating either that Tenant has elected to terminate the Lease or stating that
Tenant will not exercise any termination right for a period of at least thirty
(30) days from the date of Tenant's statement. Landlord and Tenant agree that
Landlord shall have the right to deliver to Tenant a notice of termination of
this Lease (the "Landlord Termination Notice") upon the first to occur of the
following: (i) the date that is five (5) months after the occurrence of the Rent
Penalty Date, as such date may be extended by Force Majeure or as otherwise
provided in this Lease; or (ii) December 31, 2000,
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regardless of whether or not any Force Majeure event has occurred. In the event
that Landlord has delivered a Landlord Termination Notice to Tenant as provided
in the preceding sentence, Tenant shall, within five (5) business days of its
receipt of such Landlord Termination Notice, advise Landlord in writing whether
or not Tenant agrees to waive the accrual of any Rent Penalty from and after the
date of the Landlord Termination Notice. If, upon Tenant's receipt of the
Landlord Termination Notice, Tenant fails to agree by written notice to Landlord
within five (5) business days to waive the accrual of any Rent Penalty from and
after the date of the Landlord Termination Notice, then this Lease shall be
terminated as of the date of the Landlord Termination Notice and Tenant shall be
entitled to receive on account of Landlord's termination an amount equal to the
monetary value of the Rent Penalty that had accrued to Tenant's benefit as of
the date of the Landlord Termination Notice. If Tenant advises Landlord within
five (5) business days of its receipt of the Landlord Termination Notice that it
has agreed to waive the accrual of any Rent Penalty from and after the date of
the Landlord Termination Notice, the Landlord Termination Notice shall be deemed
withdrawn and Landlord and Tenant shall each be obligated to continue
performance under this Lease for a period of five (5) months (the "Extension
Period") from and after the date of the Landlord Termination Notice and no Rent
Penalty shall accrue to Tenant's benefit during the period from and after the
date of the Landlord Termination Notice. In addition, both Landlord and Tenant
agree to waive any termination right during the Extension Period. Upon the
expiration of the Extension Period, either Landlord or Tenant may terminate this
Lease by written notice and if Landlord shall terminate the Lease upon the
expiration of the Extension Period, Tenant shall be entitled to receive on
account of Landlord's termination an amount equal to the monetary value of the
Rent Penalty that had accrued to Tenant's benefit as of the date of the Landlord
Termination Notice delivered by Landlord prior to the commencement of the
Extension Period. If, upon the expiration of the Extension Period neither
Landlord nor Tenant elects to terminate this Lease, the Building is
Substantially Completed and Tenant occupies the Premises as contemplated herein,
then Tenant shall be entitled to the benefit of the Rent Penalty that accrued
prior to the delivery by Landlord of the Landlord Termination Notice delivered
by Landlord prior to the commencement of the Extension Period.
(e) Option to Renew. Provided Tenant is not in default of any provisions
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of this Lease either at the time it provides notice of renewal or at the
expiration of the initial term of this Lease, the term of this Lease may be
extended twice at the option of the Tenant for consecutive five (5) year
periods. Such options shall be exercised by written notice to Landlord given at
least one hundred eighty (180) days but no more than one (1) year prior to the
expiration of the initial term or first extended term, as the case may be, of
this Lease. Any extension of the Term of this Lease shall be upon the same
terms, covenants and conditions of this Lease except that the Minimum Annual
Rent shall be equal to the lesser of: (i) one hundred five percent (105%) of the
Minimum Annual Rent paid during the immediately preceding year; or (ii) fair
market value. Payment of all additional rent and other charges to be made by
Tenant for the initial term of this Lease shall continue during any extension
period. Any termination of this Lease shall automatically terminate all
unexercised rights of further extensions. If Landlord and Tenant cannot agree
upon the fair market value of Minimum Annual Rent to be paid during a renewal of
this Lease, Landlord and Tenant shall each appoint an appraiser and such
appraisers shall, within thirty (30) days of their appointment, together
determine the fair market value of Minimum Annual Rent. If such two appraisers
cannot agree upon the fair market value of Minimum Annual Rent, they shall
submit separate appraisals to a third appraiser
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appointed by them who shall submit an appraisal for the fair market value of
Minimum Annual Rent. In such event, the Minimum Annual Rent that shall be
binding upon the parties hereto shall be the average of the three appraisals.
4. Use of Premises. Tenant shall occupy the Premises throughout the term
and shall use the same for and only for a distribution facility with appurtenant
offices or any other lawful use; provided, however, that Tenant shall not be
permitted to use the Premises for any use not permitted by applicable zoning
regulations or by any covenants and restrictions to which the Premises is made
subject during the term of this Lease.
5. Rent.
(a) Minimum Annual Rent. Subject to Section 3(d), from and after the later
to occur of March 1, 2000, and the date of Substantial Completion, Tenant shall
pay a minimum annual rent of One Million One Hundred Fifty-Five Thousand and
No/100 ($1,155,000.00) Dollars without notice or demand, and without set off in
equal monthly installments of Ninety Six Thousand Two Hundred Fifty & No/100
($96,250.00) Dollars in advance on the first day of each calendar month during
the first five years of this lease term, which shall be increased to One Million
Three Hundred Twenty Thousand & No/100 ($1,320,000.00) Dollars per annum payable
One Hundred Ten Thousand and No/100 ($110,000.00) Dollars per month during the
second five years of the term of this Lease and One Million Four Hundred Seventy
Eight Thousand Four Hundred and No/100 ($1,478,400.00) Dollars per annum in
monthly installments of One Hundred Twenty Three Thousand Two Hundred & No/100
($123,200.00) Dollars during the last five years of the lease term.
Provided, however, that rent for the first full month after the Commencement
Date shall be paid no later than the Commencement Date. If the Commencement
Date shall fall on a day other than the first day of a calendar month, the rent
shall apportioned pro rata on a per diem basis for the period between the
Commencement Date and the first day of the following calendar month. In
addition, Tenant shall pay Landlord without setoff the additional rent as
hereinafter set forth. Unless otherwise specifically provided, all sums shall
be paid to Landlord at the address given in Article 30 hereof.
6. Taxes and Other Impositions.
(a) Payment. As additional rent hereunder, at least thirty (30) days
before any fine, penalty, interest or cost may be added thereto for the non-
payment thereof (or sooner if elsewhere herein required), Tenant shall pay
throughout the term of this lease all levies, taxes, assessments, water and
sewer rents and charges, liens, license and permit fees, charges for public
utilities and all other charges, imposts or burdens of whatsoever kind and
nature, general or special, foreseen or unforeseen, whether or not
particularized by name, ordinary or extraordinary, which are applicable to the
term of this lease, and which are created, levied, assessed, confirmed,
adjudged, imposed or charged by any federal, state or municipal government or
public authority, or under any law, ordinance or regulation thereof, or pursuant
to any recorded covenants or agreements (all of which are hereinafter referred
to as "Impositions") upon or with respect to the Premises, the Lot or any
improvements made thereto, any part of the foregoing, any
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appurtenances thereto, or directly upon this lease or the rent payable hereunder
or amounts payable by any subtenants or other occupants of the Premises, or upon
this transaction or any related documents to which Tenant is a party or
successor in interest, or against Landlord because of Landlord's estate or
interest herein. If Tenant is permitted by the assessing and collecting
authorities and by all mortgagees and elects to pay any Imposition in
installments, Tenant shall not be responsible for any unpaid installments
thereof which become due and payable after the expiration or sooner termination
of the term of this lease. Tenant shall pay each Imposition at Landlord's
election to Landlord or directly to the government or other public authority
charged with the collection of such Imposition; and in the latter event, Tenant
shall furnish Landlord, not later than ten (10) days prior to the last day upon
which they may be paid without any fine, penalty, interest or cost, receipts or
other evidence satisfactory to Landlord of the payment of all such Impositions.
If requested by Tenant, Landlord will submit the appropriate applications
and enter into the appropriate agreements to cause the Premises to be subject to
a "Fee In Lieu of Property Tax" under South Carolina law. In the event Tenant
makes such a request, Tenant agrees to reimburse Landlord, as additional rent
hereunder, for all costs and expenses incurred by Landlord in connection with
making such an application and in connection with drafting and negotiating
appropriate agreements with Berkeley County including, without limitation, legal
fees and expenses. Tenant understands and agrees that it shall be responsible
not only for the legal fees and expenses of Landlord's counsel but also for the
legal fees and expenses of counsel retained by Berkeley County. Berkeley County
has advised Landlord that, if an application for a Fee In Lieu of Property Tax
is made by Landlord, Berkeley County will be represented by the law firm of
Xxxxxx Xxxxx Xxxxxx Xxxxxxx & Xxxxxxxx LLP.
(b) New Methods of Taxation. Nothing herein contained shall be interpreted
as requiring Tenant to pay any income, excess profits, corporate capital stock,
or franchise tax imposed or assessed upon Landlord, unless such tax or any
similar tax is levied or assessed in lieu of all or any part of any Imposition
or an increase in any Imposition. If under the requirements of any state or
local law with respect to such new method of taxation Tenant is prohibited from
paying such new tax which is material in amount, Landlord may, at its election,
terminate this lease by giving at least six (6) months advance written notice
thereof to Tenant.
(c) Monthly Deposits. Notwithstanding the foregoing provisions of this
Article 6, Landlord shall have the right upon the occurrence and continuance of
a default by Tenant under this Lease, at its option, to require Tenant to pay to
Landlord or to any mortgagee, at the time when the monthly installment of
minimum rent is payable, an amount equal to one-twelfth (1/12th) of the annual
Impositions as estimated by Landlord. If Landlord elects to have Tenant make
such payments, Tenant also shall pay to Landlord or to such mortgagee, as the
case may be, at least thirty (30) days before any fine, penalty, interest or
cost may be added thereto for the non-payment thereof, the amount by which the
Impositions becoming due exceed the monthly payments on account thereof
previously made by Tenant. The amounts paid by Tenant pursuant to this Paragraph
(c) shall be used to pay the Impositions, but such amounts shall not be deemed
to be trust funds and no interest shall be payable thereon.
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(d) Contest by Landlord. Landlord may bring proceedings to contest the
validity or amount of any Imposition or to recover payments therefor. Tenant
shall cooperate with Landlord with respect to such proceedings to the extent
reasonably necessary and Landlord shall be entitled to deduct from any refund
actually obtained all reasonable costs, fees and expenses incurred in connection
with such proceedings as additional rent.
(e) Contest by Tenant. Tenant, without postponement of payment, may bring
proceedings to contest the validity or amount of any Imposition or to recover
payments therefor. Tenant shall save Landlord harmless from all costs and
expenses in connection with such proceedings. Landlord shall cooperate with
Tenant with respect to such proceedings to the extent reasonably necessary, but
all costs, fees and expenses incurred in connection with such proceedings shall
be borne by Tenant, Tenant shall give Landlord advance written notice of
Tenant's intention to take any such action.
7. Insurance.
(a) Types. Tenant, at Tenant's sole cost and expense, shall maintain and
keep in effect throughout the term with policies from an insurer and in form and
substance all satisfactory to Landlord:
(i) insurance against loss or damage to the Building and all other
improvements now or hereafter located on the Premises by fire, earthquake and
such other casualties as may be included in the all-risk insurance from time to
time available, in an amount equal to the full insurable replacement value of
the Building and improvements (which shall be deemed to be Ten Million Five
Hundred Thousand Dollars ($10,500,000.00)), the policy to have attached thereto
replacement cost, agreed amount and rental coverage (for a period of one (1)
year) endorsements or comparable forms of coverage;
(ii) insurance against liability for bodily injury (including death)
or property damage in or about the Premises, under a policy of comprehensive
general public liability insurance, with such limits as to each as may be
reasonably required by Landlord from time to time but not less than $500,000 for
each person and $1,000,000 for each occurrence of bodily injury (including
death) and $500,000 for property damage;
(iii) boiler insurance (if applicable), plate glass insurance, war
risk insurance (when available), and such other forms of insurance as may be
specified from time to time by Landlord; all such insurance shall be in such
reasonable types and amounts as may be specified from time to time by Landlord
or by any mortgagee and commercially available at reasonable cost; and
(iv) any other reasonable insurance coverage that may be required from
time to time by any mortgagee or that may be required generally by institutional
mortgagees.
(b) Insured Parties. The policies of insurance described in Paragraphs
(a)(i), (iii) and (iv) of this Article 7 shall name Landlord as an insured
party, as its interest may appear, and in addition shall contain a standard
mortgagee endorsement in favor of all mortgagees or, at the
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election of any such mortgagee, any reasonable variation of such endorsement.
The policies of insurance described in Paragraph (a)(ii) of this Article 7 shall
name both Landlord and Tenant as the insured parties.
(c) Policies. Each policy of insurance required by Paragraph (a) of this
Article 7 shall provide that it shall not be canceled without at least thirty
(30) days prior written notice to Landlord and to any mortgagee named in any
endorsement thereto. Each policy shall have an executive notice endorsement or
comparable form of coverage attached thereto to the effect that no act or
omission of Tenant shall affect the obligation of the insurer to pay the full
amount of any loss sustained.
(d) Evidence of Coverage. At least thirty (30) days prior to the
Commencement Date, a certificate of insurance for each policy shall be delivered
to Landlord by Tenant. Tenant may carry any insurance required by this Article 7
under a blanket policy, applicable to the Premises, in which event Tenant shall
deliver the insurer's certificates thereof and two certified copies of the
underlying policy in lieu of the original, showing all of the terms of such
coverage applicable to the Premises and showing the insured parties as
aforesaid. If Tenant shall fail, refuse or neglect to obtain or to maintain any
insurance that it is required to provide, or to furnish Landlord with
satisfactory evidence of coverage within the time required and Tenant shall fail
to cure such insurance deficiency after Landlord has provided Tenant with five
(5) days advance written notice of such insurance deficiency, Landlord shall
have the right to purchase such insurance. All payments for such insurance made
by Landlord shall be recoverable by Landlord from Tenant, together with interest
thereon, as additional rent promptly upon being billed therefor.
(e) Waiver of Subrogation. Each of the parties hereto hereby releases the
other, to the extent of the releasing party's insurance coverage, from any and
all liability for any loss or damage covered by such insurance which may be
inflicted upon the property of such party even if such loss or damage shall be
brought about by the fault or negligence of the other party, its agents or
employees; provided, however, that this release shall be effective only with
respect to loss or damage occurring during such time as the appropriate policy
of insurance shall contain a clause to the effect that this release shall not
affect said policy or the right of the insured to recover thereunder. If any
policy does not permit such a waiver, and if the party to benefit therefrom
requests that such a waiver be obtained, the other party agrees to obtain an
endorsement to its insurance policies permitting such waiver of subrogation if
it is available. If an additional premium is charged for such waiver, the party
benefiting therefrom agrees to pay the amount of such additional premium
promptly upon being billed therefor.
8. Repairs and Maintenance.
(a) Except as specifically otherwise provided in Paragraph (b) of this
Article, Tenant, at its sole cost and expense and throughout the term of this
lease, shall keep and maintain in good order and condition the Building and the
other improvements now or hereafter located upon the Premises, and any
sidewalks, parking areas, curbs and access ways upon or adjoining the Premises,
and shall promptly make all repairs necessary to keep and maintain such good
order and condition, whether such repairs are interior or exterior, ordinary or
extraordinary, foreseen or
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unforeseen. Tenant shall not use or permit the use of any portion of the
Premises for outdoor storage. When used in this Article 8, the term "repairs'
shall include replacements and renewals when necessary. All repairs made by
Tenant shall utilize materials and equipment which are at least equal in quality
and usefulness to those originally used in constructing the Building and the
Premises. Tenant shall maintain and repair all HVAC systems appurtenant to the
Building using a service firm(s) acceptable to Landlord which shall provide
service and maintenance in accordance with the manufacturer's recommendations
and shall provide a copy of the contract to Landlord.
(b) Landlord, throughout the term of this lease and at Landlord's sole
cost and expense, shall make all necessary repairs to the footings and
foundations and the structural elements of the building including structural
steel columns and girders forming a part of the Premises but excluding the roof;
provided, however, that Landlord shall have no responsibility to make any repair
unless and until Landlord receives written notice of the need for such repair,
and provided further that Landlord shall have no responsibility to repair any
damage which arises out of or is caused by Tenant's use, manner of use or
occupancy of the Premises, or by Tenant's installations in or upon the Premises,
or by any act or omission of Tenant or any employee, agent, contractor or
invitee of Tenant.
(c) Except for those matters with respect to which Landlord is
specifically made responsible as described in paragraph (b) above, Tenant shall
keep and maintain all portions of the Premises (including, without limitation,
the roof of the Building) and any sidewalks, parking areas, curbs and access
ways adjoining the Premises in a clean and orderly condition, free of
accumulation of dirt, rubbish, snow and ice and shall keep and maintain all open
areas of the Premises not built upon or paved as landscaped areas in a neat and
orderly condition by performing all necessary tasks, including, but not limited
to, grass cutting, seeding, watering, weeding and replacing any dead or diseased
planting.
9. Utility Charges. Tenant shall be solely responsible for and shall pay
promptly all rents, costs and charges for water service, sewer service, gas,
electricity, light, heat, steam, power, telephone and other communication
services, and any and all other utilities or services rendered or supplied upon
or in connection with the Premises.
10. Net Lease. Except for the obligations of Landlord expressly set forth
herein, this lease is a "net lease" and Landlord shall receive the minimum
annual rent as hereinabove provided as net income from the Premises, not
diminished by any Imposition or any expenses or charges required to be paid to
maintain and carry the Premises or to continue the ownership of Landlord other
than payments under any mortgages now existing or hereafter created by Landlord,
and, except as set forth herein, Landlord is not and shall not be required to
render any services of any kind to Tenant.
11. Governmental Regulations. Landlord covenants and agrees that it shall
deliver the Premises to Tenant in a condition such that the Premises complies
with all applicable laws and regulations. With regard to all or any part of the
Premises or to the use or manner of use of the Premises, or to the sidewalks,
parking areas, curbs and access ways adjoining the Premises, or to the fixtures
and equipment in the Premises, throughout the term of this lease and at its sole
11
cost and expense, Tenant shall: (i) comply promptly with all laws, ordinances,
notices, orders, rules, regulations and requirements of all federal state and
municipal governments and all departments, commissions, boards and officers
thereof, and of the National Board of Fire Underwriters or any other body now or
hereafter constituted exercising similar functions relating to Tenant's business
and Tenant's obligations under this Lease; and (ii) keep in force at all times
all licenses, consents and permits necessary for the lawful use of the Premises
for the purposes herein provided; and (iii) comply with the requirements of all
public liability, fire, and other policies of insurance covering the Premises
whether any of the foregoing are foreseen or unforeseen, ordinary or
extraordinary. Provided, however, that Tenant shall not be required to comply
with the foregoing laws, ordinances and notices with respect to the footings and
foundations and the structural elements of the Building, including, without
limitation, structural steel columns and girders forming a part of the Premises
unless the need for such compliance arises out of or is caused by Tenant's use,
manner of use or occupancy of the Premises, or by Tenant's installations in or
upon the Premises or by any act or omission of Tenant or any employee, agent,
contractor or invitee of Tenant.
12. Signs. Except for signs which are located wholly within the interior
of the Building and which are not visible from the exterior of the Premises, no
signs shall be placed, erected, maintained or painted at any place upon the
Premises without the prior written consent of Landlord as to the size, design,
color, location, content, illumination, composition or material and mobility
thereof. All signs shall be maintained by Tenant in good condition during the
term of this lease, and Tenant shall remove all signs at the termination of this
lease and shall remain and restore any damage caused by the installation or
removal thereof.
13. Alterations, Additions and Fixtures.
(a) Subject to the provisions of Article 14 hereof, Tenant shall have the
right to install in the Building any trade fixtures from time to time during the
term of this lease; provided, however, that no such installation or removal
thereof shall affect the structural portions of the Building and that Tenant
shall repair and restore any damage or injury to the Premises caused thereby.
(b) Tenant shall not make or permit to be made any alterations,
improvements or additions to the Premises without on each occasion first
presenting to Landlord plans and specifications therefor and obtaining
Landlord's prior written consent thereto; except that Tenant may make
nonstructural changes to the interior of the Building without the consent of
Landlord provided that: (i) Tenant supplies Landlord with plans and
specifications and any necessary permits therefor at least ten (10) days in
advance of commencing construction thereof; (ii) such alterations and
improvements do not impair the structural strength of the Building or any other
improvements or reduce the value of the Premises; (iii) Tenant shall take or
cause to be taken all steps that are required by Article 14 hereof and that are
required or permitted by law in order to avoid the imposition of any mechanic's,
laborer's or materialman's lien upon the Premises, Building or Lot; and (iv) the
occupants of any adjoining real estate are not annoyed or disturbed by reason
thereof. Any and all alterations, improvements and additions to the Premises
which are constructed, installed or otherwise made by Tenant shall be the
property of Tenant until the expiration or sooner termination of this lease; at
that time all such alterations and additions shall
12
remain on the Premises and become the property of Landlord without payment
therefor by Landlord; unless, upon the termination of this lease, Landlord shall
give written notice to Tenant to remove the same; in which event Tenant will
remove such alterations, improvements and additions, and repair and restore any
damage to the Premises caused by the installation or removal thereof. Prior to
the completion of any alteration, Landlord and Tenant agree to execute a written
statement as to whether or not the improvement or alteration shall be required
to be removed upon the expiration of this Lease. Landlord and Tenant agree that
the mezzanine rack to be installed by Tenant and all of Tenant's Work shall
remain the property of Tenant upon the expiration or earlier termination of this
Lease. In the event Tenant elects to remove the mezzanine rack or any of
Tenant's Work upon the expiration of earlier termination of this Lease, Tenant
shall obtain the necessary building permits and authorizations to do so, and
shall repair and restore the Premises in a good and xxxxxxx-like manner to its
original condition less normal wear and tear and in such manner as to conform to
all applicable building codes and regulations. In the event Tenant elects not to
remove the mezzanine rack or any of Tenant's Work upon the expiration or earlier
termination of this Lease, then such of the mezzanine rack and Tenant's Work as
remains after Tenant vacates the Premises shall automatically become the
property of Landlord.
14. Mechanics' Liens. Tenant shall promptly pay any contractors and
materialmen who supply labor, work or materials to Tenant at the Premises so as
to minimize the possibility of a lien attaching to the Premises or the Lot.
Tenant shall take all steps permitted by law in order to avoid the imposition of
any such mechanic's, laborer's or materialman's lien upon the Premises or the
Lot. Should any such lien or notice of lien be filed, for work performed for
Tenant other than by Landlord, Tenant shall bond against or discharge the same
within fifteen (15) days after the lien or claim is filed or formal notice of
said lien or claim has been issued regardless of the validity of such lien or
claim. Nothing in this lease is intended to authorize Tenant to do or cause any
work or labor to be done or any materials to be supplied for the account of
Landlord, all of the same to be solely for Tenant's account and at Tenant's risk
and expense. Throughout this lease the term "mechanic's lien" is used to
include any lien, encumbrance or charge levied or imposed upon the premises or
the Lot or any interest therein or income therefrom on account of any
mechanic's, laborer's or materialman's lien or arising out of any debt or
liability to or any claim or demand of any contractor mechanic, supplier,
materialman or laborer and shall include without limitation any mechanic's
notice of intention given to Landlord or Tenant, any stop order given to
Landlord or Tenant, any notice of refusal to pay naming Landlord or Tenant and
any injunctive or equitable action brought by any person entitled to any
mechanic's lien.
15. Landlord's Right of Entry.
(a) Tenant shall permit Landlord and the authorized representatives of
Landlord and of any mortgagee or any prospective mortgagee to enter the Premises
at all reasonable times upon reasonable advance notice (except in emergency
situations) for the purpose of (i) inspecting them or (ii) making any necessary
repairs thereto or to the Property and performing any work therein. During the
progress of any work on the Premises Landlord will attempt not to inconvenience
Tenant, but shall not be liable for inconvenience, annoyance, disturbance, loss
of business or other damage to Tenant (except in the case of Landlord's willful
misconduct or gross
13
negligence) by reason of making any repair or by bringing or storing materials,
supplies, tools and equipment on the Premises during the performance of any
work, and the obligations of Tenant under this lease shall not be thereby
affected in any manner whatsoever.
(b) Landlord shall have the right at all reasonable times to enter and to
exhibit the Premises for the purpose of sale or mortgage, and, during the last
nine (9) months of the term of this lease, to enter and to exhibit the Premises
to any prospective tenant.
16. Damage by Fire or Other Casualty.
(a) If the Premises shall be damaged or destroyed by fire or other
casualty, Tenant shall promptly notify Landlord, and Landlord, subject to the
conditions set forth in this Article 16, shall repair, rebuild or replace such
damage and restore the Premises to substantially the same condition in which
they were immediately prior to such damage or destruction; provided, however,
that Landlord shall only be obligated to restore such damage which is covered by
the fire and other extended coverage insurance policies.
(b) The work shall be commenced promptly and completed with due diligence,
taking into account the time required by Landlord to effect a settlement with,
and procure insurance proceeds from, the insurer, and for delays beyond
Landlord's reasonable control.
(c) The net amount of any insurance proceeds (excluding proceeds received
pursuant to a rental coverage endorsement) recovered by reason of the damage or
destruction of the Premises in excess of the cost of adjusting the insurance
claim and collecting the insurance proceeds (such excess amount being
hereinafter called the "net insurance proceeds") shall be applied towards the
reasonable cost of restoration and sums held by Landlord for that purpose shall
be maintained in a segregated account. If in Landlord's reasonable judgment the
net insurance proceeds will not be adequate to complete such restoration,
Landlord shall have the right to terminate this lease and all the unaccrued
obligations of the parties hereto by sending a written notice of such
termination to Tenant, the notice to specify a termination date no less than ten
(10) days after its transmission; provided, however, that except during the last
year of the term, Tenant may require Landlord to withdraw the notice of
termination by agreeing to pay the cost of restoration in excess of the net
insurance proceeds and by giving Landlord adequate security for such payment
prior to the termination date specified in Landlord's notice of termination. If
in Landlord's reasonable judgment the net insurance proceeds are not adequate to
repair or reconstruct the Building to its condition immediately prior to the
casualty, and Landlord does not elect to so terminate the lease, Tenant shall
pay, upon notice that Landlord shall restore, out of funds other than such net
insurance proceeds, the amount by which the cost of restoration estimated by
Landlord will exceed the net insurance proceeds, such sum payable by Tenant to
be later readjusted to such actual excess upon the completion of restoration. If
such net insurance proceeds are more than adequate, the amount by which such net
insurance proceeds exceed the cost of restoration will be retained by Landlord
or applied to repayment of any mortgage secured by the Premises.
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(d) Landlord's obligation or election to restore the Premises under this
Article shall not include the repair, restoration or replacement of the
fixtures, improvements, alterations, furniture or any other property owned,
installed, made by, or in the possession of Tenant.
(e) In the event of a casualty and prior to the repair thereof, rent
hereunder shall xxxxx in proportion to the square footage of the Premises that
becomes unusable and any other portion of the Premises that is caused to become
unusable by reason of casualty to another portion of the Premises. In the event
that more than seventy-five percent (75%) of the Premises becomes unusable due
to a casualty, the entire amount of the Minimum Annual Rent shall xxxxx until
the repair thereof.
(f) Within thirty (30) days of the occurrence of a fire or other casualty,
Landlord shall deliver to Tenant a notice (the "Casualty Notice") setting forth
the estimated time that will be necessary to repair the Premises. In the event
that the notice specifies a period longer than one hundred fifty (150) days,
then Tenant shall have the option, to be exercised within ten (10) days of its
receipt of the Casualty Notice, to terminate this Lease.
17. No Abatement of Rent Except as Specifically Provided. Except as
expressly provided as to damage by fire or by any other casualty in Paragraph
16(e) and as to condemnation in Paragraphs 19(a) and (b), there shall be no
abatement or reduction of the minimum rent, additional rent or other sums
payable hereunder for any cause whatsoever, and this lease shall not terminate,
and Tenant shall not be entitled to surrender the Premises.
18. Indemnification of Landlord and Tenant. Tenant will indemnify
Landlord and save Landlord harmless from and against any and all claims,
actions, damages, liability and expense (including without limitation fees of
attorneys, investigators and experts) in connection with loss of life, personal
injury or damage to property caused to any person in or about the Premises or
arising out of the occupancy or use by Tenant of the Premises or any part
thereof or occasioned wholly or in part by any act or omission of Tenant, its
agents, contractors, employees, licensees or invitees; unless such loss, injury
or damage was caused by the negligence of Landlord, its agents, employees,
licensees or invitees. Without limiting the foregoing, Tenant will forever
release and hold Landlord harmless from all claims arising out of damage to
Tenant's property unless such damage occurs as a result of Landlord's negligent
failure to make repairs after having received written notice of the need for
such repair. In case any such claim, action or proceeding is brought against
Landlord, upon notice from Landlord and at Tenant's sole cost and expense,
Tenant shall resist or defend such claim, action or proceeding or shall cause it
to be resisted or defended by an insurer.
Landlord will indemnify Tenant and save Tenant harmless from and against
any and all claims, actions, damages, liability and expense (including without
limitation fees of attorneys, investigators and experts) in connection with loss
of life, personal injury or damage to property arising from the negligence of
Landlord, its agents, contractors, employees, licensees or invitees except to
the extent such loss, injury or damage was caused in whole or in part by the
negligence of Tenant, its agents, employees, licensees or invitees or from any
breach of this Lease by Landlord.
15
19. Condemnation.
(a) Termination. (i) If fifty percent (50%) or more of the Premises are
covered by a condemnation; or (ii) subject to the provisions of Paragraph (b)(i)
hereof, if any of the Premises is covered by a condemnation and, in Landlord's
sole opinion, it would be impractical or the condemnation proceeds are
insufficient to restore the remainder of the Premises; then, in any such event,
at Landlord's option, this lease shall terminate and all obligations hereunder
shall cease as of the date upon which possession is taken by the condemnor and
the rent herein reserved shall be apportioned and paid in full by Tenant to
Landlord to that date and all rent prepaid for periods beyond that date shall
forthwith be repaid by Landlord to Tenant.
If fifty percent (50%) or more of the Premises or twenty-five percent (25%)
or more of the floor area of the Building are covered by a condemnation, Tenant
shall have the right upon written notice to Landlord to terminate this Lease. In
the event of such a termination, then, this lease shall terminate and all
obligations hereunder shall cease as of the date upon which possession is taken
by the condemnor and the rent herein reserved shall be apportioned and paid in
full by Tenant to Landlord to that date and all rent prepaid for periods beyond
that date shall forthwith be repaid by Landlord to Tenant
(b) Partial Condemnation.
(i) If there is a partial condemnation and Landlord decides to
terminate pursuant to Paragraph (a) hereof, except during the last year of the
term, Tenant may require Landlord to withdraw its notice of termination by: (A)
giving Landlord written notice thereof within ten (10) days from transmission of
Landlord's notice to Tenant of Landlord's intention to terminate, (B) agreeing
to pay the cost of restoration in excess of the condemnation proceeds reduced by
those sums expended by Landlord in collecting the condemnation proceeds, and (C)
giving Landlord adequate security for such payment within such ten (10) day
period.
(ii) If there is a partial condemnation and this lease has not been
terminated pursuant to Paragraph (a) hereof Landlord shall restore the Building
and the improvements which are part of the Premises to a condition and size as
nearly comparable as reasonably possible to the condition and size thereof
immediately prior to the date upon which possession shall have been taken by the
condemnor. If the condemnation proceeds are more than adequate to cover the cost
of restoration and Landlord's expenses in collecting the condemnation proceeds,
any excess proceeds shall be retained by Landlord or applied to repayment of any
mortgage secured by the Premises.
(iii) If there is a partial condemnation and Landlord has not
exercised its right to terminate on the date upon which the condemnor shall have
obtained possession, the obligations of Landlord and Tenant under the lease
shall be unaffected by such condemnation except that there shall be an equitable
abatement for the balance of the term of the minimum annual rent according to
the value of the Premises before and after the date upon which the condemnor
shall have taken possession. In the event that the parties are unable to agree
upon the amount of such abatement, either party may submit the issue to
arbitration.
16
(c) Award. In the event of a condemnation affecting Tenant, Tenant shall
have the right to make a claim against the condemnor for removal expenses,
business dislocation damages and moving expenses; provided and to the extent,
however, that such claims or payments do not reduce the sums otherwise payable
by the condemnor to Landlord. Except as aforesaid, Tenant hereby waives all
claims against Landlord and against the condemnor, and Tenant hereby assigns to
Landlord all claims against the condemnor including, without limitation, all
claims for leasehold damages and diminution in value of Tenant's leasehold
interest.
(d) Temporary Taking. If the condemnor should take only the right to
possession for a fixed period of time or for the duration of an emergency or
other temporary condition, then, notwithstanding anything hereinabove provided,
this lease shall continue in full force and effect without any abatement of
rent, but the amounts payable by the condemnor with respect to any period of
time prior to the expiration or sooner termination of this lease shall be paid
by the condemnor to Landlord and the condemnor shall be considered a subtenant
of Tenant. Landlord shall apply the amount received from the condemnor
applicable to the rent due hereunder net of costs to Landlord for the collection
thereof, or as much thereof as may be necessary for the purposes, toward the
amount due from Tenant as rent for that period; and, Tenant shall pay to
Landlord any deficiency between the amount thus paid by the condemnor and the
amount of the rent, or Landlord shall pay to Tenant any excess of the amount of
the award over the amount of the rent.
20. Quiet Enjoyment. Tenant, upon paying the minimum rent, additional
rent and other charges herein provided for, and observing and keeping all
covenants, agreements and conditions of this lease on its part to be kept, shall
quietly have and enjoy the Premises during the term of this lease without
hindrance or molestation by anyone claiming by or through Landlord, subject,
however, to the exceptions, reservations and conditions of this lease.
21. Assignment and Subletting.
(a) Restricted Assignment. Tenant shall not assign, mortgage, pledge or
encumber this lease, or sublet the whole or any part of the Premises, without
the prior written consent of Landlord which consent shall not be unreasonably
withheld or delayed. This prohibition against assigning or subletting shall be
construed to include a prohibition against any assignment or subletting by
operation of law, and/or a transfer by any person or persons controlling Tenant
on the date of the lease of such control to a person or persons not controlling
Tenant on the date of the lease. In the event of any assignment of this lease
made with or without Landlord's consent, Tenant nevertheless shall remain liable
for the performance of all of the terms, conditions and covenants of this lease
and shall require any assignee to execute and deliver to Landlord an assumption
of liability agreement in form satisfactory to Landlord, including an assumption
by the assignee of all of the obligations of Tenant and the assignee's
ratification of and agreement to be bound by all the provisions of this lease.
Landlord and Tenant agree that any profit which may inure to the benefit of
Tenant as a result of any subletting of the Premises or assignment of this
lease, whether or not consented to by Landlord, shall be divided equally between
Landlord and Tenant.
17
(b) Percentage Agreements. It is agreed that Tenant shall not enter into
any assignment, sublease, license, concession or other agreement for use,
occupancy or utilization of the whole or any part of the Premises with or
without Landlord's consent, which provides for rental or other payment for such
use, occupancy or utilization based, in whole or in part on the net income or
profits derived by any person or entity from the space leased, used, occupied or
utilized (other than an amount based on a fixed percentage or percentages of
receipts or sales), and any such purported assignment, sublease, license,
concession or other agreement shall be absolutely void and ineffective as a
conveyance of any right or interest in the possession, use, occupancy or
utilization of any part of the Premises.
(c) Waiver of Lien. Upon at least ten (10) days written notice from
Tenant, Landlord agrees to execute a waiver, subject to the reasonable approval
of Landlord's counsel, of any lien in favor of Landlord with respect to the
Tenant's furniture, fixtures and equipment.
(d) Anything contained in Section 21 to the contrary notwithstanding,
provided that this Lease shall then be in full force and effect, Tenant shall
have the right without Landlord's consent, at any time and from time to time, to
assign this lease, or sublet all or part of the Premises, to:
(i) any person or entity which directly or indirectly controls, is
controlled by or under common control with Tenant;
(ii) any person or entity that purchases or acquires all or
substantially all of the assets and/or stock of Tenant; or
(iii) any person or entity resulting from a merger or consolidation of
Tenant with any other corporation or entity or any reorganization of
Tenant.
Provided, however, that the terms of this Paragraph 21(d) shall not be
applicable, and Landlord's prior written consent shall be required, unless the
successor to Tenant has a net worth computed in accordance with generally
accepted accounting principles at least equal to the net worth of Tenant as of
the date hereof. Any successor to Tenant shall at all times operate the
Premises in accordance with the provisions of the Lease. Notwithstanding any
assignment or sublet permitted by this Paragraph 21(d), the original Tenant
shall remain liable for the performance of the terms and conditions as provided
in Paragraph 21(a) and shall otherwise comply with the requirements of this
Paragraph 21. For purposes hereof, "controls," "controlled by" or "under common
control with" means ownership of 50% or more of the outstanding capital stock or
other ownership interests of such person or entity. Tenant may grant a
collateral assignment of this Lease as security to any of Tenant's lenders
identified in Paragraph 31(b) hereof or otherwise approved by Landlord.
(e) Any guarantee of this Lease shall not be affected by any assignment or
sublet of this Lease, whether or not permitted or approved by Landlord.
22. Subordination. This lease and Tenant's rights hereunder shall be
subject and subordinate at all times in lien and priority to any first mortgage
or other primary encumbrance
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now or hereafter placed upon or affecting the Premises, and to any second
mortgage or encumbrance with the consent of the first mortgagee, and to all
renewals, modifications, consolidations and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant; provided,
--------
however, that such subordination shall be subject to Tenant's right not to
-------
have its rights under this Lease disturbed so long as Tenant shall not be in
default with respect to any of its obligations under this Lease. Tenant's
subordination but right not to be disturbed shall be memorialized in a
commercially reasonable subordination and non-disturbance agreement in a form
reasonably acceptable to Landlord's mortgagee. Tenant shall execute and deliver
upon demand any further instrument or instruments confirming the subordination
of this lease to the lien of any such first mortgage or to the lien of any other
mortgage if requested to so do by Landlord with the consent of the first
mortgagee, and any further instrument or instruments of attornment that may be
desired by any such mortgagee or Landlord. Notwithstanding the foregoing, any
mortgagee may at any time subordinate its mortgage to this lease, without
Tenant's consent, by giving notice in writing to Tenant, and thereupon this
lease shall be deemed prior to such mortgage without regard to their respective
dates of execution and delivery, and in that event such mortgagee shall have the
same rights with respect to this lease as though this lease had been executed
prior to the execution and delivery of the mortgage and had been assigned to
such mortgagee.
In addition to the foregoing, Tenant agrees to deliver, for the benefit of
Landlord's construction lender, the form of Nondisturbance, Attornment and
Subordination Agreement attached hereto as Exhibit "E".
23. Memorandum of Lease; Tenant's Certificate.
(a) Tenant and Landlord, at any time and from time to time and within five
(5) days after Landlord's or Tenant's, as the case may be, written request,
shall execute, acknowledge and deliver to Landlord or Tenant, as the case may
be, a short form or memorandum of this lease for recording purposes. Landlord
and Tenant agree to use the form of memorandum of lease attached hereto as
Exhibit "F".
(b) Tenant, at any time and from time to time and within five (5) days
after Landlord's written request, so long as there are no material and
substantial defects in the Premises which Landlord is obligated to remedy and
which Landlord is not proceeding to remedy, and so long as Landlord is not
otherwise in default of this lease, shall execute, acknowledge and deliver to
Landlord a written instrument (in the form attached hereto as Exhibit "G" or
such other form as Landlord may reasonably request) in recordable form
certifying that this lease is unmodified and in full force and effect (or, if
there have been modifications, that it is in full force and effect as modified
and stating the modifications); stating that the improvements required by
Article 2 hereof have been Substantially Completed; certifying that Tenant has
accepted possession of the Premises; stating the date on which the term of the
lease commenced and the dates to which minimum rent, additional rent and other
charges have been paid in advance, if any; stating that to the best knowledge of
the signer of such instrument Landlord is not in default of this lease; stating
any other fact or certifying any other condition reasonably requested by
Landlord or required by any mortgagee or prospective mortgagee or purchaser of
the Premises or any interest therein; and stating that it is understood that
such instrument may be
19
relied upon by any mortgagee or prospective mortgagee or purchaser of the
Premises or any interest therein or by any assignee of Landlord's interest in
this lease or by any assignee of any mortgagee. The foregoing instrument shall
be addressed to Landlord and to any mortgagee, prospective mortgagee, purchaser
or other party specified by Landlord.
In addition to the foregoing, Tenant agrees to deliver, for the benefit of
Landlord's construction lender, the following documents: (i) the form of pre-
construction estoppel attached hereto as Exhibit "H"; and (ii) the form of post-
construction estoppel attached hereto as Exhibit "I".
(c) Tenant acknowledges that, upon the completion of the improvements
contemplated by this Lease, in accordance with the terms hereof, the delivery by
Tenant to Landlord of a certificate, in the form of Exhibit "G" attached hereto,
to the effect that such improvements have been Substantially Completed in
accordance with the terms and conditions of this Lease and that such
improvements have been accepted by Tenant (the "Acceptance Certificate") is
critical to the original Landlord's ability to sell its interest in the Premises
to a contemplated successor landlord. Tenant acknowledges that Tenant's
agreement to deliver the Acceptance Certificate is a material inducement for
Landlord agreeing to enter into this Lease. Tenant agrees to deliver the
Acceptance Certificate within twenty (20) days of Landlord's notice to Tenant
that the Building is Substantially Complete; provided, however, that such period
will be extended, if necessary, so that Tenant shall not be obligated to deliver
the Acceptance Certificate until ten (10) calendar days after the date Tenant
receives a copy of an as-built plans and specifications for the Premises
together with copies of the certificate of occupancy for the Building, all
permits related to the Premises, and a copy of any construction test results
obtained by Landlord. Tenant's execution of the Acceptance Certificate shall not
constitute a waiver of any claims that Tenant may have pertaining to any matter
that would not have come to Tenant's attention in connection with a commercially
reasonable diligent investigation of the Premises at the time of Tenant's
delivery of the Acceptance Certificate; provided, however, that Tenant's claims
pertaining to matters covered by the warranties attached hereto as Exhibit "J"
may be limited as provided in Section 27 hereof.
If Tenant cannot deliver the full Acceptance Certificate because Tenant
does not believe the certification required therein to be true with respect to
any significant matter, Tenant shall deliver the Acceptance Certificate with
such significant exceptions and significant qualifications as it deems
appropriate based on a certification from Tenant's architect or engineering
consultant ("Tenant's Consultant"). Subject to the immediately preceding
sentence, Tenant shall be obligated to deliver the Acceptance Certificate
without exceptions or qualifications if the Building has been Substantially
Completed by Landlord. Tenant shall not be entitled to deliver the Acceptance
Certificate with exceptions or qualifications based upon "punch list" or similar
items, it being understood and agreed that the only items that Tenant may raise
as exceptions or qualifications in the Acceptance Certificate are those matters
so significant so as render the Building not Substantially Complete. If
Landlord's architect or engineering consultant ("Landlord's Consultant")
disagrees with the exceptions and qualifications taken by Tenant's Consultant
after trying to resolve a disagreement for a period of fifteen (15) days, then
Landlord's Consultant and Tenant's Consultant shall select a third person who is
an independent architect. Such independent architect shall resolve the dispute
in its sole and absolute discretion.
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If Landlord's Consultant and Tenant's Consultant shall be unable to agree upon
the appointment of the independent architect within ten (10) days after the end
of such fifteen (15) day period, they shall give written notice of such failure
to each of Landlord and Tenant and if Landlord and Tenant shall fail to agree
upon the appointment of such independent architect with ten (10) days after the
architects give such notice, then, within ten (10) days thereafter, either of
the parties upon notice to the other party may apply for such appointment to the
American Arbitration Association in New York, New York. Landlord and Tenant
shall each bear all the respective costs and expenses of the architects or
consultants they respectively choose and shall share equally the costs and
expenses of selecting and authorizing any independent architect. Upon resolution
of any such dispute, Tenant shall issue the Acceptance Certificate consistent
with the applicable architects' determination. During any dispute between
Landlord and Tenant as to whether Substantial Completion has occurred, Tenant
shall occupy the Premises and commence paying rent as if the date of Substantial
Completion is the date originally designated by Landlord; provided, however,
that Tenant may state that such rent (or a portion thereof) is being paid under
protest. If the applicable architects determine that the Building was not
Substantially Complete on the date initially designated by Landlord, the
applicable architects shall include in their determination a statement of the
percentage of the Premises that was not available for Tenant's use by reason of
such failure to Substantially Complete the Premises and Tenant, for the period
in which it occupied the Premises while the Premises was not Substantially
Complete, shall be entitled to an abatement of rent in proportion to the
percentage of the Premises that was not available for Tenant's use during such
time.
Without limiting the effect of any other provision of this Lease, in the
event that Tenant refuses to deliver an Acceptance Certificate consistent with
the determination of the applicable architects as set forth above, then (i)
Landlord, in addition to any and all other remedies provided for in this Lease,
shall be entitled to draw upon the entire amount of the Letter of Credit
described in Section 31 of this Lease to be held and applied in accordance with
the terms hereof; and (ii) Tenant hereby appoints Landlord as its attorney in
fact to execute and deliver the Acceptance Certificate, such appointment being
coupled with an interest and irrevocable.
24. Curing Tenant's Defaults. If Tenant shall be in default in the
performance of any of its obligations hereunder, Landlord, without any
obligation to do so, in addition to any other rights it may have in law or
equity, may elect to cure such default on behalf of Tenant after written notice
(except in the case of emergency) to Tenant. Tenant shall reimburse Landlord
upon demand for any sums paid or costs incurred by Landlord in curing such
default, including interest thereon from the respective dates of Landlord's
making the payments and incurring such costs, which sums and costs together with
interest thereon shall be deemed additional rent payable promptly upon being
billed therefor.
25. Surrender.
(a) Subject to the terms of Paragraphs 13(b) and 16(a) and (c) hereof at
the expiration or earlier termination of the term hereof, Tenant shall promptly
yield up, clean and neat, and in the same condition, order and repair in which
they are required to be kept throughout the term hereof, the Premises and all
improvements, alterations and additions thereto, and all fixtures and
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equipment servicing the Building, ordinary wear and tear (and damages from fire
or casualty not required to be repaired by Tenant hereunder) excepted.
(b) If Tenant, or any person claiming through Tenant, shall continue to
occupy the Premises after the expiration or earlier termination of the term or
any renewal thereof, such occupancy shall be deemed to be under a month-to-month
tenancy under the same terms and conditions set forth in this lease; except,
however, that the minimum annual rent during such continued occupancy shall be
one hundred fifty percent (150%) of the amount set forth in Paragraphs 5 hereof.
Anything to the contrary notwithstanding, any holding over by Tenant without
Landlord's prior written consent shall constitute a default hereunder and shall
be subject to all the remedies set forth in Article 26 hereof.
26. Defaults - Remedies.
(a) Defaults. Subject to the Section 26(d) hereof, it shall be an event
of default:
(i) If Tenant does not pay in full when due and without demand any
and all installments of minimum rent or additional rent or any other charges or
payments whether or not herein included as rent; or
(ii) If Tenant violates or fails to perform or otherwise breaches any
agreement, term, covenant or condition herein contained; or
(iii) If Tenant abandons the Premises or removes or attempts to
remove Tenant's goods or property therefrom other than in the ordinary course of
business without having first paid to Landlord in full all minimum rent,
additional rent and other charges that may have become due as well as all which
will become due thereafter; or
(iv) If Tenant becomes insolvent or bankrupt in any sense or makes an
assignment for the benefit of creditors or offers a composition or settlement to
creditors, or if a petition in bankruptcy or for reorganization or for an
arrangement with creditors under any federal or state law is filed by or against
Tenant, or a xxxx in equity or other proceeding for the appointment of a
receiver, trustee, liquidator, custodian, conservator or similar official for
any of Tenant's assets is commenced, or if any of the real or personal property
of Tenant shall be levied upon by any sheriff, marshal or constable; provided,
however, that any proceeding brought by anyone other than the parties to this
lease under any bankruptcy, reorganization arrangement, insolvency,
readjustment, receivership or similar law shall not constitute a default until
such proceeding, decree, judgment or order has continued unstayed for more than
sixty (60) consecutive days; or
(v) If any of the events enumerated in Paragraph (a)(iv) of this
Article shall happen to any guarantor of this lease;
(b) Remedies. Then, and in any such event, Landlord shall have the
following rights:
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(i) To charge a late payment penalty of four (4%) percent of any
amount owed to Landlord pursuant to this lease which is not paid within five (5)
business days of the date which is set forth in the lease if a date is
specified, or, if a date is not specified, within thirty (30) days of the
mailing of a xxxx therefor by Landlord. If Landlord incurs a penalty in
connection with any payment which Tenant has failed to make within the times
required in this lease, Tenant shall pay Landlord, in addition to such sums, the
full amount of such penalty incurred by Landlord.
(ii) To accelerate the whole or any part of the rent for the lesser of
the entire unexpired balance of the term of this lease or a period of eighteen
(18) months, as well as all other charges, payments, costs and expenses herein
agreed to be paid by Tenant, and any rent or other charges, payments, costs and
expenses if so accelerated shall, in addition to any and all installments of
rent already due and payable and in arrears, and any other charge or payment
herein reserved, included or agreed to be treated or collected as rent and any
other charge, expense or cost herein agreed to be paid by Tenant which may be
due and payable and in arrears, be deemed due and payable as if, by the terms
and provisions of this lease, such accelerated rent and other charges, payments,
costs and expenses were on that date payable in advance. Landlord and Tenant
agree that in the event Landlord seeks a remedy under this subparagraph,
Landlord shall first seek payment by drawing upon the Letter of Credit, if any,
held by Landlord as security in connection with this Lease; provided, however,
that Landlord shall be entitled to apply the proceeds of any Letter of Credit
toward the payment of any past due rent, additional rent and other charges owed
by Tenant to Landlord prior to applying any Letter of Credit proceeds towards
the remedy provided in this subparagraph. Notwithstanding the foregoing,
Landlord and Tenant agree that Landlord's remedy under this subparagraph shall
not be limited by the amount held by it in the form of a Letter of Credit or in
the form of any other security held by it in connection with this Lease.
(iii) To enter the Premises and without further demand or notice
proceed to distress and sale of the goods, chattels and personal property there
found and to levy the rent and other charges herein payable as rent, and Tenant
shall pay all costs and officers' commissions which are permitted by law,
including watchmen's wages and sums chargeable to Landlord, and further
including commission(s) charged by the constable or other person making the
levy, and in such case all costs, officers' commissions and other charges shall
immediately attach and become part of the claim of Landlord for rent, and any
tender of rent without said costs, commissions and charges made after the
issuance of a warrant of distress, shall not be sufficient to satisfy the claim
of Landlord.
(iv) To re-enter the Premises, together with all additions, alterations
and improvements, and, at the option of Landlord, remove all persons and all or
any property therefrom, either by summary dispossess proceedings or by any
suitable action or proceeding at law or by force or otherwise, without being
liable for prosecution or damages therefor, and repossess and enjoy the
Premises. Upon recovering possession of the Premises as a result of a default on
the part of Tenant, Landlord may, at Landlord's option, either terminate this
lease or make such alterations and repairs as may be necessary in order to relet
the Premises and relet the Premises or any part of parts thereof, either in
Landlord's name or otherwise, for a term or terms which may, at Landlord's
option, be less than or exceed the period which would otherwise have
23
constituted the balance of the term of this lease and at such rent or rents and
upon such other terms and conditions as in Landlord's sole discretion may seem
advisable and to such person or persons as may in Landlord's discretion seem
best; upon each such reletting all rents received by Landlord from such
reletting shall be applied: first, to the payment of any costs and expenses of
such reletting, including brokerage fees and attorney's fees and all costs of
such alterations and repairs; second, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord; third, to the payment of rent
due and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future rent as it may become due and payable hereunder. If
such rentals received from such reletting during any month shall be less than
that to be paid during that month by Tenant, Tenant shall pay any such
deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No
such re-entry or taking possession of the Premises or the making of alterations
or improvements thereto or the reletting thereof shall be construed as an
election on the part of Landlord to terminate this lease unless written notice
of such intention be given to Tenant. Landlord shall in no event be liable in
any way whatsoever for failure to relet the Premises or, in the event that the
Premises or any part or parts thereof are relet, for failure to collect the rent
under such reletting. Tenant, for Tenant and Tenant's successors and assigns,
hereby irrevocably constitutes and appoints Landlord Tenant's and their agent to
collect the rents due and to become due under all subleases of the Premises or
any parts thereof without in any way affecting Tenant's obligation to pay any
unpaid balance of rent due or to become due hereunder. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect to
terminate this lease for such previous breach.
(v) To terminate this lease and the term hereby created without any
right on the part of Tenant to waive the forfeiture by payment of any sum due or
by other performance of any condition, term or covenant broken. Whereupon
Landlord shall be entitled to recover, in addition to any and all sums and
damages for violation of Tenant's obligations hereunder in existence at the time
of such termination, damages for Tenant's default in an amount equal to the
amount of the rent reserved for the balance of the term of this lease, as well
as all other charges, payments, costs and expenses herein agreed to be paid by
Tenant, all discounted at the rate of six percent (6%) per annum to their then
present worth, less the fair rental value of the Premises for the remainder of
said term, also discounted at the rate of six percent (6%) per annum to its then
present worth, all of which amount shall be immediately due and payable from
Tenant to Landlord.
(c) Non-Waiver. No waiver by Landlord of any breach by Tenant of any of
Tenant's obligations, agreement or covenants herein shall be a waiver of any
subsequent breach or of any obligation, agreement or covenant, nor shall any
forbearance by Landlord to seek a remedy for any breach by Tenant be a waiver by
Landlord of any rights and remedies with respect to such or any subsequent
breach.
(d) Grace Period. Notwithstanding anything hereinabove stated, except in
the case of emergency as set forth in Article 24 and except in the event of any
default enumerated in Paragraphs (a)(iii), (iv) and (v) of this Article, neither
party hereto will exercise any right or remedy provided for in this lease or
allowed by law because of any default of the other, except those remedies
contained in Paragraph (b)(i) of this Article unless such party shall have first
given ten (10) days written notice thereof to the defaulting party, and the
defaulting party shall
24
have failed to cure the default within such period; provided, however, that if
the default consists of something other than the failure to pay money which
cannot reasonably be cured within ten (10) days, neither party hereto will
exercise any such right or remedy if the defaulting party begins to cure the
default within the ten (10) days and continues actively and diligently in good
faith to completely cure said default; and further provided that Landlord shall
not be required to give such ten (10) days notice in the case of any payment
default more than two (2) times during any twelve (12) month period.
(e) Rights and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to Landlord is intended to be exclusive of any other right or
remedy provided herein or by law, but each shall be cumulative and in addition
to every other right or remedy given herein or now or hereafter existing at law
or in equity or by statute.
27. Condition of Title and of Premises.
(a) Landlord represents and warrants that it has good and marketable title
to the Premises, subject only to such exceptions as are set forth on Exhibit "K"
attached hereto (the "Permitted Encumbrances"). Tenant agrees to accept the
Premises subject to the title exceptions set forth in the title report. Landlord
covenants and agrees that the Building's HVAC systems and other building
systems, as set forth in the Plans and Specifications, shall be in good working
order upon the delivery of the Premises to Tenant. Except as otherwise provided
herein, Tenant represents that the Premises, the title thereto, and any surface
and sub-surface conditions thereof revealed in an environmental report delivered
to Tenant, have been examined by Tenant, and Tenant accepts them in the
condition or state in which they now are, or any of them now is, without relying
on any representation, covenant or warranty, express or implied, in fact or in
law, by Landlord and without recourse (except as expressly provided herein) to
Landlord, as to the title thereto, the encumbrances thereon, the appurtenances
thereto, the nature, condition or usability thereof or the use or uses to which
the Premises or any part thereof may be put, except as to work to be performed
by Landlord pursuant to Article 2 hereof. Tenant's occupancy of the Premises
shall constitute acceptance of the work performed by Landlord pursuant to
Article 2 hereof subject to "punch-list" items and the performance by Landlord
of its obligations contained herein.
(b) Notwithstanding the foregoing, Landlord agrees that, upon completion of
the Building, Landlord shall prepare and deliver to Tenant copies of all
warranties and guaranties relating to the construction thereof and all systems,
machinery and equipment contained therein. Landlord agrees to obtain the
warranties and guaranties set forth on Exhibit "H" attached hereto. To the
extent permitted by such warranties and guaranties, Landlord shall assign the
same to Tenant. To the extent not so permitted, Landlord shall forward to
Tenant the benefit of and right to enforce the same in Landlord's name.
Notwithstanding any previous assignment to Tenant, Landlord shall have the right
to enforce on its own behalf and with respect to its own obligations, any
warranty or guaranty relating to the Building and all systems, machinery, and
equipment contained therein.
In the event that (i) there shall be any defect(s) in workmanship,
materials, or design, with respect to any portion of Landlord's Work, (ii)
Tenant shall have attempted in good faith,
25
for a period of at least three (3) months, to enforce the above described
warranties or guaranties that are applicable to the defect(s) in workmanship,
materials, or design, and (iii) the party originally providing the warranty or
guaranty shall refuse to honor or perform the warranty or guaranty, then
Landlord agrees that it shall, at its sole cost and expense and with all due
diligence, repair and correct, or cause to be repaired or corrected any
defect(s) in workmanship, materials, or design, with respect to any portion of
Landlord's Work, specified in a written notice or notices given by Tenant to
Landlord within the applicable period of such original warranty or guaranty.
Landlord shall have no obligation to Tenant under this paragraph after the
expiration of any such original warranty or guaranty.
(c) Tenant shall not suffer or permit the Premises or any portion thereof
to be used by the public without restriction or in such manner as might
reasonably tend to impair Landlord's title to the Premises or in such manner as
might reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of the Premises or
any portion thereof.
28. Interpretation.
(a) Captions. The captions in this lease are for convenience only and
are not a part of this lease and do not in any way define, limit, describe or
amplify the terms and provisions of this lease or the scope or intent thereof.
(b) Entire Agreement. This lease represents the entire agreement between
the parties hereto and there are no collateral or oral agreements or
understandings between Landlord and Tenant with respect to the Premises. No
rights, easements or licenses are acquired in the Premises or any land adjacent
to the Premises by Tenant by implication or otherwise except as expressly set
forth in the provisions of this lease. Tenant agrees to make such changes to
this lease as are required by any mortgagee, provided such changes do not
substantially affect Tenant's rights and obligations hereunder. This lease shall
not be modified in any manner except by an instrument in writing executed by the
parties. The masculine (or neuter) pronoun, singular number, shall include the
masculine, feminine and neuter genders and the singular and plural number.
(c) Exhibits. Each writing or plan referred to herein as being attached
hereto as an Exhibit or otherwise designated herein as an Exhibit hereto is
hereby made a part hereof.
(d) Covenants. The terms, covenants and obligations set forth herein all
constitute conditions and not covenants of this lease.
(e) Arbitration. Wherever arbitration is set forth herein as the
appropriate resolution of a dispute, issues shall be submitted for arbitration
to the American Arbitration Association in the city nearest to the Premises in
which offices of the American Arbitration Association are located. Landlord and
Tenant will comply with the rules then obtaining of the American Arbitration
Association and the determination of award rendered by the arbitrator(s) shall
be final, conclusive and binding upon the parties and not subject to appeal, and
judgment thereon may be entered in any court of competent jurisdiction.
26
(f) Interest. Wherever interest is required to be paid hereunder, such
interest shall be at the highest rate permitted under law but not in excess of
the prime rate published in the Wall Street Journal plus four (4) percent
(4.00%).
(g) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of South Carolina.
29. Definitions.
(a) "Landlord". The word "Landlord" is used herein to include the
Landlord named above as well as its heirs, successors and assigns, each of whom
shall have the same rights, remedies, powers, authorities and privileges as he
would have had had he originally signed this lease as Landlord. Any such person,
whether or not named herein, shall have no liability hereunder after he ceases
to hold title to the Premises except for obligations which may have arisen prior
to the date of transfer of title. Except for such warranties under Section 27(b)
of Landlord and claims by Tenant pertaining to any matter that would not have
come to Tenant's attention in connection with a commercially reasonable diligent
investigation of the Premises at the time of Tenant's delivery of the Acceptance
Certificate, Landlord shall not have any personal liability with respect to any
of the provisions of this Lease or the Premises. In no event shall any principal
of Landlord nor any owner of the Building or the Lot, whether disclosed or
undisclosed, have any personal liability with respect to any of the provisions
of this lease or the Premises. If Landlord is in breach or default with respect
to Landlord's obligations under this lease or otherwise, Tenant shall look
solely to the equity of Landlord in the Premises for the satisfaction of
Tenant's claims.
(b) "Tenant". The word "Tenant" is used herein to include the Tenant
named above as well as its successors and assigns, each of which shall be under
the same obligations, liabilities and disabilities and each of which shall have
the same rights, privileges and powers as it would have possessed had it
originally signed this lease as Tenant. Each and every of the persons named
above as Tenant shall be bound formally and severally by the terms, covenants
and agreements contained herein. However, no such rights, privileges or powers
shall inure to the benefit of any assignee of Tenant immediate or remote, unless
the assignment to such assignee is permitted or has been approved in writing by
Landlord. Any notice required or permitted by the terms of this lease may be
given by or to any one of the persons named above as Tenant, and shall have the
same force and effect as if given by or to all thereof.
(c) "Mortgage" and "Mortgagee". The word "mortgage" is used herein to
include any lien or encumbrance on the Premises or the Lot or on any part of or
interest in or appurtenance to the Premises, including without limitation any
ground rent or ground lease if Landlord's interest is or becomes a leasehold
estate. The word "mortgagee" is used herein to include the holder of any
mortgage, including any ground lessor if Landlord's interest is or becomes a
leasehold estate. Wherever any right is given to a mortgagee, that right may be
exercised on behalf of such mortgagee by any representative or servicing agent
of such mortgagee.
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(d) "Person". The word "person" is used herein to include a natural
person, a partnership, a corporation, an association, and any other form of
business association or entity.
(e) "Date of this Lease". The "date of this lease" shall be the date
upon which this lease has been fully executed by both parties.
(f) "Lot". The metes and bounds description of the Lot is set forth in
Exhibit "L" attached hereto.
30. Notices. All notices, demands, requests, consents, certificates and
waivers required or permitted hereunder from either party to the other shall be
in writing and sent by United States certified mail, return receipt requested,
postage prepaid. Notices to Tenant shall be addressed to: Xxxxxx Xxxxxx, Chief
Financial Officer, XxXxxxxxxx Apparel Group Inc., 000 0xx Xxxxxx, Xxx Xxxx, XX
00000, with a copy to: Xxxx Xxxxxx, Esquire, Xxxxxx & Xxxxxx, 000 Xxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000, or, after the Commencement Date, to the
Premises. Notices to Landlord shall be addressed to Xxxxx X. Xxxxxxx, Xxxxx
Xxxxxxx Associates, Incorporated, X.X. Xxx 000, Xxxxxxxxxx, XX 00000, with a
copy to Xxxxx & Xxx Xxxxx, PLLC, Attention: W. E. Applegate, III, Esquire, 00
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, and to any mortgagee or other
party designated by Landlord. Either party may at any time, in the manner set
forth for giving notices to the other, specify a different address to which
notices to it shall be sent.
31. Security Deposit/Letter of Credit.
(a) In the event that the Landlord shall draw upon any letter of credit
held as security in connection with this Lease in accordance with the terms
hereof or if any letter of credit required hereunder shall be replaced, as
permitted by this Section 31, with a cash security deposit, Landlord shall hold
the funds so drawn or deposited as cash security for the faithful performance
and observance by Tenant of the covenants, agreements and conditions of this
lease. Notwithstanding anything to the contrary contained in any law or statute
now existing or hereafter passed (i) Tenant shall not be entitled to any
interest whatever on the cash security, (ii) Landlord shall not be obligated to
hold the cash security in trust or in a separate account, and (iii) Landlord
shall have the right to commingle the cash security with its other funds.
Landlord may use, apply or retain the whole or any part of the cash security to
the extent required for the payment of any minimum rent, any additional rent or
any other sums payable hereunder as to which Tenant is in default or to the
extent required for the reimbursement to Landlord of any sum which Landlord may
expend or may be required to expend by reason of Tenant's default in respect to
any of the covenants, agreements or conditions of this lease. If Tenant shall
fully and faithfully comply with all of the covenants, agreements and conditions
of this lease, the cash security shall be returned to Tenant after the
Expiration Date and surrender of the Premises to Landlord. If the Premises are
sold to a bona fide purchaser, Landlord shall have the right to transfer the
aforesaid cash security to such purchaser, by which transfer Landlord shall be
released from all liability, and Tenant shall look solely to the new landlord
for the return thereof. If Tenant terminates this Lease pursuant to any
termination right granted to Tenant herein, Landlord shall return to Tenant any
Letter of Credit then held by Landlord; provided, however, Landlord shall be
entitled to retain any portion of the Letter of Credit proceeds previously drawn
28
upon by Landlord that Landlord, in the exercise of its reasonable discretion,
believes is necessary to remedy any existing or prior default by Tenant
hereunder.
(b) Tenant shall, upon the execution and delivery of this Lease, deliver a
transferable Standby Irrevocable Letter of Credit (together with any successor,
renewal or replacement thereof, the "Letter of Credit") to be posted initially
by Norton XxXxxxxxxx of Xxxxxx, Inc. (or its successor in interest) and issued
by any of: (i) NationsBank, N. A. (or any successor banking institution); (ii)
Tenant's current lenders, namely, The CIT Group/Commercial Services, Inc.,
Nationsbanc Commercial Corporation and Fleet Bank, N.A.; or (iii) other lenders
expressly approved by Landlord, in the amount of One Million One Hundred Fifty
Five Thousand Dollars ($1,155,000.00), naming Landlord as beneficiary (the
Landlord, together with any successor landlord or other transferee of the Letter
of Credit, is referred to herein as the "Beneficiary"). The Letter of Credit
shall be issued on the date of this Lease and shall have an initial expiration
date no earlier than one (1) year from the date of this Lease. By its terms, the
Letter of Credit shall be payable upon presentation of a sight draft by the
Beneficiary, be transferable, permit partial draws, be renewable annually, and
otherwise be in form and substance satisfactory to the Landlord. Tenant shall
cause the Letter of Credit (as it may be reduced in amount in accordance with
the provisions of this Section 31) to be issued and renewed for the entire term
of this Lease. Tenant shall not be required to maintain or renew the Letter of
Credit where Tenant is permitted, by the express terms of this Section 31, to
replace the Letter of Credit with a cash security deposit and Tenant has in fact
replaced the Letter of Credit with a cash security deposit in accordance with
the terms hereof. Landlord shall have the right to absolutely assign the Letter
of Credit to any successor landlord and to collaterally assign the Letter of
Credit to any mortgagee. Landlord and Tenant agree that: (i) the original
landlord entity under this Lease will pay all letter of credit transfer fees
associated with the first assignment of this Lease to a successor landlord; and
(ii) in the event of any later assignment of this Lease, Landlord shall attempt
in good faith to cause the assignee of this Lease to pay all letter of credit
transfer fees associated with such an assignment and, in the event Landlord in
unable to cause such assignee to pay such transfer fees, such transfer fees
shall be split equally between Landlord and Tenant.
(c) The Landlord shall be permitted to draw upon the Letter of Credit upon
the occurrence of a default by Tenant under the terms and conditions of this
Lease and Tenant's failure to cure such default within the cure periods provided
for in this Lease, whether such default be monetary or non-monetary. In such
circumstances, Landlord shall be permitted to draw upon the Letter of Credit in
an amount sufficient, in the sole judgment of Landlord, to cure such default and
reimburse Landlord for all losses, damages, and expenses (including, without
limitation, reasonable attorney's fees) which are actually incurred and are
caused by such default. The amount of any drawing on the Letter of Credit shall
be consistent with the amount of damages and other remedies Landlord is entitled
to under the terms of this Lease. Nothing contained herein shall be deemed or
construed so as to limit or otherwise impair Tenant's right to challenge
Landlord's drawing under the Letter of Credit to the extent such drawing does
not represent a fair measure of damages or is otherwise inconsistent with this
Lease.
(d) Tenant shall be entitled to replace the original Letter of Credit
issued in favor of the Beneficiary in the amount of One Million One Hundred
Fifty Five Thousand Dollars ($1,155,000.00) with a replacement letter of credit
in the amount of Five Hundred Seventy Seven
29
Thousand Five Hundred Dollars ($577,500.00) (the "First Reduced Letter of
Credit"), and the Beneficiary agrees to provide Tenant with all documents
necessary to facilitate such replacement, upon the satisfaction of the following
conditions (the "First Letter of Credit Reduction Conditions"), such
determination of the satisfaction of conditions to be made on a quarterly basis:
(i) Tenant shall have physically continuously occupied the Premises
and fully performed all of its obligations under this Lease, including,
without limitation, the payment of Minimum Annual Rent and all additional
rent required by the terms of this Lease, for a period of six (6)
consecutive calendar months;
(ii) at the time condition (i) is satisfied, none of the following
events or conditions shall exist with respect to the Tenant or Norton
XxXxxxxxxx, Inc. (the "Parent") or any entity owned or controlled by Parent
or Tenant (an "Affiliate"): (A) the Tenant (or the Parent or an Affiliate)
has made a general assignment for the benefit of creditors or generally is
not paying, or is unable to pay, or admits in writing its inability to pay,
its debts as they become due; or (B) the Tenant (or the Parent or an
Affiliate) or any other party has commenced any proceeding (I) relating to
bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, in each instance with respect to the Tenant (or the Parent or an
Affiliate); (II) seeking to have an order for relief entered with respect
to the Tenant (or the Parent or an Affiliate); (III) seeking attachment,
distraint or execution of a judgment with respect to the Tenant (or the
Parent or an Affiliate); (IV) seeking to adjudicate the Tenant (or the
Parent or an Affiliate) as bankrupt or insolvent; (V) seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to the Tenant's (or
the Parent's or an Affiliate's) debts; or (VI) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for the
Tenant (or the Parent or an Affiliate) or for all or any substantial part
of the Tenant's (or the Parent's or an Affiliate's) assets; and
(iii) the Parent's unaudited quarterly financial statements shall
reflect net income of Four Million Dollars ($4,000,000.00) or greater in
the aggregate for the most recently ended four (4) consecutive fiscal
quarters.
(e) Tenant shall be entitled to replace the original Letter of Credit (or
the First Reduced Letter of Credit) with either (i) a replacement letter of
credit in the amount of One Hundred Twenty Three Thousand Two Hundred Dollars
($123,200.00) (the "Second Reduced Letter of Credit"), in which event the
Beneficiary agrees to provide Tenant with all documents necessary to facilitate
such replacement, or (ii) a cash security deposit in the amount of One Hundred
Twenty Three Thousand Two Hundred Dollars ($123,200.00), upon the satisfaction
of either of the following conditions (the "Second Reduced Letter of Credit
Conditions"), it being agreed that the determination of the satisfaction of the
Second Reduced Letter of Credit Conditions will be made annually at each lease
anniversary date:
(A) Parent's credit rating published by Standard & Poor's or Xxxxx'x
Investor's Services shall become "investment grade", it being agreed that
the current definition of
30
"investment grade" shall mean a credit rating published by Standard &
Poor's or Xxxxx'x Investor's Services of BBB- or A-, respectively, or
better; or
(B) both: (i) all First Letter of Credit Reduction Conditions (as
defined above) shall have been satisfied; and (ii) the Parent's unaudited
quarterly financial statements shall reflect a maximum debt to net worth
ratio of 2.0 to 1.0 for each of the most recently ended four (4)
consecutive fiscal quarters.
In the event that Tenant shall be obligated to renew the Letter of Credit
(or any successor letter of credit) and shall fail to renew the Letter of Credit
(or any successor letter of credit) prior to the date that is thirty (30) days
prior to the expiration of the Letter of Credit (or any successor letter of
credit), the Beneficiary shall be entitled to draw upon the entire amount of the
Letter of Credit and hold such funds as additional security for the performance
of Tenant's obligations under this Lease in accordance with this Section 31.
31
IN WITNESS WHEREOF, and in consideration of the mutual entry into this
lease and for other good and valuable consideration, and intending to be legally
bound, each party hereto has caused this agreement to be duly executed under
seal.
Landlord:
NORTH POINT PARK, LLC
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Member
Tenant:
------
XXXXXXXXXX APPAREL HOLDINGS INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: VP, CFO, Secretary &
Treasurer
Corporate Resolution and Authorization of Agency
It is hereby certified that a meeting of a quorum of the directors of
the corporation which is the Tenant herein was held on May 14, 1999, and that it
was resolved to enter into this lease and further that the officers of the
corporation, and ______________________ as agent of the corporation, have been
authorized, empowered and directed in the corporate name and with the corporate
seal to execute and deliver any or all documents and to pay all fees and charges
necessary to carry out the entry into and compliance with this lease.
/s/ Xxxxxx Xxxxxx
Secretary
32
Exhibit "A"
Graphical Depiction of Lot
(see attached depiction of Tract A-2)
Exhibit "B"
Plans
(see attached)
Exhibit "C"
Specifications
(see attached)
Exhibit "D"
Description of Tenant's Work
(see attached)
Exhibit "E"
Construction Lender Form of Nondisturbance, Attornment
and Subordination Agreement
(see attached)
Exhibit "F"
Form of Memorandum of Lease
Drawn by and mail to:
Xxxxx & Xxx Xxxxx, PLLC
Attention: Xxxxxxxxxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
MEMORANDUM OF LEASE
NORTH POINT PARK, LLC, a South Carolina limited liability company
("Landlord"), whose address is c/o Xxxxx Xxxxxxx Associates, 000 Xxxx Xxx
Xxxxxx, Xxxxxxxxxx, XX 00000, hereby acknowledges the existence of a lease to
XXXXXXXXXX APPAREL HOLDINGS INC., a Delaware corporation, ("Tenant"), whose
principal address is: 000 0xx Xxxxxx, Xxx Xxxx, XX 00000, for a term beginning
_____________, 19___ and ending not later than ______________, ____ including
extensions and renewals, if any, of the property described on Exhibit A attached
hereto and made a part hereof, located in the City of Hanahan, County of
Berkeley, South Carolina.
The provisions set forth in a written Agreement of Lease, dated as of March
__, 1999, by and between Landlord and Tenant are hereby incorporated in this
Memorandum.
TENANT:
MCNAUGTON GROUP HOLDINGS INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LANDLORD:
--------
NORTH POINT PARK, LLC
By:
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Member
STATE OF SOUTH CAROLINA
COUNTY OF _________________
The foregoing instrument was acknowledged before me this ___ day of
______________, 1999 by _______________, the _________________ of __________.
------------------------
Notary Public
[SEAL]
My commission expires:
STATE OF SOUTH CAROLINA
COUNTY OF _________________
The foregoing instrument was acknowledged before me this ___ day of
______________, 1999 by Xxxxx X. Xxxxxxx, a Member of North Point Park, LLC.
------------------------
Notary Public
[SEAL]
My commission expires:
Exhibit A to Memorandum of Lease
Description of Property
-----------------------
Exhibit "G"
Form of Tenant Estoppel Certificate
TENANT ESTOPPEL CERTIFICATE
---------------------------
Please refer to the documents described in Exhibit A hereto (the "Lease
Documents") including the "Lease" therein described. The undersigned (the
"Tenant"), hereby certifies that it is the lessee under the Lease. Tenant hereby
further acknowledges that it has been advised that the Lease may be assigned to
a purchaser of, and/or collaterally assigned in connection with a proposed
financing secured by, the property on which the demised premises under the Lease
are located, and certifies both to the landlord under the lease (the "Landlord")
and to any and all prospective purchasers (the "Purchasers") and mortgagees of
such property, including any trustee on behalf of any holders of notes or other
similar instruments, and any holders from time to time of such notes or other
instruments, and their respective successors and assigns (collectively the
"Mortgagees") that as of the date hereof:
1. The information set forth in Exhibit A hereto is true and correct;
2. Tenant is in occupancy of the demised premises and the Lease is in
full force and effect and except by such writings as are identified on Exhibit A
hereto, has not been modified, assigned, supplemented or amended since its
original execution, nor are there any other agreements between Landlord and
Tenant concerning the space rented under the Lease, whether oral or written;
3. All conditions and agreements under the Lease to be satisfied or
performed by Landlord have been satisfied and performed including but not
limited to Substantial Completion of the demised premises in accordance with the
plans and specifications approved by Tenant;
4. Tenant is not in default under the Lease Documents, Tenant has not
received any notice of default under the Lease Documents, and, to Tenant's
knowledge, there are no events which have occurred that with the giving of
notice or the passage of time or both, would result in a default by Tenant under
the Lease Documents;
5. Tenant has not paid any rents or sums due under the Lease more than 30
days in advance of the date due under the Lease and Tenant has no rights of
setoff, counterclaim, concession or other rights of diminution of any rent or
sums due and payable under the Lease except as set forth in Exhibit A hereto;
6. To Tenant's knowledge, there are no uncured defaults on the part of
the Landlord under the Lease Documents, Tenant has not sent any notice of
default under the Lease Documents to the Landlord, and, to Tenant's knowledge,
there are no events which have occurred that, with the giving of notice or the
passage of time or both, would result in a default
by Landlord thereunder, and at the present time Tenant has no claim against
Landlord under the Lease Documents;
7. Except as expressly set forth in the Lease, there are no provisions
for, and Tenant has no rights with respect to, renewal or extension of the
initial term of the Lease; terminating the term, leasing or occupying additional
space or purchasing the premises;
8. If Tenant has the right to obtain leasehold financing, then Tenant
represents that it has no right to obtain fee subordination or otherwise to
encumber the estate of the Landlord in the demised premises;
9. Tenant is in compliance with the covenants set forth in the Lease
Documents obligating Tenant to comply with all applicable law;
10. Tenant is in compliance with all insurance requirements set forth in
the Lease Documents. Tenant covenants and agrees that after receipt of notice of
the sale of the Property it will promptly cause a new Certificate of Insurance
to be issued naming the new landlord and its managing agent as additional
insureds.
11. Except as set forth on Part M of Exhibit A, no action, voluntary or
involuntary, is pending against Tenant under federal of state bankruptcy or
insolvency laws;
12. Tenant covenants and agrees promptly to notify Landlord in writing if
any certification by Tenant contained herein shall be or become untrue in any
material respect at any time prior to __________________________;
13. The undersigned has the authority to execute and deliver this
Certificate on behalf of the Tenant and acknowledges that all Purchasers will
rely on this estoppel certificate in purchasing the property and all Mortgagees
will rely upon this estoppel certificate in extending credit to Landlord or
Landlord's successors in interest; and
14. This Tenant Estoppel Certificate shall be binding upon the successors,
assigns and representatives of the undersigned and any party claiming through or
under the undersigned and shall inure to the benefit of all Purchasers and
Mortgagees.
IN WITNESS WHEREOF, Tenant has duly executed this Certificate this ______
day of __________, 199__.
[ ]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Exhibit "H"
Construction Lender Form of Pre-construction Estoppel
(see attached)
Exhibit "I"
Construction Lender Form of Post-construction Estoppel
(see attached)
Exhibit "J"
List of Warranties
(see attached)
Exhibit "K"
Permitted Encumbrances
1. Declaration of Restrictive Covenants filed November 10, 1998 in Book 1479 at
page 0227 in the RMC Office for Berkeley County.
2. Survey prepared by Trico Engineering Consultants, Inc. dated April 7, 1999
shows the following:
a. Wetlands and Wetlands Buffer
3. Easement for stormwater drainage and retention to be granted by Landlord and
to be located along the easterly line of the property that connects the main
portion of the property with the stormwater retention pond; provided, however,
that such easement shall not impair Tenant's use or operation of the property.
4. Restrictive covenants to be adopted by Landlord restricting the use of the
property provided that such restrictions shall permit the use of the property as
a warehouse and distribution facility and provided that Tenant shall have the
right to approve such restrictive covenants, such approval not to be
unreasonably withheld and such approval to be deemed given if Tenant fails to
respond to a request for approval within ten (10) business days.
Exhibit "L"
Legal Description of Lot
