EXHIBIT 10.1
BUILDING LEASE
Between
XXXXXXX - XXXXXXX DEVELOPMENT, LLC
As LESSOR
and
FORTUNE DIVERSIFIED INDUSTRIES, INC.
As LESSEE
ARTICLE I. PARTIES
Section 1.01. Parties. This Lease, effective as of February ___, 2004, is made
by and between XXXXXXX - XXXXXXX DEVELOPMENT, LLC, and its successors and
assigns, an Indiana limited liability company ("Lessor") and FORTUNE DIVERSIFIED
INDUSTRIES, INC., a Delaware corporation ("Lessee").
ARTICLE II. PREMISES
Section 2.01. Demise of Premises. Lessor hereby leases to Lessee and Lessee
leases from Lessor for the term, at the rental, and upon all of the terms and
conditions set forth herein, the premises consisting of one free standing office
and warehouse building ("Premises") more particularly described on Exhibit "A"
attached hereto and commonly known as 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000 (the "Property"). The Premises shall consist of approximately one
hundred seventy-one thousand (171,000) square feet, of which approximately
forty-five thousand (45,000) square feet is office space and approximately one
hundred twenty six thousand (126,000) square feet is warehouse space.
Section 2.02. Tenant Improvements. All improvements initiated by Lessee or for
or on behalf of Lessee shall be deemed "Tenant Improvements," and Lessee shall
pay all costs associated with them.
ARTICLE III. TERM
Section 3.01. Lease Term. Commencement Date. The term of this Lease ("Lease
Term") shall be for five (5) years beginning on the ____ day of February, 2004
and ending on the ___ day of February, 2009.
Section 3.02. Option to Extend.
(a) Lessee is given one (1) option to extend the Lease Term ("Option to
Extend") for a one (1) year period ("Extended Term") following the date on which
the initial Lease Term would otherwise expire, which option may be exercised
only by written notice ("Option Notice") from Lessee to Lessor given not less
than six (6) months prior to the Expiration Date of the initial Lease Term.
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(b) Extended Term Rent. In the event Lessee exercises its Option to
Extend set forth herein, all the terms and conditions of this Lease shall
continue to apply except that the Base Rent payable by Lessee during the Option
Term shall be equal to one hundred percent (100%) of Fair Market Rent. A "Fair
Market Rent" shall mean the effective rate being charged (including periodic
adjustments thereto) for comparable space in similar buildings in the vicinity,
i.e. of a similar age and quality considering any recent renovations or
modernization, and floor plate size or, if such comparable space is not
available, adjustments shall be made in the determination of Fair Market Rent to
reflect the age and quality of the Premises as contrasted to other buildings
used for comparison purposes, with similar amenities, taking into consideration:
size, location, floor level, leasehold improvements or allowances provided or to
be provided, term of the lease, extent of services to be provided, the time that
the particular rate under consideration became or is to become effective, and
any other relevant terms or conditions applicable to both new and renewing
tenants, but in no event less than the monthly Base Rent prevailing during the
first year of the initial Lease Term.
ARTICLE IV. RENT; TRIPLE NET LEASE
Section 4.01. Base Rent. During the first twelve (12) month period of this
Lease, Lessee shall pay to Lessor a monthly installment of Twenty Thousand
Dollars ($20,000.00) in advance, on the first day of each calendar month of the
Lease Term, commencing on the Commencement Date. In addition, Lessee shall pay
to Lessor an amount equal to one percent (1%) of Commercial Solutions, Inc.'s (a
wholly-owned subsidiary of Lessee) gross sales. Such amount shall be paid no
later than the fifteenth day of each month for the gross sales from the previous
month. Base Rent for any period during the Lease Term which is for less than one
month shall be a pro rata portion of the monthly installment (based on the
actual days in that month). Following the first twelve (12) month period of this
Lease, the Base Rent shall be adjusted annually to Fair Market Rent.
Section 4.02. Absolute Triple Net Lease.
(a) This Lease is what is commonly called a "Absolute Triple Net
Lease," it being understood that Lessor shall receive the Base Rent set forth in
Section 4.01 free and clear of any and all expenses, costs, impositions, taxes,
assessments, liens or charges of any nature whatsoever. Lessee shall pay all
rent in lawful money of the United States of America to Lessor at the notice
address stated herein or to such other persons or at such other places as Lessor
may designate in writing on or before the due date specified for same without
prior demand, set-off or deduction of any nature whatsoever.
(b) To the extent not paid pursuant to other provisions of this Lease,
and at Lessor's sole election, Lessor may submit invoices and Lessee shall pay
Additional Rent (as defined below) in monthly installments on the first day of
each month in advance in an amount to be estimated by Lessor. Within ninety (90)
days following the end of the period used by Lessor in estimating Additional
Rent, Lessor shall furnish to Lessee a statement (hereinafter referred to as
"Lessor's Statement") of the actual amount of Lessee's Additional Rent, or
Lessor shall remit or credit to Lessee, as the case may be, the difference
between the estimated amounts paid by Lessee and the actual amount of Lessee's
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Additional Rent for such period as shown by such statement. Monthly installments
for the ensuing year shall be adjusted upward or downward as set forth in
Lessor's Statement.
Section 4.03. Additional Rent. In addition to the Base Rent reserved by Section
4.01, Lessee shall pay (with respect to the Premises), as Additional Rent, all
taxes, assessments, fees and other impositions in accordance with the provisions
of Article IX, insurance premiums in accordance with the provisions of Article
VII, operating charges, maintenance, repair and replacement costs and expenses
in accordance with the provisions of Article VI and any other charges, costs and
expenses (including appropriate reserves therefor) which are contemplated or
which may arise under any provision of this Lease during the Lease Term. All of
such charges, costs, expenses, and all other amounts payable by Lessee
hereunder, shall constitute Additional Rent, and upon the failure of Lessee to
pay any of such charges, costs or expenses, Lessor shall have the same rights
and remedies as otherwise provided in this Lease for the failure of Lessee to
pay Base Rent. Notwithstanding any other provision of this Lease, Additional
Rent shall not include: (i) depreciation, interest, or amortization on
mortgages, (ii) legal fees incurred in negotiating and enforcing tenant leases,
(iii) real estate brokers' leasing commissions, (iv) costs of any items to the
extent Lessor receives reimbursement for same from insurance proceeds or a third
party, and (v) interest, principal, depreciation, attorney fees, costs of
environmental investigations or reports, points, fees, and other lender costs
and closing costs on any mortgage or mortgages, or other debt instrument
encumbering any portion of the Property.
Section 4.04. Security Deposit. Within five (5) business days after the date on
which this Lease is executed by Lessee and Lessor, Lessee shall deposit with
Lessor a Security Deposit in the amount of Ten Thousand Dollars and no Cents
($10,000.00) in the form of cash (the "Security Deposit"). The Security Deposit
shall be held by Lessor as security for the faithful performance by Lessee of
all of the terms, covenants, and conditions of this Lease applicable to Lessee.
If Lessee defaults with respect to any provision of this Lease, including but
not limited to, the condition of the Premises upon Lease Termination, Lessor may
(but shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any amount which Lessor may spend by reason
of Lessee's default or to compensate Lessor for any loss or damage which Lessor
may suffer by reason of Lessee's default.
ARTICLE V. USE
Section 5.01. Permitted Use and Limitations on Use. The Premises shall be used
and occupied only for office, and warehouse use, together with such ancillary
uses which do not cause excessive wear of the Premises or increase the potential
liability of Lessor, and for no other use, without Lessor's prior written
consent. Lessee shall not use, suffer or permit the use of the Premises in any
manner that will tend to create waste, nuisance or unlawful acts. In no event
shall it be unreasonable for Lessor to withhold its consent as to uses which it
determines would tend to increase materially the wear of the Premises or any
part thereof or increase the potential liability of Lessor or decrease the
marketability, financability, leasability or value of the Premises. Lessee shall
not do anything in or about the Premises which will (i) cause structural injury
to the Premises, or (ii) cause damage to any part of the Premises except to the
extent reasonably necessary for the installation of Lessee's trade fixtures and
Lessee's Alterations (as defined below), and then only in a manner which has
been first approved by Lessor in writing. Lessee shall not operate any equipment
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within the Premises which will (i) materially damage the Property, (ii) overload
existing electrical systems or other mechanical equipment servicing the
Property, (iii) impair the efficient operation of the sprinkler system or the
heating, ventilating or air conditioning ("HVAC") equipment, or (iv) damage,
overload or corrode the sanitary sewer system. Lessee shall not attach, hang or
suspend anything from the ceiling, roof, walls or columns or set any load on the
floor in excess of the load limits for which such items are designed nor operate
hard wheel forklifts within the Premises. Any dust, fumes, or waste products
generated by Lessee's use of the Premises shall be contained and disposed so
that they do not (i) create an unreasonable fire or health hazard, (ii) damage
the Premises, or (iii) result in the violation of any law. Except as approved by
Lessor, Lessee shall not change the exterior of the Premises, or install any
equipment or antennas on or make any penetrations of the exterior or roof of the
Property.
Section 5.02. Compliance with Law.
(a) Lessor shall deliver the Premises to Lessee free of violations of
any covenants or restrictions of record, or any applicable-law, building code,
regulation or ordinance in effect on the date of delivery, including without
limitation, the Americans with Disability Act.
(b) Except as provided in Section 5.02.(a), Lessee shall, at Lessee's
cost and expense, comply promptly with all statutes, ordinances, codes, rules,
regulations and orders, and all covenants and restrictions of record, and
requirements applicable to the Premises and Lessee's use and occupancy of same
in effect during any part of the Lease Term, whether the same are presently
foreseeable or not, and without regard to the cost or expense of compliance.
(c) By executing this Lease, Lessee acknowledges that it has reviewed
and satisfied itself as to its compliance, or intended compliance with the
applicable zoning and permit laws, hazardous materials and waste requirements,
and all other statutes, laws, or ordinances relevant to the uses stated in
Section 5.01, above.
Section 5.03. Condition of Premises at Delivery of Possession. Lessor shall
deliver the Property to Lessee with the plumbing, lighting, heating,
ventilating, air conditioning, gas, electrical, and sprinkler systems and
loading doors in proper operating condition. Except as otherwise provided in
this Lease, Lessee hereby accepts the Premises in their condition existing as of
the Commencement Date, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use and
condition of the Premises, and any covenants or restrictions, liens,
encumbrances and title exceptions of record, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Lessee acknowledges that neither Lessor nor any agent of Lessor has made
any representation or warranty as to the present or future suitability of the
Premises for the conduct of Lessee's business.
Section 5.04. Building Security. Lessee acknowledges and agrees that it assumes
sole responsibility for security at the Premises for its agents, employees,
invitees, licensees, contractors, guests and visitors and will provide such
systems and personnel for same as it deems necessary or appropriate and at its
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sole cost and expense. Lessee acknowledges and agrees that Lessor does not
intend to provide any security system or security personnel at the Premises.
Section 5.05. Rules and Regulations. Lessor may from time-to-time promulgate
reasonable and nondiscriminatory rules and regulations applicable for the care
and orderly management of the Premises. Such rules and regulations shall be
binding upon Lessee upon delivery of a copy thereof to Lessee, and Lessee agrees
to abide by such rules and regulations. If there is a conflict between the rules
and regulations and any of the provisions of this Lease, the provisions of this
Lease shall prevail. Lessor shall not be responsible for the violation of any
such rules and regulations by any person, including, without limitation, Lessee
or its employees, agents, invitees, licensees, guests, visitors or contractors.
ARTICLE VI. MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Maintenance of Premises.
(a) Throughout the Lease Term, Lessee, at its sole cost and expense,
shall keep, maintain, repair and replace the Premises and all improvements and
appurtenances in or serving the Premises, including, without limitation, all
interior and exterior walls, all doors and windows, all roof membranes, all
elevators and stairways, all wall surfaces and floor coverings, all Tenant
Improvements and Alterations, additions and improvements installed during the
Lease Term, all sewer, plumbing, electrical, lighting, heating, ventilation and
cooling systems, fire sprinklers, fire safety and security systems, fixtures and
appliances and all wiring and glazing, in the same good order, condition and
repair as they are in on the commencement date, or any later date of
installation, reasonable wear excepted, provided that wear which could be
prevented by first class maintenance shall not be deemed reasonable.
(b) Lessor, at its sole cost and expense, shall repair defects in the
exterior walls (including all exterior glass which is damaged by structural
defects in such exterior walls), supporting pillars, structural walls, roof
structure and foundations, and sewer storm drainage and plumbing systems,
provided that the need for repair is not caused by Lessee, in which event Lessor
shall repair same and Lessee shall reimburse Lessor for the cost and expense of
same except to the extent of insurance proceeds received for same. Lessor shall
replace the roof membrane, the parking lot surface, landscaping, drainage,
irrigation, sprinkler systems as well as sewer and plumbing systems when the
useful life of each has expired, and Lessee shall pay that portion of the cost
of each replacement, together with annual interest at the Agreed Rate which
shall be amortized over the useful life of each such replacement applicable to
the balance of the Lease Term, in equal monthly installments due and payable
with installments of Base Rent. Lessee shall give Lessor written notice of any
need of repairs which are the obligation of Lessor hereunder and Lessor shall
have a reasonable time to perform same. Should Lessor default with respect to
its obligation to make any of the repairs assumed by it hereunder, Lessee shall
have the right to perform such repairs and Lessor agrees that within thirty (30)
days after written demand accompanied by detailed invoice(s), it shall pay to
Lessee the cost of any such repairs together with accrued interest from the date
of Lessee's payment at the Agreed Rate. Lessor shall not be liable to Lessee,
its employees, invitees, or licensees for any damage to person or property, and
Lessee's sole right and remedy shall be the performance of said repairs by
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Lessee with right of reimbursement from Lessor of the reasonable fair market
cost of said repairs, not exceeding the sum actually expended by Lessee,
together with accrued interest from the date of Lessee's payment at the Agreed
Rate, provided that nothing herein shall be deemed to create a right of setoff
or withholding by Lessee of Base Rent or Additional Rent or any other amounts
due herein.
(c) Lessee agrees to keep the Premises, both inside and out, clean and
in sanitary condition as required by the health, sanitary and police ordinances
and regulations of any political subdivision having jurisdiction and to remove
all trash and debris which may be found in or around the Premises. Lessee
further agrees to keep the interior surfaces, including, without limitation,
windows, floors, walls, doors, showcases and fixtures, clean and neat in
appearance.
(d) If Lessee refuses or neglects to commence such repairs and/or
maintenance for which Lessee is responsible under this Article VI within a
thirty (30) day period (or as soon as practical and in no event later than ten
(10) days if the failure to initiate the repair threatens to cause further
damage to the Premises) after written notice from Lessor and thereafter
diligently prosecute the same to completion, then Lessor may (i) enter the
Premises (except in an emergency, upon at least twenty-four (24) hours advanced
written notice) during Lessor's business hours and cause such repairs and/or
maintenance to be made and shall not be responsible to Lessee for any loss or
damage occasioned thereby and Lessee agrees that upon demand, it shall pay to
Lessor the reasonable cost of any such repairs, not exceeding the sum actually
expended by Lessor, together with accrued interest from the date of Lessor's
payment at the Agreed Rate, and (ii) elect to enter into a maintenance contract
at a market rate for first-rate maintenance with a third party for the
performance of all or a part of Lessee's maintenance obligations, whereupon,
Lessee shall be relieved from its obligations to perform those maintenance
obligations expressly covered by such maintenance contract, and Lessee shall
bear the entire cost of such maintenance contract which shall be due and paid in
advance, as Additional Rent, on a monthly basis with Lessee's Base Rent
payments.
Section 6.03. Alterations, Additions and Improvements. No alterations,
additions, or improvements ("Alterations") shall be made to the Premises by
Lessee without the prior written consent of Lessor which Lessor will not
unreasonably withhold, provided, however, that Lessee may make Alterations which
do not affect any building system, exterior appearance, structural components or
structural integrity and which do not exceed Twenty Thousand Dollars ($20,000)
in cost within any twelve (12) month period, without Lessor's prior written
consent.
Section 6.04. Lessee shall not permit any Statement of Intention to hold a
Mechanic's Lien to be filed against the Premises or any part thereof nor against
any interest or estate therein by reason of labor, services or materials claimed
to have been performed or furnished to or for Lessee. If such Statement of
Intention to hold a Mechanic's Lien shall be filed and not released within
forty-five (45) days, Lessee shall either cause the lien to be released
immediately or if Lessee chooses to defend against said lien, Lessee shall cause
the lien to be foreclosed in a court of law and shall post a surety bond in an
amount as approved by the court to cause the lien to be released. Lessee shall
indemnify and hold Lessor harmless from all costs, expenses and attorneys' fees
incurred by Lessor as a result of said lien and shall at the request of Lessor
defend Lessor in any action brought to foreclose said lien. Nothing in this
Lease shall be deemed or construed to constitute consent to or request to any
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party for the performance of any labor or services or the furnishing of any
materials for the improvement, alteration or repairing of the Leased Premises;
nor as giving Lessee the right or authority to contract for, authorize or permit
the performance of any labor or services or the furnishing of any material that
would permit the attaching of a valid Mechanic's Lien.
Section 6.05 Reimbursable Capital Expenditures. Except for items of capital
expenditures which are to be made at Lessor's sole cost and expense pursuant to
the first sentence of Section 6.01 (b) above, capital expenditures, together
with interest thereon at the Agreed Rate, for any replacement item at the
Premises for which Lessor is responsible hereunder made by Lessor in excess of
Thirty Thousand Dollars ($30,000.00) during the Lease Term shall be amortized
over the remaining Lease Term for the useful life of such replacement item with
the numerator being the number of months remaining in the Lease Term and the
denominator being the number of months of the useful life of the improvements as
determined by Lessor in its sole discretion. Lessee shall be obligated for such
amortized portion of any such expenditure in equal monthly installments due and
payable with each installment of Base Rent during the Lease Term.
ARTICLE VII. INSURANCE
Section 7.01. Property/Rental Insurance for Premises. At all times during the
Lease Term, Lessor shall keep the Premises insured against loss or damage by
fire and those risks normally included in the term "all risk," including,
without limitation, coverage for (i) earthquake and earthquake sprinkler
leakage, (ii) flood, (iii) loss of rents and extra expense, including scheduled
rent increases, (iv) boiler and machinery, (v) Tenant Improvements, and (vi)
fire damage legal liability form, including waiver of subrogation. Any
deductibles shall be paid by Lessee. The amount of such insurance shall not be
less than 100% of replacement cost. Any recovery received from said insurance
policy shall be paid to Lessor and thereafter applied by Lessor to the
reconstruction of the Premises in accordance with the provisions of Article VIII
below. Lessee, in addition to the rent and other charges provided herein, shall
reimburse Lessor for the cost of the premiums for all such insurance covering
the Premises in accordance with Article IV. Such reimbursement and shall be made
within (15) days of Lessor's delivery of a copy of Lessor's statement therefor.
Lessee shall pay to Lessor any deductible (subject to the above conditions)
owing within fifteen (15) days after delivery of notice from Lessor of the
amount owing.
Section 7.02. Property Insurance for Fixtures and Inventory. At all times during
the Lease Term, Lessee shall, at its sole expense, maintain insurance with "all
risk, coverage on any fixtures, furnishings, merchandise, equipment or personal
property in or on the Premises, whether in place as of the date hereof or
installed hereafter. The amount of such insurance shall not be less than one
hundred percent (100%) of the replacement cost thereof, and Lessor shall not
have any responsibility nor pay any cost for maintaining any types of such
insurance. Lessee shall pay all deductibles.
Section 7.03. Lessor's Liability Insurance. At all times during the Lease Term,
Lessor shall maintain a policy of comprehensive general liability insurance
naming Lessor (and such others as designated by Lessor) against liability for
bodily injury, property damage on our about the Premises, with combined single
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limit coverage in an amount determined by Lessor in its sole discretion. Lessee,
in addition to the rent and other charges provided herein, agrees to pay to
Lessor the premiums for all such insurance. The insurance premiums shall be paid
in accordance with Article IV, within (15) days of Lessor's delivery of a copy
of Lessor's statement therefore.
Section 7.04. Liability Insurance Carried by Lessee. At all times during the
Lease Term (and any holdover period) Lessee shall obtain and keep in force a
commercial general liability policy of insurance protecting Lessee, Lessor and
any Lender(s) whose names are provided to Lessee as Additional Insureds against
claims from bodily injury, personal injury and property damage based upon
involving or arising out of ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing a single limit coverage in amount of not less than
One Million Dollars ($1,000,000) per occurrence. The limits of said insurance
required by this Lease as carried by Lessee shall not, however limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance to be carried by the Lessee shall be primary to and not contributory
with, any similar insurance carried by Lessor whose insurance shall be
considered excess insurance only.
Section 7.05. Lessee to Furnish Proof of Insurance. Lessee shall furnish to
Lessor prior to the Commencement Date, and at least thirty (30) days prior to
the expiration date of any policy, certificates indicating that the property
insurance and liability insurance required to be maintained by Lessee is in full
force and effect for the twelve (12) month period following such expiration
date; that Lessor has been named as an additional insured to the extent of
contractual liability assumed in Section 7.07. "Indemnification" and Section
7.08. "Lessor as Party Defendant"; and that all such policies will not be
canceled unless thirty (30) days prior written notice of the proposed
cancellation has been given to Lessor. The insurance shall be with insurers
approved by Lessor, provided, however, that such approval shall not be
unreasonably withheld so long as Lessee's insurance carrier has a Best's
Insurance Guide rating not less than A+ VIII. Lessor shall furnish to Lessee,
prior to the Commencement Date, and at least ten (10) days prior to the
expiration date of any policy, or if later in each case, within ten (10)
business days after receipt of a written request for same, certificates
indicating that the property insurance and liability insurance required to be
maintained by Lessor is in full force and effect for the twelve (12) month
period following such expiration date.
Section 7.06. Mutual Waiver of Claims and Subrogation Rights. Lessor and Lessee
hereby release and relieve the other, and waive their entire claim of recovery
for loss or damage to property arising out of or incident to fire, lightning,
and the other perils included in a standard "all risk" insurance policy when
such property constitutes the Premises, or is in, on or about the Premises,
whether or not such loss or damage is due to the negligence of Lessor or Lessee,
or their respective agents, employees, guests, licensees, invitees, or
contractors. Lessee and Lessor waive all rights of subrogation against each
other on behalf of, and shall obtain a waiver of all subrogation rights from,
all property and casualty insurers referenced above.
Section 7.07. Indemnification and Exculpation.
(a) Except as otherwise provided in Section 7.07.(b), Lessee shall
indemnify and hold Lessor free and harmless from any and all liability, claims,
loss, damages, causes of action (whether in tort or contract, law or equity, or
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otherwise), expenses, charges, assessments, fines, and penalties of any kind,
including without limitation, reasonable attorney fees, expert witness fees and
costs, arising by reason of the death or injury of any person, including any
person who is an employee, agent, invitee, licensee, permitee, visitor, guest or
contractor of Lessee, or by reason of damage to or destruction of any property,
including property owned by Lessee or any person who is an employee, agent,
invitee, permitee, visitor, or contractor of Lessee, caused or allegedly caused
(1) while that person or property is in or about the Premises; (2) by some
condition of the Premises; (3) by some act or omission by Lessee or its agent,
employee, licensee, invitee, guest, visitor or contractor or any person in,
adjacent, on, or about the Premises with the permission, consent or sufferance
of Lessee; (4) by any matter connected to or arising out of Lessee's occupation
or use of the Premises, or any breach or default in timely observance or
performance of any obligation on Lessee's part to be observed or performed under
this Lease.
(b) Notwithstanding the provisions of Section 7.07.(a) of this Lease,
Lessee's duty to indemnify and hold Lessor harmless shall not apply to any
liability, claims, loss or damages to the extent caused solely by Lessor's
active negligence or willful acts of misconduct.
(c) Lessee hereby waives all claims against Lessor for damages to
goods, wares and merchandise and all other personal property in, on, or about
the Premises and for injury or death to persons in, on, or about the Premises
from any cause arising at any time to the fullest extent permitted by law and in
no event shall Lessor be liable for lost profits or other consequential damages
arising from any cause or for any damage which is or could be covered by the
insurance Lessee is required to carry under this Lease.
ARTICLE VIII
DAMAGE OR DESTRUCTION
Section 8.01. Destruction of the Premises.
(a) In the event of a partial destruction of the Premises during the
Lease Term from any cause, Lessor, upon receipt of, and to the extent of,
insurance proceeds paid in connection with such casualty, shall forthwith repair
the same, provided the repairs can be made within a reasonable time under state,
federal, county and municipal applicable law, but such partial destruction shall
in no way annul or void this Lease, (except as provided in Section 8.01.(b)
below) provided that Lessee shall be entitled to a proportionate credit for rent
equal to the payment of rental income insurance received by Lessor. Lessor shall
use diligence in making such repairs within a reasonable time period, acts of
God, strikes and delays beyond Lessor's control excepted, in which instance the
time period shall be extended accordingly, and this Lease shall remain in full
force and effect, with the rent to be proportionately reduced as provided in
this Section. If the Premises are damaged by any peril within twelve (12) months
prior to the last day of the Lease Term and, in the reasonable opinion of the
Lessor's architect or construction consultant, the restoration of the Premises
cannot be substantially completed within ninety (90) days after the date of such
damage and such damage renders unusable more than thirty percent (30%) of the
Premises, Lessor may terminate this Lease on sixty (60) days written notice to
Lessee.
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(b) If the Premises are damaged or destroyed by any cause to the
extent of more than fifty percent (50%) of the Premises during the Lease Term,
Lessor shall notify Lessee within sixty (60) days after such damage or
destruction whether it will repair the same within twelve (12) months (subject
to force majeure) from the date of such notice and if Lessor states that it will
not repair within said twelve (12) months (subject to force majeure) this Lease
shall terminate ten (10) business days after Lessor gives its notice. In the
event Lessor elects to repair, Lessor shall commence repairs within a reasonable
time and diligently proceed to complete such repairs, in each instance subject
to force majeure delays. In the event of termination, Lessor shall pay to Lessee
all insurance proceeds, if any, received by Lessor as a result of the damage or
destruction to the extent allocable to unamortized Tenant Improvements or other
Alterations installed in the Premises at Lessee's sole cost and expense, using
an amortization schedule of equal monthly installments over the first sixty (60)
months.
Section 8.02. No Abatement of Rentals. The Rentals and other charges due under
this Lease shall not be reduced or abated by reason of any damage or destruction
to the Premises (except to the extent of proceeds received by Lessor from the
rental loss insurance), and Lessor shall be entitled to all proceeds of the
insurance maintained pursuant to Section 7.01. above during the period of
rebuilding pursuant to Section 8.01.(a) above, or if the Lease is terminated
pursuant to Section 8.01.(a) above. Lessee shall have no claim against Lessor,
including, without limitation, for compensation for inconvenience or loss of
business, profits or goodwill during any period of repair or reconstruction.
Section 8.03. Liability for Personal Property. In no event shall Lessor have any
liability for, nor shall it be required to repair or restore, any injury or
damage to Lessee's personal property or to any other personal property or to
Alterations in or upon the Premises by Lessee.
ARTICLE IX. REAL PROPERTY TAXES
Section 9.01. Payment of Taxes. Lessee shall pay any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license, fee,
charge, excise or imposition ("real property tax"), imposed, assessed or levied
on or with respect to the Premises by any Federal, State, County, City or other
political subdivision or public authority having the direct or indirect power to
tax, including any improvement district thereof, as against any legal or
equitable interest of Lessor in the Premises or against the Premises or any part
thereof applicable to the Premises for a period of time included within the
Lease Term. All such payments shall be made at least ten (10) days prior to the
delinquency date for such payment or ten (10) days after Lessee's receipt of the
tax xxxx, whichever is later. Notwithstanding the foregoing, Lessee shall not be
required to pay any net income taxes, franchise taxes, or any succession or
inheritance taxes of Lessor.
Section 9.02. Pro Ration for Partial Years. If any such taxes paid by Lessee
shall cover any period prior to the Commencement Date or after the Expiration
Date of the Lease Term, Lessee's share of such taxes shall be equitably prorated
to cover only the period of time within the tax fiscal year during which this
Lease shall be in effect, and Lessor shall reimburse Lessee to any extent
required. If Lessee shall fail to pay any such taxes, Lessor shall have the
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right to pay the same in which case Lessee shall repay such amount to Lessor
within ten (10) days after written demand, together with interest at the Agreed
Rate.
ARTICLE X. UTILITIES
Section 10.01. Lessee to Pay. Lessee shall pay prior to delinquency and
throughout the Lease Term, all charges for water, gas, heating, cooling, sewer,
telephone, electricity, garbage, air conditioning and ventilation, janitorial
service, landscaping and all other materials and utilities supplied to the
Premises. The disruption, failure, lack or shortage of any service or utility
due to any cause whatsoever shall not affect any obligation of Lessee hereunder,
and Lessee shall faithfully keep and observe all the terms, conditions and
covenants of this Lease and pay all rent due hereunder, all without diminution,
credit or deduction.
ARTICLE XI. ASSIGNMENT AND SUBLETTING
Section 11.01. Lessor's Consent Required. Except as provided in Section 11.02,
Lessee shall not voluntarily or by operation of law assign, transfer, mortgage,
sublet, license or otherwise transfer or encumber all or any part of Lessee's
interest in this Lease or in the Premises or any part thereof, without Lessor's
prior written consent which Lessor shall not unreasonably withhold or delay.
Lessor shall respond in writing to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance,
subletting or licensing without such consent shall be void, and shall constitute
a breach of this Lease.
Section 11.02. Lessee Affiliates. Without the approval of Lessor, Lessee may
assign or sublet the Premises, or any portion thereof, to any corporation which
controls, is controlled by, or is under common control with Lessee, or to any
corporation resulting from the merger or consolidation with Lessee, or to any
person or entity which acquires all, or substantially all of the assets of
Lessee as a going concern of the business that is being conducted on the
Premises ("Affiliates"), provided that said assignee or sublessee assumes, in
full, the obligations of Lessee under this Lease and provided further that the
use to which the Premises will be put does not materially change and provided
further, Lessee shall provide Lessor at least ten (10) business days advance
written notice of any such assignment or sublease, including fully executed
assignment or sublease documents and evidence that the transaction is of a type
described in this Section 11.02. Any such assignment or sublease shall not, in
any way, affect or limit the liability of Lessee under the terms of this Lease.
Section 11.03. No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed consent to any subsequent
assignment or subletting. In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof, Lessor
may proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.
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ARTICLE XII. DEFAULTS
Section 12.01. Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee:
(a) The abandonment of the Premises by Lessee or the commission of
waste at the Premises or the making of an assignment or subletting in violation
of Article XI, provided however, abandonment shall be considered to not occur if
the Premises are maintained and occupied to the extent necessary to maintain the
insurance on each and every portion of the Premises;
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, if such
failure continues for a period of five (5) business days after written notice
thereof from Lessor to Lessee; or
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (a) or (b) above, if such failure continues
for a period of ten (10) days after written notice thereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than ten (10) days are reasonably required for its cure, then Lessee shall
not be deemed to be in default if Lessee commences such cure within said ten
(10) day period and thereafter diligently prosecutes such cure to completion.
ARTICLE XIII. CONDEMNATION OF PREMISES
Section 13.01. If the entire Premises, or such portion thereof as will make the
remainder unsuitable for the use permitted by this Lease, is condemned by any
legally constituted authority, or if a conveyance or other acquisition in lieu
of such condemnation is made, then this Lease shall terminate as of the date
possession is required by the condemnor. If a portion of the Premises is
condemned but the remainder is still suitable for the use permitted by this
Lease, this Lease shall not terminate but a portion of the rent for the rest of
the term shall be abated in proportion to the amount of the Premises taken. Each
party shall be entitled to such compensation for condemnation as he may
negotiate or be awarded by a court of law.
ARTICLE XIV. GENERAL PROVISIONS
Section 14.01. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
Section 14.02. Time of Essence. Time is of the essence in the performance of all
obligations under this Lease.
Section 14.03. Notices. Notices required hereunder shall be as follows and shall
be deemed delivered upon personal delivery to the party or three (3) days after
deposit in the United States Mail by registered or certified mail, return
receipt requested, or the date of actual receipt as shown by the return receipt
for registered or certified mail:
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Lessor: Xxxxxxx - Xxxxxxx Development, LLC Lessee: Fortune Diversified Industries, Inc.
0000 Xxxxxxxxx Xxxxx 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxxxx
Section 14.04. Waivers. No waiver of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach of the same or
any other provisions. Any consent to, or approval of, any act shall not be
deemed to render unnecessary the obtaining of consent to or approval of any
subsequent act. The acceptance of rent hereunder by Lessor shall not be a waiver
of any preceding breach by Lessee of any provision hereof, other than the
failure of Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
Section 14.05. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a "short form" memorandum
of this Lease for recording purposes.
Section 14.06. Binding Effect; Choice of Law. Lessor and Lessee agree that in
the interpretation, performance or resolution of any disputes or claims arising
under this Lease, the law of the State of Indiana will govern, notwithstanding
any state's choice of law rules to the contrary.
Section 14.07. Lease to be Subordinate. Lessee agrees that this Lease is and
shall be, at all times, subject and subordinate to the lien of any mortgage or
other encumbrances which Lessor may create during the Lease Term against the
Premises including all renewals, replacements and extensions thereof provided,
however, that regardless of any default under any such mortgage or encumbrance
or any sale of the Premises under such mortgage, so long as Lessee timely
performs all covenants and conditions of this Lease and continues to make all
timely payments hereunder, this Lease and Lessee's possession and rights
hereunder shall not be disturbed by the mortgagee or anyone claiming under or
through such mortgagee. Lessee shall execute any documents subordinating this
Lease within ten (10) days after delivery of same by Lessor so long as the
Lender agrees therein that this Lease will not be terminated if Lessee is not in
default following a foreclosure.
[SIGNATURE PAGE FOLLOWS]
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The parties have executed this Lease as of the dates indicated below.
XXXXXXX - XXXXXXX DEVELOPMENT, LLC
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
Date:
--------------------------------
FORTUNE DIVERSIFIED INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx, Chief Executive Officer
Date:
--------------------------------
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