EXHIBIT 10(f)
LEASE AGREEMENT
THIS AGREEMENT (the "Lease") made as of the 17th day of May, 1999, by and
between 2828 Partnership, L.P., a Pennsylvania limited partnership ("Lessor"),
and Marlton Technologies, Inc., a New Jersey corporation ("Lessee").
W I T N E S S E T H
WHEREAS, pursuant to the Agreement of Sale (the "Agreement of Sale") dated
April 5, 1999 between Lessor's predecessor in interest under the Agreement of
Sale and the legal owner, Charter Road Partnership (the "Current Owner"), Lessor
is the equitable owner of a certain tract of land located in the City of
Philadelphia, County of Philadelphia and Commonwealth of Pennsylvania known as
0000 Xxxxxxx Xxxx and containing 19.36 acres, more or less, as more fully
described on Exhibit "A" attached hereto and incorporated herein by reference
(the "Land"), together with the building and improvements thereon, including the
approximately 234,285 square foot one-story building thereon (the "Building")
(the Land, the Building and the other improvements on the Land are sometimes
collectively referred to herein as the "Property"); and
WHEREAS, an affiliate of Lessee, Sparks Exhibits Holding Corporation
("Sparks"), currently leases the Property from the Current Owner pursuant to an
Indenture of Lease dated December 21, 1988, as amended, between the Current
Owner and Sparks' predecessor in interest (the "Existing Lease"); and
WHEREAS, the Agreement of Sale provides that, upon closing thereunder and
Lessor becoming the legal owner of the Property, the Current Owner will assign
its right, title and interest in, to and under the Existing Lease to the Lessor;
and
WHEREAS, Lessor and Lessee desire to enter into a Lease for the Property
which: (a) will be contingent upon Lessor closing under the Agreement of Sale
and becoming the legal owner of the
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Property (the "Title Closing"); (b) will have a term commencing on the date of
the Title Closing; and (c) will replace the Existing Lease upon the occurrence
of the Title Closing.
NOW THEREFORE, the parties hereto, in consideration of the mutual covenants
made herein, and INTENDING TO BE LEGALLY BOUND, hereby agree as follows:
1. Incorporation of Recitals. The foregoing recitals are incorporated into
and made a part of this Lease.
2. Lease Contingent Upon the Occurrence of the Title Closing. This Lease is
conditioned and contingent upon the occurrence of the Title Closing and, if, for
any reason, the Title Closing does not occur within one year from the date of
this Lease, this Lease shall be null and void.
3. Existing Lease Terminated Upon Title Closing. Upon the occurrence of the
Title Closing: (a) the Existing Lease shall be deemed to have been terminated as
if the date of the Title Closing were its natural expiration date; and (b) the
term of this Lease shall commence, such date of commencement being sometimes
referred to herein as the "Effective Date" of this Lease.
4. Lease of Demised Premises. Lessor does hereby demise and lease unto
Lessee and Lessee does hereby lease from the Lessor the Property (sometimes
referred to herein as the "Demised Premises"), on the terms and conditions set
forth herein.
5. Use of Demised Premises. The Demised Premises may be used by Lessee for
any legal purpose and for no other purpose.
6. Term
A. Term. The term of this Lease (the "Term") shall be for twenty (20)
years, commencing on the Effective Date, unless extended or sooner
terminated as herein provided. Notwithstanding the foregoing, if the
Effective Date shall occur on a day which is not the first day of the
month, the Term shall be twenty (20) years plus the number of days in the
month in which the Effective Date occurs which are on or after the
Effective Date. The period from the Effective Date to the end of the month
in which the Effective Date occurs is referred to herein as the "Stub
Period."
B. Option to Terminate Term. Notwithstanding the foregoing, Lessee
shall have the right to terminate the Lease effective on that date which is
the day before the tenth (10th) anniversary of
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the Effective Date or, if there is a Stub Period, effective on that date
which is the tenth (10th) anniversary of the expiration of the Stub Period
(such right to terminate hereinafter referred to as the "Termination
Right"), provided that Lessee shall have given Lessor written notice of
Lessee's election to terminate the Lease which notice must be given at
least six (6) months prior to the day before the tenth (10th) anniversary
of the Effective Date or, if there is a Stub Period, at least six (6)
months prior to that day which is the tenth (10th) anniversary of the
expiration of the Stub Period. If Lessee fails to give such termination
notice in a timely fashion, Lessee shall be deemed to have waived its
Termination Right and the term of the Lease shall be as set forth in
Section 6.A. hereof.
Notwithstanding the foregoing, it is expressly understood and agreed that, even
if Lessee does validly exercise its Termination Right, Lessee shall,
nevertheless, continue to be fully responsible for all of its responsibilities
and obligations under this Lease, including the payment of all rent owed
hereunder, as if the Lease had not been terminated, until such time as Lessor
shall have either "Sold" the Demised Premises or "Re-leased" the Demised
Premises. "Sold" shall mean Seller shall actually have conveyed legal title to
and received the purchase price for the Demised Premises. "Re-leased" shall mean
that Lessor shall have actually leased the Demised Premises and shall be
receiving rent, after any free rent period. Lessor shall use reasonable efforts
to Sell or Release the Demised Premises and shall not unreasonably refuse to
Sell or Re-lease the Demised Premises to a buyer or lessee located by Lessee and
at a sale price or rent and on other terms negotiated by Lessee, but under no
circumstances shall Lessor be obligated to either: (i) Sell the Demised Premises
for a price less than the sum of (a) the balance due on any mortgage debt
secured by the Demised Premises plus (b) $1,000,000.00, if the Lessor has closed
on the Addition Permanent Financing, or $850,000.00, if the Lessor has not
closed on the Addition Permanent Financing; or (ii) Re-lease the Demised
Premises at a rental rate less than Lessor would have received under the Lease
if it had not been terminated, in each case unless Lessee shall consent to such
Sale or Re-leasing and shall agree to pay any deficiency. If Lessor Re-leases
part, but not all, of the Demised Premises, Lessee shall be released from its
obligations pro rata based upon the fraction having as the numerator the square
footage of the Building, as expanded (if applicable), Re-leased and having as
the denominator all leaseable square footage of the Building, as expanded (if
applicable). Anything herein to the contrary notwithstanding, if Lessee
exercises the Termination Right, it may nevertheless continue to occupy the
Demised Premises, at the rent and on the other terms provided herein, after the
effective date of the termination until the Move Out Date (hereinafter defined).
"Move Out Date" shall mean that earliest date which is, sixty (60) days after
Lessor has provided Lessee with written notification of any of: (a) the date the
buyer or new lessee is expected to occupy the Demised Premises; (b) the date, in
connection with a Re-leasing, that the Lessor needs possession in order to
commence those landlord improvements to the Demised Premises, if any, required
under the relevant lease; or (c) Lessor's exercise of the Ultimate Right
(hereinafter defined). Lessee shall vacate the Demised Premises on or before the
Move Out Date.
It is expressly understood and agreed that, in addition to any other right
Lessor has hereunder, after the Lessee has exercised the Termination Right,
Lessor shall have the right, but not the obligation, (the "Ultimate Right") to
either Sell or Re-lease the Demised Premises on any terms Lessor elects, in
Lessor's sole discretion, or to refrain from Selling or Re-leasing, or both, for
any reason, in Lessor's sole discretion, provided Lessor releases Lessee from
its obligation under this Section 6.B. to continue to be responsible for all of
Lessee's responsibilities and obligations, including the payment of rent, which
obligations and responsibilities accrue after the later of (i) the date which is
the day before the tenth (10th) anniversary of the Effective Date or, if there
is a Stub Period, effective on
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that date which is the tenth (10th) anniversary of the expiration of the Stub
Period and (ii) sixty (60) days after Lessor's written exercise of the Ultimate
Right.
7. Base or Minimum Rent.
A. Amount of Payments.
(i) Stub Period. During the Stub Period, if any, Lessee shall pay
to Lessor a base rent (the "Stub Period Base Rent") equal to the sum
of (a) the interest which Lessor owes to its mortgage lender for the
Stub Period on the $5,400,000.00 mortgage loan which Lessor will use
to finance its acquisition of the Demised Premises (the "Acquisition
Loan") and (b) $232.88 for each day of the Stub Period. The Stub
Period Base Rent shall be due and payable on the first day of the Stub
Period. Lessor shall allow Lessee a credit against the Stub Period
Base Rent in the amount, if any, of any prepaid rent relating to the
Stub Period which Sparks shall have paid to the Current Owner and
which the Current Owner shall have transferred, assigned or credited
to Lessor (the "Stub Period Prepaid Base Rent"). If the Stub Period
Base Rent is less than the Stub Period Prepaid Base Rent, then Lessor
shall be obligated to repay or credit against Lessee's rental
obligations the amount, if any, by which the Stub Period Prepaid Base
Rent exceeds the Stub Period Base Rent.
(ii) First Ten Year Period Following Stub Period.
a) Initial Base Rent. During the first ten years of the Term
of this Lease immediately following the Stub Period, if any, or,
if there is no Stub Period, during the first ten years of the
Term of this Lease (whichever is applicable is hereinafter
sometimes referred to as the "First Ten Year Period"), Lessee
shall pay to Lessor an annual base rent (the "Initial Base Rent")
of Six Hundred Seven Thousand Twenty-Four Dollars and Thirty-Two
Cents ($607,024.32) payable in one hundred twenty (120) equal
monthly installments of Fifty Thousand Five Hundred Eighty-Five
Dollars and Thirty-Six Cents ($50,585.36) each payable on the
first day of each month, the first installment to be payable on
the first day of the Term of this Lease if there is no Stub
Period, or, if there is a Stub Period, on the first day
immediately after the Stub Period.
It is understood and agreed that the Initial Base Rent has been calculated
based on the assumption that the Lessor will incur exactly $850,000.00 in
out-of-pocket costs in connection with or relating to its acquisition of the
Demised Premises, its obtaining a commitment for and closing (or attempting to
close in the event that the Addition Permanent Financing does not close) both
the Acquisition Loan and the Addition Permanent Financing and its drafting and
negotiation of and entry
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into this Lease (collectively "Lessor's Out-Of-Pocket Costs"). It is further
understood and agreed that: (I) Lessee shall reimburse Lessor, in addition to
any of Lessee's rental or other obligations under this Lease, for the amount, if
any, by which Lessor's Out-Of-Pocket Costs exceed $850,000.00; and (II) Lessor
shall pay Lessee the amount, if any, by which Lessor's Out-Of-Pocket Costs are
less than $850,000.00 (the "Lessor's Reimbursement").
While the following is not an exclusive list of Lessor's Out-Of-Pocket
Costs, Lessee acknowledges and agrees that the following costs, if incurred by
Lessor, are proper Lessor's Out-Of-Pocket Costs:
(1) $600,000 difference between the $6,000.000.00 purchase price for the
Demised Premises and the amount of the Acquisition Loan;
(2) $120,000.00 transfer tax which Lessor will pay in connection with the
acquisition of the Demised Premises;
(3) $14,708.37 title insurance premium which Lessor will pay plus the cost
of any endorsements required by GE, recording fees for the deed and mortgage and
other miscellaneous charges of the title company in connection with the
acquisition of legal title to the Demised Premises and the closing on the
Acquisition Loan;
(4) The title insurance premium and attendant charges which Lessor will pay
in connection with the Addition Permanent Financing.
(5) $4,000.00 for the appraisal plus the cost of the updated appraisal
which will be required in connection with the Addition Permanent Financing;
(6) $5,800.00 for the survey plus the cost of updating the survey in
connection with the Addition Permanent Financing;
(7) $1,800.00 for the engineering study plus the cost, if any, of updating
same in connection with the Addition Permanent Financing;
(8) $1,075.00 for Phase I Environmental Report;
(9) GE's attorneys fees in connection with both the Acquisition Loan and
the Addition Permanent Financing;
(10) Lessor's legal fees incurred in connection with or relating to the
acquisition of the Demised Premises, the drafting and negotiation of this Lease
and the negotiation and closing of both the Acquisition Loan and the Addition
Permanent Financing;
(11) Nonrefundable $13,500.00 "forward commitment fee" required under the
commitment for the Addition Permanent Financing; and
(12) Any "refundable" deposits paid under the loan commitment for either
the Acquisition Loan or the Addition Permanent Financing which are not actually
refunded.
Lessor shall not be obligated to pay Lessee the Lessor's Reimbursement, if
applicable, until after the Addition Permanent Financing has closed or it is
known that it will not close and the Lessor's Out-Of-Pocket Costs relating
thereto are known.
If and when Lessor's Out-Of-Pocket Costs exceed $850,000.00, however,
Lessee shall promptly reimburse Lessor, from time to time, for those Lessor's
Out-Of-Pocket Costs which Lessor has incurred in excess of $850,000.00.
b) Revised Initial Base Rent. If, and only if, the Lessor closes
on the Addition Permanent Financing (hereinafter defined), the Initial
Base Rent shall be increased by the
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sum of (I) amount of the Lessor's debt service (principal and
interest) on the Addition Permanent Financing for the concomitant
period and (II) $1,250.00 per month. By way of example, assume,
hypothetically, that Lessor obtains the Addition Permanent Financing
on the following terms:
Loan Amount: $1,350,000.00
Interest Rate: 7.50%
Amortization Rate: 20 years
Monthly Payment of
Principal and Interest: $10,875.51:
By way of example under such hypothetical facts, after closing on the Addition
Permanent Financing, the Initial Base Rent would be increased by $12,125.51
($1,250.00 + $10,875.51) per month resulting in a monthly Initial Base Rent of
$62,710.87. If there is a stub period (the "Addition Stub Period") for a partial
month during which the Lessor is obligated to pay only interest on the Addition
Permanent Financing, the Initial Base Rent for that month shall be increased by
only the sum of (I) the amount of such interest for the Addition Stub Period and
(II) $41.67 for each day of the Addition Stub Period. The intent of this
paragraph is to pass on the full debt service on the Addition Permanent
Financing to Lessee plus the sum of $1,250.00 per month for the period from the
closing on the Addition Permanent Financing to the tenth (10th) anniversary of
the Effective Date, if there is no Stub Period, or, if there is a Stub Period,
the tenth (10th) anniversary of the expiration of the Stub Period.
Lessor acknowledges that Lessee intends to construct an approximately
15,800 square foot expansion to the Building (the "Addition"). While Lessee
shall finance the construction of the Addition, Lessor has agreed to
attempt to obtain non-recourse permanent financing for the Addition in
order to reimburse Lessee for a portion of the cost of constructing the
Addition in an amount not to exceed $1,350,000.00. This financing is
referred to herein as the "Addition Permanent Financing." In the event that
Lessor is able to obtain and close on the Addition Permanent Financing,
Lessor shall: (I) pay the proceeds from the Addition Permanent Financing to
Lessee and the Initial Base Rent shall be increased as set forth in this
Section 7.A.(ii).b; and (II) pay to Lessee a one time lump sum payment of
$150,000.00 in addition to, and not from, the proceeds of the Addition
Permanent Financing.
Lessor currently has a commitment from General Electric Capital
Business Asset Financial Corporation ("GE") for the Addition Permanent
Financing, a copy of which is attached hereto as Exhibit "B" and made a
part hereof (the "Existing Commitment"). While Lessor shall use its
reasonable efforts to close the loan described in the Existing Commitment,
Lessor does not promise, warrant or represent that it will be able to do so
since some of the conditions for funding under the Existing Commitment are
outside of Lessor's control. In the event that Lessor is not able to close
under the Existing Commitment, Lessee shall have no recourse against Lessor
as a result thereof other than the fact that, as a result thereof, the
Initial Base Rent shall not be increased pursuant to this Section
7.A.(ii).b. In the event that Lessor is not able to close under the
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Existing Commitment, however, Lessor shall use its reasonable efforts to
close on any other alternative Addition Permanent Financing which Lessee
may secure for Lessor no later than April 1, 2000, provided that such
financing is non-recourse, the amount shall not exceed $1,350,000.00, the
debt service is passed on to Lessee pursuant to this Section 7.A.(ii).b and
the maturity date of such financing is the same as the maturity date on the
Acquisition Loan.
(iii) Second Ten Year Period Following First Ten Year Period.
During the next ten years of the Term of this Lease immediately
following the First Ten Year Period (the "Second Ten Year Period"),
Lessee shall pay to Lessor an annual base rent (the "Second Ten Year
Base Rent") equal to the sum of (a) $100,000 if Lessor has closed on
the Addition Permanent Financing and $85,000 if Lessor has not closed
on the Addition Permanent Financing, (b) Thirty-Four Cents ($.34) for
each foot in the Building Square Footage (hereinafter defined), and
(c) the Hypothetical Refinanced Mortgage Debt Service (hereinafter
defined) for the concomitant year of the Lease.
"Building Square Footage" shall mean the sum of the square footage of the
existing Building on the date hereof (agreed to be 234,285 square feet)
plus the square footage of any additions made to the Building. By way of
example, if the Lessee constructs a 15,800 square foot Addition, as
contemplated, and no other additions, the Building Square Footage would be
250,085.
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While, both the Acquisition Loan and the Addition Permanent Financing will
have a maturity date on or about the end of the First Ten Year Period, both will
be repaid based on a twenty (20) year amortization schedule. Therefore, there
will be a significant outstanding balance on both the Acquisition Loan and the
Addition Permanent Financing that will need to be refinanced at their maturity.
"Refinanced Mortgage" shall be the mortgage loan used by Lessor to refinance and
repay the balances, at maturity, of the Acquisition Loan and the Addition
Permanent Financing. The per annum interest rate on the Refinanced Mortgage
which the Lessor actually obtains is hereinafter referred to as the "Refinanced
Mortgage Interest Rate."
If, for logistical or other reasons, the Refinanced Mortgage has not yet
been obtained and closed at the end of the First Ten Year Period, until such
time as the Refinanced Mortgage has closed, and only until such time,
Hypothetical Refinanced Mortgage Debt Service shall mean the sum of the debt
service (principal and interest) which Lessor was paying under the Acquisition
Loan and the Addition Permanent Financing prior to their maturity.
"Hypothetical Refinanced Mortgage Debt Service" shall mean the debt service
(principal and interest) on the Hypothetical Refinanced Mortgage (hereinafter
defined). "Hypothetical Refinanced Mortgage" shall mean a hypothetical loan
(which shall not actually be obtained) (a) in the principal amount of the
aggregate of (i) the original principal amount of the Acquisition Loan, i.e.
$5,400,000.00 and (ii) the original principal amount of the Addition Permanent
Financing if Lessor has closed on that loan; (b) having an amortization schedule
of twenty (20) years; and (c) having an interest rate equal to the Refinanced
Mortgage Interest Rate.
By way of example, if the Refinanced Mortgage Interest Rate was eight
percent (8%) and the original principal amount of the Addition Permanent
Financing was $1,350,000.00, then the Hypothetical Refinanced Mortgage Debt
Service would be $677,516.40 per annum, or $56,459.70 per month.
The annual Second Ten Year Base Rent shall be payable annually throughout
the Second Ten Year Period in twelve equal monthly installments equal to
one-twelfth (1/12th) of the annual Second Ten Year Base Rent.
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(iv) Notwithstanding anything contained in Section 7.A to the
contrary, it is expressly agreed that, if, at any time after the date of
this Lease, there is a "Change in Control of the Lessee" (hereinafter
defined) then, as of that date which is the sixth (6th) month anniversary
of the Change in Control of the Lessee (the "Sixth Month Anniversary"), the
Base Rent hereunder shall be the greater of (a) the Base Rent otherwise
provided herein and (b) the "Fair Market Rental" (hereinafter defined) of
the Demised Premises.
If the Sixth Month Anniversary occurs during the Second Ten Year Period,
the Fair Market Rental need only be calculated once, as of the Sixth Month
Anniversary, for the portion of the Second Ten Year Period remaining after the
Sixth Month Anniversary. If the Sixth Month Anniversary occurs during the First
Ten Year Period, then the Fair Market Rental shall be calculated twice: once, as
of the Sixth Month Anniversary, for the portion of the First Ten Year Period
remaining after the Sixth Month Anniversary and once again, as of the first day
of the Second Ten Year Period, for the full Second Ten Year Period.
"Change in Control of the Lessee" shall mean that greater than fifty
percent (50%) of the common stock of the Lessee shall have been acquired by a
person or entity who/which did not own such stock as of the date of this Lease,
regardless of the reason for the transfer, including transfers by operation of
law; provided, however, that such term shall not include any merger,
consolidation or similar transaction in which (a) Lessee is the surviving
entity, (b) a majority of the members of Lessee's board of directors immediately
after consummation of the merger or consolidation were members of Lessee's board
of directors immediately prior to consummation of the merger or consolidation,
and (c) senior management of Lessee is not materially altered.
"Fair Market Rental" shall mean the current rental charge, as of the date
in question (i.e. the date of the Sixth Month Anniversary and, if the Sixth
Month Anniversary occurs during the First Ten Year Period, the first day of the
Second Ten Year Period), for space comparable to the Demised Premises in the
vicinity of the Demised Premises taking into account the term remaining and the
other terms and conditions of this Lease. Fair Market Rental shall be
exclusively determined by the following procedure:
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Lessor and Lessee shall each determine their good-faith opinion of the Fair
Market Rental value of the Demised Premises taking into account the quality,
size, configuration, location, comparable values and all other facts which each
determine to be relevant. Within forty-five (45) days after the Sixth Month
Anniversary (or, if applicable, within forty-five (45) days after the first day
of the Second Ten Year Period), at a mutually agreeable time and place, the
Lessor and Lessee shall simultaneously exchange in writing their respective
good-faith opinions of the Fair Market Rental value of the Demised Premises. If
the respective opinions of Lessor and Lessee are within ten percent (10%) of
each other, the Fair Market Rental value of the Demised Premises for the
applicable term shall be determined to be the average of the two opinions. If
the respective opinions of the Lessor and Lessee are not within ten percent
(10%) of each other, the Lessor and Lessee shall promptly select a disinterested
real estate appraiser familiar with values in the Philadelphia Industrial Park,
and the sole function of the agreed-upon real estate appraiser shall be to
choose either the opinion of the Lessor or the opinion of the Lessee which most
closely reflects the Fair Market Rental value of the Demised Premises.
The determination as to the Fair Market Rental value of the Demised
Premises, as provided herein, shall be final and conclusively binding on the
parties and may be enforced by legal proceedings.
The Lessor and the Lessee will equally share the compensation of the real
estate appraiser selected. In the event the Lessor and Lessee are unable to
agree upon a disinterested appraiser, either party may apply to any court of
competent jurisdiction for the appointment of a disinterested appraiser. In the
event the Fair Market Rental for the applicable period shall not have been
determined under the aforesaid procedure at the relevant time (i.e. the date of
the Sixth Month Anniversary or, if applicable, the first day of the Second Ten
Year Period) for comparing it to the Base Rent hereunder to see which is
greater, Lessee shall continue to pay the Base Rent otherwise provided herein
until the Fair Market Rental has been determined at which time the Base Rent
shall be retroactively adjusted if the Fair Market Renal is greater than the
Base Rent otherwise provided for herein.
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B. Date and Place Payable. All rent, additional rent and any other
sums due Lessor (hereinafter collectively the "Rent") shall be payable in
advance on the first day of each and every calendar month to 2828
Partnership, L.P. at c/o Equivest Management, Inc., 000 X. Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxxxx, XX 00000, or at such other address as Lessor may
designate, from time to time, by written notice to Lessee, and shall be
payable without any prior demand thereof and without any deduction, set-off
or counterclaim whatever (except to the extent demand or notice shall be
expressly provided for herein).
C. Late Charges. If Lessee's rental payment has not been received by
Lessor by the fifth day of any month, Lessee will pay any late charge
assessed by Lessor's mortgage lender as a result of such late payment.
Additionally, if rent or any other sum due from Lessee to Lessor has been
overdue for more than fifteen (15) days, it will thereafter bear interest
at the rate of three percent (3%) per annum in excess of the announced
prime rate of interest of Citibank, NA, from time to time in effect (or, if
lower, the highest legal rate), until paid.
D. Acceptance of Rent. If Lessor, at any time or times, shall accept
said rent or any other sum due to it hereunder after the same shall become
due and payable, such acceptance shall not excuse delay upon subsequent
occasions, or constitute, or be construed as, a waiver of any of Lessor's
rights hereunder.
8. Base Rent is Absolutely Net to Lessor/Additional Rent. It is understood
and agreed that the Base Rent which Lessee is obligated to pay to Lessor
pursuant to Section 7 hereof is to be absolutely net to Lessor, and Lessee,
throughout the full term of this Lease, shall be responsible for all costs of
owning, operating, maintaining and repairing (including necessary replacements
except as expressly provided for in Sections 9.B and 30 hereof relating to
casualty damage and condemnation, respectively) the Demised Premises, as
expressly provided herein and otherwise, with the sole exception that Lessee
shall not be obligated or responsible for any mortgage debt of the Lessor
secured by the Demised Premises.
In illustration of, but not in limitation of, the foregoing, in addition to
the Base Rent which Lessee shall be obligated to pay pursuant to Section 7
hereof, Lessee
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shall be obligated to pay the following amounts as additional rent (individually
or collectively "Additional Rent") through the full term of this Lease, as
extended:
A. Additional Rent on Account of Real Estate Taxes. Lessee shall be
responsible for, and shall pay Lessor as additional rent hereunder, 100.00%
of the Real Estate Taxes (hereinafter defined) for each and every calendar
year during the term hereof, as extended (the "Real Estate Tax Additional
Rent"). If the term of this Lease does not commence on January 1st,
Lessee's obligation shall be prorated for the calendar year in which the
term of this Lease commences and the last partial calendar year in the term
of this Lease. Such proration shall be based on a fraction of the
obligation for a full calendar year, which fraction has, as a numerator,
the number of days in the calendar year in the term of the Lease, and, as a
denominator, the number "365". Notwithstanding the foregoing, Lessee shall
not be obligated to pay any Real Estate Taxes for calendar year 1999 which
Sparks has already paid under the Existing Lease.
Lessee shall pay its Real Estate Tax Additional Rent within fifteen (15) days of
its receipt from Lessor of an invoice therefor. Such invoice shall be
accompanied by a copy of the tax xxxx to which the invoice relates. If, at any
time during the term of this Lease, either Lessee shall have failed to pay its
Real Estate Tax Additional Rent within the required fifteen (15) day period or
Lessor's mortgage lender shall require Lessor to establish an escrow account for
the payment of Real Estate Taxes, Lessor shall have the right, with respect to
future Real Estate Tax Additional Rent, to collect same on a good-faith
estimated basis in advance by requiring Lessee to pay one-twelfth (1/12) of the
estimated amount together with and at the same time as its monthly installment
of Base Rent. Within forty-five (45) days from the time that the actual Real
Estate Tax Additional Rent becomes known, Lessor shall provide Lessee with a
written reconciliation of Lessee's estimated payments received against the
actual amount. Lessee shall pay Lessor any shortfall reflected by the
reconciliation within fifteen (15) days of its receipt of the reconciliation
statement. Lessor shall refund to Lessee any overage reflected by the
reconciliation within fifteen (15) days of Lessee's receipt of the
reconciliation.
If Lessor is not contesting any increased Real Estate Tax assessment occurring
during the term of this Lease, Lessee shall have the right, at its sole cost, to
appeal said increased assessment in its name or in the name of Lessor. During
any such appeal, however, Lessee shall, nevertheless, be required to pay, when
due, its Real Estate Tax Additional Rent but shall be entitled to and shall
receive its share (100%) of any refund obtained relating to any period within
the Term of this Lease. Lessee hereby agrees to indemnify, defend and hold
Lessor harmless from and against any cost or liability incurred by Lessor in
connection with Lessee's exercise of this right. At Lessee's request, Lessor
shall xxxx any tax payments made during the pendency of a tax assessment appeal
as "paid under protest."
"Real Estate Taxes" shall mean all real estate taxes and assessments, general or
special, ordinary or extraordinary, foreseen or unforeseen, imposed upon the
Building or the Land, and any existing or future improvements of whatever kind
thereto or thereon. Taxes shall include, without limitation, any assessment
imposed by any public or quasi-public entity by reason of the Building being
located in a special services district or similar designation. If, due to a
future change in the method of taxation, any franchise, profit or other tax,
however designated, shall be levied or imposed in substitution, in whole or in
part, for (or in lieu of) any tax which would otherwise be included within the
definition of Taxes, such other tax shall be deemed to be included within Taxes
as defined herein.
47
B. Additional Rent on Account of Lessor's Insurance. Lessee shall be
responsible for, and shall pay Lessor as additional rent hereunder, 100.00%
of the Insurance Premium (hereinafter defined) for each and every calendar
year during the term hereof, as extended (the "Insurance Additional Rent").
If the term of this Lease does not commence on January 1st, Lessee's
obligation shall be prorated for the calendar year in which the term of
this Lease commences and the last partial calendar year in the term of this
Lease. Such proration shall be based on a fraction of the obligation for a
full calendar year, which fraction has, as a numerator, the number of days
in the calendar year in the term of this Lease, and, as a denominator, the
number "365".
Lessee shall pay its Insurance Additional Rent within fifteen (15) days of
its receipt from Lessor of an invoice or invoices therefor. Such invoice shall
be accompanied by a copy of the Insurance Premium xxxx or bills to which the
invoice relates. If, at any time during the term of this Lease, either Lessee
shall have failed to pay its Insurance Additional Rent within the required
fifteen (15) day period or Lessor's mortgage lender shall require Lessor to
establish an escrow account for the payment of insurance premiums, Lessor shall
have the right, with respect to future Insurance Additional Rent, to collect
same on a good faith estimated basis in advance by requiring Lessee to pay
one-twelfth (1/12th) of the estimated amount (which shall not be less than the
actual Insurance Additional Rent for the immediately preceding year) together
with and at the same time as its monthly installment of base rent. Within
forty-five (45) days from the time that the actual Insurance Additional Rent
becomes known, Lessor shall provide Lessee with a written reconciliation of
Lessee's estimated payments received against the actual amount. Lessee shall pay
Lessor any short-fall reflected by the reconciliation within fifteen (15) days
of its receipt of the reconciliation. Lessor shall refund to Lessee any overage
reflected by the reconciliation within fifteen (15) days of Lessee's receipt of
the reconciliation.
"Insurance Premium" shall mean the cost, premium or xxxx for each and
all of the following types of insurance which will be obtained and
maintained by Lessor for the benefit of Lessor:
(i) insurance against loss or damage to the Building, as
expanded, by fire, windstorm, lightning and tornado and against loss
and damage by such other additional risk as may be now or hereafter
embraced by an "all-risk" form of insurance policy for the full
insurable value, subject to a reasonable deductible (which deductible
shall, in all events, be acceptable to Lessor's mortgage lender) of
the Building, as expanded ("Lessor's Casualty Insurance"). Lessee
acknowledges and understands that Lessor is not obligated to, and does
not intend to, insure the value of any improvements, alterations or
additions that Lessee makes to the Demised Premises other than the
Addition.
(ii) loss of rents or business interruption insurance in an
amount, as reasonably determined by Landlord, from time to time, to
cover the aggregate total of Base Rent, Additional Rent and all other
costs, expenses, sums, charges and other amounts which are the
obligation of Lessee under this Lease for a twelve (12) month period
from the date of the event giving rise to the business interruption or
loss of rents ("Lessor's Loss of Rents Insurance").
(iii) comprehensive general public liability insurance coverage
against claims for or arising out of bodily injury, death or property
damage, occurring in, on or about the streets, sidewalks or properties
adjacent to the Demised Premises as well as in, on, or about the
Demised
48
Premises ("Lessor's Liability Insurance"). The aforementioned
policy shall be a single limit policy initially in the amount of Five
Million Dollars ($5,000,000) and thereafter in such increased amounts
as may be reasonably determined by Landlord.
Lessee acknowledges that Lessor's Casualty Insurance, Lessor's Loss of
Rents Insurance and Lessor's Liability Insurance may or may not be on the same
premium or insurance year and, that, if there are different premium or insurance
years, Lessor may submit invoices at different times. Lessee also acknowledges
that, in order to close on the mortgage loan which will enable Lessor to acquire
the Demised Premises, Lessor will have to have these insurance coverages in
place and thus Lessor will have to pay the relevant Insurance Premiums therefor
on or prior to the Effective Date. Lessee further acknowledges that Lessor shall
be obtaining the Lessor's Casualty Insurance, Lessor's Loss of Rents Insurance
and Lessor's Liability Insurance in satisfaction of the requirements of the
lender holding a mortgage on the Premises, including, but not limited to those
reflected on Exhibit "C" attached hereto and made apart hereof. Lessee agrees to
accept any requirements of such insurance imposed by the Lessor's mortgage
lender.
Notwithstanding the foregoing, it is expressly understood and agreed
that, except as required by a lender providing the Acquisition Loan or the
Addition Permanent Financing, or a refinance thereof, Lessee shall have the
right to directly acquire and maintain, during the full term of this Lease and
for the benefit of Lessor, the Lessor's Casualty Insurance, the Lessor's Loss of
Rents Insurance and the Lessor's Liability Insurance or any one or ones thereof,
at Lessee's sole cost and expense and as Insurance Additional Rent hereunder.
Lessee, in fact, has so elected to obtain and maintain all such insurance as of
the Effective Date and Lessee shall continue to maintain such insurance on
Lessor's behalf until Lessee elects or is directed to do otherwise by such
lender in writing. Notwithstanding the foregoing, the following rules shall
always be applicable to the Lessee's right to directly maintain the Lessor's
Casualty Insurance, the Lessor's Loss of Rents Insurance and the Lessor's
Liability Insurance:
I. Lessee shall never elect to discontinue maintaining any such
insurance directly without having provided Lessor with thirty (30)
days advance written notification thereof; and
II. In the event of Lessee's Default (as defined in Section 19
hereof) of this Lease, Lessor shall have the right (but not the
obligation) to terminate Lessee's right to directly maintain any such
insurance; and
III. Lessee shall, in all events and with respect to all
insurance which Lessee directly maintains pursuant to this Section
8.B, provide Lessor with certificates of insurance evidencing renewals
of any and all such insurance prior to the date of expiration for such
insurance as reflected in the most recent prior certificate of
insurance evidencing coverage which Lessee has delivered to Lessor;
and
IV. All insurance which Lessee maintains directly pursuant to
this Section 8.B shall not be cancelable by the insurer without first
providing Lessor thirty (30) days advance written notice.
C. Water and Sewer Charges. During the full term of this Lease, as
extended, Lessee shall be responsible for and shall pay, as additional rent
hereunder, one hundred percent (100%) of the water and sewer charges for
the entire Demised Premises. At the election of Lessor, Lessee shall either
pay the bills for water and sewer charges directly to the provider within
the times specified in the bills (simultaneously providing Lessor with
evidence of payment) or pay the amounts due to Lessor, for Lessor's
submission to the provider, within fifteen (15) days after receipt of a
copy of the relevant xxxx therefor. Until otherwise directed by Lessor in
writing to the contrary, Lessee
49
shall pay such charges directly to the provider and if possible, arrange
for the billing account to be placed in Lessee's name.
D. Utilities. During the full term of this Lease, as extended, Lessee
shall be responsible for and shall pay one hundred percent (100%) of the
cost of all utilities (other than water and sewer which are addressed in
the foregoing subsection (C)) used or consumed at, on or in the Demised
Premises including, but not limited to, electricity, gas (if any) and all
energy consumed or used in connection with the lighting, heating and air
conditioning of the Demised Premises. Lessee shall cause the electric
service (and other utility services) to be billed directly to Lessee in
Lessee's name, and Lessee shall pay its electric (and other utility) bills
when due.
E. Sidewalks. Lessee shall be responsible, at Lessee's sole expense
and cost, for maintaining the sidewalks and parking areas at the Demised
Premises and keeping them free from snow and ice.
F. Other Taxes. If, during the term of this Lease or any renewal or
extension thereof, any tax is imposed upon the privilege of renting or
occupying the Demised Premises or upon the amount of rentals collected
therefor, Lessee will pay each month, as additional rent, a sum equal to
such tax or charge that is imposed for such month, but nothing herein shall
be taken to require Lessee to pay any income, estate, inheritance or
franchise tax imposed upon Lessor.
G. Use and Occupancy Tax. Without limiting the foregoing, Lessee will
pay promptly when due and in any event not later than fifteen (15) days
after receipt of a xxxx therefor (whether said xxxx be submitted by Lessor,
the City of Philadelphia, the Philadelphia School District or otherwise),
all City of Philadelphia School District Use and Occupancy Tax imposed upon
the use and occupancy of the Demised Premises. It is expressly understood
that Lessor shall have the right, but not the obligation, to collect such
use and occupancy tax from Lessee and submit it to the City of Philadelphia
and, if Lessor exercises said right, Lessee shall pay such use and
occupancy tax to Lessor.
H. Survival After Termination. If, upon termination of this Lease for
any cause, the amount of any additional rent due pursuant to this Section
has not yet been determined, an
50
appropriate payment from Lessee to Lessor, or refund from Lessor to Lessee,
shall be made promptly after such determination.
I. Lessor's Option as to Manner of Payment. Except as required by a
lender providing the Acquisition Loan, the Addition Permanent Financing or
a refinance thereof, and except after Lessee's Default under this Lease,
Lessee shall have the option, exercisable from time to time, of either
paying any Additional Rent, other than Use and Occupancy Tax pursuant to
Section 8.G. hereof and Real Estate Tax Additional Rent pursuant to Section
8.A. hereof, directly to the provider/vendor/xxxxxx or paying the relevant
Additional Rent to the Lessor so that the Lessor can pay the
provider/vendor/xxxxxx.
J. Anything to the contrary herein notwithstanding, Lessee shall have
the right to terminate this Lease at any time before the Effective Date if
any requirement, imposed by any lender, with which Lessee will have to
comply under the terms of this Lease, is unacceptable to Lessee in its sole
and unreviewable discretion. Lessee shall effect such termination by giving
Lessor written notice of termination prior to the Effective Date and
reimbursing Lessor for all expenses actually and reasonably incurred by
Lessor and Lessor's predecessor in interest under the Agreement of Sale in
connection with the acquisition of the Demised Premises, the financing
thereof, and the negotiation of this Lease. Furthermore, if at any time
after the Effective Date Lessor proposes to incur additional debt secured
by a mortgage on the Demised Premises or an assignment of this Lease
(including, without limitation, the Addition Permanent Financing), then
Lessor shall give Lessee fifteen (15) days prior written notice of all
requirements, imposed by the lender, with which Lessee will have to comply
under the terms of this Lease. Lessee shall have a period of ten (10) days
after receipt of Lessor's notice to notify Lessor of any requirement that
is unacceptable to Lessee in its reasonable discretion, and Lessor shall
not proceed to incur such debt unless all requirements to which Lessee
reasonably objects are removed.
9. Lessee's Insurance/Casualty Damage.
A. In General. During the full Term hereunder, Lessee will, at its
sole expense, obtain and maintain insurance against liability for bodily
injury, including death, and property damage in or
51
about the Building, under a single limit policy of comprehensive general
public liability insurance, with limits initially of not less than
$5,000,000 and thereafter in such increased amounts as may be reasonably
determined by Lessor. Each insurance policy hereunder shall name Lessor as
an additional insured. On or prior to the Commencement Date of this Lease,
Lessee shall deliver to Lessor a certificate of insurance evidencing that
such insurance has been obtained and is in effect. Lessee shall deliver to
Lessor renewals thereof at least fifteen (15) days prior to expiration. All
such policies of insurance shall provide that they shall not be canceled or
amended without at least thirty (30) days prior notice to Lessor.
B. Destruction and Damage to Demised Premises by Fire or Other
Casualty. In the event of damage to the Building, by fire or other
casualty, Lessee, at its sole expense, shall cause the damage to be
repaired and the Building to be restored or rebuilt to a condition as
nearly as practicable to that existing prior to the damage, with reasonable
speed and diligence. Lessor shall make available to Lessee for the purpose
of such repair, restoration and rebuilding any insurance proceeds available
from Lessor's Casualty Insurance which Lessor's mortgage lender (which will
be the primary loss payee on Lessor's Casualty Insurance) shall make
available to Lessor but only to the extent and when such proceeds are so
made available to Lessor. If Lessor's mortgage lender does not make
available the proceeds from Lessor's Casualty Insurance for the purpose of
repair, restoration and rebuilding, and Lessor does not elect (at its sole
option) to make substitute funds available from some other source, Lessee
shall have the option to purchase (the "Option to Purchase") the Demised
Premises from the Lessor at the sales price of the sum of (a) the
outstanding balance owed on or under the Acquisition Loan (or any
replacement or refinance thereof) together with any applicable prepayment
premium; (b) the outstanding balance owed on or under the Addition
Permanent Financing (or any replacement or refinance thereof) together with
any applicable prepayment premium; and (c) $1,000,000.00, if the Lessor has
closed on the Addition Permanent Financing, or $850,000.00, if the Lessor
has not closed on the Addition Permanent Financing, and on such other terms
and conditions as are customary and reasonable. Lessee must exercise the
Option to Purchase, if at all, by providing Lessor with written
notification of Lessee's exercise of the Option to Purchase (the "Written
Election") within sixty (60)
52
days from the date that Lessor notifies Lessee in writing that Lessor's
mortgage lender will not make the insurance proceeds available for the
purpose of repair, restoration and rebuilding. If the Lessee exercises the
Option to Purchase, Lessor shall assign to Lessee, at closing, any interest
it has in any insurance proceeds resulting from the casualty damage to the
Demised Premises giving rise to Lessee's option to purchase the Demised
Premises. Notwithstanding anything to the contrary in the foregoing, it is
expressly understood and agreed that, in the event that Lessee has the
right to and does exercise the Option to Purchase, Lessor shall have the
right, exercisable by written notification to Lessee ("Lessor's Termination
Notice") within thirty (30) days after Lessor's receipt of the Written
Election, to terminate this Lease effective as of the date set forth
therein but no later than fifteen (15) days after the date of Lessor's
Termination Notice (the "Accelerated Expiration Date"). Lessor's provision
of the Lessor's Termination Notice shall not only terminate the Lease but
it shall also negate the Option to Purchase and Lessee shall no longer have
the option to purchase the Demised Premises. If Lessor provides the
Lessor's Termination Notice, the Accelerated Expiration Date shall be the
date which the term of this Lease expires as if it had been the natural
expiration date. Lessor agrees that, without Lessee's prior written
consent, Lessor shall not agree with the holder of the Acquisition Loan to
amend the terms and conditions in the documents evidencing or relating to
the Acquisition Loan which relate to the Lessor's right to use insurance
proceeds for the repair, restoration or rebuilding of the Demised Premises.
Lessee understands, however, that Lessor does not covenant, warrant or
represent that identical or similar terms and conditions will be part of
any loan documents evidencing the refinance of the Acquisition Loan.
It is expressly understood and agreed that no damage to the Building or the
Demised Premises, nor any interruption or interference with Lessee's use
and enjoyment thereof resulting therefrom, shall entitle Lessee to any rent
abatement of any kind (whether of Base Rent or Additional Rent) except for
a dollar for dollar abatement for such amounts as Lessor actually receives
from Lessor's Loss of Rent's Insurance.
C. Personalty. Lessee shall be responsible for obtaining and
maintaining, and Lessee shall obtain and maintain, at Lessee's sole cost
and expense, insurance covering the replacement value, subject to a
reasonable deductible, of all furniture, trade fixtures, equipment and
other personalty Lessee keeps on or at the Demised Premises.
10. Indemnification and Release/Waiver of Subrogation.
A. Waiver of Subrogation. Each party hereto hereby indemnifies, holds
harmless and releases the other party, to the extent of the releasing
party's insurance coverage, from and against
53
any and all liability for any loss or damage covered by such insurance
which may be inflicted upon the property of such releasing party, even if
such loss or damage shall be brought about by the fault or negligence of
the other party, its agents, servants or employees; provided however, that
this indemnification and 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, then the other party agrees to obtain an endorsement to its
insurance policy permitting such waiver of subrogation, if it is available.
If an additional premium is charged for such waiver, then the party
benefiting therefrom agrees to pay the amount of such additional premium
promptly upon being billed therefor.
B. Liability
1. Damage in General. Lessee agrees that Lessor, its building
manager (if applicable), and their respective principals, officers,
employees and agents, shall not be liable to Lessee, and Lessee hereby
releases said parties, for any personal injury or damage to or loss of
personal property in or about the Demised Premises or Building from
any cause whatsoever unless such damage, loss or injury results from
the gross negligence or deliberate acts of Lessor, its building
manager (if applicable), or their officers, employees or agents.
Lessor and its building manager (if applicable) and their respective
principals, officers, employees and agents shall not be liable to
Lessee for any such damage or loss, whether or not such damage or loss
results from gross negligence or deliberate acts, to the extent Lessee
is compensated therefor by Lessee's insurance or to the extent Lessee
could have obtained coverage against such damage or loss at regular
rates under commonly available insurance.
2. Indemnity. Lessee shall defend, indemnify and save harmless
Lessor and its principals, partners, agents and employees against and
from all liabilities, obligations, damages, penalties, claims, costs,
charges and expenses, including reasonable attorneys' fees, which may
be imposed upon or incurred by or asserted against Lessor and/or its
agents by reason of any of the following which shall occur during the
term of this Lease, or during any period of time prior to the
54
commencement date hereof when Lessee may have been given access to or
possession of all or any part of the Demised Premise:
(i) any work or act done in, on or about the Demised
Premises or any part thereof at the direction of Lessee, its
agents, contractors, subcontractors, servants, employees,
licensees or invitees, except if such work or act is done or
performed by Lessor or its agents or employees;
(ii) any negligence or other wrongful act or omission on the
part of Lessee or any of its agents, contractors, subcontractors,
servants, employees, subtenants, licensees or invitees;
(iii) any accident, injury or damage to any person or
property occurring in, on or about the Demised Premises or any
part thereof, unless caused by the gross negligence or deliberate
acts of Lessor, its employees or agents; and
(iv) any failure on the part of Lessee to perform or comply
with any of the covenants, agreements, terms, provisions,
conditions or limitations contained in this Lease on its part to
be performed or complied with which is directly related to the
claim for indemnification.
11. Lessor's Access to Demised Premises. Lessor shall at all times
hereunder have access upon reasonable notice to the Demised Premises for the
purposes of inspection, cleaning, maintenance, repairs, and for the performance
of any work consistent with the ownership and maintenance of the Demised
Premises. Nothing in the foregoing sentence, however, is intended to increase or
alter the Lessor's obligations with respect to the maintenance of the Demised
Premises as set forth in Section 14 hereof. In the event that Lessor enters the
Demised Premises pursuant to this Section 11 or otherwise, Lessor shall use
reasonable efforts to minimize interference with the conduct of Lessee's
business on the Demised Premises. Provided that Lessor uses such reasonable
efforts (which reasonable efforts shall not include or otherwise require
Lessor's utilizing its access right at a time when Lessee is closed for business
unless Lessee pays the incremental cost thereof), Lessee shall have no recourse
against Lessor, including the abatement of rent, on account of such
interference.
12. This Section has been left blank intentionally.
55
13. Condition of Demised Premises/Absolutely As-Is. The entry into
possession of the Demised Premises by Lessee shall be conclusive evidence as
against Lessee that the Demised Premises were in good and satisfactory condition
at the time of such entry. No promise of Lessor to alter, remodel or improve the
Demised Premises or the Building and no representation respecting the condition
of the Demised Premises or the Building have been made by Lessor or its agents
to Lessee. Notwithstanding the foregoing, it is expressly understood that the
Lessee has agreed to accept the Demised Premises in their present condition,
absolutely "as-is," and Lessor is not required to perform any so called tenant
fit-up or other landlord's work in connection with the leasing of the Demised
Premises to Lessee hereunder.
Lessee acknowledges that Sparks has occupied the Demised Premises for some
time under the Existing Lease and that Lessee is familiar with the condition of
the Demised Premises. 14. Maintenance and Repair of Demised Premises. In order
to assure to Lessor the payment of the Base Rent and all Additional Rent due
under this Lease, net of all costs and expenses, Lessee shall be fully
responsible for the maintenance, repair and replacement, if applicable (except
as provided in Section 9.B hereof for casualty damage), of the Demised Premises
as fully as if Lessee were the owner of the Demised Premises. Lessee, at
Lessee's sole cost and expense, shall keep and maintain the Demised Premises in
good and tenantable condition during the full term of this Lease, and Lessee
shall promptly arrange, at Lessee's sole expense, for the repair of all damage
to the Demised Premises (except for reasonable wear and tear and as otherwise
provided in Section 9.B of this Lease relating to casualty damage). Without
limiting the generality of the foregoing, Lessee, at Lessee's sole cost and
expense, shall keep the following in good repair and condition:
A. The Building, including the roof, the foundation and other
structural and nonstructural components thereof, both exterior and
interior;
B. The building systems of the Building including heating, electrical,
plumbing, air conditioning (if applicable) and mechanical;
56
C. The parking areas and sidewalks. Lessee shall not only be
responsible for keeping them free from ice and snow but shall also be
responsible for their repair and, if necessary, replacement or repaving;
and
D. Outdoor areas, if any, requiring landscaping services including
lawn cutting.
Lessee shall also be obligated to make any replacements (as well as repairs)
necessary at or to the Demised Premises during the term of this Lease and Lessee
shall not be relieved of its obligation to do so on the basis that the action
would be a capital expense as opposed to an ordinary repair.
All such repairs and replacements shall be of good quality sufficient for
the proper maintenance and operation of the Demised Premises and shall be
constructed and installed in compliance with all requirements of all
governmental authorities having jurisdiction thereof. Lessee, further, shall not
permit the accumulation of waste or refuse matter, nor permit anything to be
done upon the Demised Premises which would invalidate or prevent the procurement
of any insurance policies which may at any time be required pursuant to the
provisions of Section 8.B hereof. Lessee shall not obstruct or permit the
obstruction of the street or sidewalk adjacent to the Demised Premises except as
may be permitted by municipal authorities having jurisdiction thereof and shall
keep the sidewalk, parking areas and curb adjoining the Demised Premises clean
and free from snow and ice.
At all times during the Term, Lessee shall be responsible for and shall
make, at its sole cost and expense, any and all repairs, additions and
alterations to the Building, including any of the systems thereof, structural or
non-structural, which are required by any law, statute, ordinance or
governmental authority.
Lessor shall have the right, but not the obligation, after providing the
notice specified in Section 19.A.2 hereof, to make any of the repairs or
alterations or additions to the Demised Premises which Lessee is required to
make pursuant to the terms of this Lease in the event Lessee fails to make such
repairs. Lessee shall promptly reimburse to Lessor, as additional rent, any and
all costs for any such repairs, alterations or additions incurred by Lessor.
Lessor shall not furnish any services, utilities or repairs to the Demised
Premises during the Term or any extension thereof, whether structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen, whether
arising from requirements of any applicable laws or governmental
57
regulations or otherwise; and the Lessee expressly acknowledges and agrees that,
except as expressly provided herein, no defense or claim can arise hereunder
from any physical condition now or hereafter affecting the Demised Premises, and
no condition can exist which could give rise to the assertion of a claim or
defense by the Lessee against Lessor of a constructive eviction from the Demised
Premises, which claim or defense the Lessee hereby expressly waives and agrees
not to assert in any action or proceeding relating to this Lease brought by
Lessor.
In the event Lessor or its agents or contractors shall elect or be required
to make repairs, alterations, improvements or additions to the Demised Premises
or the Building, Lessor shall be allowed to take into and upon the Demised
Premises all material that may be required to make such repairs, alterations,
improvements or additions and during the continuance of any said work, to
temporarily close doors, entryways, public space and corridors in the Building
and to interrupt or temporarily suspend Building service and facilities without
being deemed or held liable for eviction of Lessee or for damages to Lessee's
property, business or person, and the rent reserved herein shall in no way xxxxx
while said repairs, alterations, improvements or additions are being made, and
Lessee shall not be entitled to maintain any set-off or counterclaim for damages
of any kind against Lessor by reason thereof. Lessor will use reasonable efforts
to make any such repairs in a prompt and professional manner. Lessor may, at its
option, make all such repairs, alterations, improvements or additions in and
about the Building and the Demised Premises during ordinary business hours, but
if Lessee desires to have the same done at any other time, Lessee shall pay for
all overtime and additional expenses resulting therefrom.
15. Remodeling, Alterations and Improvements.
A. Interior Decorative or Cosmetic Changes. Lessee shall be permitted
to make decorative and cosmetic changes to the Demised Premises without the
Lessor's consent. Notwithstanding the foregoing, Lessee shall not make any
such change which requires the consent of the lender holding a mortgage on
the Demised Premises (a "Mortgage Lender") unless and until Lessee shall
have notified Lessor of the proposed change and Lessor shall have obtained
the consent of the Mortgage Lender. Lessor shall use its reasonable efforts
to obtain the Mortgage Lender's
58
consent but shall not be obligated to pay Mortgage Lender any sum of money
in order to obtain such consent. Lessee agrees to supply any information
required by the Mortgage Lender as a condition to granting its consent.
B. Structural, Non-Decorative and Non-Cosmetic Changes. It is
specifically understood and agreed that Lessee shall not have the right to
make structural or non-decorative or non-cosmetic changes, alterations or
improvements to the Demised Premises or to the Building (including the
Addition) without first having submitted reasonably detailed plans and
specifications therefor to Lessor and securing the written approval of
Lessor (and Mortgage Lender, if required), which approval Lessor shall not
unreasonably withhold. Lessor acknowledges that it has already consented to
the Addition conceptually although it reserves the right of it and its
Mortgage Lender to review the plans and specifications for the Addition.
C. Covenant Against Liens. Lessee covenants and agrees not to suffer
or permit any lien of mechanics or materialmen to be placed against the
Building or the Demised Premises, and in case of any such lien attaching,
to immediately pay off and remove the same. If Lessee has not removed any
such lien or encumbrance within fifteen (15) days after notice to Lessee by
Lessor, Lessor shall have the right to (but shall not be obligated to) pay
the amount necessary to remove the lien or encumbrance without being
responsible for making an investigation as to the validity thereof, and the
amount so paid shall be deemed additional rent reserved under this Lease
due and payable forthwith. Lessee has no authority or power to cause or
permit any lien or encumbrance of any kind whatsoever, whether created by
act of Lessee, operation of law or otherwise, to attach to or be placed
upon Lessor's title or interest in the Building or the Demised Premises,
and any and all liens and encumbrances created by Lessee shall attach to
Lessee's interest only.
Lessee further covenants and agrees that it shall not contract with, or
otherwise allow, any contractor (a "Contractor") to perform any work or
activity at the Demised Premises, including, but not limited to, the
construction of the Addition, which could give rise to a mechanic's or
materialman's lien under the Pennsylvania Mechanics Lien Law of 1963 (or
any replacement thereof) unless and until such Contractor shall have signed
and filed with the Prothonotary of Philadelphia County a Waiver of
Mechanics Lien in form reasonably acceptable to Lessor in a time and manner
which will have the effect of binding the Contractor's subcontractors to
the Contractor's waiver.
59
D. Other All work performed pursuant to this Section 15 shall be at
Lessee's sole cost and expense and shall be subject to the following
conditions and qualifications:
(i) The work shall be performed by responsible contractors and
subcontractors, approved in advance by Lessor (and Mortgage Lender, if
required), who shall furnish in advance and maintain in effect
Workmen's Compensation Insurance in accordance with statutory
requirements and comprehensive public liability insurance (naming
Lessor as an additional insured) with limits satisfactory to Lessor.
(ii) Lessee shall have sole responsibility for compliance with
all Governmental Requirements with respect to any work performed by or
at the request of Lessee (including the obtaining of any necessary
building permit) and neither Lessor's (or Mortgage Lender's) approval
of plans and specifications nor Lessor's (or Mortgage Lender's)
inspection or approval of any work proposed by Lessee shall constitute
an implication, representation or certification by Lessor that said
improvements are in compliance with Governmental Requirements. Lessee
acknowledges that any review or inspection by Lessor (or Mortgage
Lender) shall be for Lessor's (or Mortgage Lender's) internal purposes
and shall not be of a technical nature. Neither Lessee nor any third
party shall be entitled to rely on such an approval in any manner
other than Lessee's ability to rely on such approval as the approval
required under Section 15.B hereof; and
(iii) Lessee and its contractors and subcontractors shall be
solely responsible for the transportation, safekeeping and storage of
materials and equipment used in the performance of any work and for
the removal of waste and debris resulting therefrom.
(iv) Lessee shall obtain and maintain any "builder's risk" or
other insurance required by the Mortgage Lender or reasonably required
by Lessor in connection with the construction of the Addition and any
other improvements made by Lessee pursuant to this Section 15.
X. Xxxxxx'x Rights to Alterations. All repairs, alterations and/or
improvements (in whole or in designated part) will be the sole and
exclusive property of Lessor upon termination of this Lease, provided,
however, that Lessor shall have the right to require Lessee to remove such
repairs,
60
alterations or improvements, other than the Addition, at Lessee's sole cost
upon the termination of this Lease by lapse of time or otherwise.
F. Indemnification. Lessee shall indemnify, defend and hold Lessor
harmless from and against any and all injuries, claims, liabilities or
actions for damage or injury to person or property (including the property
of Lessor) resulting from Lessee's performance of any improvements to the
Demised Premises.
16. Lessor's Services. Lessor shall not be obligated to provide any service
to Lessee. All services required by Lessee (including trash removal) shall be
obtained by Lessee at Lessee's sole cost and expense. Lessor shall not have any
liability to Lessee, nor shall Lessee have the right to xxxxx rent, on account
of the interruption of any service. Nor shall Lessor have any liability to
Lessee, nor shall Lessee have the right to xxxxx rent, on account of any repairs
or other work Lessor performs in, at, to or about the Demised Premises. The
foregoing, however, is not intended in any way to expand the Lessor's
obligations under this Lease beyond those obligations of Lessor which are
expressly set forth herein.
17. Affirmative Covenants of Lessee. At all times during Initial Term
hereunder, Lessee covenants and agrees to do the following without demand:
A. Payment of Rent and Other Costs. Lessee shall pay to Lessor the
monthly Base Rent payments, all additional rent, late charges, and all
other charges herein set forth on the days and at the place the same are
due. If Lessor shall at any time or times accept any payment of rent or
otherwise after such payment has become due and payable, such acceptance
shall not excuse Lessee's delay in payment upon any subsequent occasion, or
constitute or be construed as a waiver of any of Lessor's rights. Lessee
agrees that any charge or payment herein reserved, included or agreed to be
treated or collected as rent and/or any other charges, taxes, expenses or
costs herein agreed to be paid by Lessee shall be considered to be
additional rent and may be proceeded for and recovered by Lessor by legal
process in the same manner as rent due and in arrears and, for all purposes
hereof, shall be deemed to be Rent.
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B. Compliance with Legal Requirements. Lessee shall comply with all
requirements of any of the constituted public authorities affecting the use
of the Demised Premises at Lessee's sole cost and expense, and in
compliance with the terms of any state or federal statute or local
ordinance or regulation applicable to Lessee's use of the Demised Premises.
Lessee shall also maintain the Demised Premises and use it in accordance
with the requirements or conditions imposed by Lessor's insurance carrier,
which are communicated in writing to Lessee. Lessee shall pay all
penalties, fines, costs or damages, including counsel fees, resulting from
any failure of Lessee to comply with the covenants of this Section 17,
including expenses Lessor may incur in order to cure any violation and
bring the Demised Premises into compliance with any of the requirements of
public authorities by reason of any act or failure to act by the Lessee.
C. Utilities. Lessee shall open an account in Lessee's name, and shall
pay for, all electricity and other utilities used in, at and for the
Demised Premises.
D. Notices to Lessor. Lessee shall promptly notify Lessor of any fire,
theft, accident, or any other damage occurring to or upon the Demised
Premises.
E. Surrender of Demised Premises. On or before the date this Lease and
the Term hereby created terminates, or on or before the date Lessee's right
of possession terminates, whether by lapse of time or by right of Lessor,
Lessee shall: (a) to the extent required by Lessor in whole or in part
(Lessor also having the right to deem repairs, alterations and/or
improvements (in whole or in part) to be the sole and exclusive property of
Lessor), restore the Demised Premises to the same condition as they were in
at the beginning of the Term (except for the Addition, reasonable wear and
tear and as otherwise provided in Section 9.B of this Lease) and remove
those alterations, improvements and additions installed by Lessee during
Lessee's occupancy; (b) remove from the Demised Premises and the Building
all of Lessee's personal property; and (c) surrender possession of the
Demised Premises to Lessor in broom clean condition. If Lessee shall fail
or refuse to restore the Demised Premises to the above-described condition,
on or before the above specified date, Lessor may put the Demised Premises
in such condition, and recover from Lessee Lessor's cost of so doing. If
Lessee shall fail or refuse to comply with Lessee's duty to remove all
personal property from the
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Demised Premises and the Building on or before the above specified date,
the parties hereto agree and stipulate that Lessor may, at its election:
(1) Treat such failure or refusal as an offer by Lessee to transfer title
to such personal property to Lessor, in which event title thereto shall
thereupon pass under this Lease as a xxxx of sale to and vest in Lessor
absolutely without any cost either by set-off, credit allowance or
otherwise, and Lessor may remove, sell, donate, destroy, store, discard, or
otherwise dispose of all or any part of said personal property in any
manner that Lessor shall choose; (2) Treat such failure or refusal as
conclusive evidence on which Lessor shall be entitled absolutely to rely
and act, that Lessee has forever abandoned such personal property, and
without accepting title thereto, Lessor may, at Lessee's expense, remove,
store, destroy, discard or otherwise dispose of all or any part thereof in
any manner that Lessor shall choose without incurring liability to Lessee
or to any other person. In no event shall Lessor ever become or accept or
be charged with the duties of a bailee (either voluntary or involuntary) of
any personal property; and the failure of Lessee to remove all personal
property from the Demised Premises and the Building shall forever bar
Lessee from bringing any action or from asserting any liability against
Lessor with respect to any such property which Lessee fails to remove. If
Lessee shall fail or refuse to surrender possession of the Premises to
Lessor on or before the above-specified date, Lessor may forthwith obtain
possession of the Premises by legal process.
F. Cost, Expenses and Attorneys' Fees. In case Lessor shall, without
fault on its part, be made a party to any litigation commenced by or
against Lessee, then Lessee shall pay all cost, expense and reasonable
attorneys' fees incurred or paid by Lessor in connection with such
litigation. Lessee shall also pay all costs, expenses and reasonable
attorneys' fees that may be incurred or paid by Lessor in enforcing
Lessee's covenants and agreements in this Lease.
G. Lessee to Keep Demised Premises Clean. Lessee, at Lessee's sole
expense: (i) shall keep the Demised Premises reasonably clean; (ii) shall
replace all broken glass windows and doors at the Demised Premises and keep
all waste and drain pipes open; and (iii) repair all damage to plumbing to
and for the Demised Premises.
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18. Negative Covenants of Lessee. Lessee covenants and agrees that Lessee
will do none of the following things without the prior written consent of
Lessor, which consent Lessor shall not unreasonably withhold, condition or
delay:
A. Misuse of Demised Premises. Occupy the Demised Premises in any
manner or for any other purpose than the purpose set forth in Section 5
hereof. Without limiting the foregoing, Lessee shall not use the Demised
Premises, or allow the Demised Premises to be used, for any illegal
purpose.
B. Assignment or Sublease. Assign, mortgage, pledge, lease, underlet
or sublease the Demised Premises or any part of thereof, or permit any
other person, firm or corporation to occupy the Demised Premises or any
part thereof, without the Lessor's prior written approval to do so which
approval Lessor shall not unreasonably withhold, condition or delay unless
the consent of the Lessor's Mortgage Lender is required and is withheld;
nor shall any permitted assignee or sublessee assign, mortgage or pledge
this Lease or such sublease without the specific written consent by Lessor,
and without such consent no such assignment, mortgage or pledge shall be
valid. It is expressly understood that any consent granted by Lessor
(including the consent set forth in the last sentence of this Section 18.B)
shall not be construed to release Lessee from any liability under this
Lease. Any permitted assignment or subletting (including the sublease set
forth in the last sentence of this Section 18.B) shall be under the
condition that Lessee shall remain fully and primarily liable for the
Lessee's obligations under this Lease. Lessor hereby consents to the
Lessee's sublease of the entire Demised Premises to Sparks Exhibits &
Environment Corp., a Pennsylvania corporation ("Sparks EEC").
C. Alterations. Make any alterations, improvements or additions to the
Demised Premises or to the Building, other than those provided for in this
Lease or otherwise approved in writing by Lessor.
D. Harmful Machinery. Use or operate any machinery that is harmful to
the Building.
E. Excessive Weights. Place any weights in any portions of the Demised
Premises beyond the safe carrying capacity of the structure.
F. Risk of Fire or Explosion. Do or suffer to be done, any act, matter
or thing objectionable to the fire insurance companies whereby the fire
insurance or any other insurance now
64
in force or hereafter to be placed on the Building shall become void or
suspended; or employ any person or persons objectionable to the fire
insurance companies or carry or have any benzine or explosive matter of any
kind in and about the Demised Premises except such amounts as may be
necessary in connection with the operation of Lessee's (or Sparks EEC's)
business and even then only in accordance with all applicable laws
governing their use, storage and disposal. In case of a breach of this
covenant (in addition to all other remedies given to Lessor in case of the
breach of any of the conditions or covenants of this Lease) Lessee agrees
to pay to Lessor as additional rent any and all increase or increases of
premiums on insurance carried by or for Lessor on the Building, caused in
any way by the occupancy of the Lessee.
G. Vacate Demised Premises. Remove, attempt to remove or manifest any
intention to remove Lessee's goods or property from or out of the Demised
Premises otherwise than in the ordinary and usual course of business,
without having first paid and satisfied Lessor of all Rent which may become
due during the then current term of this Lease; or vacate the Demised
Premises during the terms of this Lease, or any extensions thereof, or
permit the same to be empty and unoccupied.
X. Xxxxx a Leasehold Mortgage. Grant a leasehold mortgage in, on or to
Lessee's leasehold interest in the Demised Premises.
19. Default.
A. Defined. The occurrence of any one or more of the following, at the
election of Lessor, shall constitute a Default by Lessee hereunder:
1. Non-Payment of Monies Owed. Lessee's failure to pay any
monthly Base Rent or any cost or other amount required to be paid by
Lessee pursuant to this Lease when due, and continuance of such
failure for five (5) days after Lessor has given Lessee written notice
of non-payment; provided, however, that Lessor shall not be required,
as a condition precedent to default, to provide such notice more than
twice in any twelve month period;
2. Non-Performance. Lessee's failure to comply with or perform
any of the terms, covenants, conditions or agreements to be complied
with or performed by Lessee, and continuance of such failure for
thirty (30) days after receipt by Lessee of written notice from
Lessor, or, if the failure is
65
of such a character as cannot reasonably be cured within thirty (30)
days, failure to initiate within such thirty (30) day period such
action as reasonably can be taken toward curing the same or failure to
reasonably prosecute the cure thereafter, but in no event shall the
cure period extend beyond one hundred eighty (180) days after receipt
by Lessee of such written notice;
3. Insolvency; Bankruptcy; Etc. If Lessee is adjudicated an
insolvent; or makes an assignment for the benefit of creditors; or if
a petition in bankruptcy is filed by or against Lessee and remains
undismissed for sixty (60) days; or if a xxxx in equity or other
proceeding for the appointment of a receiver for Lessee is filed and
remains undismissed for sixty (60) days; or if a proceeding for
reorganization or for composition with creditors under any State or
Federal law is instituted by or against Lessee, and such proceeding
remains undismissed for sixty (60) days; or if any execution is issued
against a significant portion of the assets of Lessee or any guarantor
or surety of this lease, or against Lessee's leasehold interest
hereunder which is not stayed or discharged at least twenty (20) days
prior to a scheduled execution sale; or
4. Vacating Demised Premises. Lessee's vacating or deserting the
Demised Premises or permitting same to be empty or unoccupied;
5. Removal of Lessee's Goods or Property. Lessee's removing,
attempting to remove, or manifesting an intention to remove Lessee's
goods or property from the Demised Premises (except in the ordinary
and usual course of business) without having first paid Lessor all the
rent for the balance of the Term of this Lease;
6. Lessee Causing Lessor to be in Default of its Mortgage Debt.
Lessee shall have caused, through failure of Lessee to pay its rent or
otherwise, Lessor to be in default of the Lessor's indebtedness which
is secured by a mortgage on the Demised Premises.
B. Consequences of Default. If any Default shall have occurred, then
Lessor, in addition to all other rights and remedies available to it by law
or equity or by any other provisions hereof, may at any time thereafter:
1. Declare the rent for the entire unexpired balance of the then
current term of this Lease, as well as all other charges, payments,
costs and expenses herein agreed to be paid by Lessee,
66
or at the option of Lessor any part thereof, in addition to any and
all installments of rent already due and payable and in arrears and/or
any other charge or payment herein reserved, included or agreed to be
treated or collected as rent, and/or any other charge, expense or
costs herein agreed to be paid by Lessee which may be due and payable
and in arrears, as if by the terms and provisions of this Lease, the
whole balance of unpaid rent and other charges, payments, taxes, costs
and expenses were on that date payable in advance, to be immediately
due and payable to Lessor, discounted, however, to present value based
on a discount rate (the "Effective Rate") equal to the weighted
average of the rates charged with respect to the Acquisition Loan and
the Addition Permanent Financing (if there is Addition Permanent
Financing) (the "Accelerated Rent").
Lessor's charges, payments, costs and expenses herein agreed to be
paid by Lessee up to the end of the term of the Lease which shall not
be capable of precise determination shall be determined by Lessor's
good faith estimate.
2. As an alternative remedy, give Lessee notice of Lessor's
intention to terminate this Lease on a date specified in such notice,
which date shall not be less than five (5) days after the date of
giving of such notice, and upon the giving of such notice, the Lease
term and the estate hereby granted shall expire on the date so
specified in said notice with the same effect as if the date specified
in said notice were the date hereinbefore fixed for the expiration of
the Lease term. Upon such termination, Lessor shall have the right (in
addition to other rights contained herein) to recover from Lessee, on
demand, as and for liquidated and agreed final damages for Lessee's
default, an amount equal to the difference between the rent reserved
under this Lease, for the period commencing upon the date of such
termination and ending upon the date which the Lease term would have
expired if this Lease had remained in effect for the then current
term, and the then fair rental value of the Demised Premises for a
like period, discounted, however, to present value based upon a
discount rate equal to the Effective Rate.
20. Further Remedies of Lessor. If a Default, as defined in Section 19.A
hereof, shall have occurred, Lessor may, at Lessor's option, and in addition to
the other rights and remedies contained in this Lease do any of the following:
67
A. With or without terminating this Lease, Lessor may enter upon and
repossess the Demised Premises, by summary proceedings, ejectment or
otherwise, and may dispossess Lessee and remove Lessee and all other
persons and property from the Demised Premises and may have, hold and enjoy
the Demised Premises and the rents and profits therefrom. Lessor may, in
its own name, as agent for Lessee, if this Lease has not been terminated,
or in its own behalf, if this Lease has been terminated, relet the Demised
Premises or any part thereof for such term or terms (which may be greater
or less than the period which would otherwise have constituted the balance
of the term of this Lease) and on such conditions and provisions (which may
include concessions or free rent) as Lessor in its sole discretion may
determine. Lessor may, in connection with any such reletting, cause the
Demised Premises to be redecorated, altered, divided, consolidated with
other space or otherwise changed or prepared for reletting. No reletting
shall be deemed a surrender and acceptance of the Demised Premises.
B. Lessee's Continuing Liability. Lessee shall, with respect to all
periods of time up to and including the expiration of the term of this
Lease (or what would have been the expiration date in the absence of
default or breach) remain liable to Lessor as follows:
(i) in the event of termination of this Lease on account of
Lessee's default or breach, Lessee shall remain liable to Lessor for
damages equal to the rent and other charges payable under this Lease
by Lessee as if this Lease were still in effect, less the net proceeds
of any reletting after deducting all costs incident thereto (including
without limitation all repossession costs, brokerage and management
commissions, operating and legal expenses and fees, alternation costs
and expenses of preparation for reletting) and to the extent such
damages shall not have been recovered by Lessee by virtue of payment
by Lessee of the Accelerated Rent (but without prejudice to the right
of Lessee to demand and receive the Accelerated Rent) such damages
shall be payable to Lessor monthly upon presentation to Lessee of a
xxxx for the amount due.
(ii) In the event and so long as this Lease shall not have been
terminated after default or breach by Lessee, the rent and all other
charges payable under this Lease shall be reduced by the net proceeds
of any reletting by Lessor (after deducting all costs incident thereto
as above set
68
forth) and by any portion of the Accelerated Rent paid by Lessee to
Lessor and any amount due to Lessor shall be payable monthly upon
presentation to Lessee of a xxxx for the amount due.
C. Credit. In the event Lessor shall, after default or breach by
Tenant, recover the Accelerated Rent from Lessee and it shall be determined
at the expiration of the term of this Lease (taken without regard to early
termination for default) that a credit is due Lessor because the net
proceeds of reletting, as aforesaid, plus the amounts paid to Lessor by
Lessee exceed the aggregate of rent and other charges accrued in favor of
Lessor to the end of said term, Lessor shall refund such excess to Lessee,
without interest, promptly after such determination.
D. No Responsibility for Inability to Relet. Lessor shall in no event
be responsible or liable for any failure to relet the Demised Premises or
any part thereof, or for any failure to collect any rent due upon a
reletting; provided, however, that Lessor shall act reasonably to mitigate
its damages in the event of a Default by Lessee hereunder.
21. CONFESSION OF JUDGMENT FOR RENT. IF A DEFAULT OCCURS BY REASON OF
LESSEE'S FAILURE TO PAY RENT OR ANY OTHER CHARGE WHEN DUE, LESSEE HEREBY
EMPOWERS ANY PROTHONOTARY, CLERK OF COURT OR ATTORNEY OF ANY COURT OF RECORD TO
APPEAR FOR LESSEE IN ANY AND ALL SUITS OR ACTIONS WHICH MAY BE BROUGHT FOR RENT
AND/OR CHARGES, PAYMENTS, COSTS AND EXPENSES RESERVED AS RENT, OR AGREED TO BE
PAID BY THE LESSEE. IN SAID SUITS OR ACTIONS, LESSEE EMPOWERS SUCH PROTHONOTARY,
CLERK OF COURT OR ATTORNEY TO CONFESS JUDGMENT AGAINST LESSEE FOR ALL OR ANY
PART OF THE RENT SPECIFIED IN THIS LEASE AND THEN UNPAID, INCLUDING WITHOUT
LIMITATION, AT LESSOR'S OPTION, THE ACCELERATED RENT, AND/OR OTHER CHARGES,
PAYMENTS, COSTS AND EXPENSES RESERVED AS RENT OR AGREED TO BE PAID BY LESSEE,
AND FOR INTEREST AND COSTS TOGETHER WITH AN ATTORNEY'S COMMISSION OF 5% OF THE
AMOUNT SO CONFESSED. SUCH AUTHORITY SHALL NOT BE EXHAUSTED BY ONE EXERCISE
THEREOF, BUT JUDGMENT MAY BE CONFESSED AS AFORESAID FROM TIME TO TIME AS OFTEN
AS ANY OF SAID RENT AND/OR OTHER CHARGES, PAYMENTS, COSTS AND EXPENSES, RESERVED
AS RENT SHALL FALL DUE OR BE IN ARREARS, INCLUDING WITHOUT LIMITATION FOR THE
SAME AMOUNTS DUE AS PREVIOUSLY
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CONFESSED IF AND TO THE EXTENT THAT A PREVIOUS CONFESSION OF JUDGMENT SHALL BE
STRICKEN OR OTHERWISE INVALIDATED WITHOUT A FINAL DECISION IN THE MERITS OF THE
CLAIM. SUCH POWERS MAY BE EXERCISED AS WELL AFTER THE EXPIRATION OF THE ORIGINAL
TERM AND/OR ANY OPTION TERM OR EXTENSION OR RENEWAL OF THIS LEASE, AND/OR AFTER
THE TERMINATION OF THIS LEASE.
22. CONFESSION OF JUDGMENT FOR EJECTMENT. IF A DEFAULT OCCURS BY REASON OF
LESSEE'S DEFAULT IN THE COMPLIANCE WITH OR THE PERFORMANCE OR NON-PERFORMANCE OF
ANY PROVISIONS OF THIS LEASE, EITHER DURING THE INITIAL TERM OF THIS LEASE OR
ANY OPTION TERM HEREUNDER, AND ALSO WHEN AND AS SOON AS THE TERM HEREBY CREATED
OR ANY EXTENSION THEREOF SHALL HAVE TERMINATED OR EXPIRED, IT SHALL BE LAWFUL
FOR ANY ATTORNEY TO APPEAR FOR LESSEE IN ANY AND ALL SUITS OR ACTIONS WHICH MAY
BE BROUGHT FOR POSSESSION AND/OR EJECTMENT; AND, AS ATTORNEY FOR LESSEE, TO
CONFESS JUDGMENT IN EJECTMENT AGAINST LESSEE AND ALL PERSONS CLAIMING UNDER
LESSEE FOR THE RECOVERY BY LESSOR OF POSSESSION OF THE DEMISED PREMISES, FOR
WHICH THIS LEASE SHALL BE LESSOR'S SUFFICIENT WARRANT. UPON SUCH CONFESSION OF
JUDGMENT FOR POSSESSION, IF LESSOR SO DESIRES, A WRIT OF EXECUTION OR OF
POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDINGS
WHATSOEVER. IF FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED THE
SAME SHALL BE DETERMINED AND THE POSSESSION OF THE DEMISED PREMISES SHALL REMAIN
IN OR BE RESTORED TO LESSEE, THEN LESSOR SHALL HAVE THE RIGHT UPON ANY
SUBSEQUENT OR CONTINUING DEFAULT OR DEFAULTS, OR AFTER EXPIRATION OF THE LEASE
OR UPON THE TERMINATION OF THIS LEASE AS HEREINBEFORE SET FORTH, TO BRING ONE OR
MORE FURTHER ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF THE
DEMISED PREMISES.
23. Affidavit of Default. In any action by confession of judgment in
ejectment and/or for rent in arrears or other amount due, Lessor shall first
cause to be filed in such action an affidavit made by Lessor or someone acting
for Lessor setting forth the facts necessary to authorize the entry of judgment,
of which facts such affidavit shall be conclusive evidence. If a true copy of
this Lease (and
70
of the truth of the copy such affidavit shall be sufficient evidence) be filed
in such action, it shall not be necessary to file the original as a warrant of
attorney, any rule of Court, custom or practice to the contrary notwithstanding.
24. Waivers by Lessee of Errors, etc. Lessee expressly agrees, to the
extent not prohibited by law, that any judgment, order or decree entered against
it by or in any Court or Judge by virtue of the warrant of attorney contained in
this Lease or otherwise, shall be final, and that Lessee will not file a motion
or rule to strike off or to stay execution of the same, and releases to Lessor
and to any and all attorneys who may appear for Lessee all errors in the said
proceedings, and all liability therefor. Lessee expressly waives the benefits of
all laws, now or hereafter in force, exempting any goods on the Demised Premises
from distraint, levy or sale in any legal proceedings taken by the Lessor to
enforce any rights under this Lease. If proceedings shall be commenced by Lessor
to recover possession under any Acts of Assembly either at the end of any term
or sooner termination of this Lease, or for the nonpayment of rent or any other
reason, Lessee specifically waives the right to the three months' notice and/or
the fifteen or thirty days' notice required by the Landlord and Tenant Act of
Pennsylvania, Act of April 6, 1951 P.L. 69, or the right to any other notice to
quit which might be applicable, and agrees that five (5) days' notice shall be
sufficient in either or any other case.
25. Right of Lessor to Assign This Lease Upon Sale/Lessor's Liability
Limited to Its Interest in Demised Premises. Upon sale or other disposition of
the Demised Premises, Lessor may assign all of Lessor's rights and obligations
under this Lease to the purchaser or transferee of Lessor's interest in the
Demised Premises. The right to enter or confess judgment against Lessee and to
enforce all of the other provisions of this Lease hereinabove provided for may,
at the option of any purchaser, assignee or transferee, be exercised by such
purchaser, assignee or transferee of the Lessor's right, title and interest in
this Lease in his, her, its or their own name, notwithstanding the fact that any
or all assignments of the said right, title and interest may not be executed
and/or witnessed in accordance with the Act of Assembly of May 28, 1715, 1 Sm.
L. 90, and all supplements and amendments thereto that have been or may
hereafter be passed, and Lessee hereby expressly waives the requirements of
71
said Act of Assembly and any and all laws regulating the manner and/or form in
which such assignments shall be executed and witnessed.
The term "Lessor" as used in this Lease means the then owner of the Demised
Premises. Lessor above-named represents that it will be the holder of such
rights as of the Effective Date. In the event of the voluntary or involuntary
transfer of such ownership or right to a successor-in-interest of Lessor, Lessor
shall be freed and relieved of all liability and obligation hereunder which
shall thereafter accrue and Lessee shall look solely to such successor in
interest for the performance of the covenants and obligations of the Lessor
hereunder which shall thereafter accrue. The liability of Lessor (and any of its
partners) and its successors in interest, under or with respect to this Lease,
shall be strictly limited to and enforceable only out of its or their interest
in the Demised Premises, and shall not be enforceable out of any other assets.
26. Holding Over. Lessee shall pay to Lessor double the Base Rent and
additional rent, if any, then applicable for each month or portion thereof
Lessee shall retain possession of the Demised Premises or any part thereof after
the termination of this Lease, whether by lapse of time or otherwise, and also
shall pay all damages sustained by Lessor on account thereof. The provisions of
this Section shall not operate as a waiver by Lessor of any right to obtain
possession of the Demised Premises by legal process. At the option of Lessor,
expressed in a written notice to Lessee and not otherwise, such holding over
shall constitute a renewal of this Lease from month-to month.
It is expressly understood, notwithstanding the foregoing, that, in the event
that Lessee has exercised the Termination Right but continues to occupy the
Demised Premises pursuant to its right to do so provided for in Section 6.B
hereof, Lessee shall not be considered a holdover tenant subject to the
provisions of the first paragraph of this Section 26 until the earlier of (a)
sixty (60) days after Lessor has provided Lessee with the written notification
referred to in Section 6.B or (b) the date that the term of this Lease would
have expired had the Lessee not exercised the Termination Right.
27. Disclosure of Broker. Lessee and Lessor warrant and represent to each
other that neither of them has dealt with any brokers in connection with this
Lease. Lessee and Lessor agree that, should any claim be made for brokerage
commissions or fees by any person or entity for representing and/or being the
broker of or for Lessee or Lessor, respectively, in this transaction, the party
through which the
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claim is being made shall be solely responsible therefor, and the party through
which the claim is being made agrees to and shall defend, indemnify, save and
hold the other party free and harmless from and against any and all such
liabilities, obligations, etc.
28. Estoppel Certificate. Lessee shall from time to time, within 10 days
after written request by Lessor therefor, deliver to Lessor or a person or
entity designated by Lessor (e.g. a mortgagee) (a "Third Party") a statement in
writing certifying:
A. That this Lease is unmodified and in full force and effect or, if
there have been modifications, that this Lease as modified is in full force
and effect;
B. The amount of Base Rent, additional rent, any other charges then
payable hereunder and the date to which Base Rent, additional rent, and any
other charges have been paid;
C. The terms of any options to extend the Term or add expansion space;
D. That Lessor is not in default under this Lease, or, if in default,
a detailed description of such default(s); and
E. Such other reasonable and customary items as may be required by the
Third Party.
29. Cumulative Remedies. Except as expressly provided herein, all of the
remedies hereinbefore given to Lessor and all rights and remedies given to
Lessor by law and equity shall be cumulative and concurrent. No determination of
this Lease or the taking or recovering of the Demised Premises shall deprive
Lessor of any of Lessor's remedies or actions against Lessee for rent due at the
time or which, under the terms hereof, would in the future become due as if
there has been no determination, or for any and all sums due at the time or
which, under the terms hereof, would in the future become due as if there had
been no determination, nor shall the bringing of any action for rent or breach
of covenant, or the resort to any other remedy herein provided for the recovery
of rent be construed as a waiver of the right to obtain possession of the
Demised Premises; provided, however, that if Lessee pays the Accelerated Rent
after default, it shall have undisturbed possession and occupancy of the Demised
Premises for the entire balance of the term of this Lease, provided Lessee
complies with those other terms and conditions of this Lease other than those
rental obligations satisfied by payment of the Accelerated Rent.
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30. Partial or Total Condemnation/Taking of Demised Premises. In the event
that the Demised Premises, or any part thereof, is acquired or taken,
temporarily or permanently, or condemned for a public or quasi-public use, this
Lease shall, as to the part so taken or condemned, terminate as of the date of
such condemnation or taking; and rent shall xxxxx equitably, in the case of a
partial condemnation. Any unearned prepaid rent which is abated pursuant to the
immediately preceding sentence shall be refunded to Lessee. This Lease shall
terminate in the event the Demised Premises are entirely taken. Lessor shall
have the option of terminating this Lease in the event that it reasonably
determines that the reduced rental, resulting from the equitable abatement, no
longer makes it economically feasible to lease the Demised Premises to the
Lessee. Lessor shall promptly give notice to Lessee if any authority shall
commence negotiations or shall commence legal action for the acquiring or taking
of all or any party of the Demised Premises, either temporarily or permanently,
by condemnation or by exercise of the right of eminent domain. Lessee hereby
waives all claims against the fee, the leasehold and otherwise against Lessor by
reason of the complete or partial taking or condemnation of the Demised
Premises. The foregoing, however, is not intended to prohibit the Lessee from
asserting any claim against the condemnor (e.g. for relocation costs) which will
not reduce the Lessor's just compensation.
31. Subordination. This Lease and Lessee's rights hereunder shall be
subject and subordinate to any mortgages or other encumbrances now or hereafter
placed upon or affecting the Demised Premises including the mortgage(s) securing
the Acquisition Loan and the Addition Permanent Financing, and to all renewals,
modifications, consolidations, and extensions thereof. Notwithstanding the
foregoing, it is expressly agreed that Lessee's subordination to any future
mortgage is contingent upon the future mortgagee entering into a non-disturbance
agreement in form reasonably acceptable to the Lessee providing that, so long as
the Lessee is not in default hereunder, no foreclosure of the lien of the
mortgagee's mortgage or any other proceeding in respect thereof shall divest,
impair, impede or otherwise adversely affect any interests or rights of Lessee
under this Lease. It is understood that the failure or refusal of any mortgagee
or encumbrancer to execute a written non-
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disturbance agreement shall not affect Lessee's obligations under this Lease
but, instead, only its obligation to subordinate.
Notwithstanding the foregoing, the party holding the instrument to which this
Lease is subordinate shall have the right to recognize and preserve this Lease
in the event of any foreclosure sale or possessory action, and in such case this
Lease shall continue in full force and effect at the option of the party holding
the superior lien and Lessee shall attorn to such party and shall execute,
acknowledge and deliver any instrument that has for its purpose and effect the
confirmation of such attornment.
32. Owner's Interest/Quiet Enjoyment. Lessor warrants and represents that:
(a) Lessor is the equitable owner of the Demised Premises and that, upon the
Effective Date, Lessor will be the legal owner of the Demised Premises; (b)
Lessor has the full right and authority to enter into the Lease; and (c) Lessee,
upon paying the rent herein reserved and upon performing all terms and
conditions to be performed by Lessee hereunder, shall at all times during the
term herein demised peacefully and quietly have, hold and enjoy the Demised
Premises. Notwithstanding the foregoing, Lessee acknowledges that its leasehold
interest in the Demised Premises is subject and subordinate to those title
exceptions excluded from the coverage of the Lessor's owner's title insurance
policy Lessor obtained in connection with Lessor's acquisition of the Demised
Premises (the "Title Exceptions") and that, except for the requirements of
Lessor's mortgage, Lessee shall be responsible for complying with the
requirements of all Title Exceptions.
33. Notices.
A. All notices provided for by this Lease shall be in writing and sent
either by nationally recognized overnight carrier (e.g. Federal Express) or
by certified mail, return receipt requested, to Lessor at c/o Equivest
Management, Inc., 000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000,
with a copy to Xxxx X. Xxxxx, Esquire of Xxxxxxxx Xxxxxxx Chicco Foxman
Oxholm & Xxxxx, 0000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xx 00000, and
to Lessee at 0000 Xxxxxxx Xxxx, Xxxxxxxxxxxx, XX 9154, Attention:
President, with a copy to Xxxxxxx X. Xxxxxxxx, Esquire, Xxxxxx Xxxxxxxx
LLP, 200 One Keystone Plaza, North Front and Xxxxxx Xxxxxxx, X.X. Xxx 0000,
Xxxxxxxxxx, XX 00000-0000.
B. Notice by certified mail shall be deemed given on the third
business day following deposit in the mail. Notice by nationally recognized
overnight carrier shall be deemed given on the first business day after
deposit with the carrier. Either party may change the address to which
notice
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is to be given, provided that notice of such change is given to the other
party in the manner provided for in subparagraph A of this Section 33.
34. Successors and Assigns. All covenants, conditions and obligations
contained in this Lease shall be binding upon and inure to the benefit of the
parties hereto and each of their respective successors and assigns. No person
not a party to this Lease shall have any "third party beneficiary" or other
rights hereunder.
35. Entire Agreement. This Lease contains the entire understanding and
agreement between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements or understandings. No
amendment or modification of this Lease shall be effective unless it is written
and executed by all parties hereto or their proper successors or assigns.
36. General.
A. Headings Not Determinative. The headings to the various sections of
this Lease have been inserted for convenience of reference only and shall
not modify, amend or change the express terms and provisions of this Lease.
B. Controlling Law. This Lease shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
C. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original.
D. Use of Gender; Plurals; Etc. As used herein, the neuter shall be
deemed to refer to and include the male and female, and vice versa, where
appropriate. As used herein, the singular shall be deemed to refer to and
include the plural, and vice versa, where appropriate.
E. Non-Waiver. The failure of either party to insist in any one or
more instances upon the strict performance of any one or more of the
agreements, terms, covenants, conditions or obligations of this Lease, or
to exercise any right, remedy or election herein contained, shall not be
construed as a waiver or relinquishment in the future of such performance
or exercise, but the same shall continue and remain in full force and
effect with respect to any subsequent breach, act or omission.
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F. Partial Payment. No payment by Lessee or receipt by Lessor of a
lesser amount than the correct Base Rent or additional rent due hereunder
shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or any letter accompanying any check
or payment be deemed to effect or evidence an accord and satisfaction, and
Lessor may accept such check or payment without prejudice to Lessor's right
to recover the balance or pursue any other remedy in this Lease or at law
provided.
G. Requested Modifications. If, in connection with obtaining,
continuing or renewing financing for which the Building, Land or the
Demised Premises or any interest therein represents collateral in whole or
in part, a banking, insurance or other lender shall request reasonable
modifications of this Lease as a condition of such financing, Lessee will
not unreasonably withhold, delay or defer its consent thereto, provided
that such modifications do not increase the monetary obligations of Lessee
hereunder or adversely affect to a material degree the Lessee's leasehold
interest hereby created.
H. Partial Invalidity. If any of the provisions of this Lease, or the
application thereof to any person or circumstances, shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the
application of such provision or provisions to persons or circumstances
other than those as to whom or which it is held invalid or unenforceable,
shall not be affected thereby, and every provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.
I. Lease Not Binding Until Fully Executed. This Lease shall not be
binding on either party until both parties have executed this Lease.
J. No Construction Against Drafter or Lessor. This Lease has been
fully negotiated and, notwithstanding any rule of construction to the
contrary, shall not be construed against either the Lessor or the party
which drafted this Lease.
37. Security Deposit. Lessee shall not be required to pay any security
deposit to Lessor under this Lease. Promptly after the Effective Date, Lessor
shall return to Sparks any security deposit which Lessor actually receives from
the Current Owner relating to the Existing Lease.
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38. Miscellaneous Provisions:
A. Should contractors and materialmen supply work or materials to
Lessee at the Demised Premises, Lessee agrees that it shall hold Lessor
fully indemnified from any and all mechanic's liens or costs or expenses as
a result thereof.
B. It is hereby covenanted and agreed, any law, usage or custom to the
contrary notwithstanding, that Lessor shall have the right at all times to
enforce the covenants and provisions of this Lease in strict accordance
with the terms hereof, notwithstanding any conduct or custom on the part of
Lessor in refraining from so doing at any time or times. Further, the
failure of Lessor at any time or times to enforce Lessor's rights under
said covenants and provisions strictly in accordance with the same shall
not be construed as having created a custom in any way or manner contrary
to the specific terms, provisions and covenants of this Lease or as having
in any way or manner modified the same.
C. If the Lessee shall be comprised of two or more persons or
entities, it is expressly understood that the obligations of all parties
comprising the Lessee hereunder shall be joint and several.
39. Environmental Considerations. Lessee acknowledges and agrees that,
because its affiliate, Sparks, has occupied the Demised Premises and operated
its business therefrom for some time, Lessee is familiar with the environmental
condition of the Demised Premises. Lessee further acknowledges and agrees that
Lessor has relied on the covenants and indemnification set forth in this Section
39 and that Lessor would not have acquired legal title to the Demised Premises
without them.
Lessee shall be solely responsible for any environmental condition existing on,
at, in or under the Demised Premises as of the Effective Date (the "Existing
Environmental Conditions"). Additionally Lessee shall be solely responsible for
any other environmental conditions on, at, in or under the Demised Premises
occurring or arising between the Effective Date and the date on which the term
of this Lease expires or has been terminated, except for any conditions actually
caused by the Lessor (the "Future Environmental Conditions").
Lessee covenants and agrees with Lessor as follows:
A. Lessee shall defend, indemnify and hold Lessor harmless from and
against any claim, liability, damage, cost or expense, including reasonable
attorneys' fees, arising from or relating to any and all Existing
Environmental Conditions and any and all Future Environmental Conditions.
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B. Lessee shall comply with all so-called environmental laws
("Environmental Laws") relating to the Demised Premises and the operation
of the Lessee's business therefrom.
C. Lessee shall not use or store any so-called hazardous substances or
hazardous materials on, at or in the Demised Premises except such amounts
as may be necessary in connection with the operation of the Lessee's (or
Sparks EEC's) business and even then only in accordance with all applicable
laws governing their use, storage and disposal.
D. Lessee, at Lessee's sole cost and expense, shall remediate any and
all Existing Environmental Conditions and any Future Environmental
Conditions if and to the extent that such remediation is required by any
Environmental Laws.
It is expressly understood and agreed that Lessee's responsibilities and
obligations under this Section 39 shall survive the termination or expiration of
this Lease.
40. Lessor Has No Obligations, Liability or Responsibility Under Existing
Lease. Regardless of whether, as between the Current Owner and the Lessor,
Lessor may have assumed any obligations of the Current Owner under the Existing
Lease, it is expressly understood and agreed that, as between the Lessor, on the
one hand, and the Lessee and Sparks, on the other hand, the Lessor shall have no
obligations, responsibilities or liability under the Existing Lease and the
rights and remedies of Sparks and Lessee relating to the Demised Premises, as
they relate to the Lessor, shall solely be defined by this Lease. Nothing herein
is intended to prevent Sparks from asserting any claim against the Current Owner
under the Existing Lease relating to the period prior to the Effective Date.
41. Lessee to Perform Work Required by GE. Attached hereto as Exhibit D and
made a part hereof is a copy of a letter dated May 6, 1999 from GE to Lessor
setting forth certain work which GE requires Lessor to perform as a post-closing
requirement in connection with the Acquisition Loan (the "GE Letter"). The GE
Letter also sets forth the times by which the work required therein must be
completed. Lessee, at Lessee's sole cost and expense, shall perform the work
required under the GE Letter within the time frames set forth therein and
Lessee's failure to fully do so, at Lessor's option, shall constitute a Default
under this Lease.
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At the time of the execution of this Lease, Lessor has not yet been notified by
GE what work, if any, of an environmental nature GE will require Lessor to
perform as a condition to GE's making the Acquisition Loan (the "GE
Environmental Work"). Lessee agrees to perform the GE Environmental Work, at
Lessee's sole cost and expense and within the time frames required by GE,
subject to Lessee's right to terminate this Lease pursuant to Section 8.J
hereof.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement the day
and year first above written.
LESSOR
2828 PARTNERSHIP, L.P.,
a Pennsylvania limited partnership
By: 2828 Corporation,
a Pennsylvania corporation,
its General Partner
ATTEST: CORPORATE SEAL
By:____________________________
------------------------------ Xxx X. Xxxxxxxx, President
LESSEE:
ATTEST: CORPORATE SEAL MARLTON TECHNOLOGIES, INC.
By:_____________________________
------------------------------ Xxxxxx X. Xxxxxxxx, President
The undersigned, Sparks Exhibits
Holding Corporation, has joined
in and executed this Lease for the
sole purpose of acknowledging its
agreement to be legally bound by the
terms and conditions set forth in
Sections 3, 7, 8, 13, 18 and 40 hereof.
ATTEST: CORPORATE SEAL SPARKS EXHIBITS HOLDING CORPORATION
By:_____________________________
------------------------------
90424v12
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LIST OF EXHIBITS
Exhibit A Legal Description of Land
Exhibit B Loan Commitment for Addition Permanent Financing
Exhibit C Insurance Requirements of Lessor's Mortgage Lender
Exhibit D Letter from GE dated May 6, 1999 Requiring Work
