Exhibit 10.2
LEASE AGREEMENT
(Single Tenant Facility) - 1996
ARTICLE ONE: BASIC TERMS.
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and are
to be read in conjunction with the Basic Terms.
Section 1.1. Date of Lease: February 14, 1997
Section 1.2. Landlord (include legal entity): CORPORATE ESTATES, INC., a
California corporation, and XXXXXXXX INVESTMENTS, LLC, a Tennessee limited
liability company
Address of Landlord: 0000 Xxxxxxx Xxxx, Xxxxx X
Xxxxxxxxxx, XX 00000
Section 1.3. Tenant (include legal entity): GENESIS DIRECT NINE, LLC, a
Delaware limited liability company
Address of Tenant: Genesis Direct Nine, LLC
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxx, Xxx Xxxxxx 00000-0000
Section 1.4. Property: an office/warehouse building consisting of
approximately 500,000 square feet of total area currently under construction by
Landlord on the land in Shelby County, Tennessee described on the attached
Exhibit A, incorporated herein by reference, and known as 0000 Xxxxxxxxxx Xxxxx.
Section 1.5. Lease Term: 10 years 2 months beginning on the "Commencement
Date" (defined in Rider Paragraph 2) or such other date as is specified in this
Lease, and ending on the last day of the month in which the date that is the ten
(10) year and two (2) month anniversary of the Commencement Date shall occur
(the "Expiration Date").
Section 1.6. Permitted Uses (See Article Five): office/warehouse, shipping,
receiving, distribution and light manufacturing
Section 1.7. Tenant's Guarantor (if none, so state): Genesis Direct, Inc.,
a Delaware corporation, pursuant to the terms of the Guaranty of even date
herewith from Tenant's Guarantor to Landlord.
Section 1.8. Brokers (See Article fourteen) (if none, so state):
Landlord's Broker: None
Tenant's Broker: Weston Companies/The Xxxxxxxxx Company
Section 1.9. Commission payable to Landlord's Broker (See Article
Fourteen): None
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Section 1.10. Initial Security Deposit (See Section 3.3): $650,000.00. See
paragraph 6 of the attached Rider.
Section 1.11. Vehicle parking Spaces Allocated to Tenant: 500, as per the
Parking Specifications attached hereto as Exhibit A-1.
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: ONE HUNDRED EIGHT THOUSAND THREE HUNDRED THIRTY-THREE and
33/100 DOLLARS ($108,333.33) per month, for the first 62 months, and shall be
increased on the first day of the 61st month after the Rental Commencement Date
(hereinafter defined) to ONE HUNDRED NINETEEN THOUSAND ONE HUNDRED SIXTY-SIX and
67/100 DOLLARS ($119,166.67) per month for the remaining 60 months of the Lease
term; which monthly base rent shall be payable as provided in Section 3.1.
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.2);
(ii) Utilities (See Section 4.3); (iii) Insurance Premiums (See Section 4.04);
(iv) Impounds for Insurance Premiums and Property Taxes (See Section 4.7); (v)
Maintenance, Repairs and Alterations (See Article Six).
Section 1.13. Landlord's Share of Profit on Assignment or Sublease (See
Section 9.5): fifty percent (50%) of the profit (the "Landlord's Share").
Section 1.14. Riders: The following Riders are attached to and made a part
of this Lease: (If none, so state) Rider of even date, containing paragraphs
1-14.
ARTICLE TWO. LEASE TERM.
Section 2.1. Lease of Property for Lease Term. Landlord leases the Property
to Tenant and Tenant leases the Property from Landlord for the Lease Term. The
Lease Term is for the period stated in Section 1.5 above and shall begin and end
on the dates specified in Section 1.5 above, unless the beginning or end of the
Lease Term is changed under any provision of this Lease. The "Commencement Date"
shall be the date specified in Section 1.5 above for the beginning of the Lease
Term, unless delayed under any provision of this Lease.
Section 2.2. Delay in Commencement. Except as provided in paragraph 9 of
the Rider, Landlord shall not be liable to Tenant if Landlord does not deliver
possession of the Property to Tenant by April 1, 1997. Landlord's non-delivery
of the Property to Tenant on that date shall not affect this Lease or the
obligations of Tenant under this Lease except as set forth in Rider Paragraph 9
and that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. Upon delivery of possession of the Property to Tenant, Landlord and
Tenant shall, upon such delivery, execute an amendment to this Lease setting
forth the actual Commencement Date and expiration date of the Lease. Failure to
execute such amendment shall not affect the actual Commencement Date and
Expiration Date of the Lease.
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Section 2.3. Early Occupancy. If Tenant occupies the Property prior to the
Commencement Date, Tenant's occupancy of the Property shall be subject to all of
the provisions of this Lease, except that in no event shall rent be payable by
Tenant until the Rental Commencement Date (hereinafter defined) if such
occupancy is for the purpose of preparing the Property for Tenant's occupancy of
the Property during the Lease Term.
Section 2.4. Holding Over. Tenant shall vacate the Property upon the
Expiration Date or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord incurs
from Tenant's delay in vacating the Property. If Tenant does not vacate the
Property upon the Expiration Date or earlier termination of the Lease and
Landlord thereafter accepts rent from Tenant, Tenant's occupancy of the Property
shall be a "month to month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in effect
shall be increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT.
Section 3.1. Time and Manner of Payment. Anything herein to the contrary
notwithstanding, Base Rent shall be abated in its entirety for the first two (2)
full months of the Lease Term. Upon execution of this Lease, Tenant shall pay
Landlord the Base Rent in the amount stated in paragraph 1.12(a) above for the
third full calendar month of the Lease Term. On the first day of the fourth full
calendar month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, and, except as otherwise set forth in this
Lease, without offset, deduction or prior demand. The Base Rent shall be payable
at Landlord's address or at such other place as Landlord may designate in
writing. Base Rent for any partial calendar month at the beginning of the Lease
term shall be prorated and shall be payable on the first day of the third full
calendar month of the Lease term.
Section 3.2. Security Deposit; Increases. Upon the execution of this Lease,
Tenant shall deposit with Landlord a cash Security Deposit in the amount set
forth in Section 1.10 above. Landlord may apply all or part of the Security
Deposit to any unpaid rent or other charges due from Tenant or to cure any other
defaults of Tenant. If Landlord uses any part of the Security Deposit, Tenant
shall restore the Security Deposit to its full amount within ten (10) days after
Landlord's written request. Tenant's failure to do so shall be a material
default under this Lease. Landlord shall keep the Security Deposit in an
interest bearing account and, until applied in accordance with the terms hereof,
shall be deemed the property of Tenant subject to a security interest (hereby
granted) in such funds in favor of Landlord. Interest on the Security Deposit
shall be added to the Security Deposit. At Tenant's option, Tenant may furnish
an irrevocable, unconditional letter of credit in such amount (the "Letter of
Credit:"). The Letter of Credit must:
(i) be in favor of Landlord or its assignee as beneficiary;
(ii) provide for automatic renewals, without amendment, for
consecutive periods of one year each, unless the issuing bank or financial
institution sends written notice to Landlord by certified or registered mail,
return receipt requested, not less than thirty (30) days next preceding the then
expiration date of the Letter of Credit, that it elects not to have such Letter
of Credit renewed;
(iii) be issued by Chase Manhattan Bank, N.A., or another financial
institution satisfactory to Landlord in Landlord's sole discretion; and
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(iv) provide that it can be drawn upon by Landlord's certification
that Tenant is in default under this Lease beyond any applicable cure period. In
the event Landlord draws under the Letter of Credit and applies the proceeds to
cure a default by Tenant hereunder, the balance, if any, of such proceeds shall
be retained by Landlord and held as a cash Security Deposit and invested at
interest as above provided. Tenant shall restore the amount so applied by
Landlord in cash or in the form of a new letter of credit.
Section 3.3. Termination; Advance Payments. Upon termination of this Lease
under Article Seven (Damage or Destruction), Article Eight (Condemnation) or any
other termination not resulting from Tenant's default, and no more than fifteen
(15) days after Tenant has vacated the Property in the manner required by this
Lease, Landlord shall refund or credit to Tenant (or Tenant's successor) the
unused portion of the Security Deposit, any advance rent or other advance
payments made by Tenant to Landlord, and any amounts paid for real property
taxes and other reserves which apply to any time periods after termination of
this Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT.
Section 4.1. Additional Rent. All charges payable by Tenant other than Base
Rent are called "Additional Rent." Unless this Lease provides otherwise, Tenant
shall pay all Additional Rent then due with the next monthly installment of Base
Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.2. Property Taxes.
(a) Real Property Taxes. Tenant shall pay all Real Property Tax
(hereinafter defined) on the Property (including any fees, taxes or assessments
against, or as a result of, any tenant improvements installed on the Property by
or for the benefit of Tenant) during the Lease Term. Subject to Section 4.2(c)
and Section 4.7 below, such payment shall be made at least ten (10) days prior
to the delinquency date of the taxes. Within such ten (10)-day period, Tenant
shall furnish Landlord with reasonable evidence that the Real Property Tax has
been paid. Prior to the time that Tenant shall be obligated to pay same pursuant
to the immediately preceding sentence, Landlord shall advance to Tenant any Real
Property Tax to be paid by Tenant covering any period of time prior to or after
the Lease Term. If Tenant fails to pay the Real Property Tax when due, Landlord
may pay the taxes and Tenant shall reimburse Landlord for the amount of such tax
payment as Additional Rent. See Paragraph 8 of the attached Rider.
(b) Definition of "Real Property Tax." "Real Property Tax" means: (i) any
ad valorem fee, license fee, license tax, business license fee, commercial
rental tax, levy charge, assessment, penalty or tax imposed by any taxing
authority against the Property; (ii) any tax on the Landlord's right to receive,
or the receipt of, rent or income from the Property, provided that for such
purposes, the rent paid by Tenant for the Property shall be deemed Landlord's
sole source of income, (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (iv) any tax imposed upon this transaction or based
upon a reassessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord's interest in the
Property (excluding transfer and transfer gains tax); and (v) any charge or fee
replacing any tax previously included within the definition of Real Property
Tax. "Real Property Tax" does not, however, include
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Landlord's federal, state, or local income, franchise, inheritance, estate taxes
or similar taxes.
(c) Joint Assessment. Landlord shall have the Property separately
assessed. Until the Property is separately assessed, Landlord shall reasonably
determine Tenant's share of the Real Property Tax payable by Tenant under
Section 4.2(a) from the assessor's worksheets or other reasonably available
information. Tenant shall pay such share to Landlord within fifteen (15) days
after receipt of Landlord's written statement.
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall reasonably try to have personal property taxed separately from the
Property.
(ii) If any of Tenant's personal property is taxed with the
Property, Tenant shall pay Landlord the taxes for the personal property within
fifteen (15) days after Tenant receives a written statement from Landlord for
such personal property taxes.
(e) Tenant's Right to Contest Taxes. Tenant may attempt to have the
assessed valuation of the Property reduced or may initiate proceedings to
contest the Real Property Tax. If required by law, Landlord shall join in the
proceedings brought by Tenant. However, Tenant shall pay all costs of the
proceedings, including any costs or fees incurred by Landlord. Upon the final
determination of any proceedings or contest, Tenant shall pay when due pursuant
to such final determination, the Real Property Tax due, together with all costs,
charges, interest and penalties incidental to the proceedings. If Tenant does
not pay the Real Property Tax when due and contests such taxes, Tenant shall not
be in default under this Lease for nonpayment of such taxes if Tenant deposits
funds with Landlord or opens an interest bearing account reasonably acceptable
to Landlord in the joint names of Landlord and Tenant. The amount of such
deposit shall be sufficient to pay the Real Property Tax plus a reasonable
estimate of the interest, costs, charges and penalties which may accrue if
Tenant's action is unsuccessful, less any applicable tax impounds previously
paid by Tenant to Landlord. The deposit shall be applied to the Real Property
Tax due, as determined at such proceedings. Such Real Property Tax shall be paid
under protest from such deposit if such payment under protest is necessary to
prevent the Property from being sold under a "tax sale" or similar enforcement
proceeding.
Section 4.3. Utilities. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. Landlord shall construct the Property with all utilities brought
to the Building and with all utilities and services supplied to the Property
being separately metered.
Section 4.4. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form
comprehensive general liability insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the Property. Tenant
shall name Landlord as an additional insured under such policy. The initial
amount of such insurance shall be ONE MILLION DOLLARS
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($1,000,000.00) per occurrence and shall be subject to periodic increase to
amounts consistent with that carried by occupants of similarly situated
properties used for the same purposes as the Property based upon inflation,
increased liability awards, recommendation of Landlord's professional insurance
advisers and other relevant factors, but in no event shall the amount of such
insurance be required to exceed $5,000,000.00 per occurrence. The liability
insurance obtained by Tenant under this Section 4.4(a) shall (i) be primary and
non-contributing; (ii) contain cross-liability endorsements; and (iii) insure
Landlord against Tenant's performance under Section 5.5, if the matters giving
rise to the indemnity under Section 5.5 result from the negligence of Tenant.
The amount and coverage of such insurance shall not limit Tenant's liability nor
relieve Tenant of any other obligations under this Lease. Landlord may also
obtain comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The policy obtained by
Landlord shall not be contributory and shall not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease Term,
Landlord shall maintain policies of insurance covering loss of or damage to the
Property in the full amount of its replacement value. Such policy shall contain
an inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain insurance
for Tenant's fixtures or equipment or building improvements installed by Tenant
on the Property. During the Lease Term, Landlord shall also maintain a rental
income insurance policy, with loss payable to Landlord, in an amount equal to
one (1) year's Base Rent, plus estimated Real Property Tax and insurance
premiums. Tenant shall be liable for the payment of any deductible amount under
Landlord's or Tenant's insurance policies maintained pursuant to this Section
4.4, in an amount not to exceed TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
Tenant shall not knowingly do or permit anything to be done which invalidates
any such insurance policies. If Tenant notifies Landlord that it is able to
obtain a policy of insurance complying with this Section and subsection (d)below
at a lower premium than being paid for Landlord's policy, Landlord shall cause
the cancellation of its own policy and Landlord's policy shall be substituted
with the policy obtained by Tenant.
(c) Payment of Premiums. Subject to Section 4.7, Tenant shall pay all
premiums for the insurance policies described in Sections 4.4(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after Tenant's
receipt of a copy of the premium statement or other evidence of the amount due,
except Landlord shall pay all premiums for non-primary comprehensive public
liability insurance which Landlord elects to obtain as provided in Section
4.4(a). If insurance policies maintained by Landlord cover improvements to real
property other than the Property, Landlord shall deliver to Tenant a statement,
subject to Tenant's approval, of the premium applicable to the Property showing
in reasonable detail how Tenant's share of the premium was computed. If the
Lease Term expires before the expiration of an insurance policy maintained by
Landlord, Tenant shall be liable only for Tenant's prorated share of the
insurance premiums. Before the Commencement Date, Landlord and Tenant shall
deliver to each other copies of all policies of insurance which the other is
required to maintain under this Section 4.4. At least thirty (30) days prior to
the expiration of any such policy, Landlord and Tenant shall deliver to the
other a renewal of any such policy as an alternative to providing a policy of
insurance. Landlord and Tenant shall have the right to provide the other a
certificate of insurance, executed by an authorized officer of the insurance
company, showing that
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the insurance which the other is required to maintain under this Section 4.4 is
in full force and effect and containing such other information which the other
party reasonably requires.
(d) General Insurance Provisions.
(i) Any insurance which Tenant or Landlord is required to
maintain under this Lease shall include a provision which requires the insurance
carrier to give the other party not less than thirty (30) days' written notice
prior to any cancellation or modification of such coverage. All such policies
shall name Landlord's mortgagee as additional insured or loss payee, as
applicable.
(ii) If Landlord or Tenant fails to deliver a policy,
certificate or renewal to the other required under this Lease within the
prescribed time period or if any such policy is canceled or modified during the
Lease Term without the other party's consent, the other party may obtain such
insurance, in which case, as applicable, Tenant shall reimburse Landlord for the
cost of such insurance within fifteen (15) days after receipt of a statement
that indicates the cost of such insurance, or Tenant shall take a credit against
the Base Rent next coming due in the amount of the cost of such insurance.
(iii) All insurance required under this Lease shall be carried
with companies holding a "General Policy Rating" of A-12 or better, as set
forth in the most current issue of "Best Key Rating Guide". Landlord and Tenant
acknowledge the insurance markets are rapidly changing and that insurance in the
form and amounts described in this Section 4.4 may not be available in the
future. Tenant acknowledges that the insurance described in this Section 4.4 is
for the primary benefit of Landlord. If at any time during the Lease Term,
Landlord or Tenant is unable to maintain the insurance required under the Lease,
they shall nevertheless maintain insurance coverage which is customary and
commercially reasonable in the insurance industry for Tenant's type of business,
and for properties like the Property, as that coverage may change from time to
time.
(iv) Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all rights of recovery
against the other, or against the officers, employees, agents or representatives
of the other, for loss of or damage to its property or the property of others
under its control, if such loss or damage is covered by any insurance policy in
force (whether or not described in this Lease) at the time of such loss or
damage. Upon obtaining the required policies of insurance, Landlord and Tenant
shall give notice to the insurance carriers of this mutual waiver of
subrogation.
(v) Tenant may carry any insurance required under this lease
in an umbrella policy or other policy covering Tenant and the Property along
with other affiliates of Tenant and their respective properties.
(vi) Landlord and Tenant each shall endeavor to secure an
appropriate clause in, or an endorsement upon, each property or casualty
insurance policy insuring the Building or the Property pursuant to which the
insurance company waives subrogation against the other party, or permits the
insured, prior to a loss, to waive any claim it may have against the other party
without invalidating the coverage under the insurance policy. If either party's
insurer shall refuse to issue such clause or endorsement even with an additional
premium, then the other party shall have the right to designate another insurer
complying with the conditions of subsection (d)(iii) of this Section 4.4 who
would be prepared to permit such clause or endorsement.
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Section 4.5. Late Charges. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed encumbering the
Property. Therefore, if Landlord does not receive any rent payment within ten
(10) days after it becomes due, Tenant shall pay to Landlord a late charge equal
to five percent (5%) of the overdue amount. The parties agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of such late payment; no more than one late charge shall be
applied against any payment due. Notwithstanding the foregoing, Landlord shall
not impose a late charge without giving Tenant written notice that Tenant is
delinquent in paying any rent due hereunder and allowing Tenant a period of five
(5) days from receipt of such notice to pay such delinquent rent unless Tenant
has previously been notified by Landlord of a delinquency in paying rent at any
time within the immediately preceding twelve (12) month period, in which event
no notice shall be required to be given by Landlord prior to imposition of the
late fee.
Section 4.6. Interest on Past Due Obligations. Any amount owed by
Tenant to Landlord which is not paid within ten (10) days after it first becomes
due shall bear interest at the rate of twelve percent (12%) per annum from the
due date of such amount. However, interest shall not be payable on late charges
to be paid by Tenant under this Lease. The payment of interest on such amounts
shall not excuse or cure any default by Tenant under this Lease. If the interest
rate specified in this Lease is higher than the rate permitted by law, the
interest rate is hereby decreased to the maximum legal interest rate permitted
by law.
Section 4.7. Impounds for Insurance Premiums and Real Property Taxes.
If requested by any ground lessor or lender to whom Landlord has granted a
security interest in the Property, or if Tenant is more than ten (10) days late
in the payment of rent more than three (3) times in any consecutive twelve (12)
month period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the
annual Real Property Tax and insurance premiums payable by Tenant under this
Lease, together with each payment of Base Rent. Unless otherwise provided in the
existing Mortgage on the Property, Landlord shall hold such payments in an
interest bearing impound account and the interest thereon shall be added to such
amount. If unknown, Landlord shall reasonably estimate the amount of Real
Property Tax and insurance premiums when due. Tenant shall pay any deficiency of
funds in the impound account to Landlord upon written request. If Tenant
defaults under this Lease and Landlord terminates this Lease or Tenant abandons
the Property, Landlord may apply any funds in the impound account to any
obligation then due under this Lease. Tenant's payments under this Section 4.7
shall be in satisfaction of Tenant's obligations for payment of Real Property
Tax under Section 4.2.
Section 4.8. Management Fees. Tenant shall reimburse Landlord monthly
for management fees in connection with the Property in an amount not to exceed
two and one-half percent (2-1/2%) of the monthly Base Rent whether or not such
fees are actually paid or incurred by Landlord. In consideration of payment of
such management fees by Tenant, Landlord shall, upon request, arrange for and
monitor performance of service contracts for landscape maintenance and trash
removal with respect to the Property. Such service contracts shall be in
Tenant's name and Tenant shall pay all charges and fees due the service provider
thereunder without markup. Should Landlord fail or refuse to provide such
services as requested and such failure or refusal continues for a period of
fifteen (15) days after notice from Tenant, Tenant may cease payment of said
management fees until such time as Landlord is requested to and does provide
such services.
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Section 4.9. Maintenance Expense. Tenant shall reimburse Landlord for
amounts paid by Landlord as Landlord's share of the costs of maintenance and
repair (but not the initial construction) of Southpoint Drive pursuant to the
Declaration of Ingress-Egress Easement recorded under Register's No. FZ 0217,
Shelby County Register's Office, in an amount not to exceed $10,000.00 for each
lease year, cumulative, but not in any event to exceed $30,000.00 per each
consecutive four (4) year period.
ARTICLE FIVE: USE OF PROPERTY.
Section 5.1. Permitted Uses. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.6 above.
Section 5.2. Manner of Use. Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
other tenants of Landlord, or which constitutes a nuisance or waste. Tenant
shall obtain and pay for all permits, including a Certificate of Occupancy
(provided that Landlord obtains a temporary certificate of occupancy subject
only to final inspection of Tenant's materials handling and storage equipment
and racking; and all other certificates and permits, if any, required with
respect to the construction and operation of the "Shell Building"), required for
Tenant's occupancy of the Property and shall promptly take all actions necessary
to comply with all applicable statutes, ordinances, rules, regulations, orders
and requirements regulating the specific use by Tenant of the Property,
including the Occupational Safety and Health Act (as opposed to the general
compliance by the Building with applicable statutes, ordinances, rules,
regulations, orders and requirements, which shall be Landlord's obligation).
Section 5.3. Hazardous Materials. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state or
local laws or regulations, including, without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently regulated as "hazardous" or "toxic" under applicable federal, state
or local law. Tenant shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or
about the Property by Tenant, its agents, employees, contractors, sublessees
(other than Hazardous Materials used in compliance with applicable law for
ordinary cleaning, maintenance or office purposes provided that such Hazardous
Materials are used, handled or stored upon the Property only in the minimum
quantities necessary for such purposes) without the prior written consent of
Landlord. Landlord shall be entitled to take into account such other factors or
facts as Landlord may reasonably determine to be relevant in determining whether
to grant or withhold consent to Tenant's proposed activity with respect to
Hazardous Material. In no event, however, shall Landlord be required to consent
to the installation or use of any storage tanks on the Property.
Section 5.4. Signs and Auctions. Subject to the remaining portions of this
Section, Tenant shall not place any signs on the Property without Landlord's
prior written
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consent. Landlord will not unreasonably withhold its consent to signs proposed
by Tenant for placing on or above the doors of the Property identifying Tenant's
business. Landlord shall furnish two (2) pylon mounted signs and parking,
loading and shipping dock signage comparable to similar signage on other
buildings in Southpoint Distribution Park. No signs shall be permitted on the
Building except as provided in the previous two sentences. Tenant shall not
conduct or permit any auctions or sheriff's sales at the Property.
Section 5.5. Indemnity. Subject to Section 4.4(d)(iv) and subject to
Landlord's representations and warranties as to the permitted uses of the
Property contained in Section 6.2, Tenant shall indemnify Landlord against and
hold Landlord harmless from any and all costs, claims or liability arising from:
(a) Tenant's use of the Property; (b) the conduct of Tenant's business or
anything else done or permitted by Tenant to be done in or about the Property,
including any contamination of the Property or any other property resulting from
the presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant's obligations under this Lease;
(d) any material misrepresentation or material breach of material warranty by
Tenant under this Lease; or (e) other acts or omissions of Tenant (excluding
immaterial representations or immaterial breaches of warranties). Tenant shall
defend Landlord against any such cost, claim or liability at Tenant's expense
with counsel reasonably acceptable to Landlord or, at Landlord's election,
Tenant shall reimburse Landlord for any reasonable legal fees or costs incurred
by Landlord in connection with any such claim. As a material part of the
consideration to Landlord, Tenant assumes all risk of damage to property or
injury to persons in or about the Property arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord, except for any
injury or claim arising out of Landlord's negligence or willful act or failure
to act. As used in this Section, the term "Tenant" shall include Tenant's
employees, agents, contractors and invitees, if applicable.
Landlord shall indemnify Tenant against and hold Tenant harmless from
any and all costs, claims or liability arising from: (a) any breach or default
in the performance of Landlord's obligations under this Lease; (b) any material
misrepresentation or material breach of warranty by Landlord under this Lease;
(c) other acts or omissions of Landlord; or (d) any entry or testing by Landlord
on the Property under Section 5.6 below. Landlord shall defend Tenant against
any such cost, claim or liability at Landlord's expense with counsel reasonably
acceptable to Tenant or, at Tenant's election, Landlord shall reimburse Tenant
for any reasonable legal fees or costs incurred by Tenant in connection with any
such claim. As used in this Section, the term "Landlord" shall include
Landlord's employees, agents, contractors and invitees, if applicable.
Notwithstanding anything herein to the contrary, Landlord shall have no
liability to Tenant for damages to Tenant's property, inventory or other
personalty, or for consequential damages or damages for loss of Tenant's
business, except if caused by Landlord's gross negligence or willful misconduct.
Section 5.6. Landlord's Access. Landlord or its agents may enter the
Property at all reasonable times during business hours to show the Property to
potential buyers, investors or (during the last six (6) months of the Lease
Term) tenants, without interfering with the conduct of Tenant's business, to
inspect and conduct tests in order to monitor Tenant's compliance with all
applicable environmental laws and all laws governing the presence and use of
Hazardous Material; or for any other purpose Landlord deems necessary, or to
comply with Landlord's repair and maintenance obligations under this Lease.
Landlord shall give Tenant prior notice of such entry, except in the case of an
emergency. Landlord may place customary "For Sale" or "For Lease" signs on the
Property during the last six (6) months of the Lease Term.
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Section 5.7. Quiet Possession. If Tenant pays the rent and complies
with all other terms of this Lease, Tenant may peaceably and quietly occupy and
enjoy the Property for the full Lease Term, subject to the provisions of this
Lease. Landlord expressly warrants that all rights of Honeywell Inc.
to lease the Property have been terminated.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Existing Conditions. Tenant accepts the Property in its
condition as of the Commencement Date, subject to all recorded matters listed on
Exhibit A-2, laws, ordinances, and governmental regulations and orders and to
Landlord's completion of the building in accordance with Rider Paragraph 1.
Except as provided herein, Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation as to the condition of the
Property or the suitability of the Property for Tenant's intended use. Tenant
represents and warrants that Tenant has made its own inspection of and inquiry
regarding the condition of the Property and is not relying on any
representations of Landlord or any Broker with respect thereto, except as set
forth in this Lease.
Section 6.2. Exemption of Landlord from Liability. Landlord represents
that the zoning applicable to the Premises permits the construction and
completion of the Property (including the parking) and for operation of the
Property for the purposes permitted hereby. Landlord warrants that the Property,
upon "substantial completion" (hereinafter defined) shall be free from defects.
Landlord shall not be liable for any damage or injury to the person, business
(or any loss of income therefrom), goods, wares, merchandise or other property
of Tenant, Tenant's employees, invitees, customers or any other person in or
about the Property, whether such damage or injury is caused by or results from:
(a) fire, steam, electricity, water, gas or rain; (b) the breakage, leakage or
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures or any other cause; (c) conditions arising
in or about the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant unless Landlord negligently or willfully obstructs such access.
Section 6.3. Intentionally Deleted.
Section 6.4. Tenant's Obligations.
(a) Except as provided in Article Seven (Damage Destruction) and
Article Eight (Condemnation) and Rider Paragraphs 4 and 12, Tenant shall keep
all portions of the Property (including nonstructural, interior, exterior, and
landscaped areas, systems and equipment) in good order, condition and repair
(including interior repainting and refinishing, as needed). If any portion of
the Property or any system or equipment in the Property which Tenant is
obligated to repair cannot be fully repaired or restored, Tenant shall promptly
replace such portion of the Property or system or equipment or equipment in the
Property, regardless of whether the benefit of such replacement extends beyond
the Lease Term; but if the benefit or useful life of such replacement extends
beyond the Lease Term (as such term may be extended by exercise of any options),
the useful life of such replacement shall be prorated over the remaining portion
of the Lease Term (as extended, if extended), and Tenant shall be liable only
for that portion of the cost which is applicable
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to the Lease Term (as extended, if extended) and Tenant shall not be obligated
to undertake such replacement until Landlord has deposited with Tenant Tenant's
reasonable estimate of the cost of such replacement. Notwithstanding the
foregoing, in no event shall Tenant be obligated to undertake any replacement
during the last year of the Lease Term (as extended, if extended). Tenant shall
maintain a preventive maintenance contract providing for the regular inspection
and maintenance of the heating and air conditioning system by a licensed heating
and air conditioning contractor. If any part of the Property is damaged by any
act or omission of Tenant, Tenant shall pay Landlord the cost of repairing or
replacing such damaged property, whether or not Landlord would otherwise be
obligated to pay the cost of maintaining or repairing such property. It is the
intention of Landlord and Tenant that at all times Tenant shall maintain the
portions of the Property which Tenant is obligated to maintain in a condition
commensurate with the other buildings in the Project used for purposes similar
to the Property, subject to ordinary wear and tear.
(b) Tenant shall fulfill all of Tenant's obligations under this Section
6.4, at Tenant's sole expense. If Tenant fails to maintain, repair or replace
the Property as required by this Section 6.4, Landlord may as necessary to avoid
further damage to or deterioration of the Building or deterioration of
landscaping plants and/or materials, upon ten (10) days' prior notice to Tenant
(except that no notice shall be required in the case of an emergency), enter the
Property and perform such maintenance or repair (including replacement, as
needed) on behalf of Tenant. In such case, Tenant shall reimburse Landlord for
all costs incurred in performing such maintenance or repair immediately upon
demand.
(c) If Landlord fails to maintain the Property or perform any other
obligation of Landlord as required under this Lease, Tenant, upon ten (10) days'
prior notice to Landlord (except no notice shall be required in the case of an
emergency), may perform such maintenance or repair (or replacement, if needed)
or other obligation on behalf of Landlord and shall take a credit against the
Base Rent for all reasonable costs incurred in performing such maintenance or
repair. Tenant shall not perform such maintenance or repair if Landlord within
such ten (10) day period commences performance and thereafter continues
diligently to complete performance of such obligation.
Section 6.5. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or improvements
to the exterior of the Property or which are visible from the outside of the
Building without Landlord's prior written consent. Landlord's consent shall not
be required for (i) non-structural alterations to the interior of the Building
which do not exceed $50,000.00 in each instance; and (ii) painting and other
decorative alterations, installations and modifications of Tenant's materials
storage and handling equipment and other trade fixtures. Landlord may require
Tenant to provide demolition and/or lien and completion bonds in form and amount
reasonably satisfactory to Landlord but in no event in excess of 105% of the
contracted cost of the proposed alteration. Tenant shall promptly remove any
alterations, additions, or improvements constructed in violation of this Section
6.5(a) upon Landlord's written request. All alterations, additions, and
improvements shall be done in a good and workmanlike manner, in conformity with
all applicable laws and regulations, and by a contractor reasonably approved by
Landlord. Upon completion of any such work, Tenant shall provide Landlord with
"as built" plans, copies of all construction contracts (if any), and proof of
payment for all labor and materials. Landlord shall not unreasonably withhold
its consent to structural changes to the Building to accommodate Tenant's
materials handling equipment provided such changes do not reduce the original
clear height or column
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spacing of the Building or otherwise materially adversely affect the ordinary
function of the Building as a warehouse.
(b) Tenant shall pay when due all claims for labor and material
furnished to the Property. Tenant shall give Landlord at least twenty (20) days'
prior written notice of the commencement of any work on the Property, regardless
of whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.
Section 6.6. Condition upon Termination. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received on the Commencement Date, except for ordinary wear
and tear which Tenant was not otherwise obligated to remedy under any provision
of this Lease. However, Tenant shall not be obligated to repair any damage which
Landlord is required to repair under Article Seven (Damage or Destruction) or
Rider Paragraph 4. In addition, Landlord may require Tenant to remove only those
alterations, additions or improvements (made without Landlord's consent or made
with Landlord's consent conditioned upon removal by Tenant at expiration of the
Lease term) prior to the expiration of the Lease and to restore the Property to
its prior condition, all at Tenant's expense. All other alterations, additions
and improvements shall, at Tenant's option, be surrendered to Landlord upon the
expiration or earlier termination of the Lease, except that Tenant may remove
any of Tenant's machinery or equipment which can be removed without material
damage to the Property and Tenant's materials storage and handling equipment and
all non-affixed personalty of Tenant. Tenant shall repair, at Tenant's expense,
any damage to the Property caused by the removal of any such machinery or
equipment (other than ordinary wear and tear). In no event, however, shall
Tenant remove any of the following materials or equipment (which shall be deemed
Landlord's property) without Landlord's prior written consent; any power wiring
or power panels; lighting or lighting fixtures; wall coverings; window blinds;
carpets or other floor coverings; heaters, air conditioners or any other heating
or air conditioning equipment; fencing or security gates; or other similar
building operating equipment and permanently affixed decorations. It is
expressly understood that Tenant shall not be obligated to remove any structural
changes made to accommodate Tenant's materials handling equipment provided such
changes do not reduce the original clear height of or column spacing of the
Building or otherwise materially adversely affect the ordinary function of the
Building as a warehouse.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.1. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than ten percent (10%) of the Property is untenantable or
inaccessible as a result of such damage), this Lease shall remain in effect and
Landlord shall repair the damage as soon as reasonably possible. Landlord may
elect (but is not required unless Landlord has received insurance applicable
thereto) to repair any damage to Tenant's fixtures, equipment, or improvements.
Subject to the provisions of Section 13.12 hereof, if for any reason Landlord
has not restored and repaired the damage to the Building and the Property within
ninety (90) days after the date of said casualty, then Tenant shall have the
option to terminate this Lease at any time thereafter prior to the substantial
completion of the repair and restoration of the damage to the Building and the
Property by Landlord by
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giving written notice to Landlord, which notice shall specify a date for
expiration of the Lease, which date shall not be more than ninety (90) days
after the giving of such notice.
(b) Tenant shall pay Landlord the "deductible amount" (if any) under
Landlord's insurance policies.
(c) If the damage to the Property occurs during the last six (6) months
of the Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of the
date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.
Section 7.2. Substantial or Total Destruction.
(a) If the Property is substantially or totally destroyed by any cause
whatsoever (i.e., the damage to the Property is greater than partial damage as
described in Section 7.1 or if such damage, regardless of the size of the
portion damaged, renders the Building unfit for the operation of Tenant's
business), and if the Property can be rebuilt within six (6) months after the
date of destruction, Landlord shall rebuild the Property at Landlord's own
expense, and this Lease shall remain in full force and effect. Landlord shall
rebuild the Property at Landlord's sole expense, except that Tenant shall pay
Landlord the "deductible amount" (if any) under Landlord's insurance policies.
In addition and subject to the provisions of Section 13.12 hereof, if for any
reason Landlord has not restored and repaired the damage to the Building and the
Property within six (6) months after the occurrence of said casualty and the
removal of Tenant's equipment and other property sufficient to allow Landlord's
contractor to begin restoration and repair, time being strictly of the essence,
then Tenant shall have the option to terminate this Lease at any time thereafter
prior to the substantial completion of the repair and restoration of the damage
to the Building and the Property by giving written notice to Landlord, which
notice shall specify a date for expiration of the Lease, which date shall not be
more than ninety (90) days after the giving of such notice.
(b) If the substantial or total damage to the Property occurs during
the last twelve (12) months of the Lease Term, either Landlord or Tenant may
elect to terminate this Lease as of the date the damage occurred by giving
written notice to the other within sixty (60) days after Tenant's notification
to Landlord of the occurrence of the damage.
Section 7.3. Temporary Reduction of Rent. If the Property is destroyed
or damaged, any rent payable during the period of such damage, repair and/or
restoration shall be reduced according to the degree, if any, to which Tenant's
use of the Property is impaired. Except for such possible reduction in rent,
including but not limited to Base Rent, insurance premiums, Real Property Tax
and management fee, Tenant shall not be entitled to any compensation, reduction,
or reimbursement from Landlord as a result of any damage, destruction, repair,
or restoration of or to the Property.
Section 7.4. Waiver. Tenant waives the protection of any statute, code
or judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.2 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
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ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of
eminent domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the Building is taken, or
if any condemnation renders the Property unfit for Tenant's business as then
being conducted, Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice to the
Landlord within thirty (30) days after receipt of written notice of such taking
(or in the absence of such notice, within thirty (30) days after the condemning
authority takes title or possession). If Tenant does not terminate and provided
that the Building can be restored to an economically usable unit, this Lease
shall remain in effect as to the portion of the Property not taken, except that
the Base Rent and Additional Rent shall be reduced in proportion to the
reduction in the floor area of the Property. Any Condemnation award or payment
shall be distributed in the following order: (a) first, to any ground lessor,
mortgagee or beneficiary under a deed of trust encumbering the Property, the
amount of its interest in the Property; (b) second, to Tenant, only the amount
of any award specifically designated for loss of or damage to Tenant's trade
fixtures or removable personal property; and (c) third, to Landlord, the
remainder of such award, whether as compensation for reduction in the value of
the leasehold, the taking of the fee, or otherwise. Tenant may also make a claim
for an award for Tenant's loss of business and relocation costs. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.1. Landlord's Consent Required. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.2 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.5 below. Any attempted transfer without consent
shall be void and shall constitute a non-curable breach of this Lease. If Tenant
is a partnership, any cumulative transfer of more than fifty percent (50%) of
the partnership interests shall be deemed an assignment of this Lease requiring
Landlord's consent. Except as set forth below, if Tenant is a corporation, any
change in the ownership of a controlling interest of the voting stock of the
corporation shall be deemed an assignment of this Lease requiring Landlord's
consent. For the purposes hereof, "control" shall be deemed to mean ownership of
not less than 50% of all of the voting stock of such corporation or not less
than 50% of all of the legal and equitable interest in any other business
entities.
Section 9.2. Tenant Affiliate. Notwithstanding Section 9.1 above,
Tenant may assign this Lease or sublease the Property, without Landlord's
consent, to any corporation which controls, is controlled by or is under common
control with Tenant, or to any corporation resulting from the merger of or
consolidation with Tenant ("Tenant's Affiliate"). In such case, any Tenant's
Affiliate shall assume in writing all of Tenant's obligations under this Lease.
This Article IX shall not apply in connection with a bona fide sale or other
transfer by Tenant of its business or substantially all of its assets, or the
sale of all
15
or substantially all of Tenant's corporate stock or other interests in
connection with such sale or other transfer of its business, provided such sale
or other transfer is the primary purpose of the transaction and the assignment
or other transfer of this lease is merely incidental thereto. Any assignment or
subletting of this lease in connection with such sale or transfer (whether
direct, by operation of law, or default by virtue of the sale of stock) shall be
nonetheless subject to Landlord's prior written consent which Landlord shall not
unreasonably withhold or delay, provided (i) the proposed assignee, sublessee or
new stockholder is a reputable person of good character and of sound financial
condition and Landlord has been furnished with reasonable proof thereof; (ii)
the form of the proposed sublease or instrument of assignment shall be in form
reasonably satisfactory to Landlord and shall comply with the provisions of this
lease; (iii) the successor to Tenant has a net worth computed in accordance with
generally accepted accounting principles at least equal to the lesser of (A) the
net worth as shown on the consolidated financial statements of Tenant's parent,
Genesis Direct, Inc. immediately prior to such transaction, or (B) the net worth
as shown on the consolidated financial statements of Genesis Direct, Inc. on
January 31, 1997; and (iv) proof satisfactory to Landlord of such net worth
shall have been delivered to Landlord at least ten (10) days prior to the
effective date of any such transaction. In addition, Tenant shall have the right
to retain a sublease interest in the Property and/or a reassignment of this
Lease as collateral security for any obligation which the purchaser of Tenant's
business shall owe to Tenant or its stockholders in connection with any such
transaction.
Section 9.3. No Release of Tenant. No transfer permitted by this
Article Nine, whether with or without Landlord's consent, shall release Tenant
or change Tenant's primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's transferee
defaults under this Lease, Landlord may proceed directly against Tenant without
pursuing remedies against the transferee. Landlord may consent to subsequent
assignments or modifications of this Lease by Tenant's transferee, without
notifying Tenant or obtaining its consent. Such action shall not relieve
Tenant's liability under this Lease.
Section 9.4. Offer to Terminate. If Tenant desires to assign the Lease
or sublease eighty percent (80%) or more of the Property, Tenant shall have the
right to offer, in writing, to terminate the Lease as of a date specified in the
offer. If Landlord elects in writing to accept the offer to terminate within
twenty (20) days after notice of the offer, the Lease shall terminate as of the
date specified and all the terms and provisions of the Lease governing
termination shall apply; and Landlord shall pay to Tenant (which obligation to
pay shall survive the termination of this Lease) fifty percent (50%) of the
"profit" Landlord receives or may receive from any reletting of the Property
over the period that would have been the original Lease term but for such
termination. If Landlord does not so elect, the Lease shall continue in effect
until otherwise terminated and the provisions of Section 9.5 with respect to any
proposed transfer shall continue to apply. As used in this Section 9.4, the term
"profit" shall mean all amounts Landlord receives from such reletting which
exceed the amounts which would have been received from Tenant over the original
Lease Term, less costs and expenses incurred directly by Landlord in connection
with the execution and performance of the new lease for broker's commissions,
advertising, legal fees and expenses, tenant improvements, and renovations, and
concessions. Tenant's share of the "profit" received by Landlord shall be paid
as received by Landlord, after recovery by Landlord of all of the foregoing
costs and expenses.
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Section 9.5. Landlord's Consent.
(a) Tenant's request for consent to any transfer described in Section
9.1 shall set forth in writing the details of the proposed transfer, including
the name, business and financial condition of the prospective transferee,
financial details of the proposed transfer (e.g., the term of and the rent and
security deposit payable under any proposed assignment or sublease), and any
other information Landlord reasonably deems relevant. Landlord shall have the
right to withhold consent, if reasonable, or to grant consent, based on the
following factors: (i) the business of the proposed assignee or subtenant and
the proposed use of the Property: (ii) the net worth and financial reputation of
the proposed assignee or subtenant: (iii) Tenant's material compliance with all
of its material obligations under the Lease: and (iv) such other factors as
Landlord may reasonably deem relevant. If Landlord objects to a proposed
assignment solely because of the net worth and/or financial reputation of the
proposed assignee, Tenant may nonetheless sublease (but not assign), all or a
portion of the Property to the proposed transferee, but only on the other terms
of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the
Lease the Landlord's Share (stated in Section 1.13) of the Profit (defined
below) on such transaction as and when received by Tenant, unless Landlord gives
written notice to Tenant and the assignee or subtenant that Landlord's Share
shall be paid by the assignee or subtenant to Landlord directly. The "Profit"
means (A) all amounts paid to Tenant for such assignment or sublease, including
"key" money (other than amounts paid for the purchase of Tenant's fixtures and
improvements), monthly rent in excess of the monthly rent payable under the
Lease, and all fees and other consideration paid for the assignment or sublease,
including fees under any collateral agreements, less (B) costs and expenses
directly incurred by Tenant in connection with the execution and performance of
such assignment or sublease for real estate broker's commissions, advertising,
legal fees and expenses, moving expenses, transfer taxes and costs of renovation
or construction of tenant improvements required under such assignment or
sublease. Tenant is entitled to recover such cost and expenses before Tenant is
obligated to pay the Landlord's Share to Landlord. The Profit in the case of a
sublease of less than all the Property shall be calculated as the rent allocable
to the subleased space as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or sublease of the
Property within thirty (30) days after the transaction documentation is signed,
and Landlord may inspect Tenant's books and records, only as they apply to such
transaction, to verify the accuracy of such statement. On written request,
Tenant shall promptly furnish to Landlord copies of all the transaction
documentation, all of which shall be certified by Tenant to be complete, true
and correct. Landlord's receipt of Landlord's Share shall not be consent to any
further assignment or subletting. The breach of Tenant's obligation under this
Section 9.5(b) shall be a material default of the Lease.
Section 9.6. No Merger. No merger shall result from Tenant's sublease
of the Property under this Article Nine and Tenant's surrender of this Lease to
Landlord or the termination of this Lease in any other manner. In any such
event, Landlord may terminate any or all subtenancies or succeed to the interest
of Tenant as sublandlord under any or all subtenancies.
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ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.1. Defaults. Tenant shall be in material default under this
Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the Property
results in the cancellation of any insurance described in Section 4.4;
(b) If Tenant fails to pay rent or any other charge when due and continues
to do so for ten (10) days after written notice from Landlord;
(c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30)-day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease as
specified in subsection (d) immediately following. The notice required by this
Section is intended to satisfy any and all notice requirements imposed by law on
Landlord and is not in addition to any such requirement.
(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within sixty (60) days; (iii) if a trustee or receiver is appointed to
take possession of substantially all of Tenant's assets located at the Property
or of Tenant's interest in this Lease and possession is not restored to Tenant
within sixty (60) days; or (iv) if substantially all of Tenant's assets located
at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
sixty (60) days. If a court of competent jurisdiction determines that any of the
acts described in this subparagraph (d) is not a default under this Lease, and a
trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent
(or any other consideration) paid in connection with such assignment or sublease
over the rent payable by Tenant under this Lease.
(e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion of
Tenant's obligations under the Lease. Unless otherwise expressly provided, no
guaranty of the Lease is revocable.
Section 10.2. Remedies. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
18
avoided;(iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, and other charges which Tenant would have paid for the balance
of the Lease Term after the time of award exceeds the amount of such rental loss
that Tenant proves Landlord could have reasonably avoided; and (iv) any other
amount (not accounted for in clauses (i), (ii) or (iii) above) necessary to
compensate Landlord (but not consequential damages) for all the detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, any costs or expenses Landlord incurs
in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Landlord's reasonable
attorneys' fee incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the "worth at the time
of the award" is computed by allowing interest on unpaid amounts at the rate per
annum of one percent (1%) over the then prime rate, or such lesser amount as may
then be the maximum lawful rate. As used in subpart (iii) above, the "worth at
the time of the award" is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award, plus
one percent (1%). If Tenant has abandoned the Property for one (1) year or
more, Landlord shall have the option of (i) retaking possession of the Property
and recovering from Tenant the amount specified in this Section 10.2(a), or (ii)
proceeding under Section 10.2(b);
(b) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant has abandoned the Property. In
such event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due;
(c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.
Section 10.3. Repayment of "Free" Rent. The rent that would be payable
during the first two months of the Term but for the abatement thereof is called
the "Abated Rent". If this Lease terminates as a result of Tenant's default and
failure to cure within any applicable grace period, the Abated Rent shall
immediately become due and payable in full and this Lease shall be enforced as
if there were no such rent abatement or other rent concession. In such case,
Abated Rent shall be calculated based on the full initial rent payable under
this Lease.
Section 10.4. Automatic Termination. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence of
any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.2 hereof (none of which actions may be taken until
expiration of any applicable grace period), including the filing of an unlawful
detainer action against Tenant. On such termination, Landlord's damages for
default shall include all costs and fees, including reasonable attorneys' fees
that Landlord incurs in connection with the filing, commencement, pursuing
and/or defending of any action in any bankruptcy court or other court with
respect to the Lease; the obtaining of relief from any stay in bankruptcy
restraining any action to evict Tenant; or the pursuing of any action with
respect to Landlord's right to possession of the Property. All such damages
suffered (apart from Base Rent and other rent payable hereunder) shall
constitute pecuniary damages which must be reimbursed to Landlord prior to
assumption of the Lease by Tenant or any successor to Tenant in any bankruptcy
or other proceeding.
Section 10.5. Cumulative Remedies. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
19
ARTICLE ELEVEN. PROTECTION OF LENDERS.
Section 11.1. Subordination. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Property, any advances made on the security thereof and any
renewals, modifications, consolidations, replacements or extensions thereof,
whenever made or recorded. Tenant shall reasonably cooperate with Landlord and
any lender which is acquiring a security interest in the Property or the Lease.
Tenant shall execute such further documents and assurances as such lender may
require, provided that Tenant's obligations under this Lease shall not be
increased (except for the performance of ministerial acts), and Tenant shall
not be deprived of its rights under this Lease. Tenant's right to quiet
possession of the Property during the Lease Term shall not be disturbed if
Tenant pays the rent and performs all of Tenant's obligations under this Lease
and is not otherwise in default beyond any applicable grace periods. If any
ground lessor, beneficiary or mortgagee elects to have this Lease prior to the
lien of its ground lease, deed of trust or mortgage and gives written notice
thereof to Tenant, this Lease shall be deemed prior to such ground lease, deed
of trust or mortgage whether this Lease is dated prior or subsequent to the date
of said ground lease, deed of trust or mortgage or the date of recording
thereof.
Section 11.2. Attornment. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, this Lease shall not be terminated and Tenant
shall attorn to the transferee or successor to Landlord's interest in the
Property and recognize such transferee or successor as Landlord under this
Lease. Tenant waives the protection of any statute or rule of law which gives or
purports to give Tenant any right to terminate this Lease or surrender
possession of the Property upon the transfer of Landlord's interest.
Section 11.3. Signing of Documents. Tenant shall sign and deliver any
instrument or documents reasonably necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. If Tenant fails to do so
within twenty (20) days after written request, Tenant hereby makes, constitutes
and irrevocably appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.4. Non-Disturbance-Agreement.
Anything contained in this Lease to the contrary notwithstanding,
Tenant's subordination or attornment to a ground lessor or the holder of a deed
of trust or mortgage is conditioned on Tenant's receipt from such lessor or
holder of a Non-Disturbance Agreement.
"Non-Disturbance Agreement" shall mean an agreement, in recordable
form, executed, acknowledged and delivered by a holder or lessor to Tenant,
providing in substance that so long as no default exists under this Lease which
is continuing after notice and beyond the expiration of any applicable grace
period, (i) the holder or the lessor, as applicable, shall not name or join
Tenant nor any person claiming through or under Tenant as a party defendant to
any action for foreclosure or other enforcement of the remedies under the
mortgage, deed of trust or lease as applicable; (ii) the leasehold, possession
and use of the Property in accordance with the terms of this Lease and all other
rights of Tenant (and any person claiming through or under Tenant) under this
Lease shall not be interfered with, affected or disturbed in any way by reason
of the subordination of this Lease to such mortgage, deed of trust or lease or
any sale pursuant to any foreclosure, deed or assignment in lieu of foreclosure
or similar device; (iii) this Lease
20
shall not be terminated in connection with, or by reason of, foreclosure or
other proceedings or by reason of a transfer of the Landlord's interest under
this Lease pursuant to the taking of a deed or assignment in lieu of foreclosure
or similar device, or by reason of the termination or expiration of a ground
lease or by other enforcement proceeding with respect to any mortgage, deed of
trust or ground lease, and this Lease shall be unaffected by any of the
foregoing proceedings.
Section 11.5. Estoppel Certificates.
(a) Upon either party's written request, the other party shall execute,
acknowledge and deliver a written statement certifying: (i) that none of the
terms or provisions of this Lease have been changed (or if they have been
changed, stating how they have been changed); (ii) that this Lease has not been
canceled or terminated; (iii) the last date of payment of the Base Rent and
other charges and the time period covered by such payment; and (iv) that the
other party is not in default under this Lease (or, if the other party is
claimed to be in default, stating why). Such a statement shall be delivered
within ten (10) days after request. Tenant may give any such statement by
Landlord to any prospective purchaser or encumbrancer of the Property. Landlord
may give any such statement by Tenant to any prospective purchaser, investor,
subtenant or assignee. Any Party may rely conclusively upon such statement as
true and correct.
(b) If either party does not deliver such statement to the other within
such ten (10) day period, the other party, and any prospective purchaser or
encumbrancer, investor, subtenant or assignee, as applicable, may conclusively
presume and rely upon the following facts: (i) that the terms and provisions of
this Lease have not been changed except as otherwise represented; (ii) that this
Lease has not been canceled or terminated except as otherwise represented; (iii)
that not more than one month's Base Rent or other charges have been paid in
advance; and (iv) that the other party is not in default under the Lease. In
such event, the party failing to deliver the statement shall be estopped from
denying the truth of such facts.
Section 11.6. Tenant's Financial Condition. Within ten (10) days after
written request from Landlord in connection with Tenant's request for consent to
a sublease, a sale or financing transaction with regard to the Building or in
connection with Rider Paragraph 11, or for any other reason which Landlord may
reasonably request, Tenant shall deliver to Landlord such financial statements
as Landlord reasonably requires to verify the net worth of Tenant or any
assignee or subtenant; it being understood, however, that Tenant has not made
any representation or warranty regarding its net worth and the failure to
maintain or obtain any level of net worth shall have no effect on Tenant's
rights hereunder. In addition, Tenant shall deliver to any lender designated by
Landlord any financial statements of Tenant and/or its parent required by such
lender to facilitate the financing or refinancing of the Property. Tenant
represents and warrants to Landlord that each such financial statement is a true
and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in the foregoing sentence.
ARTICLE TWELVE: LEGAL COSTS
Section 12.1. Legal Proceedings. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this
21
Lease, whether or not suit is commenced or judgment entered. Such costs shall
include legal fees and costs incurred for the negotiation of a settlement,
enforcement of rights or otherwise. Furthermore, if any action for breach of or
to enforce the provisions of this Lease is commenced, the court in such action
shall award to the party in whose favor a judgment is entered, a reasonable sum
as attorneys' fees and costs. The losing party in such action shall pay such
attorneys' fees and costs. Tenant shall also indemnify Landlord against and hold
Landlord harmless from all costs, expenses, demands and liability Landlord may
incur if Landlord becomes or is made a party to any claim or action (a)
instituted by Tenant against any third party, or by any third party against
Tenant, or by or against any person holding any interest under or using the
Property by license of or agreement with Tenant; (b) for foreclosure of any lien
for labor or material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or transaction of Tenant or
such other person; or (d) necessary to protect Landlord's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the
United States Code, as amended. Tenant shall defend Landlord against any such
claim or action at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
reasonable legal fees or costs Landlord incurs in any such claim or action.
Landlord shall also indemnify Tenant against and hold Tenant
harmless from all costs, expenses, demands and liability Tenant may incur if
Tenant becomes or is made a party to any claim or action (a) instituted by
Landlord against any third party, or by any third party against Landlord, or by
or against any person holding any interest under or using the property by
license of or agreement with Landlord; (b) for foreclosure of any lien for labor
or material furnished to or for Landlord or such other person; (c) otherwise
arising out of or resulting from any act or transaction of Landlord or such
other person; or (d) necessary to protect Tenant's interest under this Lease in
a bankruptcy proceeding, or other proceeding under Title 11 of the United States
Code, as amended. Landlord shall defend Tenant against any such claim or action
at Landlord's expense with counsel reasonably acceptable to Tenant or, at
Tenant's election, Landlord shall reimburse Tenant for any reasonable legal fees
or costs Tenant incurs in any such claim or action.
Section 12.2. Landlord's Consent. Tenant shall pay Landlord's
reasonable out-of-pocket attorneys' fees incurred in connection with Tenant's
request for Landlord's consent under Article Nine (Assignment and Subletting),
or in connection with any other act which Tenant proposes to do and which
requires Landlord's consent under the terms of this Lease.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.1. Non-Discrimination. Tenant promises, and it is a
condition to the continuance of this Lease, that there will be no discrimination
against, or segregation of, any person or group of persons on the basis of race,
color, sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.
Section 13.2. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the then
current owner or owners of the fee title to the Property or the leasehold estate
under a ground lease of the Property at the time in question. Each Landlord is
obligated to perform the obligations of Landlord under this Lease only during
the time such Landlord owns such interest or title.
22
Any Landlord who transfers its title or interest in an arms'-length transaction
for value is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of transfer.
However, each Landlord shall deliver to its transferee all funds that Tenant
previously paid if such funds have not yet been applied under the terms of this
Lease.
(b) Subject to Tenant's rights under Section 13 of the attached Rider
and under Section 6.4(c): except in the event of an emergency, Tenant shall give
written notice of any failure by Landlord to perform any of its obligations
under this Lease to Landlord and to any ground lessor, mortgagee or beneficiary
under any deed of trust encumbering the Property whose name and address have
been furnished to Tenant in writing. Landlord shall not be in default under this
Lease unless Landlord (or such ground lessor, mortgagee or beneficiary) fails to
cure such non-performance within thirty (30) days after receipt of Tenant's
notice. However, if such non-performance reasonably requires more than thirty
(30) days to cure, Landlord shall not be in default if such cure is commenced by
Landlord or such mortgagee within such thirty (30) day period and thereafter
diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the proceeds
thereof, and neither the Landlord nor its partners, shareholders, officers or
other principals shall have any personal liability under this Lease, except to
the extent of the proceeds of the Property.
Section 13.3. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.4. Interpretation. The captions of the Articles or Sections
of this Lease are to assist the parties in reading this Lease and are not a part
of the terms or provisions of this Lease. Whenever required by the context of
this Lease, the singular shall include the plural and the plural shall include
the singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conducts, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permission (other than Landlord, its agents, employees, contractors,
invitees or successors).
Section 13.5. Incorporation of Prior Agreements; Modifications. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
Section 13.6. Notices. All notices required or permitted under this
Lease shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.3 above, except that upon
Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes with copies to the address specified in Section 1.3
above and to Tenant's Guarantor, Genesis Direct, Inc., Xxx Xxxxxx Xxxxx, Xxxxx
000, Xxxx Xxx, Xxx Xxxxxx 00000-0000, and Greenberg, Traurig, Hoffman, Lipoff,
Xxxxx & Quentel, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq. Notices to Landlord shall be delivered to the
address
23
specified in Section 1.02 above. All notices shall be effective upon delivery.
Either party may change its notice address upon written notice to the other
party.
Section 13.7. Waivers. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
Section 13.8. No Recordation. Tenant shall not record this Lease
without prior written consent from Landlord. However, either Landlord or Tenant
may require that a "Short Form" memorandum of this Lease executed by both
parties be recorded against the Property and the expansion lot. The party
requiring such recording shall pay all transfer taxes and recording fees.
Section 13.9. Binding Effect; Choice of Law. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 13.10. Corporate Authority; Partnership Authority. If Tenant is
a corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant's recorded statement of partnership or certificate of limited
partnership.
Section 13.11. Joint and Several Liability. All parties signing this
Lease as Tenant, or Landlord, shall be jointly and severally liable for all
obligations of Tenant, or Landlord, as applicable.
Section 13.12. Force Majeure. If either Landlord or Tenant cannot
perform any of its obligations due to events beyond such party's reasonable
control, the time provided for performing such obligations shall be extended by
a period of time equal to the duration of such events. Events beyond a party's
reasonable control include, but are not limited to, acts of God, war, civil
commotion, labor disputes, strikes, fire, flood or other casualty, shortages of
labor or material, government regulation or restriction and weather conditions
but shall not include insufficiency of funds. Without limiting Tenant's rights
under the other provisions of this Lease giving Tenant the right to abatement of
Rent, this provision shall not extend the time for performance by Tenant of any
of Tenant's financial obligations hereunder, including without limitation the
timely payment of Rent.
24
Section 13.13. Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
ARTICLE FOURTEEN: BROKERS
Section 14.1. Broker's Fee. When this Lease is signed by and delivered
to both Landlord and Tenant, Landlord shall pay a real estate commission to
Tenant's Broker named in Section 1.8 above, as provided in the written agreement
between Landlord and Tenant's Broker.
Section 14.2. Agency Disclosure; No Other Brokers. Landlord and Tenant
each warrant that they have dealt with no other real estate broker(s) in
connection with this transaction except: See paragraph 7 of the attached Rider.
ARTICLE FIFTEEN: COMPLIANCE
The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties property or the subject matter of this Agreement,
including, but not limited to, the 1964 Civil Rights Act and all amendments
thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive
Environmental Response Compensation and Liability Act, and The Americans With
Disabilities Act.
Landlord and Tenant have signed this Lease at the place and on the
dates specified adjacent to their signatures below and have initialed all Riders
which are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on February 24, 0000 XXXXXXXXX XXXXXXX, INC.
at Sacramento, California
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
Its: President
Signed on February 25, 0000 XXXXXXXX XXXXXXXXXXX, XXX
xx Xxxxxxx, XX
By: /s/ Xxxxxx Xxxxxxxx
----------------------------
Xxxxxx Xxxxxxxx
Its: Chief Manager
25
"TENANT"
Signed on February 13, 1997 GENESIS DIRECT NINE, LLC
at Ft. Xxx, NJ
By: Genesis Direct Inc.
---------------------------
Its: Managing Member
---------------------------
By: /s/ Xxxxxx Xxxxx
---------------------------
Its: EVP, COO
---------------------------
RIDER
DATED FEBRUARY __, 1997, TO LEASE AGREEMENT DATED FEBRUARY 14, 0000,
XXXXXXX XXXXXXXXX XXXXXXX, INC. and XXXXXXXX INVESTMENTS, LLC, AS LANDLORD, AND
GENESIS DIRECT NINE, LLC, AS TENANT
If there is any inconsistency between this Rider and the Lease to which it is
attached, the provisions of this Rider shall prevail.
1. Construction of the Building. Landlord currently has under
construction a warehouse/office building consisting of approximately 500,000
square feet (the "Building") on the real property described in the attached
Exhibit A to this Lease and Rider. The Building will be constructed in
accordance with the Building Specifications attached as Exhibit B. Landlord will
cause the Building to be constructed in accordance with all applicable federal,
state and local laws, regulations, codes and ordinances, including, but not
limited to, applicable requirements of the Americans with Disabilities Act.
Landlord shall construct the Building (including installation of all restroom
facilities required to satisfy building code requirements) and all exterior
lighting, landscaping, parking areas and driveways and painting of the interior
and exterior walls at Landlord's sole cost; however, Tenant shall pay all costs
of constructing Tenant's office improvements in the Building in accordance with
plans and specifications to be prepared by Landlord and approved by Tenant, such
costs to be paid by Tenant promptly in progress payments during the course of
construction under Landlord's construction contract for such office
improvements. Landlord shall submit the approved plans for Tenant's office
improvements for bids and advise Tenant of the price to construct said
improvements. Tenant shall have the opportunity to eliminate or add construction
items after receipt of bids in order to adjust the bid price to an amount which
is acceptable to Tenant prior to Landlord's contracting for such improvements.
2. Term of Lease. The term of the Lease shall commence on the date (the
"Commencement Date") that is the later of (i) April 1, 1997, and (ii) the date
the entire Building including all office improvements is "substantially
completed" (as hereinafter defined) and extend for a period often (10) years and
two (2) months from such date plus the number of days necessary to end the Lease
Term on the last day of a month. Provided that Tenant approves the plans and the
costs for construction of Tenant's office improvements on or before February 15,
1997, Landlord covenants to deliver the entire Building in "substantially
completed" condition on or before April 1, 1997.
As used herein, the term "substantially completed" shall mean that the
Building including Tenant's office improvements has been completed to the point
that it may be safely and lawfully occupied (including issuance of a temporary
certificate of occupancy subject only to final inspection of Tenant's materials
handling and storage equipment and racking by applicable governmental
authorities and all other certificates and permits) for the intended use,
subject only to correction of minor defects or imperfections commonly referred
to as "punch list" items; provided that all "punch list" items shall be
completed within 30 days after Tenant has completed installation of its
materials storage and delivery system.
Notwithstanding the above, if Tenant fails or neglects to approve
either the plans or the costs for construction of Tenant's office improvements
in writing by February 15, 1997, through no fault of Landlord, and the "Base
Building" (defined as the entire Building
1
and parking facilities less Tenant's office improvements) is substantially
completed on April 1, 1997, the term of this Lease shall commence on April 1,
1997. Tenant shall be allowed possession of the Building subject to the presence
and activities of the contractor engaged to construct Tenant's office
improvements. Tenant shall not hinder or delay said contractor. Landlord shall
be allowed one day after Apr11 1, 1997, for every day after February 15, 1997,
that Tenant's plans and costs are not approved by Tenant in writing within which
to substantially complete said office improvements; and provided that said
office improvements are substantially completed within such extended period,
Tenant shall have no claim for abatement of rent pursuant to Paragraph 13 below;
or any claim for a penalty under Paragraph 9 below.
3. Rental Commencement. Base Rent shall commence to be payable on
June 1, 1997 (the "Rental Commencement Date"); provided that any delay in
occurrence of the Commencement Date after April 1, 1997 shall extend the Rental
Commencement Date by a like number of days.
4. Maintenance, Repairs, Expenses. Notwithstanding Sections 6.03 and
6.04 of this Lease, the Landlord shall be responsible for maintenance and
repair, and replacement if necessary, of the roof, exterior walls (excluding
painting), subsurface utilities and structural aspects of the Building including
the floors and foundation and the replacement of any pavement and parking
surfaces which fail or deteriorate to the degree that they must be replaced (as
opposed to patched or repaired) unless the necessity for replacement of such
surfaces arises out of Tenant's abuse as opposed to ordinary wear and tear
during the Lease Term and any renewal term. Tenant will be responsible for all
other expenses of maintenance and repair in accordance with Section 6.4 of this
Lease. In addition, Tenant shall be responsible for payment of all operating
expenses associated with the Building including without limitation the
following:
(a) Real Estate Tax applicable to the Building and the land on which
it is located in accordance with Section 4.2 of this Lease;
(b) expenses of fire and hazard insurance (including loss of rents)
on the Building and liability insurance protecting both Tenant
and Landlord in accordance with Section 4.4 of this Lease;
(c) sprinkler security/fire protection system;
(d) landscape maintenance (provided that Landlord, at its expense,
provides the initial planting of such landscaping);
(e) utilities in accordance with Section 4.3 of this Lease;
(f) parking lot sweeping and lighting (electrical and maintenance)
expense;
(g) property management expense as provided in Section 4.8 of this
Lease.
5. Options to Renew.
(a) Tenant shall have the option to renew this Lease for an
additional five (5) year period (the "First Renewal Term") at the end of the
initial Lease Term, and the option to renew for an additional five (5) year
period at the end of the First Renewal Term (the "Second Renewal Term"). Each
renewal shall be on the same terms as provided
2
herein except that the base rental during each such renewal term shall be equal
to the greater of (a) 95% of the "Fair Market Rental Value" of the Building, as
determined as of the first day of such renewal term pursuant to subparagraph (b)
below; or (b) the rental for the immediately preceding term of the Lease. To be
effective, each such option must be exercised by written notice from Tenant to
Landlord not later than six months prior to the end of the then current term.
(b) In determining the Fair Market Rental Value of the
Building, Landlord shall first inform Tenant of a proposed rental rate within
ten (10) days after receipt of Tenant's notice of exercise of Tenant's renewal
option. If Tenant does not agree with the proposed rental rate, then at Tenant's
expense, the Fair Market Rental Value of the Building shall be determined by an
appraisal done by a Member of the Appraisal Institute ("Institute") with no less
than ten (10) years' experience in the Memphis, Tennessee metropolitan area, the
arrangements for which must be made by Tenant and which must be completed within
forty-five (45) days after receipt of Landlord's proposed rental rate ("Tenants
Renewal Appraisal"). In the event that Landlord does not agree with Tenant's
Renewal Appraisal, then Landlord may, at Landlord's expense, obtain another
appraisal from an Institute member, with no less than ten (10) years' experience
in the Memphis, Tennessee metropolitan area ("Landlord's Renewal Appraisal")
which must be completed, within forty-five (45) days of receipt of Tenant's
Renewal Appraisal. In the event that the two rental rates determined by Tenant's
Renewal Appraisal and Landlord's Renewal Appraisal differ by less than ten
percent (10%), the Fair Market Rental Rate shall be the average of the two
rental rates determined by Tenant's Renewal Appraisal and Landlord's Renewal
Appraisal. In the event that the two rental rates determined by Tenant's Renewal
Appraisal and Landlord's Renewal Appraisal differ by greater than 10%, the
appraisers designated by Landlord and Tenant shall within twenty (20) days
designate a third Institute member to make a third appraisal. The Fair Market
Rental Rate as determined by the appraisal of the third Institute member shall
then be averaged with either Tenant's Renewal Appraisal or Landlord's Renewal
Appraisal, whichever shall be closest to the appraisal of the third Institute
member and the results of said averaging shall be binding on the parties.
Tenant's Renewal Appraisal and Landlord's Renewal Appraisal as well as the
appraisal of the third Institute member (if applicable) shall be based upon the
rental rates then being charged for similar buildings in the immediate area and
shall take into consideration all relevant factors including without limitation,
the age of the Building, term of the renewal and the fact that Landlord will not
be incurring concessions, if any, then being offered in the Market such as rent
abatement and improvement allowances. Each party shall bear the expense of the
appraiser designated by it with the expense of the third appraiser being shared
equally by the parties.
(c) if Tenant is in material default under any of the terms,
covenants or conditions of the Lease after notice and the expiration of the
applicable grace periods on the date of giving the option notice or the date the
Renewal Term(s) is to commence, the Renewal Term(s) in question shall not
commence and the Lease shall expire at the end of the then existing term.
6. Security Deposit/Application to Rent. Provided no uncured
material default of Tenant then exists, at the end of each twelve month period
of the Lease Term: (i) if the Security Deposit is in cash, Landlord shall apply
one-sixth of the Security Deposit provided in Section 1.10 to the next due
installment of base rent, which payment shall be in lieu of Tenant's Base Rent
payment for such month, or (ii) if the Security Deposit is in the form of a
letter of credit, the Security Deposit shall be reduced by one-sixth of the
original principal amount thereof.
3
7. Brokerage. Tenant has represented that its exclusive agents in this
transaction are The Weston Companies and The Xxxxxxxxx Company, whom Landlord
has agreed under separate agreement to pay a commission in the event the Lease
is executed. Except for the foregoing commissions, Tenant agrees to indemnify
and hold Landlord harmless from the claims of all brokers claiming to have been
engaged by Tenant in connection with this transaction.
8. PILOT Program. Upon the request of Tenant, Landlord will cooperate
with Tenant in seeking a property tax "freeze" with respect to the Building and
land under the Payment in Lieu of Taxes (PILOT) Program including without
limitation by entering into a quit-claim and leaseback transaction as may be
necessitated by the PILOT Program. All costs associated therewith shall be borne
by Tenant including all reasonable fees and charges of Landlord's attorney in
connection with review and approval of the documents required to place the
Building in the PILOT Program. All benefits accruing from the PILOT Program will
inure to Tenant's benefit. Tenant shall assume all obligations imposed on
Landlord with respect to the Property and Building by the Industrial Development
Board of the City of Memphis and County of Shelby, Tennessee (except those with
which Tenant cannot reasonably comply, e.g., payment of Landlord's taxes and
maintaining Landlord in good standing), as a condition to receiving such tax
"freeze" and Tenant shall indemnify and hold Landlord harmless from and against
any and all loss, cost or expense in connection therewith.
9. Penalty for Late Delivery. In the event Landlord is late in
delivering the Base Building (as defined in Paragraph 2 above) in substantially
completed condition by April 1, 1997, the Rental Commencement Date shall be
extended in accordance with Rider Paragraph 3 and Landlord will credit against
the Base Rent payments first due under this Lease an amount equal to $5,000.00
for each day Landlord is late. The amount of the daily penalty will increase by
$5,000.00 per day if the delay continues for as much as two weeks and will
increase by an additional $5,000.00 per day for each period of two weeks
thereafter until Landlord has delivered the Building "substantially completed".
Furthermore, for purposes of this paragraph, Landlord shall have a period of
forty-five (45) days after approval by Tenant in writing of the plans and costs
of Tenant's office improvements to cause said office improvements to be
substantially completed. In the event Landlord is late in delivering said office
improvements within said 45-day period, Landlord shall credit against the Base
Rent payments first due hereunder a further $5,000.00 per day penalty (which
shall increase as provided above) as provided above for late delivery of the
Base Building, until said office improvements are substantially completed.
Landlord will not be obligated for such penalty in the event that Landlord is
prevented from delivering the Base Building on or before April 1, 1997 (the
"Delivery Date") or Tenant's office improvements within said 45-day period by
events beyond Landlord's reasonable control as provided in Section 13.12 of the
Lease. If Landlord has not delivered the Base Building "substantially completed"
by July 1, 1997, Tenant may terminate this Lease by written notice given at any
time prior to November 1, 1997.
10. Expansion.
(a) Landlord agrees to hold available for the exclusive benefit
of Tenant for a period of up to five years from the Commencement Date the land
lying north of the Building shown on Exhibit C (the "Expansion Lot") for
construction of an expansion of the Building of between approximately 50,000 -
100,000 square feet (the "Expansion Building"). Landlord shall hold the
Expansion Lot for the first three years at no cost to Tenant. Thereafter, a
payment of $20,000.00 per year shall be required to reserve the Expansion Lot
for years four and five. Each such annual payment shall be made in advance, on
or before the first day of each Lease Year. If Tenant fails to pay the required
annual payment within thirty (30) days of its due date, Landlord's obligation to
reserve such land shall terminate.
4
(b) If Tenant notifies Landlord that it elects to build the
Expansion Building prior to the end of the fifth lease year, Landlord shall
construct the Expansion Building subject to the following conditions: (i) a
building shell (the "Base Warehouse Building") substantially in accordance with
the specification of the Building shall be constructed at Landlord's cost and
expense; (ii) the construction of all office improvements or any upgrade to the
Base Warehouse Building shall be at Tenant's cost and expense; (iii) the
Expansion Building shall be between approximately 50,000 and 100,000 rentable
square feet, subject to Tenant's needs, as determined by Tenant and applicable
zoning, subdivision and sits conditions; (iv) the plans, specifications and
construction schedule for the Expansion Building shall be mutually agreed upon
between Landlord and Tenant; (v) the Expansion Building shall not be attached to
the Building unless otherwise agreed.
(c) The Base Rent for the Expansion Building will be at the
then Fair Market Rental Value computed in accordance with the provisions of
Paragraph 5(b) of this Rider. The security for the Expansion Building will be
determined as follows: (i) twelve months of the initial Base Rent if the net
worth as shown on the consolidated financial statements of Genesis Direct, Inc.
("GDI") at the time of the commencement of the lease for the Expansion Building
(the "Expansion Commencement") is $10,000,000.00 or less; (ii) six months of the
initial Base Rent if the net worth as shown on the consolidated financial
statements of GDI at the Expansion Commencement is greater than $10,000,000.00.
One-sixth of the security for the Expansion Building lease will be returned at
the end of each 12 month period under the Expansion Lease in accordance with the
provisions of Paragraph 6 of this Rider. Otherwise, the Expansion Building will
be leased on substantially the same terms and conditions of this Lease.
(d) The term of the lease of the Expansion Building shall be
the greater of (i) seven (7) years from the date of Expansion Commencement and
(ii) a term expiring on the Expiration Date, in the event that the term of the
lease of the Expansion Building extends beyond the Expiration Date, Tenant shall
be deemed to have exercised its option for the First Renewal Term, the length of
which shall be adjusted so that it shall be coterminous with the then remaining
term of the lease of the Expansion Building. Thereafter, Tenant shall have
options to renew this Lease as to either or both the Building and the Expansion
Building (as if this Lease and the lease for the Expansion Building were two (2)
separate and distinct leases) for two periods of five (5) years each, upon the
terms and at the base rental determined according to Paragraph 5(a) above,
except that if the First Renewal Term is adjusted to a term less than five (5)
years, as provided in the second (2nd) sentence of this Paragraph 10(d), Tenant
shall have the option to renew this Lease (but not the lease for the Expansion
Building) for a "Third Renewal Term" of five (5) years, upon the terms and at
the base rental determined according to Paragraph 5(a) above. Each of said
options must be exercised as provided in said Paragraph 5(a) to be effective.
11. Payment of Option Cancellation Fee. In addition to all other
payments required hereunder, Tenant shall pay to Landlord upon execution of this
Lease the sum of $162,000.00 being one-half of the fee to be paid to Honeywell
Inc. in consideration of relinquishment by Honeywell Inc. of the option/right of
refusal it currently holds on the Building; provided that in consideration
thereof, Landlord shall deliver to Tenant a copy of an executed amendment to the
Honeywell Inc. lease, in recordable form, terminating all rights of Honeywell
with respect to the Building.
5
12. Landlord's Construction Warranty. Landlord shall repair or replace
any defects in materials or workmanship in the Building or in any of its systems
of which Landlord receives notice within one (1) year of the date of substantial
completion of the Building. Landlord and Tenant shall share equally the cost of
repairing any defects in materials or workmanship in the Building systems [i.e.,
HVAC, sprinkler, plumbing, and lighting (but not light bulbs and not including
any fixtures, wiring or equipment installed by Tenant)] of which Landlord
receives notice between the first and third anniversaries of substantial
completion of the Building. Landlord shall have no liability for any
consequential damages suffered by Tenant as a result of any such defect nor any
liability for damages to Tenant's property; however, Landlord will assign to
Tenant any right of Landlord to recover for any such damages against Landlord's
contractor or such contractor's insurance carrier upon request. Nothing in this
paragraph is intended to limit Landlord's obligations under Paragraph 4 of this
Rider.
13. Abatement of Rent When Tenant is Prevented from Using Premises. In
addition to Tenant's rights under Section 7.3, in the event that Tenant is
prevented from using, and does not use, the Building or any portion thereof, for
ten (10) consecutive business days (the "Eligibility Period") as a result of any
repair, maintenance or alteration performed by Landlord after the date hereof
and required by this Lease, which substantially interferes with Tenant's use of
the Building, then the Rent shall be abated or reduced, as the case may be,
after expiration of the Eligibility Period for such time that Tenant continues
to be so prevented from using, and does not use, the Building or any portion
thereof, in the proportion that the area of the portion of the Building that
Tenant is prevented from using and does not use, bears to the total area of the
Building.
6
14. Optional Parking Areas. Tenant shall have the option, exercisable at any
time during the period commencing on the date of this Lease and ending on the
fifth (5th) anniversary of the Commencement Date, by written notice to Landlord,
to require Landlord to pave and stripe for parking the two areas indicated on
Exhibit "D" attached hereto and made a part hereof. In the event Tenant
exercises such option, Landlord shall promptly pave and stripe such areas, and
upon the completion of such work, Tenant shall pay to Landlord, as Additional
Rent, the reasonable out-of-pocket expenses paid by Landlord for same, as
substantiated by paid invoices and other evidence reasonably satisfactory to
Tenant. If Tenant exercises such option within thirty (30) days after the date
of this Lease, Landlord agrees that the expense for such paving and striping
shall be $178,000.00, which shall be paid to Landlord on the Commencement Date
of this Lease (provided that such work has been substantially completed by the
Commencement Date), and which shall be in addition to all other amounts due from
Tenant to Landlord as elsewhere in this Lease provided. If such option is
exercised, the additional parking area shown on Exhibit D which is located on
the Expansion Lot shall become a part of the Property demised hereunder for the
entire term of this Lease and any extension thereof pursuant to Tenant's renewal
options (regardless of whether or not Tenant exercises its rights under
Paragraph 10 above, but, except for the cost of paving and striping, there shall
be no additional, or increases of, Base Rent or Additional Rent, including,
without limitation, any payments of Real Property Tax attributable to parking
area located on the expansion lot, notwithstanding anything contained in the
Lease or this Rider which may be deemed to the contrary.
LANDLORD:
CORPORATE ESTATES, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx, President
XXXXXXXX INVESTMENTS, LLC
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Xxxxxx Xxxxxxxx, Chief Manager
TENANT:
GENESIS DIRECT NINE, LLC
By: Genesis Direct, Inc.
---------------------------
Its: Managing Member
--------------------------
By: /s/ Xxxxxx Xxxxx
---------------------------
Its: EVP, COO
--------------------------
7
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is made and entered into as of December 19,
1997, by and between CORPORATE ESTATES, INC., a California corporation
("Corporate Estates"), XXXXXXXX INVESTMENTS, LLC, a Tennessee limited liability
company ("Xxxxxxxx"), XX. XXXXXXX XXXXXXXXX, an individual residing in
California and J & C INVESTMENTS, L.L.C., a California limited liability company
(collectively, the "Lessor")~ and GENESIS DIRECT MEMPHIS OPERATIONS, LLC, a
Delaware limited liability company (f/k/a Genesis Direct Nine, LLC) (herein
called "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor is the owner of certain real property (the
"Premises") situated in the County of Shelby, State of Tennessee, and more
particularly described in Exhibit "A" attached hereto; and
WHEREAS, Corporate Estates and Xxxxxxxx (as predecessors in interest
to Lessor) and Lessee have entered into a Lease Agreement dated February 14,
1997 (herein referred to as the "Sublease") by which Lessor has leased the
Premises to Lessee; and
WHEREAS, Lessor has, effective this date, by Special Warranty Deed
conveyed the Premises to the Industrial Development Board of the City of Memphis
and County of Shelby, Tennessee (the "IDB"), and the IDB has, in turn, leased
the Premises back to Lessor pursuant to that certain Real Property Lease
Agreement (the "Base Lease") effective this date, by and between the IDB, as
lessor, and Lessor, as lessee: and
WHEREAS, Lessor and Lessee desire to enter into this Amendment to
Lease to confirm the demise of the Premises to Lessee as a sublease, subject to
all of the rents, terms and conditions of the Base Lease and to further amend
the Sublease as hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Lessor and Lessee hereby agree as follows:
1. Confirmation of Sublease. Lessor and Lessee hereby confirm that,
------------------------
except as amended by this instrument, the Sublease shall continue in
full force and effect as a sublease, subject to all the terms and
provisions of the Base Lease.
2. Additional Obligations. The Sublease is hereby amended to provide
----------------------
that, subject to the provisions of this Section 2 and Section 3
hereof, in addition to the rents and obligations of Lessee under the
Sublease, the Lessee shall also assume all of the rents and
obligations of the Lessor, in its capacity as a lessee, under the
terms of the Base Lease (except as
further provided in this Section 2 and except that for so long as the Base
Lease is in effect, the Lessee's obligation to make the rental and other
payments provided for in the Base Lease shall be in lieu of Lessee's
obligations to reimburse Lessor for real and personal property taxes paid by
Lessor, as provided in Section 4.2 of the Sublease) without diminishing the
other rental obligations in the Sublease. These assumed obligations shall
include, but are not limited to: (a) the payment of all Basic Rent under
Section 4.01(2) of the Base Lease, (b) payment of all ad valorem taxes and
payments in lieu of taxes described in Article IV and VI of the Base Lease,
(c) payment of all costs and expenses required under the Base Lease to
exercise the option to purchase contained in the Base Lease (including the
Option Price of One Thousand Dollars, recording expenses for a quit claim
deed and reasonable attorney fees of counsel for Lessor and the IDB but
---
excluding the payment of the principal and accrued interest then due and
owing under the Note (as defined in the Base Lease) which shall be paid by
Lessor), and (d) all indemnification and reimbursement due from Lessor to
the IDB under the Base Lease including, but not limited to, Sections 5.03,
6.01 and 6.02 of the Base Lease, except to the extent the same are
attributable to the acts or omissions of the Lessor. Such assumed
obligations shall be subject to the following provisions:
(i) The Base Lease obligations so assumed by the Lessee shall be in the
nature of Additional Rent under the Sublease, payable as the same
become due under the Base Lease, and discharged by direct remittance
to, or performance for the benefit of the IDB.
(ii) Such assumed obligations shall not xxxxx, notwithstanding the terms of
the Sublease, unless (and only to the extent that) an abatement is
expressly provided under the terms of the Base Lease.
(iii) Lessee shall at all times throughout the term of the Base Lease
maintain and cause the Project to constitute a "Project" within the
meaning of Section 7-53-101 of the Tennessee Code Annotated.
(iv) Notwithstanding any other provision contained herein or in the
Sublease or Base Lease, Lessee shall not be liable or responsible
under this Amendment for (i) any obligations or liabilities of Lessor
contained in the Base Lease which are also the obligations or
liabilities of Lessor under the Sublease (collectively, the "Lessor
Sublease Obligations"); or (ii) payment of Basic Rent payable by
lessee under Section 4.01(1) of the Base Lease.
3. Obligations of Lessor. Notwithstanding the foregoing, Lessor shall be
---------------------
responsible for (i) through (v) hereinbelow and Lessor shall not be released
in any way from any liability, obligation, expense or damages incurred by
Lessee as a result of Lessor's failure to comply with the following
obligations of Lessor:
(i) Lessor shall be required to execute such documents (with such
reasonable assurances and indemnities required of the Lessee), respond
to notices and notify the Lessee, or take such other ministerial acts
as may be required to maintain the Base Lease, all at the Lessee's
cost and expense.
(ii) Lessor shall not, by its acts or omissions, terminate or void the Base
Lease unless the Lessee has so requested or an event of default has
occurred under the Sublease.
(iii) Lessor shall not, by its acts or omissions, cause or allow an event of
default (as defined in the Base Lease) to occur under the Base Lease.
(iv) Lessor shall forward to Lessee, within ten (10) business days of
receipt by Lessor, copies of all notices received by Lessor under the
Base Lease.
(v) Lessor shall perform all of the Lessor Sublease Obligations, at
Lessor's sole cost and expense.
Notwithstanding the foregoing, or any other provision of this
Amendment, but subject to the express provisions of the Sublease,
Lessor shall at all times be responsible and fully liable for any and
all claims, damages, expenses, liabilities and demands resulting from
Lessor's negligence or intentional misconduct and any liability
arising in connection with the Lessor Sublease Obligations, and
nothing contained in the Base Lease or this Amendment shall in any way
release Lessor from, or limit Lessor's liability for, any liability
resulting from Lessor's negligence or intentional misconduct or any
liability arising in connection with the Lessor Sublease Obligations.
4. No Amendment to Base Lease. It is hereby agreed by the Lessor and
--------------------------
Lessee that no amendment or modification to the Base Lease shall be
effective unless such amendment or modification is in writing and is
executed by Lessor and Lessee. Any amendment or modification which
does not comply with the preceding sentence shall be deemed void and
of no force and effect.
5. Termination of Base Lease. (i) Upon the exercise by Lessor of the
-------------------------
purchase option set forth in the Base Lease, the Base Lease shall be
terminated in all respects and shall have no further force and effect
(except for terms which expressly survive such termination) but the
Sublease shall continue in full force and effect in accordance with
its terms as a lease and shall govern the rights and liabilities of
the Lessor and Lessee as to the Premises.
(ii) Upon a termination of the Sublease for any reason,
Lessor agrees to use its best efforts to exercise the purchase option
contained in the Base Lease and purchase the Premises from the IDB.
(iii) Upon the written request of Lessee at any time during
the term of the Sublease, Lessor agrees to exercise the purchase
option contained in the Base Lease.
6. Tenant's Obligations to Monitor Option Dates. The Lessee shall
--------------------------------------------
undertake full responsibility to monitor the termination date of the
Base Lease and shall take all necessary steps to exercise, on behalf
of the Lessor, the option to repurchase the Premises as provided in
the Base Lease, upon the termination of the Base Lease. The Lessee
shall give notice to the Lessor in a timely fashion to allow the
Lessor to take necessary steps to join with the Lessee in the exercise
of the option, and the Lessee shall indemnify the Lessor against any
loss which may arise as a result of the failure of the Lessee to
initiate actions to exercise the Base Lease purchase option.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
7. Counterparts. This Amendment may be executed in multiple counterparts,
each of which shall be an original but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have each duly executed this
Amendment to Lease as of the day and year first above written.
GENESIS DIRECT MEMPHIS OPERATIONS,
LLC
By /s/ Xxxxx Xxxxxx
----------------------------------
Title CFO
--------------------------------
CORPORATE ESTATES, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Title President
--------------------------------
XXXXXXXX INVESTMENTS, LLC
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Title Chief Manager
----------------------------------
J & C INVESTMENTS, L.L.C.
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Title: Owner
---------------------------------
/s/ XXXXXXX XXXXXXXXX
---------------------------------------
XX. XXXXXXX XXXXXXXXX
