EXHIBIT 10.65
LEASE AGREEMENT
This Lease Agreement (this "LEASE") is made as of May 10, 2005, between
XXXX. XXXX COMPANY LLC, a Delaware limited liability company, having an office
at 0000 Xxxxxx Xxxxxx, Xxxx 0, Xxxxxxx Xxxx, Xxxxxxxx 00000 ("LANDLORD"), and
XXXX. XXXX CIRCULATING CO. LLC, a Delaware limited liability company, having an
office at c/o Source Interlink Companies, Inc., 27500 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxxxx, Xxxxxxx 00000 ("TENANT").
1. BASIC LEASE PROVISIONS:
1.1 Date: May 10, 2005
1.2 Landlord: Xxxx. Levy Company LLC
1.3. Tenant: Xxxx. Xxxx Circulating Co. LLC
1.4 Premises: The real property located 0000 Xxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxx ("LAND")
described on Exhibit A attached hereto and
made a part hereof, and all improvements
thereon, including the Building.
1.5 Building: Approximately 28,866 sq. ft. building
located on the Land
1.6 Use: The Premises shall be used only for the
purpose of distribution of magazines,
books, DVDs, CDs and other home
entertainment content, and office uses
incidental thereto.
1.7 Term: 36 Months
1.8 Commencement Date: May 10, 2005
1.9 Base Rent May 10, 2005 - May 9, 2006: $86,598 per
year; $7,216.50 per month
May 10, 2006-May 9, 2007: $88,330 per
year; $7,360.83 per month
May 10, 2007-May 9, 2008: $90,097 per
year; $7,508.08 per month
1.10 Exhibits Attached to Lease: Exhibit A: Land
1.11 Addresses for Notices:
If to Landlord: 0000 Xxxxxx Xxxxxx, Xxxx 0
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attn: General Counsel
Facsimile: 000-000-0000
With a copy in like manner to: Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile: 312-876-7934
If to Tenant: Xxxx. Xxxx Circulating Co., LLC
c/o Source Interlink Companies, Inc.
00000 Xxxxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000
Attn: General Counsel
Facsimile: 000-000-0000
With a copy in like manner to: Xxxxx & Xxxxxxx, P.C.
00 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
2. DEMISE
(a) Landlord, for and in consideration of the rents, covenants, and
agreements set forth in this Lease and to be paid, kept, observed, and performed
by Tenant, does hereby lease to Tenant, and Tenant does hereby lease from
Landlord, subject to the conditions hereinafter set forth, the Premises. Tenant
accepts the Premises in "as is, where as" condition as of the Commencement Date.
(b) Except as may be specifically provided in this Lease, Landlord
shall not be obligated to make any repairs or alterations to the Premises prior
to or during the term of this Lease.
3. TERM AND TERMINATION
(a) The Term of this Lease and the Commencement Date of the Term,
shall be as set forth in Section 1.7 and Section 1.8 of the Basic Lease
Provisions.
(b) Tenant shall have no options to extend the Term of this Lease.
(c) Tenant shall have the option, provided no Event of Default then
exists under this Lease, to terminate this Lease at any time during the Term
upon 180 days' prior written notice to Landlord.
(d) Upon the sale or potential sale of the Premises, Landlord shall
have the option to terminate this Lease at any time during the Term upon 180
days' prior written notice to Tenant.
4. RENT
(a) Tenant covenants and agrees to pay Landlord by check or wire
transfer at the address of Landlord herein provided (or at such other address or
wiring address as Landlord may designate) annual Base Rent, payable in equal
monthly installments commencing on May 10, 2005, as set forth in Section 1.9 of
the Basic Lease Provisions. Except as may be expressly provided in this Lease,
Rent shall be paid by Tenant to Landlord in advance, on the first day of each
month without notice or demand, and without abatement, deduction, setoff,
reduction, counterclaim, or diminution. If a rent payment is mailed, it shall be
mailed in sufficient time and with adequate postage thereon to be actually
received by Landlord by the due date.
2
(b) All sums due and owing by Tenant pursuant to the terms of this
Lease other than the Base Rent specified in subparagraph 4 (a) above are
additional rent, and Landlord shall have all of the same rights and remedies to
collect such additional rent as it has to collect rent. References in this Lease
to "RENT" shall mean, collectively, Base Rent and additional rent.
(c) If any payment of Base Rent is not received by Landlord by the
fifth (5th) business day of the calendar month, or if any payment of additional
rent is not received by Landlord within five (5) days from the date when such
payment is due, then Tenant shall pay Landlord, as additional rent, interest on
the amount of such overdue payment accruing from the due date until the date
when paid at the rate of five percent (5%) per annum.
(d) It is the intention of Landlord and Tenant that all rent payable
under this Lease shall be absolutely "net" to Landlord, except as to the express
obligations of Landlord contained in this Lease, and accordingly all costs,
expenses, and obligations of every kind relating to ownership, operation and
maintenance of the Premises, including, without limitation, all taxes,
utilities, insurance (including any insurance maintained by Landlord pursuant to
Section 13 of this Lease), repairs, replacement, rebuilding, painting, cleaning,
maintenance and upkeep of the Premises that are not specifically assumed by
Landlord under this Lease are the responsibility of Tenant. The obligations of
Landlord and Tenant hereunder shall be separate and independent covenants and
agreements and that the Base Rent, additional rent, and all other charges and
sums payable by Tenant hereunder shall continue to be payable in all events.
5. TAXES
(a) During the Term, Tenant shall pay to Landlord, in addition to Base
Rent, Real Property Taxes (defined below) in the following manner:
(i) Prior to the last day of each calendar year falling within
the Term (or, in the case of the partial year during the
first year of the Term, prior to the Commencement Date),
Landlord shall provide Tenant with a statement of estimated
Real Property Taxes for the upcoming year. Said statement
shall be based upon 110% of Landlord's reasonable estimate
of anticipated Real Property Taxes. Beginning January 1 of
the upcoming calendar year (or, in the case of the partial
year during the first year of the Term, beginning as of the
Commencement Date), Tenant shall pay as additional rent said
estimated Real Property Taxes in twelve (12) equal monthly
installments, payable in advance promptly upon the first
(1st) day of each month during the Term. If Landlord
determines that the Real Property Taxes are greater than the
amount estimated prior to the last day of the calendar year,
then Landlord may deliver to Tenant a notice specifying the
revised amount of additional rental and Tenant shall pay to
Landlord within thirty (30) days of such notification, the
difference between the amount estimated prior to the last
day of the calendar year and the revised estimate for the
portion of the calendar year which has expired. Monthly
installments of additional rent of Real Property Taxes will
be increased for the months following the receipt by Tenant
of the revised estimate of Real Property Taxes to the annual
revised Real Property Taxes for such calendar year, divided
by twelve (12). Any delay or failure of Landlord in billing
any tax escalation shall not constitute a waiver of or in
any way impair the continuing obligation of Tenant to pay
such tax escalation hereunder.
3
(ii) Not more than 180 days following the last day of each
calendar year, Landlord shall provide Tenant with a written
statement comparing the amount of estimated Real Property
Taxes paid by Tenant in and for the calendar year or part
thereof just ended of the Real Property Taxes actually
incurred for said period. If the amount of estimated Real
Property Taxes paid by Tenant for such prior calendar year
or part thereof exceeds the actual Real Property Taxes for
such prior calendar year, Landlord shall give Tenant a
credit against the next current monthly payment of
additional rent of Real Property Taxes, or, if the Term has
expired, refund such amount to Tenant within thirty (30)
days. If, however, the amount of estimated Real Property
Taxes paid by Tenant for such prior calendar year or part
thereof is less than the actual amount of Real Property
Taxes for such period, Tenant shall pay to Landlord, as
additional rent, the difference within thirty (30) days
following Tenant's receipt of written notice thereof. The
provisions of this Section 5(a)(ii) shall survive the
expiration or other termination of this Lease.
(b) As used herein, the term "REAL PROPERTY TAXES" shall include all
general and special real estate taxes, special assessments and other ad valorem
taxes, levies and assessments (net of any refund) levied or becoming due during
the Term, on the separately assessed tax parcel constituting the Premises by any
authority having the direct or indirect power to tax. Real Property Taxes shall
not include income, inheritance and gift taxes, transfer taxes, franchise tax,
capital stock tax, inspection fees, any permit fees payable by Landlord in order
to be in the business of leasing real estate, or interest or penalty charges and
shall reflect any discount available to Landlord by prompt payment of such tax,
regardless of whether such prompt payment is actually made.
(c) If Landlord receives a reduction or abatement of any Real Property
Taxes on the Premises included in Tenant's payment of Real Property Taxes,
Landlord shall pay such reduction to Tenant.
(d) If after by request by Tenant, Landlord does not contest any Real
Property Tax, Tenant may contest such Real Property Tax in its own or Landlord's
name; provided, however, that Tenant either pays such taxes under protest or
deposits with Landlord (or a third party reasonably acceptable to Landlord) an
amount which, in Landlord's sole judgment, shall be sufficient to pay in full
any such contested tax or imposition and any penalties, interest and expenses
associated with or resulting from such contest, and provided that Tenant shall
indemnity Landlord from and against any penalties, interest and expenses
associated with or resulting from such contest. At the conclusion of such
contest related to Real Property Taxes, upon written request of Tenant,
accompanied by the xxxx for real estate taxes then due, Landlord (or such third
party acceptable to Landlord holding such deposit) shall use the money
deposited, less the amount of any loss, cost, damage and reasonable expense,
including reasonable attorneys' fees, that Landlord or such third party may
sustain in connection with the imposition so contested, to pay such tax or
imposition, by disbursing the money deposited in the manner directed by and at
the expense of Tenant and delivering to such taxing authority the amount due. In
addition, if an Event of Default has not occurred and is continuing, Landlord or
such third party shall return the remainder of the money so deposited, if any,
to Tenant. Landlord agrees to provide Tenant with all reasonable assistance in
such context, including joining in and signing pleadings.
(e) Tenant shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment, inventory and all other
property of Tenant contained in the Premises or related to Tenant's use of the
Premises. If any of Tenant's property shall be assessed with Landlord's real or
personal property, Tenant shall pay to Landlord the taxes attributable to Tenant
within
4
10 days after receipt of a written statement from Landlord setting forth the
taxes applicable to Tenant's property.
6. CONDITION OF PREMISES
(a) Tenant's taking possession of the Premises shall be conclusive
evidence of Tenant's acceptance thereof, without warranty of any kind, either
expressed or implied, including warranties of habitability, tenantability and
fitness for a particular purpose. Tenant agrees that Landlord has no obligation
to repair or improve the Premises prior to the Commencement Date.
7. USE
Landlord agrees that Tenant may use the Premises for the purposes described
in Section 1.6 of the Basic Lease Provisions (the "PERMITTED USE") and for no
other purpose. Subject to the provisions of Section 9(c) hereof, Tenant, at its
sole cost, agrees to comply with all federal, state and local laws and
ordinances, and all governmental regulations, rules and orders relating to the
Premises or the improvements on or the use and/or occupancy of and operations at
the Premises ("LAWS"). Tenant shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor
take any actions which would constitute a nuisance. Tenant shall not permit the
storage of any materials labeled as "hazardous" on the Premises; provided,
however, Tenant may keep certain substances which may be considered hazardous
which are customarily used to operate trucks and forklifts, so long as such
substances are used and stored in conformance with all federal, state, agency
and local laws, ordinances, rules and regulations regulating such substances and
only an amount of such substances reasonably necessary for the conduct of
Tenant's business at the Premises is present at the Premises.
8. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not, voluntarily or by operation of law, assign,
transfer, mortgage, sublet or otherwise encumber Tenant's interest in this Lease
or the Premises (a "TRANSFER"), without Landlord's prior written consent, which
shall not be unreasonably withheld. Satisfactory environmental undertakings by
the assignee shall be required as a condition of Landlord's consent. Landlord
shall respond to Tenant's written request for consent hereunder within 30 days
after Landlord's receipt of the written request from Tenant and all materials
and documentation required below; provided, that should Landlord not respond to
Tenant's written request and delivery of all materials and documentation
required herein, Lender shall have deemed to have denied such a request. Any
attempted Transfer without such consent shall be void and shall constitute an
Event of Default. Tenant's written request for Landlord's consent shall include,
and Landlord's 30-day response period referred to above shall not commence,
unless and until Landlord has received from Tenant, all of the following
information: (a) financial statements or other information reasonably sufficient
to show the proposed assignee's or subtenant's financial condition, (b) a
description of the business the assignee or subtenant intends to operate at the
Premises, (c) a copy of the proposed sublease or assignment agreement which
includes all of the terms and conditions of the proposed assignment or sublease,
and (d) a description of any ownership or commercial relationship between Tenant
and the proposed assignee or subtenant. Tenant's sole remedy in the event that
Landlord shall wrongfully withhold consent to or disapprove any assignment or
sublease shall be to obtain an order by a court of competent jurisdiction that
Landlord grant such consent; in no event shall Landlord be liable for damages
with respect to its granting or withholding consent to any proposed assignment
or sublease.
(b) Landlord shall not unreasonably withhold or condition its consent
to a Transfer provided that Tenant has complied with each requirement and
condition of this Section 8. It shall be
5
deemed reasonable for Landlord to withhold its consent to a Transfer if any
requirement, term or condition of this Section 8 is not complied with or: (1) in
Landlord's reasonable judgment, a proposed assignee or subtenant is unable
financially to pay the rents due under this Lease as and when they are due and
payable; (2) a proposed assignee or subtenant refuses to enter into a written
assignment agreement or sublease, reasonably satisfactory to Landlord, which
provides that it will abide by and assume all of the terms and conditions of
this Lease for the term of any assignment or sublease and containing such other
terms and conditions as Landlord reasonably deems necessary; (3) an Event of
Default has occurred and is continuing at the time of the request; (4) Landlord
is or has been involved in a legal dispute with the proposed assignee or
subtenant; (5) the assignee or subtenant is a governmental or quasi-governmental
entity or an agency, department or instrumentality of a governmental or
quasi-governmental agency; or (6) the assignee or subtenant will use, store or
handle Hazardous Substances (as herein defined) in or about the Premises of a
type, nature, or quantity not acceptable to Landlord.
(c) The following terms and conditions shall be applicable to any
Transfer:
(i) Tenant shall remain jointly and severally liable with any
permitted assignee or subtenant to Landlord for the payment of rent or other
performance obligation of Tenant under this Lease, regardless of whether
Landlord accepts performance from any assignee or subtenant of Tenant.
(ii) Any consent by Landlord to any Transfer shall not constitute
a consent to, or waiver of, any subsequent Transfer by Tenant or to any
subsequent or successive Transfer by an assignee or subtenant.
(iii) Landlord shall have the right to require as a condition to
consent, an assignee of this Lease to provide financial security (in the form of
a security deposit, letter of credit, lease guaranty, or otherwise) to Landlord
to secure the obligations under this Lease.
(iv) Landlord shall not be liable under this Lease or under any
sublease to any subtenant.
(v) Any assignee of, or subtenant under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed,
for the benefit of Landlord, to have assumed and agreed to conform and comply
with each and every term, covenant, condition and obligation herein to be
observed or performed by Tenant during the term of said assignment or sublease,
other than such obligations as are contrary or inconsistent with provisions of
an assignment or sublease to which Landlord has specifically consented in
writing. Without limiting the generality of the foregoing, any assignee of this
Lease shall specifically acknowledge and agree to the provisions of subsection
13(a) of this Lease.
(d) The following terms and conditions shall apply to any subletting
by Tenant of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated therein:
(i) Tenant hereby absolutely and unconditionally assigns and
transfers to Landlord all of Tenant's interest in all rentals and income arising
from any sublease entered into by Tenant, and Landlord may collect such rent and
income and apply same toward Tenant's obligations under this Lease; provided,
however, that until an Event of Default, Tenant may receive, collect and enjoy
the rents accruing under such sublease. Landlord shall not, by reason of this or
any other assignment of such rents to Landlord nor by reason of the collection
of the rents from a subtenant, be deemed to have assumed or recognized any
sublease or to be liable to the subtenant for any failure of Tenant to perform
6
and comply with any of Tenant's obligations to such subtenant under such
sublease, including, but not limited to, Tenant's obligation to return any
security deposit. Tenant hereby irrevocably authorizes and directs any such
subtenant, upon receipt of a written notice from Landlord stating that an Event
of Default exists, to pay to Landlord the rents due as they become due under the
sublease. Tenant agrees that such subtenant shall have the right to rely upon
any such statement and request from Landlord, and that such subtenant shall pay
such rents to Landlord without any obligation or right to inquire as to whether
such default exists and notwithstanding any notice or claim from Tenant to the
contrary.
(ii) Should an Event of Default occur and Landlord elects to
terminate this Lease, Landlord, at its option and without any obligation to do
so, may also elect, at the time of Landlord's election to terminate this Lease,
to require any subtenant to attorn to Landlord, in which event Landlord shall
undertake the obligations of Tenant under such sublease from the time of the
exercise of said option to the termination of such sublease; provided, however,
Landlord shall not be liable for any prepaid rents or security deposit paid by
such subtenant to Tenant or for any other prior defaults of Tenant under such
sublease.
(e) Notwithstanding anything to the contrary contained in this Section
8, Tenant shall have the right, without Landlord's consent, upon 15 days advance
written notice to Landlord, to assign this Lease or to sublease all or part of
the Premises to any entity which controls, is controlled by or is under common
control with Tenant (hereinafter, an "AFFILIATE"); provided, that such
assignment is subject to the satisfaction of the following conditions: (i)
Tenant shall not be released from liability under this Lease; (ii) Any such
assignment or sublease shall be subject to all of the terms, covenants and
conditions of the Lease; (iii) The use of the Premises by the assignee must be
permitted by this Lease; (iv) any further assignment or sublease by Tenant or
any Affiliate shall be subject to this Section 8; and (v) a fully executed copy
of such transfer document shall be delivered to Landlord within fifteen (15)
days following such Transfer.
(f) In addition to reasonably withholding its consent to any proposed
Transfer, Landlord shall have the right to terminate this Lease in the event of
a proposed assignment or Transfer of this Lease or a proposed sublease of the
entire Premises or to terminate this Lease as to that portion of the Premises
which Tenant seeks to sublet, if Tenant seeks to sublease less than the entire
Premises; provided, however, that Landlord shall not have such a termination
right with respect to any transfer to an Affiliate of Tenant as set forth in
clause (e) immediately above. Landlord may exercise such right to terminate by
giving written notice to Tenant at any time on or before the date by which
Landlord is required to consent or object to such assignment or sublease or
other Transfer. If Landlord exercises its right to terminate, the Lease or
portion thereof shall be deemed terminated effective, and Landlord shall be
entitled to recover possession of and Tenant shall surrender such portion of the
Premises, on the earlier of: (i) the proposed date for possession by such
assignee, subtenant or transferee, or (ii) ninety (90) days after the date of
Landlord's notice of termination to Tenant.
(g) If Landlord consents to any assignment of this Lease or a sublease
of the Premises, as a condition of Landlord's consent, Tenant shall pay to
Landlord all reasonable attorneys' fees and expenses incurred by Landlord in
connection with such assignment or sublease.
9. REPAIRS
(a) Landlord shall maintain, at Landlord's expense, the structural
elements of the roof of the Building, the structural soundness of the foundation
of the Building and the structural elements of the exterior walls of the
Building. Tenant shall reimburse Landlord for the cost of any maintenance,
repair or replacement of the foregoing necessitated by Tenant's misuse,
negligence, alterations to the Premises or any breach of its obligations under
this Lease. By way of example, and not limitation, the
7
term "EXTERIOR WALLS" as used in this Section shall not include windows, glass
or plate glass, doors or overhead doors, special store fronts, dock bumpers,
dock plates or levelers, or office entries. Tenant shall promptly give Landlord
written notice of any repair required by Landlord pursuant to this Section,
after which Landlord shall have a reasonable time in which to complete the
repair. Nothing contained in this Section shall be construed to obligate
Landlord to seal or otherwise maintain the surface of any foundation, floor or
slab. In no event shall the sprinkler system or any component thereof be deemed
to be part of the structural elements of the roof of the Building, the
structural soundness of the foundation of the Building and the structural
elements of the exterior walls of the Building.
(b) Tenant shall, at its sole cost and expense, keep and maintain all
parts of the Premises (except those listed as Landlord's responsibility in
subsection 9(a) above) in good and sanitary condition, promptly making all
necessary repairs and replacements, including but not limited to, Tenant's
property, windows, glass and plate glass, doors, skylights, any special store
front or office entry, walls and finish work, floors and floor coverings,
heating and air conditioning systems, dock boards, bumpers, plates, seals,
levelers and lights, plumbing work and fixtures (including periodic backflow
testing), electrical systems, lighting facilities and bulbs, sprinkler systems,
alarm systems, fire detection systems, termite and pest extermination, parking
lots, asphalt and paved areas, curbs, gutters, fencing, landscaped areas,
irrigation systems, light standards, gates, tenant signage and regular removal
of trash and debris. Except in emergency situations or for minor repairs in the
ordinary course of Tenant's day-to-day business operation, Tenant shall notify
Landlord in writing prior to making any repair or performing any maintenance
pursuant to this Section, and Landlord shall have the right to approve (such
approval not to be unreasonably withheld) the contractor Tenant shall use to
make any repair or to perform any maintenance on the roof, heating, ventilation
and air conditioning systems, plumbing systems, electrical systems, fire alarm
systems or fire detection systems located at the Premises. Tenant shall not
change the exterior appearance of the Premises without Landlord's prior written
consent, which shall not be unreasonably withheld. If Tenant fails to keep the
Premises in good condition and repair, Landlord may, but shall not be obligated
to, after written notice to Tenant and a period of 10 additional days for Tenant
to commence remedial action and proceed with dispatch to complete the same, make
any necessary repairs, and xxxx Tenant for the cost of the repairs as additional
rent, and said additional rent shall be payable by Tenant within 10 days after
demand by Landlord.
(c) Notwithstanding anything to the contrary herein, Tenant and/or
Landlord shall have the right to terminate this Lease upon thirty (30) days
prior written notice in the event that either Tenant or Landlord, respectively,
is required to repair, replace and/or upgrade any portion of the Premises,
including without limitation access, fire and/or emergency systems, to comply
with any Law, and the sum of the following equals or exceeds $50,000: (i) the
reasonable estimated cost to repair, replace and/or upgrade such portion of the
Premises, as determined by a consultant reasonably approved by Lender, (ii) the
aggregate cost of any previous repairs, replacements and/or upgrades of any
portion of the Premises, including without limitation access, fire and/or
emergency systems, to comply with any Law, which have been made during the Term,
(iii) the aggregate cost of any previous repairs, replacements and/or upgrades
of any portion of the "Premises" as defined in that certain Lease Agreement by
and between Tenant and Landlord with respect to property located at 0000 Xxxx
Xxxxxx Xxxxxx in Appleton, Wisconsin, dated as of the date hereof, including
without limitation access, fire and/or emergency systems, to comply with any
Law, which is made during the Term, and (iv) the aggregate cost of any previous
repairs, replacements and/or upgrades of any portion of the "Premises" as
defined in that certain Lease Agreement by and between Tenant and Landlord with
respect to property located at 0000 Xxxxx Xxxxxx Xxxxxx in Chicago, Illinois,
dated as of the date hereof, including without limitation access, fire and/or
emergency systems, to comply with any Law, which is made during the Term.
8
10. ALTERATIONS
(a) Tenant shall not, without Landlord's prior written consent, which
shall not be unreasonably withheld, make any alterations, improvements or
additions (hereinafter collectively referred to as "ALTERATIONS") in, on or
about the Premises. Alterations shall include, but shall not be limited to, the
installation or alteration of security or fire protection systems, communication
systems, millwork, shelving, retrieval or storage systems, electrical
distribution systems, lighting fixtures, telephone or computer system wiring,
HVAC and plumbing. At the expiration of the Term, (a) if Landlord, at the time
of giving its consent to an Alteration, specified in writing to Tenant that such
Alteration is to be removed at the expiration of the Term or (b) if Tenant
failed to obtain Landlord's consent to any Alteration for which Landlord's
consent is required, then in either case Tenant shall remove such Alterations
and restore the Premises to its prior condition, at Tenant's expense. Other than
Alterations described in items (i) and (ii) below, Tenant shall make its request
to Landlord for proposed Alterations in writing, and shall include the plans and
specifications prepared by a licensed architect or engineer. Should Tenant make
any Alterations without the prior approval of Landlord, or use a contractor not
expressly approved by Landlord, Landlord may, at any time during the Term,
require that Tenant remove all or part of the Alterations and return the
Premises to the condition it was in prior to the making of the Alterations. In
the event Tenant makes any Alterations, Tenant agrees to obtain or cause its
contractor to obtain, prior to the commencement of any work, the insurance
coverages required by Section 13 below and to provide to Landlord, prior to the
commencement of any work, certificates evidencing such insurance, which
certificates shall list Landlord as an additional insured. Notwithstanding the
foregoing, Landlord's consent shall not be required for (i) any Alteration that
is of a cosmetic nature such as painting, wallpapering, hanging pictures and
installing carpeting or (ii) any single Alteration the cost of which (labor and
materials) is less than $20,000.00 and such Alteration will not affect or
involve a Building system, mechanical system, or a structural portion of the
Building.
(b) Tenant agrees to pay promptly for any work done by Tenant or
material furnished in or about the Premises, and Tenant shall not permit or
suffer any lien to attach to the Premises and shall cause any such lien or any
claim therefor, to be released within 30 days after notice thereof. All work
done by Tenant in or about the Premises shall comply with all Laws.
(c) Tenant shall not erect or install signage at the Premises without
Landlord's prior written approval as to size, design, and location, which
approval shall not be unreasonably withheld. Tenant shall be solely responsible
to obtain all zoning approvals and permits associated with Tenant's signage.
Notwithstanding the foregoing, Tenant is authorized to modify and/or replace the
signage existing at the Premises on the Commencement Date without Landlord's
prior written approval so long as the size of the modified or replacement
signage is not larger than the existing signage and is in the same location as
the existing signage, subject in all respects to Laws, including zoning
ordinances, and other local laws, compliance of which shall be Tenant's
responsibility.
11. ACCESS TO PREMISES
Tenant agrees that Landlord, or any person authorized by Landlord, may
enter the Premises at all reasonable times and be accompanied by a
representative of Tenant if Tenant so requires in order to: (a) inspect the
condition of same; (b) undertake safety measures or make repairs as Landlord may
be required to make; (c) exhibit the same to prospective purchasers of the
Premises (and, during the last six (6) months of the Term, exhibit the same to
prospective tenants of the Premises); (d) perform and/or conduct any sampling,
investigation, remediation or other activity that the Landlord may be required
to conduct to comply with the terms of this Lease or Environmental Law; and (e)
place "for sale" signs, and, during the last six months of the Term, "for rent"
signs, upon the Premises at such places as may be determined by Landlord.
Landlord shall use reasonable efforts to notify Tenant in advance of any such
entry hereunder,
9
and to avoid any material disturbance to Tenant's business operations during any
entry by Landlord, shall comply with Tenant's reasonable security requirements
during such entry, and shall repair any damage caused by such entry.
12. DAMAGE TO PREMISES
(a) In the event the Premises shall be damaged or destroyed by fire or
other casualty, Landlord may proceed as following: (i) provided that such damage
is insured under the insurance coverages maintained under subsection 13(a)
hereof, then, but only to the extent insurance proceeds have been actually paid
to Landlord by the insurer(s) for such casualty, Landlord may promptly repair
and/or restore the Premises to substantially the same condition in which they
were immediately prior to the occurrence of such casualty (excluding Alterations
made by Tenant, Tenant's trade fixtures, equipment and other items of Tenant's
personal property), or (ii) terminate this Lease. Should Landlord elect to
repair and/or restore the Premises, from the date of such casualty until the
Premises are so repaired and/or restored, Base Rent shall xxxxx in proportion to
the portion of the Premises that has been rendered untenantable.
(b) If Landlord elects to repair and/or restore the Premises as set
forth in clause (a) immediately above and Landlord then determines, in its
reasonable discretion (such determination to be made and Tenant to be notified
within 30 days after Landlord's receipt of notice of the casualty damage,
subject to insurance adjustments, mortgagee requirements, and other matters
beyond Landlord's control), that the Premises cannot be substantially repaired
within 180 days after the date of the damage or destruction, Landlord shall
notify Tenant in writing, and, if Tenant will otherwise be unable to conduct its
normal business operations during said 180 day period, Tenant shall have the
right to terminate this Lease by providing written notice of termination within
30 days after the date of Landlord's notice or deemed notice (as provided in the
next sentence). If Landlord fails to notify Tenant of Landlord's determination
within the time period provided herein (subject to permitted delays as set forth
above), Landlord shall be deemed to have notified Tenant that Landlord cannot
substantially repair the Premises within 180 days after the date of the damage
or destruction.
(c) Notwithstanding any provision of this Lease to the contrary, if
the Building is damaged during the last 12 months of the Term, so that the cost
of repair and/or restoration shall be more than fifty percent (50%) of the fair
market value of the Building immediately before such casualty, then either party
shall have the right to terminate this Lease effective as of the date of such
casualty, by giving to the other party hereto, within 30 days of the happening
of such casualty, written notice of such termination, and upon termination, rent
and all other charges shall xxxxx as aforesaid from the happening of such
casualty and Landlord shall promptly repay to Tenant any rent theretofore paid
in advance which has not been earned at the date of such casualty. If this Lease
is so terminated, insurance proceeds shall be distributed as set forth in
subsection (e) below.
(d) Notwithstanding any provision of this Lease to the contrary, if
damage or destruction to the Premises, or any part thereof, is caused in whole
or in part by the intentional act or the gross negligence of Tenant, its agents,
servants, employees or contractors, Tenant shall not be entitled to terminate
this Lease pursuant to this Section 12, nor shall Tenant be entitled to any rent
abatement.
(e) The proceeds under the all-risk insurance policies required to be
maintained by Tenant pursuant to subsection 13(a) hereof on the Building and the
other improvements on the Land shall belong to and be payable to and be the
property of Landlord, and Tenant shall not have any interest in such proceeds.
Tenant agrees to look to Tenant's all-risk insurance policies required to be
carried by Tenant pursuant to subsection 13(b)(ii) hereof for restoration of
Tenant's improvements, equipment, furnishings and Tenant's property in the
Premises. In the event of termination of this Lease, for any
10
reason following any damage or destruction, Tenant shall be responsible for any
applicable deductibles and shall assign to Landlord or otherwise pay to Landlord
upon Landlord's request, the proceeds of the all-risk insurance maintained by
Tenant pursuant to subsection 13(a) hereof (unless such all-risk insurance is
carried by Landlord pursuant to subsection 13(a)) and such other additional
funds so that the total amount assigned and/or paid by Tenant to Landlord shall
be sufficient to restore (whether or not any such restoration is to actually
occur) the Building and such other insured improvements (excepting Tenant's
property) existing therein immediately prior to such damage or destruction;
provided, however, that Tenant shall not be obligated to pay Landlord any such
additional funds (i.e., beyond the actual proceeds of insurance and any
applicable deductibles) unless Tenant has failed to fulfill its obligations with
respect to insurance coverages as set forth in subsection 13(a) of this Lease.
Despite the foregoing, in the event (i) of any damage to the Premises by fire or
other casualty, and (ii) neither Landlord nor Tenant has elected to terminate
this Lease as permitted hereunder, then, Landlord agrees to make the insurance
proceeds that Landlord receives in connection with such damage to the Premises
available for the purpose of restoring the Premises to the condition that
existed immediately prior to such fire or other casualty. If after consultation
Landlord and Tenant agree that Tenant will perform the restoration work, then
Landlord will make such insurance proceeds available to Tenant for restoration
and the proceeds will be disbursed on such terms and conditions as Landlord, in
the exercise of its prudent business judgment may determine, including retainage
provisions. Unless Landlord carries the all-risk insurance pursuant to
subsection 13(a) hereof, in the event the available casualty proceeds are
insufficient to restore the Building and other improvements to the condition
that existed immediately prior to the fire or other casualty due to the fact
that Tenant failed to carry the insurance coverage required by subsection 13(a)
hereof, Tenant shall make up the deficiency. Notwithstanding anything to the
contrary in this Section 12 or in any other provision of this Lease, any
obligation (under this Lease or otherwise) of Landlord to make insurance
proceeds available or restore all or any portion of the Building and other
improvements on the Land shall be subject to Landlord's receipt of approval of
the same by the mortgagee(s) of Landlord who hold mortgages on the Premises (and
any other approvals required by applicable laws), as well as receipt from any
such mortgagee(s) of such all-risk insurance policy proceeds as may have been
assigned to any such mortgagee; it being agreed that if Landlord has not
received such approval(s) and proceeds within 90 days after any such casualty,
then Landlord shall have the option to terminate this Lease, at any time
thereafter, upon written notice to Tenant. Landlord shall notify Tenant if any
such delay occurs.
13. INSURANCE
(a) Tenant shall obtain and keep in force during the Term an all-risk
policy or policies of insurance covering loss or damage to the Building and all
other improvements on the Land (not being required to include foundations,
driveways, sidewalks or other paved areas) written at replacement cost value
with replacement cost endorsement. The terms and conditions of said policies and
the perils and risks covered thereby shall be acceptable to Landlord in its
reasonable discretion. Such all-risk insurance shall name Landlord (and such
additional persons and/or entities as Landlord may designate) as additional
insureds, and shall cover the Building and all other improvements on the Land
and leasehold improvements. Tenant shall be entitled to provide the insurance
required by this subsection 13(a) by providing coverage under a blanket
insurance policy provided such blanket policy contains an endorsement that names
Landlord and its designees as additional insureds and provided that the
coverages required by this subsection 13(a) shall be available to Landlord
notwithstanding losses sustained by the insured under the policy with respect to
property other than the Premises.
(b) During the Term, Tenant shall keep in full force and effect at its
sole cost and expense the following: (i) public liability insurance, including
insurance against assumed or contractual liability under this Lease, with
respect to the Premises, to afford protection with limits, per person and for
each occurrence, of not less than Five Million Dollars ($5,000,000), combined
single limit, with respect
11
to personal injury and death and property damage, such insurance to provide for
only a reasonable deductible, (ii) all-risk property insurance, including theft,
written at replacement cost value and with replacement cost endorsement,
covering Tenant's trade fixtures, equipment, inventory, and all other property
of Tenant at the Premises and all improvements and installed in the Premises by
or on behalf of Tenant, such insurance to provide for only a reasonable
deductible, (iii) if, and to the extent, required by law, workmen's compensation
or similar insurance offering statutory coverage and containing statutory
limits, (iv) insurance of all plate and other interior glass in the Premises for
and in the name of Landlord, and (v) business interruption insurance in an
amount sufficient to reimburse Tenant for loss of earnings attributable to
prevention of access to the Building or the Premises for a period of at least 12
months. Tenant's liability insurance may be furnished by Tenant under a blanket
policy, provided that such blanket policy shall contain an endorsement that
names Landlord and its designees as additional insureds, specifically references
the Premises, and guarantees a minimum limit available for the Premises equal to
or greater than the insurance amounts required under this Section.
(c) In addition to the foregoing insurance coverage, Tenant shall
require any contractor retained by it to perform work on the Premises to carry
and maintain, at no expense to Landlord, during such times as contractor is
working in the Premises, a non-deductible (i) commercial general liability
insurance policy, including, but not limited to, contractor's liability
coverage, contractual liability coverage, completed operations coverage, broad
form property damage endorsement and contractor's protective liability coverage,
to afford protection with limits per person and for each occurrence, of not less
than One Million Dollars ($1,000,000), combined single limit, with respect to
personal injury and death and property damage, such insurance to provide for no
deductible, and (ii) workmen's compensation insurance or similar insurance in
form and amounts as required by law.
(d) Tenant's insurance policies shall be maintained in companies with
A.M. Best Rating of at least A-VII and in form reasonably acceptable to Landlord
and shall be written as primary policy coverage and not contributing with, or in
excess of, any coverage that Landlord may carry. Tenant shall deposit
certificates evidencing such coverage with Landlord within ten (10) business
days immediately following the Commencement Date, which policies shall name
Landlord and/or its designee and, at the request of Landlord, its mortgagees, as
additional insured and shall also contain a provision stating that such policy
or policies shall not be canceled except after 30-days' written notice to
Landlord or its designees. All such policies of insurance shall be effective as
of the date Tenant occupies the Premises and shall be maintained in force at all
times during the Term and all other times during which Tenant shall occupy the
Premises.
(e) At Landlord's option, Landlord shall obtain and keep in force,
during the Term, a policy of rental interruption insurance, with loss payable to
Landlord, which insurance shall, at Landlord's option, also cover all Real
Property Taxes. Tenant will not be named as an additional insured in any
insurance policies carried by Landlord and shall have no right to any proceeds
therefrom. Tenant shall reimburse Landlord for the cost of all insurance
purchased by Landlord pursuant to this subsection 13(e) in the same manner as
Tenant reimburses Landlord for Real Property Taxes.
(f) Landlord waives all right of recovery against Tenant and the
Tenant Parties (as hereinafter defined) for property damage if such damage is
covered by Landlord's insurance policies then in force or the insurance policies
Landlord is required to obtain by subsection (b) above, whichever is broader.
Tenant waives any and all rights of recovery against Landlord and the Landlord
Parties (as hereinafter defined) for property damage if such damage is covered
by Tenant's insurance policies then in force or the insurance policies Tenant is
required to obtain by subsection (b) above, whichever is broader. Landlord and
Tenant shall each obtain from their respective insurers under all policies of
fire and casualty insurance maintained by either of them at any time during the
Term insuring or covering the Premises or any portion thereof or operations
therein, a waiver of all rights of subrogation which the insurer of one
12
party might have against the other party, and Landlord and Tenant shall each
indemnify the other against any loss or expense, including reasonable attorney
fees, resulting from the failure to obtain such waiver, and, so long as such
waiver is outstanding each party waives, to the extent of the proceeds received
under such policy (including proceeds which would have been received but for a
party's failure to maintain insurance hereunder), any right of recovery against
the other party for any loss covered by the policy containing such waiver.
14. WAIVER OF CLAIMS
Tenant hereby agrees that Landlord shall not be liable to Tenant or
Tenant's employees, agents, customers, or servants for injury to Tenant's
business or any loss of income therefrom or for loss of or damage to the
merchandise, inventory, tenant or leasehold improvements (whether made by Tenant
or those located on the Premises as of the Commencement), voice and data cabling
installed by or for Tenant, trade fixtures, furniture, equipment, computers,
files, automobiles, or other property of Tenant, Tenant's employees, agents,
contractors or invitees, or any other person in or about the Premises, nor shall
Landlord be liable for injury to the person of Tenant, Tenant's employees,
agents, contractors or invitees, whether such damage or injury is caused by or
results from any cause whatsoever including, but not limited to, theft, criminal
activity at the Premises, bombings or bomb scares, Hazardous Substances, fire,
steam, electricity, gas, water or rain, flooding, breakage of pipes, sprinklers,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether said damage or injury results from conditions arising upon the Premises,
or from other sources or places, or from new construction or the repair,
alteration or improvement of any part of the Premises, except in the case of the
grossly negligent or intentional act of Landlord or its employees, agents or
contractors. Tenant, as a material part of the consideration to Landlord
hereunder, hereby assumes all risk of damage to Tenant's property or business or
injury to persons in, upon or about the Premises arising from any cause, except
in the case of the grossly negligent or intentional act of Landlord, its
employees, agents or contractors, and Tenant hereby waives all claims in respect
thereof against Landlord, its employees, agents and contractors.
15. SUBORDINATION
This Lease and all rights of Tenant are and shall be subject and
subordinate to all mortgages which may now or hereafter affect the fee title to
the Premises and to any modifications, renewals, extensions or replacements
thereof; provided, however, with respect to all mortgages hereafter affecting
the fee title to the Premises, Tenant's agreement to subordinate this Lease to
such mortgages shall be conditioned upon the holders of such mortgages executing
and delivering to Tenant a commercially reasonable non-disturbance agreement.
Tenant shall, within 10 days after written request, at any time or times
execute, acknowledge and deliver to Landlord any and all instruments that may be
necessary or proper to subordinate this Lease (such instruments to include
nondisturbance agreements in favor of Tenant) and all rights hereunder of any
mortgage and each such renewal, modification, consolidation, replacement and
extension. All insurance policies to be maintained by Tenant hereunder shall
insure the holder of any mortgages affecting fee title to the Premises under a
standard mortgagee clause.
If Tenant's lender requests, Landlord shall execute and deliver to such
lender a commercially reasonable landlord's waiver in which Landlord waives any
statutory landlord's lien that Landlord may have on Tenant's property.
16. INDEMNITY
(a) Tenant hereby agrees to indemnify, defend and hold harmless
Landlord and its employees, officers, agents, contractors, invitees, lenders and
ground lessors (said persons and entities are hereinafter collectively referred
to as the "LANDLORD PARTIES") from and against any and all liability, loss,
13
cost, damage, claims, loss of rents, liens, judgments, penalties, fines,
settlement costs, investigation costs, cost of consultants and experts,
reasonable attorneys fees, court costs and other expenses (hereinafter
collectively referred to as "DAMAGES") arising out of or related to an
Indemnified Matter (as defined below). For purposes of this Section, an
"INDEMNIFIED MATTER" shall mean any matter for which one or more of the Landlord
Parties incurs liability or Damages if the liability or Damages arise out of or
involve, directly or indirectly, (i) Tenant's or its employees', agents',
contractors' or invitees' (all of said persons or entities are hereinafter
collectively referred to as "TENANT PARTIES") use or occupancy of the Premises,
(ii) any grossly negligent act or willful misconduct of a Tenant Party, (iii)
Tenant's failure to perform any of its obligations under the Lease, and (iv) any
other matters for which Tenant has agreed to indemnify Landlord pursuant to any
other provision of this Lease. This indemnity is intended to apply to the
fullest extent permitted by applicable Law. Tenant's obligations under this
Section shall survive the expiration or termination of this Lease unless
specifically waived in writing by Landlord after said expiration or termination.
(b) Landlord hereby agrees to indemnify, defend and hold harmless
Tenant and the Tenant Parties from and against any Damages caused by (i) any
grossly negligent act of a Landlord Party, and (ii) any other matters for which
Landlord has expressly agreed to indemnify Tenant pursuant to any other
provision contained in this Lease. This indemnity is intended to apply to the
fullest extent permitted by applicable Law. Landlord's obligations under this
Section shall survive the expiration or termination of this Lease unless
specifically waived in writing by Tenant after said expiration or termination.
17. UTILITIES
(a) Tenant shall pay (as additional rent) all charges for or in any
way related to all public or private utilities, including but not limited to the
hook-up, furnishing, consumption, maintenance, and installation of water, water
pressure, gas, fuel, light, heat, power, electricity, telephone, sewage service,
sanitary charges, security protection, trash removal, and any other service or
services furnished to or serving the Premises during the Term (hereinafter
collectively referred to as the "UTILITIES"). Tenant shall contract directly
with all service providers.
(b) Tenant shall be solely responsible for obtaining all Utility
services, and Landlord shall have no liability to Tenant if Tenant is unable to
obtain such service for any reason including, but not limited to, repairs,
replacements or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, telephone service or other Utility
at the Premises, by any accident, casualty or event arising from any cause
whatsoever, including the negligence of Landlord, its employees, agents and
contractors, by act, negligence or default of Tenant or any other person or
entity, or by any other cause, and such failures shall never be deemed to
constitute an eviction or disturbance of Tenant's use and possession of the
Premises or relieve Tenant from the obligation of paying rent or performing any
of its obligations under this Lease. Furthermore, Landlord shall not be liable
under any circumstances for loss of property or for injury to, or interference
with, Tenant's business, including, without limitation, loss of profits, however
occurring, through or in connection with or incidental to Tenant's inability to
obtain services. Landlord may comply with voluntary controls or guidelines
promulgated by any governmental entity relating to the use or conservation of
energy, water, gas, light or electricity or the reduction of automobile or other
emissions without creating any liability of Landlord to Tenant under this Lease.
18. EMINENT DOMAIN
(a) If any part of the Premises shall be taken or condemned for any
public use by any legally constituted authority by right of eminent domain and
if a part thereof remains that is suitable for the full conduct of Tenant's
business, this Lease as to the part to be taken shall terminate as of the date
14
title shall vest in the condemnor, and the Base Rent payable hereunder shall be
adjusted to an amount which is the product of the Base Rent times a fraction,
the numerator of which is the fair market value of the entire Premises
immediately after such taking, and the denominator of which is the fair market
value of the Premises immediately prior to such taking. If the aforesaid taking
renders the remainder of the Premises unsuitable for Tenant's Permitted Use (as
mutually agreed upon by Landlord and Tenant in their good faith and reasonable
discretion), Tenant or Landlord may terminate this Lease as of the date when
Tenant is required to yield possession, by giving such other party notice to
that effect within 30 days after such possession is so yielded.
(b) If all or substantially all of the Premises are taken or
condemned, this Lease shall terminate and both Landlord and Tenant shall
thereupon be released from any liability thereafter accruing hereunder. Landlord
shall thereupon be entitled to the entire award or compensation in such
condemnation proceedings, but nothing contained herein shall be deemed to affect
Tenant's right, if any, to receive compensation or damages with respect to its
fixtures (to the extent such fixtures are included in such award or
compensation) and Tenant's relocation expenses and any damages suffered because
of business interruption.
19. DEFAULTS BY TENANT
(a) The occurrence of any of the following shall constitute an "EVENT
OF DEFAULT" under this Lease:
(i) Tenant shall default in the payment of any installment of
rent, additional rent or any other payment required to be made by Tenant
hereunder following the expiration of the five (5) day grace period set forth in
Section 4(c) hereof; and/or
(ii) The failure by Tenant to observe and perform any other
material provision of this Lease to be observed or performed by Tenant, where
such failure continues for 30 days after written notice thereof by Landlord to
Tenant; provided however, that if the nature of such default is such that the
same cannot reasonably be cured within such 30-day period, Tenant shall not be
deemed to be in default if Tenant shall, within such period, commence such cure
and thereafter diligently prosecute the same to completion within 90 days after
Landlord's notice (except with respect to any default by Tenant in connection
with the Tenant's obligations under Section 24 hereof); and/or
(iii) The making by Tenant (or any guarantor of Tenant with
respect to this Lease) of any general assignment for the benefit of creditors;
the filing by or against Tenant (or any guarantor of Tenant with respect to this
Lease) of a petition to have Tenant adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Tenant, the same is dismissed within 90
days); the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within 30
days; or the attachment, execution or other judicial seizure or non-judicial
repossession of substantially all of Tenant's assets located at the Premises or
of Tenant's interest in this Lease, where such seizure or repossession, as the
case may be, is not discharged within 30 days; or any Tenant, guarantor of
Tenant, subtenant or assignee with respect to this Lease shall die or, in the
case of corporations, shall have its corporate existence terminated.
(b) In the event of any such default by Tenant, then in addition to
any other remedies available to Landlord hereunder and at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate.
15
(c) In the event of any such default by Tenant, with or without
terminating this Lease, Landlord shall also have the right to re-enter the
Premises and remove all persons and property from the Premises. Such property
may be removed and stored elsewhere at the cost of and for the account of
Tenant. In the event Tenant shall vacate or abandon the Premises and fail to
make timely payments of Rent, Tenant shall be deemed to have granted Landlord a
security interest in all furniture, fixtures, equipment, inventory, merchandise
and other of Tenant's property which remains in the Premises after such vacation
or abandonment and Landlord may, at Landlord's election, thereafter deal with
such property as provided under the Uniform Commercial Code as adopted within
the state in which the Premises is located.
(d) Landlord may from time to time, without terminating this Lease,
either recover all rental as it becomes due or relet the Premises or any parts
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Landlord in its sole discretion may deem advisable, with
the right to make alterations and repairs to the Premises.
(e) Both Landlord and Tenant shall each use commercially reasonable
efforts to mitigate any damages resulting from an Event of Default. Landlord's
obligation to mitigate damages after an Event of Default shall be satisfied in
full if Landlord undertakes to lease the Premises to another tenant (a
"SUBSTITUTE TENANT") in accordance with the following criteria: (i) Landlord
shall have no obligation to solicit or entertain negotiations with any other
prospective tenants for the Premises until Landlord obtains full and complete
possession of the Premises including, without limitation, the final and
unappealable legal right to relet the Premises free of any claim of Tenant; (ii)
Landlord shall not be obligated to lease the Premises to a Substitute Tenant for
a rental less than the current fair market rental then prevailing for similar
uses in comparable properties in the same market area as the Premises, nor shall
Landlord be obligated to enter into a new lease under other terms and conditions
that are unacceptable to Landlord; and (iii) Landlord shall not be obligated to
enter into a lease with any proposed Substitute Tenant which does not have, in
Landlord's reasonable opinion, sufficient financial resources.
Should Landlord elect to so relet, then rentals received by Landlord from
such reletting shall be applied; first, to the payment of the entire costs
associated with such reletting; second, to the payment of the cost of any
alterations and repairs to the Premises deemed necessary by Landlord; third, to
the payment of rent and additional rent due and unpaid hereunder; fourth, the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; and the residue, if any, shall be held by Landlord and applied in
payment of future rent and additional rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord within 10 days after Landlord shall xxxx
Tenant for same. Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expense incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting
of the Premises.
(f) No re-entry or taking possession of the Premises by Landlord
pursuant to paragraphs (c) or (d) of this Article shall be construed as either
an acceptance of surrender or an election to terminate this Lease, nor shall it
cause a forfeiture of Rents or other charges remaining to be paid during the
balance of the Term, unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any default by Tenant, Landlord may at any time after such default
elect to terminate this Lease.
(g) If Landlord elects to terminate this Lease on account of the
occurrence of a default by Tenant, Tenant will remain liable to Landlord for
damages in an amount equal to monthly Base
16
Rent and other amounts which would have been owing by Tenant for the balance of
the Term, had this Lease not been terminated, less the net proceeds, if any, of
any reletting of the Premises by Landlord subsequent to such termination, after
deducting all of Landlord's expenses in connection with such reletting. Landlord
will be entitled to collect such damages from Tenant monthly on the day on which
monthly rent and other amounts would have been payable under this Lease if this
Lease had not been terminated, and Landlord will be entitled to receive such
monthly rent and other amounts from Tenant on each such day. Alternatively, at
the option of Landlord, in the event this Lease is so terminated, Landlord will
be entitled to recover against Tenant as damages for loss of the bargain and not
as a penalty:
(i) The worth at the time of award of the unpaid rent which had
been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the Term (had the same not been so terminated by
Landlord) after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; and
(iv) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in clauses (i)
and (ii) above is computed by adding interest at the per annum interest rate
described in subsection (g) below on the date on which this Lease is terminated
from the date of termination until the time of the award. The worth at the time
of award of the amount referred to in clause (iii) above is computed by
discounting such amount at the discount rate of the Federal Reserve Bank, at the
time of award plus one percent (1%).
(h) All amounts due to Landlord pursuant to this Lease that are not
paid when due shall bear interest at the lesser of ten percent (10%) per annum
or the maximum rate permitted by applicable law. Payment of such interest shall
not excuse or cure any default by Tenant under this Lease.
20. REMEDIES
All rights and remedies of Landlord herein created or otherwise available
at law or in equity are cumulative, and the exercise of one or more rights or
remedies shall not be taken to exclude or waive the right to exercise of any
other. Failure of Landlord to exercise any or all rights under this Lease shall
not be deemed a waiver of any subsequent breach or default of Tenant.
21. SURRENDER OF PREMISES
(a) Upon the expiration of the Term, or earlier termination, Tenant
shall quietly surrender to Landlord the Premises, including, without limitation,
all Alterations. The Premises and all said Alterations shall be surrendered to
Landlord by Tenant without any damage, injury or disturbance thereto, or payment
therefor by Landlord. Tenant may remove from the Premises Tenant's property
(including any leasehold improvements owned by Tenant) as Tenant elects, at
Tenant's expense; provided, however, Tenant shall be obligated to remove the
following items of Tenant's property: Tenant's trade fixtures, equipment,
furniture, inventory, merchandise and other items of moveable personal property.
Tenant shall repair any damage caused by such removal and shall restore the area
to its condition immediately before installation (reasonable wear and tear
excepted). Tenant, at its sole
17
expense, shall remove signage installed by Tenant after the Commencement Date
from the Premises and shall repair any damage to the Premises caused by such
removal and restore the affected areas to their prior condition. Tenant shall
surrender the Premises in a neat and clean condition, free of waste and debris,
subject to ordinary wear and tear. Tenant's obligation to observe and perform
these covenants shall survive the expiration or other termination of this Lease.
(b) Tenant shall have the right to be present at time of final
inspection of the Premises to determine if any damage was done thereto, if
Tenant notifies Landlord in writing of its intention to move, the date of moving
and new address. The notice of Tenant's desire to be present at the final
inspection of the Premises shall be given at least 10 days prior to the date of
moving. Upon receipt of such notice Landlord shall notify Tenant of time and
date when the Premises are to be inspected. The inspection shall occur within
five days before or five days after Tenant's date of moving, such inspection
date to be mutually satisfactory to both Landlord and Tenant.
(c) If Tenant does not remove from the Premises Tenant's furniture,
equipment, trade fixtures, or any other items of Tenant's property that Tenant
is obligated under subsection 21(a) above to remove on or prior to the
expiration of the Term or sooner termination of this Lease, then Tenant agrees
that Landlord may, at Landlord's election, (i) retain any or all of such
property, in which case Tenant shall be conclusively presumed to have conveyed
the same to Landlord under this Lease as a xxxx of sale without further payment
or credit by Landlord to Tenant, or (ii) Landlord shall have the right to cause
any or all of such property to be removed at Tenant's sole cost and expense.
Tenant agrees to reimburse Landlord for the cost of such removal.
22. LEASE STATUS/ESTOPPEL
At any time and from time to time, upon thirty (30) days' written notice
from either party, Landlord and/or Tenant will execute, acknowledge and deliver
to the requesting party an instrument prepared by Landlord, stating if the same
be true, that (i) this Lease is a true and exact copy of the Lease between the
parties hereto, (ii) there are no amendments hereof (or stating what amendments
there may be), (iii) the same is then in full force and effect and that there
are then no offsets, defenses or counterclaims with respect to the payment of
rent reserved hereunder or in the performance of the other terms and conditions
hereof on the part of such party to be performed, (iv) such party at the time
has no knowledge of any facts or circumstances which it might reasonably believe
would give rise to a default by either Landlord or Tenant, (v) the amount of
Base Rent and all additional rent, (vi) the date of the most recent installment
of rent paid, and (vii) with respect to an estoppel certificate requested by
Landlord, any other information reasonably required by a bona fide lender or
purchaser of Landlord.
23. NOTICES
Any notice given pursuant to this Lease shall be valid only if given in
writing, and shall be deemed sufficiently given if given by messenger, certified
or registered U.S. mail, a reliable express delivery service or by facsimile
(with telephone confirmation of delivery) to Landlord and Tenant at the
respective addresses set forth in the Basic Lease Provisions. Any such notice
shall be deemed to have been given on the date it is received by the addressee
as evidenced by a receipt executed by the addressee (or a responsible person in
his, her or its office), the records of the person delivering such communication
or a notice to the effect that such addressee refused to claim or accept such
communication.
24. Intentionally Omitted.
25. BROKERS
18
Landlord and Tenant each represent and warrant to the other that it has not
dealt with any broker, realtor, or agent in connection with this Lease
("BROKER"). Each party shall indemnify and hold harmless the other from and
against any and all claims for a commission or other compensation and other
loss, liability, claim, cost, damage, or expense (including without limitation
reasonable attorney's fees) asserted by any other broker, realtor, or agent with
whom the indemnifying party has dealt in violation of the foregoing warranty.
26. HOLDOVER
If Tenant remains in possession of the Premises or any part thereof after
the expiration or earlier termination of the Term with Landlord's consent, such
occupancy shall be a tenancy from month to month upon all the terms and
conditions of this Lease pertaining to the obligations of Tenant, except that
the Base Rent payable shall be 150% of the then current Base Rent for the
Premises as of the date Tenant holds over, and any options granted to Tenant
under this Lease shall be deemed terminated and be of no further effect. If
Tenant remains in possession of the Premises or any part thereof, after the
expiration of the Term without Landlord's consent, Tenant shall, at Landlord's
option, be treated as a tenant at sufferance or a trespasser. Nothing contained
herein shall be construed to constitute Landlord's consent to Tenant holding
over at the expiration or earlier termination of the Term or to give Tenant the
right to hold over after the expiration or earlier termination of the Term.
Tenant hereby agrees to indemnify, hold harmless and defend Landlord from any
cost, loss, claim or liability (including attorneys' fees) Landlord may incur as
a result of Tenant's failure to surrender possession of the Premises to Landlord
upon the termination of this Lease.
27. TENANT REMEDIES.
In the event of any alleged default in any obligation of Landlord under
this Lease, Tenant will deliver to Landlord written notice listing the reasons
for Landlord's default and Landlord will have 30 days following receipt of such
notice to cure such alleged default or, in the event the alleged default cannot
reasonably be cured within a 30-day period, to commence action and proceed
diligently to cure such alleged default. A copy of such notice to Landlord will
be sent to any holder of a mortgage or other encumbrance on the Premises of
which Tenant has been notified in writing.
28. MISCELLANEOUS
(a) This Lease constitutes the entire understanding between the
parties hereto with respect to the transactions contemplated herein, and all
prior or contemporaneous agreements, understandings, representations, and
statements, oral or written, are merged into this Lease. This Lease may be
modified in writing only, signed by the parties in interest at the time of such
modification.
(b) This Lease shall be governed by, and construed in accordance with,
the laws of the state in which the Premises is located.
(c) Descriptive headings provided in this Lease are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Lease.
(d) This Lease shall be binding upon and shall inure to the benefit of
Landlord, its successors, and assigns. This Lease shall be binding upon and
shall inure to the benefit of Tenant and its successors and assigns, subject to
Section 8 hereof.
(e) Tenant acknowledges that Landlord shall have the right to transfer
all or any portion of its interest in the Premises and to assign this Lease to
the transferee. Tenant agrees that in the
19
event of such a transfer Landlord shall automatically be released from all
liability under this Lease accruing after the date of such transfer; and Tenant
hereby agrees to look solely to Landlord's transferee for the performance of
Landlord's obligations hereunder after the date of the transfer. Subject to the
rights of any lender holding a mortgage or deed of trust encumbering all or part
of the Premises, Tenant agrees to look solely to Landlord's equity interest in
the Premises for the collection of any judgment requiring the payment of money
by Landlord arising out of (a) Landlord's failure to perform its obligations
under this Lease or (b) the negligence or willful misconduct of Landlord, its
officers, employees and agents. No other property or assets of Landlord shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of any judgment or writ obtained by Tenant against Landlord. No officer,
employee or agent of Landlord shall be personally liable for the performance of
Landlord's obligations hereunder or be named as a party in any lawsuit arising
out of or related to, directly or indirectly, this Lease and/or the obligations
of Landlord hereunder.
(f) Whenever the context of this Lease shall so require, the singular
shall include the plural, the male gender shall include the female gender and
the neuter and vice versa.
(g) If any one or more of the provisions contained in this Lease shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Lease shall be construed as if such invalid, illegal,
or unenforceable provision had never been contained herein unless to do so would
materially alter the benefits and burdens the parties hereto have bargained for.
(h) The options, if any, granted to Tenant in this Lease are not
assignable separate and apart from this Lease, nor may any option be separated
from this Lease in any manner, either by reservation or otherwise.
(i) Tenant hereby acknowledges that Landlord shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises, and Landlord shall have no liability to Tenant due to its
failure to provide such services. Tenant assumes all responsibility for the
protection of Tenant, its agents, employees, contractors and invitees and the
property of Tenant and of Tenant's agents, employees, contractors and invitees
from acts of third parties.
(j) If either Landlord or Tenant shall be in default in the observance
or performance of any provision of this Lease, and an action shall be brought
for the enforcement thereof in which it shall be judicially determined that said
party was in default, the defaulting party shall pay to the non-defaulting party
all reasonable attorneys' fees and expenses incurred by the prevailing party.
(k) Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction or going-out-of-business sale upon the
Premises.
(l) Neither this Lease, nor any memorandum, affidavit or other writing
with respect thereto, shall be recorded by Tenant or by anyone acting through,
under or on behalf of Tenant. Landlord shall have the right to record a
memorandum of this Lease, and Tenant shall execute, acknowledge and deliver to
Landlord for recording any memorandum prepared by Landlord.
[SIGNATURE PAGE FOLLOWS]
20
SIGNATURE PAGE TO LEASE AGREEMENT
IN WITNESS WHEREOF, and with intent to be legally bound hereby, the parties
have hereto set their hands and seals as of the day and date first above
written, and are authorized to execute on behalf of that party.
LANDLORD
ATTEST: XXXX. XXXX COMPANY LLC
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------- ------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: VP & CFO
TENANT
ATTEST: XXXX. XXXX CIRCULATING CO. LLC
/s/ Xxxxxxx X. Xxxxx By: /s/ S. Xxxxxx Xxxxxx
------------------------------------- ------------------------------------
Name: S. Xxxxxx Xxxxxx
Title: Chairman & Chief Executive
Officer
