EX-10.26
XXXXX RIVER PAPER COMPANY, INC.
Landlord
AND
CPG - VIRGINIA INC.,
Tenant
------------------------
DEED OF LEASE
------------------------
Dated as of October 31, 1993
Property Located in Richmond, Virginia
================================================================================
ARTICLE 1
DEMISE OF PREMISES AND EQUIPMENT;
LANDLORD REPRESENTATIONS
1.1...................................................................... 1
1.2...................................................................... 3
ARTICLE 2
CERTAIN DEFINITIONS
2.1...................................................................... 4
ARTICLE 3
USE OF DEMISED PREMISES AND EQUIPMENT
3.1...................................................................... 11
ARTICLE 4
TERM OF LEASE
4.1. .................................................................... 12
ARTICLE 5
BASIC RENT AND ADDITIONAL RENT
5.1...................................................................... 13
5.2...................................................................... 13
5.3...................................................................... 15
5.4...................................................................... 15
5.5...................................................................... 16
ARTICLE 6
PAYMENT OF IMPOSITIONS
6.1...................................................................... 17
6.2...................................................................... 17
6.3...................................................................... 19
6.4...................................................................... 20
6.5...................................................................... 21
6.6...................................................................... 22
6.7...................................................................... 23
6.8...................................................................... 25
6.9...................................................................... 26
2.10..................................................................... 26
ARTICLE 7
SERVICES AND UTILITIES
7.1...................................................................... 27
7.2...................................................................... 28
7.3...................................................................... 28
ARTICLE 8
INSURANCE
8.1...................................................................... 29
8.2...................................................................... 30
8.3...................................................................... 31
8.4...................................................................... 31
8.5...................................................................... 33
8.6...................................................................... 34
3.7...................................................................... 35
8.8...................................................................... 36
8.9...................................................................... 36
8.10..................................................................... 37
8.11..................................................................... 37
ARTICLE 9
DAMAGE OR DESTRUCTION
9.1...................................................................... 38
9.2...................................................................... 39
9.3...................................................................... 41
ARTICLE 10
CONDEMNATION
10.1..................................................................... 42
10.2..................................................................... 42
10.3..................................................................... 45
10.4..................................................................... 46
ARTICLE 11
MAINTENANCE AND REPAIRS
11.1..................................................................... 47
11.2..................................................................... 49
11.3..................................................................... 50
ARTICLE 12
ALTERATIONS
12.1..................................................................... 50
12.3..................................................................... 53
ARTICLE 13
COMPLIANCE WITH LAW
13.1..................................................................... 54
13.2..................................................................... 54
13.3..................................................................... 55
ARTICLE 14
DISCHARGE OF LIENS
14.1..................................................................... 55
14.2..................................................................... 56
14.3..................................................................... 57
ARTICLE 15
RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
15.1..................................................................... 58
15.2..................................................................... 58
ii
ARTICLE 16
ENTRY ON PREMISES BY THE LANDLORD
16.1..................................................................... 59
16.2..................................................................... 60
16.3..................................................................... 60
ARTICLE 17
ASSIGNMENT AND TRANSFERS OF
TENANT'S INTEREST; SUBLETTING
17.1..................................................................... 61
17.2..................................................................... 64
17.3..................................................................... 64
17.4..................................................................... 65
ARTICLE 18
ADDITIONAL UNDERTAKING OF THE TENANT
18.1..................................................................... 69
ARTICLE 19
CONDITION OF AND TITLE TO DEMISED PREMISES
19.1..................................................................... 70
ARTICLE 20
INDEMNIFICATION OF THE LANDLORD AND THE TENANT
20.1..................................................................... 70
20.2..................................................................... 72
20.3..................................................................... 73
20.4..................................................................... 73
20.5..................................................................... 73
ARTICLE 21
EXCAVATIONS ON ADJOINING PROPERTY
21.1..................................................................... 74
ARTICLE 22
DEFAULT
22.1..................................................................... 74
22.2..................................................................... 79
22.3..................................................................... 79
22.4..................................................................... 80
22.5..................................................................... 81
ARTICLE 23
ADDITIONAL RIGHTS OF THE LANDLORD AND TENANT
23.1..................................................................... 82
ARTICLE 24
SURRENDER AND HOLDING OVER
24.1..................................................................... 83
24.2..................................................................... 86
24.3..................................................................... 86
24.4..................................................................... 86
iii
24.5..................................................................... 86
24.6..................................................................... 87
ARTICLE 25
REMOVAL OF ALTERATIONS AND EQUIPMENT
25.1..................................................................... 87
25.2..................................................................... 88
25.3..................................................................... 89
25.4..................................................................... 89
ARTICLE 26
ESTOPPEL CERTIFICATES
26.1..................................................................... 89
ARTICLE 27
ASSIGNMENT OF THE LANDLORD'S INTEREST
27.1..................................................................... 90
27.2..................................................................... 90
ARTICLE 28
LIMITATION OF LANDLORD'S LIABILITY
28.1..................................................................... 91
ARTICLE 29
SEPARATE COVENENTS; INVALIDITY
OF PARTICULAR PROVISIONS
29.1..................................................................... 92
ARTICLE 30
CUMULATIVE REMEDIES; NO WAIVER
30.1..................................................................... 92
30.2..................................................................... 93
ARTICLE 31
RECORDING; LABELING OF EQUIPMENT;
FINANCING STATEMENTS
31.1..................................................................... 93
31.2..................................................................... 93
31.3..................................................................... 93
31.4..................................................................... 94
ARTICLE 32
RIGHT OF FIRST OFFER; RIGHT OF TERMINATION
32.1..................................................................... 94
32.2..................................................................... 96
32.3..................................................................... 97
32.4..................................................................... 97
32.5..................................................................... 100
32.6..................................................................... 101
32.7..................................................................... 102
iv
ARTICLE 33
FORCE MAJEURE
33.1..................................................................... 105
ARTICLE 34
LAWS APPLICABLE AND CONSTRUCTION
34.1..................................................................... 106
ARTICLE 35
COUNTERPARTS
35.1..................................................................... 106
ARTICLE 36
NO ORAL MODIFICATION; SUCCESSORS AND ASSIGNS
36.1..................................................................... 107
ARTICLE 37
NOTICES
37.1..................................................................... 107
ARTICLE 38
HEADINGS AND TABLE OF CONTENTS
38.1..................................................................... 109
ARTICLE 39
NO MODIFICATION OF ASSET PURCHASE AGREEMENT
39.1..................................................................... 109
ARTICLE 40
SIGNS
40.1..................................................................... 109
ARTICLE 41
ARBITRATION
41.1..................................................................... 110
41.2..................................................................... 110
ARTICLE 42
COMMON AREAS
42.1..................................................................... 114
42.2..................................................................... 114
42.3..................................................................... 115
42.4..................................................................... 116
42.5..................................................................... 116
42.6..................................................................... 116
42.7..................................................................... 117
42.8..................................................................... 118
42.9..................................................................... 119
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ARTICLE 43
SERVICES PROVIDED BY LANDLORD
43.1..................................................................... 119
ARTICLE 44
SERVICES PROVIDED BY TENANT
44.1..................................................................... 119
44.2..................................................................... 120
44.3..................................................................... 120
ARTICLE 45
MISCELLANEOUS PROVISIONS WITH
RESPECT TO SERVICES AND COMMON AREA COSTS
45.1..................................................................... 122
45.2..................................................................... 122
45.3..................................................................... 123
45.4..................................................................... 123
45.5..................................................................... 123
45.6..................................................................... 124
45.7..................................................................... 124
45.8..................................................................... 127
45.9..................................................................... 127
vi
THIS DEED OF LEASE is made as of October 31, 1993, between XXXXX RIVER
PAPER COMPANY, INC., a Virginia corporation having an office at Tredegar
Street, Richmond, Virginia, (hereinafter called the "Landlord"), and
CPG-VIRGINIA INC., a Virginia corporation (hereinafter called the "Tenant"),
having an office at c/o SCI Investors Inc., First National Bank Building,
Suite 1200, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000. Tenant is a
wholly owned subsidiary of CPG Holdings Inc., a Delaware corporation ("CPG") .
The Landlord desires to lease and demise to the Tenant, and the Tenant
desires to lease, hire and take from the Landlord, the Demised Premises and the
Equipment (both as hereinafter defined) upon the terms and conditions
hereinafter set forth. Accordingly, the parties hereto hereby agree as follows:
ARTICLE 1
DEMISE OF PREMISES AND EQUIPMENT;
LANDLORD REPRESENTATIONS
1.1. The Landlord, for and in consideration of the rents to be paid and of
the covenants and agreements herein contained to be kept and performed by the
Tenant, hereby demises and leases to the Tenant, and the Tenant, for and in
consideration of the covenants and agreements herein contained to be kept and
performed by the Landlord, hereby leases, hires and takes from the Landlord, in
each case upon the terms and conditions herein contained, the Demised Premises
and the Equipment, for the Term:
SUBJECT, HOWEVER, only to the following:
(a) Any state of facts which an inspection or an accurate survey would
show;
(b) Impositions (as defined in Section 6.2), accrued or unaccrued,
fixed or not fixed;
(c) Grants, licenses or consents, if any, with respect to public
utility lines and equipment;
(d) Present and future zoning laws, ordinances, regulations and orders
of the Governmental Authorities;
(e) The effect of all present and future municipal, county, state and
federal laws, orders and regulations relating to subtenants, their rights and
rentals to be charged by Tenant for the use of the Demised Premises and the
Equipment or any portion or portions thereof;
(f) Violations of laws, ordinances, orders or requirements that might
be disclosed by an examination and inspection or search of the Demised Premises
and the Equipment by any of the Governmental Authorities, as the same may exist
on the date of the commencement of the Term;
(g) The condition and state of repair of the Demised Premises and the
Equipment, without warranty or representation by the Landlord, as the same may
exist on the date of the commencement of the Term and the Landlord makes no
warranty or representation of any kind with respect thereto including, in
respect of the Equipment, no express or implied warranty whatsoever of
merchantability or fitness for purpose;
2
(h) Covenants, conditions, restrictions, easements, rights, licenses,
or any other matters affecting title;
(i) Any defects of title or encumbrances or encroachments, existing at
the date of the commencement of the Term;
(j) Assessments or installments of assessments becoming a lien against
the Demised Premises or the Equipment on or after the date of this Lease;
(k) With respect to any Leased Equipment, the rights of any owner or
lessor thereof and the terms and provisions of any lease pursuant to which such
Leased Equipment is leased;
TO HAVE AND TO HOLD the same, subject as aforesaid, unto the Tenant, and,
subject to the provisions hereof, its permitted successors and assigns, for the
Term.
1.2. Landlord covenants and agrees that Tenant, upon paying the Basic Rent,
Additional Rent, and all other charges provided for in this Lease and upon
observing and keeping all of the covenants, agreements, and provisions of this
Lease on its part to be observed and kept, shall lawfully and quietly hold,
occupy, and enjoy the Demised Premises and the Equipment during the Term without
hindrance or molestation by Landlord, or by any party claiming by, through or
under Landlord (except for those claiming by, through or under Tenant) under
claim of right arising from any event, act or omission occurring after the date
hereof, including, without limitation, any failure of Landlord to comply with
its obligations under Section 6.1.
3
ARTICLE 2
CERTAIN DEFINITIONS
2.1. Unless the context otherwise requires, the terms defined below shall
have the respective meanings set forth below:
(a) "Additional Rent" shall have the meaning given to it in Section
5.3;
(b) "Affiliate", with respect to any party, means a party, person or
entity that directly controls, is controlled by or is under common control with
such party, whether through the ownership of voting securities, by contract or
otherwise;
(c) "Allowed Price" shall have the meaning given to it in Section
32.1;
(d) "Alteration" and "Alterations" shall have the respective meanings
given to them in Section 12.1;
(e) "Asset Purchase Agreement" shall mean that certain Asset Purchase
Agreement dated as of March 15, 1991 among Xxxxx River Corporation of Virginia
and certain of its subsidiaries, (referred to therein collectively as the
"Transferors") and Specialty Coatings Group Inc. ("SCG") and certain of its
subsidiaries (referred to therein collectively as the "Transferees") as the same
may have been heretofore amended, modified or supplemented;
(f) "Basic Rent" shall have the meaning given to it in Section 5.1;
(g) "Business" shall have the meaning given to it in Section 3.1;
4
(h) "Closing Date" shall have the meaning given to it in Section 32.2;
(i) "Common Areas" shall have the meaning given to it in Section 42.1;
(j) "Common Area Costs" shall have the meaning given to it in Section
42.6;
(k) "Business Value" shall have the meaning given to it in Section
32.4;
(1) "Default" shall mean any event which would constitute an Event of
Default if any requirement in connection therewith for the giving of notice, or
the lapse of time or the happening of any further condition, event or action had
been satisfied or any event that has constituted an Event of Default;
(m) "Default Rate" shall mean an annual rate of interest equal to the
"prime rate" of the Bank of Nova Scotia plus 3%;
(n) "Demised Premises" shall mean the real property described on
Schedule 2.1 attached hereto and the Improvements (as hereinafter defined);
(o) "East Parcel" shall have the meaning given to it in Section 6.3;
(p) "Environmental Expenditures" shall have the meaning given to it in
Section 22.1;
(q) "Equipment" shall mean all personal property including machinery,
equipment and fixed assets not included within the definition of Demised
Premises owned by Landlord and
5
ordinarily located on the Demised Premises, and any replacements, alterations,
and substitutions therefor; provided, however, that the term "Equipment" shall
include neither "Inventory" nor "Excluded Assets", as such terms are defined in
the Asset Purchase Agreement, other than as described in Section 2.2(iii) of the
Asset Purchase Agreement; the major items of which Equipment are, to the best
knowledge of the each of the parties, listed on Schedule B, the parties
recognizing, however, that Schedule B does not constitute an all-inclusive list
of the Equipment;
(r) "Event of Default" shall have the meaning given to it in Section
22.1;
(s) "Fully Loaded Costs" shall have the meaning given to it in Section
45.2;
(t) "Governmental Authorities" shall mean any local, state or federal
governmental bodies, units, authorities, both public and quasi-public, courts,
boards, bureaus, commissions and officers, or any agent or representative
thereof, having or purporting to have jurisdiction or authority over Tenant, the
Demised Premises, the Equipment or the Business;
(u) "Guarantor" shall mean CPG;
(v) "Guaranty" shall mean a guaranty by Guarantor of Tenant's
obligations under this Lease in the form attached to the Asset Purchase
Agreement;
(w) "Headquarters" shall mean all areas within the Tredegar Complex
other than the Demised Premises;
6
(x) "Headquarters Services" shall have the meaning given to it in
Section 44.1;
(y) "Imposition" and "Impositions" shall have the respective meanings
given to them in Section 6.2;
(z) "Improvements" shall mean all buildings, structures,
appurtenances, parking facilities, walkways, utilities, landscaping and other
improvements now or hereafter located on or under the Demised Premises
(including any rights to support thereof, to the extent owned by Landlord) and
any restoration, addition to or replacement thereof (including all machinery,
equipment, fixtures and fixed assets to the extent they constitute real property
under applicable law);
(aa) "Interest Rate" shall mean an annual rate of interest equal to
the "prime rate" of the Bank of Nova Scotia plus 1%;
(ab) "Landlord Facilities" shall have the meaning given to it in
Section 44.3;
(ac) "Leased Equipment" shall mean all personal property, (including
machinery, equipment and fixed assets) ordinarily located on the Demised
Premises that Landlord leases as lessee immediately prior to the commencement of
the Term pursuant to any lease that has been assigned to and assumed by SCG or
one of its Affiliates pursuant to the Asset Purchase Agreement, and any
replacements, alterations, and substitutions therefor made pursuant to any
applicable lease (provided,
7
however, that the term "Leased Equipment" shall not include "Inventory" as
defined in the Asset Purchase Agreement);
(ad) "Leasehold Value" shall mean the net present value, applying a
discount rate of 12 1/2% per annum, at the time the calculation of such
leasehold value is made, of all Basic Rent that would be required to be paid
after such date if this Lease were to continue in full force and effect until
the date set forth in Article 4 for the natural expiration of the Term;
(ae) "Liability" and "Liabilities" shall have the respective meanings
given to them in Section 20.1;
(af) "Note Guaranty" shall mean a guaranty by Guarantor of the
promissory note referred to in Sections 10.2, 17.1.(b) and Article 32 under
this Lease in the form attached to the Asset Purchase Agreement;
(ag) "Mill Services" shall have the meaning given to it in Section
43.1;
(ah) "Mill Services Costs" shall have the meaning given to it in
Section 43.1;
(ai) "Parking Deck" shall have the meaning given to it in Section
42.3;
(aj) "Parking Deck Charges" shall have the meaning given to it in
Section 42.8;
(ak) "Paying Party" shall have the meaning given to it in Section
45.4;
(al) "Premium Amount" shall mean 42.73% of the Leasehold Value;
8
(am) "Proceeding" shall mean the taking of real or personal property
by virtue of condemnation or eminent domain for any public or quasi-public
purpose (or by deed in lieu thereof, if the transfer by such deed is made with
the consent of Tenant, which shall not be unreasonably withheld or delayed)
pursuant to any law, general or special, or by reason of the temporary
requisition of the use or occupancy of such property;
(an) "Providing Party" shall have the meaning given to it in Section
45.7;
(ao) "Qualified Assignee" shall have the meaning given to it in
Section 32.4;
(ap) "Real Estate Taxes" shall have the meaning given to it in Section
6.1;
(aq) "Receiving Party" shall have the meaning given to it in Section
45.7;
(ar) "Related Lease Process Technology" shall mean all letters patent,
patent rights, copyrights, licenses and unpatented technology, inventions, trade
secrets, processes and formulae and other industrial and intellectual property
necessary to operate any of the Equipment or Improvements;
(as) "Road Charges" shall have the meaning given to it in Section
42.7;
(at) "Security Charges" shall have the meaning given to it in Section
42.9;
(au) "Services" shall have the meaning given to it in Section 45.1;
9
(av) "Service Termination Notice" shall have the meaning given to it
in Section 45.5;
(aw) "Tax Fraction" shall have the meaning given to it in Section 6.3;
(ax) "Term" shall have the meaning given to it in Article 4;
(ay) "Tenant" shall mean, at any given time, the then tenant under
this Lease; provided that such definition, in and of itself, shall in no event
be construed to effect the release of the Guarantor or of any assigning or
subletting tenant from any obligations it may otherwise have under the
provisions of this Lease;
(az) "Tenant's Real Estate Taxes" shall have the meaning given to it
in Section 6.2;
(ba) "Termination Fee" shall have the meaning given to it in Section
32.7;
(bb) "Total Taking" shall have the meaning given to it in Section
10.2; and
(bc) "Tredegar Complex" shall mean all of the real property, including
all improvements located thereon and all appurtenances thereto, and all other
property owned or leased by Landlord and located at or used in connection with
such real property, located at Tredegar Street between the railroad tracks and
the Xxxxx River in Richmond, Virginia.
10
ARTICLE 3
USE OF DEMISED PREMISES AND EQUIPMENT
3.1. The Tenant covenants and agrees that it will use and occupy the
Demised Premises and the Equipment for the manufacture, coating, conversion,
packaging, distribution and sale of paper, film and related products and
services and any purpose ancillary to all or any of the foregoing (the uses
described in the foregoing provisions being collectively referred to as the
"Business") and for no other purpose without the prior consent of the Landlord;
provided that Tenant may use the Demised Premises for offices used in connection
with the Business, and, in the case of any assignment or subletting pursuant to
Section 17.1(c), the assignee or subtenant pursuant to such assignment or
sublease may use the Demised Premises for offices used in connection with the
business of such assignee or subtenant. The Tenant shall not at any time during
the Term use or occupy, nor permit to be used or occupied, the Demised Premises
or the Equipment (i) in violation of any certificate of occupancy or certificate
of compliance covering or affecting the Demised Premises or any part thereof,
(ii) in a manner to cause a reduction in the coverage or a termination of any
insurance policy or policies relating to the Demised Premises or the Equipment
and required under Article 8, (iii) in a manner that constitutes a public or
private nuisance or in connection with any dangerous, noxious or offensive
business, (iv) in any manner constituting waste of the Demised Premises, the
Equipment, or any portion of either, or (v) subject to the provisions of Section
11
13.3 in any manner that constitutes a violation of, or renders the Demised
Premises or the Equipment, or any portion of either in violation of, any law,
rule, regulation or ordinance applicable to the Demised Premises or the
Equipment relating to the protection of, or prohibiting or limiting the
contamination of, the environment. In furtherance of the foregoing, the Tenant
shall indemnify and hold the Landlord harmless against all costs, expenses,
liabilities, losses, damages, injunctions, suits, fines, penalties, claims and
demands, including reasonable fees of counsel, accountants, appraisers and
others arising out of any violation of or default in the covenants and
agreements contained in this Article 3 with respect to facts, events, actions or
omissions occurring after the date hereof, but expressly excluding any such
violations or defaults that are attributable to facts, events, actions or
omissions that occurred prior to the date hereof.
ARTICLE 4
TERM OF LEASE
4.1. The term of this Lease (the "Term") shall commence on the date hereof
and shall expire, unless sooner terminated or unless automatically extended as
hereinafter provided, at midnight on April 30, 2006.
12
ARTICLE 5
BASIC RENT AND ADDITIONAL RENT
5.1. The Tenant shall pay to the Landlord during the Term in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, at the address of the
Landlord for notices as specified in Article 37, a net basic rental (hereinafter
called the "Basic Rent") over and above the other additional payments to be made
by the Tenant as hereinafter provided, equal to TWO HUNDRED THOUSAND AND NO/100
Dollars ($200,000) per annum. Basic Rent shall be payable in arrears in equal
semiannual payments of ONE HUNDRED THOUSAND AND NO/100 Dollars ($100,000) on the
first days of June and December during the Term. If the Term of the Lease shall
begin other than on the first day of the month of June or December, the Basic
Rent period shall be prorated on a per diem basis, and Tenant shall promptly pay
to Landlord on December 1, 1993, the amount thereof for such partial semiannual
period. If the Term of the Lease shall expire or terminate other than on the
last day of the month of June or December, the Basic Annual Rent shall be
prorated on a per diem basis, and Tenant shall promptly pay to Landlord the
amount thereof for such partial semiannual period.
5.2. The liability and obligation of the Tenant to pay the Basic Rent is a
separate, absolute, unconditional and independent covenant. The Tenant shall pay
the Basic Rent without notice, demand, set-off, counterclaim, deduction,
defense, abatement, suspension, deferment, recoupment, diminution or reduction
and,
13
except as otherwise expressly provided in this Lease, the Tenant shall have no
right to terminate this Lease or to be released, relieved or discharged from any
obligations or liabilities hereunder (which notice, demand, set-off,
counterclaim, deduction, defense, abatement, suspension, deferment, recoupment,
diminution, reduction, termination, release, relief and discharge are
hereinafter referred to collectively as "Remedies") for any reason whatsoever,
including without limitation:
(a) any damage to or destruction of the Demised Premises or the
Equipment or any part thereof;
(b) any limitation, restriction, deprivation or prevention of, or any
interference with, any use of the Demised Premises or the Equipment or any part
thereof;
(c) any taking of the Demised Premises or any part thereof by
condemnation or otherwise;
(d) any occurrence or circumstance constituting eviction from the
Demised Premises or the Equipment or any part thereof;
(e) any action, omission or breach on the part of the Landlord under
this Lease or under any other agreement at the time existing between the
Landlord and the Tenant;
(f) any claim as a result of any other business dealings of the
Landlord or the Tenant; or
(g) any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding up or similar proceeding
involving or affecting the Landlord.
14
Basic Rent payments by the Tenant hereunder shall be final, and the Tenant will
not seek to recover any such payment or any part thereof for any reason
whatsoever. Except as may be otherwise provided in this Lease, the Tenant waives
any right it might otherwise have had, howsoever arising, to any abatement,
suspension, deferment, diminution or reduction of the Basic Rent. Nothing
contained in this Section 5.2 shall limit any rights or remedies that Tenant may
have against Landlord in the event of a breach of Landlord's covenant in Section
1.2 except that the Remedies, as defined above, are unavailable to Tenant.
5.3. The Tenant shall also pay, as additional rent, all sums, costs,
expenses and other payments which the Tenant under any of the provisions of this
Lease assumes or agrees to pay and all Impositions (which sums, costs, expenses
and other payments, including, without limitation, any payments required to be
made at the termination of this lease in accordance with the provisions of
Article 22 or Article 32, and Impositions are hereinafter collectively called
the "Additional Rent"), and, in the event of any nonpayment of the Additional
Rent, the Landlord shall have all the rights and remedies provided herein or by
law.
5.4. This Lease is a net lease and the Basic Rent shall be absolutely net
to the Landlord, so that this Lease shall yield, net, to the Landlord, the Basic
Rent during the Term, and, except as is otherwise specifically provided for in
this Lease (including, without limiting the generality of the foregoing
provision, the provisions of Section 6.4), all costs, expenses
15
and obligations of every kind and nature whatsoever relating to the Demised
Premises or the Equipment which may arise and be attributable to the ownership,
use or occupancy of the Demised Premises or the Equipment during the Term shall
be paid by the Tenant and, except with respect to facts, events, actions, or
omissions arising or occurring prior to the date hereof, Landlord shall be
indemnified and saved harmless by Tenant against the same. Nothing contained in
this Section 5.4 shall be deemed to modify the obligations of Landlord as
described in Articles 42 through 45, inclusive.
5.5. Tenant shall make all payments of rent hereunder by wire transfer into
Landlord's account number 000-00-000 at Xxxxxx Guaranty Trust, 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, (ABA Routing No. 000000000) the denomination of which
account is "Xxxxx River Corporation." Tenant shall advise Xxxxx Xxxx by
telephone at 000-000-0000 of each transfer of funds. Landlord may, by notice to
Tenant given in accordance with the provisions of Section 37.1, change any of
the bank, account name or account number into which funds are to be transferred
hereunder or the identity or the telephone number of the party Tenant is
required to contact upon any such transfer, each which change shall be effective
as of the sixth day after the date upon which notice of such change is deemed
given under Section 37.1.
16
ARTICLE 6
PAYMENT OF IMPOSITIONS
6.1. Subject to the provisions of Section 6.4 Landlord shall pay, in the
first instance, during the Term all (a) taxes and governmental assessments, (b)
water and sewer rents, rates and charges, whether governmental or
non-governmental, (c) excises, levies, license and permit fees and other
governmental charges, general and special, ordinary and extraordinary, foreseen
and unforeseen, of any kind and nature whatsoever which at any time in respect
of any period during the Term may be assessed, levied, confirmed, imposed upon,
or become due and payable out of or in respect of, or become a lien on, the
Demised Premises or any part thereof or any appurtenances thereto (all such
rent, taxes, assessments, water and sewer rents, rates and charges, excises,
levies, licenses and permit fees and other governmental charges and any other
amounts referred to in this Section 6.1 are hereinafter referred to as "Real
Estate Taxes").
6.2. Subject to the provisions of Section 6.4 the Tenant shall pay as
Additional Rent all (a) taxes and governmental assessments, (b) rents, rates and
charges, whether governmental or non-governmental, (c) excises, levies, license
and permit fees and other governmental charges, general and special, ordinary
and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever
which at any time in respect of any period during the Term may be assessed,
levied, confirmed, imposed upon, or become due and payable out of or in respect
of, or become a lien on, (i) the Equipment or any part thereof, (ii) the rent,
income or other
17
payments received by Tenant or anyone claiming by, through or under Tenant for
which the Landlord may become liable, (iii) upon or against this Lease or the
leasehold estate hereby created or any document to which Tenant is a party
creating or transferring any interest or estate in the Demised Premises or the
Equipment, (iv) any use or occupation of the Demised Premises or the Equipment,
or (v) such franchises as may be appurtenant to the use of the Demised Premises
or the Equipment, and, as Additional Rent, shall reimburse Landlord for all Real
Estate Taxes assessed or levied against the Demised Premises (which Real Estate
Taxes shall be hereinafter referred to as "Tenant's Real Estate Taxes," and all
such rent, taxes, assessments, water and sewer rents, rates and charges,
excises, levies, licenses and permit fees and other governmental charges and any
other amounts referred to in this Section 6.2, together with Tenant's Real
Estate Taxes, are hereinafter referred to as "Impositions" and any of the same
are hereinafter referred to as an "Imposition"), together with any penalty,
interest or cost payable to third parties which may be imposed thereon or added
for late payment thereof (except to the extent imposed or added as a result of
Landlord's failure to timely pay the Real Estate Taxes); provided, however, that
if, by law, any Imposition is payable or at the option of the taxpayer may be
paid in installments (whether or not interest shall accrue on the unpaid balance
thereof), Tenant may pay the same (and any accrued interest on the unpaid
balance) in installments and shall be required to pay only such installments as
may become due in
18
respect of periods during the Term as the same respectively become due and
before any fine, penalty, interest, or cost may be added thereto for non-payment
thereof; and provided further, that any Imposition relating to a fiscal period
of a taxing authority, a part of which period is included within the Term and a
part of which is included in a period of time before the commencement of the
Term or after the termination of this Lease, shall (whether or not such
Imposition shall be assessed, levied, confirmed, imposed, or become a lien upon
the Demised Premises or the Equipment, or shall become payable, during the Term)
be appropriately prorated between Landlord and Tenant. The Landlord shall
promptly provide the Tenant with copies of notices of Impositions which are
received by the Landlord, and, notwithstanding any provision contained in this
Lease to the contrary, Tenant shall have no obligation to reimburse Landlord for
any Real Estate Tax as required hereby before the twentieth day after Landlord
provides Tenant with a copy of the notice of such tax.
6.3. For purposes of determining the amount of Tenant's Real Estate Taxes,
(a) all Real Estate Taxes assessed or levied against the real estate tax parcel
containing the building within the Demised Premises known as the "Hollywood Mill
Building" shall be deemed assessed against the Demised Premises, and (b) subject
to adjustment as set forth below, the product of (i) the "Tax Fraction," as
defined below, and (ii) the amount of the Real Estate Taxes assessed against or
levied against the real estate
19
tax parcel (the "East Parcel") containing the Parking Deck and the building
within the Demised Premises known as the "Saturating Plant" shall be deemed to
be a portion of Tenant's Real Estate Taxes. The "Tax Fraction" shall be a
fraction the numerator of which is the value of the portion of the Demised
Premises contained within the East Parcel and the denominator of which is the
value of the East Parcel. The Tax Fraction shall initially be 1/2. Upon the
construction or removal of any improvements constituting real property upon the
East Parcel, the parties shall, at the request of either party, change the Tax
Fraction by modification of this Lease as may be fairly and reasonably required
to provide for Tenant's reimbursement of all Real Estate Taxes assessed against
the portion of the Demised Premises located within the East Parcel, but to
prevent Tenant's being required to reimburse, pursuant to this Article 6, Real
Estate Taxes assessed against any portion of the Tredegar Complex not
constituting a portion of the Demised Premises.
6.4. Nothing herein contained shall require the Tenant to pay any income
and/or excess profits, capital levy, corporate franchise, payroll, estate,
succession, inheritance or transfer, or similar taxes levied or assessed against
the Landlord or any income, excess profits, revenue or similar tax upon the
Basic Rent, the Additional Rent or any other amounts payable under this Lease;
provided, however, that if at any time during the Term (a) the methods of
taxation prevailing at the commencement of the Term shall be altered so as to
cause the whole or any part of
20
such taxes, assessments, rates, levies, fees, impositions or charges now or
hereafter levied, assessed or imposed on, real estate and the improvements
thereon or machinery and equipment to be levied, assessed and imposed wholly or
partially as a capital levy, or otherwise, directly on the rents received
therefrom, or (b) as the result of the alteration of the current method of
taxation, any such tax, assessment, rate, levy, fee, imposition or charge, or
any part thereof, shall be measured by or based, in whole or in part, upon the
Demised Premises or the Equipment, the Basic Rent or the Additional Rent and
shall be imposed upon the Landlord and if in the case of (a) or (b) above it is
shown by demonstrable evidence that any such tax, assessment, rate, levy, fee
imposition or charge is in substitution of, or in lieu of an increase in, any
Imposition that Tenant is otherwise required hereunder to pay then all such
taxes, assessments, rates, levies, fees, impositions or charges or the part
thereof so measured or based shall be deemed to be included within the term
"Impositions" for the purposes hereof to the extent that such Impositions would
be payable if the Demised Premises and the Equipment were the only property of
the Landlord subject to such Impositions; and Tenant shall pay and discharge the
same.
6.5. Each party required hereunder to pay any Imposition or Real Estate
Tax, upon request of the other designating the specific Imposition or Real
Estate Tax involved and the period to which it relates, will furnish to or as
directed by the requesting party, within 15 days after the date when such
21
Imposition or Real Estate Tax would become delinquent, official receipts of the
appropriate taxing authority, or other evidence reasonably satisfactory to the
requesting party, evidencing the payment thereof. If such official receipts are
not available within 15 days after the date such Imposition or Real Estate Tax
would become delinquent, the party to whom such request is made will furnish the
same within 15 days after they are available.
6.6. Tenant shall have the right to contest the amount or validity
(including the accuracy or propriety of any assessed valuation of property
upon which the amount of an Imposition is based), in whole or in part, of any
Imposition by appropriate proceedings diligently conducted in good faith;
provided, however, that any contest relating to the amount or validity of any
Real Estate Tax (including the accuracy or propriety of any assessed
valuation of property upon which the amount of any Real Estate Tax is based)
shall be governed by the provisions of Section 6.7. Tenant shall keep
Landlord informed, and consult in good faith with Landlord, with respect to
any such contest of Tenant prosecuted hereunder. In the event of any such
contest, notwithstanding any of the provisions of this Lease, including
without limitation Sections 6.2 and 6.5, Tenant may postpone or defer payment
of such Imposition pursuant to appropriate contest procedures that operate
during the pendency thereof to prevent the collection of or other realization
upon such Imposition and which also prevent the sale, forfeiture or loss of
the Demised Premises or any portion thereof or any other property of
22
Landlord, or any Basic Rent or other Additional Rent, and which shall not affect
the payment of any Basic Rent or Additional Rent, provided that (i) such
postponement or deferment shall not subject Landlord or any assignee of its
interests in the Demised Premises including, without limitation, its interests
in this Lease (including any person or entity having a beneficial interest in
such interests) to the risk of any civil or criminal liability, (ii) such
postponement or deferment does not prevent or interfere with Landlord's ability
to sell or refinance the Demised Premises and (iii) such postponement or
deferment is not prohibited or objected to by any mortgagee of Landlord. In the
event of any such postponement or deferment Tenant shall give such security as
may be reasonably required by Landlord to insure the ultimate payment and
discharge of such Impositions and to prevent any sale, forfeiture or loss
referred to above by reason of such nonpayment or noncompliance.
6.7. With respect to the East Parcel, Landlord shall have the right to
contest the amount or validity of any Real Estate Tax (including the accuracy or
propriety of any assessed valuation of property upon which the amount of any
Real Estate Tax is based), by appropriate proceedings diligently conducted in
good faith. Landlord shall keep Tenant informed, and consult in good faith with
Tenant with respect to any such contest of Landlord prosecuted under this
Section 6.7. In the event of any such contest, notwithstanding any of the
provisions of this Lease, Landlord may postpone or defer payment of such Real
Estate
23
Tax pursuant to appropriate contest procedures that operate during the pendency
thereof to prevent the collection of or other realization upon such Real Estate
Tax and which also prevent the sale, forfeiture or loss of the Demised Premises
or any portion thereof, provided that (i) such postponement or deferment shall
not subject Tenant or any assignee of its interests in the Demised Premises
including, without limitation, its interests in this Lease (including any person
or entity having a beneficial interest in such interests) to the risk of any
civil or criminal liability, and (ii) such postponement or deferment does not
prevent or interfere with Tenant's ability to assign or mortgage its interest in
the Demised Premises. Landlord shall give Tenant notice of Landlord's election
to seek a reduction in the valuation of the Demised Premises for tax purposes
promptly upon Landlord's decision to seek such reduction, and shall give Tenant
notice of Landlord's filing of any application, pleading or other document, or
taking of any other action, constituting the initiation of any proceeding to
seek such reduction promptly upon such filing or taking such action. If, but
only if, Tenant has not received notice from Landlord that Landlord has so
initiated a proceeding to seek such a reduction in value before the earliest of
(a) the first day of the second half of the period during which such proceeding
may be initiated, (b) the day that is 15 days before the last day that such
proceeding may be initiated, and (c) 30 days after Tenant notifies Landlord that
Landlord intends to initiate such a proceeding, Tenant shall have
24
the right at its own expense to seek a reduction in the valuation of the Demised
Premises assessed for tax purposes and, in any event, Tenant shall have the
right at Tenant's expense to participate in any action or proceeding theretofore
commenced by Landlord. With respect to that portion of the Demised Premises not
constituting any portion of the East Parcel, Tenant shall have the same contest
rights and obligations that the Landlord has with respect to the East Parcel,
and Landlord shall have the same contest rights and obligations that the Tenant
has with respect to the East Parcel, all upon the terms set forth in the
preceding provisions of this Section 6.7, mutatis mutandis.
6.8. Any "net tax refund," as hereinafter defined, shall be paid to and
belong to Tenant except that any net tax refund payable as a result of any
proceeding with respect to any tax year a portion of which begins before the
commencement, or extends beyond the expiration or other termination, of the
Terms shall be apportioned between Landlord and Tenant. For purposes of this
Section 6.8, the term "net tax refund" shall mean the tax refund actually
received by Tenant or Landlord in contesting the assessed valuation of the
Demised Premises and/or the Equipment less the expenses incurred by Tenant or
Landlord, as the case may be, in connection with such proceeding. Any right or
obligation to have apportioned or apportion any net tax refund as set forth in
this Section 6.8 shall survive any expiration or termination of the Term.
25
6.9. Landlord shall not be required to join in any proceedings referred to
in Section 6.7 unless the provisions of any law, rule or regulation at the time
in effect shall require that such proceedings be brought by or in the name of
Landlord, in which event Landlord shall join in such proceedings or permit the
same to be brought in its name. Landlord shall not be subjected to any liability
for the payment of any costs or expenses in connection with any such
proceedings, and Tenant will indemnify and save Landlord harmless from any such
costs and expenses including reasonable attorneys' fees incurred at any stage of
such proceedings or on appeal therefrom. Except as otherwise provided in this
Lease, Tenant shall be entitled to any refund of any Imposition and penalties or
interest thereon received by Landlord which have been paid by Tenant, or which
have been paid by Landlord but previously reimbursed in full by Tenant.
6.10. Landlord hereby authorizes Tenant to make, in Landlord's name if
necessary, all payments to be made by Tenant pursuant to any of the provisions
of this Lease to persons or entities other than Landlord. In case any person or
entity to whom any sum is directly payable by Tenant under any of the provisions
of this Lease shall refuse to accept payment of such sum from Tenant, Tenant
shall thereupon give written notice of such fact to Landlord and shall pay such
sum directly to Landlord at the address of Landlord specified pursuant to
Article 37 or at such other place as Landlord may from time to time specify by
26
notice given pursuant to Article 37 and to the attention of such officer or
other person as Landlord may by like notice from time to time designate to
Tenant, and Landlord shall thereupon promptly pay such sum or cause such sum to
be paid to such person or entity and Tenant shall be deemed to have paid such
sum.
ARTICLE 7
SERVICES AND UTILITIES
7.1. The Tenant shall pay or cause to be paid all charges for (i) utilities
for the Demised Premises, including but not limited to electricity, steam,
water, gas, sewer, telephone and other communication service, and (ii) new and
further installations and equipment to supply the same, and the Tenant shall
indemnify and hold the Landlord harmless against any liability, loss, expense or
damage incurred in connection therewith arising or accruing after the date
hereof. In furtherance of the foregoing, the Tenant shall procure any and all
necessary permits, licenses or other authorizations required for the lawful and
proper installation and maintenance upon the Demised Premises of wires, pipes,
conduits, tubes and other equipment and appliances for use in supplying any such
service to and upon the Demised Premises. Except as expressly provided in this
Lease, the Landlord shall not be required to furnish to the Tenant or provide
any facilities or services of any kind, nor shall the Landlord be liable for any
failure of water supply, electric current or other utilities. Nothing contained
in this
27
Section 7.1 shall be deemed to modify the obligations of Landlord as described
in Articles 42 through 45, inclusive.
7.2. Landlord shall not unreasonably withhold or delay its consent to a
request by Tenant to enter into agreements with utility companies which may
create easements on the Demised Premises which are required by the utility
companies in order to provide utility service to the Demised Premises for the
Business. Landlord shall execute and deliver such documents and take such
actions as may be reasonably required in connection therewith. Tenant shall pay
(or reimburse) Landlord for Landlord's reasonable attorney's fees and other
reasonable out-of-pocket expenses incurred in connection with the foregoing
promptly upon Landlord's request to Tenant for such reimbursement.
7.3. Landlord hereby reserves the right at any time during the Term to
encumber the Demised Premises with easements for utility facilities, if and when
such easements are necessary in Landlord's reasonable judgment to provide
utility service to Tredegar Complex, or any portion thereof; provided, however,
that the installation and operation of utility facilities within the areas
encumbered by such easements will not materially interfere with Tenant's
operation of the Business. Before granting any such easement, Landlord shall
serve notice upon Tenant of Landlord's intention to grant such easement, which
notice shall set forth reasonable details of the location, nature and purpose of
such proposed easement as well as a description of the utility facilities to be
located therein. If within 20 days of
28
Landlord's service of such notice, Tenant, in its reasonable judgment determines
that either (a) the granting of such easement is not necessary to serve the
Tredegar Complex with any utility, or (b) that the existence of such easement
will materially interfere with Tenant's operation of the Business, and within
such 20-day period serves notice of its determination upon Landlord, the matter
shall be submitted to arbitration in accordance with Article 41, and the
easement shall be granted or not granted in accordance with the decision
rendered in such arbitration. Upon Landlord's granting of any easement in
accordance with this Section 7.3, Tenant's leasehold interest in the Demised
Premises shall, without any further act on the part of any party, become subject
and subordinate to such easement and the beneficiaries thereof in accordance
with the terms thereof, and, upon the request of either party, the other party
shall promptly execute an agreement modifying this Lease to reflect such
subjugation and subordination.
ARTICLE 8
INSURANCE
8.1. Tenant, at its sole cost and expense, shall keep the Improvements and
the Equipment insured, during the term of the Lease, against loss or damage
under an all risk policy, without exclusion of any of the perils covered by a
standard form fire and extended coverage policy and including, without
limitation, to the fullest extent obtainable (with any exception to be subject
to Landlord's consent, which shall not be unreasonably
29
withheld), coverage for damage caused by earthquake, earth movement, flood,
collapse and freeze, in an amount not less than the full repair and replacement
cost of the Improvements and the Equipment under a policy of insurance
containing no provisions whereby the insured thereunder could be deemed a
"co-insurer" to any extent whatsoever. Such all risk policy shall include (i)
boiler and machinery insurance, under "comprehensive form" endorsement, of the
type currently carried by Landlord, provided the Improvements contain equipment
of the nature ordinarily covered by such insurance in such limits as may
reasonably be required by Landlord from time to time, and (ii) business
interruption insurance sufficient to provide not less than 12 months' coverage
of all Rent and Additional Rent payable hereunder .
8.2. Tenant, at its sole cost and expense, shall maintain:
(a) comprehensive general liability insurance or commercial general
liability insurance, in either case written standard forms, including, without
limitation, contractual liability insurance, on an "occurrence basis", against
claims for bodily injury (including death), personal injury and property damage,
occurring on, in or about the Common Areas, the Demised Premises or any elevator
or any escalator therein and on, in or about the adjoining sidewalks, streets
and passageways, or in connection with operations thereon, such insurance (which
may be effected under a policy affording excess liability coverage (i.e., an
"umbrella" policy) with respect to one or more
30
properties other than the Demised Premises owned by the Tenant or any other
Affiliate of CPG, and which excess liability insurance policy shall not be
deemed to be a blanket policy for purposes of Section 8.8) to afford minimum
protection, during the Term of annual aggregate limits of not less than
$20,000,000 in respect of (x) bodily injury (including death) or personal injury
to any one person and property damage and (y) any one "occurrence" involving any
one or more persons or properties;
(b) workers' compensation insurance which provides for the applicable
statutory benefits, including Employer's Liability insurance in an amount not
less than $1,000,000, covering all persons employed by the Tenant in connection
with the Demised Premises;
8.3. Tenant, at its sole cost and expense, shall also maintain such other
insurance, in such amounts as may from time to time be reasonably required by
Landlord against other insurable hazards and risks, due regard being given to
what is customary in the paper industry, the height and type of buildings which
are part of the Improvements, their construction, use and occupancy and the type
and use of Equipment.
8.4. Tenant shall not violate or permit to be violated any of the
conditions or provisions of any policy provided for in Sections 8.1, 8.2, or
8.3. For all purposes of this Lease, "full repair and replacement cost" means
the actual replacement cost of the Improvements and the Equipment without
physical depreciation. Tenant shall determine annually and submit to its
insurance
31
carrier and to Landlord a schedule of values for the Demised Premises and the
Equipment. If Landlord and Tenant cannot agree, in their respective
reasonable judgments, as to the adequacy of such values, then Tenant shall
cause the Demised Premises and the Equipment to be appraised by one of the
insurers or by an architect, appraiser or appraisal company, selected and
paid by Tenant and reasonably acceptable to Landlord and such appraisal shall
be used to determine the values mutually agreeable to Landlord, Tenant and
Tenant's insurers in their respective reasonable judgments, but Landlord
shall not arbitrarily or unreasonably require such appraisal to be made, nor
shall such appraisal be required to be made more frequently than once every
36 months. If a dispute between Landlord and Tenant arises in the application
of Sections 8.1 or 8.3 or this Section 8.4, such dispute shall be determined
by arbitration in the manner provided in Article 41, except that Landlord's
requirements with respect to the amounts of any insurance in Section 8.3
shall be deemed reasonable if the amounts required do not exceed the amounts
then customarily maintained by prudent operators of buildings and equipment
of similar construction, use and class in the area in which the Demised
Premises is located. Until the resolution of any such dispute Tenant shall
carry the insurance that Tenant agrees to be required under this Article 8 and
shall also carry insurance as required by Landlord, subject to reimbursement
from Landlord of excess insurance premiums, plus interest at the
32
Default Rate if the decision in the arbitration is in favor of Tenant
8.5. All insurance provided for under this Lease shall be effected under
valid and enforceable policies in such forms and amounts as may, from time to
time, be required as herein and elsewhere specified in this Lease, issued by
insurers mutually acceptable to the parties or insurers of recognized
responsibility that are licensed to do business as admitted carriers in the
state in which the Demised Premises are located, are rated "A" or better by
Best's Key Rating Guide or, if there is no Best's Key Rating Guide, a comparable
rating by another national rating organization mutually acceptable to the
Landlord and Tenant. Upon execution of this Lease, and thereafter on or before
the expiration dates of the expiring policies theretofore furnished pursuant to
this Article, certificates, or copies of binders, of insurance reasonably
satisfactory to Landlord and, upon request, true and complete copies of the
policies involved, shall be delivered by Tenant to or as directed by Landlord.
Landlord agrees that, on any copy of an insurance policy Tenant delivers to
Landlord, any information disclosing the amount of the premium paid by Tenant
for the insurance evidenced by such policy and other information specific to
properties other than, and which does not relate to, the Demised Premises or the
Equipment, may be deleted or rendered illegible. Each policy of insurance
procured pursuant to this Article 8 shall contain either (i) a waiver by the
insurer of any right of subrogation
33
against Landlord or (ii) a statement that the insurance shall not be invalidated
should any insured waive in writing prior to a loss any or all right of recovery
against any party for loss occurring to the property described in the insurance
policy and the insurer will be bound by such waiver. Tenant hereby waives all
claims against Landlord for damages to goods, inventory, equipment and other
property of Tenant in, upon or about the Demised Premises or the Common Areas or
in connection with the operations conducted on either and for injury to Tenant,
its agents or third persons in or about the Demised Premises or the Common Areas
from any cause arising at any time. Tenant shall not carry separate or
additional insurance, concurrent in form or contributing, in the event of any
loss or damage, with any insurance required to be obtained by Tenant under this
Lease without the prior consent of the Landlord which consent shall not be
unreasonably withheld or delayed.
8.6. All policies of insurance provided for in Sections 8.1, 8.2 and 8.3
(except for the insurance provided for in Section 8.2.(b)) shall insure
Landlord as an additional named insured and loss payee. All policies of
insurance provided for in Sections 8.1, 8.2 (except for the insurance provided
for in Section 8.2.(b), which may contain deductible clauses allowing
deductibles and self-insured retentions in such amounts selected by Tenant in
its sole discretion) and 8.3 may contain deductible clauses allowing deductibles
and self-insured retentions in the case of each type of coverage required (i.e.
property insurance
34
and liability insurance), in the aggregate amount of not more than the
"Deductible Amount" as defined in Section 8.11. The proceeds of any property
insurance covering the Demised Premises and the Equipment, shall be payable (i)
to the Tenant in the case of any particular casualty resulting in damage or
destruction not exceeding the Deductible Amount in the aggregate, or (ii) to
Landlord or, at Tenant's option, to a bank or trust company designated under
Section 8.10 as insurance trustee for the purpose set forth in Section 8.10 in
the case of any particular casualty resulting in damage or destruction exceeding
the Deductible Amount in the aggregate. All such policies shall provide that the
loss, if any, thereunder shall be adjusted and paid as hereinabove provided.
Each such policy shall contain (a) a provision that no act or omission of Tenant
which would otherwise result in a forfeiture or reduction of the insurance
therein provided shall affect or limit the obligation of the insurance company
so to pay in accordance with this Section 8.6 the amount of any loss sustained
to the interests of Landlord and (b) an agreement by the insurer that such
policy shall not be cancelled without at least thirty (30) days prior written
notice to Landlord.
8.7. The proceeds of any property insurance provided for in Sections 8.1
and 8.3 shall be adjusted with the insurance companies (i) by Tenant in the case
of any particular casualty resulting in damage or destruction not exceeding
twice the Deductible Amount in the aggregate, or (ii) by Landlord and
35
Tenant in the case of any particular casualty resulting in damage or destruction
exceeding twice the Deductible Amount in the aggregate.
8.8. Nothing in this Article 8 shall prevent Tenant from taking out
insurance of the kind and in the amounts and with companies as otherwise
provided for in this Article 8 under a policy or policies of blanket insurance
which can cover other properties as well as the Common Areas, the Demised
Premises and the Equipment; provided, however, that the total amount of the
insurance shall be such as to furnish in protection the equivalent of separate
policies in the amounts herein required; and provided, further, that any such
policy of insurance provided for under this Article 8 shall specify therein, or
Tenant shall furnish Landlord with a written certification from the insurers
under such policies or the authorized representative of such insurers
specifying, the total amount of the insurance allocated to the Common Areas, the
Demised Premises and the Equipment, which amount shall not be less than the
amount required by Sections 8.1, 8.2 and 8.3 to be carried.
8.9. Tenant shall furnish Landlord annually a certificate signed by an
authorized officer of Tenant containing a summary of the insurance coverages
then outstanding and in force on the Common Areas, the Demised Premises or the
Equipment prepared for Tenant by its insurance broker and stating that such
insurance complies with the requirements of this Article 8.
36
8.10. Any monies, or the equivalent thereof, to be paid to or deposited
with Landlord pursuant to this Article 8, shall, at the option of Tenant, be
deposited for the benefit of Landlord and Tenant, as their respective interests
may appear, with a bank or trust company with offices in the state in which the
Demised Premises are located selected by Tenant and approved by Landlord, which
approval shall not be unreasonably withheld or delayed, to act as an insurance
trustee or depositary, as the case may be, for the purposes set forth in this
Lease, to be disbursed in accordance with the provisions of Section 9.2. Tenant
shall pay all charges and fees, including fees of attorneys, engineers and
architects, of the bank or trust company that performs the functions of such
insurance trustee or depositary.
8.11. The "Deductible Amount" for any calendar year shall be the product of
(a) $250,000, times (b) a fraction the numerator of which shall be the "PPI", as
defined below, last published before the end of the calendar year in which the
determination of the Deductible Amount is being made and the denominator of
which shall be the PPI last published before the last day of the 1990 calendar
year. "PPI" shall be the U.S. Department of Labor, Bureau of Labor Statistics,
Producer's Price Index for Capital Equipment, Paper Industries Machinery (June
1982=100), or, in the event such index is no longer published, a similar index
mutually acceptable to the parties.
37
ARTICLE 9
DAMAGE OR DESTRUCTION
9.1. (a) In the case of any particular casualty to the Improvements or
the Equipment (including any such casualty occurring after the date of the Asset
Purchase Agreement but prior to the date of this Lease), resulting in damage or
destruction exceeding $100,000 in the aggregate, the Tenant shall promptly give
written notice thereof to Landlord. Without limiting Tenant's right to terminate
this Lease in accordance with Section 32.7 and regardless of the amount of any
damage or destruction, Tenant shall, except as may be hereinafter expressly
provided, at its sole cost and expense, and whether or not the insurance
proceeds, if any, shall be sufficient for the purpose, restore, repair, replace,
rebuild or alter (including any necessary demolition) the Improvements and the
Equipment as nearly as possible to their quality, condition and character
immediately prior to such damage or destruction, with such Alterations as Tenant
may elect to make in accordance with Article 12. Such restoration, repairs,
replacements, rebuilding or alterations shall be commenced with reasonable
promptness and prosecuted with reasonable diligence.
(b) Notwithstanding anything to the contrary contained in this
Lease, including without limitation, the provisions of this Article 9, if Tenant
exercises its right to terminate this Lease as provided in Section 32.7, Tenant
shall not be obligated to restore, repair, replace, rebuild or alter the
Improvements and the Equipment if Tenant pays to Landlord, at or before
38
Tenant's termination of this Lease, an amount equal to all insurance proceeds
that are or would be payable as a result of such casualty under property
insurance policies required to be maintained by Tenant under Sections 8.1 and
8.3, together with an amount equal to the aggregate applicable deductible
amounts carried by Tenant under the policies evidencing such insurance coverage.
9.2. All insurance proceeds received by Landlord or any insurance
trustee selected by Tenant pursuant to Section 8.10, on account of such damage
or destruction, less the actual third party costs, fees and expenses, if any,
incurred in connection with adjustment of the loss, shall be applied to pay or
reimburse Tenant for the payment of the costs of the aforesaid restoration,
repairs, replacements, rebuilding or alterations (all of which are hereinafter
collectively referred to as the "restoration"), and shall be paid out from time
to time as such restoration progresses upon the written request of Tenant which
shall be accompanied by reasonable evidence of the incurrence of the costs
involved. Any such restoration shall be made in accordance with plans and
specifications prepared by architects and/or engineers approved by Landlord,
which approval shall not be unreasonably withheld or delayed. If such
restoration will result in any material change to the Improvements or Equipment
being restored from the condition of such Improvement or Equipment immediately
before the casualty, such restoration shall be made substantially in accordance
with plans and specifications approved in writing
39
by Landlord, which approval shall not be unreasonably withheld or delayed,
except that, with respect to the exterior surfaces and treatments of the
Improvements, Landlord in its sole discretion may withhold its approval of any
repair to or restoration of such exterior that would not result in such
exterior's being restored to substantially the same condition and configuration
(including being constructed of the same types of materials) existing before the
occurrence of such casualty damage. Landlord's review of any such plans and
specifications shall be at its sole cost and expense. If Landlord receives any
insurance proceeds on account of such damage or destruction, Landlord shall
during the Term hold such proceeds in trust for the purposes set forth in
Sections 9.l.(b) and 9.2. If the insurance money at the time available for the
purpose, less the actual third party costs, fees and expenses, if any, incurred
in connection with the adjustment of the loss, shall be insufficient to pay the
entire cost of such restoration, Tenant will pay the deficiency; provided,
however, that if and to the extent that Tenant shows by demonstrable evidence
that the sum of the insurance proceeds under the property insurance coverage
required to be maintained under Article 8, together with the amount of the
deductible allowed hereunder in respect of such coverage, will not or would not
be sufficient to repair or restore the exterior surfaces and treatments of the
Improvements to the condition in which such surfaces and treatments are required
to be maintained hereunder as a result of the scarcity or unique characteristics
of the
40
materials and/or labor required to be incorporated in such restoration or
repair, and if Landlord nonetheless requires that such surfaces and treatments
be so restored or repaired, Landlord shall reimburse Tenant for the additional
costs of such restoration or repair over the costs of the restoration and repair
of such surfaces and treatments that are or would be covered by the proceeds of
such insurance together with such deductible amount. Upon receipt by the
Landlord or such insurance trustee of reasonable evidence that the restoration
has been completed, any balance of the insurance money held by Landlord or such
insurance trustee selected by Tenant hereunder shall be paid to Tenant.
9.3. No destruction of or damage to the Demised Premises or any part
thereof by fire or any other casualty shall terminate or permit Tenant to
surrender this Lease or shall relieve Tenant from its liability to pay the Basic
Rent and Additional Rent and other charges payable under this Lease or from any
of its other obligations under this Lease, and Tenant waives any rights now or
hereafter conferred upon it by statute or otherwise to quit or surrender this
Lease or the Demised Premises or any part thereof, or to any suspension,
diminution, abatement or reduction of rent, on account of any such destruction
or damage. The provisions of this Section are not intended to, and shall not,
limit or restrict Tenant's right to exercise its right to terminate this Lease
in accordance with the provisions of this Section 9.3.
41
ARTICLE 10
CONDEMNATION
10.1. The Tenant hereby assigns to the Landlord any award, payment or
compensation to which it may be or become entitled during the Term by reason of
any taking of the Demised Premises or a part thereof, or such items of the
Equipment as may constitute a part of the Demised Premises because such items
are fixtures or for some other reason or a part thereof, in or by a Proceeding
by any governmental authority, civil or military, whether the same shall be paid
or payable in respect of the Tenant's leasehold interest hereunder or otherwise,
provided that such award, payment or compensation and any interest or income
earned thereon shall be held in trust by Landlord and shall be applied as
hereinafter provided for in this Article 10. Tenant shall have the right at its
sole cost and expense to assert a claim for its equipment, trade fixtures and
other personal property and for its relocation expenses. Landlord and Tenant
shall be entitled to participate in any such Proceeding and each shall pay its
own costs and expenses in connection therewith. Landlord and Tenant shall each
notify the other of any such Proceeding.
10.2. If during the Term the Demised Premises shall be taken in its
entirety, taken in substantially its entirety, or such portion is taken that
Tenant, in its reasonable judgment, determines that it can no longer conduct its
business at the Demised Premises with economic feasibility (any of which
occurrences shall be a "Total Taking") in or by a Proceeding,
42
then this Lease shall terminate as of the effective date of such taking, and
Tenant shall, on or before the date of such termination, pay to Landlord an
amount equal to the Premium Amount, which, at Tenant's election may be paid by
Tenant's delivery to Landlord of Tenant's non interest bearing promissory note
in the original principal amount of the Premium Amount, made upon the terms
described in Section 32.7, mutatis mutandis, and guaranteed under the Note
Guaranty. Upon the occurrence of a Total Taking, Landlord shall pay to Tenant
the portion of any award received by Landlord in respect of such Total Taking
that is attributable to Tenant's leasehold interest in the Demised Premises and
the Equipment. If any order, or similar decision, of any Governmental Authority
rendered in connection with such Total Taking allocates a portion of such award
to such leasehold interest, such order or decision shall be controlling upon the
parties as to the issue of such allocation. If no such allocation is made on any
such order or decision, and the parties fail to agree upon such allocation
within a reasonable period of time after the occurrence of such Total Taking,
such allocation shall be determined by arbitration in accordance with Article
41. If during the Term a portion of the Demised Premises, but less than the
entire Demised Premises, shall be taken in or by any Proceeding, but no Total
Taking has occurred, then this Lease shall continue in full force and effect,
and the Tenant's obligation to pay the Basic Rent, Additional Rent and all other
charges on the part of the Tenant to be paid and to perform all
43
other covenants and agreements on the part of the Tenant to be performed shall
not be affected by any such taking of the Demised Premises and/or the Equipment,
and the Tenant hereby waives the provisions of any statutes or laws now or
hereafter in effect contrary to such obligation of the Tenant as herein set
forth or which relieves the Tenant therefrom. In such event, any portion of such
award or awards collected by the Landlord and necessary to pay costs of
demolition, repair and restoration required as a result of the taking in any
such proceeding, shall be delivered by the Landlord to the Tenant and shall be
applied and paid over by the Tenant toward the cost of any demolition, repair
and restoration required as a result of the taking in any such Proceeding, which
demolition, repair and restoration shall be undertaken by Tenant in
substantially the same manner specified in Section 9.1 (and Tenant's obligations
with respect to repair or restoration of the exterior surfaces and treatments of
the Improvements shall be as specified in Section 9.1, mutatis mutandis). Any
balance of the award remaining after payment of such costs of demolition, repair
and restoration shall be retained by the Landlord. The provisions of this
Section are not intended to, and shall not, limit or restrict Tenant's right to
exercise its right to terminate this Lease in accordance with the provisions of
Section 32.7; and, notwithstanding the preceding provisions of this Section
10.2, if (x) Tenant exercises such right of termination within 60 days of the
date Tenant receives notice of any such condemnation Tenant shall not be
obligated to
44
repair or restore the damage caused by such condemnation except to the extent
required under Article 13; provided, however that if Tenant terminates this
Lease pursuant to Section 32.7, Tenant shall return to the Landlord upon such
termination any portion of the award payable with respect to such taking that
Tenant shall have theretofore received to the extent not applied by Tenant to
the repair or restoration of such damage.
10.3. If the whole or any part of the Demised Premises, or of Tenant's
leasehold estate under this Lease, shall be taken in or by a Proceeding for
temporary use or occupancy, the foregoing provisions of this Article 10 shall
not apply and Tenant shall continue to pay, in the manner and at the times
specified in this Lease, the full amounts of the Basic Rent and Additional Rent
and other charges payable by Tenant under this Lease, and Tenant shall perform
and observe all of the other terms, covenants, conditions, and obligations of
this Lease upon the part of Tenant to be performed and observed, as though such
taking had not occurred. Tenant shall be entitled to receive the entire amount
of the award with respect to such temporary taking, whether paid by way of
damages, rent, or otherwise, unless such period of temporary use or occupancy
shall extend beyond the termination of this Lease, in which case such award, if
paid in a lump sum, shall be apportioned between Landlord and Tenant upon
receipt thereof as of the date of termination of this Lease. If such award is
paid in installments, Tenant shall be entitled to those installments covering
any period prior to the termination of this
45
Lease and Landlord shall be entitled to the remaining installments (any
installments covering a period both before and after the termination of this
Lease shall be apportioned between Landlord and Tenant as of the date of the
termination of this Lease). Tenant shall, upon the expiration of any such
period of temporary use or occupancy during the Term, restore the Improvements
and/or the Equipment to the condition in which the same are required to be
maintained hereunder, subject to Tenant's rights to make changes or alterations
pursuant to Article 12. Any portion of the award received by Tenant as
compensation for the cost of restoration of the Improvements and/or the
Equipment shall, if such period of temporary use or occupancy shall extend
beyond the Term, be paid to Landlord on the date of termination of this Lease to
the extent not theretofore disbursed by Tenant in connection with restoration of
the Improvements and/or the Equipment.
10.4. Any award, payment or compensation in excess of $25,000 received
by Landlord by reason of any taking of the Demised Premises or any part thereof
shall be held in trust for the purposes set forth in this Article 10 and shall
be invested, pending disbursement in accordance with this Article 10, through
the bond department of any money center bank whose deposits are insured by the
Federal Deposit Insurance Corporation as follows:
(a) U.S. treasury bills; or
(b) money market funds, to the extent mutually agreed by Landlord
and Tenant.
46
ARTICLE 11
MAINTENANCE AND REPAIRS
11.1. Throughout the Term the Tenant shall, at its sole cost and
expense, take good care of the Demised Premises and of the Equipment, and keep
the same (regardless whether any portion of the Demised Premises or the
Equipment has been retired, temporarily or permanently, from use in Tenant's
operation of the business) in at least as good order, condition and repair,
ordinary wear and tear and obsolescence excepted, as the condition and repair in
which the Demised Premises and the Equipment are delivered to Tenant by Landlord
at the commencement of the Term, and shall make all necessary repairs, renewals,
replacements and alterations thereto, interior and exterior (except to the
extent that Landlord's consent to any exterior repair, renewal, replacement or
alteration is withheld), structural and nonstructural, ordinary and
extraordinary, foreseen and unforeseen including, in respect of the Equipment,
supplying all service and parts and other items required for operation and
maintenance thereof; provided, however, that (except to the extent necessary to
comply with the provisions of Article 13) Tenant shall make no repairs,
renewals, replacements or alterations to the exterior surfaces or treatments of
the Improvements without the consent of the Landlord, which may be withheld in
the sole discretion of the Landlord. Except as expressly set forth in Section
9.2, Section 10.2 or in the next succeeding sentence, the Landlord shall not be
required to make
47
or pay for any repairs or alterations in or to the Demised Premises or the
Equipment, the Tenant hereby assuming the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the
Demised Premises and the Equipment during the Term. Landlord agrees that if
repairs to any of the surfaces or treatments of the exterior of the Improvements
are necessary, and such repairs or restoration are not covered by the property
insurance required to be maintained under Article 8, and to the extent that
Tenant shows by demonstrable evidence that the sum of the insurance proceeds
under the property insurance coverage required to be maintained under Article 8,
together with the amount of the deductible allowed hereunder in respect of such
coverage, would have been (if such repairs or restoration had resulted from
events or occurrences that are or would have been covered under such insurance)
insufficient to repair or restore the exterior surfaces and treatments of the
Improvements to the condition in which such surfaces and treatments are required
to be maintained hereunder as a result of the scarcity or unique characteristics
of the materials and/or labor required to be incorporated in such restoration or
repair, and if Landlord nonetheless requires that such surfaces and treatments
be so restored or repaired, Landlord shall reimburse Tenant for the additional
costs of such restoration or repair over the costs of the restoration and repair
of such surfaces and treatments that would have been covered by the proceeds of
such insurance together with such
48
deductible amount had such repairs or restoration resulted from events or
occurrences that would have been covered by such insurance. The necessity for
and adequacy of repairs to the Improvements and the Equipment pursuant to this
Article 11 shall be measured by the standards which are generally appropriate
for equipment and improvements of the same kind and character used in the
Business, except that Landlord may require that the surfaces and treatments
constituting the exterior of the Improvements be maintained in substantially the
same condition and configuration as existing at the commencement of the Term.
Nothing contained in this Section 11.1 shall modify the provisions of Articles
42 through 45, inclusive.
11.2. With respect to any lease of Leased Equipment pursuant to which
Tenant has any option to extend or renew the term thereof, purchase any or all
of the property leased thereunder, or exercise any other option, election or
right with respect to such equipment, Tenant agrees to give notice to Landlord,
not later than 60 days before the last day (the "Buy-Out Date") upon which such
right, election or option may be exercised, of Tenant's decision with respect to
each such option, election or right available to it. Tenant hereby acknowledges
that Landlord will rely upon such notice from Tenant with respect to Tenant's
exercise of any such election, option or right, and Tenant agrees to exercise,
or refrain from exercising, as the case may be, each such election, option or
right in accordance with Tenant's notice served upon Landlord. Tenant shall have
the
49
right at its sole cost and expense, to exercise any such option, election or
right. Upon Tenant's obtaining clear title to any Leased Equipment pursuant to
the exercise of any such election, option or right, such Leased Equipment shall
become solely the property of Tenant and Tenant may thereafter remove any such
Leased Equipment from the Demised Premises at any time. If Tenant elects not to
exercise any such option, election or right with respect to any Leased
Equipment, Landlord shall have the right to exercise any such option, election
or right, and, upon Landlord's obtaining clear title to such Leased Equipment,
Landlord may remove such Leased Equipment from the Demised Premises without any
payment to Tenant.
11.3. The Tenant covenants not to alter or add new equipment or
machinery to the Demised Premises so as to cause any overloading of the floors
of any buildings contained in the Demised Premises or the electrical equipment
therein contrary to the applicable Certificate of Occupancy, Board of Fire
Underwriters certificate or law.
ARTICLE 12
ALTERATIONS
12.1. Except as provided in Article 12.l.(b), Tenant shall make no
changes, replacements, alterations, additions, enlargements or expansions in, of
or to the Improvements or the Equipment nor shall Tenant construct additional
buildings or improvements on the Demised Premises (all of the foregoing
hereinafter collectively called "Alterations" and each
50
individually called an "Alteration"), except for any Equipment or Improvement
that Tenant is entitled to remove without Landlord's consent pursuant to Article
25, without Landlord's written consent; provided, however that the provisions of
this Section 12.1 shall not apply to the removal of any moveable Equipment for
which Equipment of no less value and utility in the Business is substituted.
(a) No particular Alteration involving an estimated cost of more
than $250,000 shall be undertaken except after twenty (20) days prior written
notice to Landlord.
(b) There shall be no consent required from Landlord for any
non-structural Alteration if the Alteration (i) does not involve any change to
the exterior of any Improvement, (ii) does not require the removal of any
Equipment or Improvement that Tenant is otherwise prohibited under the terms of
this Lease from removing, and (iii) either (A) does not result in the
reconfiguration or change in purpose of any major functional unit of Equipment,
or (B) requires the expenditure of less than $250,000. There shall be no consent
required from Landlord for any structural Alteration that requires the
expenditure of less than $25,000. Any Alterations will be made substantially in
accordance with plans and specifications approved in writing by Landlord, such
approval not to be unreasonably withheld, the failure of Landlord to disapprove
of such plans and specifications within 30 days after receipt being deemed
approval. A copy of plans and specifications in such reasonable
51
detail as will permit Landlord to exercise its judgment shall be submitted to
Landlord in connection with Alterations under this Section 12.1.(b).
Landlord's failure to serve notice upon Tenant of Landlord's election to
withhold consent for any Alteration within 30 days after Landlord's receipt of
the plans and specifications for such Alteration required to be delivered as set
forth in the preceding sentence shall be deemed Landlord's consent to such
Alteration.
(c) No Alteration shall be undertaken until Tenant shall have
procured and paid for, so far as the same may be required from time to time, all
permits and authorizations of the Governmental Authorities. Landlord shall join
in the application for such permits or authorizations whenever such action is
necessary, but without any liability or expense to Landlord.
(d) Any Alteration allowed hereunder shall be made promptly and in
a good and workmanlike manner, and, if such Alteration requires the consent of
the Landlord, it shall be made substantially in accordance with plans and
specifications approved by the Landlord. Any Alteration shall be made in
compliance with all applicable permits and authorizations and building and
zoning laws and with all other applicable laws, ordinances, orders, rules,
regulations and requirements of all the Governmental Authorities, any national
or local Board of Fire Underwriters (if required by law or Tenant's insurance
carrier), or any other body hereafter exercising functions similar to those of
any of the foregoing.
52
(e) The cost of any such Alterations shall be paid by Tenant to
the extent required to prevent any lien or other interest from attaching to or
arising on any portion of the Demised Premises or the Equipment.
(f) Tenant shall cause workers' compensation insurance including
Employer's Liability insurance in an amount not less than $1,000,000, covering
all persons employed in connection with the installation or construction of the
Alteration and with respect to whom death or bodily injury claims could be
asserted against Landlord, Tenant, the Demised Premises or the Equipment, to be
maintained at all times when any work is in process in connection with any
Alteration.
(g) All Equipment, whether originally leased hereunder, replaced
or restored by the Tenant or added by the Tenant to the Equipment as an
Alteration, shall be and shall remain a part of the Equipment and shall not be
removed by the Tenant except as may be specifically provided in Article 25.
(h) Upon completion of any Alteration for which plans and
specifications are required to be delivered to Landlord, Tenant shall deliver to
Landlord three copies of "as-built" plans for such Alteration if Tenant
otherwise prepares such plans. Tenant shall prepare such plans if Landlord prior
to the date hereof would ordinarily have prepared such plans for a similar
Alteration.
12.2. No approval of plans or specifications by Landlord or consent by
Landlord allowing Tenant to make Alterations to the
53
Demised Premises or the Equipment shall in any way be deemed to be an agreement
by Landlord that the contemplated Alterations comply with requirements of the
Governmental Authorities or any insurance policy affecting the Demised Premises,
the Equipment or any certificates of occupancy for the Improvements nor shall it
be deemed to be a waiver by Landlord of the compliance by Tenant of any of the
terms of this Lease.
ARTICLE 13
COMPLIANCE WITH LAW
13.1. The Tenant shall during the Term, at its sole cost and expense,
promptly comply with all laws, ordinances, orders, rules, regulations and
requirements of the Governmental Authorities, any national or local Board of
Fire Underwriters (to the extent also required by any Governmental Authorities
or any of Tenant's insurance policies), any insurer of the Demised Premises or
the Equipment or any other body exercising functions similar to those of any of
the foregoing, foreseen or unforeseen, ordinary as well as extraordinary, which
may be applicable to the Demised Premises or to the use, manner of use or
occupancy thereof whether or not the same shall necessitate structural repairs
or alterations or interfere with the use or occupancy of the Demised Premises
and to the Equipment and the use and manner of use thereof, whether or not the
same shall interfere with the use of the Equipment.
13.2. The Tenant shall not cause, maintain or permit any nuisance in or
upon the Demised Premises. The Tenant shall not
54
suffer or permit the Demised Premises, or any portion thereof, to be used by the
public, as such, in any way as to impair the Landlord's title thereto.
13.3. Tenant shall have the right to contest by appropriate legal
proceedings, in the name of Tenant or Landlord or both, without cost or expense
to Landlord, the validity or application of any law, ordinance, order, rule,
regulation, or requirement referred to, and if, by the terms of any such law,
ordinance, order, rule, regulation, or requirement, compliance therewith pending
the prosecution of any such proceeding may legally be held in abeyance without
the incurrence of a lien, charge, or liability against the Demised Premises or
the Equipment and without subjecting Landlord to any civil or criminal liability
for failure so to comply, Tenant may postpone compliance until the final
determination of any proceedings, provided that all such proceedings shall be
prosecuted with reasonable diligence and dispatch. Landlord agrees, upon
reimbursement for any associated expense, to execute and deliver any papers
which may be reasonably necessary to permit Tenant to contest the validity or
application of any such law, ordinance, order, rule, regulation, or requirement
in accordance with this Section 13.3.
ARTICLE 14
DISCHARGE OF LIENS
14.1. Tenant will not create or permit to remain, and will discharge,
any lien, encumbrance or charge levied on account of any Imposition or any
mechanic's, laborer's or materialman's lien
55
or any security interest, conditional sale, title retention agreement or chattel
mortgage, or otherwise (but not including any lien, encumbrance, or charge
created by Landlord or any mortgage lien, mechanics lien or materialman's lien
existing on the date hereof), upon the Demised Premises, the Equipment or any
part thereof, having any priority or preference over or ranking on a parity with
the estate, rights and interest of Landlord in the Demised Premises, the
Equipment or any part thereof or the income therefrom, and Tenant will not
suffer any other matter or thing to be done (other than by Landlord) whereby the
estate, rights and interest of Landlord in the Demised Premises, the Equipment
or any part thereof might be impaired; provided that any Imposition may, after
the same becomes a lien on the Demised Premises or the Equipment, be paid or
contested in accordance with Article 6, and any mechanic's, laborer's or
materialman's lien may be discharged in accordance with Section 14.2.
14.2. If any mechanic's, laborer's or materialman's lien that Tenant is
required to remove pursuant to Section 14.1 shall at any time be filed against
the Demised Premises, the Equipment or any part thereof, Tenant, within 20 days
of service of process on Tenant (or Landlord's notice to Tenant of such service
of process upon Landlord) by the lienor to foreclose such lien or 10 days before
the time for the first court appearance in response to such service, whichever
is earlier, shall cause the same to be discharged of record by payment, deposit,
bond, order of a court of competent jurisdiction or otherwise. If Tenant shall
fail to
56
cause such lien to be discharged within the period aforesaid, then, in addition
to any other right or remedy of Landlord, Landlord may, but shall not be
obligated to, discharge the same either by paying the amount claimed to be due
or by procuring the discharge of such lien by deposit or by bonding proceedings,
and in any such event Landlord shall be entitled, if Landlord so elects, to
compel the prosecution of an action for the foreclosure of such lien by the
lienor, provided that Landlord pays the amount of the judgment in favor of the
lienor with interest costs and allowances in a manner as to prevent any loss of
title to the Demised Premises or the Equipment. Any amount so paid by Landlord
and all costs and expenses incurred by Landlord in connection therewith,
together with interest thereon at the Default Rate from the respective dates of
the making of the payment or incurring of the cost and expense by Landlord shall
constitute Additional Rent payable by Tenant under this Lease and shall be paid
by Tenant to Landlord on demand.
14.3. Nothing contained in this Lease shall be deemed or construed in
any way as constituting the consent or request of Landlord or Tenant, express or
implied by inference or otherwise, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of any materials
for any specific improvement, or alteration to or repair of the Demised
Premises, the Equipment or any part thereof.
57
ARTICLE 15
RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
15.1. In case of emergency or in case any fine, penalty, interest or
cost may otherwise be imposed on or incurred by Landlord, the Landlord shall
have the right at any time, with such notice as may be reasonable under the
circumstances, to make any payment or perform any act required of the Tenant
under this Lease. Furthermore, if Tenant has failed to make any payment or
perform any act required to be made or performed by Tenant under this Lease and,
as a result of such failure, there has occurred an Event of Default and any
period of time allowed under this Lease for Tenant to cure such failure has
expired, the Landlord shall have the right at any time to make any such payment
or perform any such act. In exercising any right described in the preceding two
sentences, Landlord may incur necessary and incidental costs and expenses,
including reasonable fees and expenses of third party counsel, accountants,
appraisers, architects and engineers. Nothing herein shall imply any obligation
on the part of the Landlord to make any payment or perform any act required of
the Tenant, and the exercise of the right so to do shall not constitute a
release of any obligation or a waiver of any Default.
15.2. All payments made by the Landlord and all costs and expenses
incurred by the Landlord in connection with any exercise of the rights described
in Section 15.1, together with interest at the Default Rate from the respective
dates of the making of such payments or the incurring of such costs and
expenses, shall
58
be payable to the Landlord by the Tenant within 10 days after demand therefor
accompanied by evidence reasonably establishing that the expenditure has been
made. All sums which may become payable to Landlord by Tenant pursuant to this
Article shall be deemed Additional Rent hereunder.
ARTICLE 16
ENTRY ON PREMISES BY THE LANDLORD
16.1. The Tenant shall permit the Landlord and the authorized
representatives of the Landlord to enter the Demised Premises at all reasonable
times during usual business hours for the purpose of (a) inspecting the same and
(b) making any necessary repairs to the Demised Premises and performing any work
therein that may be necessary by reason of the Tenant's failure to make any such
repairs or perform any such work after an Event of Default has occurred. Tenant
shall be entitled to have its representative accompany each such visitor.
Nothing herein shall imply any duty upon the part of the Landlord to do any such
work which under any provision of this Lease the Tenant may be required to
perform and the performance thereof by the Landlord shall not constitute a
waiver of the Tenant's Default in performing the same. Landlord may, during the
progress of any such work in the Demised Premises, keep and store therein or
elsewhere upon the Demised Premises all necessary materials, tools, supplies and
equipment. To the extent that Landlord exercises its right of entry under this
Article 16 in a manner designed to minimize interference with the normal
business
59
operations of Tenant, the Landlord shall not be liable for inconvenience,
annoyance, disturbance, loss of business or other damage of Tenant or any
subtenant by reason of making such repairs or the performance of any such work,
or on account of bringing materials, tools, supplies and equipment into or
through the Demised Premises during the course thereof and the obligations of
Tenant under this Lease shall not be affected thereby.
16.2. The Landlord shall have the right at all reasonable times to enter
upon the Demised Premises for the purpose of exhibiting the same to bona fide
prospective purchasers and tenants. Tenant shall be entitled to have its
representative accompany each such visitor.
16.3. In the exercise of its rights under Section 16.1 or Section 16.2,
Landlord shall disclose to Tenant either (a) the identity and business
affiliation of any party, other than any employee of Xxxxx River Corporation of
Virginia or any Affiliate thereof, accompanying Landlord or its representative
upon any visit to the Demised Premises, or (b) the fact that such party has
declined to have such information disclosed to Tenant. Tenant shall have the
right to take reasonable precautions, during any such visit, to safeguard
against the disclosure of Tenant's trade secrets to any (i) third party in whose
hands such trade secrets may, in Tenant's reasonable judgment, be used in a
manner injurious to Tenant or the Business or (ii) any party described in clause
(b) of this Section 16.3.
60
ARTICLE 17
ASSIGNMENT AND TRANSFERS OF
TENANT'S INTEREST; SUBLETTING
17.1. (a) Except as expressly allowed under Section 17.l.(b), Section
17.l.(c) or Section 17.4 below, Tenant shall not assign to any party any of its
rights under this Lease, nor shall Tenant sublease to any party any portion of
the Demised Premises without the consent of Landlord, which consent may be
withheld in the sole discretion of Landlord.
(b) Tenant may assign the interest of the Tenant under this Lease
to any Qualified Assignee in connection with Tenant's sale of the Business to
such Qualified Assignee, or to any Appraisal Sale Buyer in connection with
Tenant's sale of the Business to such Appraisal Sale Buyer in accordance with
the provisions of Section 32.1. If Tenant assigns this Lease to a Qualified
Assignee or an Appraisal Sale Buyer in accordance with this Section 17.l.(b),
then upon delivery to Landlord of an agreement whereby such assignee assumes and
agrees to keep, observe and perform the obligations to be kept, observed and
performed by Tenant hereunder from and after the date of such assignment, the
assigning Tenant shall be released from the performance of any and all such
assumed obligations to be performed hereunder. Upon the assignment of the
interest of Tenant under this Lease in accordance with the provisions of this
Section 17.l.(b), Landlord shall elect either (x) to reduce the Basic Rent by
42.73%, whereupon the assigning Tenant shall make and deliver to Landlord its
non interest bearing promissory note
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in the original principal amount of the Premium Amount, made upon the terms
described in Section 32.7, mutatis mutandis, and guaranteed under the Note
Guaranty, and Tenant and Landlord shall enter into a modification of this Lease
effecting such reduction, or (y) not to reduce the Basic Rent hereunder, in
which case, the assigning Tenant shall have no obligation to make and deliver
any promissory note to Landlord. Notwithstanding the above, if this Lease is
assigned as a result of the transfer of the stock of the Tenant, and the
Landlord elects to reduce the Basic Rent as set forth above, the Tenant whose
stock is transferred shall have no obligation to deliver a promissory note, but
CPG shall deliver its non interest bearing promissory note in the original
principal amount of the Premium Amount, made upon the terms described in Section
32.2, mutatis mutandis; provided, however, that CPG's obligations under such
promissory note shall be subordinated on substantially the same terms as the
Guarantor's obligations are subordinated under the Note Guaranty.
(c) In addition to the rights hereinabove provided to the Tenant,
the Tenant may at any time and from time to time without the prior consent of
Landlord, assign the Lease and the interest of the Tenant under this Lease to
CPG or any subsidiary of CPG, and may from time to time sublease all or any
portion of the Demised Premises and the Equipment to CPG or any subsidiary of
CPG.
(d) The acceptance of an assignment or subletting of the Demised
Premises by any assignee or subtenant shall be
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construed as a promise on the part of such assignee or subtenant to be bound by
and to perform all of the terms, conditions and covenants by which Tenant herein
is bound. Notwithstanding any provision of this Lease to the contrary, no
subtenant of all or any portion of the Demised Premises shall have the right to
further sublease to any other party all or any portion of the Demised Premises.
Any sublease pursuant to which any party subleases any portion of the Demised
Premises shall require the sublessee thereunder to attorn to Landlord upon the
expiration or termination of this Lease in the event this Lease expires or is
terminated before the expiration or termination of such sublease. Except as may
be otherwise expressly provided in Section 17.1.(b), no assignment or
subletting shall be construed to constitute a novation or a release of any claim
Landlord may then or thereafter have against Tenant hereunder. Landlord's
consent to any assignment or subletting shall not be deemed a consent to any
subsequent assignment or subletting and no assignee of this Lease or subtenant
of the Demised Premises shall further assign this Lease or further sublease the
Demised Premises without first obtaining the express consent of Landlord in the
manner provided in this Article 17. Tenant shall furnish Landlord with a fully
executed counterpart of any assignment or sublease of all or any part of the
Demised Premises with reasonable promptness after the time such instrument is
executed. Tenant hereby irrevocably assigns to Landlord, as additional security
for Tenant's obligations under this Lease, all rent or other income from any
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subletting of all or part of the Demised Premises. Notwithstanding the
foregoing, until the occurrence of an Event of Default, Tenant shall have the
right to collect such rent and other income. Neither the collection of rent by
Landlord from any assignee, subtenant or occupant of the Demised Premises nor
the application thereof toward Tenant's obligations under this Lease shall be
deemed an acceptance of any such assignee, subtenant or occupant as the Tenant
under this Lease or a release of Tenant from the performance of the covenants
herein contained on the part of Tenant to be performed. Nothing in the preceding
sentence shall be deemed to modify any release of Tenant provided for in Section
17.l.(b).
17.2. If Tenant requests Landlord to consent to a proposed assignment or
sublease, Tenant shall pay to Landlord, whether or not such consent shall be
ultimately granted, Landlord's reasonable attorneys' fees and expenses and any
other costs incurred in connection with such request. Any assignment (by
operation of law, as a result of merger, consolidation, reorganization,
liquidation or otherwise) or other attempted disposition or encumbering of this
Lease or any sublease hereof, or of the interest of Tenant hereunder, in
violation of the provisions of, or not specifically permitted by, this Article
17 shall be invalid and of no effect against Landlord.
17.3. For purposes of this Lease, the sale of substantially all of the
assets of Tenant or any transfer of any interest in Tenant after which Tenant is
no longer controlled by CPG shall be
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considered an "assignment," and the buyer in such sale or the transferee in such
transfer shall be considered an "assignee" and shall be subject to the
provisions of this Article 17. Notwithstanding the foregoing sentence, neither
the pledge of the capital stock of Tenant to an institutional lender as security
for the repayment of indebtedness nor the acquisition by such lender of such
stock in accordance with the arrangements by which such stock is pledged shall
constitute an "assignment" hereunder, but any transfer of such stock to a third
party, including without limitation any such transfer pursuant or subsequent to
any transaction in the nature of a foreclosure or creditor's sale, shall
constitute an "assignment" hereunder.
17.4. (a) Notwithstanding the foregoing provisions of this Article 17,
Tenant may, at any time and from time to time during the Term, mortgage the
interest of Tenant under this Lease under one or more leasehold mortgages (any
of which being a "Leasehold Mortgage") in favor of an institutional lender, and
assign its interest in this Lease as collateral security for such Leasehold
Mortgage, upon the condition that all rights acquired under such Leasehold
Mortgage shall be subject to each and all of the covenants, conditions and
restrictions set forth in this Lease, and to all rights and interests of
Landlord herein, none of which covenants, conditions or restrictions is or shall
be waived by Landlord by reason of the right given to so mortgage such interest
in this Lease except as may be expressly provided herein. Neither any such
Lender's purchase at foreclosure of
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the interest of Tenant under this Lease nor the transfer of such rights by deed
in lieu of foreclosure shall constitute an "assignment" hereunder, but any
transfer of such rights to a third party, including without limitation any such
transfer pursuant or subsequent to any foreclosure or delivery of a deed in lieu
thereof shall constitute an "assignment" hereunder.
(b) If Tenant shall mortgage its leasehold and if the holder of
such Leasehold Mortgage (the "Leasehold Mortgagee") shall, within 30 days of
execution of such Leasehold Mortgage send to Landlord a true and complete copy
thereof, together with a written notice specifying the name and address of the
Leasehold Mortgagee and the pertinent recording data with respect to such
Leasehold Mortgage, Landlord agrees that after receiving such notice and so long
as any such Leasehold Mortgage shall remain unsatisfied of record or until
written notice of satisfaction is given by the Leasehold Mortgagee to Landlord,
the following provisions shall apply:
(i) There shall be no cancellation, surrender or material
modification of this Lease by joint action of Landlord and Tenant without the
prior consent in writing of the Leasehold Mortgagee, unless Tenant has become
contractually bound, before Landlord is given notice of the existence of such
Leasehold Mortgage as provided above, to cancel, surrender or modify the Lease.
(ii) Landlord shall, upon serving Tenant with any notice
of Default or with notice of any election by Landlord to
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initiate arbitration pursuant to the terms of this Lease, simultaneously serve a
copy of such notice upon the Leasehold Mortgagee.
(iii) Landlord shall accept the cure of any Default, or the
performance of any of Tenant's other obligations hereunder, from the Leasehold
Mortgagee to the same extent that Landlord is required to accept such cure or
performance from Tenant hereunder, and any such cure or other performance made
by the Leasehold Mortgagee shall be deemed hereunder to be performance by Tenant
for purposes of determining whether Tenant has fulfilled its obligations under
this Lease.
(iv) Landlord agrees that, at the sole cost and expense of
Tenant, the name of the Leasehold Mortgagee may be added to the "loss payable"
endorsement of any and all insurance policies required to be carried by Tenant
under this Lease on the condition that the insurance proceeds under any such
policy shall be applied in the manner specified in this Lease and that the
Leasehold Mortgage shall so provide.
(v) Nothing contained herein shall require any Leasehold
Mortgagee to cure any default of Tenant under this Lease. Furthermore, nothing
contained in this Section 17.4 shall require any Leasehold Mortgagee, (a) as a
condition to either (1) the exercise by any such Leasehold Mortgagee of any of
its rights under this Section 17.4 or (2) the rights and protections provided
for in this Section 17.4 for the benefit of each Leasehold Mortgagee, or (b)
otherwise, to cure any Non-Curable
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Default, as defined below, and Landlord's right to terminate this Lease by
reason of a Non-Curable Default, as long as no other Event of Default has
occurred and is continuing, and so long as the Lease otherwise remains in full
force and effect, shall be of no force and effect as against a Leasehold
Mortgagee, or (to the extent such Non-Curable Default existed at the time such
purchaser purchased the Leasehold estate) any purchaser of the leasehold estate
under this Lease at a foreclosure sale. As used above the term "Non-Curable
Default" means a default or breach by Tenant described in either Section 22.1.
(d) or Section 22.1.(e).
(vi) If Landlord has been supplied with a copy of any contract
to which Tenant, Guarantor and any Leasehold Mortgagee are parties pursuant to
which Tenant, with the Guarantor's consent, has (a) assigned any right of Tenant
to participate in any arbitration proceeding under this Lease, or (b) granted to
such Leasehold Mortgagee the right to prevent, or withhold its consent to, any
act or agreement of Tenant in any such arbitration proceeding, Landlord shall
allow such Leasehold Mortgagee to participate in any such arbitration proceeding
to the extent necessary for such Leasehold Mortgagee to exercise any such right
and, if, but only if, such Leasehold Mortgagee actually does participate in any
such arbitration proceeding within the time limits specified in Article 41,
Landlord shall consider, and shall be entitled to treat, any act or decision of
such Leasehold Mortgagee with respect to such arbitration proceeding to be the
act or decision of Tenant to the extent
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required by such contractual arrangement between Tenant, Guarantor and the
Leasehold Mortgagee.
ARTICLE 18
ADDITIONAL UNDERTAKING OF THE TENANT
18.1. If for any reason (a) the Basic Rent payable by the Tenant to the
Landlord pursuant to this Lease shall during the Term hereof (i) be diminished
or subject to diminution through attachment, claim, demand, charge, lien, levy,
process, encumbrance or by law, order or regulation of the Governmental
Authorities; or (ii) be subject to withholding or diminution at the source, in
either case by reason of any taxes, assessments, expenses, indebtedness,
obligation or liabilities of any character, foreseen or unforeseen, and required
to be paid by Tenant under this Lease, so that the Basic Rent or any part
thereof would be unavailable to the Landlord, when due; or
(b) if the Demised Premises or the Equipment shall be or become
subject to or burdened by any lien, charge or encumbrance of any kind other than
as permitted in this Lease and other than such created by Landlord;
then and in any such event, the Tenant promptly shall take, at any time and
from time to time after notice by the Landlord, such action (including the
payment of money to the Landlord) as may be necessary to (i) pay fully and
discharge such taxes, assessments, expenses, indebtedness, obligations and
liabilities, and to eliminate or nullify the cause of such attachment, claim,
demand, charge, lien, levy, order, process, encumbrance, withholding or
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diminution, and (ii) eliminate or prevent any such diminution in the payment in
full of the Basic Rent when the same is due and payable under this Lease.
Nothing contained in this Section 18.1 is intended to modify any of the
provisions of Section 6.4.
ARTICLE 19
CONDITION OF AND TITLE TO DEMISED PREMISES
19.1. Tenant acknowledges that the Demised Premises, the Equipment, the
title thereto, and the present uses and non-uses thereof, have been examined by
Tenant and that Tenant accepts the same in the condition or state in which they
or any of them now are, without representation or warranty express or implied in
fact or by law, and, except as provided in Section 1.2, without recourse to
Landlord, as to the title thereto, the nature, condition or usability thereof or
the use or uses to which the Demised Premises, the Equipment or any part thereof
may be put.
ARTICLE 20
INDEMNIFICATION OF THE LANDLORD AND THE TENANT
20.1. The Tenant will indemnify and save harmless the Landlord from and
against any and all liabilities, obligations, damages, penalties, claims, costs,
charges and expenses, including reasonable engineers', reasonable architects'
and reasonable attorneys' fees and expenses (collectively "Liabilities" and
individually, a "Liability"), which may be imposed upon or asserted against the
Landlord by reason of any of the following occurring during the Term, provided
that the
70
Liability in question was not based upon, and did not arise out of, any facts,
events, actions or omissions that existed or occurred prior to the date hereof:
(a) any work or thing done in, on or about the Demised Premises,
the Equipment or any part thereof;
(b) any use, non-use, possession, occupation, condition,
operation, maintenance or management of the Business, the Demised Premises, the
Equipment or any part thereof or any street, alley, sidewalk, curb, passageway,
or street adjacent thereto;
(c) any negligence or willful misconduct of the Tenant or any
agent, contractor, employee, licensee or invitee of the Tenant;
(d) any accident or injury to any person (including death) or
damage to property occurring in, on or about the Demised Premises or any part
thereof or any street, alley, sidewalk, curb, passageway or space adjacent
thereto;
(e) any failure on the part of the Tenant to perform or comply
with any of the agreements, terms or conditions contained in this Lease on its
part to be performed or complied with;
(f) any material interruption of, material interference with, or
material adverse effect upon, the business or operation of the Landlord at the
Headquarters to the extent resulting from the act or omission of the Tenant, or
any agent, contractor, employee, licensee or invitee of the Tenant which act
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or omission is in breach of the Tenant's obligations under this Lease; or
(g) any acts or omissions of Tenant, its employees, agents or
contractors related to Tenant's use, operation, maintenance or repair of the
water pumping and filtration system located in the basement of the building
known as the "Riverside Building" located at the Headquarters.
Subparagraph (f) above shall be applicable only to Articles 42
through 45, inclusive.
Landlord shall notify Tenant of any claim asserted against Landlord for which
Landlord claims Tenant may have to indemnify Landlord hereunder. In the event
that any action or proceeding shall be brought against the Landlord by reason of
any matter covered by this Section 20.1, the Tenant, upon written notice from
the Landlord will, at the Tenant's sole cost and expense, resist or defend the
same.
20.2. The Landlord will indemnify and save harmless the Tenant from and
against any and all Liabilities incurred by Tenant by reason of any failure on
the part of Landlord to perform and comply with any of the agreements, terms or
conditions contained in this Lease on its part to be performed or complied with,
including, without limitation, liabilities incurred as a result of (a)
Landlord's negligence or willful misconduct in exercising Landlord's rights
under Section 15.1 or Section 16.1, or (b) Landlord's material breach of its
obligations described in Articles 42 through 45, inclusive.
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20.3. Each party shall indemnify and hold harmless the other party from
and against all Liabilities which may be imposed upon the indemnified party as a
result of the acts or omissions of the indemnifying party in or on the Common
Areas to the extent such acts or omissions (a) result from the indemnifying
party's negligence or willful misconduct, or (b) constitute a breach of the
obligations of the indemnifying party under the terms of this Lease.
20.4. The Tenant shall indemnify the Landlord against all reasonable
legal costs and charges, including reasonable attorneys' fees and expenses,
lawfully and reasonably incurred in obtaining possession of the Demised Premises
and the Equipment after the occurrence of an Event of Default or after the
Tenant's Default in surrendering possession upon expiration or earlier
termination of the Term or enforcing any covenant or agreement of the Tenant
herein contained.
20.5. To the extent of the proceeds received by the indemnified party
under any insurance furnished or supplied to the indemnified party, the
indemnifying party's obligation to indemnify and save harmless the indemnified
party against the hazard which is the subject of such insurance shall be deemed
to be satisfied. The indemnification obligations set forth in this Article 20
shall survive any termination of this Lease or expiration of the Term.
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ARTICLE 21
EXCAVATIONS ON ADJOINING PROPERTY
21.1. If any excavation or other building operation shall be about to be
made or shall be made upon any premises or streets adjoining the Demised
Premises, the Tenant shall at the direction of Landlord permit the owner or
lessee of such adjoining premises and their respective representatives to enter
the Demised Premises and to shore the foundations and walls thereof, and to do
any other act or thing necessary for the safety or preservation of the Demised
Premises. The Landlord shall not be liable for any inconvenience, annoyance,
disturbance, loss of business or other damage arising therefrom and the Tenant's
obligations hereunder shall not thereby be affected. Nothing in this Article 21
shall be construed as a waiver of any rights of the Tenant against persons other
than Landlord.
ARTICLE 22
DEFAULT
22.1. This Lease and the Term and estate hereby granted are subject to
the limitations that if during the Term any one or more of the following acts or
occurrences (any one of such occurrences or acts being hereinafter called an
"Event of Default") shall happen:
(a) The Tenant shall default in making the payment of any
installment of (i) Basic Rent, or (ii) Additional Rent other than Additional
Rent described in Section 22.1, and such payment
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shall not have been made within 5 business days after written notice from
Landlord that any such payment is overdue; or
(b) The Tenant shall default in making payment of any installment
of Additional Rent becoming due under Section 6.4, and such payment shall not
have been made within 10 business days after written notice from Landlord that
such payment is owing; provided, however, that if Tenant within 10 days after
receipt of such notice shall give written notice to Landlord that it disputes
the obligation to make such payment, the matter shall be determined by
arbitration as provided in Article 41 and if it shall be determined in such
arbitration that such payment of Additional Rent is owing, the time within which
Tenant shall have to pay the same shall be computed from the date of receipt by
Tenant of notice of such determination (but the extension of such time shall not
affect any obligation of Tenant to pay interest, or the determination of the
date from which interest shall accrue, as the same may be required under Section
41.2.(g)).
(c) The Tenant shall default in the performance of any other
covenant or agreement on the part of Tenant to be performed under this Lease,
and such default shall continue for a period of 40 days after notice thereof,
specifying such default, shall have been given to Tenant; provided, however, in
the case of a default which cannot with reasonable diligence be remedied by
Tenant within a period of 40 days, if Tenant shall commence within such period
of 40 days to remedy the default and thereafter shall prosecute the remedying of
such default with all reasonable
75
diligence, the period of time after the giving of such notice within which to
remedy the default shall be extended for such period as may be necessary to
remedy the same with all reasonable diligence and without limiting the
generality of the foregoing, the period of time within which Tenant shall remedy
any default shall be extended for delays resulting from any Force Majeure; and,
provided further, that if Tenant within 15 days after Tenant's receipt of such
notice of default shall dispute the existence of a default the matter shall be
determined by arbitration as provided in Article 41 and if it shall be
determined in such arbitration that Tenant is so in default, the time within
which Tenant shall have to remedy the same shall be computed from the date of
receipt by Tenant of notice of such determination;
(d) The Tenant shall file a voluntary petition in bankruptcy or
shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, composition, readjustment or similar relief
under any present or future bankruptcy or other applicable law, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Tenant or of all or any substantial part of its properties or of
all or any substantial part of the Demised Premises or the Equipment; or
(e) Within 90 days after the filing of an involuntary petition in
bankruptcy against the Tenant or the commencement of any proceeding against
Tenant seeking any reorganization,
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composition, readjustment or similar relief under any law, such proceeding
shall not have been dismissed, or if, within 90 days after the appointment,
without the consent or acquiescence of Tenant, of any trustee, receiver or
liquidator of Tenant or of all or any substantial part of the properties of
Tenant of all or any substantial part of the Demised Premises or the
Equipment, such appointment shall not have been vacated or stayed on appeal
or otherwise, or if, within 90 days after the expiration of any such stay,
such appointment shall not have been vacated, or if within 90 days after the
taking possession, without the consent or acquiescence of the Tenant, of the
property of Tenant by any Governmental Authority pursuant to statutory
authority for the dissolution or liquidation of Tenant, such taking shall not
have been vacated or stayed on appeal or otherwise; then, and in such event,
the Landlord may at its option, then or thereafter while any such Event of
Default shall continue and notwithstanding the fact that the Landlord may
have any other remedy hereunder or at law or in equity, by notice to the
Tenant, designate a date, not less than 10 days after the giving of such
notice, on which the Term shall terminate; and thereupon, on such date Tenant
shall pay the Termination Fee and the Term and the estate hereby granted
shall expire and terminate upon the date specified in such notice with the
same force and effect as if the date specified in such notice were the date
hereinbefore fixed for the natural expiration of the Term under Article 4,
and all rights of the Tenant hereunder shall expire and terminate. If
77
Landlord terminates this Lease in accordance with the provisions of this Section
22.1, Landlord shall, provided all payments due to Landlord from Tenant have
then been received by Landlord, reimburse Tenant for the "Environmental
Expenditures," as defined below, made by Tenant after the date hereof and before
such termination. "Environmental Expenditures" shall mean the aggregate
expenditures made by Tenant in respect of the Demised Premises that, if the same
had been made by Custom Papers-Richmond, Inc. during the term of its April 20,
1991, lease from Landlord, would have constituted Losses subject to
indemnification from Xxxxx River Corporation of Virginia under Section 11.3
(without regard to any basket amounts) of the Asset Purchase Agreement less any
portion of such expenditures for which Tenant has been reimbursed by Xxxxx River
Corporation of Virginia, any of its Affiliates or any other party, or for which
Tenant has been reimbursed by any party (an "Environmental Indemnitee") having a
right to recover any of such expenses from Landlord or Xxxxx River Corporation
of Virginia. Tenant agrees not to make a claim against any Environmental
Indemnitee for any Environmental Expenditures for which Tenant makes a claim
against Landlord hereunder, and Tenant agrees not to make a claim against
Landlord hereunder for any Environmental Expenditures for which Tenant makes a
claim against any Environmental Indemnitee; provided, however, that Tenant may
make such duplicative claim in either case if (x) Tenant reasonably deems it
necessary in order to preserve its right to make a claim against the second
party
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upon which the claim is made, and (y) Landlord's reimbursement to Tenant (alone,
or in conjunction with any termination of Tenant's claim against the
Environmental Indemnitee) of the amount of such duplicative claim will prevent
the Environmental Indemnitee from being entitled to any indemnity from Landlord
or Xxxxx River Corporation of Virginia in respect of the claim made by Tenant
against such Environmental Indemnitee or Tenant has made other arrangements
reasonably satisfactory to Landlord and Tenant to prevent such recovery by the
Environmental Indemnitee after Landlord's reimbursement to Tenant, its having
been agreed by the parties hereto that Landlord and Xxxxx River Corporation of
Virginia, taken together, shall not be required to indemnify and reimburse any
Environmental Indemnitee and Tenant, respectively, in respect of the same
Environmental Expenditure.
22.2. Nothing contained in this Lease shall be deemed to prevent
Landlord from maintaining any summary proceeding for the non-payment of rent or
any plenary action for recovery of rent; provided, however, that Landlord shall
not commence any such action before the occurrence of an Event of Default under
Section 22.1.
22.3. If the Term is terminated as provided in Section 22.1, or as
permitted by law, then the Tenant shall peaceably quit and surrender possession
of the Demised Premises and the Equipment to the Landlord, and the Landlord may,
without further notice enter upon, re-enter, possess and repossess the same by
summary proceedings, ejectment or other judicial proceeding, and
79
again have, possess and enjoy the same, and in any such event neither the Tenant
nor any person claiming by, through or under the Tenant (by virtue of any law or
an order of any court or otherwise) shall be entitled to possession or to remain
in possession of the Demised Premises and the Equipment but shall forthwith quit
and surrender the Demised Premises and the Equipment. Upon the termination of
this Lease in accordance with Section 22.1, Landlord's only remedies against
Tenant shall be (a) Landlord's right to have Tenant removed from the Demised
Premises in accordance with any legal means available to Landlord, and (b)
Landlord's right to recover any damages it sustains as a result of Tenant's
failure to so remove from the Demised Premises or any failure of Tenant to pay
the Termination Fee or perform any of its obligations accruing hereunder before
the date of such termination; provided, however, that nothing herein contained
shall limit or prejudice the right of the Landlord, in any bankruptcy or
reorganization or insolvency proceeding, in the event Landlord is unable to
avail itself of the remedies set forth above in this sentence, to prove for and
obtain as liquidated damages by reason of such termination an amount equal to
the maximum allowed by any bankruptcy or reorganization or insolvency
proceedings, or to prove for and obtain as liquidated damages by reason of such
termination, an amount equal to the maximum allowed by any statute or rule of
law.
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22.4. Tenant hereby expressly waives, so far as permitted by law, the
service of any notice to terminate or of intention to re-enter provided for in
any statute, and Tenant, for and on behalf of itself and all persons claiming
through or under Tenant, also waives any and all right of redemption or re-entry
or re-possession or right to restore the operation of this Lease in case Tenant
shall be dispossessed by a judgment or by warrant of any court or judge or in
case of re-entry or repossession by Landlord or in case of any expiration or
termination of this Lease. The foregoing shall not be deemed a waiver by Tenant
of notices provided for in Section 22.1. Tenant, so far as permitted by law,
waives and will waive the benefits of any present or future constitution,
statute or rule of law that exempts property from liability for debt or for
distress for rent and trial by jury in any action, proceeding or counterclaim
brought by Landlord against Tenant on any matters whatsoever arising out of or
in any way connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of said premises, the Equipment, or any claim of
injury or damage. The terms "enter", "re-enter", "entry" or "re-entry", as used
in this Lease, are not restricted to their respective technical legal meanings.
22.5. Interest at the Default Rate shall accrue upon any Termination
Fee, Basic Rent or Additional Rent payable under this Lease directly to Landlord
during any period while the payment thereof by Tenant to Landlord may be
overdue.
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ARTICLE 23
ADDITIONAL RIGHTS OF THE LANDLORD AND TENANT
23.1. If Landlord shall claim that Tenant is in default in the
performance of any of its obligations under this Lease and an action shall be
brought for the enforcement thereof in which it shall be finally determined
(including any appeal process) that the Tenant was in default, the Tenant shall
pay to the Landlord the expenses of Landlord incurred in connection therewith,
including reasonable attorneys' fees and reasonable attorneys' fees incurred on
appeal, if any. If Landlord shall claim that Tenant is in default in the
performance of any of its obligations under this Lease and an action shall be
brought for the enforcement thereof in which it shall be finally determined
(including any appeal process) that the Tenant was not in default, the Landlord
shall pay to the Tenant the expenses of Tenant incurred in connection therewith,
including reasonable attorneys' fees and reasonable attorneys' fees incurred on
appeal, if any. If Tenant shall claim that Landlord is in default in the
performance of any of its obligations under this Lease and an action shall be
brought for the enforcement thereof in which it shall be finally determined
(including any appeal process) that the Landlord was in default, the Landlord
shall pay to the Tenant the expenses of Tenant incurred in connection therewith,
including reasonable attorneys' fees and reasonable attorneys' fees incurred on
appeal, if any. If Tenant shall claim that Landlord is in default in the
performance of any of its obligations under this Lease and an action shall be
brought for
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the enforcement thereof in which it shall be finally determined (including any
appeal process) that the Landlord was not in default, the Tenant shall pay to
the Landlord the expenses of Landlord incurred in connection therewith,
including reasonable attorneys' fees and reasonable attorneys' fees incurred on
appeal, if any. If the Tenant shall, without legal liability on its part, be
made a party to any litigation commenced against the Landlord, and if the
Landlord shall not provide the Tenant with counsel reasonable satisfactory to
the Tenant, the Landlord shall pay all costs and reasonable attorneys' fees
incurred or paid by the Tenant in connection with such litigation (including
appeal thereof). If the Landlord shall, without legal liability on its part, be
made a party to any litigation commenced against the Tenant, and if the Tenant
shall not provide the Landlord with counsel reasonably satisfactory to the
Landlord, the Tenant shall pay all costs and reasonable attorneys' fees incurred
or paid by the Landlord in connection with such litigation (including appeal
thereof).
ARTICLE 24
SURRENDER AND HOLDING OVER
24.1. On the last day of the Term, or upon any earlier termination of
this Lease, or upon any re-entry by Landlord upon the Demised Premises or
repossession by the Landlord of the Equipment pursuant hereto, Tenant shall
surrender the Demised Premises and the Equipment into the possession and use of
Landlord without delay and, except as otherwise specifically
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provided in Article 9 or Article 10, in at least as good order, condition and
repair, ordinary wear and tear and obsolescence excepted, as the condition and
repair in which the Demised Premises and the Equipment are delivered to Tenant
by Landlord at the commencement of the Term, free and clear of all letting and
occupancies and free and clear of all liens and encumbrances other than those,
if any, existing on the date of this Lease and those created by Landlord after
the date of this Lease without the consent of the Tenant. Nothing contained in
this Lease shall require Tenant to deliver to Landlord at the expiration or
other termination of this Lease any Equipment that Tenant has theretofore
removed in accordance with the provisions of this Lease. At or prior to the
expiration or earlier termination of the Term, Tenant shall (a) pay to Landlord
any amounts required to modify, to the extent necessary to render such
Improvements or Equipment operable by Landlord, any Improvement or Equipment
that cannot be operated, or the products produced by which cannot be sold, as a
result of Landlord's lack of any Related Lease Process Technology (after taking
into account any Related Lease Process Technology offered by Tenant for
immediate transfer or license to Landlord at no cost to Landlord), or (b) in
lieu of the payment of such amounts, (i) make in accordance with Article 12 any
Alteration necessary to restore the Demised Premises and the Equipment, or any
portion of either, to substantially the same configuration and condition that
existed as of the date of the commencement of the Term, and to render the
Demised Premises and
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the Equipment operable by Landlord to the extent the same were operable
immediately before the commencement of the Term, and (ii) transfer or
perpetually license to Landlord, (A) without cost to Landlord, any intellectual
property necessary to operate the Demised Premises and the Equipment, as so
restored, to the extent that such intellectual property was transferred or
licensed to SCG or any of its Affiliates pursuant to the Asset Purchase
Agreement, and (B) at Landlord's election and for a reasonable royalty
negotiated in good faith by Landlord and Tenant, a license to use improvements
and enhancements to such intellectual property. At or prior to the expiration or
earlier termination of the Term, Tenant shall, upon Landlord's request with
respect to each such agreement or contract, Landlord's assumption of the
obligations of Tenant accruing thereunder after the date of such transfer and
Landlord's indemnification of Tenant against such obligations assumed, transfer
to Landlord Tenant's interest in each then valid and binding contract or other
agreement (to the extent assignable) relating to the Demised Premises or the
Equipment the lack of which would materially adversely affect Landlord's ability
to operate the physical facilities at the Demised Premises in the manner in
which they are being used at the time of such expiration or termination. Tenant
shall indemnify Landlord for any claims, loss, damages or expense incurred by
Landlord as a result of Tenant's breach of any such contract or agreement
arising before Tenant so transfers its interest in such contract or agreement.
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Landlord shall reimburse Tenant for the reasonable costs incurred by Tenant in
the transfer of such agreements and contracts.
24.2. Any personal property of Tenant or any subtenant which shall
remain at the Demised Premises for more than 20 days after the termination of
this Lease or any sublease may, at the option of Landlord, be deemed to have
been abandoned by Tenant or any such subtenant and either may be retained by
Landlord as its property or be disposed of without accountability in such manner
as Landlord may see fit.
24.3. With respect to the events referred to in Section 24.2, Landlord
shall not be responsible for any loss or damage occurring to any property owned
by Tenant or any subtenant.
24.4. Any subrents shall be apportioned between Landlord and Tenant as
of the last day of the Term hereof or as of the effective date of any earlier
termination of this Lease to the extent necessary to provide Landlord with the
benefits of any sublease arrangement that extends beyond the expiration or
termination of the Term to the extent such benefits relate to any period after
such expiration or termination. Nothing in this Section 24.4 shall be deemed to
confer upon Tenant any right to sublease all or a portion of the Demised
Premises.
24.5. (a) In the event of a termination of the Term and a holding over
by the Tenant thereafter, there shall be no renewal or extension of this Lease
by operation of law, but the Tenant shall continue to pay to the Landlord a sum
equal to twice the Basic Rent installment then payable, plus all other amounts
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payable by Tenant to Landlord hereunder, the Basic Rent to be calculated on a
per diem basis for each day or fraction thereof that the Tenant remains in
occupancy of the Demised Premises after expiration of the Term.
(b) Nothing contained in this Section 24.5 shall be deemed to
grant Tenant any right to occupy the Demised Premises at any time after the
termination of this Lease, whether as a result of the expiration of the Term or
otherwise.
24.6. The provisions of this Article 24 shall survive any termination of
this Lease.
ARTICLE 25
REMOVAL OF ALTERATIONS AND EQUIPMENT
25.1. If such removal will result in the diminution of the value of the
Demised Premises and the Equipment, taken as a whole, Tenant shall not (except
to the extent specifically allowed under this Article 25) remove or permit
removal of any Equipment, buildings, structures or improvements on the Demised
Premises or any appurtenances thereto or fixtures thereon or any Alterations
thereof (including, without limitation, any structural Alterations not requiring
Landlord's consent under Section 12.1) without Landlord's prior written consent.
Any determination of whether a removal will result in the diminution of the
value of the Demised Premises and the Equipment taken as a whole shall take into
account, for purposes of establishing any such diminution in value after the
removal at issue, any Improvement or Equipment then, or promptly thereafter,
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constructed, installed or placed in service in replacement of the Improvement or
Equipment removed. An Improvement or piece of Equipment shall, for purposes of
this Section 25.1, be deemed constructed, installed or placed in service in
replacement of an asset removed if the new Improvement or Equipment, once
constructed, installed or placed in service, is of equal or greater value and
utility as the asset removed.
25.2. Notwithstanding anything contained in this Lease to the contrary,
Tenant may remove or permit removal from the Demised Premises of any
Improvement, Alteration or Equipment, without Landlord's consent, if (x) (a) the
Improvement, Alteration or Equipment was not originally leased hereunder, and
(b) the installation or construction of such Improvement, Alteration or
Equipment did not require the modification or removal of any Improvement,
Alteration or Equipment (other than any Improvement, Alteration or Equipment
that Tenant, under this Section 25.2, was entitled to modify or remove without
Landlord's consent) or (y) (a) such removal does not constitute a structural
Alteration the value of which is over $25,000 or Alteration to the exterior of
any Improvement, and (b) such Improvement, Alteration or Equipment is replaced,
promptly after such removal, by an Improvement, Alteration or Equipment, as the
case may be, of no less value and utility in the Business as the Improvement,
Alteration or Equipment removed. Upon removal in accordance with this Section
25.2, the property so removed shall no longer be
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deemed an Improvement, Alteration or Equipment, as the case may be, hereunder.
25.3. Upon removal of any Improvement, Alteration or Equipment, Tenant
shall restore the Demised Premises and the Improvements and Equipment, to the
extent of any physical damage thereto caused by the removal.
25.4. Notwithstanding the foregoing provisions of this Article 25,
Landlord shall grant its consent for the removal of any Alteration, Equipment or
machinery and equipment in connection with damage or destruction thereof so long
as the other preconditions to such removal, as set forth above, are satisfied.
ARTICLE 26
ESTOPPEL CERTIFICATES
26.1. Each of the Tenant and the Landlord shall, from time to time upon
not less than 10 business days' prior request by the other, execute, acknowledge
and deliver to the requesting party a statement in writing, executed by an
authorized officer of the Tenant or the Landlord, as the case may be, certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that this Lease is in full force and effect as modified, and
setting forth such modifications) and the dates to which the Basic Rent and the
Additional Rent have been paid, and either stating that to the knowledge of the
Tenant or the Landlord, as the case may be, no default exists in the performance
of any covenant, agreement or condition contained in
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this Lease or specifying each such default of which the Tenant or the Landlord,
as the case may be, may have knowledge, it being intended that any such
statement delivered pursuant to this Section 26.1 may be relied upon by the
other party or any purchaser, assignee, subtenant or mortgagee of its estate in
the Demised Premises or the Equipment.
ARTICLE 27
ASSIGNMENT OF THE LANDLORD'S INTEREST
27.1. Any and all future mortgages or other liens on the interest of the
Landlord in the Demised Premises and the Equipment shall be subject and
subordinate to this Lease and to the rights of Tenant under this Lease.
27.2. The Landlord may at any time and from time to time assign to any
person, firm or corporation (herein called the "Landlord's Assignee"), by way of
pledge or otherwise, any or all of the rights (in whole or in part) of the
Landlord under this Lease. The Landlord's Assignee may enforce any and all of
the terms of this Lease, to the extent so assigned, as though the Landlord's
Assignee had been a party hereto. The Landlord shall notify the Tenant of any
such assignment and shall deliver a true copy thereof to Tenant. Landlord's
Assignee shall have no greater rights against Tenant and Tenant shall have no
greater obligations to Landlord's Assignee than in each case are provided for
under this Lease. Nothing in this Section 27.2 is intended to affect or modify
the provisions of Section 27.1.
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ARTICLE 28
LIMITATION OF THE LANDLORD'S LIABILITY
28.1. The term "Landlord" as used in this Lease, so far as covenants or
agreements on the part of the Landlord are concerned, shall be limited to mean
and include only the owner or owners of the Landlord's interest in this Lease at
the time in question, and in the event of any transfer or transfers of such
interest, except a transfer by way of security, the Landlord herein named (and
in case of any subsequent transfer, the then transferor) shall be automatically
freed and relieved from and after the date of such transfer of all personal
liability as respects the performance of any covenants or agreements on the part
of the Landlord contained in this Lease thereafter to be performed; provided,
however, that;
(a) any funds in the hands of such Landlord or the then transferor
at the time of such transfer, in which the Tenant has an interest shall be
turned over to the transferee and any amount then due and payable to the Tenant
by the Landlord or the then transferor under any provision of this Lease, shall
be paid to the Tenant; and
(b) upon any such transfer, the transferee shall be deemed to have
assumed, subject to the limitations of this Article 28, all of the covenants,
agreements and conditions in this Lease to be performed on the part of the
Landlord, it being intended hereby that the covenants and agreements contained
in this Lease on the part of the Landlord shall, subject as aforesaid, be
binding on the Landlord, its successors and
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assigns, only during and in respect of their respective successive periods of
ownership.
ARTICLE 29
SEPARATE COVENANTS; INVALIDITY
OF PARTICULAR PROVISIONS
29.1. Each covenant and agreement contained in this Lease shall be
construed to be a separate and independent covenant and agreement, and the
breach of any such covenant or agreement by the Landlord shall not discharge or
relieve the Tenant from the Tenant's obligation to perform each and every
covenant and agreement of this Lease to be performed by the Tenant. If any term
or provision of this Lease or the application thereof to any person or
circumstance shall to any extent be invalid and unenforceable, the remainder of
this Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected, and each term and provision of this Lease shall be valid and
shall be enforced to the extent permitted by law.
ARTICLE 30
CUMULATIVE REMEDIES; NO WAIVER
30.1. Except as otherwise expressly stated in this Lease, the remedies
to which Landlord or Tenant may resort under the terms of this Lease are
cumulative and are not intended to be exclusive of any other remedies or means
of redress, including, without limitation, the right to specific performance, to
which
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the party may be lawfully entitled in case of any breach by the other party of
any provision of this Lease.
30.2. The failure of the Landlord to insist in any one or more cases
upon the strict performances of any of the covenants of this Lease, or to
exercise any option herein contained, shall not be construed as a waiver or
relinquishment for the future of such covenants or option. A receipt by the
Landlord of Basic Rent or Additional Rent with knowledge of the breach of any
covenant hereof shall not be deemed a waiver of such breach.
ARTICLE 31
RECORDING; LABELING OF EQUIPMENT;
FINANCING STATEMENTS
31.1. Each of Landlord and the Tenant, at the request of the other, and
at the sole expense of the party so requesting, shall execute and deliver in
recordable form a Memorandum of Lease for the purpose of recording and giving
notice of this Lease.
31.2. At the request of the Landlord, the Tenant shall permit the
Landlord to place and maintain on each item of Equipment designated by the
Landlord a notice conspicuously disclosing the Landlord's ownership of such item
of Equipment, and the Tenant shall also maintain on each item of Equipment any
serial or other identifying numbers existing on such Equipment at the
commencement of the Term.
31.3. The Tenant shall execute and deliver to the Landlord financing
statements under the Uniform Commercial Code (as
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codified in the states the laws of which govern the filing of financing
statements for the purpose of disclosing Landlord's interest in the Equipment)
and amendments and substitutes therefor and continuations thereof as the
Landlord may from time to time require in order to reflect the Landlord's
ownership of the Equipment. In the event that the Tenant fails to execute and
deliver such financing statements and continuations thereof, the Tenant hereby
appoints the Landlord the attorney-in-fact of the Tenant for the purpose of
executing such financing statements, amendments and substitutes therefor and
continuations pursuant to the provisions of this Section 31.3. Such appointment
is coupled with an interest and shall be irrevocable. Landlord agrees to execute
appropriate termination statements relating to all such financing statements
upon the termination or expiration of this Lease.
31.4. The cost of filing the financing statements, amendments and
substitutes and continuation statements referred to in Section 31.3 shall be
paid by the Tenant.
ARTICLE 32
RIGHT OF FIRST OFFER; RIGHT OF TERMINATION
32.1. In the event Tenant desires to sell, assign or otherwise transfer,
including, without limitation by means of a sale of stock, all of the Business
as a going concern, including, without limitation, Tenant's leasehold interest
in the Demised Premises and the Equipment, Tenant shall give a notice (the
"First Offer Notice") to Landlord; provided, Tenant shall have no
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right to give a First Offer Notice unless, in accordance with the provisions of
Section 32.4, either (a) a list of Qualified Assignees has been approved by
Landlord or (b) Tenant has caused an appraisal to be made as provided in Section
32.4. The First Offer Notice shall constitute an offer by Tenant to sell the
Business to Landlord (i) on the terms and conditions set forth in such notice if
a list of Qualified Assignees has been approved by Landlord, or (ii) on the
terms and conditions set forth in such notice, but at the price set forth in the
second sentence preceding the last sentence of Section 32.4 if Tenant has caused
an appraisal to be made as described in Section 32.4. Landlord, if it desires to
accept such offer shall, within 60 days after its receipt of the First Offer
Notice, give Tenant written notice to such effect (the "Acceptance Notice"),
provided, however, that, if the First Offer Notice sets forth a consideration
(the "Non-Cash Consideration") for the proposed sale other than cash, Landlord
nevertheless shall have the right to substitute for the Non-Cash Consideration,
cash in an amount equal to the fair market value of such Non-Cash Consideration.
If the parties cannot agree as to the cash amount to be paid by Landlord in
respect of the Non-Cash Consideration, the dispute shall be determined by
appraisal of the Non-Cash Consideration, in accordance with the terms of Section
32.6. If Landlord shall fail to give the Acceptance Notice within the time
period provided, Landlord shall be deemed to have consented to the proposed sale
to any Qualified Assignee or to an Appraisal Sale
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Buyer, as the case may be, and Tenant may sell the Business to such Qualified
Assignee or Appraisal Sale Buyer upon the terms and conditions set forth in the
First Offer Notice provided Tenant has entered into a binding contract to so
sell the Business within six months of the expiration of the time period for the
giving of the Acceptance Notice and the sale is consummated within twelve months
of the expiration of such time period; and provided further, that as to the
price to be paid for the Business, Tenant may sell only at a price greater than
90% of the "Allowed Price," as defined below. The "Allowed Price" shall be (x)
the price stated in the First Offer Notice if Landlord elects to reduce the
Basic Rent in accordance with Section 17.1. (a) upon the assignment of this
Lease to the purchaser, and (y) the sum of the amount stated in the First Offer
Notice plus the Premium Amount if Landlord elects not to reduce the Basic Rent
in accordance with Section 17.1. (a) upon the assignment of this Lease to the
purchaser.
32.2. In the event that Landlord shall give the Acceptance Notice, then,
on such business day (the "Closing Date") not less than 60 days nor more than
180 days after the giving of the Acceptance Notice as Landlord shall set forth
in the Acceptance Notice, Landlord shall purchase the Business upon the terms
and conditions constituting the offer of Tenant to sell made by the delivery of
said First Offer Notice. The closing of the sale shall be held at the offices of
McGuire, Woods, Battle & Xxxxxx, or any other place that is mutually acceptable
to the parties, on
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the Closing Date selected as provided above; provided, however, that, if a
cash equivalent amount for Non-Cash Consideration must be determined by
appraisal, the Closing Date shall be postponed to a business day selected by
Landlord upon the conclusion of the appraisal process which day shall not be
less than 20 days nor more than 60 days after the conclusion of the appraisal
process. At the closing, Tenant shall deliver to Landlord any documents of
transfer necessary or appropriate to accomplish the transfer of the Business
to Landlord, together with any other documents reasonably requested by
Landlord.
32.3. Upon the sale of the Business to Landlord pursuant to the
provisions of this Article 32, Tenant shall be deemed to have exercised its
right to terminate this Lease in accordance with the terms of Section 32.7
whereupon Tenant shall, in addition to fulfilling any other obligations set
forth in such Section, pay the Premium Amount as required under such Section.
The effective date of such termination shall be the date upon which the Business
is transferred to Landlord. Tenant shall be responsible for the payment of Basic
Rent and Additional Rent (including Impositions) to the Closing Date. Each party
shall bear all costs incurred by it in connection with such transfer and share
equally any transfer taxes incurred in connection with such transfer.
32.4. Prior to giving a First Offer Notice, Tenant shall submit in
writing to Landlord a list of proposed buyers of the Business. Upon request,
Tenant shall supply to Landlord such
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information with respect to any such proposed buyer which is reasonably
requested by Landlord. Landlord may disapprove any one or more of such proposed
buyers in its reasonable judgment. Without limiting the generality of the
foregoing, Landlord may disapprove any such party based upon Landlord's
reasonable assessment of such party's reputation, integrity or financial
condition or upon the fact that such party is then, or is reasonably likely to
be in the future, engaged in competition with Landlord. Within 20 days after
receipt of such list, Landlord shall notify Tenant of any such proposed buyer
which Landlord has disapproved and all such parties shall be deemed deleted from
the list of proposed buyers submitted by Tenant. All proposed buyers remaining
on such list after the expiration of such 20-day period, together with any one
or more parties with whom Tenant does not compete in the Business that are
identified in writing by Landlord to Tenant shall then be "Qualified Assignees."
Any additional parties so identified by Landlord to Tenant shall be deemed to
have been approved by Landlord as parties that, in Landlord's reasonable
judgment, are not then, or reasonably likely to be in the future, engaged in
competition with Landlord and parties that have sufficient reputation, integrity
and financial condition to qualify such parties as Qualified Assignees. If
Tenant fails to notify Landlord in writing, within seven business days after the
date that Landlord identifies to Tenant in writing any party that Landlord seeks
to have considered a Qualified Assignee, that Tenant considers such
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party to be engaged in competition with Tenant's Business, Tenant shall be
deemed to have agreed that such party is not engaged in competition with
Tenant's Business. Except that Tenant may negotiate with any potential Appraisal
Sale Buyer if Tenant becomes entitled to have the Business appraised in
accordance with this Section 32.4, Tenant shall not negotiate with any person
for the sale of the Business if such sale includes an assignment or other
transfer of Tenant's interest in this Lease unless such person is a Qualified
Assignee. In the event that the number of Qualified Assignees is less than 3,
Tenant may cause the Business to be appraised in accordance with the provisions
of Section 32.6. If, at any time after which Tenant may sell the Business to a
third party as a result of Landlord's failure to give an Acceptance Notice,
Tenant requests in writing that Landlord elect, with respect to any proposed
Qualified Assignee or proposed Appraisal Sale Buyer, whether to reduce the Basic
Rent under Section 17.1.(a) should such proposed Qualified Assignee or Appraisal
Sale Buyer become the Tenant hereunder, Landlord shall make such election and
serve written notice thereof upon Tenant within 10 days of Tenant's request.
Upon Landlord's failure to make such election within such 10-day period,
Landlord shall make such election with respect to such proposed Qualified
Assignee or Appraisal Sale Buyer in accordance with Tenant's direction. The fair
market value of the Business so appraised (the "Business Value") shall be
determined on a going concern basis, shall include the fair market value of the
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leasehold interest of Tenant in the Demised Premises and the Equipment but shall
be based upon the assumption that Landlord will, upon the sale of the Business,
elect to reduce the Basic Rent as described in Section 17.1.(a). Within 30 days
of the completion of any such appraisal, Tenant may serve upon Landlord a First
Offer Notice offering to sell the Business so appraised at a price equal to or
less than the Business Value so established by such appraisal. Any person or
entity to whom Tenant sells such interest in accordance with the provisions of
Section 32.1 after Landlord's failure to give an Acceptance Notice as therein
provided shall be an "Appraisal Sale Buyer". Landlord agrees that Tenant may
initiate the appraisal of the Business as described above either before or after
Tenant serves upon Landlord a First Offer Notice and notwithstanding such
initiation or the determination of any fair market value, Tenant shall not be
obligated to serve any such First Offer Notice, but, if Tenant does not become
entitled, as a result of there existing less than three Qualified Assignees as
described above, to have the Business appraised, Tenant shall reimburse Landlord
for all costs and expenses (including reasonable attorneys' fees) incurred by
Landlord as a result of Tenant's having initiated such appraisal procedures.
32.5. On the Closing Date Landlord shall release to Tenant any monies
held by it pursuant to this Lease for the account of or owing to Tenant (and if
monies are held by an insurance
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trustee for the benefit of Tenant, Landlord shall direct such insurance trustee
to pay the same to Tenant).
32.6. The fair market value of any asset or interest required to be
established pursuant to this Section 32.6 shall be established as follows:
(a) Each of Tenant and Landlord shall, within 10 days of notice
from the other to do so, appoint an appraiser experienced in appraising the
types of such assets or interests and who has been conducting appraisals in the
county or city in which the Demised Premises are located (or, if such an
appraiser cannot be found, an appraiser who has been conducting appraisals in
the geographical area in which the Demised Premises are located) for a period of
at least 15 years. The two appraisers shall afford each party a hearing and
shall, within 30 days after the appointment of the last of the two to be
appointed, make their determination in writing and give notice thereof to both
parties;
(b) If the fair market values so determined by the two appraisers
differ by less than 5% from the arithmetic average of such two values, then such
average shall be the fair market value of the asset or assets appraised; if such
difference is more than 5%, then, upon request of either party, the appraisers
shall, within ten days after notice to do so, select and appoint in writing a
third appraiser having the same minimum qualifications as the other two
appraisers and give written notice of such appointment to each of the parties;
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(c) In the event the two appraisers shall fail to so appoint or
agree, such third appraiser may be selected by the parties if they so agree upon
such third appraiser within a further period of 10 days and otherwise, either
party may apply to any appropriate court for appointment of the third appraiser;
(d) The third appraiser so appointed shall have access to the
first two appraisers' appraisals and shall, with all possible speed, select one
or the other of such appraisals, and the appraisal selected shall be deemed to
be the fair market value of the asset or interest being appraised and binding on
both parties, and if neither party requires the selection of or selects a third
appraiser, the average of the two appraisals shall be deemed to be the fair
market value of the asset or assets being appraised and shall be conclusive and
binding on both parties; and
(e) In the event there are two appraisers, each of the parties
shall pay the fees and expenses of the appraiser selected by it and any fees and
expenses of a third appraiser shall be divided equally between the parties.
32.7. Tenant may, by notice in writing given to Landlord, terminate this
Lease at any time upon Tenant's (a) payment to Landlord of Basic Rent and
Additional Rent payable with respect to and apportioned as of the date of
termination, (b) performance of any other of its obligations hereunder then
accrued but unperformed, and (c) payment of a fee (the "Termination Fee") in an
amount equal to the sum of (i) any amounts required to modify,
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to the extent necessary to render such Improvements or Equipment operable by
Landlord, any Improvement or Equipment that cannot be operated, or the products
produced by which cannot be sold, as a result of Landlord's lack of any Related
Lease Process Technology (after taking into account any Related Lease Process
Technology offered by Tenant for immediate transfer or perpetual license to
Landlord at no cost to Landlord) and (ii) an amount equal to the Leasehold
Value, were such amount calculated as of the effective date of such termination.
If, but only if, the termination right granted hereunder is exercised by the
original Tenant named on the first page of this Lease, or an Affiliate of Tenant
to whom this Lease has been assigned pursuant to Section 17.1.(c), as Tenant, a
portion of the Termination Fee may be paid, at the original Tenant's or such
Affiliate's election, by delivery of Tenant's non-interest bearing negotiable
promissory note made in the principal amount of the Premium Amount, payable
until all amounts due thereunder are paid in equal semi-annual installments on
the dates that Basic Rent would have otherwise been due, and each in the amount
of 42.73% of the amount of the semi-annual installment of Basic Rent required to
be paid and guaranteed under the Note Guaranty. The payment obligations under
such note shall be neither more senior nor more junior than the payment
obligations under this Lease. Tenant shall inform Landlord of its decision to
exercise its right to terminate this Lease as soon as possible after such
decision has been made. The date upon which any termination resulting from
Tenant's exercise of
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its rights under this Section 32.7 shall be effective shall be the later of (x)
the date (if any) specified as the effective date in Tenant's notice of such
election, and (y) the earlier of (i) the date of the natural expiration of the
Term, and (ii) the first business day that is at least 90 days after Landlord's
receipt of such notice. In lieu of payment of any amounts required to be paid
pursuant to Section 32.7(c)(i), Tenant may, at its option, (xx) make in
accordance with Article 12 any Alteration necessary to restore the Demised
Premises and the Equipment, or any portion of either, to substantially the same
configuration and condition that existed as of the date of the commencement of
the Term, or, in the case of any such assets damaged after the date of the Asset
Purchase Agreement and prior to the commencement of the Term, the condition and
repair thereof immediately prior to such damage and to render the Demised
Premises and the Equipment operable by Landlord to the extent the same were
operable immediately before the commencement of the Term, or, in the case of any
such assets rendered wholly or partially inoperable due to damage occurring
after the date of the Asset Purchase Agreement and prior to the commencement of
the Term, to the extent operable immediately prior to such damage and (yy)
transfer or perpetually license to Landlord, (1) without cost to Landlord, any
intellectual property necessary to operate the Demised Premises and the
Equipment, as so restored, to the extent that such intellectual property was
transferred or licensed to SCG or any of its Affiliates pursuant to the Asset
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Purchase Agreement, and (2) at Landlord's election and for a reasonable royalty
negotiated in good faith by Landlord and Tenant, a license to use improvements
and enhancements to such intellectual property. At or prior to the termination
of the Lease in accordance with this Section, Tenant shall, upon Landlord's
request with respect to each such agreement or contract, Landlord's assumption
of the obligations of Tenant accruing thereunder after the date of such transfer
and Landlord's indemnification of Tenant against such obligations assumed,
transfer to Landlord Tenant's interest in each then valid and binding contract
or other agreement (to the extent assignable) relating to the Demised Premises
or the Equipment the lack of which would materially adversely affect Landlord's
ability to operate the physical facilities at the Demised Premises in the manner
in which they are being used at the time of such termination. Tenant shall
indemnify Landlord for any claims, loss, damages or expense incurred by Landlord
as a result of Tenant's breach of any such contract or agreement arising before
Tenant so transfers its interest in such contract or agreement. Landlord shall
reimburse Tenant for the reasonable costs incurred by Tenant in the transfer of
such agreements and contracts
ARTICLE 33
FORCE MAJEURE
33.1. In the event that Landlord or Tenant shall be delayed or prevented
from performing any act (not including payment of money) required hereunder by
reason of any of the following
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(collectively and individually, a "Force Majeure"): strikes or lock-outs,
inability to procure labor or materials, failure of power, laws or regulations
of Governmental Authorities, riots or civil commotion, insurrection, enemy
action or war, acts of God, fires, casualties, or other causes beyond the
reasonable control of Tenant or Landlord, as the case may be, whether similar or
dissimilar to those causes enumerated in this Section 33.1, then performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay.
ARTICLE 34
LAWS APPLICABLE AND CONSTRUCTION
34.1. This Lease shall be construed and enforced in accordance with the
substantive (as opposed to procedural) laws of the State of Virginia.
ARTICLE 35
COUNTERPARTS
35.1. This Lease may be executed and delivered, for the convenience of
the Landlord and the Tenant, in several counterparts, but all counterparts shall
constitute only one Lease.
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ARTICLE 36
NO ORAL MODIFICATION; SUCCESSORS AND ASSIGNS
36.1. This Lease may not be amended, changed, modified or discharged
except by a writing signed by the Landlord and the Tenant. All covenants,
conditions and obligations contained in this Lease shall be binding upon and
inure to the benefit of the respective successors and assigns of the Landlord
and the Tenant to the same extent as if each such successor and assign were
named as a party to this Lease.
ARTICLE 37
NOTICES
37.1. All notices and other communications (each, a "Notice") required
or permitted hereunder shall be in writing (including telex, telefax or similar
writing) and shall be given by (a) mail, postage prepaid for registered or
certified mail with return receipt requested, (b) by Federal Express or similar
generally recognized overnight carrier regularly providing proof of delivery or
(c) personal delivery, in each case to the parties hereto at the following
addresses or at such other address as any party hereto shall hereafter specify
by 10 days' prior Notice given in the manner specified in this Section 37.1 to
the other parties described in this Section 37.1:
(a) If to Landlord, to:
c/o Xxxxx River Corporation of Xxxxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx
Telefax: (000) 000-0000
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with copies to:
McGuire, Woods, Battle & Xxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxx, Xx., Esq.
Telefax: (000) 000-0000
(b) If to Tenant:
c/o Custom Papers Group, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: X. Xxxxxxx
with a copy to:
SCI Investors, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telefax: (000) 000-0000
CPG-Richmond Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Resident Manager
A notice shall be deemed to have been duly given (x) if mailed or sent by
overnight courier, on the date set forth on the return receipt, or on the
overnight courier's proof of delivery, as applicable, or (y) if personally
delivered, on the date of such delivery. The inability to make delivery because
of changed address of which no Notice was given, or rejection or refusal to
accept any Notice offered for delivery, shall be deemed the giving of the Notice
as of the date of such inability to deliver or rejection or refusal to accept.
Any notice may be given by counsel for the party giving same.
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ARTICLE 38
HEADINGS AND TABLE OF CONTENTS
38.1. The headings of the Articles of this Lease and the table of
contents preceding this Lease are for convenience of reference only and in no
way define, limit or describe the scope or intent of this Lease or in any way
modify, amend or change the express terms and provisions of this Lease.
ARTICLE 39
NO MODIFICATION OF ASSET PURCHASE AGREEMENT
39.1. No provision of this Lease is intended to, nor shall any such
provision, modify, diminish or increase the rights or obligations of any party
(whether or not a party to this Lease) under the Asset Purchase Agreement.
Without limiting the generality of the foregoing, no provision of this Lease is
intended to, nor shall the same, limit, amend or modify in any respect any of
the warranties, representations, covenants, guarantees or indemnities of any
party to the Asset Purchase Agreement under such Asset Purchase Agreement,
subject, however, to the provisions of such Asset Purchase Agreement, including,
without limitation, provisions relating to, or limiting, the survival of the
same.
ARTICLE 40
SIGNS
40.1. The Tenant shall have the right to erect and place signs, notices
and advertisements of any kind on or over the
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Demised Premises and on the walls or roof of any of the Improvements, subject to
the prior written consent of Landlord (which consent shall not be unreasonably
withheld or delayed) and any applicable laws, ordinances, orders, rules,
regulations and requirements of the Governmental Authorities.
ARTICLE 41
ARBITRATION
41.1. When this Lease provides for the determination of any matter by
arbitration, the same shall be settled and finally determined by arbitration
conducted in the City of Richmond, Virginia, State of Virginia, in accordance
with the Rules of the American Arbitration Association, or its successor, except
that the arbitrators shall be selected as provided in Section 41.2, and the
judgment upon the award rendered may be entered in any court having
jurisdiction. However, such award shall be final and binding notwithstanding
failure of such entry. The persons conducting the arbitration shall not have the
right to modify the provisions of this Lease.
41.2. (a) Whenever under this Lease it shall become necessary to resort
to arbitration, such arbitration shall be conducted as follows: the party
desiring arbitration shall give notice to that effect to the other party,
specifying the name and address of the person designated to act as arbitrator on
its behalf. Within 10 days after the service of such notice, the other party
shall give notice to the first party specifying the name and address of the
person designated to act as arbitrator on
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its behalf. If either party fails to notify the other party of the appointment
of its arbitrator, as stated above, within or by the time above specified, then
the appointment of the second arbitrator shall be made in the same manner as
provided for the appointment of a third arbitrator in a case where the two
arbitrators have been appointed and the parties are unable to agree upon such
appointment.
(b) The arbitrators so chosen shall meet within 10 days after the
second arbitrator is appointed and if, within 30 days after that first meeting,
the two arbitrators shall be unable to agree upon the decision as to the
question being arbitrated, they shall appoint a third arbitrator who shall be a
competent and impartial person; and in the event of their being unable to agree
upon such appointment within 15 days after the 30-day time limit such third
arbitrator shall be selected by the parties if they can agree within a further
period of 15 days.
(c) If the parties do not so agree, then either party, on behalf
of both, may request such appointment by the then president of the Richmond Bar
Association, or in his absence or failure, refusal or inability to act within 15
days, then either party, on behalf of both, may apply to the Presiding Justice
of the highest court of record in the city and/or county in which the Demised
Premises are located, for the appointment of such third arbitrator, and the
other party shall not raise any question as to the court's full power and
jurisdiction to entertain the application and make the appointment.
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(d) In the event of the failure, refusal, or inability of any
arbitrator to act, his successor shall be appointed within 10 days by the party
who originally appointed him or if that party shall fail so to appoint such
successor, or in case of the third arbitrator, his successor shall be appointed
as hereinbefore provided. If a valuation of property is involved in the matter
being arbitrated any arbitrator selected or appointed pursuant to this Article
shall be a member of the American Institute of Real Estate Appraisers (or a
successor organization), shall be an appraiser, and shall have been doing
business as such in the county in which the Demised Premises are located (or, if
such person cannot be found, in the geographical area in which the Demised
Premises are located) for a period of at least 15 years before the date of his
appointment.
(e) Any arbitrator acting under this section shall be qualified in
the field in which the arbitration is involved and shall have been actively
engaged in such field in the county in which the Demised Premises are located
(or, if such person cannot be found, in the geographical area in which the
Demised Premises are located) for a period of at least 15 years before the date
of his appointment as arbitrator.
(f) All arbitrators chosen or appointed pursuant to this section
shall be sworn fairly and impartially to perform their duties.
(g) Within 15 days after the appointment of the third arbitrator
each of the first two arbitrators shall submit their
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valuation or determination, as the case may be, to the third arbitrator who must
select one or the other of such valuations or determinations, and the decision
so made shall in all cases be binding upon the parties, and judgment thereon may
be entered in any court of competent jurisdiction. Unless the decision rendered
in the arbitration determines otherwise, each party shall pay the fees and
expenses of its respective arbitrator and both shall share the fee and expenses
of the third arbitrator, if any. The decision rendered in any arbitration shall
include a determination of whether one or the other of the parties prevailed
upon each issue upon which a decision is rendered. In each case where a party is
identified as the prevailing party, the other party shall reimburse the
reasonable fees, costs and expenses (including reasonable attorneys' fees) of
such prevailing party incurred in connection with the arbitration of each issue
as to which the prevailing party is identified as having prevailed. In the case
of any decision by the arbitrators that any sum of money is owed by one party to
the other, the arbitrators shall determine the date upon which such payment
obligation occurred, and the party owing such payment obligation shall pay to
the other party interest at the Default Rate from the date of such accrual until
the date such payment is made.
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ARTICLE 42
COMMON AREAS
42.1. The areas delineated by crosshatching on the survey attached
hereto as Exhibit A, which areas include certain paved parking areas, parking
facilities, drainage facilities, sidewalks, lighting, and landscaped areas, are
hereafter referred to as the Common Areas." For the benefit of Tenant and its
employees, agents and business invitees, Landlord hereby grants as an
appurtenance to the Demised Premises a non-exclusive temporary easement, the
duration of which shall be coextensive with the Term, for pedestrian and
vehicular ingress to and egress from the Demised Premises across that portion of
the Common Areas intended for use as and used for pedestrian and vehicular
access ways.
42.2. For the benefit of Tenant and its employees, agents and business
invitees, Landlord hereby grants as an appurtenance to the Demised Premises a
non-exclusive temporary easement, the duration of which shall be coextensive
with the Term, for the use, for the purposes for which such areas are intended
to be used, of all driveways, sidewalks, walkways, parking areas and parking
deck areas constituting a portion of the Common Areas. Landlord also grants to
Tenant as an appurtenance to the Demised Premises a temporary easement, the
duration of which shall be coextensive with the Term, over that portion of the
Common Areas into which portions of the Improvements (including, without
limitation, xxxxx, windowsills and overhangs) encroach, for the
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purpose of maintaining such encroaching portions of the Improvements.
42.3. The use of the Common Areas by Tenant and its employees, agents
and business invitees shall be in accordance with practices prevailing as of the
date hereof subject to, and as may be modified by, all reasonable rules and
regulations promulgated by Landlord from time to time and delivered in writing
to Tenant, which rules and regulations may be changed from time to time at
Landlord's discretion, reasonably exercised. Without limiting the generality of
the foregoing, Tenant acknowledges that Landlord has now promulgated rules and
regulations (a) limiting to 75 the number of spaces available to Tenant in the
parking deck (the "Parking Deck") constituting a portion of the Common Areas;
(b) requiring Tenant to cause its employees to park only in the Parking Deck,
(c) limiting the use of certain areas designated by Landlord on the ground floor
of the Parking Deck to parking for handicapped persons, visitors of Landlord or
Tenant, or other special purposes and (d) providing for sanctions against those
violating the rules and regulations promulgated by Landlord, including, without
limitation, barring such violators from using the Parking Deck. Except with
respect to (a) and (b) above, Landlord agrees that all existing practices and
all existing rules and regulations, and all changes to such rules and
regulations, shall be enforced by Landlord in a uniform manner with respect to
Landlord, Tenant and their respective agents, employees and business invitees
(i.e., without
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discrimination to Tenant, Tenant's agents, employees or business invitees).
42.4. Each party shall repair any damage to or destruction of any
portion of the Common Areas or any improvement or equipment located thereon
caused by such party, its employees, agents, licensees, successors or assignees.
Neither party shall use the Common Areas in any manner that results in the
interference with, or interruption of, the operations of the other party at the
Tredegar Complex.
42.5. Landlord shall (except to the extent Tenant is required to
maintain or repair any portion of the Common Areas as specifically provided in
this Lease) operate, manage, equip, police, repair, keep free of snow and ice,
and maintain the Common Areas in accordance with practices existing prior to the
date hereof. Landlord shall have the right at any time to delegate the
responsibility for maintenance and operating the Common Areas to such persons or
entities as it may in its sole discretion deem desirable or appropriate, but
Landlord agrees to cause such persons or entities to comply with the preceding
sentence.
42.6. Tenant shall pay to Landlord during the Term as Additional Rent
the "Parking Deck Charges" and the "Security Charges," as defined in Sections
42.8 and 42.9 respectively. The Parking Deck Charges and the Security Charges
(together, the "Common Area Costs") shall be annual charges to be paid by Tenant
in monthly installments on the first day of each calendar month
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in advance in an amount estimated by Landlord but not greater than one-twelfth
of the sum of the Common Area Costs for the preceding calendar year and any
amount by which Landlord has reasonably ascertained (as a result of entering
into contracts, executing purchase orders, or finalizing other arrangements,
with respect to the maintenance or operation of the facilities with respect to
which Common Area Costs are payable hereunder) that Common Area Costs for the
calendar year with respect to which Landlord has calculated its estimate for
purposes of this Section 42.6 will be increased over the sum of the Common Area
Costs for the calendar year preceding such calendar year. Within 90 days after
the end of each calendar year, Landlord shall furnish to Tenant a statement in
reasonable detail of the Common Area Costs incurred with respect to such period,
and there shall be an adjustment between Landlord and Tenant, with payment to
Landlord by Tenant or repayment by Landlord to Tenant, as the case may require.
42.7. The "Road Charges" for any calendar year shall be the lesser of
(a) all costs incurred by Landlord during such year for the structural repair
and maintenance (which term shall not include any repair, maintenance or
improvement performed for aesthetic or cosmetic purposes only) of the private
road separating the Headquarters from the Demised Premises beginning at the east
end of the Parking Deck and ending at the west end of the building within the
Headquarters commonly referred to as the "Riverside Building," and (b) the
excess of (i) the sum of (A)
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$7,500.00, and (B) the product of $7,500.00 times the number of the preceding
four calendar years ending within the Term, over (ii) the sum of the Road
Charges paid by Tenant for the four calendar years preceding the year in respect
of which such charges are being calculated. Tenant shall pay the "Road Charges"
from time to time to Landlord upon receipt of statements of Landlord therefor
with invoices for costs incurred by Landlord under (a) above attached thereto,
subject, however, to the calculations and limitations set forth above in this
Section 42.7.
42.8. The "Parking Deck Charges" for any calendar year shall be the
product of (a) Landlord's Fully Loaded Costs for such year for operating,
equipping, policing, repairing and maintaining the facilities (the "Parking
Facilities") designated from time to time by Landlord, including without
limitation, the Parking Deck, for parking for employees at the Tredegar Complex
as deemed desirable for the Tredegar Complex as a whole in the reasonable
judgment of Landlord, times (b) a fraction the numerator of which is the number
of parking spaces available to Tenant in the Parking Facilities and the
denominator of which is the aggregate number of parking spaces available to
Landlord and Tenant and their respective agents, employees and business invitees
in the Parking Facilities. Landlord's Fully Loaded Costs described in this
Section 42.8 shall not include any costs for "Security Charges" described in
Section 42.9.
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42.9. The "Security Charges" for any calendar year shall be the product
of (a) Landlord's Fully Loaded Costs in supplying security services to the
Tredegar Complex for such year, times (b) a fraction the numerator of which is
the average number of Tenant's full time employees assigned at the Demised
Premises during such year, and the denominator of which is the average aggregate
number of full time employees of both Tenant and Landlord assigned at the
Tredegar Complex during such year.
ARTICLE 43
SERVICES PROVIDED BY LANDLORD
43.1. Subject to the terms and conditions of this Article 43, Landlord
shall supply to Tenant during the Term long distance telephone service and
telephone equipment maintenance and purchasing services (the "Mill Services") at
levels consistent with those at which such services are presently supplied to
Landlord's mill operation at the Demised Premises. Tenant agrees to pay to
Landlord Landlord's Fully Loaded Costs for supplying such services to the
Demised Premises (the "Mill Service Costs").
ARTICLE 44
SERVICES PROVIDED BY TENANT
44.1. Subject to the terms and conditions of this Lease, Tenant hereby
agrees to furnish to Landlord during the Term the "Headquarters Services," as
defined below. The "Headquarters Services" shall consist of (a) Tenant's
supplying to Landlord steam for purposes of Landlord's heating the buildings
located at
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the Headquarters (including the buildings known as the "Riverside" building and
the "Pump House" building, the latter of which is under construction as of the
commencement of the Term), (b) Tenant's furnishing Landlord with trash-hauling
and disposal services to the extent necessary to remove daily trash from the
Headquarters, (c) Tenant's furnishing auxiliary municipal water, or the
availability of such water, to the fire suppression system serving the Tredegar
Complex, and (d) Tenant's supplying electric power (i) to the Parking Deck for
lighting as may be required to keep the Parking Deck lit, and (ii) to the
Headquarters for all purposes. The parties agree that such services are to be
provided at levels consistent with those heretofore maintained by Landlord's
employees at the Demised Premises in providing such services to the
Headquarters. Landlord hereby agrees to cooperate with Tenant with respect to
the provision of the "Headquarters Services."
44.2. Landlord shall pay to Tenant Tenant's Fully Loaded Costs incurred
in supplying the Headquarters Services described in Sections 44.1(a), 44.1(b)
and 44.1(d). Landlord shall reimburse Tenant for one-half of all charges and
fees paid by Tenant to the provider of the auxiliary municipal water described
in Section 44.1(c) in respect of the provision of such water.
44.3. Tenant recognizes that certain utility facilities (the "Landlord's
Facilities") owned by Landlord are, or are contemplated to be, located within
the Demised Premises. Among the Landlord's Facilities are (a) Landlord's air
conditioning
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chiller units and (b) Landlord's standby electrical generation system, each
located, or to be located on the roof of the buildings constituting portions of
the Demised Premises. The Landlord's Facilities described in (a) and (b) in the
preceding sentence are hereby specifically reserved from the demise hereunder of
the Demised Premises. At all reasonable times during the Term upon reasonable
advance notice to Tenant (except in the case of emergency), Tenant shall provide
Landlord and its employees and agents with access to those portions of the
Demised Premises with respect to which access is reasonably necessary for
Landlord, its employees and agents to inspect the Landlord Facilities, to make
any alterations, repairs, improvements and additions, or to remove or maintain
the Landlord Facilities as Landlord may deem necessary or desirable. Landlord
hereby grants to Tenant the right and license, irrevocable during the Term, to
enter upon the building known as the "Riverside Building" at the Headquarters to
the extent necessary, and in accordance with reasonable rules and regulations
promulgated by Landlord from time to time, to operate and maintain the water
pump and filtration system used to supply process water to the Demised Premises.
Tenant agrees that all obligations of Tenant under this Lease relating to the
repair and maintenance of Equipment shall apply as well to the repair and
maintenance of such pumping and filtration system, and Tenant agrees to use all
reasonable efforts to operate and maintain such system in a manner that does
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not interfere with or interrupt Landlord's operation at the Headquarters.
ARTICLE 45
MISCELLANEOUS PROVISIONS WITH
RESPECT TO SERVICES AND COMMON AREA COSTS
45.1. During any period in which any of the Mill Services or the
Headquarters Services (collectively, the "Services") are reduced or suspended by
a party as a result of any Force Majeure, the party to whom such Services are
required to be provided shall not be obligated to make payment with respect to
the reduced, suspended or terminated portion of the Services.
45.2. For purposes of calculating amounts to be paid in respect of
services supplied under this Lease, "Fully Loaded Costs" shall mean the
allocable portions of any direct variable costs (including, without limitation,
costs such as fuel and maintenance costs) and fixed operating costs (including,
without limitation, depreciation) incurred by the party providing such Service
in supplying the Service including, without limitation, the wages, employee
benefits, incentives and other payments to employees who provide such Service.
Without limiting the generality of the foregoing, Tenant's "Fully Loaded Costs"
of supplying electricity to the Headquarters shall include only those "demand
charges" or similar charges or fees assessed by the provider of electricity that
result from the fluctuation in the demand for electricity to serve the
Headquarters. If the parties disagree as to the source of any fluctuation in
demands for
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electrical power, as between the Demised Premises and the Headquarters, such
disagreement shall be settled by an electrical engineer mutually acceptable to
the parties.
45.3. It is intended that the Services to be supplied hereunder shall be
supplied pursuant to this Lease substantially in the same manner and to the
extent services were provided prior to the date hereof at the Tredegar Complex
by Landlord's operation at the Headquarters or its operation at the Demised
Premises, as the case may be.
45.4. Each party supplying Services under this Lease shall xxxx the
party (the "Paying Party") to whom such Services are supplied for such Services
no less often than once per calendar quarter after the date hereof. Each xxxx
rendered for Services hereunder shall contain an itemized (by Service) breakdown
of costs incurred in supplying such Services, together with supporting
documentation, each in detail sufficient for determination, by the Paying Party,
whether the Paying Party is, pursuant to the provisions of this Lease, required
to pay the charges set forth in such xxxx. The Paying Party shall remit to the
other party all amounts required to be paid by the Paying Party in respect of
any Service rendered for which it has received a xxxx as set forth above within
30 days after its receipt of the xxxx for such Service.
45.5. Any party receiving Mill Services or Headquarters Services under
this Lease may at any time elect to discontinue the receipt of such Services.
Upon 30 days' notice (a "Service
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Termination Notice") from any party entitled to receive any Mill Service or
Headquarters Service hereunder to the party obligated hereunder to provide such
Service, the party entitled to receive such service may terminate its obligation
to pay for such Service. The termination of such receiving party's obligation to
pay for such service, together with the providing party's obligation to supply
such service, shall terminate on the later of (a) the date that is 30 days after
the service of the Service Termination Notice, and (b) the date set forth in the
Service Termination Notice as the effective date of the termination of such
obligations.
45.6. If the Term of this Lease shall begin other than on the first day
of the calendar year, the charges calculated under Articles 42, 43, 44 or 45 of
this Lease which are calculated on a calendar year basis shall be prorated on a
partial calendar year basis for the first calendar year of the Term. If the Term
of this Lease shall expire or terminate other than on the last day of the
calendar year, the charges calculated under Articles 42, 43, 44 or 45 of this
Lease which are calculated on a calendar year basis, shall be prorated on a
partial calendar year basis.
45.7. Promptly upon request therefor, the party obligated to provide any
of the services described in Articles 42, 43, 44 or 45 of this Lease (the
"Providing Party") shall provide to the party entitled to receive any of such
services (the "Receiving Party") with such records, documents and other evidence
reasonably sufficient to enable the Receiving Party to review the
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Providing Party's calculations of any costs billed to the Receiving Party under
Articles 42, 43, 44 and 45 of this Lease (individually and collectively "Costs")
together with a statement of Costs (a "Providing Party Statement") for the
calendar year or partial year in question for which the Providing Party has
requested a payment from the Receiving Party, setting forth each category of
expense in reasonable detail and any explanation thereof (if not readily
ascertainable) and a computation of the payment for such period. Each Providing
Party Statement shall be certified correct by the chief financial officer of the
Providing Party or his designee. If the Providing Party Statement for any such
period shall require a payment for such period in excess of the payment actually
due from the Receiving Party for such period, the Providing Party shall refund
to the Receiving Party, promptly after delivery to the Receiving Party of such
Providing Party Statement, the amount of such excess (or, in the case of any
dispute that is submitted to the Accounting Firm for settlement as described
below, promptly after such dispute is finally settled). If the Providing Party
Statement for any period shall require sums to be paid by the Receiving Party
less than the payment due for any such period, the Receiving Party shall pay the
amount of such deficiency promptly after delivery to the Receiving Party of such
Providing Party Statement (or, in the case of any dispute that is submitted to
the Accounting Firm for settlement as described below, promptly after such
dispute is finally settled). The Providing Party shall keep and maintain
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accurate books and records of the Costs for each calendar year or partial year
during the Term, and the Receiving Party and the Receiving Party's agents and
accountants shall have the right, at the Receiving Party's sole cost and
expense, to examine the same during business hours in the Providing Party's
office in Richmond, Virginia, for the purpose of checking and verifying any
Providing Party Statement and any computation of Costs thereunder. The Receiving
Party, its agents and accountants, shall be entitled to photocopy from such
books and records such information as the Receiving Party reasonably requires in
order to check or verify any Providing Party Statement or computation
thereunder. If the Receiving Party objects to any Providing Party Statement or
any computations therein, the Receiving Party shall promptly notify the
Providing Party of such objection (specifying in reasonable detail the nature of
such objection and the basis therefor). Notwithstanding any such objection, the
Receiving Party shall pay any invoice in full when due. Upon receipt of such
objection, the Providing Party and the Receiving Party shall negotiate in good
faith in an effort to resolve such dispute. If such objection cannot be resolved
between the Providing Party and the Receiving Party within 10 business days
after receipt of such notice by the Providing Party, then either party shall
have the right to have such objection submitted, as soon as practicable, to the
"Accounting Firm," as defined below, the decision of which shall be final and
binding on the parties. Without limiting the generality of the last sentence of
Section
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42.6, if the amount in question as finally determined by the Accounting Firm is
less than the amount in question paid by the Receiving Party, the Providing
Party shall refund to the Receiving Party, within 10 days after such
determination the amount of such difference. If the amount in question as
finally determined by the Accounting Firm is more than the amount in question
paid by the Providing Party, the Receiving Party shall pay to the Providing
Party, within 10 days after such determination, the amount of such difference.
The Accounting Firm's fees incurred in making such determination shall be borne
equally by the Providing Party and the Receiving Party. The Providing Party
shall be obligated to retain the books and records required to be kept under
this Section 45.7 for not less than 4 years after the period to which same
relate. The "Accounting Firm" shall be a public accounting firm of recognized
international reputation mutually acceptable to the parties.
45.8. Notwithstanding anything in this Lease to the contrary, there
shall be no duplication of costs assessed to Tenant for Mill Services Costs,
Common Area Costs and Road Charges.
45.9. While it is the desire of the Landlord and Tenant to enumerate all
services and facilities which need to be provided by one or the other, both
Landlord and Tenant recognize the close relationship of the Headquarters and the
Demised Premises and the need to delegate to local management thereof the
furnishing of other necessary services not herein provided for and hereby
127
covenant to negotiate in good faith to reach agreement with respect to the
furnishing of any such services.
IN WITNESS WHEREOF, the Landlord and the Tenant respectively have caused
this Lease to be executed by their duly authorized officers as of the day and
year first above written.
LANDLORD:
XXXXX RIVER PAPER COMPANY, INC.
[corporate Seal]
By: /s/ J. Xxxxxx Xxxx
--------------------------
Its: Vice President
ATTEST:
/s/ [ILLEGIBLE]
--------------------------------
Secretary
TENANT:
[Corporate Seal] CPG - VIRGINIA INC
By: /s/ [ILLEGIBLE]
--------------------------
Its: President
ATTEST:
/s/ A. Xxxxxxx Xxxxxx
--------------------------------
Secretary
128
