Exhibit 10.7
FIRST AMENDMENT TO OFFICE SUBLEASE
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THIS FIRST AMENDMENT TO OFFICE SUBLEASE (this "AMENDMENT") is
effective as of this 1st day of May, 1998, by and between Boston Chicken, Inc.,
a Delaware corporation ("LANDLORD"), and Einstein/Noah Bagel Corp., a Delaware
corporation ("TENANT").
RECITALS:
R-1. Prudential Insurance Company of America and its successors and
assigns ("PRUDENTIAL"), as landlord, and Landlord, as tenant, are parties to a
Lease Agreement dated December 20, 1996 (the "MASTER LEASE"), wherein Prudential
leased to Landlord and Landlord leased from Prudential, one office building
containing approximately 62,746 square feet, having a street address of 00000
Xxxxxx Xxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000 ("BUILDING NO. 1") and one office
Building containing approximately 94,918 square feet, having a street address of
00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000 ("BUILDING NO. 2").
R-2. Landlord and Tenant entered into an Office Sublease dated as of
December 20, 1996 (the "SUBLEASE"), wherein Landlord subleased to Tenant and
Tenant subleased from Landlord approximately 32,585 square feet located on the
second floor of Building No. 2 and approximately 5,375 square feet located in
the basement of Building No. 2, known as the test bakery (the "TEST BAKERY"),
for a total of 37,960 square feet (together, the "ORIGINAL PREMISES").
R-3. The term of the Sublease expires on December 30, 2001.
R-4. Tenant desires to (i) retain only that portion of the Original
Premises known as the Test Bakery, and (ii) relocate the office portion of
Tenant's business from the Original Premises to new premises located on the
first floor of Building No. 1, containing approximately 21,625 square feet (the
"NEW OFFICE PREMISES"), and to amend certain other terms of the Sublease as
provided in this Amendment. The Test Bakery and the New Office Premises are
collectively referred to hereafter as the "NEW PREMISES," which contains a total
of approximately 27,000 square feet. The legal description of Building No. 1 is
attached hereto as EXHIBIT A, and the floor plan of the New Office Premises is
attached hereto as EXHIBIT B.
AGREEMENT
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:
1. Incorporation of Recitals. The foregoing recitals are incorporated
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herein and made a part hereof to the same extent as if set forth herein in full.
2. Lease of New Premises. Effective as of May 1, 1998 (the "EFFECTIVE
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DATE"), Landlord leases to Tenant, and Tenant leases from Landlord the New
Office Premises, upon the same terms and conditions as are stated in the
Sublease, except as modified by this Amendment. Landlord shall continue to lease
to Tenant, and Tenant shall continue to lease from Landlord the Test Bakery,
upon the same terms and conditions as are stated in the Sublease, except as
modified by this Amendment. From and after the Effective Date, the term
"Building" as used in the Sublease shall mean Building No. 1, (except that any
references to "Building", as it relates to the Test Bakery only shall mean
Building No. 2) and the term "Premises" as used in the Sublease shall mean the
New Premises.
3. Surrender of Original Premises. On or before the Effective Date,
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Tenant shall surrender the Original Premises (except for the Test Bakery) to
Landlord broom clean and in good condition, normal wear and tear excepted.
4. Rent. Notwithstanding anything to the contrary in Section
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1(a)(vi) of the Sublease, commencing on May 1, 1998, and continuing on the first
day of each month thereafter until December 30, 2001, Tenant shall pay Landlord,
as Rent due under the Sublease for the New Premises, the sum of $27,000.00 per
month.
5. Rent for Extension. Section 1(a)(xi) of the Sublease is hereby
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deleted in its entirety and the following is substituted in its place:
(xi) Rent for Extension(s):
Lease Years Annual Rent Monthly Rent
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6-10 $372,606.00 $31,050.53
11-15 $428,497.00 $35,708.06
16-20 $492,759.00 $41,063.22
21-25 $567,009.00 $47,250.77
26-30 $651,791.00 $54,315.91
6. Common Areas/Taxes and Insurance/Building Operating Costs.
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Section 8 of the Sublease is hereby deleted in its entirety and the following is
substituted in its place:
8.1. Common Areas. During the Term hereof, Tenant shall have a non-
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exclusive easement to use the common areas in the Building
including the entrances and exits, public hallways, reception
area, stairways, elevator, eating areas, public rest rooms and
work out facilities, excluding, however, areas intended for the
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exclusive use of the Landlord and other tenants or occupants in
the Building, all as outlined on EXHIBIT C, attached hereto and
incorporated herein by this reference (the "Interior Common
Areas"). During the Term hereof, Tenant shall have a non-
exclusive easement to use the common areas of the Property
including the curb cuts, driveways, parking areas, walkways,
service drives and loading docks on the Property, all as outlined
on EXHIBIT D, attached hereto and incorporated herein by this
reference ( the "Exterior Common Areas"). The Interior Common
Areas and the Exterior Common Areas may hereafter be collectively
referred to as the "Common Areas". Common Areas shall include
those areas and facilities designated from time-to-time by
Landlord , and the use of the Common Areas by Tenant shall be
subject to the use thereof by Landlord, and Landlord's tenants
and its and their officers, directors, employees, shareholders,
customers, invitees, agents and contractors, the exclusive
control and management of Landlord, and the rules and regulations
promulgated from time to time by Landlord in its discretion.
Landlord shall operate, repair, replace and maintain the Common
Areas in a first class manner. Landlord reserves the right to
make changes to the Common Areas, construct and install temporary
or permanent improvements and make such use of the Common Areas
from time to time in Landlord's sole discretion. In the event
that Landlord fails to so operate, repair, replace and maintain
the Common Areas in a first-class manner, after receipt of
written notice by Tenant and an opportunity to cure the same
within a reasonable amount of time, not to exceed fourteen (14)
days, Tenant shall have the right, but not the obligation, to
perform or arrange for the performance of such operation, repair,
replacement and maintenance of the Common Areas to maintain said
Common Areas in a first-class manner. Notwithstanding the
foregoing, if Landlord has commenced to cure the default within
the fourteen (14) day period set forth above, such default is not
capable of being cured within such time frame, and Landlord is
diligently prosecuting the cure, then Landlord shall have an
additional reasonable period of time to effect such cure. If
Tenant so elects to perform or arrange for the performance of
such operation, repair, replacement and maintenance of the Common
Areas, Tenant shall be entitled to an offset or abatement of Rent
in an amount equal to the reasonable cost of such services.
8.2. Taxes and Insurance.
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8.2.1. Definitions. The following terms shall have the
following meanings with respect to the provisions of this
Sublease:
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(a) "Base Year" shall mean calendar year 1998.
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(b) "Taxes" shall mean any form of assessment, tax, levy,
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or charge imposed by any authority having the direct
power to tax, including any city, county, state or
federal government or other improvement or special
district, against the Premises, Building, Common Areas,
or Property, or any legal or equitable interest of
Landlord therein.
(c) "Insurance Costs" shall mean Landlord's cost to
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provide insurance for the Property, Building, Common
Areas and all other improvements to the same.
(d) "Tenant's Prorata Share" shall mean a fraction, the
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numerator of which shall be 27,000 (the number of
square feet in the Premises), and the denominator of
which shall be 62,079 ( the number of square feet in
the Building). Tenant's Prorata Share as of the
Effective Date is 43.49%. At such time, if ever, any
space is added to or subtracted from the Premises or
the Interior Common Areas, Tenant's Prorata Share shall
be adjusted by Landlord accordingly.
(e) "Tenant's Prorata Share of Taxes and Insurance Costs"
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shall mean Taxes and Insurance Costs multiplied by
Tenant's Prorata Share.
(f) "Base Year Taxes" shall mean the Taxes for the Base
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Year.
(g) "Base Year Insurance Costs" shall mean the Insurance
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Costs for the Base Year.
(h) "Tenant's Prorata Share of Base Year Taxes and Base
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Year Insurance Costs" shall mean Base Year Taxes and
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Base Year Insurance Costs multiplied by Tenant's
Prorata Share.
8.2.2. It is hereby agreed that commencing with calendar year
1999 and each calendar year thereafter until the Expiration
Date, Tenant shall pay Tenant's Prorata Share of Taxes and
Insurance Costs in excess of Tenant's Prorata Share of Base
Year Taxes and Base Year Insurance Costs. Such amount shall
be paid by Tenant in equal monthly installments, as
additional rent hereunder, at the times and in the manner
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of payment of Rent, in such amounts as are estimated by
Landlord from time to time during the Term.
8.2.3. Landlord shall provide a written reconciliation statement
with respect to Taxes and Insurance Costs to Tenant within
sixty (60) days of the end of each calendar year, and any
amount owed to Landlord shall be paid by Tenant within
twenty (20) days after receipt by Tenant of such written
reconciliation statement from Landlord. Any amount owed to
Tenant by Landlord shall be credited toward the next
estimated payment(s) of Taxes and Insurance Costs.
Notwithstanding the foregoing however, if Tenant's Prorata
Share of Taxes and Insurance Costs for any calendar year is
less than the Tenant's Prorata Share of Base Year Taxes and
Base Year Insurance Costs Tenant shall not be entitled to
any credit or refund for such difference.
8.2.4. Tenant's obligation with respect to its Prorata Share of
Taxes and Insurance Costs shall survive the expiration or
early termination of this Sublease. If the last year of
the Term of this Sublease, as may be extended, ends on any
day other than the last day of December, any payments due to
Landlord of Tenant's Prorata Share of Taxes and Insurance
Costs, shall be prorated on the basis by which the number of
days in such partial year bears to 365.
8.2.5. Upon request by Tenant, Landlord and Tenant shall set up an
escrow account, to be governed and controlled by mutually
acceptable commercially reasonable joint escrow
instructions, with a mutually satisfactory financial
institution or other third party, to be used by Tenant for
the payment of Tenant's Prorata Share of Taxes and Insurance
as contemplated herein.
8.3. Building Operating Costs.
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8.3.1. Definitions. The following terms shall have the
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following meanings with respect to the provisions of this
Sublease:
(a) "Building Operating Costs" shall mean all costs
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involved in the ownership, operation, upkeep,
maintenance, repair and replacement of the Building,
Premises and Common Areas during the Term and any
extensions, including without limitation, the
following: any costs, expenses or fees borne or
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paid by Landlord under the terms of the Master Lease;
utility charges including electrical, gas, water,
sewer, lighting, heating, air-conditioning, and
ventilating services; license, permit and inspection
fees; cost of services of independent contractors,
property management fees, and cost of compensation
(including employment taxes and fringe benefits) of all
persons who perform regular and recurring duties
connected with the day-to-day operation, maintenance,
management and repair of the Building, Premises and
Common Areas; trash removal; landscaping and gardening;
elevator repairs and maintenance; window washing;
reserves for replacement; rental expenses or a
reasonable allowance for depreciation of personal
property used in the maintenance, operation and repair
of the Building. Building Operating Costs shall not
include: (i) Taxes , (ii) Insurance Costs, (iii) the
cost of work performed exclusively for other tenants or
prospective tenants, (iv) the cost of work covered by
insurance proceeds or a condemnation award; (v) leasing
and brokerage commissions; and (vi) amortization of
principal and interest expense with respect to
Landlord's financing.
(b) "Base Year Building Operating Costs" shall mean that
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certain dollar amount to be calculated as follows:
Seven and 00/100 Dollars ($7.00) per square foot minus
Base Year Taxes per square foot, minus Base Year
Insurance Costs per square foot.
(c) "Tenant's Prorata Share of Base Year Building Operating
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Costs" shall mean Base Year Building Operating Costs
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multiplied by 27,000 (the number of square feet in the
Premises)
8.3.2. It is hereby agreed that commencing with calendar year 1999,
Tenant shall pay in equal monthly installments, as
additional rent hereunder, at the times and in the manner of
the payment of Rent, the three percent (3%) increases over
the previous years Building Operating Costs as set forth
below. Commencing with calendar year 1999, however, Tenant's
Prorata Share of Base Year Building Operating Costs shall be
increased by three percent (3%) each calendar year until the
Expiration Date, and Tenant shall pay such increases over
the Base Year Building Operating Costs to Landlord as
additional rent. ( For purposes of illustration, if Tenant's
Prorata Share of Base Year Building Operating Costs equal
$5.00 per square foot, then Tenant's Prorata Share of
Building
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Operating Costs in calendar year 1999, would equal $0.15 per
square foot ($5.00 x 3%); Tenant's Prorata Share of Building
Operating costs in calendar year 2000 would equal $.30 per
square foot ($5.15 x 1.03 -$5.00); and Tenant's Prorata
Share of Building Operating costs in calendar year 2001
would equal $.46 per square foot ($5.30 x 1.03 -$5.00)
etc... ).
8.3.3. Tenant's obligation as set forth in Section 8.3 hereof
shall survive the expiration or early termination of this
Sublease. If the last year of the Term of this Sublease, as
may be extended, ends on any day other than the last day of
December, any payments due to Landlord in accordance with
Section 8.3 hereof, shall be prorated on the basis by which
the number of days in such partial year bears to 365.
7. Access to Test Kitchen and Test Bakery. The parties hereto acknowledge
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and agree that Landlord, and its officers, directors, employees, shareholders,
customers, invitees, agents and contractors shall continue to have undisturbed
access to and from the Boston Market Test Kitchen identified on EXHIBIT B, and
Tenant, and its officers, directors, employees, shareholders, customers,
invitees, agents and contractors shall continue to have undisturbed access to
and from the Test Bakery identified on EXHIBIT B.
8. Insurance. Section 16 of the Sublease is hereby deleted in its
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entirety and the following is substituted in its place:
16.1 Tenant's Insurance.
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16.1.1. Coverage. Tenant shall, at all times during the term of this
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Sublease, and at its own cost and expense procure and continue
in force the following insurance coverage:
(a) Comprehensive commercial general liability insurance
(including Tenant's legal liability coverage) with a
combined single limit for bodily injury and property
damage of not less than $1,000,000 per occurrence, or
such higher amounts and coverages as Landlord may
reasonably require.
(b) Property Damage, and Fire Insurance including vandalism,
malicious mischief, and all extended coverage
endorsements in an amount equal to the full replacement
value of all fixtures, furniture and improvements
installed and/or owned by Tenant.
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16.1.2. Insurance Policies. The aforementioned minimum limits of
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policies shall in no event limit the liability of Tenant
hereunder. The aforesaid insurance shall name Landlord and
Landlord's lender(s) and Master Landlord as additional insureds.
Said insurance shall be with companies having a rating of not
less than a Class A (vii) in "Best's Key Rating Guide". Tenant
shall furnish from the insurance companies or cause the insurance
companies to furnish certificates of coverage. No such policy
shall be cancelable or subject to reduction of coverage or other
modifications or cancellation except after thirty (30) days prior
notice in writing to Landlord by the insurer. All such policies
shall be written as primary policies, not contributing with and
not in excess of the coverage which Landlord may carry. Tenant
shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders. Tenant
agrees that if Tenant does not take out and maintain such
insurance, Landlord may (but shall not be required to) procure
said insurance on Tenant's behalf (excluding insurance on
Tenant's personal property) and charge Tenant the premium
together with a twenty-five percent (25%) handling charge,
payable upon demand. Tenant shall have the right to provide such
insurance coverage pursuant to blanket policies obtained by
Tenant provided such blanket policies expressly afford coverage
to the Premises and to Tenant as required by this Sublease.
16.2. Landlord's Insurance. Landlord shall maintain "All Risk"
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property insurance on the Property, Common Areas, Building and
all other improvements on the Property for the full replacement
cost thereof. Landlord shall maintain comprehensive general
public liability insurance against claims for bodily injury or
property damage occurring in or about the Property, Building and
Common Areas in the following minimum amounts:
$1,000,000.00 with respect to the injury to or death of a single
person.
$2,000,000.00 with respect to the injury or death of more than
one person.
$250,000.00 with respect to property damage.
or such additional coverages and such increased amounts of
coverage as Landlord in its reasonable judgment shall determine
from time-to-time. At Tenant's request Landlord shall provide
Tenant with a Certificate of Insurance naming Tenant as an
additional insured with respect to the general liability coverage
as to the Common Areas.
16.3. Waiver of Subrogation. Landlord and Tenant each hereby waive
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any and all rights of recovery against the other or against the
officers, directors, shareholders, employees, agents, contractors
and representatives of the other to
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the extent that such loss or damage is insured against in any
insurance policy which either party may have in force at the time
of such loss or damage. Tenant shall, upon obtaining the policies
of insurance required under this Sublease, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Sublease. Landlord and Tenant
shall, from time to time, upon request, cause their respective
insurers to issue appropriate waiver of subrogation rights
endorsements to all property insurance policies carried in
connection with the Building or the Premises or the contents of
either.
9. 1998 expenses for Building Operating Expenses, Taxes and Insurance.
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Notwithstanding anything contained in the Sublease to the contrary, as of the
Effective Date, and through the end of calendar year 1998, Tenant shall pay to
Landlord Seven and 00/100 Dollars ($7.00) per square foot (on an annual basis)
for its share of Building Operating Expenses, Taxes and Insurance, prorated
based upon eight months of occupancy (May - December, 1998). For purposes of
illustration, Tenant shall pay an amount equal to $126,000.00 ($7.00 x 27,000
sq.ft. x 8/12 = $126,000) payable on a monthly basis in the amount of
$15,750.00 commencing on the Effective Date and monthly thereafter on the first
day of each month through the end of calendar year 1998.
10. Tenant's Notice Address. As of the Effective Date, Tenant's notice
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address for all purposes under the Sublease shall be Einstein/Noah Bagel Corp.,
00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000, Attn: Legal Department.
11. Non-Disturbance Agreement. Landlord shall use its best efforts to
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obtain a non-disturbance agreement from Prudential, in a form reasonably
satisfactory to Tenant, wherein Prudential agrees that, if Landlord is in
default under the Master Lease, Prudential shall not disturb Tenant's rights
under the Sublease, so long as Tenant is not in default thereunder.
12. Ratification of Sublease. All terms and conditions of the Sublease
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are hereby ratified and affirmed, as modified by this Amendment.
13. Capitalized Terms. All capitalized terms in this Amendment shall have
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the same meanings as in the Sublease unless expressly provided otherwise herein.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
under seal as of the date first above written.
LANDLORD:
BOSTON CHICKEN, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Senior Vice President and General Counsel
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TENANT:
EINSTEIN/NOAH BAGEL CORP.,
a Delaware corporation
By: /s/ H. Xxxxxx Xxx
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Name: H. Xxxxxx Xxx
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Title: Vice President Real Estate and Development
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Exhibits:
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Exhibit A - Legal Description of Building No. 2
Exhibit B - Floor Plan of the New Office Premises
Exhibit C - Interior Common Areas (Floor Plan)
Exhibit D - Exterior Common Areas (Floor Plan)
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EXHIBIT A
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Lot 1 of Denver West Properties Amendment No.4, recorded December 19,1996 at
Reception No. F0347080, Plat Book 133 at Page 12, located in the Southwest 1/4
of Section 31, Township 3 South, Range 69 West, County of Jefferson, State of
Colorado, a reconfiguration of the common lot lines in Office Park Activity
Areas 4,5,7 and 8 of Denver West Properties, a subdivision recorded December 14,
1989 in Book 102, at Page 23, Reception Xx. 00000000.
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Xxxxx xx Xxxxxxxx
