Minnesota-Plymouth-Bass Creek Business Park Lease - Opus Corp. and Select Comfort Corp.
NET LEASE AGREEMENT
Opus Corporation - Landlord
Select Comfort Corporation - Tenant
Dated: December 3, 1993
<PAGE>
TABLE OF CONTENTS
ARTICLE I
TERM OF LEASE
Page
Section 1.1 Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Options to Renew. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONSTRUCTION OF IMPROVEMENTS
Section 2.1 Landlord's Improvements . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Possession of Demised Premises. . . . . . . . . . . . . . . . 2
Section 2.4 Construction Guaranty . . . . . . . . . . . . . . . . . . . . 2
Section 2.5 Tenant's Acceptance of Demised Premises . . . . . . . . . . . 3
Section 2.6 Repair and Maintenance. . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
BASIC RENT
Section 3.1 Basic Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Basic Rent Adjustment . . . . . . . . . . . . . . . . . . . . 3
Section 3.3 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4 Delinquent Payments . . . . . . . . . . . . . . . . . . . . . 3
Section 3.5 Independent Obligations . . . . . . . . . . . . . . . . . . . 4
Section 3.6 Security Deposit. . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
USE OF DEMISED PREMISES
Section 4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.2 Preservation of Demised Premises. . . . . . . . . . . . . . . 4
Section 4.3 Acceptance of Demised Premises. . . . . . . . . . . . . . . . 4
ARTICLE V
PAYMENT OF TAXES, ASSESSMENTS, ETC.
Section 5.1 Payment of Impositions. . . . . . . . . . . . . . . . . . . .4
Section 5.2 Tenant's Right to Contest Impositions . . . . . . . . . . . .5
Section 5.3 Levies and Other Taxes. . . . . . . . . . . . . . . . . . . .5
Section 5.4 Evidence of Payment . . . . . . . . . . . . . . . . . . . . .5
Section 5.5 Escrow for Taxes and Assessments. . . . . . . . . . . . . . .6
Section 5.6 Landlord's Right to Contest Impositions . . . . . . . . . . .6
i
<PAGE>
ARTICLE VI
INSURANCE
Section 6.1 Tenant's Insurance Obligations. . . . . . . . . . . . . . . . 6
Section 6.2 Insurance Coverage. . . . . . . . . . . . . . . . . . . . . . 6
Section 6.3 Insurance Provisions. . . . . . . . . . . . . . . . . . . . . 6
Section 6.4 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . 7
Section 6.5 Tenant's Indemnification of Landlord. . . . . . . . . . . . . 7
Section 6.6 Unearned Premiums . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.7 Blanket Insurance Coverage. . . . . . . . . . . . . . . . . . 7
ARTICLE VII
UTILITIES
Section 7.1 Payment of Utilities. . . . . . . . . . . . . . . . . . . . . 7
Section 7.2 Additional Charges. . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII
REPAIRS
Section 8.1 Tenant's Repairs. . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.2 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 8.3 Tenant's Waiver of Claims Against Landlord. . . . . . . . . . 8
Section 8.4 Prohibitions Against Waste. . . . . . . . . . . . . . . . . . 8
Section 8.5 Landlord's Right to Effect Repairs. . . . . . . . . . . . . . 8
Section 8.6 Misuse or Neglect . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX
COMPLIANCE WITH LAWS AND ORDINANCES
Section 9.1 Compliance with Laws and Ordinances . . . . . . . . . . . . . 8
Section 9.2 Compliance with Permitted Encumbrances. . . . . . . . . . . . 8
Section 9.3 Tenant's Obligations. . . . . . . . . . . . . . . . . . . . . 8
Section 9.4 Tenant's Right to Contest Laws and Ordinances . . . . . . . . 8
Section 9.5 Compliance with Hazardous Materials Laws. . . . . . . . . . . 9
Section 9.6 Hazardous Materials Representation by Landlord. . . . . . . . 9
Section 9.7 Cost of Compliance with Hazardous Materials Laws. . . . . . . 9
Section 9.8 Discovery of Hazardous Materials. . . . . . . . . . . . . . . 9
Section 9.9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9.10 Environmental Audits. . . . . . . . . . . . . . . . . . . . .10
Section 9.11 Acts or Omissions Regarding Hazardous Materials . . . . . . .10
Section 9.12 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . .10
ii
<PAGE>
ARTICLE X
MECHANIC'S LIENS AND OTHER LIENS
Section 10.1 Freedom from Liens. . . . . . . . . . . . . . . . . . . . . .10
Section 10.2 Landlord's Indemnification. . . . . . . . . . . . . . . . . .10
Section 10.3 Removal of Liens. . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE XI
INTENT OF PARTIES
Section 11.1 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 11.2 Entry by Landlord . . . . . . . . . . . . . . . . . . . . . .11
Section 11.3 Interest on Unpaid Amounts. . . . . . . . . . . . . . . . . .11
ARTICLE XII
DEFAULTS OF TENANT
Section 12.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . .11
Section 12.2 Surrender of Demised Premises . . . . . . . . . . . . . . . .12
Section 12.3 Reletting by Landlord . . . . . . . . . . . . . . . . . . . .12
Section 12.4 Survival of Tenant's Obligations. . . . . . . . . . . . . . .12
Section 12.5 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 12.6 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 12.7 Landlord's Remedies . . . . . . . . . . . . . . . . . . . . .13
Section 12.8 Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . .13
Section 12.9 Waiver by Tenant. . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE XIII
Section 13.1 Destruction and Restoration . . . . . . . . . . . . . . . . .13
Section 13.2 Application of Insurance Proceeds . . . . . . . . . . . . . .13
Section 13.3 Continuance of Tenant's Obligations . . . . . . . . . . . . .14
Section 13.4 Completion of Restoration . . . . . . . . . . . . . . . . . .14
Section 13.5 Termination of Lease. . . . . . . . . . . . . . . . . . . . .14
ARTICLE XIV
CONDEMNATION
Section 14.1 Condemnation of Entire Demised Premises . . . . . . . . . . .14
Section 14.2 Partial Condemnation/Termination of Lease . . . . . . . . . .15
Section 14.3 Partial Condemnation/Continuation of Lease. . . . . . . . . .15
Section 14.4 Continuance of Obligations. . . . . . . . . . . . . . . . . .16
Section 14.5 Adjustment of Rent. . . . . . . . . . . . . . . . . . . . . .16
iii
<PAGE>
ARTICLE XV
ASSIGNMENT, SUBLETTING, ETC.
Section 15.1 Restriction on Transfer . . . . . . . . . . . . . . . . . . .16
Section 15.2 Restriction From Further Assignment . . . . . . . . . . . . .16
Section 15.3 Tenant's Failure to Comply. . . . . . . . . . . . . . . . . .17
Section 15.4 Sharing of Excess Rent. . . . . . . . . . . . . . . . . . . .17
ARTICLE XVI
SUBORDINATION, NONDISTURBANCE,
NOTICE TO MORTGAGEE AND ATTORNMENT
Section 16.1 Subordination by Tenant . . . . . . . . . . . . . . . . . . .17
Section 16.2 Landlord's Default. . . . . . . . . . . . . . . . . . . . . .17
Section 16.3 Attornment. . . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE XVII
SIGNS
Section 17.1 Tenant's Signs. . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE XVIII
REPORTS BY TENANT
[Intentionally Omitted.]
ARTICLE XIX
CHANGES AND ALTERATIONS
Section 19.1 Tenant's Changes and Alterations. . . . . . . . . . . . . . .18
ARTICLE XX
MISCELLANEOUS PROVISIONS
Section 20.1 Entry by Landlord . . . . . . . . . . . . . . . . . . . . . .19
Section 20.2 Exhibition of Demised Premises. . . . . . . . . . . . . . . .19
Section 20.3 Indemnification by Tenant . . . . . . . . . . . . . . . . . .19
Section 20.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 20.5 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . .20
Section 20.6 Landlord's Continuing Obligations . . . . . . . . . . . . . .20
Section 20.7 Estoppel. . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 20.8 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . .20
Section 20.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . .21
Section 20.10 Successors and Assigns. . . . . . . . . . . . . . . . . . . .21
Section 20.11 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 20.12 Relationship of Parties . . . . . . . . . . . . . . . . . . .21
Section 20.13 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .21
Section 20.14 No Merger . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 20.15 Possession and Use. . . . . . . . . . . . . . . . . . . . . .21
iv
<PAGE>
Section 20.16 No Surrender During Lease Term. . . . . . . . . . . . . . . .21
Section 20.17 Surrender of Demised Premises . . . . . . . . . . . . . . . .21
Section 20.18 Holding Over. . . . . . . . . . . . . . . . . . . . . . . . .21
Section 20.19 Landlord Approvals. . . . . . . . . . . . . . . . . . . . . .21
Section 20.20 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 20.21 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . .22
Section 20.22 Landlord's Limited Liability. . . . . . . . . . . . . . . . .22
Section 20.23 Broker. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 20.24 Governing Law . . . . . . . . . . . . . . . . . . . . . . . .22
Section 20.25 Joint and Several Liability . . . . . . . . . . . . . . . . .22
Section 20.26 Time is of the Essence. . . . . . . . . . . . . . . . . . . .22
Section 20.27 Tenant Termination Right. . . . . . . . . . . . . . . . . . .22
Section 20.28 Moving Allowance. . . . . . . . . . . . . . . . . . . . . . .22
EXHIBITS
Exhibit "A" Legal Description and Permitted Encumbrances
Exhibit "B" Outline Plans and Specifications
Exhibit "C" Final Plans and Specifications
Exhibit "D" Business Plan
v
<PAGE>
NET LEASE AGREEMENT
THIS NET LEASE AGREEMENT ("Lease"), made this 3rd day of December, 1993, by
and between Opus Corporation, a Minnesota corporation ("Landlord") and Select
Comfort Corporation, a Minnesota corporation ("Tenant").
WITNESSETH:
Landlord, for and in consideration of the rents, covenants and agreements
hereinafter reserved, mentioned and contained on the part of Tenant, its
successors and assigns, to be paid, kept, observed and performed, has leased,
rented, let and demised, and by these presents does lease, rent, let and demise
unto Tenant, and Tenant does hereby take and hire, upon and subject to the
conditions and limitations hereinafter expressed, all that parcel of land
situated in the City of Plymouth, County of Hennepin and State of Minnesota,
described in Exhibit "A" attached hereto and made a part hereof, together with
any appurtenant easements described in said Exhibit "A" (the "Land"), together
with all improvements located on and to be constructed thereon, Landlord's
Improvements (as defined in Article II) and all other improvements, machinery,
equipment, fixtures and other property, real, personal or mixed (except Tenant's
trade fixtures) installed or located thereon, together with all additions,
alterations and replacements thereof are hereinafter referred to as the
"Improvements." The Land and the Improvements are hereinafter referred to as
the "Demised Premises." The Demised Premises are subject to the easements,
restrictions, reservations and other "permitted encumbrances" set forth in said
Exhibit "A." The structures located upon and being a part of the Demised
Premises which are constructed for human occupancy or for storage of goods,
merchandise, equipment, or other personal property are collectively called the
"Building."
ARTICLE I
TERM OF LEASE
Section 1.1 Term of Lease. The initial term of this Lease shall
commence on the Commencement Date, as defined in Section 2.3, and shall end on
the 1st day of June, 2004. The initial term of the Lease, as set forth above,
is sometimes hereinafter referred to as the "Initial Term." Any reference to
the term of this Lease or similar reference shall be a reference to the Initial
Term together with any renewal terms (if any) of this Lease or any extensions to
or modifications of the Initial Term. Tenant shall not be liable to Landlord
for the payment of Basic Rent (as hereinafter defined) or the payment of any
other obligation to be paid by Tenant until the Commencement Date as defined in
Section 2.3.
Section 1.2 Options to Renew. Tenant shall have the right, to be
exercised as hereinafter provided, to extend the term of this Lease Agreement
for two periods of five years each from and after the end of the Initial Term
(each a "Renewal Term") upon the following terms and conditions and subject to
the following limitations:
(a) No event of Default. At the time hereinafter set forth for the
exercise of the renewal option and at the time of commencement of the
Renewal Term in
1
<PAGE>
question, this Lease shall be in full force and effect and there shall be
no uncured Event of Default under this Lease, but Landlord shall have the
right, in its sole discretion to waive any such conditions regarding an
Event of Default.
(b) Terms. The Demised Premises shall be leased to Tenant on an "as is"
basis and each Renewal Term shall be upon the same terms, covenants and
conditions in this Lease except for Landlord's construction obligations and
except that the Basic Rent during each Renewal Term shall be as set forth
in clause (d).
(c) Exercise of Renewal Term(s). Tenant shall exercise its right to
extend the term of this Lease (i) for the first Renewal Term, if at all, by
notifying Landlord in writing of its election to exercise the right to
renew and extend the term of this Lease by no later than May 1, 2003, and
(ii) for the second Renewal Term, if at all, by notifying Landlord of its
election to renew and extend the term of this Lease by no later than May 1,
2008.
(d) Basic Rent. The annual Basic Rent payable during the first Renewal
Term shall be the greater of (i) the Basic Rent payable during the last
year of the Initial Term, and (ii) an amount equal to the Basic Rent
payable during the last year of the Initial Term multiplied by a fraction
the numerator of which is the CPI (as defined below) as of June 1, 2004,
and the denominator of which is the CPI as of June 1, 2002. The annual
Basic Rent payable during the second Renewal Term shall be the greater of
(y) the annual Basic Rent payable during the first Renewal Term, and (z) an
amount equal to the annual Basic Rent payable during the first Renewal Term
multiplied by a fraction the numerator of which is the CPI as of June 1,
2009, and the denominator of which is the CPI as of June 1, 2004. The CPI
is the Consumer Price Index, All Urban Consumers, U.S. City Average, All
Items, 1982-1984 = 100, issued by the Bureau of Labor Statistics of the
U.S. Department of Labor. If the reference years for the CPI is changed,
an appropriate adjustment shall be made so that the reference basis in each
denominator and numerator as set forth above is comparable. If publication
of the CPI is discontinued, the CPI shall be the most nearly comparable
index as selected by Landlord in good faith.
The options in this Section 1.2 are personal to Select Comfort Corporation, and
an option for a Renewal Term, whether or not exercised, shall be of no effect if
Select Comfort Corporation assigns this Lease.
ARTICLE II
CONSTRUCTION OF IMPROVEMENTS
Section 2.1 Landlord's Improvements. Upon obtaining the necessary
permits, Landlord agrees to furnish at Landlord's sole cost and expense all of
the material, labor, and equipment for the construction on the Land of the
improvements specified on the Outline Plans and Specifications which are
attached hereto and made a part hereof as Exhibit "B" ("Landlord's
Improvements"). Landlord's Improvements shall be constructed in a good and
workmanlike manner in accordance with the Outline Plans and Specifications and
Landlord agrees to complete
2
<PAGE>
the construction thereof in accordance with the applicable building code as
it is presently interpreted and enforced by the governmental bodies having
jurisdiction thereof and in accordance with the Americans With Disabilities
Act. Landlord agrees to cause final plans and specifications to be prepared
in accordance with the Outline Plans and Specifications and the aforesaid
building code and to submit the same to Tenant for its approval. Tenant
agrees that it will not withhold its approval except for just and reasonable
cause and will not act in an arbitrary or capricious manner with respect to
the approval of the final plans and specifications. The final plans and
specifications shall be approved by Landlord and Tenant by affixing thereon
the signature or initials of an authorized officer or employee of each of the
respective parties hereto and copies thereof shall be attached to each
party's copy of this Lease and made a part hereof as Exhibit "C." Such
Exhibit "C" shall be in lieu of and shall replace Exhibit "B" except as to
nonconstruction matters contained in Exhibit "B" such as allowances and
exclusions not expressly and specifically superseded by Exhibit "C." The
signature of an authorized officer or employee shall be deemed conclusive
evidence of the approval indicated by such signature. Landlord agrees to
appoint competent personnel to work with Tenant in the preparation of the
final plans and specifications for the Building and Tenant agrees to appoint
an officer or employee of Tenant to work with Landlord in the preparation of
the final plans and specifications for the Building. When Landlord requests
Tenant to specify details or layouts, Tenant shall specify same, subject to
the provisions of the Outline Plans and Specifications, so as not to delay
completion of the Landlord's Improvements. Tenant shall pay to Landlord all
increased costs of Landlord's Improvements attributable to delays caused by
Tenant. If any of the building permits and other approvals required to start
construction of Landlord's Improvements have not been obtained by January 15,
1994, then either Landlord or Tenant can terminate this Lease by notice to
the other given before such permits and approvals are obtained.
Section 2.2 Force Majeure. Landlord shall diligently proceed with the
construction of the Landlord's Improvements and complete the same and deliver
possession thereof to Tenant on or about June 1, 1994; provided, however, if
delay is caused or contributed to by act or neglect of Tenant, or those acting
for or under Tenant, labor disputes, casualties, acts of God or the public
enemy, governmental embargo restrictions, shortages of fuel, labor, or building
materials, action or non-action of public utilities, or of local, state or
federal governments affecting the work, or other causes beyond Landlord's
reasonable control, then the time of completion of said construction shall be
extended for the additional time caused by such delay. Such delays are each
hereinafter referred to as an "Excused Delay." If the Commencement Date has not
occurred by September 30, 1994, as extended by the number of days of Excused
Delays (if any) between the date hereof and the Commencement Date, then Tenant
may terminate this Lease by written notice given to Landlord at any time prior
to the Commencement Date.
Section 2.3 Possession of Demised Premises. Tenant shall, not later
than February 1, 1994, advise Landlord of required color selections. Tenant
shall be responsible for Landlord's increased cost of labor and materials if
any, and loss of rent, arising out of delay in the completion of the Demised
Premises caused by Tenant's failure to comply in a timely manner with the
foregoing schedule. Tenant shall not be liable to Landlord for the payment of
Basic Rent or the payment of any other obligation to be paid by Tenant under
this Lease nor shall Tenant have any right to possession or use of the Demised
Premises until the date upon which the Demised Premises are substantially
completed and ready for occupancy by Tenant
3
<PAGE>
("Commencement Date"). Except as provided for in Section 2.2, if the
Landlord's Improvements are not substantially completed but are partially
ready for occupancy, Tenant may, but need not, occupy the portion of same
that is ready for occupancy, and in the event of such occupancy Tenant shall
pay to Landlord the pro rata portion of the full Basic Rent and the pro rata
portion of the full amount of other obligations to be paid by Tenant
hereunder equitably based upon the value and area of the Building occupied by
Tenant. If Tenant occupies any portion of the Demised Premises prior to
substantial completion of the Landlord's Improvements the terms of this Lease
shall apply to such occupancy or use of the Demised Premises by Tenant.
Basic Rent and the payment of other obligations to be paid by Tenant shall
commence upon the Commencement Date; provided, however, in the event that
Landlord's Improvements are partially completed and partially ready for
occupancy, and are occupied by Tenant, or Tenant is required to occupy same,
a pro rata portion of the Basic Rent and the pro rata portion of all other
obligations to be paid by Tenant shall be payable commencing with such date
of partial occupancy, and shall be equitably adjusted from time to time based
upon the area and value of the portion of Landlord's Improvements
substantially completed and ready for Tenant's occupancy. The failure of
Tenant to take possession of or to occupy the Demised Premises or any portion
thereof which Tenant is required to occupy on or after the date Landlord's
Improvements or such applicable portion thereof are substantially complete
and ready for occupancy by Tenant shall not serve to relieve Tenant of said
obligations or delay payments by Tenant to Landlord. Tenant shall be allowed
not less than 30 days prior to the Commencement Date to install its
machinery, equipment, fixtures and other personal property on the Demised
Premises during the final stages of completion of construction provided that
Tenant does not thereby interfere with the completion of construction or
occasion any labor dispute as a result of such installations and provided
further that Tenant does hereby agree to assume all risk of loss or damage to
such machinery, equipment, fixtures and other personal property, and to
indemnify, defend and hold harmless Landlord from any loss or damage to such
machinery, equipment, fixtures and personal property, and all liability, loss
or damage arising from any injury to the property of Landlord, or its
contractors, subcontractors or materialmen, and any death or personal injury
to any person or persons to the extent arising out of such installations,
except for liability, loss or damage caused by Landlord's gross negligence or
willful misconduct. Delay in putting Tenant in possession of the Demised
Premises shall not serve to extend the Initial Term of this Lease or to make
Landlord liable for any damages arising therefrom.
Landlord shall be obligated to deliver possession of the Demised Premises
to Tenant in accordance with the provisions of Section 2.2 if Tenant has
executed and delivered this Lease in a form acceptable to Landlord on or before
December 3, 1993, and if Tenant has complied with the provisions of this Lease.
Section 2.4. Construction Guaranty. Landlord guarantees the Landlord's
Improvements against defective workmanship and/or materials for a period of five
years from the date of substantial completion of Landlord's Improvements and
Landlord agrees, at it sole cost and expense, to repair or replace any defective
item occasioned by poor workmanship and/or materials during said five-year
period, and performance of such five-year guaranty shall be Landlord's sole and
exclusive obligation with respect to defective workmanship and/or materials, and
Tenant's rights to enforce such five-year guaranty shall be Tenant's sole and
exclusive remedy with respect to such defective workmanship and/or materials in
limitation of any
4
<PAGE>
contract, warranty or other rights, whether express or implied, that Tenant
may otherwise have under applicable law. The Landlord's Improvements shall
be considered substantially completed at such time as the municipality having
jurisdiction thereof issues a certificate of occupancy permitting Tenant to
occupy the Landlord's Improvements or takes such other action as may be
customary to permit occupancy or use thereof; provided, however, the issuance
of a certificate of occupancy or such other action as may be customary to
permit occupancy or use thereof shall not be a condition to payment of rent
or commencement of the term if failure to secure such certificate or action
is caused by the act or neglect of Tenant or unless matters required for
issuance are not the responsibility of Landlord. From and after the
expiration of the five year guaranty of Landlord against defective
workmanship and materials, Landlord agrees to cooperate with Tenant in the
enforcement by Tenant, at Tenant's sole cost and expense, of any express
warranties or guaranties of workmanship or materials given by subcontractors
or materialmen that guarantee or warrant against defective workmanship or
materials for a period of time in excess of the five-year period described
above and to cooperate with Tenant in the enforcement by Tenant, at Tenant's
sole cost and expense, of any service contracts that provide service, repair
or maintenance to any item incorporated in the Building for a period of time
in excess of such five-year period.
Section 2.5 Tenant's Acceptance of Demised Premises. Within a period of
90 days after commencement of the Initial Term, Tenant shall notify Landlord, in
writing, of all portions of the Landlord's Improvements which are incomplete and
Landlord shall forthwith complete such items. Subject to Excused Delays,
Landlord shall complete such incomplete items within 60 days after receipt of
Tenant's notice.
Section 2.6 Repair and Maintenance. Save and except for the five year
guaranty against defective items occasioned by poor workmanship and/or materials
referred to in Section 2.4 above and the incomplete items referred to in Section
2.5 above, Tenant upon commencement of the term shall have and hold the Demised
Premises as the same shall then be without any liability or obligation on the
part of Landlord for making any alterations, improvements or repairs of any kind
in or about the Demised Premises for the term of this Lease, or any extension or
renewal thereof, and Tenant agrees to maintain the Demised Premises and all
parts thereof in a good and sufficient state of repair as required by the
provisions of this Lease.
ARTICLE III
BASIC RENT
Section 3.1 Basic Rent. In consideration of the leasing of the Demised
Premises and the construction of the Landlord's Improvements referred to in
Article II hereof, Tenant covenants to pay Landlord, without previous demand
therefor and without any right of setoff or deduction whatsoever, at the office
of Landlord at:
Opus Corporation
9900 Bren Road East, Suite 800
Minnetonka, Minnesota 55343
5
<PAGE>
or at such other place as Landlord may from time to time designate in writing,
an annual rental for the Initial Term of this Lease of Four Hundred Sixty
Thousand Seven Hundred Six and no/100 Dollars ($460,706.00) for the period
beginning on the Commencement Date and ending May 31, 1997, Four Hundred
Seventy-Seven Thousand Six Hundred Two and no/100 Dollars ($477,602.00) for the
period beginning June 1, 1997, and ending May 31, 2000, Five Hundred Forty-Three
Thousand One Hundred Ninety-Eight and no/100 Dollars ($543,198.00) for the
period beginning June 1, 2000, and ending May 31, 2002, and Five Hundred
Eighty-Four Thousand Nine Hundred Forty-One and no/100 Dollars ($584,941.00)
for the balance of the Initial Term, payable monthly, in advance, in equal
installments, commencing on the Commencement Date and continuing on the first
day of each month thereafter for the succeeding months during the balance of
the Initial Term. The rent provided for in this Section 3.1 is hereinafter
called the "Basic Rent."
Section 3.2 Basic Rent Adjustment. If the Initial Term of this Lease
does not commence on the first day of a calendar month or end on the last day of
a calendar month, the installment of Basic Rent for the partial calendar month
at the commencement or the termination of the term shall be prorated on the
basis of the number of days of the term within such calendar month.
Section 3.3 Additional Rent. The Basic Rent shall be absolutely net to
Landlord so that this Lease shall yield, net to Landlord, the Basic Rent
specified in Section 3.1 in each year of the term of this Lease and that all
impositions, insurance premiums, utility charges, maintenance, repair and
replacement expenses, all expenses relating to compliance with laws (except in
connection with the completion of Landlord's Improvements, which shall be at
Landlord sole cost and expense), and all other costs, fees, charges, expenses,
reimbursements and obligations of every kind and nature whatsoever relating to
the Demised Premises (excepting only Landlord's portion of the proration of real
estate taxes and special assessments for the first and last years of the term of
this Lease referred to in Section 5.1 and certain taxes of Landlord referred to
in the last sentence of Section 5.3 of this Lease) which may arise or become due
during the term or by reason of events occurring during the term of this Lease
shall be paid or discharged by Tenant. In the event Tenant fails to pay or
discharge any imposition, insurance premium, utility charge, maintenance repair
or replacement expense which it is obligated to pay or discharge, Landlord may,
but shall not be obligated to pay the same, and in that event Tenant shall
immediately reimburse Landlord therefor and pay the same as additional rent (all
such items being sometimes hereinafter collectively referred to as "Additional
Rent") and Tenant hereby agrees to indemnify, defend and save Landlord harmless
from and against such impositions, insurance premiums, utility charges,
maintenance, repair and replacement expenses, all expenses relating to
compliance with laws, and all other costs, fees, charges, expenses,
reimbursements and obligations above referred to.
Section 3.4 Delinquent Payments. All payments of Basic Rent and
Additional Rent shall be payable without previous demand therefor and without
any right of setoff or deduction whatsoever, and in case of nonpayment of any
item of Additional Rent by Tenant when the same is due, Landlord shall have, in
addition to all its other rights and remedies, all of the rights and remedies
available to Landlord under the provisions of this Lease or by law in the case
of nonpayment of Basic Rent. The performance and observance by Tenant of all
the terms,
6
<PAGE>
covenants, conditions and agreements to be performed or observed by
Tenant hereunder shall all be performed and observed by Tenant at Tenant's sole
cost and expense. Any installment of Basic Rent or Additional Rent or any other
charges payable by Tenant under the provisions hereof which shall not be paid
when due or within ten days after the due date shall bear interest at an annual
rate equal to two percentage points per annum in excess of the published "prime
rate" or "base rate" of interest charged by Norwest Bank Minneapolis, N.A. (or
similar institution if said Bank shall cease to exist or to publish such a prime
rate) from the date when the same is due hereunder until the same shall be paid,
but in no event in excess of the maximum lawful rate permitted to be charged by
Landlord against Tenant. Said rate of interest is sometimes hereinafter
referred to as the "Maximum Rate of Interest."
In addition, any installment of Basic Rent or Additional Rent or any other
charges payable by Tenant under the provisions hereof which shall not be paid
when due and which remain unpaid ten days thereafter shall be subject to a late
payment fee of four percent of the unpaid amount.
Section 3.5 Independent Obligations. Any term or provision of this
Lease to the contrary notwithstanding, the covenants and obligations of Tenant
to pay Basic Rent and Additional Rent hereunder shall be independent from any
obligations, warranties or representations, express or implied, if any, of
Landlord herein contained.
Section 3.6 Security Deposit. Contemporaneously with the execution
hereof, Tenant shall pay to Landlord the sum of Two Hundred Fifty-Seven
Thousand Eight Hundred Thirty-Three and No/100 Dollars ($257,833.00) as
increased or decreased as provided below (the "Security Deposit"). The
Security Deposit shall be held by Landlord as security for the performance by
Tenant of Tenant's covenants and obligations under this Lease, it being
expressly understood that such deposit shall not be considered an advance
payment of Basic Rent or Additional Rent or a measure of Landlord's damages
in case of default by Tenant. Attached hereto as Exhibit D is a business plan
of Tenant showing Tenant's net worth as of the date shown on Exhibit D and
Tenant's net income before taxes for the twelve month period ending on the
date shown on Exhibit D (the "Base Business Plan"). By no later than July
31, 1995, Tenant shall provide Landlord with a business plan of Tenant
prepared as to all data on the same basis as the basis used in preparing the
attached business plan and showing Tenant's net worth as of June 30, 1995,
and its net income before taxes for the twelve month period ending June 30,
1995 (the "Comparison Business Plan"). If, based upon the Comparison
Business Plan, Tenant's net worth as of June 30, 1995, is less than 90% of
the net worth shown on the Base Business Plan, or Tenant's net income before
taxes for the twelve month period ending June 30, 1995, is less than 90% of
the comparable number shown on the Base Business Plan, Tenant shall, by no
later than August 15, 1995, deposit an additional $73,667 security deposit
with Landlord. If, based upon the Comparison Business Plan, Tenant's net
worth as of June 30, 1995, is over 110% of its net worth as shown in the Base
Business Plan, and Tenant's net income before taxes for the twelve month
period ending June 30, 1995, is 110% or more of the comparable number shown
on the Base Business Plan, then, by no later than 15 days after receipt of
the Comparison Business Plan, Landlord shall refund to Tenant $36,833 of the
Security Deposit. Upon the occurrence of any event of default by Tenant,
Landlord may, from time to time, without prejudice to any other remedy, use
the Security Deposit to the extent necessary to make good any arrearages of
Basic
7
<PAGE>
Rent, Additional Rent and any other damage, in jury, expense or liability
caused to Landlord by such event of default. Following any such application
of the Security Deposit, Tenant shall pay to Landlord on demand the amount so
applied in order to restore the Security Deposit to its original amount.
Provided there exists no Event of Default hereunder, any remaining balance of
the Security Deposit shall be returned by Landlord to Tenant upon expiration
or earlier termination of this Lease. If Landlord transfers its interest in
the Demised Premises during the term of this Lease, Landlord may assign the
Security Deposit to the transferee and thereafter shall have no further
liability for the return of the Security Deposit. Landlord shall pay
interest on the Security Deposit at the rate of six percent per annum,
payable semi-annually on July 1 and January 1 of each year during the term,
except that, if there is an uncured Event of Default hereunder, interest
shall be added to the Security Deposit. If at the end of the fifth year of
the Initial Term of the Lease, Tenant has exceeded the net worth shown on the
Business Plan by an amount of 110% or more, Landlord shall reduce the
Security Deposit to $110,499.00.
ARTICLE IV
USE OF DEMISED PREMISES
Section 4.1 Permitted Use. The Demised Premises including all buildings
or other improvements hereafter erected upon the same shall be used for
office/warehouse, showroom and miscellaneous light manufacturing. Tenant shall
not use or occupy the same, or knowingly permit them to be used or occupied,
contrary to any statute, rule, order, ordinance, requirement or regulation
applicable thereto, or in any manner which would violate any certificate of
occupancy affecting the same, or which would make void or voidable any insurance
then in force with respect thereto or which would make it impossible to obtain
fire or other insurance thereon required to be furnished hereunder by Tenant, or
which would cause structural injury to the improvements or cause the value or
usefulness of the Demised Premises, or any portion thereof, substantially to
diminish (reasonable wear and tear excepted), or which would constitute a public
or private nuisance or waste or would violate any Hazardous Materials Laws (as
defined in Section 9.5), and Tenant agrees that it will promptly, upon discovery
of any such use, take all necessary steps to compel the discontinuance of such
use.
Section 4.2 Preservation of Demised Premises. Tenant shall not use,
suffer, or permit the Demised Premises, or any portion thereof, to be used by
Tenant, any third party or the public in such manner as might reasonably tend to
impair Landlord's title to the Demised Premises, or any portion thereof, or in
such manner as might reasonably make possible a claim or claims of adverse usage
or adverse possession by the public, as such, or third persons, or of implied
dedication of the Demised Premises, or any portion thereof. Nothing in this
Lease contained and no action or inaction by Landlord shall be deemed or
construed to mean that Landlord has granted to Tenant any right, power or
permission to do any act or make any agreement that may create, or give rise to
or be the foundation for any such right, title, interest, lien, charge or other
encumbrance upon the estate of Landlord in the Demised Premises. Landlord
acknowledges that it is familiar with Tenant's operations in its current
facility and that such operations will not violate this Section.
Section 4.3 Acceptance of Demised Premises. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the
8
<PAGE>
Demised Premises or the Building or with respect to the suitability or
fitness of either for the conduct of Tenant's business or for any other
purpose and Tenant accepts the Demised Premises in an "as is" condition,
subject to Landlord's obligations under Article 2. Tenant shall comply with
any recorded covenants, conditions, and restrictions affecting the Demised
Premises and the Building as of the commencement of the Lease or which are
recorded during the Lease Term. Landlord acknowledges that it is familiar
with Tenant's operations in its current facility and that such operations
will not violate this Section.
ARTICLE V
PAYMENT OF TAXES, ASSESSMENTS, ETC.
Section 5.1 Payment of Impositions. Tenant covenants and agrees to pay
during the term of this Lease, as Additional Rent, before any fine, penalty,
interest or cost may be added thereto for the nonpayment thereof, all real
estate taxes, special assessments, water rates and charges, sewer rates and
charges, including any sum or sums payable for present or future sewer or water
capacity, charges for public utilities, street lighting, excise levies,
licenses, permits, inspection fees, other governmental charges, and all other
charges or burdens of whatsoever kind and nature (including costs, fees, and
expenses of complying with any restrictive covenants or similar agreements to
which the Demised Premises are subject) incurred in the use, occupancy,
ownership, operation, leasing or possession of the Demised Premises, without
particularizing by any known name or by whatever name hereafter called, and
whether any of the foregoing be general or special, ordinary or extraordinary,
foreseen or unforeseen (all of which are sometimes herein referred to as
"Impositions"), which at any time during the term may have been or may be
assessed, levied, confirmed, imposed upon, or become a lien on the Demised
Premises, or any portion thereof, or any appurtenance thereto, rents or income
therefrom, and such easements or rights as may now or hereafter be appurtenant
or appertain to the use of the Demised Premises. Tenant shall pay all special
(or similar) assessments for public improvements or benefits which, during the
term of this Lease shall be laid, assessed, levied or imposed upon or become
payable or become a lien upon the Demised Premises, or any portion thereof;
provided, however, that if by law any special assessment is payable (without
default) or, at the option of Landlord, may be paid (without default) in
installments (whether or not interest shall accrue on the unpaid balance of such
special assessment), Tenant may pay the same, together with any interest accrued
on the unpaid balance of such special assessment in installments as the same
respectively become payable and before any fine, penalty, interest or cost may
be added thereto for the nonpayment of any such installment and the interest
thereon. Tenant shall pay all special assessments or installments thereof
(including interest accrued thereon), whether heretofore or hereafter laid,
assessed, levied or imposed upon the Demised Premises, or any portion thereof,
which are due and payable during the term of this Lease. Landlord shall pay all
installments of special assessments (including interest accrued on the unpaid
balance) which are payable prior to the commencement and after the termination
date of the term of this Lease. Tenant shall pay all real estate taxes, whether
heretofore or hereafter levied or assessed upon the Demised Premises, or any
portion thereof, which are due and payable during the term of this Lease.
Landlord shall pay all real estate taxes which are due and payable prior to the
commencement of the term of this Lease. Provisions herein to the contrary
notwithstanding, Landlord shall pay that portion of the real estate taxes and
installments of special assessments due and payable in respect to the Demised
Premises during the year the term commences and the year in which the term ends
9
<PAGE>
which the number of days in said year not within the term of this Lease bears to
365, and Tenant shall pay the balance of said real estate taxes and installments
of special assessments during said years.
Section 5.2 Tenant's Right to Contest Impositions. Tenant shall have
the right at its own expense to contest the amount or validity, in whole or in
part, of any Imposition by appropriate proceedings diligently conducted in good
faith, but only after payment of such Imposition, unless such payment, or a
payment thereof under protest, would operate as a bar to such contest or
interfere materially with the prosecution thereof, in which event,
notwithstanding the provisions of Section 5.1 hereof, Tenant may postpone or
defer payment of such Imposition if (a) neither the Demised Premises nor any
portion thereof would by reason of such postponement or deferment, be in danger
of being forfeited or lost, and (b) Tenant shall have deposited with Landlord
cash or a certificate of deposit payable to Landlord issued by a national bank
or federal savings and loan association in the amount of the Imposition so
contested and unpaid, together with all interest and penalties which may accrue
in Landlord's reasonable judgment in connection therewith, and all charges that
may or might be assessed against or become a charge on the Demised Premises, or
any portion thereof, during the pendency of such proceedings. If, during the
continuance of such proceedings, Landlord shall, from time to time, reasonably
deem the amount deposited, as aforesaid, insufficient, Tenant shall, upon demand
of Landlord, make additional deposits of such additional sums of money or such
additional certificates of deposit as Landlord may reasonably request. Upon
failure of Tenant to make such additional deposits, the amount theretofore
deposited may be applied by Landlord to the payment, removal and discharge of
such Imposition, and the interest, fines and penalties in connection therewith,
and any costs, fees (including attorney's fees) and other liability (including
costs incurred by Landlord) accruing in any such proceedings. Upon the
termination of any such proceedings, Tenant shall pay the amount of such
Imposition or part thereof, if any, as finally determined in such proceedings,
the payment of which may have been deferred during the prosecution of such
proceedings, together with any costs, fees, including attorney's fees, interest,
penalties, fines and other liability in connection therewith, and upon such
payment Landlord shall return all amounts or certificates deposited with it with
respect to the contest of such Imposition, as aforesaid, or, at the written
direction of Tenant, Landlord shall make such payment out of the funds on
deposit with Landlord and the balance, if any, shall be returned to Tenant.
Tenant shall be entitled to the refund of any Imposition, penalty, fine and
interest thereon received by Landlord which have been paid by Tenant or which
have been paid by Landlord but for which Landlord has been previously reimbursed
in full by Tenant. Landlord shall not be required to join in any proceedings
referred to in this Section 5.2 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 Landlord's name upon compliance
with such conditions as Landlord may reasonably require. Landlord shall not
ultimately be subject to any liability for the payment of any fees, including
attorney's fees, costs and expenses in connection with such proceedings, Tenant
agrees to pay all such fees (including reasonable attorney's fees), costs and
expenses or, on demand, to make reimbursement to Landlord for such payment.
During the time when any such certificate of deposit is on deposit with
Landlord, and prior to the time when the same is returned to Tenant or applied
against the payment, removal or discharge
10
<PAGE>
of Impositions, as above provided, Tenant shall be entitled to receive all
interest paid thereon, if any. Cash deposits shall not bear interest.
Section 5.3 Levies and Other Taxes. If, at any time during the term of
this Lease, any method of taxation shall be such that there shall be levied,
assessed or imposed on Landlord, or on the Basic Rent or Additional Rent, or on
the Demised Premises or on the value of the Demised Premises, or any portion
thereof, a capital levy, sales or use tax, gross receipts tax or other tax on
the rents received therefrom, or a franchise tax, or an assessment, levy or
charge measured by or based in whole or in part upon such rents or value, Tenant
covenants to pay and discharge the same, it being the intention of the parties
hereto that the rent to be paid hereunder shall be paid to Landlord absolutely
net without deduction or charge of any nature whatsoever foreseeable or
unforeseeable, ordinary or extraordinary, or of any nature, kind or description,
except as in this Lease otherwise expressly provided. Nothing in this Lease
contained shall require Tenant to pay any municipal, state or federal net income
or excess profits taxes assessed against Landlord, or any municipal, state or
federal capital levy, estate, succession, inheritance or transfer taxes of
Landlord, or corporation franchise taxes imposed upon any corporate owner of the
fee of the Demised Premises.
Section 5.4 Evidence of Payment. Tenant covenants to furnish Landlord,
within 30 days after the date upon which any Imposition or other tax,
assessment, levy or charge is payable by Tenant, official receipts of the
appropriate taxing authority, or other appropriate proof satisfactory to
Landlord, evidencing the payment of the same. The certificate, advise or bill
of the appropriate official designated by law to make or issue the same or to
receive payment of any Imposition or other tax, assessment, levy or charge may
be relied upon by Landlord as sufficient evidence that such Imposition or other
tax, assessment, levy or charge is due and unpaid at the time of the making or
issuance of such certificate, advise or bill.
Section 5.5 Escrow for Taxes and Assessments. At Landlord's written
demand after any Event of Default and for as long as such Event of Default is
uncured, Tenant shall pay to Landlord the known or estimated yearly real estate
taxes and assessments payable with respect to the Demised Premises in monthly
payments equal to one-twelfth of the known or estimated yearly real estate taxes
and assessments next payable with respect to the Demised Premises. From time to
time Landlord may reestimate the amount of real estate taxes and assessments,
and in such event Landlord shall notify Tenant, in writing, of such reestimate
and fix future monthly installments for the remaining period prior to the next
tax and assessment due date in an amount sufficient to pay the reestimated
amount over the balance of such period after giving credit for payments made by
Tenant on the previous estimate. If the total monthly payments made by Tenant
pursuant to this Section 5.5 shall exceed the amount of payments necessary for
said taxes and assessments, such excess shall be credited on subsequent monthly
payments of the same nature; but if the total of such monthly payments so made
under this paragraph shall be insufficient to pay such taxes and assessments
when due, then if Tenant shall pay to Landlord such amount as may be necessary
to make up the deficiency. Payment by Tenant of real estate taxes and
assessments under this section shall be considered as performance of such
obligation under the provisions of Section 5.1 hereof.
11
<PAGE>
Section 5.6 Landlord's Right to Contest Impositions. In addition to the
right of Tenant under Section 5.2 to contest the amount of validity of
Impositions, Landlord shall also have the right, but not the obligation, to
contest the amount or validity, in whole or in part, of any Impositions not
contested by Tenant, by appropriate proceedings conducted in the name of
Landlord or in the name of Landlord and Tenant. If Landlord elects to contest
the amount or validity, in whole or in part, of any Impositions, such contests
by Landlord shall be at Landlord's expense, provided, however, that if Tenant
has approved such contest by Landlord, then the amounts payable by Tenant for
Impositions are reduced (or if a proposed increase in such amounts is avoided or
reduced) by reason of Landlord's contest of Impositions, Tenant shall reimburse
Landlord for costs incurred by Landlord in contesting Impositions, but such
reimbursements shall not be in excess of the amount saved by Tenant by reason of
Landlord's actions in contesting such Impositions.
ARTICLE VI
INSURANCE
Section 6.1 Tenant's Insurance Obligations. Tenant, at its sole cost
and expense, shall obtain and continuously maintain in full force and effect
during the term of this Lease, commencing with the date that rental (full or
partial) commences, policies of insurance covering the Improvements constructed,
installed or located on the Demised Premises naming the Landlord, as an
additional insured, against (a) loss or damage by fire; (b) loss or damage from
such other risks or hazards now or hereafter embraced by an "Extended Coverage
Endorsement," including, but not limited to, windstorm, hail, explosion,
vandalism, riot and civil commotion, damage from vehicles, smoke damage, water
damage and debris removal; and (c) loss or damage from such other risks or
hazards of a similar or dissimilar nature which are now or may hereafter be
customarily insured against with respect to improvements similar in
construction, design, general location, use and occupancy to the Improvements.
At all times, such insurance coverage shall be in an amount equal to 100% of the
then "full replacement cost" of the Improvements. "Full Replacement Cost" shall
be interpreted to mean the cost of replacing the improvements without deduction
for depreciation or wear and tear, and it shall include a reasonable sum for
architectural, engineering, legal, administrative and supervisory fees connected
with the restoration or replacement of the Improvements in the event of damage
thereto or destruction thereof. If a sprinkler system shall be located in the
Improvements, sprinkler leakage insurance shall be procured and continuously
maintained by Tenant at Tenant's sole cost and expense. For the period prior to
the date when full or partial rental commences hereunder Landlord, at its sole
cost and expense, shall maintain in full force and effect, on a completed value
basis, insurance coverage on the Building on Builder's Risk or other comparable
coverage.
Section 6.2 Insurance Coverage. During the term of this Lease, Tenant,
at its sole cost and expense, shall obtain and continuously maintain in full
force and effect the following insurance coverage:
(a) Comprehensive general liability insurance against any loss, liability
or damage on, about or relating to the Demised Premises, or any portion
thereof, with limits of not less than Two Million Dollars ($2,000,000.00)
combined single limit, per occurrences and aggregate, coverage on an
occurrence basis. Any such insurance
12
<PAGE>
obtained and maintained by Tenant shall name Landlord as an additional
insured therein and shall be obtained and maintained from and with a
reputable and financially sound insurance company authorized to issue
such insurance in the state in which the Demised Premises are located.
Such insurance shall specifically insure (by contractual liability and
consent) Tenant's obligations under Section 20.3 of this Lease.
(b) Boiler and pressure vessel (including, but not limited to, pressure
pipes, steam pipes and condensation return pipes) insurance, provided the
Building contains a boiler or other pressure vessel or pressure pipes.
Landlord shall be named as an additional insured in such policy or policies
of insurance.
(c) Such other insurance and in such amounts as may from time to time be
reasonably required by Landlord, against other insurable hazards which at
the time are commonly insured against in the case of premises and/or
buildings or improvements similar in construction, design, general
location, use and occupancy to those on or appurtenant to the Demised
Premises.
The insurance set forth in this Section 6.2 shall be maintained by Tenant
at not less than the limits set forth herein until reasonably required to be
changed from time to time by Landlord, in writing, whereupon Tenant covenants to
obtain and maintain thereafter such protection in the amount or amounts so
required by Landlord. Landlord may not require increases more frequently than
at five year intervals, with the first such increase not earlier than June 1,
1999.
Section 6.3 Insurance Provisions. All policies of insurance required by
Section 6.1 shall provide that the proceeds thereof shall be payable to Landlord
and if Landlord so request shall also be payable to any contract purchaser of
the Demised Premises and the holder of any mortgages now or hereafter becoming a
lien on the fee of the Demised Premises, or any portion thereof, as the interest
of such purchaser or holder appears pursuant to a standard named insured or
mortgagee clause. Tenant shall not, on Tenant's own initiative or pursuant to
request or requirement of any third party, take out separate insurance
concurrent in form or contributing in the event of loss with that required in
Section 6.1 hereof, unless Landlord is named therein as an additional insured
with loss payable as in said Section 6.1 provided. Tenant shall immediately
notify Landlord whenever any such separate insurance is taken out and shall
deliver to Landlord original certificates evidencing the same.
Each policy required under this Article VI shall have attached thereto (a)
an endorsement that such policy shall not be canceled or materially changed
without at least 30 days prior written notice to Landlord, and (b) an
endorsement to the effect that the insurance as to the interest of Landlord
shall not be invalidated by any act or neglect of Landlord or Tenant. All
policies of insurance shall be written in companies reasonably satisfactory to
Landlord and licensed in the state in which the Demised Premises are located.
Such certificates of insurance shall be in a form reasonably acceptable to
Landlord and Tenant, shall be delivered to Landlord upon commencement of the
term and prior to expiration of such policy, new certificates of insurance,
shall be delivered to Landlord not less than 20 days prior to the expiration of
the then current policy term.
13
<PAGE>
Section 6.4 Waiver of Subrogation. Tenant shall cause to be inserted
in the policy or policies of insurance required by this Article VI hereof a
so-called "Waiver of Subrogation Clause" as to Landlord. Tenant and Landlord
each hereby waives, releases and discharges the other party hereto, its
agents and employees from all claims whatsoever arising out of loss, claim,
expense or damage to or destruction covered or coverable by property or loss
of use or business interruption insurance of the kind required under this
Article VI notwithstanding that such loss, claim, expense or damage may have
been caused by such party, its agents or employees, and Tenant agrees to look
to the insurance coverage only in the event of such loss.
Section 6.5 Tenant's Indemnification of Landlord. Tenant shall maintain
insurance coverage upon Tenant's business and upon all personal property of
Tenant or the personal property of others kept, stored or maintained on the
Demised Premises against loss or damage by fire, windstorm or other casualties
or causes for such amount as Tenant may desire, and Tenant agrees that such
policies shall contain a waiver of subrogation clause as to Landlord.
Section 6.6 Unearned Premiums. Upon expiration of the term of this
Lease, the unearned premiums upon any insurance policies or certificates thereof
lodged with Landlord by Tenant shall, subject to the provisions of Article XIII
hereof, be payable to Tenant, provided that Tenant shall not then be in default
in keeping, observing or performing the terms and conditions of this Lease.
Section 6.7 Blanket Insurance Coverage. Nothing in this Article shall
prevent Tenant from taking out insurance of the kind and in the amount provided
for under the preceding paragraphs of this Article under a blanket insurance
policy or policies (certificates thereof reasonably satisfactory to Landlord
shall be delivered to Landlord) which may cover other properties owned or
operated by Tenant as well as the Demised Premises; provided, however, that any
such policy of blanket insurance of the kind provided for shall (a) specify
therein the amounts thereof exclusively allocated to the Demised Premises or
Tenant shall furnish Landlord and the holder of any fee mortgage with a written
statement from the insurers under such policies specifying the amounts of the
total insurance exclusively allocated to the Demised Premises, and (b) not
contain any clause which would result in the insured thereunder being required
to carry any insurance with respect to the property covered thereby in an amount
not less than any specific percentage of the Full Replacement Cost of such
property in order to prevent the insured therein named from becoming a
co-insurer of any loss with the insurer under such policy; and further provided,
however, that such policies of blanket insurance shall, as respects the Demised
Premises, contain the various provisions required of such an insurance policy by
the foregoing provisions of this Article VI.
ARTICLE VII
UTILITIES
Section 7.1 Payment of Utilities. During the term of this Lease, Tenant
will pay, when due, all charges of every nature, kind or description for
utilities furnished to the Demised Premises or chargeable against the Demised
Premises, including all charges for water, sewage, heat, gas, light, garbage,
electricity, telephone, steam, power, or other public or private utility
14
<PAGE>
services. Prior to the Commencement Date, Tenant shall pay for all utilities or
services at the Demised Premises used by it or its agents, employees or
contractors.
Section 7.2 Additional Charges. Except for initial SAC, WAC and
connection charges (including gas and electrical, but not telephone), in the
event that any charge or fee is required after the Commencement Date by the
state in which the Demised Premises are located, or by any agency, subdivision,
or instrumentality thereof, or by any utility company furnishing services or
utilities to the Demised Premises, as a condition precedent to furnishing or
continuing to furnish utilities or services to the Demised Premises, such charge
or fee shall be deemed to be a utility charge payable by Tenant. The provisions
of this Section 7.2 shall include, but not be limited to, any charge of fees for
present or future water or sewer capacity to serve the Demised Premises, any
charges for the underground installation of gas or other utilities or services,
and other charges relating to the extension of or change in the facilities
necessary to provide the Demised Premises with adequate utility services. In
the event that Landlord has paid any such charge or fee after the date hereof,
Tenant shall reimburse Landlord for such utility charge. Nothing contained in
this Section 7.2 shall be construed to relieve Landlord of the obligation to
finish Landlord's Improvements described in Exhibit "B."
ARTICLE VIII
REPAIRS
Section 8.1 Tenant's Repairs. Save and except for the five-year
guaranty against defective materials and workmanship or other guaranties
provided for in Section 2.4 hereof, and the completion of incomplete items
provided for in Section 2.5 hereof, Tenant, at its sole cost and expense,
throughout the term of this Lease, shall take good care of the Demised Premises
(including any improvements hereafter erected or installed on the Land), and
shall keep the same in good order, condition and repair, and irrespective of
such guaranty shall make and perform all routine maintenance thereof and all
necessary repairs thereto, interior and exterior, structural and nonstructural,
ordinary and extraordinary, foreseen and unforeseen, of every nature, kind and
description. When used in this Article VIII, "repairs" shall include all
necessary replacements, renewals, alterations, additions and betterments. All
repairs made by Tenant shall be at least equal in quality and cost to the
original work and shall be made by Tenant in accordance with all laws,
ordinances and regulations whether heretofore or hereafter enacted. The
necessity for or adequacy of maintenance and repairs shall be measured by the
standards which are appropriate for improvements of similar construction and
class, provided that Tenant shall in any event make all repairs necessary to
avoid any structural damage or other damage or injury to the Improvements.
Section 8.2 Maintenance. Tenant, at its sole cost and expense, shall
take good care of, repair and maintain all driveways, pathways, roadways,
sidewalks, curbs, spur tracks, parking areas, loading areas, landscaped areas,
entrances and passageways in good order and repair and shall promptly remove all
accumulated snow, ice and debris from any and all driveways, pathways, roadways,
sidewalks, curbs, parking areas, loading areas, entrances and passageways, and
keep all portions of the Demised Premises, including areas appurtenant thereto,
in a clean and orderly condition free of snow, ice, dirt, rubbish, debris and
unlawful obstructions. Further, Tenant shall keep the Demised Premises safe for
human occupancy and use.
15
<PAGE>
Section 8.3 Tenant's Waiver of Claims Against Landlord. Landlord shall
not be required to furnish any services or facilities or to make any repairs or
alterations in, about or to the Demised Premises or any improvements hereafter
erected thereon. Tenant hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the
Demised Premises and all improvements hereafter erected thereon, and Tenant
hereby waives any rights created by any law now or hereafter in force to make
repairs to the Demised Premises or improvements hereafter erected thereon at
Landlord's expense.
Section 8.4 Prohibition Against Waste. Tenant shall not do or suffer
any waste or damage, disfigurement or injury to the Demised Premises, or any
improvements hereafter erected thereon, or to the fixtures or equipment therein,
or permit or suffer any overloading of the floors or other use of the
Improvements that would place an undue stress on the same or any portion thereof
being that for which the same was designed.
Section 8.5 Landlord's Right to Effect Repairs. If Tenant should fail
to perform any of its obligations under this Article VIII, then Landlord may, if
it so elects, in addition to any other remedies provided herein, effect such
repairs and maintenance. Any sums expended by Landlord in effecting such
repairs and maintenance shall be due and payable, on demand, together with
interest thereon at the Maximum Rate of Interest from 10 days after the date of
invoice by Landlord for such expenditure by Landlord to the date of repayment by
Tenant.
Section 8.6 Misuse or Neglect. Tenant shall be responsible for all
repairs to the Building which are made necessary by any misuse or neglect by:
(i) Tenant or any of its officers, agents, employees, contractors, licensees, or
subtenants; or (ii) any visitors, patrons, guests, or invitees of Tenant or its
subtenant while in or upon the Demised Premises.
ARTICLE IX
COMPLIANCE WITH LAWS AND ORDINANCES
Section 9.1 Compliance with Laws and Ordinances. Tenant shall,
throughout the term of this Lease, and at Tenant's sole cost and expense,
promptly comply or cause compliance with or remove or cure any violation of any
and all present and future laws, ordinances, orders, rules, regulations and
requirements of all federal, state, municipal and other governmental bodies
having jurisdiction over the Demised Premises and the appropriate departments,
commissions, boards and officers thereof, and the orders, rules and regulations
of the Board of Fire Underwriters where the Demised Premises are situated, or
any other body now or hereafter constituted exercising lawful or valid authority
over the Demised Premises, or any portion thereof, or the sidewalks, curbs,
roadways, alleys, entrances or railroad track facilities adjacent or appurtenant
thereto, or exercising authority with respect to the use or manner of use of the
Demised Premises, or such adjacent or appurtenant facilities, and whether the
compliance, curing or removal of any such violation and the costs and expenses
necessitated thereby shall have been foreseen or unforeseen, ordinary or
extraordinary, and whether or not the same shall be presently within the
contemplation of Landlord or Tenant or shall involve any change of governmental
policy, or require structural or extraordinary repairs, alterations or additions
by Tenant and irrespective of the costs thereof.
16
<PAGE>
Section 9.2 Compliance with Permitted Encumbrances. Tenant, at its sole
cost and expense, shall comply with all agreements, contracts, easements,
restrictions, reservations or covenants, if any, set forth in Exhibit "A"
attached, or hereafter created by Tenant or consented to, in writing, by Tenant
or requested, in writing, by Tenant. Tenant shall also comply with, observe and
perform all provisions and requirements of all policies of insurance at any time
in force with respect to the Demised Premises and required to be obtained and
maintained under the terms of Article VI hereof and shall comply with all
development permits issued by governmental authorities issued in connection with
development of the Demised Premises.
Section 9.3 Tenant's Obligations. Notwithstanding that it may be usual
and customary for Landlord to assume responsibility and performance of any or
all of the obligations set forth in this Article IX, and notwithstanding any
order, rule or regulation directed to Landlord to perform, Tenant hereby assumes
such obligations because, by nature of this Lease, the rents and income derived
from this Lease by Landlord are net rentals not to be diminished by any expense
incident to the ownership, occupancy, use, leasing, or possession of the Demised
Premises or any portion thereof.
Section 9.4 Tenant's Right to Contest Laws and Ordinances. After prior
written notice to Landlord, Tenant, at its sole cost and expense and without
cost or expense to Landlord, shall have the right to contest the validity or
application of any law or ordinance referred to in this Article IX in the name
of Tenant or Landlord, or both, by appropriate legal proceedings diligently
conducted but only if compliance with the terms of any such law or ordinance
pending the prosecution of any such proceeding may legally be delayed without
the incurrence of any lien or charge, liability of any kind against the Demised
Premises, or any portion thereof, and without subjecting Landlord or Tenant to
any liability, civil or criminal, for failure so to comply therewith until the
final determination of such proceeding; provided, however, if any lien or charge
would be incurred by reason of any such delay, Tenant nevertheless, on the prior
written consent of Landlord, may contest as aforesaid and delay as aforesaid,
provided that such delay would not subject Tenant or Landlord to civil or
criminal liability and Tenant (a) prosecutes the contest with due diligence and
in good faith, and (b) agrees to indemnify, defend and hold harmless Landlord
and the Demised Premises from any charge, liability or expense whatsoever.
If necessary or proper to permit Tenant so to contest the validity or
application of any such law or ordinance, Landlord shall, at Tenant's sole cost
and expense, including reasonable attorney's fees incurred by Landlord, execute
and deliver any appropriate papers or other documents; provided, Landlord shall
not be required to execute any document or consent to any proceeding which would
result in the imposition of any cost, charge, expense or penalty on Landlord or
the Demised Premises.
Section 9.5 Compliance with Hazardous Materials Laws. Tenant shall at
all times and in all respects comply with all federal, state and local laws,
ordinances and regulations ("Hazardous Materials Laws") relating to the
industrial hygiene, environmental protection or the use, analysis, generation,
manufacture, storage, presence, disposal or transportation of any oil, petroleum
products, flammable explosives, asbestos, urea formaldehyde, polychlorinated
biphenyls, radioactive materials or waste, or other hazardous, toxic,
contaminated or polluting
17
<PAGE>
materials, substances or wastes, including without limitation any "hazardous
substances," "hazardous wastes," "hazardous materials" or "toxic substances"
under any such laws, ordinances or regulations (collectively, "Hazardous
Materials").
Tenant shall at its own expense procure, maintain in effect and comply with
all conditions of any and all permits, licenses and other governmental and
regulatory approvals required for Tenant's use of the Demised Premises,
including, without limitation, discharge of (appropriately treated) materials or
waste into or through any sanitary sewer system serving the Demised Premises.
Except as discharged into the sanitary sewer in strict accordance and conformity
with all applicable Hazardous Materials Laws, Tenant shall cause any and all
Hazardous Materials to be removed from the Demised Premises and transported
solely by duly licensed haulers to duly licensed facilities for final disposal
of such Hazardous Materials and wastes. Tenant shall in all respects, handle,
treat, deal with and manage any and all Hazardous Materials in, on, under or
about the Demised Premises in complete conformity with all applicable Hazardous
Materials Laws and prudent industry practices regarding the management of such
Hazardous Materials. All reporting obligations to the extent imposed upon
Tenant by Hazardous Materials Laws are solely the responsibility of Tenant.
Upon expiration or earlier termination of this Lease, Tenant shall cause all
Hazardous Materials (to the extent such Hazardous Materials are generated,
stored, released or disposed of during the term of this Lease by Tenant) to be
removed from the Demised Premises and transported for use, storage or disposal
in accordance and in compliance with all applicable Hazardous Materials Laws.
Tenant shall not take any remedial action in response to the presence of any
Hazardous Materials in, on, about or under the Demised Premises or in any
Improvements situated on the Land, nor enter into any settlement agreement,
consent, decree or other compromise in respect to any claims relating to any way
connected with the Demised Premises or the Landlord's Improvements on the Land
without first notifying Landlord of Tenant's intention to do so and affording
Landlord ample opportunity to appear, intervene or otherwise appropriately
assert and protect Landlord's interest with respect thereto. In addition, at
Landlord's request, at the expiration of the term of this Lease, Tenant shall
remove all tanks or fixtures which were placed on the Demised Premises during
the term of this Lease and which contain, have contained or are contaminated
with, Hazardous Materials.
Tenant shall immediately notify Landlord in writing of (a) any enforcement,
clean-up, removal or other governmental or regulatory action instituted,
completed or threatened pursuant to any Hazardous Materials Laws; (b) any claim
made or threatened by any person against Landlord, or the Demised Premises,
relating to damage, contribution, cost recovery, compensation, loss or injury
resulting from or claimed to result from any Hazardous Materials; and (c) any
reports made to any environmental agency arising out of or in connection with
any Hazardous Materials in, on or about the Demised Premises or with respect to
any Hazardous Materials removed from the Demised Premises, including, any
complaints, notices, warnings, reports or asserted violations in connection
therewith. Tenant shall also provide to Landlord, as promptly as possible, and
in any event within five business days after Tenant first receives or sends the
same, with copies of all claims, reports, complaints, notices, warnings or
asserted violations relating in any way to the Demised Premises or Tenant's use
thereof. Upon written request of Landlord (to enable Landlord to defend itself
from any claim or charge related to any Hazardous Materials Law), Tenant shall
promptly deliver to Landlord notices of hazardous waste manifests reflecting the
legal and proper disposal of all such Hazardous Materials removed or to
18
<PAGE>
be removed from the Demised Premises. All such manifests shall list the Tenant
or its agent as a responsible party and in no way shall attribute responsibility
for any such Hazardous Materials to Landlord.
Section 9.6 Hazardous Materials Representation by Landlord. To the best
of Landlord's knowledge, there are no Hazardous Materials or asbestos containing
materials whether friable or non-friable which exist or are located on or in the
Demised Premises, except as may be disclosed in that certain environmental site
assessment prepared by GME Consultants, Inc., dated April 10, 1989. Further,
Landlord represents to Tenant that, to the best of its knowledge, Landlord has
not caused the generation, storage or release of Hazardous Materials upon the
Demised Premises, except in accordance with Hazardous Materials Laws.
Section 9.7 Cost of Compliance with Hazardous Materials Laws.
Provisions of Sections 9.5 and 9.6 notwithstanding, Tenant shall be responsible
only for that part of the cost of compliance with Hazardous Materials Laws which
relates to a breach by Tenant of the covenants contained in this Lease to be
kept and performed by Tenant, including but not limited to the covenants
contained in Section 9.5. Landlord shall be responsible only for that part of
the cost of compliance with Hazardous Materials Laws which relates to a breach
by Landlord of the covenants contained in this Lease, including but not limited
to the covenants contained in Section 9.6.
Section 9.8 Discovery of Hazardous Materials. In the event (a)
Hazardous Materials are discovered upon the Demised Premises, (b) Landlord has
been given written notice of the discovery of such Hazardous Materials, and (c)
pursuant to the provisions of Section 9.7, neither Landlord nor Tenant is
obligated to pay the cost of compliance with Hazardous Materials Laws, then and
in that event Landlord may voluntarily but shall not be obligated to agree with
Tenant to take all action necessary to bring the Demised Premises into
compliance with Hazardous Materials Laws at Landlord's sole cost. In the event
Landlord fails to notify Tenant in writing within 30 days of the notice to
Landlord of the discovery of such Hazardous Materials that Landlord intends to
voluntarily take such action as is necessary to bring the Demised Premises into
compliance with Hazardous Materials Laws, then unless Landlord and Tenant agree
in writing to share the costs of compliance, Tenant may (i) bring the Demised
Premises into compliance with Hazardous Materials Laws at Tenant's sole cost or
(ii) provided such Hazardous Materials endanger persons or property in, on, or
about the Demised Premises or interfere with Tenant's use of the Demised
Premises, terminate the Lease on a date not less than 30 days following written
notice of such intent to terminate. If Landlord gives Tenant notice pursuant to
this Section 9.8 that it intends to take action, it shall promptly do so.
Section 9.9 Indemnification. Tenant shall indemnify, defend (with
counsel reasonably acceptable to Landlord), protect and hold Landlord and
each of Landlord's officers, directors, partners, employees, agents,
attorneys, successors and assigns free and harmless from and against any and
all claims, liabilities, damages, costs, penalties, forfeitures, losses or
expenses (including attorneys' fees) for death or injury to any person or
damage to any property whatsoever (including water tables and atmosphere)
(collectively, "Indemnified Matters") arising or resulting in whole or in
part, directly or indirectly, from the presence or discharge of Hazardous
Materials, in, on, under, upon or from the Demised Premises or the
Improvements located thereon or from
19
<PAGE>
the transportation or disposal of Hazardous Materials to or from the Demised
Premises to the extent caused by Tenant, whether knowingly or unknowingly,
the standard herein being one of strict liability. Landlord shall indemnify,
defend, protect and hold harmless Tenant and each of Tenant's officers,
directors, partners, employees, agents, attorneys, successors and assigns
from and against any Indemnified Matters arising or resulting in whole or in
part, directly or indirectly, from the presence or discharge of Hazardous
Materials in, on, under, upon or from the Demised Premises or the
Improvements located thereon or from the transportation or disposal of
Hazardous Materials to the Demised Premises to the extent caused by Landlord,
whether knowingly or unknowingly, the standard herein being one of strict
liability. Tenant's and Landlord's obligations hereunder shall include,
without limitation, and whether foreseeable or unforeseeable, all costs of
any required or necessary repairs, clean-up or detoxification or
decontamination of the Demised Premises or the Improvements, and the presence
and implementation of any closure, remedial action or other required plans in
connection therewith, and shall survive the expiration of or early
termination of the term of this Lease. For purposes of the indemnity
provided herein, any acts or omissions of Tenant, or its employees, agents,
customers, sub-lessees, assignees, contractors or sub-contractors of Tenant
(whether or not they are negligent, intentional, willful or unlawful) shall
be strictly attributable to Tenant.
Section 9.10 Environmental Audits. Upon request by Landlord during the
term of this Lease, prior to the exercise of any renewal term and/or prior to
vacating the Demised Premises, Tenant shall undertake and submit to Landlord an
environmental audit from an environmental company reasonably acceptable to
Landlord which audit shall evidence Tenant's compliance with this Article IX.
Landlord shall pay for the cost of any such audit unless it discloses a hazard
or problem.
Section 9.11 Acts of Omissions Regarding Hazardous Materials. For
purposes of the covenants and agreements contained in Section 9.5 through 9.10,
inclusive, any acts or omissions of Tenant, its employees, agents, customers,
sublessees, assignees, contractors or sub-contractors (except Landlord and its
sub-contractors providing the Landlord's Improvements) shall be strictly
attributable to Tenant; any acts or omissions of Landlord, its employees,
agents, customers, assignees, contractors or sub-contractors shall be strictly
attributable to Landlord.
Section 9.12 Survival. The respective rights and obligations of Landlord
and Tenant under this Article IX shall survive the expiration or earlier
termination of this Lease.
ARTICLE X
MECHANIC'S LIENS AND OTHER LIENS
Section 10.1 Freedom from Liens. Tenant shall not suffer or permit any
mechanic's lien or other lien to be filed against the Demised Premises, or any
portion thereof, by reason of work, labor, skill, services, equipment or
materials supplied or claimed to have been supplied to the Demised Premises at
the request of Tenant, or anyone holding the Demised Premises, or any portion
thereof, through or under Tenant. If any such mechanic's lien or other lien
shall at any time be filed against the Demised Premises, or any portion thereof,
Tenant shall cause the same to be discharged of record within 60 days after the
date of filing the same. If Tenant shall fail to discharge such mechanic's lien
or liens or other lien within such period, then, in addition to any
20
<PAGE>
other right or remedy of Landlord, after five days prior written notice to
Tenant, Landlord may, but shall not be obligated to, discharge the same by
paying to the claimant the amount claimed to be due or by procuring the
discharge of such lien as to the Demised Premises by deposit in the court
having jurisdiction of such lien, the foreclosure thereof or other
proceedings with respect thereto, of a cash sum sufficient to secure the
discharge of the same, or by the deposit of a bond or other security with
such court sufficient in form, content and amount to procure the discharge of
such lien, or in such other manner as is now or may in the future be provided
by present or future law for the discharge of such lien as a lien against the
Demised Premises. Any amount paid by Landlord, or the value of any deposit
so made by Landlord, together with all costs, fees and expenses in connection
therewith (including reasonable attorney's fees of Landlord), together with
interest thereon at the Maximum Rate of Interest set forth in Section 3.4
hereof, shall be repaid by Tenant to Landlord on demand by Landlord and if
unpaid may be treated as Additional Rent. Tenant shall indemnify and defend
Landlord against and save Landlord and the Demised Premises, and any portion
thereof, harmless from all losses, costs, damages, expenses, liabilities,
suits, penalties, claims, demands and obligations, including, without
limitation, reasonable attorney's fees resulting from the assertion, filing,
foreclosure or other legal proceedings with respect to any such mechanic's
lien or other lien.
All materialmen, contractors, artisans, mechanics, laborers and any other
person now or hereafter furnishing any labor, services, materials, supplies or
equipment to Tenant with respect to the Demised Premises, or any portion
thereof, are hereby charged with notice that they must look exclusively to
Tenant to obtain payment for the same. Notice is hereby given that Landlord
shall not be liable for any labor, services, materials, supplies, skill,
machinery, fixtures or equipment furnished or to be furnished to Tenant upon
credit, and that no mechanic's lien or other lien for any such labor, services,
materials, supplies, machinery, fixtures or equipment shall attach to or affect
the estate or interest of Landlord in and to the Demised Premises, or any
portion thereof.
Section 10.2 Landlord's Indemnification. The provisions of Section 10.1
above shall not apply to any mechanic's lien or other lien for labor, services,
materials, supplies, machinery, fixtures or equipment furnished to the Demised
Premises in the performance of Landlord's obligations to construct the
Landlord's Improvements required by the provisions of Article II hereof, and
Landlord does hereby agree to indemnify and defend Tenant against and save
Tenant and the Demised Premises, and any portion thereof, harmless from all
losses, costs, damages, expenses, liabilities and obligations, including,
without limitation, reasonable attorney's fees resulting from the assertion,
filing, foreclosure or other legal proceedings with respect to any such
mechanic's lien or other lien.
Section 10.3 Removal of Liens. Except as otherwise provided for in this
Article X, Tenant shall not create, permit or suffer, and shall promptly
discharge and satisfy of record, any other lien, encumbrance, charge, security
interest, or other right or interest which shall be or become a lien,
encumbrance, charge or security interest upon the Demised Premises, or any
portion thereof (excluding liens upon and security interests in Tenant's
equipment and personal property), or the income therefrom, or on the interest of
Landlord or Tenant in the Demised Premises, or any portion thereof, save and
except for those liens, encumbrances, charges, security interests, or other
rights or interests consented to, in writing, by Landlord, or those mortgages,
21
<PAGE>
assignments of rents, assignments of leases and other mortgage documentation
placed thereon by Landlord in financing or refinancing the Demised Premises.
ARTICLE XI
INTENT OF PARTIES
Section 11.1 Net Lease. Landlord and Tenant do each state and represent
that it is the intention of each of them that this Lease be interpreted and
construed as an absolute net lease and all Basic Rent and Additional Rent shall
be paid by Tenant to Landlord without abatement, deduction, diminution,
deferment, suspension, reduction or setoff, and the obligations of Tenant shall
not be affected by reason of damage to or destruction of the Demised Premises
from whatever cause (except as provided for in Section 13.5 hereof); nor shall
the obligations of Tenant be affected by reason of any condemnation, eminent
domain or like proceedings (except as provided in Article XIV hereof); nor shall
the obligations of Tenant be affected by reason of any other cause whether
similar or dissimilar to the foregoing or by any laws or customs to the
contrary. It is the further express intent of Landlord and Tenant that (a) the
obligations of Landlord and Tenant hereunder shall be separate and independent
covenants and agreements and that the Basic Rent and Additional Rent, and all
other charges and sums payable by Tenant hereunder, shall commence at the times
provided herein and shall continue to be payable in all events unless the
obligations to pay the same shall be terminated pursuant to an express provision
in this Lease; (b) all costs or expenses of whatsoever character or kind,
general or special, ordinary or extraordinary, foreseen or unforeseen, and of
every kind and nature whatsoever that may be necessary or required in and about
the Demised Premises, or any portion thereof, and Tenant's possession or
authorized use thereof during the term of this Lease, shall be paid by Tenant
and all provisions of this Lease are to be interpreted and construed in light of
the intention expressed in this Section 11.1; (c) the Basic Rent specified in
Section 3.1 shall be absolutely net to Landlord so that this Lease shall yield
net to Landlord the Basic Rent specified in Section 3.1 in each year during the
term of this Lease (unless extended or renewed at a different Basic Rent); (d)
all Impositions, insurance premiums, utility expense, repair and maintenance
expense, and all other costs, fees, interest, charges, expenses, reimbursements
and obligations of every kind and nature whatsoever relating to the Demised
Premises, or any portion thereof, which may arise or become due during the term
of this Lease, or any extension or renewal thereof, shall be paid or discharged
by Tenant as Additional Rent; and (e) Tenant hereby agrees to indemnify, defend
and save Landlord harmless from and against such costs, fees, charges, expenses,
reimbursements and obligations, any interest thereon.
Section 11.2 Entry by Landlord. If Tenant shall at any time fail to pay
any Imposition in accordance with the provisions of Article V, or to take out,
pay for, maintain and delivery any of the insurance policies or certificates of
insurance provided for in Article VI, or shall fail to make any other payment or
perform any other act on its part to be made or performed, then Landlord, after
10 days' prior written notice to Tenant as provided in Section 12.1 (or without
notice in case of emergency), and without waiving or releasing Tenant from any
obligation of Tenant contained in this Lease, may, but shall be under no
obligation to do so, (a) pay any Imposition payable by Tenant pursuant to the
provisions of Article V; (b) take out, pay for and maintain any of the insurance
policies provided for in this Lease; or (c) make any other payment or perform
any other act on Tenant's part to be paid or performed as in this Lease
provided, and
22
<PAGE>
Landlord may enter upon the Demised Premises for any such purpose and take
all such action therein or thereon as may be necessary therefor. Nothing
herein contained shall be deemed as a waiver or release of Tenant from any
obligation of Tenant in this Lease contained.
Section 11.3 Interest on Unpaid Amounts. If Tenant shall fail to perform
any act required of it, Landlord may perform the same, but shall not be required
to do so, in such manner and to such extent as Landlord may deem necessary or
desirable, and in exercising any such right to employ counsel and to pay
necessary and incidental costs and expenses, including reasonable attorney's
fees. All sums so paid by Landlord and all necessary and reasonable incidental
costs and expenses, including reasonable attorneys fees, in connection with the
performance of any such act by Landlord, together with interest thereon at the
Maximum Rate of interest provided for in Section 3.4 hereof from the date of
making such expenditure by Landlord, such interest shall begin accruing 10 days
from Tenant's receipt of Landlord's invoice, shall be deemed Additional Rent
hereunder and, except as is otherwise expressly provided herein, shall be
payable to Landlord within 10 days after Tenant's receipt of invoice from
Landlord or, at the option of Landlord, may be added to any monthly rental then
due or thereafter becoming due under this Lease, and Tenant covenants to pay any
such sum or sums, with interest as aforesaid, and Landlord shall have, in
addition to any other right or remedy of Landlord, the same rights and remedies
in the event of nonpayment thereof by Tenant as in the case of default by Tenant
in the payment of monthly Basic Rent. Landlord shall not be limited in the
proof of any damages which Landlord may claim against Tenant arising out of or
by reason of Tenant's failure to provide and keep in force insurance as
aforesaid, to the amount of the insurance premium or premiums not paid or not
incurred by Tenant, and which would have been payable upon such insurance, but
Landlord shall also be entitled to recover as damages for such breach the
uninsured amount of any loss (to the extent of any deficiency between the dollar
limits of insurance required by the provisions of this Lease and the dollar
limits of the insurance actually carried by Tenant), damages, costs and expenses
of suits, including reasonable attorney's fees, suffered or incurred by reason
of damage to or destruction of the Demised Premises, or any portion thereof or
other damage or loss which Tenant is required to insure against hereunder,
occurring during any period when Tenant shall have failed or neglected to
provide insurance as aforesaid.
ARTICLE XII
DEFAULTS OF TENANT
Section 12.1 Event of Default. If any one or more of the following
events (in this Article sometimes called "Events of Default") shall happen:
(a) If default shall be made by Tenant, by operation of law or otherwise,
under the provisions of Article XV hereof relating to assignment, sublease,
mortgage or other transfer of Tenant's interest in this Lease or in the
Demised Premises or in the income arising therefrom;
(b) If default shall be made in the due and punctual payment of any Basic
Rent or Additional Rent payable under this Lease or in the payment of any
obligation to be paid by Tenant, when and as the same shall become due and
payable, and such
23
<PAGE>
default shall continue for a period of ten business days after written
notice thereof given by Landlord to Tenant;
(c) If default shall be made by Tenant in keeping, observing or performing
any of the terms contained in this Lease, other than those referred to in
Subparagraphs (a) and (b) of this Section 12.1, which does not expose
Landlord to criminal liability, and such default shall continue for a
period of 45 days after written notice thereof given by Landlord to Tenant,
or in the case of such a default or contingency which cannot with due
diligence and in good faith be cured within 45 days, and Tenant fails to
proceed promptly and with due diligence and in good faith to cure the same
and thereafter to prosecute the curing of such default with due diligence
and in good faith, it being intended that in connection with a default
which does not expose Landlord to criminal liability, not susceptible of
being cured with due diligence and in good faith within 45 days, that the
time allowed Tenant within which to cure the same shall be extended for
such period as may be necessary for the curing thereof promptly with due
diligence and in good faith;
(d) If default shall be made by Tenant in keeping, observing or performing
any of the terms contained in this Lease, other than those referred to in
Subparagraphs (a), (b) and (c) of this Section 12.1, and which exposes
Landlord to criminal liability, and such default shall continue after
written notice thereof given by Landlord to Tenant, and Tenant fails to
proceed timely and promptly with all due diligence and in good faith to
cure the same and thereafter to prosecute the curing of such default with
all due diligence, it being intended that in connection with a default
which exposes Landlord to criminal liability that Tenant shall proceed
immediately to cure or correct such condition with continuity and with all
due diligence and in good faith;
then, and in any such event, Landlord, at any time thereafter during the
continuance of any such Event of Default, may give written notice to Tenant
specifying such Event of Default or Events of Default and stating that this
Lease and the terms hereby demised shall expire and terminate on the date
specified in such notice, and upon the date specified in such notice this Lease
and the terms hereby demised, and all rights of Tenant under this Lease,
including all rights of renewal whether exercised or not, shall expire and
terminate, or in the alternative or in addition to the foregoing remedy,
Landlord may assert and have the benefit of any other remedy allowed herein, at
law, or in equity.
Section 12.2 Surrender of Demised Premises. Upon any expiration or
termination of this Lease, Tenant shall quit and peaceably surrender the Demised
Premises, and all portions thereof, to Landlord, and Landlord, upon or at any
time after any such expiration or termination, may, without further notice,
enter upon and reenter the Demised Premises, and all portions thereof, and
possess and repossess itself thereof, by force, summary proceeding, ejectment or
otherwise, and may dispossess Tenant and remove Tenant and all other persons and
property from the Demised Premises, and all portions thereof, and may have, hold
and enjoy the Demised Premises and the right to receive all rental and other
income of and from the same.
24
<PAGE>
Section 12.3 Reletting by Landlord. At any time, or from time to time
after any such expiration or termination, Landlord may relet the Demised
Premises, or any portion thereof, in the name of Landlord or otherwise, for such
term or terms (which may be greater or less than the period which would
otherwise have constituted the balance of the term of this Lease) and on such
conditions (which may include concessions or free rent) as Landlord, in its
uncontrolled discretion, may determined and may collect and receive the rents
therefor. Landlord shall in no way be responsible or liable for any failure to
relet the Demised Premises, or any part thereof, or for any failure to collect
any rent due upon any such reletting.
Section 12.4 Survival of Tenant's Obligations. No such expiration or
termination of this Lease shall relieve Tenant of its liabilities and
obligations under this Lease (as if this Lease had not been so terminated or
expired), and such liabilities and obligations shall survive any such expiration
or termination. In the event of any such expiration or termination, whether or
not the Demised Premises, or any portion thereof, shall have been relet, Tenant
shall pay to Landlord a sum equal to the Basic Rent, and the Additional Rent and
any other charges required to be paid by Tenant, up to the time of such
expiration or termination of this Lease, and thereafter Tenant, until the end of
what would have been the term of this Lease in the absence of such expiration or
termination, shall be liable to Landlord for, and shall pay to Landlord, as and
for liquidated and agreed current damages for Tenant's default:
(a) The equivalent of the amount of the Basic Rent and Additional Rent
which would be payable under this Lease by Tenant if this Lease were still
in effect, less
(b) The net proceeds of any reletting effected pursuant to the provisions
of Section 12.3 hereof after deducting all of Landlord's reasonable
expenses in connection with such reletting, including, without limitation,
all repossession costs, brokerage commissions, legal expenses, reasonable
attorney's fees, alteration costs, and expenses of preparation of the
Demised Premises, or any portion thereof, for such reletting.
Tenant shall pay such current damages in the amount determined in
accordance with the terms of this Section 12.4, as set forth in a written
statement thereof from Landlord to Tenant (hereinafter called the "Deficiency"),
to Landlord in monthly installments on the days on which the Basic Rent would
have been payable under this Lease if this Lease were still in effect, and
Landlord shall be entitled to recover from Tenant each monthly installment of
the Deficiency as the same shall arise.
Section 12.5 Damages. At any time after an Event of Default and
termination of this Lease, whether or not Landlord shall have collected any
monthly Deficiency as set forth in Section 12.4, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord, on demand, as and for
final damages for Tenant's default (and in lieu of sums thereafter required to
be paid in Section 12.4 above), an amount equal to the difference between the
then present worth of the aggregate of the Basic Rent and Additional Rent and
any other charges to be paid by Tenant hereunder for the unexpired portion of
the term of this Lease (assuming this Lease had not been so terminated), and the
then present worth of the then aggregate fair and reasonable fair market rent of
the Demised Premises for the same period. In
25
<PAGE>
the computation of present worth, a discount at the rate of 6% per annum
shall be employed. If the Demised Premises, or any portion thereof, be relet
by Landlord for the unexpired term of this Lease, or any part thereof, before
presentation of proof of such damages to any court, commission or tribunal,
the amount of rent reserved upon such reletting shall, prima facie, be the
fair and reasonable fair market rent for the part or the whole of the Demised
Premises so relet during the term of the reletting.
Section 12.6 No Waiver. No failure by Landlord or by Tenant to insist
upon the performance of any of the terms of this Lease or to exercise any right
or remedy consequent upon a breach thereof, and no acceptance by Landlord of
full or partial rent from Tenant or any third party during the continuance of
any such breach, shall constitute a waiver of any such breach or of any of the
terms of this Lease. None of the terms of this Lease to be kept, observed or
performed by Landlord or by Tenant, and no breach thereof, shall be waived,
altered or modified except by a written instrument executed by Landlord and/or
by Tenant, as the case may be. No waiver of any breach shall affect or alter
this Lease, but each of the terms of this Lease shall continue in full force and
effect with respect to any other then existing or subsequent breach of this
Lease. No waiver of any default of Tenant herein shall be implied from any
omission by Landlord to take any action on account of such default, if such
default persists or is repeated and no express waiver shall affect any default
other than the default specified in the express waiver and that only for the
time and to the extent therein stated. One or more waivers by Landlord shall
not be construed as a waiver of a subsequent breach of the same covenant, term
or condition.
Section 12.7 Landlord's Remedies. In the event of any breach of any of
the terms contained in this Lease, Landlord shall be entitled to enjoin such
breach and shall have the right to invoke any right or remedy allowed at law or
in equity or by statute or otherwise as though entry, reentry, summary
proceedings and other remedies were not provided for in this Lease. Each remedy
or right of Landlord provided for in this Lease shall be cumulative and shall be
in addition to every other right or remedy provided for in this Lease, or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or the beginning of the exercise by Landlord of any one or more of such
rights or remedies shall not preclude the simultaneous or later exercise by
Landlord of any or all other rights or remedies.
Section 12.8 Bankruptcy. If, during the term of this Lease, (a) Tenant
shall make an assignment for the benefit of creditors, (b) a voluntary petition
be filed by Tenant under any law having for its purpose the adjudication of
Tenant a bankrupt, or Tenant be adjudged a bankrupt pursuant to an involuntary
petition in bankruptcy, (c) a receiver be appointed for the property of Tenant,
or (d) any department of the state or federal government, or any officer thereof
duly authorized, shall take possession of the business or property of Tenant,
the occurrence of any such contingency shall be deemed a breach of the Lease and
this Lease shall, ipso facto upon the happening of any of said contingencies, be
terminated and the same shall expire as fully and completely as if the day of
the happening of such contingency were the date herein specifically fixed for
the expiration of the term, and Tenant will then quit and surrender the Demised
Premises, but Tenant shall remain liable as hereinafter provided.
Notwithstanding other provisions of this Lease, or any present or future law,
Landlord shall be entitled to recover from Tenant or Tenant's estate (in lieu of
the equivalent of the amount of all rent and other charges
26
<PAGE>
unpaid at the date of such termination) as damages for loss of the bargain
and not as a penalty, an aggregate sum which at the time of such termination
represents the difference between the then present worth of the aggregate of
the Basic Rent and Additional Rent and any other charges payable by Tenant
hereunder that would have accrued for the balance of the term of this Lease
(assuming this Lease had not been so terminated), over the then present worth
of the aggregate fair market rent of the Demised Premises for the balance of
such period, unless any statute or rule of law covering the proceedings in
which such damages are to be proved shall limit the amount of such claim
capable of being so proved, in which case Landlord shall be entitled to prove
as and for damages by reason of such breach and termination of this Lease the
maximum amount which may be allowed by or under any such statute or rule of
law without prejudice to any rights of Landlord against any guarantor of
Tenant's obligations herein. In the computation of present worth, a discount
rate of 6% per annum shall be employed. Nothing contained herein shall limit
or prejudice Landlord's right to prove and obtain as damages arising out of
such breach and termination the maximum amount allowed by any such statute or
rule of law which may govern the proceedings in which such damages are to be
proved, whether or not such amount be greater, equal to, or less than the
amount of the excess of the present value of the rent and other charges
required herein over the present value of the fair market rents referred to
above. Specified remedies to which Landlord may resort under the terms of
this Section 12.8 are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which Landlord may be lawfully entitled.
Section 12.9 Waiver by Tenant. Tenant hereby expressly waives, so far as
permitted by law, any and all right of redemption or reentry or repossession or
to revive the validity and existence of this Lease in the event that Tenant
shall be dispossessed by a judgment or by order of any court having jurisdiction
over the Demised Premises or the interpretation of this Lease or in case of
entry, reentry or repossession by Landlord or in case of any expiration or
termination of this Lease.
ARTICLE XIII
DESTRUCTION AND RESTORATION
Section 13.1 Destruction and Restoration. Tenant covenants and agrees
that in case of damage to or destruction of the Improvements after the
Commencement Date of the term of this Lease, by fire or otherwise, Tenant, at
its sole cost and expense, shall promptly restore, repair, replace and rebuild
the same as nearly as possible to the condition that the same were in
immediately prior to such damage or destruction with such changes or alterations
(made in conformity with Article XIX hereof) as may be reasonably acceptable to
Landlord or required by law. Tenant shall forthwith give Landlord written
notice of such damage or destruction upon the occurrence thereof and specify in
such notice, in reasonable detail, the extent thereof. Such restoration,
repairs, replacements, rebuilding, changes and alterations, including the cost
of temporary repairs for the protection of the Demised Premises, or any portion
thereof, pending completion thereof are sometimes hereinafter referred to as the
"Restoration". The Restoration shall be carried on and completed in accordance
with the provisions and conditions of Section 13.2 and Article XIX hereof. If
the net amount of the insurance proceeds (after deduction of all costs, expenses
and fees related to recovery of the insurance proceeds) recovered by Landlord
and held by Landlord and Tenant as co-trustees is reasonably deemed insufficient
by Landlord to
27
<PAGE>
complete the Restoration of such improvements to its then current condition
(exclusive of Tenant's personal property and trade fixtures which shall be
restored, repaired or rebuilt out of Tenant's separate funds), Tenant shall,
upon request of Landlord, deposit with Landlord and Tenant, as co-trustees a
cash deposit equal to the reasonable estimate of the amount necessary to
complete the Restoration of such improvements less the amount of such
insurance proceeds available.
Section 13.2 Application of Insurance Proceeds. All insurance moneys
recovered by Landlord and held by Landlord and Tenant as co-trustees on account
of such damage or destruction, less the costs, if any, to Landlord of such
recovery, shall be applied to the payment of the costs of the Restoration and
shall be paid out from time to time as the Restoration progresses upon the
written request of Tenant, accompanied by a certificate of the architect or a
qualified professional engineer in charge of the Restoration stating that as of
the date of such certificate (a) the sum requested in justly due to the
contractors, subcontractors, materialmen, laborers, engineers, architects, or
persons, firms or corporations furnishing or supplying work, labor, services or
materials for such Restoration, or is justly required to reimburse Tenant for
any expenditures made by Tenant in connection with such Restoration, and when
added to all sums previously paid out by Landlord does not exceed the value of
the Restoration performed to the date of such certificate by all of said
parties; (b) except for the amount, if any, stated in such certificates to be
due for work, labor, services or materials, there is no outstanding indebtedness
known to the person signing such certificate, after due inquiry, which is then
due for work, labor, services or materials in connection with such Restoration,
which, if unpaid, might become the basis of a mechanic's lien or similar lien
with respect to the Restoration or a lien upon the Demised Premises, or any
portion thereof; and (c) the costs, as estimated by the person signing such
certificate, of the completion of the Restoration required to be done subsequent
to the date of such certificate in order to complete the Restoration do not
exceed the sum of the remaining insurance moneys, plus the amount deposited by
Tenant, if any, remaining in the hands of Landlord after payment of the sum
requested in such certificate.
Tenant shall furnish Landlord at the time of any such payment with evidence
reasonably satisfactory to Landlord that there are no unpaid bills in respect to
any work, labor, services or materials performed, furnished or supplied in
connection with such Restoration. Landlord and Tenant as co-trustees shall not
be required to pay out any insurance moneys where Tenant fails to supply
satisfactory evidence of the payment of work, labor, services or materials
performed, furnished or supplied, as aforesaid. If the insurance moneys in the
hands of Landlord and Tenant as co-trustees, and such other sums, if any,
deposited with Landlord and Tenant as co-trustees pursuant to Section 13.1
hereof, shall be insufficient to pay the entire costs of the Restoration, Tenant
agrees to pay any deficiency promptly upon demand. Upon completion of the
Restoration and payment in full thereof by Tenant, Landlord shall, within a
reasonable period of time thereafter, turn over to Tenant all insurance moneys
or other moneys then remaining upon submission of proof reasonably satisfactory
to Landlord that the Restoration has been paid for in full and the damaged or
destroyed Building and other improvements repaired, restored or rebuilt as
nearly as possible to the condition they were in immediately prior to such
damage or destruction, or with such changes or alterations as may be made in
conformity with Section 13.1 and Article XIX hereof.
28
<PAGE>
Section 13.3 Continuance of Tenant's Obligations. Except as provided for
in Section 13.5, no destruction of or damage to the Demised Premises, or any
portion thereof, by fire, casualty or otherwise shall permit Tenant to surrender
this Lease or shall relieve Tenant from its liability to pay to Landlord the
Basic Rent and Additional Rent payable under this Lease or from any of its other
obligations under this Lease, and Tenant waives any rights now or hereafter
conferred upon Tenant by present or future law or otherwise to quit or surrender
this Lease or the Demised Premises, or any portion thereof, to Landlord or to
any suspension, diminution, abatement or reduction of rent on account of any
such damage or destruction.
Section 13.4 Completion of Restoration. The foregoing provisions of this
Article XIII apply only to damage or destruction of the Improvements by fire,
casualty or other cause occurring after the Commencement Date. Any such damage
or destruction occurring prior to such time shall be promptly restored,
repaired, replaced and rebuilt by Landlord and during such period of
construction Landlord shall obtain and maintain the builder's risk insurance
coverage referred to in Section 6.1 hereof. All moneys received by Landlord
under its builder's risk insurance coverage shall be applied by Landlord to
complete the Restoration of such damage or destruction and if such insurance
proceeds are insufficient Landlord shall provide all additional funds necessary
to complete the Restoration of the Improvements.
Section 13.5 Termination of Lease. If, within six months prior to the
expiration of the term of this Lease, the Improvements shall be destroyed or
damaged to such an extent that the Restoration thereof will cost an amount in
excess of Five Hundred Thousand Dollars ($500,000.00) over and above the net
proceeds of the insurance required to be maintained by Tenant (to be collected
by Landlord and Tenant as co-trustees), hereinafter referred to as the "Excess
Funds," and Tenant shall be unable or unwilling to expend out of its own funds
such Excess Funds for the purpose of Restoration of such damage or destruction
for occupancy by Tenant, Tenant shall, with reasonable promptness, notify
Landlord, in writing, of such fact, which notice shall be accompanied by a
detailed statement of the nature and extent of such damage or destruction and
detailed estimates of the total cost of Restoration. Within 30 days after the
giving of such notice, Landlord shall notify Tenant either that (a) it will
furnish, at its sole cost and expense, the Excess Funds which are necessarily
required in connection with the Restoration (to be disbursed in conformity with
the requirements of Section 13.2 and Article XIX hereof), or (b) it is unwilling
to expend the Excess Funds for such purpose. Failure to give such notice within
such 30-day period shall be deemed an election by Landlord not to make such
expenditure. In the event that Landlord elects not to expend the Excess Funds,
as aforesaid, then Tenant shall have the option, within 60 days after the
expiration of said 30-day period, to terminate this Lease and surrender the
Demised Premises to Landlord by a notice, in writing, addressed to Landlord,
specifying such election accompanied by Tenant's payment of the balance of the
Basic Rent and Additional Rent and other charges hereafter specified in this
Section 13.5. Upon the giving of such notice and the payment of such amounts,
the term of this Lease shall cease and come to an end on a day to be specified
in Tenant's notice, which date shall not be more than 30 days after the date of
delivery of such notice by Tenant to Landlord. Tenant shall accompany such
notice with its payment of all Basic Rent and Additional Rent and other charges
payable by Tenant hereunder, justly apportioned to the date of such termination,
together with the dollar amount of Landlord's reasonable estimate of the Excess
Funds. In such event Landlord shall be entitled to the proceeds of all
insurance required to be carried by Tenant
29
<PAGE>
hereunder and Tenant shall execute all documents reasonably requested by
Landlord to allow such proceeds to be paid to Landlord.
ARTICLE XIV
CONDEMNATION
Section 14.1 Condemnation of Entire Demised Premises. If, during the
term of this Lease, the entire Demised Premises shall be taken as the result of
the exercise of the power of eminent domain (hereinafter referred to as the
"Proceedings"), this Lease and all right, title and interest of Tenant hereunder
shall cease and come to an end on the date of vesting of title pursuant to such
Proceedings and Landlord shall be entitled to and shall receive the total award
made in such Proceedings, Tenant hereby assigning any interest in such award,
damages, consequential damages and compensation to Landlord and Tenant hereby
waiving any right Tenant has now or may have under present or future law to
receive any separate award of damages for its interest in the Demised Premises,
or any portion thereof, or its interest in this Lease.
In any taking of the Demised Premises, or any portion thereof, whether or
not this Lease is terminated as in this Article provided, Tenant shall not be
entitled to any portion of the award for the taking of the Demised Premises or
damage to the Improvements, except as otherwise provided for in Section 14.3
with respect to the restoration of the Improvements, or for the estate or
interest of Tenant therein, all such award, damages, consequential damages and
compensation being hereby assigned to Landlord, and Tenant hereby waives any
right it now has or may have under present or future law to receive any separate
award of damages for its interest in the Demised Premises, or any portion
thereof, or its interest in this Lease, except that Tenant shall have,
nevertheless, the limited right to prove in the Proceedings and to receive any
award which may be made for damages to or condemnation of Tenant's movable trade
fixtures and equipment, and for Tenant's relocation costs in connection
therewith.
Section 14.2 Partial Condemnation/Termination of Lease. If, during the
Initial Term of this Lease, or any extension or renewal thereof, less than the
entire Demised Premises, but more than 15% of the floor area of the Building, or
more than 25% of the land area of the Demised Premises, shall be taken in any
such Proceedings, this Lease shall, upon vesting of title in the Proceedings,
terminate as to the portion of the Demised Premises so taken, and Tenant may, at
its option, terminate this Lease as to the remainder of the Demised Premises.
Tenant shall not have the right to terminate this Lease pursuant to the
preceding sentence unless (a) the business of Tenant conducted in the portion
of the Demised Premises taken cannot reasonably be carried on with substantially
the same utility and efficiency in the remainder of the Demised Premises (or any
substitute space securable by Tenant pursuant to clause [b] hereof) and (b)
Tenant cannot construct or secure substantially similar space to the space so
taken, on the Demised Premises. Such termination as to the remainder of the
Demised Premises shall be effected by notice in writing given not more than 60
days after the date of vesting of title in such Proceedings, and shall specify a
date not more than 60 days after the giving of such notice as the date for such
termination. Upon the date specified in such notice, the term of this Lease,
and all right, title and interest of Tenant hereunder, shall cease and come to
an end. If this Lease is terminated as in this Section 14.2 provided, Landlord
shall be entitled to and shall receive the total award made in
30
<PAGE>
such Proceedings, Tenant hereby assigning any interest in such award,
damages, consequential damages and compensation to Landlord, and Tenant
hereby waiving any right Tenant has now or may have under present or future
law to receive any separate award of damages for its interest in the Demised
Premises, or any portion thereof, or its interest in this Lease except as
otherwise provided in Section 14.1. The right of Tenant to terminate this
Lease, as in this Section 14.2 provided, shall be exercisable only upon
condition that Tenant is not then in default in the performance of any of the
terms, covenants or conditions of this Lease on its part to be performed, and
such termination upon Tenant's part shall become effective only upon
compliance by Tenant with all such terms, covenants and conditions to the
date of such termination. In the event that Tenant elects not to terminate
this Lease as to the remainder of the Demised Premises, the rights and
obligations of Landlord and Tenant shall be governed by the provisions of
Section 14.3 hereof.
Section 14.3 Partial Condemnation/Continuation of Lease. If 15%, or
less, of the floor area of the Building, or 25%, or less, of the land area of
the Demised Premises, shall be taken in such Proceedings, or if more than 15% of
the floor area of the Building or more than 25% of the land area of the Demised
Premises is taken (but less than the entire Demised Premises), and this Lease is
not terminated as in Section 14.2 hereof provided, this Lease shall, upon
vesting of title in the Proceedings, terminate as to the parts so taken, and
Tenant shall have no claim or interest in the award, damages, consequential
damages and compensation, or any part thereof except as otherwise provided in
Section 14.1. Landlord shall be entitled to and shall receive the total award
made in such Proceedings, Tenant hereby assigning any interest in such award,
damages, consequential damages and compensation to Landlord, and Tenant hereby
waiving any right Tenant has now or may have under present or future law to
receive any separate award of damages for its interest in the Demised Premises,
or any portion thereof, or its interest in this Lease except as otherwise
provided in Section 14.1. The net amount of the award (after deduction of all
costs and expenses, including attorneys' fees), shall be held by Landlord and
Tenant as co-trustees and applied as hereinafter provided. Tenant, in such
case, covenants and agrees, at Tenant's sole cost and expense (subject to
reimbursement to the extent hereinafter provided), promptly to restore that
portion of the Improvements on the Demised Premises not so taken to a complete
architectural and mechanical unit for the use and occupancy of Tenant as in this
Lease provided. In the event that the net amount of the award (after deduction
of all costs and expenses, including attorney's fees) that may be received by
Landlord and held by Landlord and Tenant as co-trustees in any such Proceedings
for physical damage to the Improvements as a result of such taking is
insufficient to pay all costs of such restoration work, Tenant shall deposit
with Landlord and Tenant as co-trustees such additional sum as may be required
upon the written request of Landlord. The provisions and conditions in Article
XIX applicable to changes and alterations shall apply to Tenant's obligations to
restore that portion of the Improvements to a complete architectural and
mechanical unit. Landlord and Tenant as co-trustees agree in connection with
such restoration work to apply so much of the net amount of any award (after
deduction of all costs and expenses, including attorney's fees) that may be
received by Landlord and held by Landlord and Tenant as co-trustees in any such
Proceedings for physical damage to the Improvements as a result of such taking
to the costs of such restoration work thereof and the said net award for
physical damage to the Improvements as a result of such taking shall be paid out
from time to time to Tenant, or on behalf of Tenant, as such restoration work
progresses upon the written request of Tenant, which shall be accompanied by a
certificate of the architect or the
31
<PAGE>
registered professional engineer in charge of the restoration work stating
that (a) the sum requested is justly due to the contractors, subcontractors,
materialmen, laborers, engineers, architects or other persons, firms or
corporations furnishing or supplying work, labor, services or materials for
such restoration work or as is justly required to reimburse Tenant for
expenditures made by Tenant in connection with such restoration work, and
when added to all sums previously paid out by Landlord and Tenant as
co-trustees does not exceed the value of the restoration work performed to
the date of such certificate; and (b) the net amount of any such award for
physical damage to the Improvements as a result of such taking remaining in
the hands of Landlord, together with the sums, if any, deposited by Tenant
with Landlord and Tenant as co-trustees pursuant to the provisions hereof,
will be sufficient upon the completion of such restoration work to pay for
the same in full. If payment of the award for physical damage to the
Improvements as a result of such taking, as aforesaid, shall not be received
by Landlord in time to permit payments as the restoration work progresses
(except in the event of an appeal of the award by Landlord), Tenant shall,
nevertheless, perform and fully pay for such work without delay (except such
delays as are referred to in Article XIX hereof), and payment of the amount
to which Tenant may be entitled shall thereafter be made by Landlord out of
the net award for physical damage to the Improvements as a result of such
taking as and when payment of such award is received by Landlord. If
Landlord appeals an award and payment of the award is delayed pending appeal
Tenant shall, nevertheless, perform and fully pay for such work without delay
(except such delays as are referred to in Article XIX hereof), and payment of
the amount to which Tenant would have been entitled had Landlord not appealed
the award (in an amount not to exceed the net award prior to such appeal)
shall be made by Landlord to Tenant as restoration progresses pursuant to
this Section 14.3. In which event Landlord shall be entitled to retain an
amount equal to the sum disbursed to Tenant pursuant to the preceding
sentence out of the net award as and when payment of such award is received
by Landlord. Tenant shall also furnish Landlord and Tenant as co-trustees
with each certificate hereinabove referred to, together with evidence
reasonably satisfactory to Landlord that there are no unpaid bills in respect
to any work, labor, services or materials performed, furnished or supplied,
or claimed to have been performed, furnished or supplied, in connection with
such restoration work, and that no liens have been filed against the Demised
Premises, or any portion thereof. Landlord and Tenant as co-trustees shall
not be required to pay out any funds when there are unpaid bills for work,
labor, services or materials performed, furnished or supplied in connection
with such restoration work, or where a lien for work, labor, services or
materials performed, furnished or supplied has been placed against the
Demised Premises, or any portion thereof. Upon completion of the restoration
work and payment in full therefor by Tenant, and upon submission of proof
reasonably satisfactory to Landlord that the restoration work has been paid
for in full and that the Improvements have been restored or rebuilt to a
complete architectural and mechanical unit for the use and occupancy of
Tenant as provided in this Lease, Landlord and Tenant as co-trustees shall
pay over to Tenant any portion of the cash deposit furnished by Tenant then
remaining. From and after the date of delivery of possession to the
condemning authority pursuant to the Proceedings, a just and proportionate
part of the Basic rent, according to the extent and nature of such taking,
shall abate for the remainder of the term of this Lease.
Section 14.4 Continuance of Obligations. In the event of any termination
of this Lease, or any part thereof, as a result of any such Proceedings, Tenant
shall pay to Landlord all Basic Rent and all Additional Rent and other charges
payable hereunder with respect to that portion of
32
<PAGE>
the Demised Premises so taken in such Proceedings with respect to which this
Lease shall have terminated justly apportioned to the date of such
termination. From and after the date of vesting of title in such
Proceedings, Tenant shall continue to pay the Basic Rent and Additional Rent
and other charges payable hereunder, as in this Lease provided, to be paid by
Tenant, subject to an abatement of a just and proportionate part of the Basic
Rent according to the extent and nature of such taking as provided for in
Section 14.3 and 14.5 hereof in respect to the Demised Premises remaining
after such taking.
Section 14.5 Adjustment of Rent. In the event of a partial taking of the
Demised Premises under Section 14.3 hereof, or a partial taking of the Demised
Premises under Section 14.2 hereof, followed by Tenant's election not to
terminate this Lease, the fixed Basic Rent payable hereunder during the period
from and after the date of vesting of title in such Proceedings to the
termination of this Lease shall be reduced to a sum equal to the product of the
Basic Rent provided for herein multiplied by a fraction, the numerator of which
is the value of the Demised Premises after such taking and after the same has
been restored to a complete architectural unit, and the denominator of which is
the value of the Demised Premises prior to such taking. In no event, however,
shall such reduction in Basic Rent exceed 10% of the net award received by
Landlord as a result of such taking after deductions of all costs of the
Proceedings, including the costs of Restoration.
ARTICLE XV
ASSIGNMENT, SUBLETTING, ETC.
Section 15.1 Restriction on Transfer. Tenant shall not sublet the
Demised Premises, or any portion thereof, nor assign, mortgage, pledge, transfer
or otherwise encumber or dispose of this Lease, or any interest therein, or in
any manner assign, mortgage, pledge, transfer or otherwise encumber or dispose
of its interest or estate in the Demised Premises, or any portion thereof,
without obtaining Landlord's prior written consent in each and every instance,
which consent shall not be unreasonably withheld or delayed, provided the
following conditions are complied with:
(a) Any assignment of this Lease shall transfer to the assignee all of
Tenant's right, title and interest in this Lease and all of Tenant's estate
or interest in the Demised Premises.
(b) At the time of any assignment or subletting, and at the time when
Tenant requests Landlord's written consent thereto, this Lease must be in
full force and effect, without any breach or default thereunder on the part
of Tenant.
(c) Any such assignee shall assume, by written, recordable instrument, in
form and content satisfactory to Landlord, the due performance of all of
Tenant's obligations under this Lease, including any accrued obligations at
the time of the effective date of the assignment, and such assumption
agreement shall state that the same is made by the assignee for the express
benefit of Landlord as a third party beneficiary thereof. A copy of the
assignment and assumption agreement, both in form and content satisfactory
to Landlord, fully executed and
33
<PAGE>
acknowledged by assignee, together with a certified copy of a properly
executed corporate resolution (if the assignee be a corporation)
authorizing the execution and delivery of such assumption agreement,
shall be sent to Landlord ten days prior to the effective date of such
assignment.
(d) In the case of a subletting, a copy of any sublease fully executed and
acknowledged by Tenant and the sublessee shall be mailed to Landlord ten
days prior to the effective date of such subletting, which sublease shall
be in form and content acceptable to Landlord.
(e) Such assignment or subletting shall be subject to all the provisions,
terms, covenants and conditions of this Lease, and Tenant-assignor (and the
guarantor or guarantors of this Lease, if any) and the assignee or
assignees shall continue to be and remain liable under this Lease, as it
may be amended or extended, or both, from time to time without notice to
any assignor of Tenant's interest or to any guarantor.
(f) Each sublease permitted under this Section 15.1 shall contain
provisions to the effect that (i) such sublease is only for actual use and
occupancy by the sublessee; (ii) such sublease is subject and subordinate
to all of the terms, covenants and conditions of this Lease and to all of
the rights of Landlord thereunder; and (iii) in the event this Lease shall
terminate before the expiration of such sublease, the sublessee thereunder
will, at Landlord's option, attorn to Landlord and waive any rights the
sublessee may have to terminate the sublease or to surrender possession
thereunder, as a result of the termination of this Lease.
(g) Tenant agrees to pay on behalf of Landlord any and all costs of
Landlord, including reasonable attorney's fees paid or payable to outside
counsel, occasioned by such assignment or subletting other than to an
affiliate.
Section 15.2 Restriction From Further Assignment. Notwithstanding
anything contained in this Lease to the contrary and notwithstanding any consent
by Landlord to any sublease of the Demised Premises, or any portion thereof, or
to any assignment of this Lease or of Tenant's interest or estate in the Demised
Premises, no sublessee shall assign its sublease nor further sublease the
Demised Premises, or any portion thereof, and no assignee shall further assign
its interest in this Lease or its interest or estate in the Demised Premises, or
any portion thereof, nor sublease the Demised Premises, or any portion thereof,
without Landlord's prior written consent in each and every instance which
consent shall not be unreasonably withheld or unduly delayed. No such
assignment or subleasing shall relieve Tenant from any of Tenant's obligations
in this Lease contained. Notwithstanding anything herein to the contrary,
Tenant may assign this Lease or sublet the Demised Premises to an affiliate or
in connection with the merger or reorganization of Tenant or the sale of all or
substantially all of Tenant's assets. As used herein, the Affiliate shall mean
any entity which owns or controls or is owned or controlled by or its under
common ownership or control with the Tenants.
34
<PAGE>
Section 15.3 Tenant's Failure to Comply. Tenant's failure to comply with
all of the foregoing provisions and conditions of this Article XV shall (whether
or not Landlord's consent is required under this Article), at Landlord's option,
render any purported assignment or subletting null and void and of no force and
effect.
Section 15.4 Sharing of Excess Rent. If Landlord consents to Tenant
assigning its interest under this Lease or subletting all or any portion of the
Demised Premises, Tenant shall pay to Landlord (in addition to Rent and all
other amounts payable by Tenant under this Lease) 33% of the rents and other
considerations payable by such assignee or subtenant in excess of the Rent
otherwise payable by Tenant from time to time under this Lease. For the
purposes of this computation, the additional amount payable by Tenant shall be
determined by application of the rental rate per square foot for the Demised
Premises or any portion thereof sublet. Said additional amount shall be paid to
Landlord immediately upon receipt by Tenant of such Rent or other considerations
from the assignee or subtenant. This Section 15.4 shall not apply to subletting
or assignment to an affiliate.
ARTICLE XVI
SUBORDINATION, NONDISTURBANCE,
NOTICE TO MORTGAGEE AND ATTORNMENT
Section 16.1 Subordination by Tenant. This Lease and all rights of
Tenant therein, and all interest or estate of Tenant in the Demised Premises, or
any portion thereof, shall be subject and subordinate to the lien of any
mortgage, deed of trust, security instrument or other document of like nature
("Mortgage"), which at any time may be placed upon the Demised Premises, or any
portion thereof, by Landlord, and to any replacements, renewals, amendments,
modifications, extensions or refinancing thereof, and to each and every advance
made under any Mortgage provided the holder of such Mortgage agrees in writing
not to disturb Tenant in its quiet enjoyment of the Demised Premises in its
rights and under this Lease, so long as Tenant is not in default hereunder.
Tenant agrees at any time hereafter, and from time to time on demand of
Landlord, to execute and deliver to Landlord any instruments, releases or other
documents that may be reasonably required for the purpose of subjecting and
subordinating this Lease to the lien of any such Mortgage. It is agreed,
nevertheless, that such instruments, releases or other documents shall state in
writing that so long as Tenant is not in default in the payment of Basic Rent
and Additional Rent and the performance and observance of all covenants,
conditions, provisions, terms and agreements to be performed and observed by
Tenant under this Lease, that such subordination agreement or other instrument,
release or document shall not interfere with, hinder or molest Tenant's right to
quiet enjoyment under this Lease, nor the right of Tenant to continue to occupy
the Demised Premises, and all portions thereof, and to conduct its business
thereon in accordance with the covenants, conditions, provisions, terms and
agreements of this Lease. The lien of any such Mortgage shall not cover
Tenant's trade fixtures or other personal property located in or on the Demised
Premises.
Section 16.2 Landlord's Default. In the event of any act or omission of
Landlord constituting a default by Landlord, Tenant shall not exercise any
remedy until Tenant has given Landlord prior written notice of such act or
omission and until a 30-day period of time to allow Landlord or the mortgagee to
remedy such act or omission shall have elapsed following the
35
<PAGE>
giving of such notice; provided, however, if such act or omission cannot,
with due diligence and in good faith, be remedied within such 30-day period,
the Landlord and/or mortgagee shall be allowed such further period of time as
may be reasonably necessary provided that it shall have commenced remedying
the same with due diligence and in good faith within said 30-day period. In
the event Landlord's act or omission which constitutes a Landlord's default
hereunder results in an immediate threat of bodily harm to Tenant's
employees, agents or invitees, or damage to Tenant's property Tenant may
proceed to cure the default without prior notice to Landlord provided,
however, in that event Tenant shall give written notice to Landlord as soon
as possible after commencement of such cure. Nothing herein contained shall
be construed or interpreted as requiring any mortgagee to remedy such act or
omission.
Section 16.3 Attornment. If any mortgagee shall succeed to the rights
of Landlord under this Lease or to ownership of the Demised Premises, whether
through possession or foreclosure or the delivery of a deed to the Demised
Premises, then, upon the written request of such mortgagee so succeeding to
Landlord's rights hereunder, Tenant shall attorn to and recognize such mortgagee
as Tenant's landlord under this Lease, and shall promptly execute and deliver
any instrument that such mortgagee may reasonably request to evidence such
attornment (whether before or after making of the mortgage). In the event of
any other transfer of Landlord's interest hereunder, upon the written request of
the transferee and Landlord, Tenant shall attorn to and recognize such
transferee as Tenant's landlord under this Lease and shall promptly execute and
deliver any instrument that such transferee and Landlord may reasonably request
to evidence such attornment.
ARTICLE XVII
SIGNS
Section 17.1 Tenant's Signs. Subject to Landlord's reasonable approval,
Tenant may erect signs on the exterior or interior of the Building or on the
landscaped area adjacent thereto, provided that such sign or signs (a) do not
cause any structural damage or other damage to the Building; (b) do not violate
applicable governmental laws, ordinances, rules or regulations; and (c) do not
violate any existing restrictions affecting the Demised Premises.
ARTICLE XVIII
REPORTS BY TENANT
[Intentionally omitted.]
ARTICLE XIX
CHANGES AND ALTERATIONS
Section 19.1 Tenant's Changes and Alterations. Tenant shall have the
right at any time, and from time to time during the term of this Lease, to make
such changes and alterations, structural or otherwise, to the Building,
improvements and fixtures hereafter erected on the Demised Premises as Tenant
shall deem necessary or desirable in connection with the requirements of its
business, which such changes and alterations (other than changes or
36
<PAGE>
alterations of Tenant's movable trade fixtures and equipment) shall be made
in all cases subject to the following conditions, which Tenant covenants to
observe and perform:
(a) Permits. No charge or 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 municipal, state and federal permits and authorizations
of the various governmental bodies and departments having jurisdiction
thereof, and Landlord agrees to join in the application for such permits or
authorizations whenever such action is necessary, all at Tenant's sole cost
and expense, provided such applications do not cause Landlord to become
liable for any cost, fees or expenses.
(b) Compliance with Plans and Specifications. Before commencement of any
change, alteration, restoration or construction (hereinafter sometimes
referred to as "Work") involving in the aggregate an estimated cost of more
than Twenty-Five Thousand and no/100 Dollars ($25,000.00) or which in
Landlord's reasonable judgment would materially alter the mechanical,
structural, or electrical systems of the Improvements, Tenant shall (i)
furnish Landlord with detailed plans and specifications of the proposed
change or alteration; (ii) obtain Landlord's prior written consent, which
consent shall not be unreasonably withheld (but such consent may be
withheld if the change or alteration would, in the reasonable judgment of
Landlord, impair the value or usefulness of the Land or Improvements, or
any substantial part thereof to Landlord); (iii) obtain Landlord's prior
written approval of a licensed architect or licensed professional engineer
selected and paid for by Tenant, who shall supervise any such work
(hereinafter referred to as "Alterations Architect or Engineer") which
approval shall not be unreasonably withheld; (iv) obtain Landlord's prior
written approval of detailed plans and specifications prepared and approved
in writing by said Alterations Architect or Engineer, and of each amendment
and change thereto; and (v) if Landlord reasonably determines that it is
necessary, furnish to Landlord a surety company performance bond issued by
a surety company licensed to do business in the state in which the Demised
Premises are located and reasonably acceptable to Landlord in an amount
equal to the estimated cost of such work guaranteeing the completion
thereof within a reasonable time thereafter (1) free and clear of all
mechanic's liens or other liens, encumbrances, security interests and
charges, and (2) in accordance with the plans and specifications approved
by Landlord.
(c) Value Maintained. Any change or alteration shall, when completed, be
of such character as not to reduce the value or utility of the Demised
Premises or the Building to which such change or alteration is made below
its value or utility to Landlord immediately before such change or
alteration, nor shall such change or alteration reduce the area or cubic
content of the Building, nor change the character of the Demised Premises
or the Building as to use without Landlord's express written consent.
37
<PAGE>
(d) Compliance with Laws. All Work done in connection with any change or
alteration shall be done promptly and in a good and workmanlike manner and
in compliance with all building and zoning laws of the place in which the
Demised Premises are situated, and with all laws, ordinances, orders,
rules, regulations and requirements of all federal, state and municipal
governments and appropriate departments, commissions, boards and officers
thereof, and in accordance with the orders, rules and regulations of the
Board of Fire Underwriters where the Demised Premises are located, or any
other body exercising similar functions. The cost of any such change or
alteration shall be paid in cash so that the Demised Premises and all
portions thereof shall at all times be free of liens of labor and materials
supplied to the Demised Premises, or any portion thereof. The Work of any
change or alteration shall be prosecuted with reasonable dispatch, delays
due to strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions or similar causes beyond the control
of Tenant excepted. Tenant shall obtain and maintain, at its sole cost and
expense, during the performance of the Work, workers' compensation
insurance covering all persons employed in connection with the Work and
with respect to which death or injury claims could be asserted against
Landlord or Tenant or against the Demised Premises or any interest therein,
together with comprehensive general liability insurance for the mutual
benefit of Landlord and Tenant with limits of not less than Two Million
Dollars ($2,000,000.00) combined single limit, and the fire insurance with
"extended coverage" endorsement required by Section 6.1 hereof shall be
supplemented with "builder's risk" insurance on a completed value form or
other comparable coverage on the Work. All such insurance shall be in a
company or companies authorized to do business in the state in which the
Demised Premises are located and reasonably satisfactory to Landlord, and
all such policies of insurance or certificates of insurance shall be
delivered to Landlord endorsed "Premium Paid" by the company or agency
issuing the same, or with other evidence of payment of the premium
satisfactory to Landlord.
(e) Property of Landlord. All affixed improvements and alterations (other
than Tenant's movable trade fixtures and equipment) made or installed by
Tenant shall immediately, upon completion or installation thereof, become
the property of Landlord without payment therefor by Landlord, and shall be
surrendered to Landlord on the expiration of the term of this Lease.
(f) Location of Improvements. No change, alteration, restoration or new
construction shall be in or connect the Improvements with any property,
building or other improvement located outside the boundaries of the parcel
of land described in Exhibit "A" attached, nor shall the same obstruct or
interfere with any existing easement.
(g) Removal of Improvements. As a condition to granting approval for any
changes or alterations, Landlord may require Tenant to agree that Landlord,
by written notice to Tenant, given at or prior to the time of granting such
approval, may require Tenant at the termination of this Lease to remove any
improvements,
38
<PAGE>
additions or installations installed by Tenant in the Demised Premises at
Tenant's sole cost and expense, and repair and restore any damage caused
by the installation and removal of such improvements, additions, or
installations; provided, however, the only improvements, additions or
installations which Tenant shall remove shall be those specified in such
notice. All improvements, additions or installations installed by Tenant
which did not require Landlord's prior approval shall be removed by Tenant
as provided for in this Section 19.1(g), unless Tenant has obtained a
written waiver of such condition from Landlord.
(h) Written Notification Required. Tenant shall notify Landlord in
writing 30 days prior to commencing any alterations, additions or
improvements to the Demised Premises which have been approved by Landlord
so that Landlord shall have the right to record and post notices of
non-responsibility on the Demised Premises.
ARTICLE XX
MISCELLANEOUS PROVISIONS
Section 20.1 Entry by Landlord. Tenant agrees to permit Landlord and
authorized representatives of Landlord to enter upon the Demised Premises at all
reasonable times during ordinary business hours for the purpose of inspecting
the same and making any necessary repairs to comply with any laws, ordinances,
rules, regulations or requirements of any public body, or the Board of Fire
Underwriters, or any similar body. Nothing herein contained shall imply any
duty upon the part of Landlord to do any such work which, under any provision of
this Lease, Tenant may be required to perform and the performance thereof by
Landlord shall not constitute a waiver of Tenant's default in failing to perform
the same. Landlord may, during the progress of any work, keep and store upon
the Demised Premises all necessary materials, tools and equipment. Landlord
shall not in any event be liable for inconvenience, annoyance, disturbance, loss
of business or other damage to Tenant by reason of making repairs or the
performance of any work in or about the Demised Premises, or on account of
bringing material, supplies and equipment into, upon or through the Demised
Premises during the course thereof, and the obligations of Tenant under this
Lease shall not be thereby affected in any manner whatsoever.
Section 20.2 Exhibition of Demised Premises. Landlord is hereby given
the right during usual business hours at any time during the term of this Lease
to enter upon the Demised Premises and to exhibit the same for the purpose of
mortgaging or selling the same. During the final year of the term, Landlord
shall be entitled to display on the Demised Premises, in such manner as to not
unreasonably interfere with Tenant's business, signs indicating that the Demised
Premises are for rent or sale and suitably identifying Landlord or its agent.
Tenant agrees that such signs may remain unmolested upon the Demised Premises
and that Landlord may exhibit said premises to prospective tenants during said
period.
Section 20.3 Indemnification by Tenant. To the fullest extent allowed by
law, Tenant shall at all times indemnify, defend and hold Landlord and
Landlord's shareholders, employees and managing agent harmless against and from
any and all claims, costs, liabilities, actions and damages (including, without
limitation, attorneys' fees and costs) by or on behalf of any person or persons,
firm or firms, corporation or corporations, arising from the conduct or
management,
39
<PAGE>
or from any work or things whatsoever done in or about the Demised Premises,
unless caused by Landlord or its agents or employees, and will further
indemnify, defend and hold Landlord harmless against and from any and all
claims arising during the term of this Lease from any condition of the
Improvements, or arising from any breach or default on the part of Tenant in
the performance of any covenant or agreement on the part of Tenant to be
performed, pursuant to the terms of this Lease, or arising from any act or
negligence of Tenant, its agents, servants, employees or licensees, or
arising from any accident, injury or damage whatsoever caused to any person,
firm or corporation occurring during the term of this Lease, in or about the
Demised Premises (unless caused by Landlord or its agents or employees), or
upon the sidewalk and the land adjacent thereto, and from and against all
costs, attorney's fees, expenses and liabilities incurred in or about any
such claim or action or proceeding brought thereon; and in case any action or
proceeding be brought against Landlord by reason of any such claim, Tenant,
upon notice from Landlord, covenants to defend such action or proceeding by
counsel reasonably satisfactory to Landlord. Tenant's obligations under this
Section 20.3 shall be insured by contractual liability endorsements in
Tenant's policies of insurance required under the provisions of Section 6.2
hereof.
Section 20.4 Notices. All notices, demands and requests which may be or
are required to be given, demanded or requested by either party to the other
shall be in writing. All notices, demands and requests shall be sent by United
States registered or certified mail, postage prepaid or by an independent
overnight courier service, addressed as follows:
To Landlord: Opus Corporation
P.O. Box 150
Minneapolis, Minnesota 55440-0150
Attention: John D. Griffith
With a copy to: James A. Dueholm
Faegre & Benson
90 South Seventh Street, Suite 2200
Minneapolis, Minnesota 55402-3901
To Tenant: Select Comfort Corporation
6105 Trenton Lane North
Plymouth, Minnesota 55442
Attention: Marcel Kole
With a copy to: Mark E. Kimball
Oppenheimer, Wolff & Donnelly
45 South Seventh Street, Suite 3400
Minneapolis, Minnesota 55402
or at such other place as Landlord may from time to time designate by written
notice to Tenant. Notices, demands and requests which shall be served upon
Landlord by Tenant, or upon Tenant by Landlord, in the manner aforesaid, shall
be deemed to be sufficiently served or given for all
40
<PAGE>
purposes hereunder at the time such notice, demand or request shall be mailed
or delivered to a courier.
Section 20.5 Quiet Enjoyment. Landlord covenants and agrees that Tenant,
upon paying the Basic Rent and Additional Rent, and upon observing and keeping
the covenants, agreements and conditions of this Lease on its part to be kept,
observed and performed, shall lawfully and quietly hold, occupy and enjoy the
Demised Premises (subject to the provisions of this Lease) during the term of
this Lease without hindrance or molestation by Landlord or by any person or
persons claiming under Landlord. Landlord represents that, as of the date of
this Lease, the Demised Premises are not subject to a mortgage.
Section 20.6 Landlord's Continuing Obligations. The term "Landlord," as
used in this Lease so far as covenants or obligations on the part of Landlord
are concerned, shall be limited to mean and include only the owner or owners at
the time in question of the fee of the Demised Premises, and in the event of any
transfer or transfers or conveyance the then grantor shall be automatically
freed and relieved from and after the date of such transfer or conveyance of all
liability as respects the performance of any covenants or obligations on the
part of Landlord contained in this Lease thereafter to be performed, provided
that any funds in the hands of such landlord or the then grantor at the time of
such transfer, in which Tenant has an interest, shall be turned over to the
grantee, and any amount then due and payable to Tenant by Landlord or the then
grantor under any provision of this Lease shall be paid to Tenant. The
covenants and obligations contained in this Lease on the part of Landlord shall,
subject to the aforesaid, be binding on Landlord's successors and assigns,
during and in respect of their respective successive periods of ownership.
Nothing herein contained shall be construed as relieving Landlord of its
obligations under Article II of this Lease, or releasing Landlord from any
obligation to complete the cure of any breach by Landlord during the period of
its ownership of the Demised Premises.
Section 20.7 Estoppel. Landlord and Tenant shall, each without charge at
any time and from time to time, within ten business days after written request
by the other party, certify by written instrument, duly executed, acknowledged
and delivered to any mortgagee, assignee of a mortgagee, proposed mortgagee, or
to any purchaser or proposed purchaser, or to any other person dealing with
Landlord, Tenant or the Demised Premises:
(a) That this Lease (and all guaranties, if any) is unmodified and in full
force and effect (or, if there have been modifications, that the same is in
full force and effect, as modified, and stating the modifications);
(b) The dates to which the Basic Rent or Additional Rent have been paid in
advance;
(c) Whether or not there are then existing any breaches or defaults by
such party or the other party known by such party under any of the
covenants, conditions, provisions, terms or agreements of this Lease, and
specifying such breach or default, if any, or any setoffs or defenses
against the enforcement of any covenant, condition, provision, term or
agreement of this Lease (or of any guaranties) upon the part of Landlord or
Tenant (or any guarantor), as the case may be, to be
41
<PAGE>
performed or complied with (and, if so, specifying the same and the steps
being taken to remedy the same); and
(d) Such other statements or certificates as Landlord or any mortgagee may
reasonably request.
It is the intention of the parties hereto that any statement delivered
pursuant to this Section 20.7 may be relied upon by any of such parties dealing
with Landlord, Tenant or the Demised Premises. If Tenant does not deliver such
statement to Landlord within such 10 day period, Landlord, and any prospective
purchaser or encumbrancer of the Demised Premises or the Building, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been canceled or terminated and is in
full force and effect, except as otherwise represented by Landlord; that the
current amounts of the Basic Rent and Security Deposit are as represented by
Landlord; that any changes made against the Security Deposit are uncontested and
valid; that there have been no subleases or assignments of the Lease; (iii) that
not more than one month's Basic Rent or other charges have been paid in advance;
and (iv) that Landlord is not in default under the Lease. In such event, Tenant
shall be estopped from denying the truth of such facts.
Section 20.8 Memorandum of Lease. Upon not less than ten business days
prior written request by either party, the parties hereto agree to execute and
deliver to each other a Memorandum Lease, in recordable form, setting forth the
following:
(a) The date of this Lease;
(b) The parties to this Lease;
(c) The term of this Lease;
(d) The legal description of the Demised Premises; and
(e) Such other matters reasonably requested by Landlord to be stated
therein.
Section 20.9 Severability. If any covenant, condition, provision, term
or agreement of this Lease shall, to any extent, be held invalid or
unenforceable, the remaining covenants conditions, provisions, terms and
agreements of this Lease shall not be affected thereby, but each covenant,
condition, provision, term or agreement of this Lease shall be valid and in
force to the fullest extent permitted by law. This Lease shall be construed and
be enforceable in accordance with the laws of the state in which the Demised
Premises are located.
Section 20.10 Successors and Assigns. The covenants and agreements herein
contained shall bind and inure to the benefit of Landlord, its successors and
assigns, and Tenant and its permitted successors and assigns.
42
<PAGE>
Section 20.11 Captions. The caption of each article of this Lease is for
convenience and reference only, and in no way defines, limits or describes the
scope or intent of such article or of this Lease.
Section 20.12 Relationship of Parties. This Lease does not create the
relationship of principal and agent, or of partnership, joint venture, or of any
association or relationship between Landlord and Tenant, the sole relationship
between Landlord and Tenant being that of landlord and tenant.
Section 20.13 Entire Agreement. All preliminary and contemporaneous
negotiations are merged into and incorporated in this Lease. This Lease
together with the Exhibits contains the entire agreement between the parties and
shall not be modified or amended in any manner except by an instrument in
writing executed by the parties hereto.
Section 20.14 No Merger. There shall be no merger of this Lease or the
leasehold estate created by this Lease with any other estate or interest in the
Demised Premises by reason of the fact that the same person, firm, corporation
or other entity may acquire, hold or own directly or indirectly, (a) this Lease
or the leasehold interest created by this Lease or any interest therein, and (b)
any such other estate or interest in the Demised Premises, or any portion
thereof. No such merger shall occur unless and until all persons, firms,
corporations or other entities having an interest (including a security
interest) in (1) this Lease or the leasehold estate created thereby, and (2) any
such other estate or interest in the Demised Premises, or any portion thereof,
shall join in a written instrument expressly effecting such merger and shall
duly record the same.
Section 20.15 Possession and Use. Tenant acknowledges that the Demised
Premises are the property of Landlord and that Tenant has only the right to
possession and use thereof upon the covenants, conditions, provisions, terms and
agreements set forth in this Lease.
Section 20.16 No Surrender During Lease Term. No surrender to Landlord of
this Lease or of the Demised Premises, or any portion thereof, or any interest
therein, prior to the expiration of the term of this Lease shall be valid or
effective unless agreed to and accepted in writing by Landlord and consented to
in writing by all contract vendors and mortgagees, and no act or omission by
Landlord or any representative or agent of Landlord, other than such a written
acceptance by Landlord consented to by all contract vendors and the mortgagees,
as aforesaid, shall constitute an acceptance of any such surrender.
Section 20.17 Surrender of Demised Premises. At the expiration of the
term of this Lease, Tenant shall surrender the Demised Premises in the same
condition as the same were in upon delivery of possession thereto at the
Commencement Date of the term of this Lease, reasonable wear and tear and
alterations completed in accordance with the terms hereof excepted, and shall
surrender all keys to the Demised Premises to Landlord at the place then fixed
for the payment of Basic Rent and shall inform Landlord of all combinations on
locks, safes and vaults, if any. Tenant shall at such time remove all of its
property therefrom and all alterations and improvements placed thereon by Tenant
if so requested by Landlord. Tenant shall repair any damage to the Demised
Premises caused by such removal, and any and all such property not so removed
shall, at Landlord's option, become the exclusive property of Landlord or be
disposed
43
<PAGE>
of by Landlord, at Tenant's cost and expense, without further notice to or
demand upon Tenant. If the Demised Premises be not surrendered as above set
forth, Tenant shall indemnify, defend and hold Landlord harmless against loss
or liability resulting from the delay by Tenant in so surrendering the
Demised Premises, including, without limitation any claim made by any
succeeding occupant founded on such delay. Tenant's obligations to observe
or perform this covenant shall survive the expiration or other termination of
this Lease.
All property of Tenant not removed within 30 days after the last day of the
term of this Lease shall be deemed abandoned. Tenant hereby appoints Landlord
its agent to remove all property of Tenant from the Demised Premises upon
termination of this Lease and to cause its transportation and storage for
Tenant's benefit, all at the sole cost and risk of Tenant and Landlord shall not
be liable for damage, theft, misappropriation or loss thereof and Landlord shall
not be liable in any manner in respect thereto. Tenant shall pay all costs and
expenses of such removal, transportation and storage. Tenant shall reimburse
Landlord upon demand for any expenses incurred by Landlord with respect to
removal or storage of abandoned property and with respect to restoring said
Demised Premises to good order, condition and repair.
Section 20.18 Holding Over. In the event Tenant remains in possession
of the Demised Premises after expiration of this Lease, and without the
execution of a new lease, it shall be deemed to be occupying the Demised
Premises as a tenant from month to month, if with Landlord's written consent,
or at sufferance, if without such consent, subject to all the provisions,
conditions and obligations of this Lease insofar as the same can be
applicable to a month-to-month tenancy, except that the Basic Rent shall be
escalated to 150% of the then current Basic Rent for the Demised Premises.
Section 20.19 Landlord Approvals. Any approval by Landlord or Landlord's
architects and/or engineers of any of Tenant's drawings, plans and
specifications which are prepared in connection with any construction of
improvements respecting the Demised Premises shall not in any way be construed
or operate to bind Landlord or to constitute a representation or warranty of
Landlord as to the adequacy or sufficiency of such drawings, plans and
specifications, or the improvements to which they relate, for any reason,
purpose or condition, but such approval shall merely be the consent of Landlord,
as may be required hereunder, in connection with Tenant's construction of
improvements relating to the Demised Premises in accordance with such drawings,
plans and specifications.
Section 20.20 Survival. All obligations (together with interest or money
obligations at the Maximum Rate of Interest) accruing prior to expiration of the
term of this Lease shall survive the expiration or other termination of this
Lease.
Section 20.21 Attorneys' Fees. In the event of any litigation or judicial
action in connection with this Lease or the enforcement thereof, the prevailing
party in any such litigation or judicial action shall be entitled to recover all
costs and expenses of any such judicial action or litigation (including, but not
limited to, reasonable attorneys' fees and paralegals' fees) from the other
party.
44
<PAGE>
Section 20.22 Landlord's Limited Liability. Tenant agrees to look solely
to Landlord's interest in the Demised Premises for recovery of any judgment from
Landlord, it being agreed that Landlord (and if Landlord is a partnership, its
partners, whether general or limited, and if Landlord is a corporation, its
directors, officers or shareholders) shall never be personally liable for any
personal judgment or deficiency decree or judgment against it.
Section 20.23 Broker. Tenant represents that it has dealt directly with
and only with CB Commercial and Towle Real Estate Company in connection with
this Lease and that no other broker has negotiated or participated in
negotiations of this Lease or is entitled to any commission in connection
therewith. Tenant shall indemnify and hold Landlord harmless from and against
any and all commissions, fees and expenses and all claims therefor by any
broker, salesman or other party in connection with or arising out of Tenant's
action in entering into this Lease, except for the commissions of CB Commercial
and Towle Real Estate Company, which commissions Landlord shall be obligated to
pay.
Section 20.24 Governing Law. This Lease shall be governed by the laws of
the State of Minnesota. All covenants, conditions and agreements of Tenant
arising hereunder shall be performable in the county wherein the Demised
Premises are located. Any suit arising from or relating to this Lease shall be
brought in the county wherein the Demised Premises are located, and the parties
hereto waive the right to be sued elsewhere.
Section 20.25 Joint and Several Liability. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.
Section 20.26 Time is of the Essence. Time is of the essence with respect
to the performance of every provision of this Lease in which time of performance
is a factor.
Section 20.27 Tenant Termination Right. Tenant may terminate this Lease
as of May 31, 1997, by notice given to Landlord not later than May 31, 1996, if,
and only if, prior to the date of the notice of termination Tenant (i) has
entered into a lease with Landlord of not less than 170,000 square feet in a
building constructed by Landlord after the date of this Lease, and (ii) has paid
Landlord $198,409, which represents the unamortized cost of the mezzanine in
Landlord's Improvements. Neither Landlord nor Tenant shall have any obligation
to enter into a lease which would give rise to the right of termination under
this Section 20.27, but, if Tenant gives notice to Landlord that Tenant desires
to enter into such a lease, both Landlord and Tenant shall negotiate in good
faith.
Section 20.28 Moving Allowance. Promptly after Tenant has occupied the
Demised Premises, Landlord shall pay Tenant the lesser of $30,000 or Tenant's
documented costs of moving from its existing premises to the Demised Premises.
Section 20.29 Change Orders. If there are change orders which increase
the cost of Landlord's Improvements, Tenant may pay such increase, or (a) the
cost of such change orders up to an aggregate of $50,000, together with interest
thereon at the rate of seven percent per annum, shall be paid through additional
Basic Rent in equal monthly installments over the initial
45
<PAGE>
term of this Lease, and (b) Tenant shall pay such change order costs in
excess of $50,000 within 10 days after receipt of invoice from Landlord.
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease to be
duly executed as of the day and year first above written.
LANDLORD:
OPUS CORPORATION
By: /S/
-------------------------------
Its: Vice President, General Manager
By:
-------------------------------
Its:
-------------------------------
TENANT:
SELECT COMFORT CORPORATION
By: /S/
-------------------------------
Its: COO/CFO
By:
-------------------------------
Its:
-------------------------------
46
<PAGE>
EXHIBIT "A"
Lot 1, Block 1, Bass Creek Business Park 2nd Addition
Subject to the lien of real estate taxes and installments of special assessments
due and payable in 1994 and thereafter, and to easements, restrictions and
covenants of record, if any, none of which, Landlord represents, would adversely
affect the improvement, operation or use of the Demised Premises as contemplated
hereby.