EXHIBIT 10.18
LEASE
RREEF MIDAMERICA/EAST-V NINE, INC., a Delaware corporation
Landlord
VICON INDUSTRIES, INC., a New York corporation
Tenant
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
1. USE AND RESTRJCTIONS ON USE 1
2. TERM 1
3. RENT 2
4. TAXES 2
5. SECURITY DEPOSIT 3
6. ALTERATIONS 3
7. REPAIR 5
8. LIENS 6
9. ASSIGNMENT AND SUBLETTING 6
10. INDEMNIFICATION 8
11. INSURANCE 9
12. WAIVER OF SUBROGATION 10
13. SERVICES AND UTILITIES 10
14. HOLDING OVER 10
15. SUBORDINATION 10
16. REENTRY BY LANDLORD 10
17. DEFAULT 11
18. REMEDIES 11
19. TENANT'S BANKRUPTCY OR INSOLVENCY 14
20. QUIET ENJOYMENT 15
21. DAMAGE BY FIRE,ETC 15
22. EMINENT DOMAIN 16
23. SALE BY LANDLORD 16
24. ESTOPPEL CERTIFICATES 16
25. SURRENDER OF PREMISES 17
26. NOTICES 17
27. TAXES PAYABLE BY TENANT 18
28. DEFINED TERMS AND HEADINGS 18
29. TENANT'S AUTHORITY 18
30. COMMISSIONS 18
-i-
ARTICLE PAGE
- ------- ----
3l. TIME AND APPLICABLE LAW 19
32. SUCCESSORS AND ASSIGNS 19
33. ENTIRE AGREEMENT 19
34. EXAMINATION NOT OPTION 19
35. RECORDATION 19
36. LIMITATION OF LANDLORD'S LIABILITY 19
37. OPTION TO EXTEND 19
38. MISCELLANEOUS 21
EXHIBIT A - PREMISES
EXHIBIT B - INITIAL ALTERATIONS
EXHIBIT C - WARRANTY
- ii -
REFERENCE PAGE
PREMISES: The land, building (the "Building") and
improvements thereon located at:
89 Arkay Drive
Hauppauge, New York
(as more particularly described on
Exhibit A annexed hereto)
LANDLORD: RREEF MIDAMERICA/EAST-V NINE,
INC., a Delaware corporation
LANDLORD'S ADDRESS: 125 Maiden Lane
New York, New York 10038
LEASE REFERENCE DATE: December 24, 1996
TENANT: VICON INDUSTRIES, INC., a New York
corporation
TENANT'S ADDRESS:
(a) As of beginning of Term: 89 Arkay Drive
Hauppauge, New York 11788
(b) Prior to beginning of Term 525 Broad Hollow Road
(if different): Melville, New York 11747
BUILDING RENTABLE AREA: 56,000 square feet (which the parties
agree shall be the rentable square
footage of the Building for all purposes
of this Lease)
USE: General office use and light assembly of
closed circuit security television
equipment and systems
COMMENCEMENT DATE: Date of execution and delivery of this
Lease by Landlord and Tenant.
TERMINATION DATE: The last day of the month in which the
fifth (5th)anniversary of the
Commencement Date occurs.
TERM OF LEASE: 5 years beginning on the Commencement
Date and ending on the Termination Date
(unless sooner terminated pursuant to
this Lease), subject to one five (5)
year renewal option as set forth in
Article 37.
-i-
INITIAL ANNUAL RENT (Article 3): From the Commencement Date through the
date immediately preceding the first
anniversary of the Commencement Date:
$364,000.00
From the first anniversary of the
Commencement Date through the date
immediately preceding the second
anniversary of the Commencement Date:
$371,280.00
From the second anniversary of the
Commencement Date through the date
immediately preceding the third
anniversary of the Commencement
Date: $378,560.00
From the third anniversary of the
Commencement Date through the date
immediately preceding the fourth
anniversary of the Commencement Date:
$386,400.00
From the fourth anniversary of the
Commencement Date through the
Termination Date: $394,240.00
INITIAL MONTHLY INSTALLMENT OF From the Commencement Date through
ANNAUL RENT (Article 3): the date immediately preceding the
first anniversary of the Commencement
Date: $30,333.33
From the first anniversary of the
Commencement Date through the date
immediately preceding the second
anniversary of the Commencement Date:
$30,940.00
From the second anniversary of the
Commencement Date through the date
immediately preceding the third
anniversary of the Commencement Date:
$31,546.67
From the third anniversary of the
Commencement Date through the date
immediately preceding the fourth
anniversary of the Commencement Date:
$32,200.00
From the fourth anniversary of the
Commencement Date through the
Termination Date: $32,853.33
ASSIGNMENT/SUBLETTING FEE: N/A
SECURITY DEPOSIT: $63,093.33 (subject to reduction as set
forth in Article 5).
TENANT IMPROVEMENT ALLOWANCE: $125,000
REAL ESTATE BROKERS DUE Island Realty Group, Inc.
COMMISSION: James Mounce, Inc
.
- ii -
The Reference Page information is incorporated into and made a part of the
Lease. In the event of any conflict between any Reference Page information and
the Lease, the Lease shall control. This Lease includes Exhibits A, B and C
which are made a part of this Lease.
LANDLORD: RREEF TENANT: VICON INDUSTRIES, INC., a
MIDAMERICA/EAST-V NINE, INC., a New York Corporation
Delaware corporation
By: RREEF Management Company, a
California Corporation
By: Alane Berkowitz By: Kenneth M. Darby
Title: District Manager Title: President
Dated: 12-24-96 Dated: 12-24-96
- iii -
LEASE
By this Lease Landlord leases to Tenant and Tenant leases from
Landlord the Premises as set forth and described on the Reference Page. The
Reference Page, including all terms defined thereon, is incorporated as part of
this Lease.
1. USE AND RESTRICTIONS ON USE.
1.1 The Premises are to be used solely for the purposes stated on
the Reference Page. Tenant shall not allow the Premises to be used for any
improper, immoral, unlawful, or objectionable purpose. Tenant shall not do,
permit or suffer in, on, or about the Premises the sale of any alcoholic liquor
without the written consent of Landlord first obtained, or the commission of any
waste. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises and its occupancy and shall
promptly comply with all governmental orders and directions for the correction,
prevention and abatement of any violations in or upon, or in connection with,
the Premises, all at Tenant's sole expense. Tenant shall not do or permit
anything to be done on or about the Premises or bring or keep anything into the
Premises which will in any way increase the rate of, invalidate or prevent the
procuring of any insurance protecting against loss or damage to the Building or
any of its contents by fire or other casualty or against liability for damage to
property or injury to persons in or about the Building or any part thereof.
1.2 Tenant shall not, and shall not direct, suffer or permit any of
its agents, contractors, employees, licensees or invitees to at any time handle,
use, manufacture, store or dispose of in or about the Premises or the Building
any (collectively "Hazardous Materials") flammables, explosives, radioactive
materials, hazardous wastes or materials, toxic wastes or materials, or other
similar substances, petroleum products or derivatives or any substance subject
to regulation by or under any federal, state and local laws and ordinances
relating to the protection of the environment or the keeping, use or disposition
of environmentally hazardous materials, substances, or wastes, presently in
effect or hereafter adopted, all amendments to any of them, and all rules and
regulations issued pursuant to any of such laws or ordinances (collectively
"Environmental Laws"), nor shall Tenant suffer or permit any Hazardous Materials
to be used in any manner not fully in compliance with all Environmental Laws, in
the Premises or the Building and appurtenant land or allow the environment to
become contaminated with any Hazardous Materials. Notwithstanding the foregoing,
and subject to Landlord's prior consent, Tenant may handle, store, use or
dispose of products containing small quantities of Hazardous Materials (such as
aerosol cans containing insecticides, toner for copiers, paints, paint remover
and the like) to the extent customary and necessary for the use of the Premises
for general office purposes; provided that Tenant shall always handle, store,
use, and dispose of any such Hazardous Materials in a safe and lawful manner and
never allow such Hazardous Materials to contaminate the Premises, Building and
appurtenant land or the environment. Tenant shall protect, defend, indemnify and
hold each and all of the Landlord Entities (as defined in Article 28) harmless
from and against any and all loss, claims, liability or costs (including court
costs and reasonable attorney's fees) incurred by reason of any actual or
asserted failure of Tenant to fully comply with all applicable Environmental
Laws, or the presence, handling, use or disposition in or from the Premises of
any Hazardous Materials (even though permissible under all applicable
Environmental Laws or the provisions of this Lease), or by reason of any actual
or asserted failure of Tenant to keep, observe, or perform any provision of this
Section 1.2.
2. TERM.
2.1 The Term of this Lease shall begin on the Commencement Date as
shown on the Reference Page. Tenant shall accept the Premises in their "as is"
condition and Landlord shall not be required to perform any work or make any
contribution (except as set forth in Exhibit B to this Lease) to ready the
Premises for Tenant's occupancy. Landlord and Tenant shall execute a memorandum
setting forth the actual Commencement Date, the Rent Commencement Date (as
hereinafter defined) and the Termination Date.
2.2 In the event Landlord shall permit Tenant to occupy the
Premises prior to the Commencement Date, such occupancy shall be subject to all
the provisions of this Lease. Said early possession shall not advance the
Termination Date.
-1-
3. RENT.
3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from
time to time by paying the Monthly Installment of Rent then in effect on or
before the first day of each full calendar month during the Term, except that
the first month's rent shall be paid upon the execution of this Lease. The
Monthly Installment of Rent in effect at any time shall be one-twelfth of the
Annual Rent in effect at such time. Rent for any period during the Term which is
less than a full month shall be a prorated portion of the Monthly Installment of
Rent based upon a thirty (30) day month. Said rent shall be paid to Landlord,
without deduction or offset and without notice or demand, at the Landlord's
address, as set forth on the Reference Page, or to such other person or at such
other place as Landlord may from time to time designate in writing.
3.2 Notwithstanding anything contained in the immediately preceding
paragraph, provided that no Event of Default occurs at any time prior to the
date that is ninety (90) days following the date hereof, no Annual Rent will be
payable for the period prior to the date that is ninety (90) days following the
date hereof (the "Rent Commencement Date"); provided, however, that the Rent
Commencement Date shall be postponed by one day for each day that Landlord fails
to comply with the time periods provided for the review of Tenant's Plans and
Specifications (as hereinafter defined) for the Initial Alterations (as
hereinafter defined) set forth in Paragraph 2 of the section titled "Tenant's
Initial Alterations" in Exhibit B annexed hereto.
3.4 Tenant recognizes that late payment of any rent or other sum
due under this Lease will result in administrative expense to Landlord, the
extent of which additional expense is extremely difficult and economically
impractical to ascertain. Tenant therefore agrees that if rent or any other sum
is not paid within five (5) days after it becomes due and payable pursuant to
this Lease a late charge shall be imposed once on each such unpaid installment
of rent or other payment in an amount equal to the greater of: (a) Fifty Dollars
($50.00) and (b) a sum equal to five percent (5%) of the unpaid installment of
rent or other payment. In addition to the foregoing late charge, if any rent or
other sum due under this Lease is not paid by Tenant to Landlord when due, the
same shall bear interest at the rate of 15% per annum or the maximum rate
permitted by law, whichever is less, from the due date thereof until paid, and
the amount of such interest shall be due Landlord as additional rent hereunder.
The provisions of this Section 3.4 in no way relieve Tenant of the obligation to
pay rent or other payments on or before the date on which they are due, nor do
the terms of this Section 3.4 in any way affect Landlord's remedies pursuant to
Article 18 in the event said rent or other payment is unpaid after the date due.
4. TAXES.
4.1 Tenant shall pay as additional rent all Taxes incurred on the
Building during the Term. Taxes shall be defined as real estate taxes and any
other taxes, assessments and governmental charges (excluding penalties, fines
and charges resulting from violations of law), which are levied with respect to
the Building or the land appurtenant to the Building, or with respect to any
improvements, fixtures and equipment or other property of Landlord, real or
personal, located in the Building and used in connection with the operation of
the Building and said land, any payments to any ground lessor in reimbursement
of taxes paid by such lessor; and all reasonable fees, expenses and costs
incurred by Landlord in investigating, protesting, contesting or in seeking to
reduce or avoid increase in any assessments, levies or the tax rate pertaining
to any Taxes to be paid by Landlord in any Lease Year. Taxes shall not include
any corporate franchise, or estate, inheritance or net income tax, or tax
imposed upon any transfer by Landlord of its interest in this Lease or the
Building.
4.2 Throughout the term of this Lease, Tenant shall pay to
Landlord, as additional rent, all Taxes and other taxes payable under Section
4.1, Article 6 and Article 27 within thirty (30) days after Landlord's delivery
of each bill therefor. Landlord shall furnish to Tenant, promptly upon Tenant's
request, copies of the applicable tax bills. If any assessment payable under
Section 4.1 may be paid in installments, such assessment shall be included in
Taxes for any year only to the extent that the corresponding installment would
be payable in such year.
-2-
4.3 If Landlord shall actually receive a refund of any portion of the Taxes paid
by Tenant with respect to any lease year (or portion thereof) as a result of a
reduction in such taxes by final determination of legal proceedings, settlement
or otherwise, Landlord shall promptly give notice of such refund to tenant and
promptly after receiving such refund, pay Tenant the refund (after deducting
from such refund the costs and expenses of obtaining the same, including,
without limitation, appraisal, accounting and legal fees, to the extent that
such fees were not previously included in "Taxes" pursuant to Section 4.1 of
this Lease).
4.4 Landlord shall, within 30 days following an inquiry from Tenant
specifically referring to this Section, notify Tenant as to whether Landlord
intends to contest a particular tax assessment, levy or tax rate pertaining to
any Taxes levied with respect to any lease year. If Landlord notifies Tenant
that Landlord is not intending to make any such contest, Tenant shall have the
right to make such contest by appropriate proceedings diligently prosecuted,
provided that if Landlord notifies Tenant that it is not contesting Taxes for
such year as a result of or in connection with a settlement with the applicable
taxing authority, then Tenant shall have no right to make such contest. Tenant
shall provide Landlord with copies of any applications, petitions or other
pleadings filed by Tenant in connection with a tax reduction proceeding.
Landlord shall not be subjected to any liability for the payment of any costs or
expenses in connection with any proceeding commenced by Tenant under this
Section 4.4,
4.5 If the Commencement Date is other than January 1 or if the
Termination Date is other than December 31, Tenant's liability for Taxes for the
year in which said Date occurs shall be prorated based upon a three hundred
sixty-five (365) day year.
4.6 Even though the Term has expired and Tenant has vacated the
premises, when the final determination is made of Tenant's liability for Taxes
for the year in which the Lease terminated, Tenant shall pay any unpaid portion
of Tenant's prorated share of the Taxes.
5. SECURITY DEPOSIT.
5.1 Tenant shall deposit the Security Deposit with Landlord upon
the execution of this Lease. Said sum shall be held by Landlord as security for
the faithful performance by Tenant of all the terms, covenants and conditions of
this Lease to be kept and performed by Tenant and not as an advance rental
deposit or as a measure of Landlord's damage in case of Tenant's default. If
Tenant defaults with respect to any provision of this Lease, Landlord may use
any part of the Security Deposit for the payment of any rent or any other sum in
default, or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant's default, or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion is so used, Tenant shall within five (5) days after
written demand therefor, deposit with Landlord an amount sufficient to restore
the Security Deposit to its original amount and Tenant's failure to do so shall
be a material breach of this Lease. Except to such extent, if any, as shall be
required by law, Landlord shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest on
such deposit. If Tenant shall fully and faithfully perform every provision of
this Lease to be performed by it, the Security Deposit or any balance thereof
shall be returned to Tenant at such time after termination of this Lease when
Landlord shall have determined that all of Tenant's obligations under this Lease
have been fulfilled.
5.2 Notwithstanding anything to the contrary contained in Section
5.1, provided that (a) as of the first anniversary of the Rent Commencement Date
Tenant is not in default under this Lease beyond the expiration of any
applicable notice and cure period and (b) Landlord shall not have theretofore
drawn down any portion of the Security Deposit, Landlord, within thirty (30)
days after receipt of a request from Tenant therefor, shall pay Tenant an amount
equal to the amount required to reduce the Security Deposit to $31,546.67.
6. ALTERATIONS.
6.1 Except for those, if any, specifically provided for in Exhibit
B to this Lease, Tenant shall not make or suffer to be made any alterations,
additions, or improvements, including, but not limited to, the attachment of any
fixtures or equipment in, on, or to the Premises or any part thereof or the
making of any improvements as required by Article 7,
-3-
(collectively, "Alterations") without the prior written consent of
Landlord. When applying for such consent, Tenant shall, if requested by
Landlord, furnish complete plans and specifications for the applicable
Alterations,
6.2 In the event Landlord consents to the making of any
Alterations, the same shall be made using contractors selected by Tenant (which
shall be subject to Landlord's reasonable approval), at Tenant's sole cost and
expense. If Tenant shall employ any contractor and such contractor or any
subcontractor of such contractor shall employ any non-union labor or supplier,
Tenant shall be responsible for and hold Landlord harmless from any and all
delays, damages and extra costs suffered by Landlord as a result of any dispute
with any labor unions concerning the wage, hours, terms or conditions of the
employment of any such labor. In any event Landlord may charge Tenant for
Landlord's out-of-pocket costs incurred in connection with any Alterations.
6.3 All Alterations proposed by Tenant shall be constructed in
accordance with all government laws, ordinances, rules and regulations and
Tenant shall, prior to construction, provide the additional insurance required
under Article 11 in such case, and also all such reasonable assurances to
Landlord, including but not limited to, waivers of lien and surety company
performance bonds as Landlord shall require to assure payment of the costs
thereof and to protect Landlord and the Building and appurtenant land against
any loss from any mechanic's, materialmen's or other liens. Notwithstanding the
foregoing, Tenant shall not be required to post surety company bonds for (i) the
Initial Alterations (as hereinafter defined), (ii) Alterations having a cost of
less than $50,000.00 or (iii) Alterations that are solely decorative in nature
(such as carpeting, wallpaper, cabinetry and shelving).
6.4 If Tenant shall request Landlord's approval of the plans and
specifications for any Alteration(s) (other than the Initial Alterations which
shall be governed by the provisions of Exhibit B annexed hereto) then Landlord
shall either approve or disapprove (and in the case of disapproval, Landlord
shall specify the reasons therefor in reasonable detail) such plans and
specifications on or prior to date that is 10 business days (Or in the case of
resubmittals of plans and specifications, 5 business days) after Landlord's
receipt of Tenant's request for such approval. If Landlord fails to respond to a
request for approval of plans and specifications or if Landlord disapproves such
request and fails to specify the reasons therefor, in either case within 10
business days after Landlord's receipt of Tenant's request for such approval,
then Tenant may notify Landlord of such failure (which notice (the "Reminder
Notice") shall refer specifically to this Section 6.4), and if, in such event,
Landlord does not, within a period of 3 business days after its receipt of the
Reminder Notice, either approve or disapprove (and in the case of disapproval,
specify the reasons therefor) the plans and specifications at issue, then
Landlord shall be deemed to have granted its approval to such plans and
specifications (but Tenant shall still be required to comply with the other
provisions of this Article 6).
6.5 All Alterations in, on, or to the Premises made or installed by
Tenant, including carpeting, shall be and remain the property of Tenant during
the Term but, excepting furniture, furnishings, movable partitions of less than
full height from floor to ceiling and other trade fixtures, shall become a part
of the realty and belong to Landlord without compensation to Tenant upon the
expiration or sooner termination of the Term, at which time title shall pass to
Landlord under this Lease as by a bill of sale, unless Landlord elects
otherwise. Upon such election by Landlord, Tenant shall upon demand by Landlord,
at Tenant's sole cost and expense, forthwith and with all due diligence remove
any such Alterations which are designated by Landlord to be removed, and Tenant
shall forthwith and with all due diligence, at its sole cost and expense, repair
and restore the Premises to their original condition, reasonable wear and tear
and damage by fire or other casualty and condemnation excepted.
6.6 Tenant shall pay in addition to any sums due pursuant to
Article 4, any increase in real estate taxes attributable to any such Alteration
for so long, during the Term, as such increase is billed; said sums shall be
paid in the same way as sums due under Article 4.
6.7 Notwithstanding anything to the contrary contained in this
Lease, including but not limited to this Article 6 and Exhibit B, Landlord's
consent shall not be unreasonably withheld or delayed with respect to any
repairs (including replacements), or Alterations which are (a) non-structural
and do not affect the strength of any structural
-4-
component of the Building, (b) do not adversely affect the proper functioning of
the Building's mechanical, gas, electrical, sanitary, plumbing, heating or air
conditioning or other service systems (beyond a de minimis extent) and do not
overload the capacity of such systems (unless Tenant increases the capacity of
such systems in connection with such Alterations), (c) do not affect the
exterior of the Building or are visible from outside of the Premises, and (d) do
not affect the certificate of occupancy for the Building (except with respect to
those Alterations affecting the Building's HVAC or electrical systems).
6.8 Notwithstanding anything to the contrary contained in this
Lease, including but not limited to this Article 6, Landlord's consent shall not
be required with respect to: (a) minor cosmetic Alterations (such as painting,
installation of carpeting, and installation of shelves and cabinetry)
("Decorations"); provided the aggregate cost of such Decorations do not with
respect to any particular project exceed $2.00 per square foot of Building
Rentable Area; and (b) the installation of equipment consisting of ordinary
office furnishings and equipment.
6.9 Landlord shall reasonably cooperate with Tenant (at no cost to
Landlord) with respect to all aspects of Alterations approved by Landlord,
including signing any necessary applications required to be filed with the
buildings department or other governmental agency having jurisdiction over the
Premises.
7. REPAIR.
7.1 Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Premises, except as specified in Section 7.2 and
Exhibit C attached to this Lease. By taking possession of the Premises, Tenant
accepts them as being in good order, condition and repair and in the condition
in which Landlord is obligated to deliver them, subject to the Landlord
warranties expressly set forth in Exhibit C annexed hereto. It is hereby
understood and agreed that no representations respecting the condition of the
Premises or the Building have been made by Landlord to Tenant, except as
specifically set forth in this Lease. Landlord shall not be liable for any
failure to make any repairs or to perform any maintenance unless such failure
shall persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant.
7.2 Landlord shall at its own cost and expense keep the roof,
exterior walls, structural columns and foundation of the Building (collectively,
the "Landlord Repair Items") in good condition, promptly making all necessary
repairs and replacements, with materials and workmanship of the same character,
kind and quality as the original, except that Tenant shall be responsible for
such repairs or replacements to the extent the same are required due to the acts
or the negligent or wrongful omissions of Tenant or its agents, employees or
contractors. ~ addition to the foregoing Landlord shall be responsible for the
replacement of the parking lot only to the extent that a complete resurfacing is
necessary (as determined in Landlord's reasonable discretion).
7.3 Tenant shall at its own cost and expense keep and maintain all
parts of the Premises (excluding the Landlord Repair Items other than those for
which Tenant is responsible pursuant to Section 7.2) in good condition, promptly
making all necessary repairs and replacements, whether structural or
non-structural, ordinary or extraordinary, with materials and workmanship of the
same character, kind and quality as the original (including, but not limited to,
repair and replacement of all fixtures installed by Tenant, water heaters
serving the Premises, windows, glass and plate glass. doors, exterior stairs,
skylights, any special office entries, interior walls and finish work, floors
and floor coverings, heating and air conditioning systems, electrical systems
and fixtures, sprinkler systems, dock boards, truck doors, dock bumpers, parking
lots (excluding the complete resurfacing as set forth in Section 7.2),
driveways, landscaping, plumbing work and fixtures, and performance of regular
removal of trash and debris). Tenant as part of its obligations hereunder shall
keep the Premises in a clean and sanitary condition. Upon termination of this
Lease in any way Tenant will yield up the Premises to Landlord in at least as
good condition as the Premises were in at the Commencement Date, subject to
ordinary wear and tear, loss by fire or other casualty or condemnation excepted.
7.3 Except as provided in Article 21, there shall be no abatement
of rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business arising
-5-
from the making of any repairs, alterations or improvements in or to any portion
of the Building or the Premises or to fixtures, appurtenances and equipment in
the Building.
7.4 Tenant shall, at its own cost and expense, enter into a
regularly scheduled preventive maintenance/service contract with a maintenance
contractor approved by Landlord, which approval shall not be unreasonably
withheld or delayed, for servicing all heating and air conditioning systems and
equipment serving the Premises (and a copy thereof shall be furnished to
Landlord). The service contract must include all services suggested by the
equipment manufacturer in the operation/maintenance manual provided by Landlord
to Tenant and must become effective within thirty (30) days of the date Tenant
takes possession of the Premises. Landlord may, if Tenant defaults in its
obligations to maintain such service contract and fails To cure such default
within 10 days after notice thereof from Landlord to Tenant, enter into such a
maintenance/service contract on behalf of Tenant, or perform the work and in
either case, charge Tenant the cost thereof along with a reasonable amount for
Landlord's overhead.
8. LIENS.
Tenant shall keep the Premises, the Building and appurtenant land and Tenant's
leasehold interest in the Premises free from any liens arising out of any
services, work or materials performed, furnished, or contracted for by Tenant,
or obligations incurred by Tenant. In the event that Tenant shall not, within
forty-five (45) days following the imposition of any such lien, cause the same
to be released of record, Landlord shall have the right to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All such sums paid by Landlord and all reasonable
expenses incurred by it in connection therewith shall be considered additional
rent and shall be payable to it by Tenant on demand.
9. ASSIGNMENT AND SUBLETTING.
9.1 Tenant shall not have the right to assign or pledge this Lease
or to sublet the whole or any part of the Premises whether voluntarily or by
operation of law, or permit the use or occupancy of the Premises by anyone other
than Tenant, and shall not make, suffer or permit such assignment, subleasing or
occupancy without the prior written consent of Landlord, and said restrictions
shall be binding upon any and all assignees of the Lease and subtenants of the
Premises. In the event Tenant desires to sublet, or permit such occupancy of,
the Premises, or any portion thereof, or assign this Lease, Tenant shall give
written notice thereof to Landlord at least thirty (30) days but no more than
one hundred eighty (180) days prior to the proposed commencement date of such
subletting or assignment, which notice shall set forth: (i) the name and address
of the proposed assignee or sublessee, (ii) a duly executed counterpart of the
proposed agreement of assignment or sublease and all ancillary documents
executed or to be executed by Tenant and such proposed assignee or sublessee,
(iii) information as to the nature and character of the business and of the
proposed use for the Premises, and (iv) banking, financial or other credit
information relating to the proposed assignee or sublessee reasonably sufficient
to enable Landlord to determine the financial responsibility and character of
the proposed assignee or sublessee.
9.2 Landlord will not unreasonably withhold its consent to Tenant's
request for consent to such specific assignment or subletting, provided that:
(i) Tenant pays Landlord's reasonable costs in reviewing the
proposed assignment or sublease in connection with the requested consent,
including any reasonable attorneys' fees incurred by Landlord;
(ii) The proposed assignee or sublessee is not (A) a school,
college, university or educational institution, or (B) a government or any
subdivision or agency thereof;
(iii) In the case of a subletting of a portion of the
Premises, the portion sublet is regular in shape and suitable for normal renting
purposes;
(iv) The proposed assignment or sublease specifically
provides that (A) Tenant has complied with the requirements of Section 9.1,
(B) the sublessee or assignee,
-6-
as the case may be, will not have the right to further assign or sublet all or
part of the Premises or to allow same to be used by others, without the consent
of Landlord in each instance in accordance with this Article 9, (C) a consent by
Landlord thereto shall not be deemed or construed to modify, amend or affect the
terms and provisions of this Lease, or Tenant's obligations hereunder, and (D)
the receipt by Landlord of any amounts from an assignee or sublessee, or other
occupant of any part of the Premises shall not be deemed or construed as
releasing Tenant from Tenant's obligations under the lease or the acceptance of
that party as a direct tenant;
(v) Tenant has provided Landlord with all of the information
specified in Section 9.1 and on the basis of such information Landlord
reasonably determines that (A) the proposed sublessee or assignee is a reputable
party whose financial net worth, credit and financial responsibility is,
considering the responsibilities involved, satisfactory to Landlord and (B) the
nature and character of the proposed sublessee or assignee, its business or
activities and the proposed use of the space are in keeping with the standards
that would be acceptable to prudent landlords of comparable buildings located in
the area in which the Premises are located; and
(vi) the Premises shall not be used by the proposed assignee
or sublessee in a manner which would (x) involve increased wear upon the
Building; (b) require any addition to or modification of the Premises or the
Building in order to comply with building code or other governmental
requirements; or (c) involve a violation of Section 1.2.
(b) Any such consent of Landlord shall be subject to the terms
of this Article 9 and conditioned upon there being no default by Tenant beyond
any grace period under any of the terms, covenants and conditions of this Lease
at the time that Landlord's consent to any such subletting or assignment is
requested and on the date of the commencement of the term of any such proposed
sublease or the effective date of any such proposed assignment.
9.3 Notwithstanding any assignment or subletting, permitted or
otherwise, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent specified in this Lease and
for compliance with all of its other obligations under the terms, provisions and
covenants of this Lease. Upon the occurrence of an Event of Default, if the
Premises or any part of them are then assigned or sublet, Landlord, in addition
to any other remedies provided in this Lease or provided by law, may, at its
option, collect directly from such assignee or subtenant all rents due and
becoming due to Tenant under such assignment or sublease and apply such rent
against any sums due to Landlord from Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant from
the further performance of Tenant's obligations under this Lease.
9.4 In addition to Landlord's right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the event
of a proposed assignment or a subletting of all or substantially all of the
Premises for at least 90% of the then remaining term of this Lease, to terminate
this Lease. The option shall be exercised, if at all, by Landlord giving Tenant
written notice given by Landlord to Tenant within 30 days following Landlord's
receipt of Tenant's written notice as required above. If this Lease shall be
terminated with respect to the entire Premises pursuant to this Section, the
Term of this Lease shall end on the date stated in Tenant's notice as the
effective date of the sublease or assignment as if that date had been originally
fixed in this Lease for the expiration of the Term. This Section 9.4 shall not
apply to any assignments or sublettings permitted without Landlord's consent
pursuant to Section 9.8 and Section 9.9 of this Lease.
9.5 In the event that Tenant sells, sublets, assigns or transfers
this Lease, Tenant shall pay to Landlord as additional rent an amount equal to
one hundred percent (100%) of any Increased Rent (as defined below) when and as
such Increased Rent is received by Tenant. As used in this Section, "Increased
Rent" shall mean the excess of (i) all rent and other consideration which Tenant
is entitled to receive by reason of any sale, sublease, assignment or other
transfer of this Lease, over (ii) the rent otherwise payable by Tenant under
this Lease at such time less (iii) Tenant's reasonable out-of-pocket sublet or
assignment expenses. For purposes of the foregoing, any consideration received
by Tenant in form other than cash shall be valued at its fair market value as
determined by Landlord in good faith. This Section 9.5 shall
-7-
not apply to any assignments or sublettings permitted without Landlord's consent
pursuant to Section 9.8 and Section 9.9 of this Lease.
9.6 Upon any request to assign or sublet, Tenant will pay to
Landlord, on demand, a sum equal to all of Landlord's out-of-pocket costs,
including reasonable attorney's fees, incurred in investigating and considering
any proposed or purported assignment or pledge of this Lease or sublease of any
of the Premises, regardless of whether Landlord shall consent to, refuse
consent, or determine that Landlord's consent is not required for, such
assignment, pledge or sublease. Any purported sale, assignment, mortgage,
transfer of this Lease or subletting which does not comply with the provisions
of this Article 9 shall be void.
9.7 If Tenant is a corporation, partnership or trust, any transfer
or transfers of or change or changes within any twelve month period in the
number of the outstanding voting shares of the corporation, the general
partnership interests in the partnership or the identity of the persons or
entities controlling the activities of such partnership or trust resulting in
the persons or entities owning or controlling a majority of such shares,
partnership interests or activities of such partnership or trust at the
beginning of such period no longer having such ownership or control shall be
regarded as equivalent to an assignment of this Lease to the persons or entities
acquiring such ownership or control and shall be subject to all the provisions
of this Article 9 to the same extent and for all intents and purposes as though
such an assignment. This Section 9.7 shall not apply to any corporate tenant,
subtenant or assignee whose shares are publicly traded on any national or
regional stock exchange or in the "over-the-counter" market.
9.8 Notwithstanding anything to the contrary contained in Section
9.1, without the consent of Landlord, this Lease may be assigned to (1) an
entity created by the merger, consolidation or reorganization of or with Tenant
or (ii) a purchaser of all or substantially all of Tenant's assets; provided, in
the case of both clause (i) and clause (ii), that (A) Landlord shall have
received a notice of such assignment from Tenant, (B) the assignee assumes all
of Tenant's obligations under this Lease pursuant to an assignment and
assumption agreement which shall be reasonably satisfactory to Landlord, (C)
such assignment is for a valid business purpose and not principally to
circumvent the provisions of this Article 9, and (D) the assignee is a reputable
entity of good character and shall have, immediately after giving effect to such
assignment, an aggregate net worth (computed in accordance with generally
accepted accounting principles consistently applied) at least equal to the
aggregate net worth (as so computed) of Tenant immediately prior to such
assignment.
9.9 Notwithstanding anything to the contrary contained in Section
9.1, without the consent of Landlord, Tenant may assign this Lease or sublet all
or any part of the Premises to an Affiliate (as hereinafter defined) of Tenant;
provided, that (i) Landlord shall have received a notice of such assignment or
sublease from Tenant; and (ii) in the case of any such assignment, (A) the
assignment is for a valid business purpose and not to circumvent the provisions
of this Article 9, and (B) the assignee assumes all of Tenant's obligations
under this Lease pursuant an assignment and assumption agreement reasonably
satisfactory to Landlord, "Affiliate" means, as to any designated person or
entity, any other person or entity which controls, is controlled by, or is under
common control with, such designated person or entity. "Control" (and with
correlative meaning, "controlled by" and "under common control with") means
either (x) ownership or voting control, directly or indirectly, of 50% or more
of the voting stock, partnership interests or other beneficial ownership
interests of the entity in question or (y) the power to direct the management
and policies of such entity.
10. INDEMNIFICATION.
10.1 None of the Landlord Entities shall be liable and Tenant hereby waives
all claims against them for any damage to any property or any injury to any
person in or about the Premises by or from any cause whatsoever (including
without limiting the foregoing, rain or water leakage of any character from the
roof, windows, walls, basement, pipes, plumbing works or appliances, the
Premises not being in good condition or repair, gas, fire, oil, electricity or
theft), except to the extent caused by or arising from the gross negligence or
willful misconduct of Landlord or its agents, employees or contractors. Tenant
shall protect, indemnify and hold the Landlord Entities harmless from and
against any and all loss, claims, liability or costs (including court costs and
reasonable attorney's fees) incurred by reason of (a) any damage to any
property
-8-
(including but not limited to property of any Landlord Entity) or any injury
(including but not limited to death) to any person occurring in, on or about the
Premises to the extent that such injury or damage shall be caused by or arise
from any act, neglect, fault, or omission by or of Tenant, its agents, servants,
employees, invitees, or visitors to meet any standards imposed by any duty with
respect to the injury or damage; (b) the conduct or management of any work or
thing whatsoever done by the Tenant in or about the Premises or from
transactions of the Tenant concerning the Premises; (c) Tenant's failure to
comply with any and all governmental laws, ordinances and regulations for which
Tenant is responsible to comply with pursuant to the terms of this Lease; or (d)
any breach or default on the part of Tenant in the performance of any covenant
or agreement on the part of the Tenant to be performed pursuant to this Lease.
The provisions of this Article shall survive the termination of this Lease with
respect to any claims or liability accruing prior to such termination. The
indemnification obligations set forth in this Article 10 are subject to the
release and waiver of subrogation provisions set forth in Article 12.
10.2 Tenant may, at its option, defend Landlord against claims
described in this Article 10 by counsel approved by Landlord (which approval
shall not be unreasonably withheld or delayed), and in such event, Tenant shall
have no obligation to reimburse Landlord for attorneys' fees and disbursements
incurred by Landlord in connection with such claims unless Landlord reasonably
believes that a conflict of interest exists and that it would be in Landlord's
best interests to retain separate counsel. Landlord hereby approves any counsel
engaged by Tenant's insurance carrier in any matters for which Tenant is
defending Landlord that are fully covered by Tenant's insurance,
11. INSURANCE.
11.1 Tenant shall keep in force throughout the Term; (a) a
Commercial General Liability insurance policy or policies to protect the
Landlord, Landlord's managing agent, the general partners of Landlord if
Landlord is a partnership, the holders of any mortgages or ground or underlying
leases encumbering the Premises, Landlord's trustees and Landlord's investment
manager against any liability to the public or to any invitee of Tenant or a
Landlord Entity incidental to the use of or resulting from any accident
occurring in or upon the Premises with a limit of not less than $1,000,000.00
per occurrence and not less than $2,000,000.00 in the annual aggregate, or such
larger amount as Landlord shall reasonably require that is consistent with the
then requirements of prudent landlords of comparable buildings in the area in
which the Premises is located, such increases to be made no more often than once
every three years, covering bodily injury and property damage liability and ~
1,000,000 products/completed operations aggregate; (b) Business Auto Liability
covering owned, non-owned and hired vehicles with a limit of not less than
$1,000,000 per accident; (c) insurance protecting against liability under
Worker's Compensation Laws with limits at least as required by statute; (d)
Employers Liability with limits of $500,000 each accident, $500~000 disease
policy limit, $500,000 disease - each employee; (e) All Risk or Special Form
coverage protecting Tenant against loss of or damage to Tenant's Alterations,
carpeting, floor coverings, panelings, decorations, fixtures, inventory and
other business personal property situated in or about the Premises to the full
replacement value of the property so insured; and, (f) Business interruption
Insurance with limit of liability representing loss of at least approximately
six months of income.
11.2 Each of the aforesaid policies shall (a) be provided at
Tenant's expense; (b) with respect to the Commercial General Liability insurance
policy, name the Landlord and the building management company, if any, as
additional insureds; (c) be issued by an insurance company with a minimum Best's
rating of "A/VIJ" during the Term; and (d) provide that said insurance shall not
be cancelled unless thirty (30) days prior written notice (ten days for
nonpayment of premium) shall have been given to Landlord; and said policy or
policies or certificates thereof shall be delivered to Landlord by Tenant upon
the Commencement Date and at least thirty (30) days prior to each renewal of
said insurance.
11.3 Whenever Tenant shall undertake any Alterations in, to or
about the Premises, the aforesaid insurance protection must extend to and
include injuries to persons and damage to property arising in connection with
such Alterations, without limitation including liability under any applicable
structural work act, and such other insurance as Landlord shall reasonably
require that is consistent with the requirements of prudent landlords of
comparable
-9-
buildings in the area in which the Premises is located; and the policies of or
certificates evidencing such insurance must be delivered to Landlord prior to
the commencement of any such Work.
12. WAIVER OF SUBROGATION.
So long as their respective insurers so permit, Tenant and Landlord hereby
mutually waive their respective rights of recovery against each other for any
loss insured by fire, extended coverage, All Risks or other insurance now or
hereafter existing for the benefit of the respective party but only to the
extent of the net insurance proceeds payable under such policies. Each party
shall obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.
13. SERVICES AND UTILITIES.
Tenant shall pay for all water, gas, heat. light, power, telephone, sewer,
sprinkler system charges and other utilities and services used on or from the
Premises, including without limitation, the cost of any central station
signaling system installed in the Premises together with any taxes, penalties,
and surcharges or the like pertaining thereto and any maintenance charges for
utilities, Any such charges paid by Landlord and assessed against Tenant shall
be immediately payable to Landlord on demand and shall be additional rent
hereunder. Landlord shall in no event be liable for any interruption or failure
of utility services on or to the Premises unless such interruption or failure to
act is due to the gross negligence or willful misconduct of Landlord, its
employees, agents or contractors..
14. HOLDING OVER.
Tenant shall pay Landlord not as rent, but for use and occupancy, for each day
Tenant retains possession of the Premises or part of them after termination of
this Lease by lapse of time or otherwise at the rate ("Holdover Rate") which
shall be 150% of the greater of: (a) the amount of the Annual Rent for the last
period prior to the date of such termination plus all Rent Adjustments under
Article 4; and, (b) the then market rental value of the Premises assuming a new
lease of the Premises of the then usual duration and other terms, in either case
prorated on a daily basis, and also pay all damages sustained by Landlord by
reason of such retention. ~ any event, no provision of this Article 14 shall be
deemed to waive Landlord's right of reentry or any other right under this Lease
or at law.
15. SUBORDINATION.
Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be subject and
subordinate at all times to ground or underlying leases and to the lien of any
mortgages or deeds of trust now or hereafter placed on, against or affecting the
Building, Landlord's interest or estate in the Building, or any ground or
underlying lease; provided, however, that if the lessor, mortgagee, trustee, or
holder of any such mortgage or deed of trust elects to have Tenant's interest in
this Lease be superior to any such instrument, then, by notice to Tenant, this
Lease shall be deemed superior, whether this Lease was executed before or after
said instrument. Notwithstanding the foregoing, Tenant covenants and agrees to
execute and deliver upon demand such further instruments evidencing such
subordination or superiority of this Lease as may be reasonably required by
Landlord.
16. REENTRY BY LANDLORD.
16.1 Landlord reserves and shall at all times have the right to
re-enter the Premises to inspect the same, to show said Premises to prospective
purchasers, mortgagees or, in the last 12 months of the Lease term, tenants, to
cure any default of Tenant (after the expiration of any applicable notice and
cure period) and to alter, improve or repair the Premises and any portion of the
Building, without abatement of rent, and may for that purpose erect, use and
maintain scaffolding, pipes, conduits and other necessary structures and open
any wall, ceiling or floor in and through the Building and Premises where
reasonably required by the character of the work to be performed, provided
entrance to the Premises shall not be blocked thereby and the
- 10 -
parking lot shall be substantially usable, and further provided that the
business of Tenant shall not be interfered with unreasonably
16.2 Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of landlord authorized by this Article 16. Tenant agrees to reimburse Landlord,
on demand, as additional rent, for any reasonable expenses which Landlord may
incur in thus effecting compliance with Tenant's obligations under this Lease.
16.3 For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in the
Premises, excluding Tenant's vaults and safes or special security areas
(designated in advance), and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency to
obtain entry to any portion of the Premises. As to any portion to which access
can not be had by means of a key or keys in Landlord's possession, Landlord is
authorized to gain access by such means as Landlord shall elect and the cost of
repairing any damage occurring in doing so shall be borne by Tenant and paid to
Landlord as additional rent upon demand.
17. DEFAULT.
17.1 Except as otherwise provided in Article 19, the following
events shall be deemed to be Events of Default under this Lease:
17.1.1 Tenant shall fail to pay when due any sum of money
becoming due to be paid to Landlord under this Lease, whether such sum be any
installment of the rent reserved by this Lease, any other amount treated as
additional rent under this Lease, or any other payment or reimbursement to
Landlord required by this Lease, whether or not treated as additional rent under
this Lease, and such failure shall continue for a period of five (5) days after
written notice that such payment was not made when due, but if any such notice
shall be given, for the twelve month period commencing with the date of such
notice, the failure to pay within five (5) days after due any additional sum of
money becoming due to be paid to Landlord-under this Lease during such period
shall be an Event of Default, without notice.
17.1.2 Tenant shall fail to comply with any term, provision
or covenant of this Lease which is not provided for in another Section of this
Article and shall not cure such failure within twenty (20) days (forthwith, if
the failure involves a hazardous condition) after written notice of such failure
to Tenant, or if such default is of such a nature that it cannot, with
reasonable diligence, be cured in such twenty (20) day period, if Tenant shall
fail to commence to cure such default within such twenty (20) day period and
thereafter to diligently prosecute such cure to completion.
17.1.3 Tenant shall fail to vacate the Premises immediately
upon termination of this Lease, by lapse of time or otherwise, or upon
termination of Tenant's right to possession only.
17.1.4 Tenant shall become insolvent, admit in writing its
inability to pay its debts generally as they become due, file a petition in
bankruptcy or a petition to take advantage of any insolvency statute, make an
assignment for the benefit of creditors, make a transfer in fraud of creditors,
apply for or consent to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in
effect or hereafter amended, or any other applicable law or statute of the
United States or any state thereof.
17.1.5 A court of competent jurisdiction shall enter an
order, judgment or decree adjudicating Tenant bankrupt, or appointing a receiver
of Tenant, or of the whole or any substantial part of its property, without the
consent of Tenant, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the bankruptcy laws of the United
States, as now in effect or hereafter amended, or any state thereof, and such
order, judgment or decree shall not be vacated or set aside or stayed within
sixty (60) days from the date of entry thereof.
-11 -
18. REMEDIES.
18.1 Except as otherwise provided in Article 19, upon the
occurrence of any of the Events of Default described or referred to in Article
17, Landlord shall have the option to pursue any one or more of the following
remedies without any notice or demand whatsoever, concurrently or consecutively
and not alternatively:
18.1.1 Landlord may, at its election, terminate this Lease or
terminate Tenant's right to possession only, without terminating the Lease.
18.1.2 Upon any termination of this Lease, whether by lapse
of time or otherwise, or upon any Termination of Tenant's right to possession
without termination of the Lease, Tenant shall surrender possession and vacate
the Premises immediately, and deliver possession thereof to Landlord, and Tenant
hereby grants to Landlord full and free license to enter into and upon the
Premises in such event and to repossess Landlord of the Premises as of
Landlord's former estate and to expel or remove Tenant and any others who may be
occupying or be within the Premises and to remove Tenant's signs and other
evidence of tenancy and all other property of Tenant therefrom without being
deemed in any manner guilty of trespass, eviction or forcible entry or detainer,
and without incurring any liability for any damage resulting therefrom, Tenant
waiving any right to claim damages for such re-entry and expulsion, and without
relinquishing Landlord's right to rent or any other right given to Landlord
under this Lease or by operation of law.
18.1.3 Upon any termination of this Lease, whether by lapse
of time or otherwise, Landlord shall be entitled to recover as damages, all
rent, including any amounts treated as additional rent under this Lease, and
other sums due and payable by Tenant on the date of termination, plus as
liquidated damages and not as a penalty, an amount equal to the sum of: (a) an
amount equal to the then present value of (i) the rent reserved in this Lease
for the residue of the stated Term of this Lease including any amounts treated
as additional rent under this Lease, minus (ii) the fair rental value of the
Premises for such residue; and (b) the expenses then incurred by Landlord to
obtain a replacement tenant or tenants and the estimated expenses described in
Section 18.1.4 relating to recovery of the Premises, preparation for reletting
and for reletting itself.
18.1.4 Upon any termination of Tenant's right to possession
only without termination of the Lease:
18.1.4.1 Neither such termination of Tenant's right
to possession nor Landlord's taking and holding possession thereof as
provided in Section 18.1.2 shall terminate the Lease or release Tenant, in whole
or in part, from any obligation, including Tenant's obligation to pay the rent,
including any amounts treated as additional rent, under this Lease for the full
Term. and if Landlord so elects Tenant shall pay forthwith to Landlord the sum
equal to the entire amount of the rent, including any amounts treated as
additional rent under this Lease, for the remainder of the Term as the same
shall become due and payable plus any other sums provided in this Lease to be
paid by Tenant for the remainder of the Term.
18.1.4.2 Landlord may, but need not, relet the Premises
or any part thereof for such rent and upon such terms as Landlord, in its
sole discretion, shall determine (including the right to relet the premises for
a greater or lesser term than that remaining under this Lease, the right to
relet the Premises as a part of a larger area, and the right to change the
character or use made of the Premises). In connection with or in preparation for
any reletting, Landlord may, but shall not be required to, make repairs,
alterations and additions in or to the Premises and redecorate the same to the
extent Landlord deems necessary or desirable, and Tenant shall, upon demand, pay
the cost thereof, together with Landlord's expenses of reletting, including,
without limitation, any broker's commission incurred by Landlord. If Landlord
decides to relet the Premises or a duty to relet is imposed upon Landlord by
law, Landlord and Tenant agree that nevertheless Landlord shall at most be
required to use only the same efforts Landlord then uses to lease premises in
the Building gener~1y and that in any case that Landlord shall not be required
to give any preference or priority to the showing or leasing of the Premises
over any other space that Landlord may be leasing or have available and may
place a suitable prospective tenant in any such other space regardless of when
such other
- 12 -
space becomes available. Landlord shall not be required to observe any
instruction given by Tenant about any reletting or accept any tenant offered by
Tenant unless such offered tenant has a credit-worthiness acceptable to Landlord
and leases the entire Premises upon terms and conditions including a rate of
rent (after giving effect to all expenditures by Landlord for tenant
improvements, broker's commissions and other leasing costs) all no less
favorable to Landlord than as called for in this Lease, nor shall Landlord be
required to make or permit any assignment or sublease for more than the current
term or which Landlord would not be required to permit under the provisions of
Article 9.
18.1.4.3 Until such time as Landlord shall elect to
terminate the Lease and shall thereupon be entitled to recover the amounts
specified in such case in Section 18.1.3, Tenant shall pay to Landlord upon
demand the full amount of all rent as it becomes due and payable, including any
amounts treated as additional rent under this Lease and other sums reserved in
this Lease for the remaining Term, together with the costs of repairs,
alterations, additions, redecorating and Landlord's expenses of reletting and
the collection of the rent accruing therefrom (including reasonable attorney's
fees and broker's commissions), as the same shall then be due or become due from
time to time, less only such consideration as Landlord may have received from
any reletting of the Premises; and Tenant agrees that Landlord may file suits
from time to time to recover any sums falling due under this Article 18 as they
become due. Any proceeds of reletting by Landlord in excess of the amount then
owed by Tenant to Landlord from time to time shall be credited against Tenant's
future obligations under this Lease but shall not otherwise be refunded to
Tenant or inure to Tenant's benefit.
18.2 Landlord may, at Landlord's option, enter into and upon the
Premises if Tenant fails to maintain, repair or replace anything for which
Tenant is responsible under this Lease and Tenant, after notice (provided that
no notice shall be due in the case of emergency), fails to cure such default
within the applicable cure period, and Landlord may correct the same, without
being deemed in any manner guilty of trespass, eviction or forcible entry and
detainer and without incurring any liability for any damage or interruption of
Tenant's business resulting therefrom. If Tenant shall have vacated the
Premises, Landlord may at Landlord's option re-enter the Premises at any time
during the last month of the then current Term of this Lease and make any and
all such changes, alterations, revisions, additions and tenant and other
improvements in or about the Premises as Landlord shall elect, all without any
abatement of any of the rent otherwise to be paid by Tenant under this Lease.
18.3 If, on account of any breach or default by either Landlord or
Tenant in such party's obligations under the terms and conditions of this Lease,
it shall become necessary or appropriate for the other party to employ or
consult with an attorney concerning or to enforce or defend any of the other
party's rights or remedies arising under this Lease, the non-prevailing party in
any action or proceeding agrees to pay all of the prevailing party's reasonable
attorney's fees so incurred. Tenant expressly waives any right to: (a) trial by
jury; and (b) service of any notice required by any present or future law or
ordinance applicable to landlords or tenants but not required by the terms of
this Lease.
18.4 Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies provided in this Lease or any other
remedies provided by law (all such remedies being cumulative), nor shall pursuit
of any remedy provided in this Lease constitute a forfeiture or waiver of any
rent due to Landlord under this Lease or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants contained
in this Lease.
18.5 No act or thing done by Landlord or its agents during the Term
shall be deemed a termination of this Lease or an acceptance of the surrender of
the Premises, and no agreement to terminate this Lease or accept a surrender of
said Premises shall be valid, unless in writing signed by Landlord. No waiver by
either party of any violation or breach of any of the terms, provisions and
covenants contained in this Lease shall be deemed or construed to constitute a
waiver of any other violation or breach of any of the terms, provisions and
covenants contained in this Lease. Landlord's acceptance of the payment of
rental or other payments after the occurrence of an Event of Default shall not
be construed as a waiver of such Default, unless Landlord so notifies Tenant in
writing. Forbearance by Landlord in enforcing one or more of the
- 13 -
remedies provided in this Lease upon an Event of Default shall not be deemed or
construed to constitute a waiver of such Default or of Landlord's right to
enforce any such remedies with respect to such Default or any subsequent
Default.
18.6 To secure the payment of all rentals and other sums of money
becoming due from Tenant under this Lease, Landlord shall have and Tenant grants
to Landlord a first lien upon the leasehold interest of Tenant under this Lease,
which lien may be enforced in equity.
18.7 Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of this Lease or of law, to which Tenant is
or may be entitled, may be handled, removed and/or stored, as the case may be,
by or at the direction of Landlord but at the risk, cost and expense of Tenant.
and Landlord shall in no event be responsible for the value, preservation or
safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all
expenses incurred in such removal and all storage charges against such property
so long as the same shall be in Landlord's possession or under Landlord's
control. Any such property of Tenant not retaken by Tenant from storage within
thirty (30) days after removal from the Premises shall, at Landlord's option, be
deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale
without further payment or credit by Landlord to Tenant.
19. TENANT'S BANKRUPTCY OR INSOLVENCY.
19.1 If at any time and for so long as Tenant shall be subjected to
the provisions of the United States Bankruptcy Code or other law of the United
States or any state thereof for the protection of debtors as in effect at such
time (each a "Debtor's Law"):
19.1.1 Tenant, Tenant as debtor-in-possession, and any
trustee or receiver of Tenant's assets (each a "Tenant's Representative") shall
have no greater right to assume or assign this Lease or any interest in this
Lease, or to sublease any of the Premises than accorded to Tenant in Article 9,
except to the extent Landlord shall be required to permit such assumption,
assignment or sublease by the provisions of such Debtor's Law. Without
limitation of the generality of the foregoing, any right of any Tenant's
Representative to assume or assign this Lease or to sublease any of the Premises
shall be subject to the conditions that:
19.1.1.1 Such Debtor's Law shall provide to
Tenant's Representative a right of assumption of this Lease which Tenant's
Representative shall have timely exercised and Tenant's Representative shall
have fully cured any default of Tenant under this Lease.
19.1.1.2 Tenant's Representative or the proposed
assignee, as the case shall be, shall have deposited with Landlord as
security for the timely payment of rent an amount equal to the larger of: (a)
three months' Rent and other monetary charges accruing under this Lease; and (b)
any sum specified in Article 5; and shall have provided Landlord with adequate
other assurance of the future performance of the obligations of the Tenant under
this Lease. Without limitation, such assurances shall include, at least, in the
case of assumption of this Lease, demonstration to the satisfaction of the
Landlord that Tenant's Representative has and will continue to have sufficient
unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that Tenant's Representative will
have sufficient funds to fulfill the obligations of Tenant under this Lease;
and, in the case of assignment, submission of current financial statements of
the proposed assignee, audited by an independent certified public accountant
reasonably acceptable to Landlord and showing a net worth and working capital in
amounts determined by Landlord to be sufficient to assure the future performance
by such assignee of all of the Tenant's obligations under this Lease.
19.1.1.3 The assumption or any contemplated
assignment of this Lease or subleasing any part of the Premises, as shall
be the case, will not breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord is bound.
19.1.1.4 Landlord shall have, or would have had
absent the Debtor's Law, no right under Article 9 to refuse consent to the
proposed assignment or sublease
- 14 -
by reason of the identity or nature of the proposed assignee or sublessee
or the proposed use of the Premises concerned.
20. QUIET ENJOYMENT.
Landlord represents and warrants that it has full right and authority to enter
into this Lease and that Tenant, while paying the rental and performing its
other covenants and agreements contained in this Lease. shall peaceably and
quietly have, hold and enjoy the Premises for the Term without hindrance or
molestation from Landlord subject to the terms and provisions of this Lease.
Landlord shall not be liable for any interference or disturbance by other
tenants or third persons, nor shall Tenant be released from any of the
obligations of this Lease because of such interference or disturbance.
21. DAMAGE BY FIRE, ETC.
21.1 Landlord shall maintain standard fire and extended coverage
insurance covering the Premises in an amount not less than ninety percent (90%)
of the replacement cost thereof insuring against the perils of fire and
lightning and including extended coverage or, at Landlord's option, all risk
coverage and, if Landlord so elects, and such coverage is carried by prudent
landlords of comparable buildings located in the area in which the Premises is
located, earthquake, flood and wind coverages and Tenant shall pay, as
additional rent, the cost of such policies upon demand by Landlord. Such
insurance shall be for the sole benefit of Landlord and under its sole control.
Tenant shall not take out separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained by Landlord hereunder
unless Landlord is included as a loss payee thereon. Tenant shall immediately
notify Landlord whenever any such separate insurance is taken out and shall
promptly deliver to Landlord the policy or policies of such insurance.
21.2 In the event the Premises or the Building are damaged by fire
or other cause and in Landlord's reasonable estimation such damage can be
materially restored within six (6) months of the date of such fire or other
cause, Landlord shall forthwith repair the same and this Lease shall remain in
full force and effect, except that Tenant shall be entitled to a proportionate
abatement in rent from the date of such damage. Such abatement of rent shall be
made pro rata in accordance with the extent to which the damage and the making
of such repairs shall interfere with the use and occupancy by Tenant of the
Premises from time to time. Within forty-five (45) days from the date of such
damage, Landlord shall notify Tenant, in writing, of the reasonable estimation
of the length of time within which material restoration can be completed, which
estimation shall be made by an independent third party architect or engineer
chosen by Landlord, and such determination shall be binding on Tenant. For
purposes of this Lease, the Building or Premises shall be deemed '1materially
restored" if they are restored to the condition existing immediately prior to
such fire or other casualty.
21.3 If such repairs cannot, in Landlord's reasonable estimation,
be made within six (6) months, Landlord and Tenant shall each have the option of
giving the other, at any time within sixty (60) days after such damage, notice
terminating this Lease as of the date of such damage. In the event of the giving
of such notice, this Lease shall expire and all interest of the Tenant in the
Premises shall terminate as of the date of such damage as if such date had been
originally fixed in this Lease for the expiration of the Term. In the event that
neither Landlord nor Tenant exercises its option to terminate this Lease, then
Landlord shall repair or restore such damage, this Lease continuing in full
force and effect, and the rent hereunder shall be proportionately abated as
provided in Section 21.2.
21.4 Landlord shall not be required to repair or replace any damage
or loss by or from fire or other cause to any panelings, decorations,
partitions, additions, railings, ceilings, floor coverings, office fixtures or
any other property or improvements installed on the Premises or belonging to
Tenant. Any insurance which may be carried by Landlord or Tenant against loss or
damage to the Building or Premises shall be for the sole benefit of the party
carrying such insurance and under its sole control.
21.5 In the event that Landlord should fail to complete such
repairs and restoration within sixty (60) days after the date estimated by
Landlord therefor as extended by
- 15 -
this Section 21.5, Tenant may at its option and as its sole remedy terminate
this Lease by delivering written notice to Landlord, within fifteen (15) days
after the expiration of said period of time, whereupon the Lease shall end on
the date of such notice or such later date fixed in such notice as if the date
of such notice was the date originally fixed in this Lease for the expiration of
the Term; provided, however, that if construction is delayed because of changes,
deletions or additions in construction requested by Tenant, strikes. lockouts,
casualties, Acts of God, war, material or labor shortages, government regulation
or control or other causes beyond the reasonable control of Landlord, the period
for restoration, repair or rebuilding shall be extended for the amount of time
Landlord is so delayed; provided, however, such extension, shall not exceed
three (3) months with respect to force majeure delays.
21.6 Notwithstanding anything to the contrary contained in this
Article, if the Building is damaged by fire or other casualty in the last twelve
(12) months of the Term (or in the last twelve (12) months of any extension
thereof), and if such damage shall render more than twenty percent (20%) of the
Premises untenantable or shall be reasonably estimated to require more than four
(4) months to repair, either Landlord or Tenant may terminate this Lease by
notice to the other party given within thirty (30) days of the date of such fire
or casualty. If Landlord or Tenant gives such notice, this Lease shall end on
the date of such damage as if the date of such damage was the date originally
fixed in this Lease for the expiration of the Term.
21.7 In the event of any damage or destruction to the Building or
Premises by any peril covered by the provisions of this Article 21, it shall be
Tenant's responsibility to properly secure the Premises and upon notice from
Landlord to remove forthwith, at its sole cost and expense, such portion of all
of the property belonging to Tenant or its licensees from such portion or all of
the Building or Premises as Landlord shall request.
22. EMINENT DOMAIN.
If more than twenty percent (20%) of the Building or if more than twenty percent
(20%) of the portion of the Premises then being used as the parking lot shall be
taken or appropriated by any public or quasi-public authority under the power of
eminent domain, or conveyance in lieu of such appropriation, either party to
this Lease shall have the right, at its option, of giving the other, at any time
within thirty (30) days after such taking, notice terminating this Lease. If
neither party to this Lease shall so elect to terminate this Lease, the rental
thereafter to be paid shall be adjusted on a fair and equitable basis under the
circumstances. In addition to the rights of Landlord above, if any substantial
part of the Building shall be taken or appropriated by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, and regardless of whether the Premises or any part thereof are so taken
or appropriated, Landlord shall have the right, at its sole option, to terminate
this Lease. Landlord shall be entitled to any and all income, rent, award, or
any interest whatsoever in or upon any such sum, which may be paid or made in
connection with any such public or quasi-public use or purpose, and Tenant
hereby assigns to Landlord any interest it may have in or claim to all or any
part of such sums, other than any separate award which may be made with respect
to Tenant's trade fixtures and moving expenses; Tenant shall make no claim for
the value of any unexpired Term.
23. SALE BY LANDLORD.
In event of a sale or conveyance by Landlord of the Building, the same shall
operate to release Landlord from any future liability upon any of the covenants
or conditions, expressed or implied, contained in this Lease in favo1/2of
Tenant, and in such event Tenant agrees to look solely to the responsibility of
the successor in interest of Landlord in and to this Lease. Except as set forth
in this Article 23, this Lease shall not be affected by any such sale and Tenant
agrees to attorn to the purchaser or assignee. If any security has been given by
Tenant to secure the faithful performance of any of the covenants of this Lease,
Landlord shall transfer or deliver said security, as such, to Landlord's
successor in interest and thereupon Landlord shall be discharged from any
further liability with regard to said security.
24. ESTOPPEL CERTIFICATES.
24.1 Within fifteen (15) days following any written request which
Landlord may make from time to time, Tenant shall execute and deliver to
Landlord or mortgagee or
- 16 -
prospective mortgagee a sworn statement certifying: (a) the date of commencement
of this Lease; (b) whether this Lease is unmodified and in full force and effect
(or, if there have been modifications to this Lease, whether this Lease is in
full force and effect, as modified, and stating the date and nature of such
modifications); (c) the date to which the rent and other sums payable under this
Lease have been paid; (d) to the best of Tenant's knowledge, the fact that there
are no current defaults under this Lease by either Landlord or Tenant except as
specified in Tenant's statement; and (e) such other matters as may be reasonably
requested by Landlord. Landlord and Tenant intend that any statement delivered
pursuant to this Article 24 may be relied upon by any mortgagee, beneficiary or
purchaser and Tenant shall be liable for all loss, cost or expense resulting
from the failure of any sale or funding of any loan caused by any material
misstatement contained in such estoppel certificate. Tenant irrevocably agrees
that if Tenant fails to execute and deliver such certificate within such fifteen
(15) day period Landlord or Landlord's beneficiary or agent may execute and
deliver such certificate on Tenant's behalf, and that such certificate shall be
fully binding on Tenant.
24.2 Within fifteen (15) days following any written request which
Tenant may make from time to time, Landlord shall execute and deliver to Tenant
a sworn statement certifying: (a) the date of commencement of this Lease; (b)
whether this Lease is unmodified and in full force and effect (or, if there have
been modifications to this Lease, whether this Lease is in full force and
effect, as modified, and stating the date and nature of such modifications); (c)
the date to which the rent and other sums payable under this Lease have been
paid; (d) to the best of Landlord's knowledge, the fact that there are no
current defaults under this Lease by either Landlord or Tenant except as
specified in Landlord's statement; and (e) such other matters as may be
reasonably requested by Tenant.
25. SURRENDER OF PREMISES.
25.1 Tenant shall, at Landlord's request, not more than thirty (30)
days before the last day of the Term, arrange to meet Landlord for a joint
inspection of the Premises. In the event of Tenant's refusal to arrange such
joint inspection at Landlord's request to be held prior to vacating the
Premises, Landlord's inspection at or after Tenant's vacating the Premises shall
be conclusively deemed correct for purposes of determining Tenant's
responsibility for repairs and restoration.
25.2 At the end of the Term or any renewal of the Term or other
sooner termination of this Lease, Tenant will peaceably deliver up to Landlord
possession of the Premises, together with all improvements or additions upon or
belonging to the same, by whomsoever made, in the same conditions received or
first installed, broom clean and free of all debris, excepting only ordinary
wear and tear and damage by fire or other casualty or condemnation. Tenant may,
and at Landlord's request shall, at Tenant's sole cost, remove upon termination
of this Lease, any and all furniture, furnishings, movable partitions of less
than full height from floor to ceiling, trade fixtures and other property
installed by Tenant, title to which shall not be in or pass automatically to
Landlord upon such termination, repairing all damage caused by such removal.
Property not so removed shall, unless requested to be removed, be deemed
abandoned by the Tenant and title to the same shall thereupon pass to Landlord
under this Lease as by a bill of sale. All other Alterations in. on or to the
Premises shall be dealt with and disposed of as provided in Article 6.
25.3 All obligations of Tenant and Landlord under this Lease not
fully performed as of the expiration or earlier termination of the Term shall
survive the expiration or earlier termination of the Term. Upon the expiration
or earlier termination of the Term, Tenant shall pay to Landlord the amount, as
reasonably estimated by Landlord, necessary to repair and restore the Premises
as provided in this Lease and/or to discharge Tenant's obligation for unpaid
amounts due or to become due to Landlord. All such amounts shall be used and
held by Landlord for payment of such obligations of Tenant, with Tenant being
liable for any additional costs upon demand by Landlord, or with any excess to
be returned to Tenant after all such obligations have been determined and
satisfied. Any otherwise unused Security Deposit shall be credited against the
amount payable by Tenant under this Lease.
- 17 -
26. NOTICES.
Any notice or document required or permitted to be delivered under this Lease
shall be addressed to the intended recipient, shall be transmitted personally,
by fully prepaid registered or certified United States Mail return receipt
requested or by Federal Express or other reputable overnight delivery service
furnishing a written record of attempted or actual delivery, and shall be deemed
to be delivered when tendered for delivery to the addressee at its address set
forth on the Reference Page, or at such other address as it has then last
specified by written notice delivered in accordance with this Article 26, or if
to Tenant at either its aforesaid address or its last known office, whether or
not actually accepted or received by the addressee.
27. TAXES PAYABLE BY TENANT.
In addition to rent and other charges to be paid by Tenant under this Lease,
Tenant shall reimburse to Landlord, upon demand, any and all taxes payable by
Landlord (other than income taxes) whether or not now customary or within the
contemplation of the parties to this Lease: (a) upon, allocable to, or measured
by or on the gross or net rent payable under this Lease, including without
limitation any tax or excise tax levied by the State, any political subdivision
thereof, or the Federal Government solely with respect to the receipt of such
rent; (b) any sales, use or service tax imposed on Landlord for services
provided by Landlord to Tenant; (c) upon or measured by the Tenant's gross
receipts or payroll or the value of Tenant's equipment, furniture, fixtures and
other personal property of Tenant or leasehold improvements, Alterations located
in the Premises; or (d) upon this transaction or any document to which Tenant is
a party creating or transferring any interest of Tenant in this Lease or the
Premises. In addition to the foregoing, Tenant agrees to pay, before
delinquency, any and all taxes levied or assessed against Tenant and which
become payable during the Term hereof upon Tenant's equipment, furniture,
fixtures and other personal property of Tenant located in the Premises.
28. DEFINED TERMS AND HEADINGS.
The Article headings shown in this Lease are for convenience of reference and
shall in no way define, increase, limit or describe the scope or intent of any
provision of this Lease. Any indemnification or insurance of Landlord shall
apply to and inure to the benefit of all the following "Landlord Entities",
being Landlord, Landlord's investment manager, and the trustees, boards of
directors, officers, general partners, beneficiaries, stockholders,
employees and agents of each of them. Any option granted to Landlord shall also
include or be exercisable by Landlord's trustee, beneficiary, agents and
employees, as the case may be. In any case where this Lease is signed by more
than one person, the obligations under this Lease shall be joint and several.
The terms "Tenant" and "Landlord" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and each of their respective successors,
executors, administrators and permitted assigns, according to the context
hereof. The term "rentable area" shall mean the rentable area of the Premises or
the Building as specified on the Reference Page. Tenant hereby accepts and
agrees to be bound by the figures for the rentable space footage of the Premises
and Tenant's Proportionate Share shown on the Reference Page.
29. TENANT'S AUTHORITY.
If Tenant signs as a corporation each of the persons executing this Lease on
behalf of Tenant represents and warrants that Tenant has been and is qualified
to do business in the state in which the Building is located, that the
corporation has full right and authority to enter into this Lease, and that all
persons signing on behalf of the corporation were authorized to do so by
appropriate corporate actions. If Tenant signs as a partnership, trust or other
legal entity, each of the persons executing this Lease on behalf of Tenant
represents and warrants that Tenant has complied with all applicable laws, rules
and governmental regulations relative to its right to do business in the state
and that such entity on behalf of the Tenant was authorized to do so by any and
all appropriate partnership, trust or other actions. Tenant agrees to furnish
promptly upon request a corporate resolution, proof of due authorization by
partners, or other appropriate documentation evidencing the due authorization of
Tenant to enter into this Lease.
- 18 -
30. COMMISSIONS.
Each of the parties represents and warrants to the other that it has not dealt
with any broker or finder in connection with this Lease, except as described on
the Reference Page.
31. TIME AND APPLICABLE LAW.
Time is of the essence of this Lease and all of its provisions. This Lease shall
in all respects be governed by the laws of the state in which the Building is
located.
32. SUCCESSORS AND ASSIGNS.
Subject to the provisions of Article 9, the Terms, covenants and conditions
contained in this Lease shall be binding upon and inure to the benefit of the
heirs, successors, executors, administrators and assigns of the parties to this
Lease.
33. ENTIRE AGREEMENT.
This Lease, together with its exhibits, contains all agreements of the parties
to this Lease and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its exhibits. This Lease may not be
modified except by a written instrument duly executed by the parties to this
Lease.
34. EXAMINATION NOT OPTION.
Submission of this Lease shall not be deemed to be a reservation of the
Premises. Landlord shall not be bound by this Lease until it has received a copy
of this Lease duly executed by Tenant and has delivered to Tenant a copy of this
Lease duly executed by Landlord, and until such delivery Landlord reserves the
right to exhibit and lease the Premises to other prospective tenants.
Notwithstanding anything contained in this Lease to the contrary, Landlord may
withhold delivery of possession of the Premises from Tenant until such time as
Tenant has paid to Landlord any security deposit required by Article 5. the
first month's rent as set forth in Article 3 and any sum owed pursuant to this
Lease.
35. RECORDATION.
Tenant shall not record or register this Lease or a short form memorandum hereof
without the prior written consent of Landlord, and then shall pay all charges
and taxes incident to such recording or registration.
36. LIMITATION OF LANDLORD'S LIABILITY.
36.1 Tenant shall look only to Landlord's estate and property in
the Land and the Building for the satisfaction of any claim against Landlord,
and no other property or assets of Landlord or its trustees, trust
beneficiaries, stockholders or board of directors and officers, or investment
manager, its partners or principals, disclosed or undisclosed, as the case may
be, or any employees or agents of Landlord or the investment manager shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant's remedies under or with respect to this lease, the relationship of
Landlord and Tenant hereunder or Tenant's use or occupancy of the Premises
37. OPTION TO EXTEND.
37.1 (a) Tenant shall have an option (the "Option") to extend the
term of this lease for one (1) additional term of five (5) years (the "Renewal
Term") commencing on the first day next succeeding the Termination Date and
terminating on the last day of the month in which the tenth anniversary of the
Commencement Date occurs upon the same terms, conditions and provisions as are
provided for in this lease except that (i) the Annual Rent payable for the
Renewal Term shall be the fair market rent for the Premises as of such
Termination Date determined in the manner hereinafter provided and (ii) this
Article 37 shall be deleted therefrom.
- 19 -
(b) The Option may be exercised only by Tenant giving written notice to
Landlord of Tenant's exercise of said Option by certified mail, return receipt
requested, not more than eighteen (18) months nor less than one year prior to
the Termination Date (the 'Exercise Notice"). Upon Tenant's giving of the
Exercise Notice. the term of this Lease shall be extended automatically upon the
terms and conditions herein specified without the execution of an extension
agreement or other instrument. It is expressly agreed that Tenant shall not have
an option to extend the term of this Lease beyond the expiration of the Renewal
Term. If Tenant shall not give Landlord the Exercise Notice at the time and in
the manner set forth above, the Option shall terminate and be deemed waived by
Tenant. Time is of the essence as to the date for the giving of the Exercise
Notice.
(c) After Landlord receives the Exercise Notice, and if in
Landlord's opinion an increase in the Annual Rent for the Renewal Term is
warranted because the fair market rent for the Premises has increased, Landlord
shall send Tenant a notice (the "Revised Rent Notice") stating the amount which,
in Landlord's opinion, shall constitute the fair market rent for the Premises as
of the Termination Date. Such notice shall be given to Tenant no later than six
(6) months prior to the Termination Date. The increased Annual Rent set forth in
the Revised Rent Notice shall be effective as of the first day of the Renewal
Term, subject to adjustment as hereinafter provided.
37.2 (a) If Landlord gives a Revised Rent Notice, then at any time
within thirty (30) days after the giving of such Revised Rent Notice, Tenant may
dispute the fair market rent for the Premises as determined by Landlord by
giving notice to Landlord that it is initiating the appraisal process provided
for herein and specifying in such Notice the name and address of the arbitrator
designated by Tenant to act on its behalf. Within 15 days after the designation
of Tenant's arbitrator, Landlord shall give notice to Tenant specifying the name
and address of Landlord's arbitrator. The two arbitrators so chosen shall meet
within 10 days after the second arbitrator is appointed and if, within 20 days
after the second arbitrator is appointed, the two arbitrators shall not agree
upon a determination in accordance with paragraph (c) of this Section 37.2 they
shall together appoint a third arbitrator. If said two arbitrators cannot agree
upon the appointment of a third arbitrator within 10 days after the expiration
of such 20 day period, then either party, on behalf of both, and on notice to
the other, may request such appointment by the American Arbitration Association
(or any successor organization) in accordance with its then prevailing rules. If
the American Arbitration Association shall fail to appoint said third arbitrator
within sixty (60) days after such request is made, then either party may apply,
on notice to the other, to the Supreme Court, New York County, New York (or any
other court having jurisdiction and exercising functions similar to those now
exercised by the foregoing court) for the appointment of such third arbitrator.
(b) Each of the arbitrators selected as herein provided
shall have at least five years experience in the leasing or management of space
in office parks in Suffolk County, New York. Each party shall pay the fees and
expenses of the arbitrator selected by it. The fees and expenses of the third
arbitrator and all other expenses (not including attorney's fees, witness fees
and similar expenses of the parties which shall be borne separately by each of
the parties) of the arbitration shall be borne equally by the parties hereto.
(c) Within five (5) days after the appointment of the third
arbitrator, Landlord's arbitrator and Tenant's arbitrator shall submit to such
third arbitrator their respective determinations of fair market rent and within
twenty (20) days thereafter, the third arbitrator shall select the determination
of either rate which is either the rate submitted to the third arbitrator by
Landlord1s arbitrator or Tenant's arbitrator. In rendering such decision and
award, the arbitrators shall assume or take into consideration as appropriate
all of the following: (i) the Landlord and prospective tenant are typically
motivated; (ii) the Landlord and prospective tenant are well informed and well
advised and each is acting in what it considers its own best interest; (iii) a
reasonable time under then-existing market conditions is allowed for exposure of
the Premises on the open market; (iv) the rent is unaffected by special
financing amounts and/or terms, or unusual services, fees, costs or credits in
connection with the leasing transaction; (v) the effect on rent of customary
rent concessions and/or work allowances; (vi) the Premises are fit for immediate
occupancy and use "as is" and require no additional work by Landlord and that no
work has been carried out thereon by the Tenant, its subtenant, or their
predecessors in interest during the term
- 20 -
which has diminished the rental value of the Premises; (vii) in the event the
Premises have been destroyed or damaged by fire or other casualty, they have
been fully restored; (viii) that the Premises are to be let with vacant
possession and subject to the provisions of this lease for a five (5) year term;
and (ix) market rents then being charged for comparable space in other similar
office parks in the same area. In rendering such decision and award, the
arbitrators shall not modify the provisions of this lease. The decision and
award of the third arbitrator shall be in writing and be final and conclusive on
all parties and counterpart copies thereof shall be delivered to each of said
parties. Judgment may be had on the decision and award of the third arbitrator
(or if Landlord's arbitrator and Tenants arbitrator reach agreement on a fair
market rent without the appointment of a third arbitrator, the decision and
award of Landlord's and Tenant's arbitrators) so rendered in any court of
competent jurisdiction.
(d) Prior to the determination of the arbitrators, Tenant
shall pay as the Annual Rent it is obligated to pay under this lease the amount
set forth in the Revised Rent Notice and in the event the arbitrators determine
that the Annual Rent payable pursuant to this Article 37 is less than that set
forth in the Revised Rent Notice, then Tenant shall be entitled to a credit in
the amount of its overpayment for the period commencing on the first day
following the Expiration Date against subsequent payments of Annual Rent due
hereunder. In the event that the arbitrators determine that the Annual Rent
payable pursuant to this Article 37 is more than that set forth in the Revised
Rent Notice, then Tenant shall promptly pay to Landlord the amount of its
underpayment for the period commencing on the day following the Expiration Date.
37.3 (a) Notwithstanding the foregoing provisions of this Article
37, if on the date that Tenant exercises the Option or if on any subsequent date
up to and including the Expiration Date, Tenant is in default in the performance
of any of the terms, conditions or provisions of this lease and such default has
continued beyond the applicable grace and notice period herein provided, then
Tenant's exercise of the Option and the extension of the term of this lease
contemplated thereby shall, at the option of Landlord exercised by written
notice to Tenant, be rendered null and void and shall be of no further force or
effect. Tenant shall have no further or additional right to exercise the Option,
which shall be deemed waived by Tenant.
(b) Notwithstanding the foregoing provisions of this Article
37, if Tenant shall assign the lease or sublet the Premises in whole or in part,
other than pursuant to Section 9.8 or Section 9.9 of this Lease, the Option
shall automatically be rendered null and void and shall be of no further force
or effect. Tenant shall have no further or additional right to exercise the
Option, which shall be automatically deemed waived by Tenant upon an assignment
or subletting.
37.4 If Tenant exercises the Option, then, at Landlord's request,
Tenant agrees within fifteen (15) business days after such request is made to
execute, acknowledge and deliver to Landlord an instrument in form and substance
satisfactory to Landlord, confirming (i) the Annual Rent payable under this
Lease and (ii) the expiration date of the Renewal Term, but no such instrument
shall be required to make the terms of this Article 37 effective.
37.5 Nothing contained in this Article 37 shall be deemed in any
way to modify the provisions of Article 4 hereunder.
38. MISCELLANEOUS.
38.1 Nothing contained in Article 4, Article 6 or Article 27 of
this Lease shall require Tenant to pay (a) any general income tax, franchise
tax, corporate transfer tax, estate or gift tax imposed on Landlord generally,
rather than solely as an owner of the Premises, or (b) any mortgage, recording,
stamp, encumbrancing or transfer tax on the sale or lease of the Premises or the
Building or any stock of or interest in Landlord, or any portion thereof or
interest therein.
38.2 Except as provided below, Landlord shall remove, but only if
and to the extent required by Environmental Laws or other applicable laws, in
compliance with all Environmental Laws, all Hazardous Materials (i) that are
present in or on the Premises as of the date hereof or that are hereafter
present in or on the Premises due to the acts or negligent or wrongful omissions
of Landlord or Landlord's agents, employees or contractors, or (ii) that are
present in or on the Premises due to the migration of such Hazardous Materials
from other
- 21 -
properties that does not result from the acts or negligent or wrongful omission
of Tenant. Tenant shall be responsible for the removal (whether or not such
removal is required by Environmental Laws or other applicable laws) in
compliance with all Environmental Laws of all Hazardous Materials in or on the
Premises due to all other causes, including but not limited to, illegal dumping
in or on the Premises. Notwithstanding anything to the contrary contained in
this Section 38.2, Landlord shall not be responsible for the removal or
encapsulation of the asbestos-containing materials contained in the mastic
located under or behind the vinyl cove base in the Building ("Mastic ACMs").
provided, that if the Initial Alterations necessitate the removal of Mastic
ACM's in order to comply with law, Landlord shall remove the Mastic ACM's
provided that Tenant shall pay to Landlord, as additional, rent, $7,500 towards
the cost of such removal (which sum shall be paid by Tenant within 10 days after
demand therefor from Landlord).
38.3 Notwithstanding anything to the contrary contained in this
Lease, including but not limited to Section 25.2. Tenant shall only be required
to remove from the Premises at the end of the Term such Alterations made to the
Premises (including, without limitation, the Initial Alterations) which Landlord
specifies at the time Landlord approves the plans and specifications for such
Alterations; provided that Tenant, at the time Tenant submitted such plans and
specifications to Landlord for its review, requested that Landlord
specifications those items that Landlord shall require Tenant to remove at the
end of the Term.
38.4 Subject to Landlord's approval (which approval shall not be
unreasonably withheld), Tenant may install (a) one monument sign on the Premises
identifying Tenant by name and/or logo and (b) one sign on the Building by the
Building entrance identifying Tenant by name and/or logo, provided that in each
case (i) such signs comply with all applicable legal requirements and insurance
requirements, and (b) Tenant removes such signs at the end of the Term and
repairs all damage caused by such removal and restores the affected areas of the
Premises to the condition that existed prior to the installation of such signs.
38.5 It is agreed that Tenant shall not be responsible for
complying with any present or future laws, orders, rules or regulations of
federal, state, county, municipal or other governments or governmental
authorities or any of their departments, commissions, boards, or agencies or
with any direction or recommendation of any public officer or officers pursuant
to law or with any orders or notices of the National Board of Fire Underwriters
or any requirements of any insurer of the Building or any part thereof, (a)
which Landlord or any affiliate, predecessor in interest, servant, employee or
agent of Landlord has violated or (b) where a notice of violation or order was
issued prior to the Commencement Date or (c) which require any work,
investigation(s), or certification(s) to be made with regard to the Landlord
Repair Items under a law enacted after the date of this Lease unless such
compliance is required by reason of Tenant's particular manner of use of the
demised premises, any Alterations performed by Tenant (including, without
limitation, the Initial Alterations) or method of operation therein, unless such
violations shall be cured by Tenant's performance of the Initial Alterations.
38.6 Notwithstanding anything to the contrary contained in this
Lease, this Lease shall be subject and subordinate to any ground or underlying
lease, deed of trust or mortgage which may affect the Premises (or any part
thereof). Landlord shall request a non-disturbance agreement on behalf of Tenant
from the holder of each ground or underlying lease, deed of trust or mortgage
that may now or hereafter encumber the Premises, and Landlord shall use its
reasonable efforts to obtain same (it being acknowledged that reasonable efforts
shall not be deemed to require the payment of any money or the commencement of
any judicial or non-judicial action or proceeding), but notwithstanding the
foregoing, this Lease and 'Tenant's obligations hereunder shall not be affected
or impaired in any respect should any such holder decline to enter into such a
non-disturbance agreement.
- 22 -
LANDLORD: TENANT:
RREEF MIDAMERICA/EAST-V NINE, VICON INDUSTRIES, INC., a
INC., a Delaware corporation New York corporation
By: RREEF Management Company, a
California Corporation
By: Alane Berkowitz By: Kenneth M. Darby
Title: District Manager Title: President
Dated: 12/24/96 Dated: 12/24/96
- 23 -
EXHIBIT A
attached to and made apart of Lease bearing the
Lease Reference Date of December 24, 1996 between
RREEF MIDAMERICA/EAST-V NINE, INC., as Landlord and
VICON INDUSTRIES INC. as Tenant
PREMISES
ALL that certain plot, piece or parcel of land situate, lying and being at
Hauppauge in the Town of Smithtown, County of Suffolk and State of New York,
being part of Lot 6 on a certain map entitled, "Map of Suffolk County Business
Center Section No. 2" filed in the Office of the Clerk of the County of Suffolk
on August 31, 1978 as Map No. 6715 bounded and described as follows:
BEGINNING at a point on the southerly side of Arkay Drive, said point or place
of beginning being 98.42 feet easterly, as measured along the southerly side of
Arkay Drive from the easterly end of a 40 foot radius curve which connects the
southerly side of Arkay Drive with the easterly side of Adams Avenue;
RUNNING THENCE easterly from said point or place of beginning, along the
southerly side of Arkay Drive north 86 degrees 44 minutes 08 seconds East, a
distance of 519.37 feet to a point;
RUNNING THENCE southerly south 3 degrees 15 minutes 52 seconds East, a distance
of 425.00 feet to a point;
RUNNING THENCE westerly south 86 degrees 44 minutes 08 seconds West, a distance
of 519.37 feet to a point;
RUNNING THENCE northerly north 3 degrees 15 minutes 52 seconds West a distance
of 425.00 feet to the southerly side of Arkay Drive and the point or place of
BEGINNING.
Ex. A - 1
EXHIBIT B
attached to and made a part of Lease bearing the
Lease Reference Date of December 24, l996 between
RREEF MIDAMERICA/EAST-V NINE, INC., as Landlord and
VICON INDUSTRIES, INC., as Tenant
INITIAL ALTERATIONS
The purpose of this Exhibit B is to describe those items of work constituting
the Initial Alterations. The same shall be done (i) as shown on the approved
Plans and Specifications, (ii) in accordance with the Lease, including, without
limitation. Article 6 thereof and this Exhibit B thereto, and (iii) in
compliance with all applicable Insurance requirements, Legal requirements, rules
and codes and such reasonable rules and regulations as Landlord and its
architects and engineers may make. The provisions of this Exhibit B shall be
supplemental to and shall be an integral part of the Lease. Any capitalized
terms used in this Exhibit B shall be construed in accordance with their
definitions in the Lease, unless otherwise defined in this Exhibit B.
TENANT'S INITIAL ALTERATIONS:
All Alterations to be performed in order to furnish, finish and
prepare the Premises for Tenant's initial occupancy thereof shall be performed
by Tenant (the "Initial Alterations), at Tenant's sole cost and expense, as
hereinabove and hereinbelow set forth.
The Initial Alterations may include, but shall not be limited to,
the installation of fixtures and equipment for heating, ventilating, and air
conditioning the demised premises, sprinklerization, plumbing and electrical
work and interior partitions.
The Initial Alterations shall be performed as follows:
1. On or before the date that is sixty (60) days after the date of
this Lease ("Plan Submission Date"), Tenant shall submit to Landlord, working
drawings, specifications and information describing the Initial Alterations in
reasonable detail (collectively, "Plans and Specifications").
2. The Plans and Specifications shall be fully detailed, shall show
complete dimensions, shall have designated thereon all points of location and
other matters, including the finish schedules, reasonably requested by Landlord,
and shall consist of the final Plans and Specifications (including air
conditioning, ventilating, electrical, plumbing and engineering design drawings
and specifications, which shall be prepared by an engineer employed by Tenant
and reasonably approved by Landlord) prepared by Tenant's licensed engineer,
interior architect or designer to describe the manner in which Tenant desires
the demised premises to be finished by Tenant, including any changes thereto
from time to time requested by Tenant or made to obtain the approvals or permits
referred to in Paragraph 3 of this Exhibit B. The Plans and Specifications shall
comply with all Legal requirements and Insurance requirements relating to
construction of the Building and/or the demised premises. Prior to the
commencement of any Initial Alterations, the Plans and Specifications shall have
been approved in writing by Landlord, but such approval shall be as to layout
only, shall not be deemed to be an approval of the legality or the cost of the
Initial Alterations or the Plans and Specifications. The Plans and
Specifications shall not be changed or modified by Tenant after such approval by
Landlord without the approval in writing of Landlord. Landlord shall approve,
conditionally approve or disapprove the Plans and Specifications, or
modifications thereof, within ten (10) business days after the receipt thereof,
or with respect to any resubmissions of the Plans and Specifications, within 5
business days after the receipt thereof. Any disapproval or conditional approval
of such plans and specifications shall set forth in reasonable detail Landlord's
objections thereto.
3. Upon written approval by Landlord of the Plans and
Specifications, Tenant shall, with reasonable speed and diligence. file with the
appropriate governmental authority or authorities the Plans and Specifications
and any plans for air conditioning, ventilating, heating, mechanical, electrical
and plumbing work, and shall take whatever action shall be necessary (including
modifications approved by Landlord of Plans and Specifications) to
Ex. B - 1
obtain and maintain all governmental permits and authorizations which may be
required in connection with the Initial Alterations. Tenant shall pay all filing
fees and other costs in connection therewith. Tenant shall deliver copies of all
such permits and authorizations to Landlord pursuant to the commencement of the
Initial Alterations. Landlord shall cooperate with Tenant in connection with the
aforesaid. Tenant will promptly furnish to Landlord copies of all Buildings
Department approved drawings.
LANDLORD'S CONTRIBUTION:
1. Landlord shall reimburse Tenant for the cost of the
Eligible Tenant Work (as defined below) in an amount (the "Work Allowance") not
to exceed $125,000.00 upon the following terms and conditions:
(a) The Work Allowance shall be payable to Tenant in
installments as Eligible Tenant Work progresses, but in no event more
frequently than monthly.
(b) Landlord shall make payments within thirty (30) days
after receipt of all of the following from Tenant: (A) a certificate signed by
Tenant1s architect and an officer of Tenant certifying that the Eligible Tenant
Work for which payment is being sought has been satisfactorily completed in
accordance with the plans and specifications therefor approved by Landlord, (B)
such evidence of payment of the cost of the Eligible Tenant Work for which
payment is being sought that Landlord may reasonably request, (C) a lien waiver
from all contractors, subcontractors and materialmen performing the Eligible
Tenant Work, in form and substance reasonably satisfactory to Landlord, provided
that if any contractor shall refuse to deliver any such lien waiver by reason of
a dispute over the amount due such contractor, Landlord shall not withhold the
entire Work Allowance, but shall only hold back 110% of the disputed portion
until Tenant delivers to Landlord a lien waiver or obtains the discharge of any
lien filed by such contractor or delivers to Landlord proof of payment of amount
due such contractor as finally determined by a court of competent jurisdiction,
and (D) with regard to the final disbursement of the Work Allowance, all
necessary licenses, approvals, permits and signoffs required under all
applicable laws that are necessary for Tenant to occupy the Premises for the
conduct of its business; and
(c) No Event of Default shall have occurred and be
continuing under the Lease.
(d) The right to receive reimbursement for the cost of the
Initial Alterations as set forth in this Exhibit B shall be for the
exclusive benefit of Tenant, it being the express intent of the parties
hereto that in no event shall such right be conferred upon or for the
benefit of any third party, including, without limitation, any
contractor, subcontractor, materialman, laborer, architect, engineer,
attorney or any other person, firm or entity.
2. "Eligible Tenant Work" means the Initial Alterations, including
demolition, and shall not include so-called soft costs or movable partitions,
business and trade fixtures, machinery, equipment, furniture, furnishings and
other articles of personal property.
The right to receive reimbursement for the cost of the
Eligible Tenant Work as set forth herein shall be for the exclusive benefit of
Tenant, it being the express intent of the parties hereto that in no event shall
such right be conferred upon or for the benefit of any third party, including,
without limitation, any contractor, subcontractor, materialman, laborer,
architect, engineer, attorney or any other person, firm or entity.
4 If Landlord shall default in its obligation to pay to Tenant the
Work Allowance pursuant to this Exhibit B, and such default shall continue for a
period of thirty (30) days after notice from Tenant shall be given to Landlord,
which notice shall state that the failure to cure such default shall entitle
Tenant to offset such amounts from the rent payable under this Lease, then
unless Landlord shall be disputing Tenant's right to such payment, Tenant shall
have the right to offset the unpaid portion of the Work Allowance, against the
next succeeding payments of rent payable under this Lease. If the parties shall
be disputing Tenant's right to such
Ex. B -2
payment, the right of Tenant to offset any amounts pursuant to this Exhibit B
shall be deferred until the resolution of such dispute.
Ex. B -3
EXHIBIT C
attached to and made a part of Lease bearing the
Lease Reference Date of December 24, 1996 between
RREEF MIDAMERICA/EAST-V NINE. INC., as Landlord and
VICON INDUSTRIES, INC., as Tenant
WARRANTY
Landlord represents and warrants that the Building shall be in the
following condition (the "Minimum Acceptable Condition") as of the Commencement
Date, and shall, promptly after receiving notice from Tenant, perform such
repairs, replacements, improvements, changes, and alterations as are necessary
to assure that the Building is in Minimum Acceptable Condition:
1. The Building shall be served by 2,000 amps of 3 phase
electricity.
2. The sprinkler and fire protection systems shall be in good
working order.
3. The HVAC system shall be in good working order.
4. The plumbing system shall be in good working order.
5. The outdoor sprinkler system shall be in good working order.
Any claim with respect to items 1, 2, 3 and 4 above must be made
within thirty (30) days of the date hereof, with the exception of claims
regarding the air conditioning system under item 3. If Tenant fails to make a
claim to Landlord by such date, Landlord shall have no further obligation to
Tenant under this Exhibit C.
Any claim with respect to item 5 above or the air conditioning
system under item 3 above must be made no later than June 30, 1997. If Tenant
fails to make a claim to Landlord by such date, Landlord shall have no further
obligation to Tenant under this Exhibit C. Upon Tenant's request, Landlord shall
assign the warranty for the Building boiler to Tenant, without representation or
recourse, for the term of this Lease. Upon the expiration or earlier termination
of this Lease, Tenant shall assign the warranty for the Building boiler to
Landlord without representation or recourse. Notwithstanding anything to the
contrary contained in this Exhibit C, Landlord shall have no obligation to
Tenant under this Exhibit C for any claims resulting from the acts or negligent
or wrongful omissions of Tenant or its agents, employees and contractors.
Landlord is currently replacing the existing boilers in the
Building, which replacement is anticipated to be completed by January 31, 1997
(subject to force majeure). Landlord shall use reasonable efforts to complete
such replacement by January 31, 1997. The replacement boilers will have a BTU
capacity at least equal to the BTU capacity of the existing boiler at the
Premises.
-1-