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LEASE AGREEMENT
BOWLING GREEN - WARREN COUNTY INDUSTRIAL AUTHORITY IV, INC.
and
KERR GROUP, INC.
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BOWLING GREEN-WARREN COUNTY INDUSTRIAL AUTHORITY IV, INC.
KERR GROUP, INC.
LEASE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Acquisition and Construction Costs. . . . . . . . . . . 1
(b) Additional Consideration. . . . . . . . . . . . . . . . 2
(c) Business Days . . . . . . . . . . . . . . . . . . . . . 2
(d) Design/Builder. . . . . . . . . . . . . . . . . . . . . 2
(e) Design/Builder Contract . . . . . . . . . . . . . . . . 2
(f) Expiration Date . . . . . . . . . . . . . . . . . . . . 3
(g) Hazardous Material. . . . . . . . . . . . . . . . . . . 3
(h) Improvements. . . . . . . . . . . . . . . . . . . . . . 3
(i) Extension Terms. . . . . . . . . . . . . . . . . . . . 3
(j) Initial Term . . . . . . . . . . . . . . . . . . . . . 3
(k) Land. . . . . . . . . . . . . . . . . . . . . . . . . . 3
(l) Landlord . . . . . . . . . . . . . . . . . . . . . . . 3
(m) Lenders . . . . . . . . . . . . . . . . . . . . . . . . 3
(n) Lease Year. . . . . . . . . . . . . . . . . . . . . . . 3
(o) Loan Documents. . . . . . . . . . . . . . . . . . . . . 3
(p) Loans . . . . . . . . . . . . . . . . . . . . . . . . . 4
(q) Plans and Specifications. . . . . . . . . . . . . . . . 4
(r) Premises. . . . . . . . . . . . . . . . . . . . . . . . 4
(s) Rent Commencement Date. . . . . . . . . . . . . . . . . 4
(t) Term. . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DEMISE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTRUCTION OF IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . 5
(a) Construction. . . . . . . . . . . . . . . . . . . . . . 5
(b) Construction Supervision. . . . . . . . . . . . . . . . 5
(c) Excess Costs. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USE OF PREMISES; HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . 6
(a) Use . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Hazardous Material. . . . . . . . . . . . . . . . . . . 6
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ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INITIAL LEASE TERM; POSSESSION;. . . . . . . . . . . . . . . . . . . . . 9
OPTION FOR EXTENSION TERM(S) . . . . . . . . . . . . . . . . . . . . . . 9
(a) Term; Effective Date. . . . . . . . . . . . . . . . . . . . 9
(b) Possesion . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
RENT; OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Absolute Triple Net Lease . . . . . . . . . . . . . . . . . 9
(b) Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Option to Purchase. . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
RESTRICTION ON TRANSFER; TERMINATION BY TENANT . . . . . . . . . . . . . 12
(a) Transfer of Landlord's Interest . . . . . . . . . . . . . . 12
(b) Termination by Tenant; Landlord's Cure Period . . . . . . . 13
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
MAINTENANCE OF LEASE PREMISES. . . . . . . . . . . . . . . . . . . . . . 13
(a) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Public Liability Insurance. . . . . . . . . . . . . . . . . 14
(b) Property Damage, Physical Damage
and Fire Insurance. . . . . . . . . . . . . . . . . . . . . 14
(c) Builders Risk Insurance . . . . . . . . . . . . . . . . . . 15
(d) Limitations . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Certificates of Insurance . . . . . . . . . . . . . . . . . 15
(f) Mortgagee Policy. . . . . . . . . . . . . . . . . . . . . . 15
(g) Insurer's Waiver of Subrogation . . . . . . . . . . . . . . 16
ARTICLE 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ALTERATIONS; IMPROVEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ASSIGNMENT; SUBLETTING; ALIENATION . . . . . . . . . . . . . . . . . . . 17
ARTICLE 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) By Tenant . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) By Landlord . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DEFAULT; TERMINATION OF LEASE BY LANDLORD; REMEDIES. . . . . . . . . . . 19
(a) Termination at End of Term. . . . . . . . . . . . . . . . . 19
(b) Default By Tenant . . . . . . . . . . . . . . . . . . . . . 19
(c) Re-Entry. . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Acceleration of Rent. . . . . . . . . . . . . . . . . . . . 20
(e) Effect of Termination . . . . . . . . . . . . . . . . . . . 21
ARTICLE 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
HOLDOVER; SURRENDER OF PREMISES. . . . . . . . . . . . . . . . . . . . . 21
(a) Holdover . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Surrender. . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Landlord's Inspection. . . . . . . . . . . . . . . . . . . 22
ARTICLE 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
UTILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
TAXES AND ASSESSMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DESTRUCTION BY FIRE OR CASUALTY. . . . . . . . . . . . . . . . . . . . . 25
(a) Partial Damage. . . . . . . . . . . . . . . . . . . . . . . 25
(b) Substantial Damage. . . . . . . . . . . . . . . . . . . . . 25
(c) Personalty Proceeds . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Taking. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Compensation Award. . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SUBORDINATION, ATTORNMENT AND NONDISTURBANCE . . . . . . . . . . . . . . 27
(a) Tenant's Instruments. . . . . . . . . . . . . . . . . . . . 27
(b) Landlord's Instruments. . . . . . . . . . . . . . . . . . . 28
ARTICLE 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ACCESS TO LEASED PREMISES. . . . . . . . . . . . . . . . . . . . . . . . 28
(a) By Landlord . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) By Prospective Tenants. . . . . . . . . . . . . . . . . . . 28
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ARTICLE 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PARTIES' REMEDIES CUMULATIVE;
NO WAIVER OR FORBEARANCE; SEVERABILITY . . . . . . . . . . . . . . . . . 29
ARTICLE 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
LANDLORD'S COVENANT OF QUIET ENJOYMENT . . . . . . . . . . . . . . . . . 30
ARTICLE 24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
TENANT'S COVENANTS AND DISCLOSURES . . . . . . . . . . . . . . . . . . . 30
(a) Employees . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Compliance Review Disclosures . . . . . . . . . . . . . . . 31
(c) Financial Disclosure. . . . . . . . . . . . . . . . . . . . 31
(d) Improvements Constructed by Tenant. . . . . . . . . . . . . 31
(e) Jobs Incentive Program. . . . . . . . . . . . . . . . . . . 32
ARTICLE 25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
INTEREST ON PAST DUE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
TITLES OF ARTICLES . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
RECORDING OF MEMORANDUM OF LEASE . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 35
EXHIBIT 1(k). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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INDUSTRIAL IV - KERR GROUP
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into on this the
30th day of June, 1994 at Bowling Green, Warren County, Kentucky, by BOWLING
GREEN-WARREN COUNTY INDUSTRIAL AUTHORITY IV, INC., a Kentucky corporation, 812
State Street, Bowling Green, Kentucky 42101, hereinafter referred to as
"Landlord"; and KERR GROUP INC., a Delaware corporation, 1840 Century Park
East, Los Angeles, California 90067 hereinafter referred to as "Tenant".
WHEREAS, Landlord desires to lease to Tenant and Tenant desires to
lease from Landlord, certain real property, Improvements and facilities
described herein; and
WHEREAS, Landlord has engaged the services of a contractor to design
and build Improvements upon the premises to be leased; and
WHEREAS, the parties desire to set forth and be bound by their
agreements herein;
NOW THEREFORE, for and in consideration of the mutual promises of the
parties to this Agreement the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings in this Lease:
(a) Construction Costs: Shall mean all costs of constructing
the Improvements including without limitation, title insurance premiums,
permitting, platting, appraisal, recording, surveying, engineering, drainage
plan fees, inspection fees, accounting, attorney and other
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professional fees and costs in connection therewith. Attorney and professional
fees together with construction interest and other costs are herein described
as "soft costs" as follows:
Construction interest. . . . . . . . . . . . . $175,000.00
Attorneys fees . . . . . . . . . . . . . . . . 19,000.00
Title insurance. . . . . . . . . . . . . . . . 8,000.00
Environmental Audit. . . . . . . . . . . . . . 2,000.00
Appraisal. . . . . . . . . . . . . . . . . . . 10,000.00
Survey . . . . . . . . . . . . . . . . . . . . 1,000.00
Miscellaneous. . . . . . . . . . . . . . . . . 10,000.00
To the extent such soft costs shall exceed the aggregate of the
foregoing, Tenant shall reimburse Landlord for such soft costs.
(b) Additional Consideration:
(i) The County of Warren will provide an amount not
to exceed Fifty Thousand Dollars ($50,000.00) to the Landlord for the
construction of a rail spur in a form reasonably acceptable to Tenant.
(ii) Warren County will pay for the construction of
an industrial access road up to Fifteen Hundred (1,500) feet in length.
(iii) Tenant will receive a five year moratorium on
Tenant's requirement to pay city ad valorem property taxes.
(c) Business Days: All days other than Saturdays, Sundays
and legal holidays.
(d) Design/Builder: Owens Engineering and H & M Construction
Company, Inc.
(e) Design/Builder Contract: The contract between Landlord
and Tenant and the Design/Builder for designing and building the Improvements,
which contract shall be in form and substance acceptable to Landlord and
Tenant. A copy of this Contract shall be delivered to the Landlord within ten
(10) days following execution of this Lease.
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(f) Expiration Date: As defined in Article 5(a) hereof.
(g) Hazardous Material: As defined in Article 4(b) hereof.
(h) Improvements: The manufacturing plant and related
buildings located on the Land.
(i) Extension Terms: As defined in Article 5(a) hereof.
(j) Initial Term: As defined in Article 5(a) hereof.
(k) Land: Lot 9, Section 4 of the South Central Kentucky
Industrial Park in Bowling Green, Kentucky, comprised of 25.115 acres, as more
particularly described in Exhibit 1(k) attached hereto and made a part hereof
for all purposes.
(l) Landlord: Bowling Green-Warren County Industrial
Authority IV, Inc.
(m) Lenders: Collectively the entities providing the Loans
to the Landlord, being
i) Kentucky Development Finance Authority
("KDFA") by virtue of its loan in the principal amount of $700,000.00 (the
"Loan");
ii) Trans Financial Bank, N.A. by virtue of
its loan in the principal amount of $4,335,000.00, (the "TFB Loan"); and
(n) Lease Year: Shall mean the twelve (12) month period
commencing on the first day of the month following the Rent Commencement Date
and ending on the last day of the twelfth (12th) full calendar month
thereafter, and each such successive 12- month period.
(o) Loan Documents: The written documents evidencing and
relating to the Loans, including without limitation loan agreements, promissory
notes, mortgages and/or other agreements securing the Loans and occupational
tax credits.
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(p) Loans: Collectively the loans obtained by Landlord from
the Lenders to finance the construction costs in the maximum principal amount
of $5,035,000.00.
(q) Plans and Specifications: The proposal, drawings,
specifications, cost estimates and documents prepared by the Design/Builder for
the design and building of the Improvements approved by Landlord and Tenant
pursuant to Article 3(a) hereof.
(i) Permitted Exceptions: As defined in Article 6(d).
(r) Premises: Collectively, the Land and the Improvements.
(i) Purchase Option: As defined in Article 6(d), if
so exercised in accordance with the terms of its Lease.
(s) Rent Commencement Date: The earlier of June 1, 1995, or
the date when Tenant commences business in the ordinary course following the
completion of all Improvements or the issuance of a certificate of occupancy.
If the Rent Commencement Date is other than the first day of the month, the
first rental payment due under this Lease shall be pro-rated to the first day
of the following month. Landlord and Tenant each covenant to execute a
written agreement stipulating the Rent Commencement Date when it has been
determined. The Rent Commencement Date is conditioned upon the delivery to
Tenant and/or completion of all Additional Consideration in a form satisfactory
to Tenant.
(t) Term: The Initial Term and both Extension Terms.
ARTICLE 2
DEMISE OF PREMISES
Landlord leases to Tenant and Tenant leases from Landlord the
Premises, together with rights of use, where applicable, to common areas, and
any additions or Improvements made
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during the term or any renewal term of this Lease, and Landlord, in
consideration of rents, covenants and agreements hereafter set forth to be
observed and/or performed on the part of the Tenant, agrees to lease the
Premises to the Tenant.
ARTICLE 3
CONSTRUCTION OF IMPROVEMENTS
(a) Construction. Landlord and Tenant shall within thirty
(30) days of execution of this Lease agree upon the Plans and Specifications.
The Plans and Specifications may be altered, amended or modified by Tenant with
the consent of Landlord, and such alteration, amendment or modification shall
not increase the cost of the construction of the Improvements and that notice
of such alteration, amendment or modification shall promptly be provided to
Landlord and its Lenders. Tenant will only be responsible for those costs
attributable solely to change orders requested by Tenant. Landlord shall
within 30 days of execution of this Lease enter into the Design/Builder
Contract with the Design/Builder for the design and building of the
Improvements in accordance with the Plans and Specifications of this Lease.
The Design/Builder Contract shall be in the form of the Standard Form of
Agreement between Owner and Design/Builder (AIA Document A191-1985, part 2 and
addendum "A") or such form as is mutually agreed upon by Landlord, Tenant and
Tenant's Lenders. It is anticipated that the Construction Costs will not
exceed $4,803,500.00.
(b) Construction Supervision. Landlord shall designate a
representative of Tenant to act on Landlord's behalf with respect to designing
and building of the Improvements pursuant to the terms of the Design/Builder
Contract. Said representative shall be available to Design/Builder on an
ongoing basis during construction of the Improvements, and shall promptly
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render decisions to Design/Builder pertaining to the design and building
process and any modifications thereof, subject to Article 3(a) hereof.
(c) Excess Costs. Tenant shall be responsible for and
shall pay all Construction Costs which shall exceed the Contract amount of
$4,803,500.00 between Landlord and H&M Construction.
ARTICLE 4
USE OF PREMISES; HAZARDOUS MATERIALS
(a) Use. The Tenant shall use and occupy the Premises for
the purpose of manufacturing and distribution of manufactured products, office
use, storage, warehousing and related activities. In connection with the use
and occupancy of the Premises, Tenant shall comply in all material respects
with all applicable rules, regulations and requirements of any federal, state
or local governmental authority and the rules, regulations and requirements of
fire rating organizations or will obtain insurance insuring over such
requirements.
(b) Hazardous Material:
(i) As used herein, the term "Hazardous
Material" means (a) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (42 USC Section 6901 et seq.), as
amended from time to time, and regulations promulgated thereunder; or (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act (42 USC Section 9601 et seq.) and regulations
promulgated thereunder, (c) any "hazardous chemical substance or mixture"
described in the Toxic Substances Control Act (15 USC 2601, et seq.); or (d)
any substance that is or becomes regulated by any federal, state or local
governmental authority as a hazardous waste or hazardous substance; any of
which is
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brought upon, kept or stored upon the Premises by Tenant.
(ii) Tenant shall not cause or permit any
Hazardous Material to be brought upon, kept or used in or about the Premises by
its agents, employees, contractors or invitees, except for such Hazardous
Material as is used or consumed in Tenant's or its sublessees' business and/or
is necessary for the manufacture of its or their products.
(iii) Any Hazardous Materials permitted on
the Premises by Tenant as provided herein and all containers therefor, shall be
used, kept, stored and disposed of in material compliance with all federal,
state and local laws and regulations applicable to such Hazardous Material.
(iv) Tenant shall be fully liable for all
costs and expenses related to the use, generation, transport, handling,
storage, disposal and cleanup or detoxification of Hazardous Material on the
Premises by Tenant or its employees or agents, including without limitation all
damages to Landlord directly or indirectly arising from these activities. The
Tenant shall promptly give notice to Landlord of any violation of the
provisions of this Article or of any citation or written notice received by
Tenant from any federal, state or local governmental authority. After the date
of this Lease except to the extent caused by Landlord or its employees, agents
or contractors, Tenant shall defend, indemnify and hold harmless Landlord and
its agents, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses (including, without
limitation, reasonable attorneys' fees, court costs and litigation expenses) of
whatever kind or nature, arising out of or in any way related to (a) the
presence, use, disposal, transport, release, or threatened release of any such
Hazardous Material that is on, from or affecting the soil, water, vegetation,
buildings, personal property, persons, animals or otherwise
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which Hazardous Material was not present on the Premises prior to the date of
this Lease; (b) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to the presence, use,
disposal, transport, release or threatened release of Hazardous Material not
present on the Premises prior to the Rent Commencement Date; (c) any lawsuit
brought or threatened, or government order relating to that Hazardous Material
not present on the Premises prior to the date of this Lease, or (d) any
violation of any laws applicable thereto.
(v) Landlord and Tenant shall each
promptly notify the other in writing should Landlord or Tenant become aware of
or receives any written notice of any complaint, order, citation or notice with
regard to air emissions, water discharges, noise emissions, or any other
environmental, health, or safety matter affecting the Premises from any person
or entity including without limitation the Kentucky Cabinet for Natural
Resources and Environmental Protection or the United States Environmental
Protection Agency. Landlord and Tenant shall provide the other with a copy of
any written environmental disclosure voluntarily made or required to be made by
such party to any local, state or federal governmental authority during the
Term of this Lease.
(vi) In consideration of Tenant's
agreements relating to Hazardous Material as set forth above, Landlord warrants
and agrees that upon the date of this Lease, the Premises shall be free of any
and all Hazardous Material. Landlord agrees to defend, indemnify and hold
harmless Tenant from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses, of whatever kind or
nature, arising out of or in any way related to any Hazardous Material in, on,
or under the Premises prior to the date of this Lease).
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(vii) Tenant's and Landlord's agreements
relating to Hazardous Materials shall survive the termination of this Lease.
ARTICLE 5
INITIAL LEASE TERM; POSSESSION;
OPTION FOR EXTENSION TERM(S)
(a) Term; Effective Date. This Lease shall be effective upon
its execution by Landlord and Tenant. The initial rental term shall be for a
period of fifteen (15) years (the "Initial Term") beginning with the Rent
Commencement Date and ending on the last day of the 180th full calendar month
thereafter (as same may be extended, the "Expiration Date"). In addition,
provided Tenant is not in default beyond notice and grace periods in any
material respect hereunder, Tenant shall have the option to extend the term for
two (2) consecutive five (5) year periods (the "Extension Terms"). To exercise
this Option, Tenant shall give Landlord written notice no later than ninety
(90) days prior to the end of the Initial Term and the first Extension Term.
(b) Possession. Tenant may enter into possession of the
Premises on or before the Rent Commencement Date for the purpose of installing
Tenant's fixtures and equipment; provided, however, that any such entry shall
not unreasonably interfere with the construction of the Improvements. Such
entry shall be under all of the terms and conditions of this Lease.
ARTICLE 6
RENT; OPTION TO PURCHASE
(a) Absolute Triple Net Lease. Landlord and Tenant
acknowledge that this Lease is a "TRIPLE NET" Lease. Therefore, all costs,
expenses and charges relating to the Premises for
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periods after the Rent Commencement Date, except as expressly provided herein,
shall be paid by Tenant. Notwithstanding the foregoing, nothing contained in
this Lease shall obligate Tenant to become directly obligated to pay any
interest or principal on any mortgage or other financing of Landlord's interest
in the Premises.
(b) Base Rent. The initial monthly base rent (the "Base
Rent") to be paid by Tenant is $50,239.00. The Base Rent shall be fixed for
the first five (5) Lease Years and adjusted thereafter every five years in
accordance with the financing provided by Trans Financial Bank, N.A. which
provides an adjustable interest rate equal to the 5 year United State Treasury
Bill interest rate plus 300 basis points; by way of example the following
schedule indicates per square foot rents applicable at various interest rates
beginning with the interest rate of 6.25%.
BANK SQUARE
INTEREST FOOT
RATE(1) RATE(2)
-------- -------
6.25 3.04
7.25 3.21
8.25 3.39
9.25 3.58
10.25 3.76
11.25 3.95
12.25 4.16
- - - ------------------
(1) This Rate is U.S. Treasury Bill rate plus 300 basis points.
(2) Includes the KDFA Loan.
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Landlord may not vary the amortization schedule without the written consent of
Tenant. To the extent that Construction Costs are below the Contract amount of
$4,803,500.00, the Base Rent shall be reduced by an amount equal to the amount
of such reduced costs calculated on a per square foot basis.
(c) Payment. The Base Rent shall be paid in equal monthly
installments in advance upon the first business day of each and every calendar
month during the Term hereof, and shall be payable at the office of the
Landlord, or its designee.
(d) Option to Purchase. Landlord does hereby grant to Tenant
an Option to Purchase the Premises (the "Purchase Option") at any time for a
purchase price equal to the greater of (x) the fair market value of the
Premises based on its present use and subject to the provisions of this Lease
(excluding the value of all improvements to the Premises made at Tenant's
expense) determined as of the date of Tenant's exercise of the Purchase Option
; (y) the then outstanding unamortized principal balance of the Loans (as such
original principal amounts existed on the date of this Lease and expressly
excluding any increases in the principal amounts thereof); and (z) in no event
shall the net purchase price payable to Landlord be less than $300,000.00. At
the end of the fifteenth (15) Lease Year, the Option Price shall be $1.5
million. To exercise this Purchase Option, Tenant shall give at least ninety
(90) days written notice to Landlord, and promptly after giving such notice
Tenant shall obtain an appraisal of the Premises at Tenant's expense. At
closing, Landlord shall provide to Tenant a deed of general warranty in
recordable form conveying fee simple title to the Premises together with all
easements, mineral rights, rights to public roads and other interests
appurtenant to the Premises, free and clear of all liens and encumbrances
granted or permitted by Landlord, except for matters appearing of record
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as of the date of the Lease, and such other easements for utilities and sewer
lines which Landlord may grant from time to time which will not materially
impair the use or value of the Premises, and subject to any liens or
encumbrances created or caused by Tenant (the "Permitted Exceptions"). At the
closing of title, the title company selected by Tenant must be prepared to
issue the then most recent ALTA Owner's Title Insurance Policy in the amount of
the purchase price insuring title to the Premises vested in Tenant, subject
only to the Permitted Exceptions. In the event Tenant exercises this Option,
Base Rent shall be paid up to the day of closing. Each party shall select and
bear all costs of its attorneys at closing, but all other closing costs
(including without limitation any transfer taxes and title insurance premiums)
shall be paid by the parties in accordance with local custom.
ARTICLE 7
RESTRICTION ON TRANSFER; TERMINATION BY TENANT
(a) Transfer of Landlord's Interest. Landlord shall give
notice to Tenant of any transfer, sale, assignment or conveyance of its
interest in the Premises; but shall not be required to obtain Tenant's consent
thereto. If Landlord shall transfer, sell, assign or convey its interest in
the first five years of the Initial Term, Landlord shall assume all of Tenant's
obligations to pay any city ad valorem property taxes and other taxes and fees
during the five year period which would not otherwise be payable if such
transfer had not taken place. Notwithstanding the foregoing, no such transfer,
sale, assignment or conveyance shall be effective unless and until the
transferee, purchaser or assignee executes and delivers to Tenant a written
agreement assuming Landlord's obligations hereunder.
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(b) Termination by Tenant; Landlord's Cure Period. Tenant may
terminate this Lease in the event of any material default by Landlord in the
performance of any material term or covenant of this Lease which continues for
thirty (30) days after written notice to Landlord specifying such default and
setting forth Tenant's intention to terminate this Lease is received by
Landlord. Notwithstanding the foregoing, it shall not be an event of default
and a termination shall not occur if said default is not capable of being cured
within the thirty (30) day period and Landlord has commenced to cure the
default during the said period, and diligently pursues such cure to
completion..
ARTICLE
MAINTENANCE OF LEASED PREMISES
(a) Maintenance. After the Rent Commencement Date, Tenant
covenants and agrees to keep and maintain the roof, parking lot and other
exterior portions of the Premises and to make any reasonably necessary
structural repairs to the interior of the Premises except such repairs required
as the result of damage arising by acts or omissions of the Landlord or of the
Design/Builder. Landlord agrees to use its best efforts to effect remedies
against the Design/Builder. Damage arising by acts or omissions of Landlord
shall be repaired upon written notice by Tenant to Landlord and Landlord, in
addition to its other rights and remedies, shall be entitled to the cure period
in Article 7(b) hereof. Tenant further covenants and agrees to keep and
maintain in good order, condition and repair the Premises and every part
thereof including without limitation any exterior and interior portions of all
doors, door checks, windows, plate glass, and all plumbing and sewage
facilities within the Premises including free flow up to the main sewer line up
to the boundary of the Premises, fixtures, heating, air conditioning and
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electrical equipment, including mechanical or electrical repairs to the
exterior of the building and parking lot, and interior walls, floors and
ceilings, including compliance with applicable building codes relative to fire
extinguishers. Tenant shall perform all snow removal, lawn care and landscaping
necessary to maintain the Premises in a neat and safe condition. If Tenant
refuses or neglects to commence said maintenance or repairs within fifteen (15)
days of the date Tenant receives written notice from Landlord, Landlord may,
but shall not be required to do so, make said repairs or maintenance and Tenant
shall pay the costs thereof to Landlord upon demand.
ARTICLE 9
INSURANCE
(a) Public Liability Insurance. From and after the Rent
Commencement Date Tenant shall procure and keep in effect general liability,
public liability, and worker's compensation liability insurance of not less
than $1,000,000.00 combined single limit per occurrence effective upon the Rent
Commencement Date.
(b) Property Damage, Physical Damage and Fire Insurance.
Tenant at Tenant's sole cost and expense, shall keep the Improvements now or
hereafter located on the Premises insured pursuant to the so-called extended
coverage policy available from time to time with an earthquake endorsement, if
available at commercially reasonably rates in a blanket policy in an amount not
less than $30,000,000.00, or the replacement cost of the Improvements. Such
insurance shall be so issued as to cover the interests of Landlord, Lenders,
and Tenant, as their interests appear, and shall provide that in the case of
loss or damage the proceeds thereof shall be payable jointly to Lenders,
Landlord and Tenant as their respective interests may appear at the time of the
loss. If Tenant exercises the Purchase Option to purchase the Premises
pursuant to Article 6(d), then
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Landlord shall turn over to Tenant, at closing thereof, the insurance proceeds
not used, if any, to repair or replace any damage to the Premises which may
have occurred during the Term hereof. In addition, Tenant shall obtain such
insurance at its own option and cost as Tenant deems necessary to insure
Tenant's leasehold improvements, equipment and other personal property located
at the Premises, and all losses for such insurance shall be payable solely to
Tenant.
(c) Builders Risk Insurance. Tenant will provide at Tenant's
sole cost and expense Builders Risk Insurance Coverage between the commencement
of construction of the Improvements and the Rent Commencement Date.
(d) Limitations. Each insurance policy required by this
Article 9 must be by an insurance company having an A.M. Best rating of not
less than "A". Each policy shall name Lenders as additional insureds, and
provide that all provisions shall operate as if there were a separate policy
insuring Lenders. Each policy shall provide thirty (30) days written notice to
Landlord and the Lenders prior to its cancellation. Notwithstanding the
foregoing, Tenant shall have the right to self-insure the workers compensation
coverage required in Article 9(a) hereof.
(e) Certificates of Insurance. Tenant shall deliver to
Landlord certificates of insurance upon execution of this Lease. Tenant shall
deliver certificates of renewal to Landlord for each policy prior to their
respective expiration dates. In the event that Tenant fails to provide any of
the insurance herein, Landlord may procure or renew such insurance, and any
amounts paid by Landlord for such insurance shall be immediately due and
payable as additional rent by Tenant.
(f) Mortgagee Policy. Upon written request of Landlord,
Tenant shall cause its insurer to issue a mortgagee policy of insurance in the
names of Lenders which requires that all notices furnished to Tenant shall
likewise be furnished to Landlord's Lenders.
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(g) Insurer's Waiver of Subrogation. Each policy of insurance
referred to herein shall provide a waiver and release by the insurer of any and
all claims, demands, suits, actions and rights, (including, without limitation,
any and all rights of subrogation) which said insurer might otherwise have
against Landlord and/or Tenant as a result of any acts or omissions of Landlord
and/or Tenant.
ARTICLE 10
ALTERATION; IMPROVEMENTS
Tenant may, without the consent of Landlord, make mechanical or
structural alterations, improvements and/or additions to the Premises or any
part thereof provided such alterations, improvements and/or additions are in
accordance with all applicable laws, are made at the expense of Tenant, and
each repair item does not cost more than Two Hundred Thousand Dollars
($200,000). Landlord's prior written consent shall be required for all
mechanical or structural alterations, improvements and/or additions exceeding
Two Hundred Thousand Dollars ($200,000.00) in cost per item, which consent
shall not be unreasonably withheld, conditioned or delayed. At termination of
this Lease, or within fifteen (15) days thereafter, Tenant shall, if Tenant so
elects, promptly remove the additions, improvements, fixtures and installations
which were placed in or on the Premises by Tenant, and repair any damage
occasioned by such removal. In the event of making such alterations,
improvements and/or additions as herein provided, Tenant further agrees to
indemnify and save harmless the Landlord from all expense, liens, claims or
damages to either persons or property arising out of, or resulting from the
undertaking or making of said alterations, additions and improvements. Any
additions, improvements, fixtures and installations which Tenant elects not to
remove from the Premises shall become property of the Landlord.
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ARTICLE 11
ASSIGNMENT; SUBLETTING; ALIENATION
Tenant may at any time during the Term of this Lease assign, sublet,
transfer, convey or otherwise alien any or all of its rights under this Lease
to its parent corporation, any company owned or controlled by Tenant or its
parent company, any company into which Tenant shall merge or consolidate, any
company purchasing substantially all of the assets of Tenant located in Bowling
Green, Kentucky, any partnership in which Tenant its parent company or any
company owned or controlled by Tenant or its parent company is or may become a
partner; provided, however, that any such assignment of rights, sublease, or
other alienation shall not relieve Tenant from liability for payment of rent or
from compliance with the terms, conditions and covenants of this Lease unless
agreed to in writing by Landlord. Tenant shall have the right, upon notice to
and with consent of Landlord, to pledge, encumber or otherwise assign its
leasehold interest herein as security for the payment of any indebtedness of
Tenant. Any assignment by Tenant of any or all of its rights under this Lease
or subletting by Tenant to any party other than those parties described in this
Article will require the written consent of the Landlord which shall not be
unreasonably withheld, conditioned or delayed. The acceptance of rent from any
other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or to be a consent to the assignment of this Lease,
subletting of the Premises, or other alienation by Tenant.
ARTICLE 12
INDEMNITY
(a) By Tenant. Tenant covenants and agrees that it will
protect, save and keep the Landlord harmless and indemnified against and from
any penalty, damage or charges imposed for
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any violation of any law or ordinance occurring on or after the Rent
Commencement Date, whether occasioned by the act or omission of Tenant or those
holding under Tenant, and that Tenant will at all times protect, indemnify,
save and keep harmless the Landlord against and from all claims, loss, cost,
damage or expense including reasonable attorney's fees arising out of or from
any accident or other occurrence on or about the Premises occurring on or after
the Rent Commencement Date causing injury to any person or property whomsoever
excepting those claims, losses, costs, damages or expenses caused or created by
Landlord or Landlord's employees or agents; and will protect, indemnify, save
and keep harmless the Landlord against and from any and all claims and against
and from any and all loss, cost, damage or expense, including reasonable
attorney fees, arising out of any material failure of Tenant in any respect to
comply with and perform all the requirements and provisions of this Lease from
and after the Rent Commencement Date.
(b) By Landlord. Landlord covenants and agrees that it will
protect, save and keep the Tenant harmless and indemnified against and from any
penalty, damage or charges imposed for any violation of any law or ordinance,
whether occasioned by the act or omission of Landlord or those holding under
Landlord and that Landlord will protect, indemnify, save and keep harmless the
Tenant against and from any and all claims, loss, cost, damage or expense,
including reasonable attorney fees, arising out of Landlord's act or omissions
or out of any material failure of Landlord to comply with and perform all the
requirements and provisions of this Lease.
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ARTICLE 13
DEFAULT; TERMINATION OF LEASE BY LANDLORD; REMEDIES
(a) Termination at End of Term. Unless otherwise sooner
terminated as elsewhere herein provided, this Lease shall terminate upon the
expiration of the Initial Term or any Extension Term thereof.
(b) Default by Tenant. The following shall constitute a
default by Tenant which, if not cured within the applicable time permitted
below, shall give rise to Landlord's remedies set forth hereinbelow, which
shall be in addition to all other remedies available to Landlord in law or in
equity:
(i) Failure to make when due any payment of rent,
unless such failure is cured within five (5) days after notice of default.
(ii) Failure to observe or perform any of the other
terms of this Lease within 30 days after written notice to Tenant; provided,
however, if such failure cannot be cured within said 30 day period, Tenant
commences such cure and thereafter diligently pursues said cure to completion;
including without limitation failure to keep and maintain the Premises in good
repair;
(iii) Abandonment of Premises, or vacation of all or a
substantial portion of the premises for more than fifteen (15) consecutive
days; casualty or condemnation shall not constitute abandonment for purposes of
this Lease
(iv) Making a general assignment for the benefit of
Tenant's creditors;
(v) Filing by or against Tenant of a petition in
bankruptcy or a petition for reorganization or under any law relating to
bankruptcy which is not discharged within ninety (90) days of the filing
thereof;
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(vi) Appointment of a trustee or receiver to take
possession of substantially all Tenant's assets located on the Premises where
possession is not restored within ninety (90) days;
(vii) Attachment, execution or other judicial seizure
of substantially all of Tenant's assets located on the Premises;
(viii) Tenant's insolvency or admission of inability
to pay its debts as they mature; or
(ix) If any representation, warranty or other
statement of fact contained herein shall be materially false or misleading when
made.
(c) Re-Entry. In the event of any uncured default by Tenant
whether or not Landlord terminates this Lease, Landlord may without notice
enter upon the Premises and the Improvements thereon, either with or without
process of law, and at its election remove all persons therefrom and hold the
Premises as if this Lease had not been made; however, before such entry,
Landlord must give Tenant notice of Landlord's intention and an opportunity to
exercise Tenant's Purchase Option.
(d) Acceleration of Rent. In the event of default by Tenant
unless cured as described above, then the rent for the balance of the Initial
Term or the Extension Term or any remaining part thereof at the option of
Landlord shall be due and payable as if by the terms of this Lease it were
payable in advance, and Landlord may immediately proceed to distrain, collect,
or bring action for the whole rent or any part thereof as if such were in
arrears. In case of termination necessitated by Tenant's uncured default,
Landlord shall be entitled to recover from Tenant all loss of rents and other
reasonable and customary costs and expenses Landlord may incur by reason of
such termination, including but not limited to the costs of repairing and
restoring the Premises to rentable condition, costs of renting the Premises to
another tenant, loss or diminution of rents and other damages; and all
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reasonable attorney fees and expenses incurred in enforcing any of the terms of
this Lease. Landlord shall use its best efforts to relet the Premises and
shall credit Tenant with the net rents received by Landlord from such
reletting.
(e) Effect of Termination. Nothing contained herein shall be
construed as giving Tenant, after the Lease has been terminated, any right,
title or interest whatsoever in or to the Premises or as giving or reserving to
Tenant any right of any kind whatever under this Lease, or in or to the
Premises. Upon termination of the Lease any and all interest of Tenant therein
shall forthwith cease and terminate and no compensation, damage or allowance
therefor shall be made to Tenant nor shall Tenant be entitled thereto.
Provided, however, in the event of such termination Tenant shall be allowed a
reasonable time not exceeding 30 days to remove from the Premises any and all
of Tenant's personal property.
ARTICLE 14
HOLDOVER; SURRENDER OF PREMISES
(a) Holdover. In the event Tenant remains in possession of
the Premises after the Initial Term or any Extension Term of this Lease, Tenant
shall be deemed a tenant from month to month only, at 120% of the monthly
rental on the date of expiration of the Initial Term or Extension Term; and
governed in all respects, except as to duration of the term, by the provisions
of this Lease.
(b) Surrender. Tenant covenants and agrees to deliver up and
surrender to the Landlord possession of the Premises upon expiration of this
Lease, or its earlier termination as herein provided, in as good condition and
repair as the same shall be on the Rent Commencement Date of this Lease,
ordinary wear and tear excepted. Tenant shall at Tenant's expense repair all
damage to the Premises caused by Tenant's removal so as to restore the Premises
to the condition in which they were prior to
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the installation of the articles so removed, ordinary wear and tear excepted.
Notwithstanding the foregoing, Tenant will not remove any structural item, but
Tenant may, at Tenants option, remove trade fixtures.
(c) Landlord's Inspection. Landlord shall have ten (10)
Business Days from the expiration or termination of this Lease to conduct an
inspection to determine if the Premises are in a condition of compliance with
the terms of this Lease. To the extent Landlord's requirements for restoration
require Tenant to remain longer in the Premises than the Expiration Date,
Tenant is not obligated to pay Base Rent. Failure to notify Tenant in writing
within said 10 Business Days of any unperformed obligations or covenants of
Tenant in connection with this Lease will be deemed to be an acceptance of the
surrendered Premises by Landlord.
ARTICLE 15
NOTICES
Any notice which Landlord or Tenant may be required to give to the
other party shall be in writing and shall be personally delivered or sent by
certified mail, return receipt requested, or by nationally recognized overnight
courier service and mailed to the other party at the address specified herein,
or to such other address as either party shall have designated in writing to
the other, and the time of the rendition of such notice shall be upon personal
delivery or three days after being deposited in an official United States Post
Office, certified mail, return receipt requested, postage prepaid, or upon the
next Business Day following mailing if sent by overnight courier:
To Landlord: Bowling Green-Warren County Industrial
Authority IV, Inc.
812 State Street
Bowling Green, KY 42101
Attn: Dennis Griffin
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With copies to: Trans Financial Bank, N.A.
500 East Main
P.O. Box 90001
Bowling Green, KY 42102-9001
Attn: Tommy Cole
Stephen B. Catron
Catron, Kilgore & Begley
P. O. Box 280
918 State Street
Bowling Green, KY 42102-0280
To Tenant: Kerr Group, Inc.
1840 Century Park East
Los Angeles, CA 90067
Attn: Larry Knipple
With copy to: Steven J. Gartner, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Refusal to accept a notice delivered by Certified Mail shall be deemed
receipt thereof effective on the date of refusal or the date said notice is
returned unclaimed.
ARTICLE 16
UTILITIES
Tenant covenants and agrees to pay for all public utility services
rendered or furnished to the Premises on and after the date of this Lease,
including heat, water, gas, electricity, sewer rental and the like, together
with all taxes levied or other charges on such utilities. All utilities
servicing the Premises shall be separately metered to Tenant or its successors
in interest. In no event shall Landlord be liable for the quality, quantity,
failure or interruption of such service to the Premises, unless caused by
Landlord or Landlord's employees or agents.
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ARTICLE 17
TAXES AND ASSESSMENTS
After the date of this Lease, Tenant, as part of the consideration for
this Lease and in addition to the rentals hereinabove provided for, will, as
the same become due and payable, pay all taxes and assessments, licenses, fees,
charges and levies, general and special, and other charges and burdens of any
and every kind that are now or hereafter levied or imposed upon the Premises or
upon any part thereof, which are imposed, levied or assessed by a governmental
taxing authority, and which are payable by Landlord after acquisition of title
by Landlord, and Tenant will promptly upon request, supply Landlord with
receipts or other data satisfactory to Landlord showing the payment of the
same. Notwithstanding the foregoing, in no event shall Tenant be required to
pay any corporate, inheritance, franchise, income or similar tax assessed
against Landlord. Tenant shall have the right to contest any taxes or
assessments imposed upon the Premises during the Term hereof and Landlord shall
cooperate in the prosecution of such contest.
The parties acknowledge that at the date of this Lease, pursuant to
KRS 152.910 and KRS 152.920, the Premises is exempt from real estate taxation
of the City of Bowling Green so long as it is owned by Landlord and used as an
industrial development site. Tenant's abatement will continue for the first
five years of the Initial Term. If Landlord shall transfer, sell, assign or
convey its interest in the first five years of the Initial Term, Landlord shall
assume all of Tenant's obligations to pay any city property taxes and other
taxes and fees during the five year period which would not otherwise be payable
if such transfer had not taken place.
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ARTICLE 18
DESTRUCTION BY FIRE OR CASUALTY
(a) Partial Damage. Except as provided in (b) below, if the
Premises shall be partially damaged by fire or other cause without the fault or
neglect of Tenant, the damages shall be repaired by and at the expense of
Tenant, and until such repairs shall be made, the rent shall be abated
according to the part of the Premises which is unusable by Tenant. All
insurance proceeds in respect of such damage shall be paid to Tenant for
restoration of the Premises. If such partial damage is due to the fault or
neglect of Tenant, the damages shall be repaired by and at the expense of
Tenant, but there shall be no apportionment or abatement of rent. No penalty
or default hereunder shall accrue for delay which may arise by reason of
adjustment of fire insurance on the part of Landlord or Tenant. The obligations
of the Tenant under this paragraph shall be limited to such insurance proceeds
as are payable to Tenant by reason of the loss.
(b) Substantial Damage. If the Premises are substantially
damaged or are rendered substantially untenantable by fire or other casualty,
the Landlord shall, within thirty (30) days of such casualty, determine whether
to restore or rebuild the Premises and give Tenant written notice thereof. If
the Landlord decides that the Premises shall not be rebuilt, the Lease shall
thereupon terminate, and Tenant's liability for rent shall cease as of the date
of such casualty. If the Landlord decides that the Premises shall be repaired
or rebuilt, then Landlord shall immediately commence such repair or rebuilding,
and shall use all reasonable efforts to substantially complete all such repairs
within one hundred-eighty (180) days from the date of such casualty, and
Tenant's liability for rent shall abate from the date of the casualty until the
date on which the Premises shall have been rebuilt and are usable by Tenant.
All insurance proceeds in respect of such damage shall be paid to Landlord for
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restoration of the Premises. All obligations of the Landlord shall be limited
to such insurance proceeds as may be payable by reason of the loss.
In the event Landlord determines not to rebuild the Premises, rent
shall abate as of the date of the casualty, and all insurance proceeds shall be
paid as follows: (i) first, to the Lenders, the unpaid principal and accrued
interest on the Loans; (ii) second, to the Landlord, the cost of restoring the
Land to a safe and neat condition; and (iii) the balance, if any, to Tenant.
(c) Personalty Proceeds. Notwithstanding the foregoing,
neither Landlord nor its Lenders shall have any right, claim or interest in the
insurance proceeds paid in respect of Tenant's equipment, inventory or other
personal property; or additions, improvements or alterations installed on the
Premises by Tenant.
ARTICLE 19
CONDEMNATION
(a) Taking. If the whole or a substantial portion of the
Premises shall be condemned or taken either permanently or temporarily for any
public or quasi-public use or purpose under any statute or by right or by
private purchase in lieu thereof, then and in that event, to the extent not
previously terminated, this Lease shall terminate as of the date of possession
of the Premises by such condemning authority, and Tenant shall be released of
any further obligations hereunder including the responsibility to pay rent. In
the event less than a substantial portion of the Premises shall be so taken but
the Premises, in Tenant's sole determination, are not usable by Tenant, Tenant,
at its option, may cancel and terminate this Lease by furnishing written notice
to Landlord of its intent to terminate and cancel the Lease, which notice must
be furnished within sixty (60) days after the date of possession of the
Premises by such condemning authority and the Lease shall terminate within
thirty (30) days from
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receipt by Landlord of such written notice. In the event less than a
substantial a portion of the Premises shall be so taken, but in Tenant's sole
determination, the Premises are usable by the Tenant, the Lease shall continue
in full force and effect, provided that the rent shall be reduced
proportionately based on the useability of the remainder of the Premises.
Provided, in no event shall the Base Rent be reduced below the amount of the
debt service to the Lenders. "Substantial portion" shall be deemed to mean
twenty percent (20%) of the designated manufacturing floor area of the
Premises.
(b) Compensation Award. In the event the Premises or any
part thereof shall be permanently taken or condemned or transferred by
agreement in lieu of condemnation for any public or quasi-public purpose by any
competent authority during any Term of this Lease, the compensation award
therefor shall be paid as follows: (i) First, to the Tenant, if Tenant has not
terminated the Lease as provided herein, the amounts reasonably necessary to
restore the balance of the Premises; (ii) Second, to the Lenders, the unpaid
principal and accrued interest on the Loans; (iii) Third, to Landlord, the
value of Landlord's reversionary interest in the portion of the Premises which
exceeds the sums paid to the Lenders under (ii), above, and (iv) The balance,
if any, to Tenant. Tenant shall be entitled to pursue and collect a
compensation award for the value of its leasehold interest including extension
Terms and purchase option, relocation expenses, and the value of the fixtures,
additions and alterations and other equipment installed by Tenant in the
Premises.
ARTICLE 20
SUBORDINATION, ATTORNMENT AND NONDISTURBANCE
(a) Tenant's Instruments. Tenant covenants and agrees to
execute and deliver upon request of Landlord such instrument(s) subordinating
this Lease to the rights of the Lenders; provided, however, that any such
agreement or subordination shall provide that, so long as Tenant is
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not in default of this Lease, any mortgagee to whose interest this Lease shall
become subordinate shall not disturb the Tenant's peaceful and lawful
possession or other rights under this Lease. In the event of a sale or
assignment of Landlord's interest in the Premises, Tenant shall attorn to and
recognize such purchaser as Landlord under this Lease, provided that such sale
or assignment is made subject to this Lease and the rights of Tenant in the
Premises.
(b) Landlord's Instruments. The Landlord agrees to execute
and deliver, upon the reasonable request of Tenant, an instrument stating that
this Lease is in full force and effect; the date through which the last rent
has been paid; the amount of rent currently then being paid and whether or not
the Tenant is in breach of any other terms and conditions of this Lease.
ARTICLE 21
ACCESS TO LEASED PREMISES
(a) By Landlord. Tenant agrees to permit, in case of due
cause and receipt of notification at least forty-eight (48) hours in advance,
or in case of emergency with as much prior notice as is reasonable under the
circumstances, any of the Landlord's agents to inspect or examine the Premises
and to permit at any reasonable time Landlord to make such repairs, which
Tenant has filed so to do in accordance with Article 8 without the same being
construed as an eviction of Tenant in whole or in part; and the rent shall in
nowise abate while such repairs are being made by reason of loss or
interruption of the business of Tenant because of the prosecution of such work.
Due to the proprietary nature of Tenant's business, Landlord's
officers, employees, agents or contractors will enter into a nondisclosure
agreement acceptable to Tenant prior to entry and/or the performance of such
work hereunder, if requested by the Tenant.
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(b) By Prospective Tenants. For a period of ninety (90) days
prior to expiration of the Term of this Lease, Landlord shall have the right,
upon giving Tenant forty-eight (48) hours notice, to enter upon the Premises
during normal business hours for the purpose of exhibiting the same to
prospective tenants or purchasers. During said period Landlord may place signs
in, or upon the Premises to indicate the same are for rent or sale, which signs
shall not be removed, obliterated or hidden by Tenant but which signs shall be
located as to not interfere with the operations of Tenant on the Premises.
Due to the proprietary nature of Tenant's business, in the event that
Tenant is still in operation at the time when such Premises are exhibited to
prospective tenants or purchasers, Landlord shall obtain a nondisclosure
agreement acceptable to Tenant from such prospective tenant or purchaser prior
to exhibiting the Premises, if requested by the Tenant.
ARTICLE 22
PARTIES' REMEDIES CUMULATIVE;
NO WAIVER OR FORBEARANCE; SEVERABILITY
Except insofar as this is inconsistent with or contrary to any other
provision of this Lease, no right or remedy herein conferred upon or reserved
to either party is intended to be exclusive of any other right or remedy, and
each and every right and remedy given hereunder or now or hereafter existing at
law or in equity or by statute shall be cumulative. Except to the extent that
either party may have otherwise agreed in writing, no waiver by such party of
any violation or nonperformance by the other party of any of its obligations,
agreements or covenants hereunder shall be deemed to be a waiver of any
subsequent violation or nonperformance of the same or any other covenant,
agreement or obligations, nor shall any forbearance by either party to exercise
a remedy for any such violation or
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nonperformance by the other party be deemed a waiver by such party of its
rights or remedies with respect to such violation or nonperformance.
If any provision of this Lease or the application thereof to any
person or circumstance should, for any reason and to any extent, be invalid,
unenforceable or illegal, the remainder of this Lease and the application of
such provision to other persons or circumstances shall not be affected thereby,
but rather shall be enforced to the greatest extent permitted by law and a
rapid remedy or replacement shall be sought for the provision found to be
invalid, unenforceable or illegal.
ARTICLE 23
LANDLORD'S COVENANT OF QUIET ENJOYMENT
Landlord, for itself and for and on behalf of all its mortgagees,
covenants and agrees that Tenant shall, at all times during said Term, have the
peaceable and quiet enjoyment and possession of the Premises without any manner
of hindrance from Landlord or any persons lawfully claiming through Landlord,
except as to such portion of the Premises as shall be taken under the power of
eminent domain. Landlord agrees to use its best efforts after request by Tenant
to obtain written confirmation of such right of quiet enjoyment from all
current mortgagees, if any, and from all future mortgagees of Landlord.
ARTICLE 24
TENANT'S COVENANTS AND DISCLOSURES
Tenant covenants with and warrants to Landlord the following:
(a) Employees. Tenant shall, within 3 years of the Rent
Commencement Date, create jobs for 75 full time equivalent employees; and
during the remaining term and extension terms, maintain an annual average of 75
full time equivalent employees. Tenant acknowledges that any
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downward deviation from said full time equivalent employees will alter the
financing of the Construction Costs and Tenant agrees to be responsible for and
make up any deficit in the financing of the Construction Costs caused by a
decrease in the number of full time equivalent employees as it shall relate to
the KDFA Loan. Landlord has an option to require Tenant to prepay all or any
portion of the KDFA Loan which shall be deemed an acceleration in Rent.
(b) Compliance Review Disclosures. Tenant shall provide to
Landlord copies of written semi-annual compliance reviews of its water and/or
waste treatment procedures by a reputable engineering firm, within 10 days of
receipt thereof by Tenant, to commence within six months of the Rent
Commencement Date. Tenant shall bear the cost of such reviews throughout the
Term of this Lease.
(c) Financial Disclosure. Throughout the Term of this Lease,
Tenant shall at Tenant's cost provide to Landlord the following:
(i) Copies of quarterly and annual financial
statements in the same general format as those distributed to others having a
similar need to know consisting of the balance sheet, statement of income,
statement of cash flows, copies of the operating statements and the management
discussion and analysis letter for the entire Kerr Group, Inc. within 120 days
of the end of any fiscal year or within 60 days of the end of any fiscal
quarter.
(ii) Copies of all Securities and Exchange Commission
filings within ten (10) days of any filing.
(d) Improvements Constructed by Tenant. Tenant shall at its
cost construct improvements to the Premises of not less than $500,000.00, which
shall be specifically identified in a List provided to Landlord by Tenant along
with evidence of costs of each such improvement within
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ninety (90) days of the Rent Commencement Date. All items on this List shall
become the property of Landlord upon termination of this Lease, notwithstanding
any other conditions of this Lease; however, all equipment is to become the
property of Tenant.
(e) Jobs Incentive Program. Tenant will supply the necessary
information as required by the City of Bowling Green in order to assist
Landlord in obtaining a Jobs Incentive Program loan; provided however, that
Tenant shall have no liability, direct or indirect, for such loan.
ARTICLE 25
INTEREST ON PAST DUE OBLIGATIONS
Except as expressly provided herein, any amount due to Landlord or
Tenant not paid within ten (10) days after the date due shall bear interest at
the Trans Financial Bank's (or its successor) prime rate plus 1% from date due
until paid in full. Payment of such interest shall not excuse or cure any
default by Tenant hereunder.
ARTICLE 26
TITLES OF ARTICLES
The titles of the articles and sections throughout this Lease are for
convenience of reference only, and the words contained therein shall in no way
be held to explain, modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Lease.
ARTICLE 27
FORCE MAJEURE
If either Landlord or Tenant is prevented or hindered from timely
satisfying the terms or conditions of this Lease because of a shortage or
inability to obtain materials or equipment, strikes or other labor
difficulties, governmental restrictions, fire, casualty, acts
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of God, or any other cause outside that party's reasonable control, said party
shall be permitted an extension of time of performance by the number of days
during which such performance was prevented or hindered. This provision shall
not affect the Rent Commencement Date or Tenant's obligation to begin paying
Base Rent on that date.
ARTICLE 28
RECORDING OF MEMORANDUM OF LEASE
Neither party shall record this Lease. However, the parties agree to
execute a memorandum of this Lease in recordable form, provided that such
memorandum shall disclose only the description of the Premises, the length of
the Initial Term and Extension Term, the purchase option and the names of the
parties. The cost of such recording shall be borne by the Tenant.
ARTICLE 29
ENTIRE AGREEMENT
This writing contains the entire agreement between the parties hereto
with respect to the leasing of the Premises and shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky; and no
agent, representative, salesman or officer of either Tenant or Landlord has
authority to make or has made any statement, agreement or representations,
either oral or written, in connection herewith, modifying, adding to or
changing the terms and conditions herein set forth. No dealings between the
parties or custom shall be permitted to contradict, vary, add to or modify the
terms hereof. No modification of this Lease shall be binding unless such
modification shall be in writing and signed by the parties hereto.
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ARTICLE 30
COMPLIANCE WITH LAWS
Landlord represents and warrants to Tenant that the Premises are in
full compliance with all applicable laws, statutes, ordinances, orders, rules,
regulations and requirements of all federal, state and municipal governments,
and the appropriate agencies, offices, departments, boards, and commissions
thereof.
IN WITNESS WHEREOF, the Landlord and Tenant have caused this Lease to
be signed by their duly authorized representatives, in duplicate, this the 30th
day of June, 1994.
TENANT:
KERR GROUP, INC.
By: /s/ D. G. STRICKLAND
--------------------------------------
D. G. STRICKLAND
Senior Vice President, Finance
STATE OF KENTUCKY )
) SS
COUNTY OF WARREN )
The foregoing Lease was subscribed and sworn to before me this 30th day,
of June, 1994, by D. G. Strickland to me personally known, the Senior Vice
President, Finance, Kerr Group, Inc., a corporation, and that said instrument
was signed on behalf of said corporation by proper authority and the instrument
was the act of the corporation for the purposes stated above.
--------------------------------------
NOTARY PUBLIC
Commission Expires: 1-28-97
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LANDLORD:
BOWLING GREEN-WARREN COUNTY
INDUSTRIAL AUTHORITY IV, INC.
By: /s/ DENNIS GRIFFIN
--------------------------------------
DENNIS GRIFFIN, President
COMMONWEALTH OF KENTUCKY )
) SS
COUNTY OF WARREN )
The foregoing Lease was subscribed and sworn to before me this 30th day,
of June, 1994, by Dennis Griffin to me personally known, the President of
Bowling Green-Warren County Industrial Authority IV, Inc., a corporation, and
that said instrument was signed on behalf of said corporation by proper
authority and the instrument was the act of the corporation for the purposes
stated above.
--------------------------------------
NOTARY PUBLIC
My Commission Expires: 1-28-97
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Exhibit 1(k)
Diagram of property under lease excerpted from Plat Book 25 page 124 which
shows the property boundaries and the planned location of the railroad
right-of-way for the rail spur.