Exhibit 10.17
STANDARD FORM INDUSTRIAL LEASE
1
& 2. PARTIES AND PREMISES. Sally A. Starr and Carol T. Donovan
as Trustees of Omnibus Realty Trust for the Benefit of Dighton
Associates Limited Partnership, with a principal place of business
at 39 Brighton Avenue, Boston, Massachusetts 02134, hereinafter
called the LESSOR, which expression shall include its heirs,
successors, and assigns where the context so admits, does hereby
lease to Swank, Inc., a Massachusetts corporation with a principal
place of business at 6 Hazel Street, P.O. Box 839, Attleboro,
Massachusetts 02703, hereinafter called the LESSEE, which
expression shall include its successors, executors, administrators,
and assigns where the context so admits, and the LESSEE hereby
leases the following described Premises:
The
land and building thereon which building (“Building”)
shall consist of approximately 242.000 square feet of rentable
first (1st) floor space on the property known as and commonly
referred to as 656 Joseph Warner Boulevard, Taunton, Massachusetts,
02764, as more particularly described in Exhibit A attached hereto,
the boundary of the Land being clearly delineated in green
(‘premises”) together with the right to use in common,
with others entitled thereto, the walkways and driveways necessary
for access to said Premises. Lessee acknowledges that a
non-exclusive easement exists on the Premises for vehicular and
pedestrian passage which easement is cross-hatched for
identification on Exhibit A. Lessee acknowledges that Lessee shall
not act in anyway so as to impact or encroach on the easement or to
adversely interfere with the use of the easement.
3A.
TERM. The term of this lease (“Original Term”) shall be
for Five (5) years commencing on March 1, 1991
(“Commencement Date”) and ending on February 29,
1996 (“Expiration Date”). If this Lease is extended
or renewed, all references to “term” herein shall refer
to the extension or renewal ten unless specifically designated
otherwise.
3B.(1)
EXTENSION OPTION I. Lessee shall have the option, to be exercised
as hereinafter provided, to extend the term of this Lease for a
period of five (5) years following the expiration of the Original
Ten, (hereinafter referred as “Extension Term I”), upon
the condition that there is then no existing default (after the
expiration of any applicable notice and cure periods) in the
performance of any conditions of this Lease by Lessee.
Lessee’s extension option shall be exercised by written
notice to Lessor, said written notice to be given by Lessee no
later than nine (9) months before the expiration of the Original
Term. The time periods herein set forth are of the essence, and the
requirements for the exercise of this extension option shall be
strictly construed. Extension Term I shall be upon the same terms
and conditions as provided in the Lease, except for this option and
except for Base Rent which shall be payable as follows:
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Option I
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Base Rent—Annually
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Monthly
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Lease Years 6-10
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$ 798,600.00
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$ 66,500.00
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3B(2)
EXTENSION OPTION II. Lessee shall have the option to extend the
term to be exercised in the same manner and upon the same
conditions as provided in Extension Option I (“Extension Term
II”) exercisable nine (9) months prior to expiration of
Extension Term I. Extension Term II shall be upon the same terms
and conditions as provided in the Lease, except for this option and
except for Base Rent which shall be determined as provided herein.
Lessee shall pay Base Rent during Extension Option II for lease
years 11 through 15 in an amount determined by the Base Rent
payable in year 10 increased by loot percent of the percentage that
the Consumer Price Index published for the February, 2001 has
increased from the Consumer Price Index published for February,
1996. The Consumer Price Index referred to above is the urban wage
earners and clerical workers, U.S. city Average, all items (1982-84
equals 100) published by the Bureau of Labor Statistics of the U.S.
Department of Labor. If the compilation and/or publication of such
Index shall be transferred to any other governmental department or
bureau or agency or shall be discontinued, the LESSOR and LESSEE
shall by agreement fix an alternative index or method to compute
such rent adjustment, but if they cannot agree, the matter shall be
settled by arbitration in accordance with the rules of the American
Arbitration Association, Provided, however, in no event shall the
Base Rent be less than the Base Rent for the last year of the
Extension Option I.
4.
RENT. Effective March 1, 1991, and through the Original Term the
LESSEE shall pay to the LESSOR a base rent (“Base
Rent”) at the rate of Five Hundred Sixty Eight Thousand
Seven Hundred ($568,700.00) Dollars per year, payable in
advance in monthly installments of Forty Seven Thousand Three
Hundred Ninety One Dollars and Sixty Seven Cents ($47,391.67)
Dollars. Where hereinafter mentioned, the Base Rent for the
Original Term shall be Five Hundred Sixty Eight Thousand Seven
Hundred Dollars.
Any
payment of rent or any other monetary sum due hereunder from LESSEE
to LESSOR which is more than ten (10) days late shall bear interest
at the rate of one (1%) percent per month (“Interest
Rate”).
5.
SECURITY DEPOSIT. INTENTIONALLY DELETED.
6.A.
TAXES. LESSEE will pay to LESSOR as additional rent hereunder, when
and as designated by notice in writing by LESSOR, one hundred
percent (100%) percent of the real estate taxes and assessments
attributable to the building or buildings now or hereafter located
on the parcel known as 656 Joseph Warner Boulevard and 100% of the
real estate taxes and assessments attributable to all parcels of
land (now owned or hereafter acquired) that comprise total site of
656 Joseph Warner Boulevard, Taunton, MA 02764 .
(“Lessee Tax Obligation”) TENANT PAYS ONE HUNDRED
PERCENT (100%) OF THE TOTAL TAX BILL FOR 656 JOSEPH WARNER
BOULEVARD, TAUNTON, MA 02764.
NOTWITHSTANDING
the foregoing, in year one of the Lease only, LESSEE TAX OBLIGATION
shall be reduced by $20,000, and in year two of the Lease only,
Lessee Tax Obligation shall be reduced by $10,000. For the
remainder of the original term and any extension thereof, Lessee
Tax Obligation shall be as otherwise provided herein. Lessee may
prosecute an action for abatement pursuant to Massachusetts General
Laws, Chapter 59, Section 59 and shall be liable for all costs and
expenses associated with said action; provided, however, Lessee
shall provide notice to Lessor prior thereto and provided, further,
that in any fiscal year in
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which Lessee Tax Obligation shall
be less than 100%, and Lessee shall prosecute successfully a tax
abatement, Lessee shall promptly refund to Lessor upon receipt
thereof, all amounts to which Lessor shall be entitled less
Lessor’s proportionate share for costs and expenses
associated with said action. Lessor agrees to reasonably cooperate
with Lessee in undertaking any such action.
6B.
LESSEE shall pay any business, rent or other taxes that are now or
hereafter levied upon Lessee’s use or occupancy of the
Premises, the conduct of Lessee’s business at the Premises,
or Lessee’s equipment, fixtures or personal property
including without limitation personal property taxes, business and
occupation taxes and occupational license taxes. In the event that
any such taxes are enacted, charged or altered so that any of such
taxes are levied against LESSOR or the mode of collection is
changed so that LESSOR is responsible for the collection or payment
of such taxes, LESSEE shall pay any and all such taxes as
additional rent to Lessor upon written demand by LESSOR. In the
event LESSOR shall be obligated to pay the taxes herein, LESSEE
shall pay Lessee’s share hereunder in the manner prescribed
for real estate taxes in Article 6A.
7.
OPERATING COSTS. INTENTIONALLY DELETED.
8.
ADJUSTED RENT. INTENTIONALLY DELETED.
9.
UTILITIES. The LESSEE shall pay, as they become due, all bills for
electricity and other utilities (whether they are used for
furnishing heat or other purposes) that are furnished to the
Building and to the Premises and presently separately metered, and
all bills for fuel furnished to a separate tank servicing the
Building and the Premises exclusively. Lessee shall provide
adequate heat and cooling to the Premises and the Building
appropriate to the season and sufficient to protect the Premises
and Building from damage. All water and sewer charges assessed
against the land and Building if not billed directly to Lessee,
shall be paid within ten (10) days of billing of LESSOR and shall
be deemed to be Additional Rent owed to LESSOR.
LESSOR
shall have no obligation to provide utilities or equipment other
than the utilities and equipment within the Premises as of the
Commencement Date of this lease. In the event LESSEE requires
additional utilities or equipment, the installation and maintenance
thereof shall be LESSEE’S sole obligation, provided that such
installation shall be subject to the written consent of the LESSOR
which consent shall not be unreasonably withheld or
delayed.
10.
USE OF LEASED PREMISES. The LESSEE shall use the Building and
Premises only for the purpose of OFFICE, WAREHOUSE AND
MANUFACTURING ASSOCIATED WITH THE SALE AND DISTRIBUTION OF LEATHER
AND JEWELRY ITEMS AND MEN’S AND WOMEN’S ACCESSORIES
but for no other purpose.
11.
COMPLIANCE WITH LAWS. The LESSEE acknowledges that no trade or
occupation shall be conducted in the Building or on the Premises or
use made thereof which will be unlawful, improper, noisy or
offensive, or contrary to any law or any municipal by-law or
ordinance in force in the city or town in which the Premises are
situated, or which tend to degrade the economic status of the
Building. LESSOR acknowledges that as of the execution of this
Lease the permitted uses are not noisy or offensive.
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12.
FIRE INSURANCE. The LESSEE shall not permit any use of the Building
and the Premises which will make voidable any insurance on the
property of which the premises are a part, or on the contents of
said property or which shall be contrary to any law or regulation
from time to time established by the New England Fire Insurance
Rating Association, or any similar body succeeding to its powers.
After notice of non-compliance, LESSEE shall reimburse the LESSOR,
and all other tenants, all extra insurance premiums caused by the
LESSEE’S use of the Premises.
13.
MAINTENANCE.
A.
LESSEE’S OBLIGATIONS. The LESSEE agrees to maintain the
Building and Premises which shall include the landscaped and paved
area of the lot on which the Building is located in the same
condition as it is as of the execution of this Lease or as may be
put in during the term, damage by fire and other casualty and
reasonable wear and tear only excepted, and whenever necessary, to
replace plate glass and other glass therein, acknowledging that the
Premises are now in good order and the glass whole. The LESSEE
shall not permit the Premises to be overloaded, damaged, stripped,
or defaced, nor suffer any waste. LESSEE shall obtain written
consent of LESSOR before erecting any sign on the Premises. LESSEE
shall be responsible for the maintenance, repair and replacement of
all electrical, plumbing, heating, air conditioning, ventilation
and other mechanical installations on or serving the Building and
Premises which obligation shall include the lot on which the
Building is located, including all landscaped and paved
areas.
Lessee
shall be responsible at Lessee’s sole expense for maintenance
of the septic system servicing the Premises, the Building and the
lot which shall include maintaining a regular maintenance contract
on said system. Lessee shall solely be responsible for repair of
the septic system, including repair of component parts and shall be
liable for all expenses related to the same not to exceed $2,500.00
per lease year. Lessor shall be liable for all reasonable expenses
in excess of $2,500.00, provided however, Lessee shall notify
Lessor in advance of the estimated expense for said repair and
Lessor shall require said expenses to be competitive. Lessor shall
be obligated to replace the current septic system, including
replacement of component parts of the system, provided, however, in
the event the total current septic system shall require
replacement, Lessor agrees to replace the same, provided, further,
however, that Lessor shall not be obligated hereunder in the event
that replacement is due to the failure of Lessee to properly
maintain and repair the system. Lessee shall promptly notify Lessor
of any and all circumstances which may give rise to the need for
replacement of the septic system. Lessor shall be entitled to
undertake efforts to repair the system prior to replacement
provided that said action is reasonable and is diligently pursued.
In the event Lessor shall engage in replacement of the system or
component parts hereunder, Lessee shall contribute an amount not to
exceed $2,500.00 per lease year.
B.
LESSOR’S OBLIGATIONS. The LESSOR agrees to maintain the
structure of the Building and the roof in the same condition as it
is as of the execution of this lease or as it may be put in during
the term of this lease, reasonable wear and tear, damage by fire
and other casualty only excepted, unless such maintenance is
required because of the conduct of LESSEE or those for whose
conduct the LESSEE is legally responsible. Lessee shall promptly
notify Lessor of any condition or circumstance which nay give rise
to Lessor’s obligations hereunder.
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C.
TRASH RESPONSIBILITY. Lessee acknowledges and agrees that Lessee
shall be solely responsible for the removal and disposal of all
trash, garbage, rubbish and/or other like encumbrances from the
Premises and shall maintain those areas of, in and around the
Building so as not to encumber or obstruct or permit such areas to
be encumbered or obstructed by reason of such trash, garbage,
rubbish and/or like encumbrances. Lessee further acknowledges and
agrees that Lessee shall act so as to reasonably dispose of such
encumbrances. Lessor shall be entitled to require Lessee to engage
in or provide for such additional removal as in Lessor’s
judgment shall be reasonably necessary and competitive. In the
event that any fines, fees or levies shall be assessed against the
Lessor by reason of a violation hereof, such fines, fees or levies
shall be the responsibility of Lessee and shall be payable by
Lessee as additional rent of demand.
14.
ALTERATIONS — ADDITIONS. The LESSEE shall not make structural
alterations or additions to the Premises, but may make
non-structural alterations provided the LESSOR consents thereto in
writing, which consent shall not be unreasonably withheld or
delayed provided, however, that the LESSEE shall be permitted to
make repair to the Premises without Lessor’s consent provided
that: (1) Lessee shall notify Lessor prior thereto; (2) LESSEE
provides copies of plans and permits where required by municipal or
other regulatory authority; and (3) the cost shall not exceed
$15,000.00 in each instance. All such allowed alterations shall be
at LESSEE’S expense and shall be in quality at least equal to
the present construction. LESSEE shall not permit any
mechanic’s liens, or similar liens, to remain upon the leased
Premises for labor and material furnished to LESSEE or claimed to
have been furnished to LESSEE in connection with work of any
character performed or claimed to have been performed at the
direction of LESSEE and shall cause any such lien to be released of
record forthwith without cost to LESSOR. Any alterations or
improvements made by the LESSEE shall become the property of the
LESSOR at the termination of occupancy as provided herein,
provided, however, LESSEE shall be permitted to remove personal
property and trade fixtures, and shall repair any damage to the
Building caused thereby.
15.
ASSIGNMENT — SUBLEASING. LESSEE shall not assign, sublet,
underlet, mortgage, pledge or encumber (collectively referred to as
“Transfer”) this lease without LESSOR’S prior
written consent, which consent shall not be unreasonably withheld
or delayed. LESSOR’S refusal to consent to a Transfer for any
use or purpose other than specifically stated in Paragraph 10
herein shall not be deemed to be an unreasonable withholding of
consent.
In
the event the LESSEE desires to Transfer this lease to a proposed
new lessee to whom LESSOR is required to give its reasonable
consent pursuant to the foregoing paragraph, LESSOR shall have the
option of either (1) allowing LESSEE to transfer this lease, in
which case LESSEE shall remain primarily liable upon all the terms,
conditions and covenants hereof, will bind any Transferee to the
terms and provisions of this lease and will pay to LESSOR the
amount by which the sum of rent, additional rent due to taxes and
all other money or consideration it received from a Transferee
exceeds the sum of all monetary obligations which LESSEE owes to
LESSOR for the period of such Transfer; or (2) terminating this
lease and relieving LESSEE of all its future obligations hereunder.
In the event that LESSOR decides to terminate this lease, it shall
be free to enter into a new lease with the proposed new tenant or
anyone else on whatever terms and conditions it chooses.
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Consent
by LESSOR, whether express or implied, to any Transfer shall not
constitute a waiver of LESSOR’S right to prohibit any
subsequent Transfer; nor shall such consent be deemed a waiver of
LESSOR’S right to terminate this lease upon any subsequent
Transfer.
As
used herein, the term “assign” or
“assignment” shall be deemed to include, without
limitation: (a) any transfer of the LESSEE’S interest in the
lease by operation of law, the merger or consolidation of the
LESSEE with or into any other firm or corporation; or (b) the
transfer or sale of a controlling interest in the LESSEE whether by
sale of its capital stock or otherwise.
NOTWITHSTANDING
the foregoing, the provisions of this Article shall not be deemed
to prohibit, nor shall consent be required for (i) transfer of
Lessee’s stock among existing stockholders or among spouses,
children or grandchildren of existing stockholders or intervivos or
testamentary transfers to trusts established for the benefit of
such persons, (ii) a public offering of stock by LESSEE, (iii) the
transfer of outstanding stock by way of trading on a recognized
securities exchange; or (iv) transfer of stock by way of trading
which is regularly traded in the over-the-counter market and quoted
on NASDAQ.
The
LESSEE may assign this Lease or sublease the entire Premises to a
parent, affiliate or wholly-owned subsidiary of LESSEE or to any
entity with which, or into which, LESSEE may consolidate or merge
or to whom all of substantially all of the assets of LESSEE are
sold or transferred provided that: (1) LESSEE shall notify LESSOR
at lease ten (10) days prior to the effective date of transfer, and
shall submit the name of Transferee; (2) LESSEE shall provide a
written instrument evidencing the assignment; (3) LESSEE shall
provide a statement that LESSEE shall remain primarily liable and
with respect to an assignment that Transferee shall assume all of
LESSEE’S obligations under the Lease, and that Transferee
shall use the Premises in the same manner as LESSEE; and (4) with
respect to a sale or transfer of all of the assets of LESSEE,
LESSEE shall submit with notice to LESSOR sufficient evidence of
the creditworthiness of Transferee including the most recent
financial statement or equivalent. In addition to the foregoing,
any transfer of all or substantially all of the Premises shall be
subject to the provisions of Article 19(6).
16.
SUBORDINATION. This lease shall be subject and subordinate to any
and all mortgages, deeds of trust and other instruments in the
nature of a mortgage, now or at any time hereafter, a lien or liens
on the property of which the Premises are a part and the LESSEE
shall, when requested, promptly execute and deliver such written
instruments as shall be necessary to show the subordination of this
lease to said mortgages, deeds of trust or other such instruments
in the nature of a mortgage. Provided, however, that if LESSEE
requests, LESSOR shall use its best efforts to cause the mortgagee
to execute a non-disturbance agreement in favor of the
LESSEE.
17.
LESSOR’S ACCESS. The LESSOR or agents of the LESSOR may, at
reasonable times upon reasonable notice to LESSEE except in the
event of emergency, enter to view the Premises and remove placards
and signs not approved and affixed as herein provided, make repairs
and alterations as LESSOR shall be obligated under the Lease, and
Lessor may show the Premises to others, and at any time provided
the same does not unreasonably interfere
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with the operation of
Lessee’s business, within three (3) months before expiration
of the term, or as may be extended, and may affix to any suitable
part of the Premises a notice for letting or selling the Premises
or property of which the Premises are a part and keep the same so
affixed without hindrance or molestation.
18.
INDEMNIFICATION AND LIABILITY. The LESSEE shall save the LESSOR
harmless from all loss and damage occasioned by anything done or
permitted to be done on the Premises by LESSEE or anyone except
LESSOR or those claiming through LESSOR. The removal of snow and
ice from the sidewalks bordering upon the Premises shall be LESSEE
responsibility.
19.
LESSEE’S INSURANCE.
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1.
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Personal Property
. The personal property, inventory,
equipment and fixtures of Lessee (“Personal Property”)
and the loss of use of Personal Property of the LESSEE shall be the
sole risk and responsibility of the LESSEE. LESSEE shall purchase
and maintain insurance in an amount adequate to repair or replace
its Personal Property and its tenant improvements and build-out to
the Premises.
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LESSEE is
responsible for the replacement of any broken plate glass that is
part of the Building covered by this Lease.
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2.
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Comprehensive General
Liability Insurance .
LESSEE agrees to purchase and maintain throughout the tern of the
Lease, general liability insurance written on a 1973 ISO form. Said
coverage shall be written on an occurrence basis and include a
broad form endorsement GL0404 or its equivalent. Such insurance
shall include products/completed operations coverage, personal
injury liability coverage, broad torn property damage liability
coverage and contractual liability coverage insuring the
indemnification agreements carried on herein. The minimum limit of
liability carried on such insurance shall be $1 million each
occurrence and, where applicable, in the aggregate, combined single
limit for bodily injury and property damage liability, $1 million
aggregate personal property injury liability. If a 1973 ISO Form is
not available or if the policy contains a general policy aggregate,
the minimum limit of liability carried on such insurance shall be
$1 million each occurrence with a $2 million aggregate per
location.
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3.
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Automobile
Liability . LESSEE agrees
to maintain automobile liability insurance for owned, non-owned,
and hired vehicles. The minimum limit of liability carried on such
insurance shall be ($1,000,000.00) each accident, combined single
limit for bodily injury and property damage.
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4.
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Workers
Compensation. LESSEE
agrees to maintain workers’ compensation insurance providing
statutory limits including employer’s liability insurance
with limits of $100,000.00 for each additional injury and, with
respect to bodily injury by disease $100,000.00 each employee and
$500,000.00 per policy year.
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5.
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Umbrella Liability
. LESSEE agrees to maintain umbrella
liability coverage with limits of $5,000,000.00 per occurrence.
Umbrella coverage is to apply excess of the comprehensive general
liability/automobile liability and employers liability coverages
mentioned in sections 2, 3 and 4 above.
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6.
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Property Insurance
. LESSEE agrees to maintain,
throughout the term of the Lease, “all risk” insurance
including broad flood and earthquake coverages on the building and
all improvements and betterments installed in, affixed to or used
in connection with the Premises. The building and improvements and
betterments are to be insured to their full insurable value. This
insurance shall contain a replacement cost endorsement insuring the
building and improvements and betterments for the full cost of
repair or replace with like kind and quality without deduction for
depreciation. This insurance shall include an agreed amount
endorsement waiving any coinsurance provisions. Coverage is to be
provided for demolition cost, increased cost of construction and
contingent liability from the operation of building laws. LESSEE
agrees that the full insurable value of the building will be
established by and independent appraisal, approved by the LESSOR,
and at the LESSEE’S expense. LESSEE agrees that the LESSOR
may require an appraisal when five years has elapsed since the last
appraisal or when alterations or additions have substantially
changed the value of the building. Lessor shall have the option at
Lessor’s expense to have an appraisal performed more
frequently then as stated. In the event the insurable value shall
increase from the previous appraisal, Lessor shall notify Lessee of
the same and Lessee shall thereafter promptly adjust or cause to be
adjusted the coverage as required and notify Lessor of the same.
Notwithstanding the foregoing, Lessor acknowledges and agrees that
Lessor shall not require Lessee to undertake an appraisal at
Lessee’s expense nor shall Lessee be obligated to incur the
expense of an appraisal during the initial five (5) years of the
Original Term.
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LESSEE agrees
that the deductible applicable to the property insurance shall not
exceed Twenty-Five Thousand ($25,000.00) Dollars. All claims which
fall within the deductible (retention) shall be the sole
responsibility of the LESSEE. Notwithstanding the foregoing, in the
event Lessee shall assign all of its rights, title and interest in
the Premises or sublet a material portion thereof, Lessor shall
have the option as a condition to Lessor’s consent to said
transfer to require the transferee in possession or Lessee as
appropriate to lower the deductible to be carried pursuant to this
provision.
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7.
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Boiler &
Machinery . LESSEE agrees
to maintain boiler and machinery coverage on a comprehensive basis
insuring all boilers and machinery. The limit for this coverage
shall be at least equal to the full insurable value of the building
and include a replacement cost endorsement.
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All insurance
policies required in paragraphs 2, 3, 5, 6, and 7 above shall
designate the LESSOR as an additional insured and in the event of
loss, all insurance proceeds are to be payable to the Mortgagees
and LESSOR as thei
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