Exhibit 10.12
LEASE
AGREEMENT
THIS LEASE AGREEMENT
(“this Lease”) is
entered into as of the 16th day of June, 2003 between C P
INVESTMENTS, INC., an Alabama corporation (hereinafter referred to
as the “Landlord”), and COMPUTER PROGRAMS AND SYSTEMS,
INC., a Delaware corporation (hereinafter referred to as the
“Tenant”).
WITNESSETH:
The Landlord, for and in
consideration of the rents, conditions, terms and covenants herein
specified to be paid, performed and observed by the Tenant, does
hereby let, lease and demise to the Tenant, and the Tenant does
hereby lease and take from the Landlord, that certain real estate
with accompanying improvements and appurtenances located at 6508
Wall Street in the City and County of Mobile, State of Alabama and
more particularly identified as Building 8 on Exhibit A
attached hereto and incorporated herein by reference (the
“Demised Premises”) upon the following terms and
conditions:
NOW, THEREFORE
, in consideration of the premises
and the rents, covenants and conditions hereinafter contained, the
Landlord and the Tenant do hereby covenant, promise and agree as
follows:
1. Landlord does hereby lease unto
Tenant and Tenant does hereby lease from Landlord the Demised
Premises for a term of one hundred twenty (120) calendar months
commencing as of June 16, 2003 (hereinafter referred to as the
“Lease Term”).
2. Tenant shall during the first
year of the Lease Term, pay to the Landlord an annual rental of
Seventy Two Thousand, and No/100 Dollars ($72,000.00) unless abated
or diminished as hereinafter provided, in equal monthly
installments of Six Thousand, and No/100 Dollars ($6,000.00) in
advance, on the 1st day of each month, commencing upon the 16th day
of June, 2003. For each of the remaining nine years of the Lease
Term, the rental rate shall be adjusted, as of May 31, 2004 and on
May 31 of each year thereafter, in accordance with changes in the
Consumer Price Index (“CPI”) as published by the Bureau
of Labor Statistics for All Urban Consumers (CPI-U), 1982-84 = 100.
Upon each such lease rate adjustment date, the lease rate for the
upcoming year of the Lease Term shall be an amount equal to the
monthly lease rate for the immediately preceding year multiplied by
a fraction, the denominator of which shall be the CPI for April,
2004 and the numerator of which shall be the CPI for the month of
such lease rate adjustment. It is the intention of the parties that
the determination of the adjusted lease rate shall not be distorted
by any changes in the method by which the CPI is determined or the
form in which the CPI is presented, including but not limited to,
changes in the reference year on which the CPI is based or changes
in the components of the CPI. Accordingly, if the method by which
the CPI is determined or the form in which the CPI is presented is
hereafter changed, the index used in the numerator of the fraction
described above shall be adjusted so that such index is determined
and presented on the same basis as the CPI used in the denominator
of such fraction. To the extent possible, such
adjustment shall be based on any adjustment
factor published by the U.S. Department of Labor or any successor
governmental agency. If for any reason the index used in the
numerator of such fraction cannot be determined on the same basis
as the CPI used in the denominator of such fraction, or if the CPI
is not hereafter published, the adjusted lease rate shall be
determined by reference to the index of consumer prices then
published by the U.S. Government, or an agency thereof, that most
nearly resembles the CPI as in effect for April, 2004.
In addition to the foregoing, the
rental may also be re-negotiated at such future times that
additional rental space may become available for use by Tenant at
the Demised Premises.
Notwithstanding the foregoing, the
parties hereby agree that ninety (90) days prior to the expiration
of the first five (5) years of the Lease Term, they shall obtain an
appraisal, in accordance with the procedures set forth below, in
order to determine the Fair Market Rental Value of the Demised
Premises. Upon the completion of such appraisal, the rental rate
for the sixth (6 th ) year of the Lease Term shall be
adjusted to an amount equal to the Fair Market Rental Value as set
forth in said appraisal.
On or about the date that is ninety
(90) days prior to the expiration of the fifth (5
th
) year of the Lease
Term, Landlord and Tenant shall consult with one another for the
purpose of appointing a mutually acceptable qualified independent
appraiser. If the parties are unable to agree on an appraiser
within ten (10) days, such Fair Market Rental Value shall be
determined by a panel of three independent appraisers, one of whom
shall be selected by each of Landlord and Tenant within five (5)
days thereafter. If one party appoints an appraiser pursuant to the
immediately preceding sentence, and if the other party fails to
appoint a second appraiser within the applicable time limit, the
appraisal shall be made by such appraiser. On or before the tenth
day after appointment of the second appraiser, a third appraiser
shall be selected by agreement of the first two appraisers.
Landlord and Tenant shall split all fees and expenses of the
appraisers. Each appraiser appointed pursuant to the foregoing
procedure shall be experienced, have equivalent qualifications to
those of a senior member of the American Society of Appraisers,
shall be independent of Landlord and Tenant, and shall be
instructed to determine Fair Market Rental Value in accordance with
the uniform standards for professional appraisal practice or the
equivalent, before the 45 th day after the appointment of the
last of such appraisers to be appointed, and such determination
shall be final, binding and conclusive upon the parties. If three
appraisers shall be appointed, the determination of Fair Market
Rental Value shall be the average of the three appraisals rendered
by the appraisers. In the event, however, that the lowest or the
highest of the three appraisals, or both, varies by more than ten
percent (10%) from the middle appraisal, the appraisal or
appraisals so varying shall be disregarded and the average of the
remaining appraisals, or the remaining appraisal, shall be the
determination of Fair Market Rental Value.
For purposes of this section, (i)
“Fair Market Rental Value” means an amount determined
by an Independent Appraisal (as defined below) on the basis of, and
shall be equal in amount to, the rental rate which would be
obtained in an arm’s-length transaction between an informed
and willing tenant under no compulsion to lease and an informed and
willing landlord under no compulsion to rent; and (ii)
“Independent Appraisal” means the procedure specified
above for determining Fair Market Rental Value.
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3. Landlord represents and warrants
that (A) it is the owner in fee simple of the Demised Premises; (B)
the Demised Premises are free and clear of all liens and
encumbrances other than the lien of current ad valorem taxes,
easements for roads and utilities serving the Demised Premises,
setbacks and other conditions of title as may be set forth in any
recorded plat, easements and restrictions of record that do not
interfere with the present use of the Demised Premises, and those
liens and encumbrances set forth on Exhibit B attached hereto (the
“Permitted Encumbrances”); (C) Landlord has not
received any notification from any governmental authority of any
pending public improvements affecting the Demised Premises or
requiring any repairs, replacements or alterations to the Demised
Premises that have not been satisfactorily made; (D) Landlord has
no knowledge of any pending or threatened condemnation or
appropriation of all or any part of the Demised Premises by any
governmental authority or other entity having the right of eminent
domain; and (E) to the best of Landlord’s knowledge and
belief, there are no applicable laws, ordinances or regulations
that would prohibit or interfere with the use of the Demised
Premises by Tenant for its intended use thereof.
Landlord covenants that Tenant, by
paying the rent herein reserved and performing and observing all of
the covenants and agreements herein agreed by Tenant to be kept and
performed, may peaceably hold and enjoy the Demised Premises with
exclusive control and possession thereof during the full Lease Term
without hindrance or interruption by Landlord and that Landlord
will warrant and defend Tenant in peaceful and quiet enjoyment of
the Demised Premises against the claims of all persons claiming
through or under Landlord, except condemning and similar
authorities.
4. The Tenant shall assess the
Demised Premises and shall pay promptly as and when they become due
all real estate taxes and all assessments, water rates and water
charges, and other governmental levies and charges, general and
special, ordinary and extraordinary, unforeseen as well as
foreseen, of any kind, which are assessed or imposed upon the
Demised Premises or any part thereof, or become payable during the
term of this Lease.
During the term of this Lease,
Tenant may attempt to have the assessed valuation of the Demised
Premises reduced or may initiate proceedi
