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LEASE AGREEMENT Between iSTAR SCC DISTRIBUTION CENTERS LLC, as Landlord and SOLO CUP OPERATING CORPORATION and SF HOLDINGS GROUP, INC. and SOLO CUP COMPANY, jointly and severally as Tenant Dated as of June 27, 2007

Lease Agreement

LEASE AGREEMENT Between iSTAR SCC DISTRIBUTION CENTERS LLC, as Landlord and SOLO CUP OPERATING CORPORATION and SF HOLDINGS GROUP, INC. and SOLO CUP COMPANY, jointly and severally as Tenant Dated as of June 27, 2007 | Document Parties: iStar Financial Inc | iSTAR SCC DISTRIBUTION CENTERS LLC | SF HOLDINGS GROUP, INC | Solo Cup Company | Solo Cup Operating Corporation You are currently viewing:
This Lease Agreement involves

iStar Financial Inc | iSTAR SCC DISTRIBUTION CENTERS LLC | SF HOLDINGS GROUP, INC | Solo Cup Company | Solo Cup Operating Corporation

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Title: LEASE AGREEMENT Between iSTAR SCC DISTRIBUTION CENTERS LLC, as Landlord and SOLO CUP OPERATING CORPORATION and SF HOLDINGS GROUP, INC. and SOLO CUP COMPANY, jointly and severally as Tenant Dated as of June 27, 2007
Governing Law: Illinois     Date: 8/15/2007
Law Firm: DLA Piper;Sidley Austin;Katten Muchin    

LEASE AGREEMENT Between iSTAR SCC DISTRIBUTION CENTERS LLC, as Landlord and SOLO CUP OPERATING CORPORATION and SF HOLDINGS GROUP, INC. and SOLO CUP COMPANY, jointly and severally as Tenant Dated as of June 27, 2007, Parties: istar financial inc , istar scc distribution centers llc , sf holdings group  inc , solo cup company , solo cup operating corporation
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** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

Exhibit 10.36

LEASE AGREEMENT

Between

iSTAR SCC DISTRIBUTION CENTERS LLC,

as Landlord

and

SOLO CUP OPERATING CORPORATION

and

SF HOLDINGS GROUP, INC.

and

SOLO CUP COMPANY,

jointly and severally

as Tenant

Dated as of June 27, 2007

 


TABLE OF CONTENTS

 

          Page

1.

   DEFINITIONS    1

2.

   DEMISE OF PREMISES    10

3.

   USE    11

4.

   TERM    12

5.

   RENTAL    13

6.

   TAXES    14

7.

   NET LEASE; NON-TERMINABILITY    17

8.

   SERVICES    19

9.

   REPAIRS AND MAINTENANCE; REPLACEMENT    19

10.

   DESTRUCTION OF OR DAMAGE TO PREMISES    21

11.

   INSURANCE, HOLD HARMLESS AND INDEMNIFICATION    22

12.

   COMPLIANCE WITH LAWS, COVENANTS    25

13.

   NON-SUBSTANTIAL TAKING    27

14.

   SUBSTANTIAL TAKING; TOTAL CASUALTY    28

15.

   DEFAULT: EVENTS OF DEFAULT    29

16.

   REMEDIES    31

17.

   SUBORDINATION    34

18.

   LANDLORD’S RIGHT OF ENTRY    35

19.

   NOTICES    36

20.

   ESTOPPEL CERTIFICATE; FINANCIAL DATA    38

21.

   MECHANICS’ LIENS    40

22.

   END OF TERM    41

23.

   ALTERATIONS    42

24.

   MEMORANDUM OF LEASE    44

25.

   SUBLETTING/ASSIGNMENT    44

26.

   HAZARDOUS MATERIAL    48

27.

   FINANCING/LEASEHOLD MORTGAGE/SECURITY INTERESTS IN TENANT’S PROPERTY    51

28.

   MISCELLANEOUS PROVISIONS    55

29.

   PURCHASE PROCEDURE    57

30.

   ECONOMIC ABANDONMENT    58

31.

   CAPITAL EXPENDITURES    62

32.

   REFUSAL RIGHT    63

33.

   STATE SPECIFIC PROVISIONS    65

 

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EXHIBITS:

 

A-1    LEGAL DESCRIPTIONS FOR ALL SITES - REAL ESTATE
A-2    IMPROVEMENTS
B-1    EQUIPMENT – LANDLORD
B-2    TENANT’S PROPERTY
C    CERTAIN PERMITTED ENCUMBRANCES
D    FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
E    FAIR MARKET VALUE DETERMINATION FOR PREMISES OR ANY SITE
F    CONDEMNATION/TOTAL CASUALTY SITE PRICES
G    FIXED RENT REDUCTION/CALCULATED SITE PRICE PERCENTAGE FOR EACH SITE

 

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THIS LEASE AGREEMENT, is made and entered into as of the date set forth in the Basic Lease Information (this lease agreement, together with all amendments and supplements hereto, this “ Lease ”), by and between iStar SCC Distribution Centers LLC, a Delaware limited liability company with offices c/o i Star Financial Inc., 1114 Avenue of the Americas, 38th Floor, New York, New York 10036 (together with any successor or assigns, hereinafter called the “ Landlord ”) and Solo Cup Operating Corporation, a Delaware corporation, SF Holdings Group, Inc., a Delaware corporation, and Solo Cup Company, a Delaware corporation, each having an address at 1700 Old Deerfield Road, Highland Park, Illinois 60035 (together with any successor or assign permitted by this Lease, hereinafter collectively called the “ Tenant ”).

 

1. DEFINITIONS

Capitalized terms used herein shall have the following meanings for all purposes of this Lease and shall be equally applicable to both the singular and plural forms of the terms herein defined.

Additional Rent ” means all amounts, liabilities and obligations other than Fixed Rent which Tenant assumes or agrees to pay under this Lease to Landlord or others.

Adjustment Date ” is defined and shall have the meaning specified in the Basic Lease Information.

Affiliates ” means Persons (other than individuals) Controlled by, Controlling, or under Common Control with another Person. Unless otherwise specified, all references herein to an “ Affiliate ” or to “ Affiliates ” shall refer to an Affiliate or Affiliates of the Tenant. For purposes hereof, an Affiliate of any of the Persons which then comprise the Tenant hereunder shall be deemed to be an Affiliate of the Tenant (regardless of whether such Person is an Affiliate of all of the Persons which then comprise the Tenant hereunder).

Alternative Credit Rating Agency ” means if either or both of S & P and Moody’s no longer exist or no longer assign Credit Ratings, such other nationally recognized statistical credit rating agency designated by Landlord, acting in its sole discretion.

Appraisal Report ” is defined in paragraph 30(b) of this Lease.

Basic Lease Information ” means the page(s) preceding this Lease which are hereby incorporated by reference.

Business Days ” or “ Business Day ” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of Illinois or is a day on which banking institutions located in such state are closed.

Calculated Site Price ” means at any time for each Site the product of (A) such Site’s percentage set forth on Exhibit G multiplied by (B) the annualized Fixed Rent for the Premises as of the date of a EAP Notice further multiplied by (C) 11.12.

 


Calendar Quarter ” means each 3 month calendar period commencing on the first day of each of January, April, July and October.

Capital Expenditures ” is defined in paragraph 31(a) of this Lease.

Capital Expenditure Waiver Test ” is defined in paragraph 31(c) of this Lease.

Casualty Repair ” is defined in paragraph 10 of this Lease.

Casualty ” means any damage or destruction caused to any Site by any reason, including fire.

Casualty Threshold ” is defined in paragraph 10 of this Lease.

Claims ” shall mean Liens (including lien removal and bonding costs), liabilities, obligations, civil or criminal damages, losses, demands, penalties, assessments, payments, fees of Mortgagee, fines, penalties, taxes, claims, actions, causes of action, suits, judgments, settlements, costs, expenses and disbursements (including legal fees and disbursements incurred and expenses and costs of investigation and environmental remedial action) of any kind and nature whatsoever, including interest that may accrue on any of the foregoing.

Commencement Date ” is defined and shall have the meaning specified in the Basic Lease Information.

Consolidated EBITDAR ” means, for any period, for the Tenant and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for federal, state, local and foreign income taxes payable by the Tenant and its Subsidiaries for such period, (iii) the amount of depreciation and amortization expense, (iv) all non cash impairment charges (to the extent not captured in amortization), (v) all underfunded pension expenses to the extent constituting non-cash charges, (vi) other non-cash non recurring expenses of the Tenant and its Subsidiaries which do not represent a cash item in such period or any future period, (vii) non cash expenses resulting from the grant of stock and stock options and other compensation to management personnel of the Tenant and its Subsidiaries pursuant to a written plan or agreement or the treatment of such options under variable plan accounting, (viii) all non–cash expenses attributable to minority interests in Subsidiaries, (ix) losses from sales of assets and foreign currency translations, (x) all of Tenant’s operating rent, including the annual Fixed Rent then payable under this Lease, and (xi) other non-recurring and one-time cash items not to exceed $5 million in any fiscal year of Tenant, and minus (b)(i) gains from sales of assets and foreign currency translations to the extent included in calculating such Consolidated Net Income for such period, (ii) interest income to the extent included in calculating such Consolidated Net Income for such period and (iii) all non cash items increasing Consolidated Net Income for such period. Consolidated EBITDAR shall be calculated on a pro forma basis for acquisitions and divestitures.

Consolidated Interest Charges ” means, for any period, for the Tenant and its Subsidiaries on a consolidated basis, the sum of (a) all interest expense, premium payments, debt discount, fees, charges and related expenses of the Tenant and its Subsidiaries in connection with borrowed money or in connection with the deferred purchase price of property acquired or

 

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services rendered, in each case to the extent treated as interest expense in accordance with GAAP and (b) the portion of rent expense of the Tenant and its Subsidiaries with respect to such period under capital lease obligations that is treated as interest expense in accordance with GAAP.

Consolidated Net Income ” means, for any period, for the Tenant and its Subsidiaries on a consolidated basis, the net income of the Tenant and its Subsidiaries (excluding extraordinary gains but including extraordinary losses) for that period.

Consumer Price Index ” means the Consumer Price Index-U.S. City Average for All Urban Consumers (all items) (1982–84=100) prepared by the Bureau of Labor Statistics of the United States Department of Labor. If such Consumer Price Index shall no longer be published with a base year of 1982–84=100, Landlord shall compute, by reference to data available from such Bureau of Labor Statistics, the actual percentage increase in consumer prices during the period or periods in question. If said Consumer Price Index shall cease to be published, Landlord shall use the most comparable index published by the United States Government. Where the Consumer Price Index is required for a given month, and if the Consumer Price Index is not published for such month, then the Consumer Price Index published for the month closest and prior to the designated month shall be used.

Control ” (including with correlative meanings, the terms “Controlling,” “Controlled by” and “under Common Control with”) means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contracts or otherwise.

Corporate Capital Expenditures ” is defined in paragraph 31(a) of this Lease.

Corporate Control Event ” means any of the following: (i) a merger or consolidation of Tenant with another entity (other than any merger or consolidation of Tenant with any entity which then also constitutes a Tenant hereunder or which is a Subsidiary of Tenant), (ii) the sale of all or substantially all the assets of Tenant to any party (other than any party which then also constitutes a Tenant hereunder or which is a Subsidiary of Tenant), (iii) any one Person (other than an entity which then constitutes a Tenant hereunder or a Subsidiary of Tenant) acquiring, directly or indirectly, fifty percent (50%) or more of publicly traded common stock, voting securities or economic benefits and burdens (including distributions) of Tenant within any twelve month period, or (iv) a change in the power to appoint more than 50% of Tenant’s Board of Directors, or (v) any other change in Control of Tenant that results in Persons which, immediately prior to such change, did not have Control of Tenant obtaining Control of Tenant (unless any such Person(s) so obtaining Control of Tenant also then constitute a Tenant hereunder or a Subsidiary of Tenant).

Credit Rating ” means the corporate debt rating issued by S&P and Moody’s or if either or both no longer exist or no longer issue ratings then, for either or both as so applicable, an Alternative Credit Rating Agency. All references to specific levels of a Credit Rating mean such rating with a “stable” or “positive” outlook, but in the event that any such rating is issued with a “negative” outlook or “on watch” associated with such rating, then, for purposes hereof, the applicable Credit Rating shall be the rating that is immediately below the credit rating issued with such negative outlook or on watch (for example, but not limitation, if S&P has at any time

 

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issued a corporate credit rating for a Person of BBB- with a negative outlook, then the Credit Rating of such Person for purposes of this Lease shall be deemed to be BB+ at such time).

Debt ” of any Person shall mean as at the date when any determination thereof is being made or to be made and in respect of all: (A) indebtedness of such Person for borrowed money; (B) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (C) obligations, other than inter-company items, of such Person to pay the deferred purchase price of property or services under conditional sales or other similar agreements relating to property purchased by such Person to the extent of the value of such property (other than customary retentions or reservations under agreements with suppliers entered into in the ordinary course of business) which provide for the deferral of payment of the purchase price for a period in excess of one year following the date of receipt and acceptance of the complete delivery of such property and/or services; (D) obligations of such Person as tenant under leases which obligations are, in accordance with GAAP, recorded as capital lease obligations, but excluding all obligations of Tenant or its Affiliates under or in any manner relating to this Lease, regardless of their treatment under GAAP; and (E) obligations of such Persons under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, indebtedness or obligations of others of the kinds referred to in clauses (A) through (D) above. Debt shall not, however, include undrawn or stand-by letters of credit issued on account of any Person. Whenever any determination of the amount of Debt is required or permitted to be, or is otherwise being or to be, made for any purpose under this Lease, the amount of any such Debt denominated in any currency other than United States dollars shall be calculated at the US dollar equivalent of such Debt as at the date when such determination of the amount of debt is being or to be made, except that, if all or any portion of the principal amount of any such Debt which is payable in a currency other than United States dollars is hedged into United States dollars, the principal amount of such hedged Debt, or the hedged portion thereof, shall be deemed to be equal to the amount of United States dollars specified in, or determined pursuant to, the applicable hedging contract.

EAP ” is defined in paragraph 30(a) of this Lease.

EAP Notice ” is defined in paragraph 30(a) of this Lease.

EAP Sale ” is defined in paragraph 30(a) of this Lease.

EAP Substitution ” is defined in paragraph 30(a) of this Lease.

EAP Undertaking ” is defined in paragraph 30(b)(xi) of this Lease.

Eligibility Requirements ” means with respect to any Person, that such Person has total assets (in name or under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity of $250,000,000.

Environmental Laws ” is defined in paragraph 26(b) of this Lease.

Environmental Reports ” is defined in paragraph 26(c) of this Lease.

Equipment – Landlord ” means the equipment described or listed on Exhibit B-1 .

 

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Equipment – Tenant ” means the equipment described or listed on Exhibit B-2 .

Event of Default ” is defined in paragraph 15 of this Lease.

Excluded Expenses ” is defined in paragraph 5(b) of this Lease.

Excluded Taxes ” means any income or franchise taxes based upon, measured by, or calculated with respect to net income or profits (but not including any franchise tax based solely upon gross receipts with respect to the Rent), inheritance, estate, succession, transfer or any similar taxes, or other taxes which are applicable to Landlord’s general or net income (as opposed to taxes specific to rents, receipts or income attributable to ownership of or operations solely at the Sites), net worth or capital. Excluded Taxes shall also include fines, penalties and interest due to the delinquent payment by Landlord of any tax or assessment (except to the extent such delinquent payment by Landlord results from Tenant’s failure to pay such tax or assessment on a timely basis as required under this Lease).

Extension Terms ” is defined in paragraph 4(b) of this Lease.

Fixed Rent ” is defined and shall have the meaning specified in the Basic Lease Information.

GAAP ” means generally accepted accounting principles recognized as such in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the Financial Accounting Standards Board.

Hazardous Materials ” is defined in paragraph 26(b) of this Lease.

Imposition ” means the various taxes and other charges referred to in paragraph 6 of this Lease payable by Tenant and required by the present and future governmental laws and regulations more specifically described in paragraph 6(b) of this Lease.

Improvements ” means all of the buildings, structures, improvements, heating, ventilation, air conditioning, plumbing, electrical, mechanical, utility and life safety systems and security systems (including parking areas, and driveways) now or hereafter located on the Land and generally described on Exhibit A-2 hereto, other than and specifically excluding Tenant’s Property.

The words “ include ”, “ includes ”, “ including ” and any other derivation of “include” means “including but not limited to” unless specifically set forth to the contrary.

Indemnified Parties ” is defined in paragraph 26(c) of this Lease.

Indenture ” is defined in paragraph 15(p) of this Lease.

Initial Appraiser ” is defined in Exhibit E of this Lease.

Initial Period ” is defined in paragraph 31(a) of this Lease.

Initial Valuation ” is defined in Exhibit E of this Lease.

 

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Institutional Lender ” means

(A) A real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided that any such Person referred to in this clause (A) satisfies the Eligibility Requirements;

(B) An investment company, money management firm or “qualified institutional buyer” within the meaning of rule 144A under the Securities Act of 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, provided that any such person referred to in this clause (B) satisfies the Eligibility Requirements;

(C) An institution substantially similar to any of the foregoing entities described in clause (A) or (B) that satisfies the Eligibility Requirements.

Investment Grade Criteria ” means a Credit Rating of both “BBB-” or higher from S&P and “Baa3” or higher from Moody’s, (or an equivalent Credit Rating from an Alternative Credit Rating Agency, as applicable).

iStar ” means iStar Financial Inc., a Maryland corporation or a majority owned subsidiary.

Land ” means the title and interest of Landlord in and to the six (6) locations of real estate described on Exhibit A-1 hereto, and any land lying in the bed of any existing dedicated street, road or alley adjoining thereto, all strips and gores adjoining thereto, and all rights, ways, easements, privileges and appurtenances thereunto belonging, including all of Landlord’s right, title, and interest in and to all other property rights, tangible or otherwise, arising out of or connected with Landlord’s ownership thereof, but none of the Improvements thereon.

Landlord ” is defined in the first paragraph of this Lease.

Landlord Parties ” shall mean, collectively, Landlord and its Affiliates and their respective agents, invitees, representatives, employees, directors, officers, shareholders, consultants, independent contractors, successors and assigns.

Landlord Representative ” is defined in the paragraph 28(f) of this Lease.

Lease ” is defined in the first sentence of this Lease.

Lease Adjusted Debt ” shall mean the sum of (i) all of Tenant’s Debt plus (ii) the product of (x) all of Tenant’s operating rent, including the annual Fixed Rent then payable under this Lease, multiplied by (y) eight (8).

Lease Expiration Date ” is defined and shall have the meaning specified in the Basic Lease Information.

 

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Leasehold Mortgage ” means any leasehold mortgage, leasehold deed to secure debt, leasehold deed of trust or other security instrument of like nature held by a Permitted Leasehold Mortgagee.

Legal Requirements ” is defined in paragraph 12 of this Lease.

Lien ” shall mean any lien, mortgage, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, including any arising under any conditional sale agreement, capital lease or other title retention agreement.

Minimum Capital Expenditure Requirement ” is defined in paragraph 31(a) of this Lease.

Moody’s ” means Moody’s Investors Services, Inc. and its successors.

Mortgage ” shall mean a mortgage, deed to secure debt, deed of trust or other security instrument of like nature or any ground or underlying lease or other document of like nature on all or any portion of the Premises given by Landlord to a Mortgagee.

Mortgagee ” shall mean any holder of a Mortgage with respect to the Premises or any part thereof.

Net Casualty Proceeds ” shall mean the compensation and/or insurance payments net of the reasonable expenses of collecting such amounts incurred by Landlord, any Mortgagee (but only in its capacity as Proceeds Trustee) and/or Tenant, and received by any Mortgagee, Landlord or Tenant in respect of any portion of the Premises by reason of and on account of a Casualty. Net Casualty Proceeds shall not include any proceeds of any insurance or compensation payable with respect to any Tenant’s Property.

Other Taxes ” is defined in paragraph 6(b) of this Lease.

Overdue Rate ” means the greater of: (x) twelve percent (12%) per annum or (y) the sum of four percent (4%) plus the prime interest rate as reported from time to time in The Wall Street Journal , but in any event, if lower, the maximum annual interest rate allowed by law for business loans (not primarily for personal, family or household purposes); provided , however , if The Wall Street Journal is no longer in existence or ceases to publish such information, Landlord shall use the prime interest rate as reported in a comparable publicly available publication selected by Landlord in its sole discretion.

Person ” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, trustee(s) of a trust, unincorporated organization, or government or governmental authority, agency or political subdivision thereof.

Permitted Encumbrances ” means for each Site:

(a) Any of the following, which are not yet due and payable at the time in question: (i) liens for water, sewer, and other utility services and (ii) taxes, assessments and other governmental charges (whether federal, state, local or foreign) and Property Taxes;

 

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(b) The easements, rights-of-way, encroachments, encumbrances, restrictive covenants and other matters affecting the title to the Premises or any part thereof set forth on Exhibit C attached hereto;

(c) Any Subordination, Non-Disturbance, and Attornment Agreement(s) recorded or otherwise, which are provided to Tenant pursuant to paragraph 17 of this Lease or as otherwise entered into by and among Landlord, Tenant, and any Mortgagee;

(d) Liens for taxes (whether federal, state, local or foreign) attributable to any taxable period whether before, on or after the Commencement Date which are being contested in good faith in accordance with the terms of this Lease by Tenant and for which Tenant has established adequate reserves; and

(e) This Lease and the rights, privileges and entitlements of Tenant hereunder; and

(f) Any sublease entered into by Tenant in accordance with the terms of this Lease.

Permitted Leasehold Mortgagee ” means: (a) any Institutional Lender, (b) any Person with a Credit Rating which satisfies the Investment Grade Criteria, and/or (c) any Person which is a lender or agent for the lender(s) (and their respective successors and/or assigns) under Tenant’s First Lien Debt or Tenant’s Second Lien Debt (regardless of whether any such Person satisfies the criteria set forth in clause (a) or (b)).

Permitted Use ” is defined in paragraph 3(a) of this Lease.

Premises ” is defined in paragraphs 2(a) and 2(b) of this Lease.

Primary Term ” is defined in paragraph 4(a) of this Lease.

Proceeds Trustee ” shall mean a federally insured bank or trust company designated by Landlord (which may not be an Affiliate of Landlord), subject to the prior written approval of Tenant, such approval not to be unreasonably withheld, delayed, or conditioned; provided , however , if a Mortgage encumbers the Premises, the Mortgagee thereunder may, at its option, be appointed Proceeds Trustee for so long as such Mortgage remains outstanding and such Mortgagee is not an Affiliate of Landlord.

Property Augusta ” is defined in paragraph 2(b) of this Lease.

Property Chicago ” is defined in paragraph 2(b) of this Lease.

Property Conyers ” is defined in paragraph 2(b) of this Lease.

Property Dallas ” is defined in paragraph 2(b) of this Lease.

Property Federalsburg ” is defined in paragraph 2(b) of this Lease.

Property Urbana ” is defined in paragraph 2(b) of this Lease.

Property Taxes ” is defined in paragraph 6(a) of this Lease.

 

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Quarterly Subtenant Allowance ” is defined in paragraph 25(b) of this Lease.

Rent ” is defined in paragraph 5(a)(ii).

Restoration Fund ” is defined in paragraph 10 of this Lease.

RR Exercise Notice ” is defined in paragraph 32(c) of this Lease.

RR Notice ” is defined in paragraph 32(b) of this Lease.

RR Notice Date ” is defined in paragraph 32(b) of this Lease.

RR Price ” is defined in paragraph 32(b) of this Lease.

RR Offer ” is defined in paragraph 32(b) of this Lease.

S&P ” means Standard & Poor’s Rating Service and its successors or assigns.

SCIC ” is defined in paragraph 15(i) of this Lease.

Site ” is defined in paragraph 2(b) of this Lease.

Site Assessments ” is defined in paragraph 26(d) of this Lease.

Site Reviewers ” is defined in paragraph 26(d) of this Lease.

Site Termination Date ” is defined in paragraph 14 of this Lease.

Subordination, Non-Disturbance and Attornment Agreement ” is defined in paragraph 17(a) of this Lease.

Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “ Subsidiary ” or to “ Subsidiaries ” shall refer to a Subsidiary or Subsidiaries of the Tenant. For purposes hereof, a Subsidiary of any of the Persons which then comprise the Tenant hereunder shall be deemed to be a Subsidiary of the Tenant (regardless of whether such Person is a Subsidiary of all of the Persons which then comprise the Tenant hereunder).

Substitute Parcel ” is defined in paragraph 30(b) of this Lease.

Substitution Deed ” is defined in paragraph 30(b)(ii) of this Lease.

Tenant ” is defined in the first paragraph of this Lease and includes each of Solo Cup Operating Corporation, SF Holdings Group, Inc., and Solo Cup Company, and all liabilities, obligations, covenants and agreements of Tenant under this Lease are and shall be the joint and

 

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several liabilities, obligations, covenants and agreements of each of Solo Cup Operating Corporation, SF Holdings Group, Inc., and Solo Cup Company.

Tenant’s First Lien Debt ” shall mean any and all amounts due and/or payable from time to time under that certain Credit Agreement dated as of February 27, 2004, among Solo Cup Company, Solo Cup Investment Corporation, Bank of America, N.A., as Administrative Agent and Swing Line Lender and as an L/C Issuer, Banc of America Securities LLC and Citigroup Global Markets Inc., as Joint Lead Arrangers and Joint Book Running Managers, Citicorp North America, Inc., as Syndication Agent, Harris Trust and Savings Bank, as Documentation Agent and as an L/C Issuer, and various lending parties named therein, as amended, as the same may be amended, restated, modified, renewed, extended, increased, decreased, refinanced and/or replaced from time to time.

Tenant’s Property ” shall mean, collectively, Tenant’s Trade Fixtures and the Equipment - Tenant.

Tenant’s Second Lien Debt ” shall mean any and all amounts due and/or payable from time to time under that certain Second Lien Credit Agreement dated March 31, 2006 among Solo Cup Company, Solo Cup Investment Corporation, Bank of America, N.A., as administrative agent for the Lenders, Banc of America Securities LLC, as Sole Lead Arranger and Sole Bookrunning Manager and various other lending parties named therein, as amended, as the same may be amended, restated, modified, renewed, extended, increased, decreased, refinanced and/or replaced from time to time.

Tenant’s Trade Fixtures ” means all personal property of Tenant in or on the Premises, affixed or not, which is not necessary for the operation of the Improvements, including all items listed or described on Exhibit B-2 and specifically excludes the Equipment – Landlord.

Term ” is defined in paragraph 4(b) of this Lease.

Third Appraiser ” is defined in Exhibit E of this Lease.

Third Valuation ” is defined in Exhibit E of this Lease.

Treasury Rate ” means the yield to maturity of a debt obligation of the United States Treasury having a maturity date closest to but not earlier than the then-existing remaining Term of the Lease (excluding any then-unexercised options for any Extension Terms) and, if more than one have been issued with such maturity date, then using the debt obligation first issued on or closest to the date of any termination by Landlord under this Lease.

Valuation Period ” is defined in Exhibit E of this Lease.

Valuation Notice ” is defined in Exhibit E of this Lease.

 

2. DEMISE OF PREMISES

(a) Landlord hereby demises and leases to Tenant and Tenant hereby leases and rents from Landlord the Premises, IN ITS “AS IS” CONDITION, SUBJECT TO THE EXISTING STATE OF TITLE (WITHOUT EXPRESS OR IMPLIED WARRANTY OF LANDLORD

 

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WITH RESPECT TO THE CONDITION, QUALITY, REPAIR OR FITNESS OF THE PREMISES FOR A PARTICULAR USE OR TITLE THERETO, ALL SUCH WARRANTIES BEING HEREBY DISCLAIMED BY LANDLORD AND WAIVED AND RENOUNCED BY TENANT). The “Premises” consists of collectively, Landlord’s interest in the Land, the Equipment – Landlord, the Improvements, together with any easements, rights, and appurtenances in connection therewith or belonging to said Land and Improvements. No easement for light, air or view is included with or appurtenant to the Premises. The foregoing disclaimer in this paragraph 2(a) has been negotiated by Landlord and Tenant, each being represented by independent counsel, and is intended as a complete negation of any representation or warranty by Landlord, express or implied, with respect to the condition, quality, repair, or fitness of the Premises for a particular use, or title thereto.

(b) The Premises includes the Land and Improvements (a) located at the address commonly known as 7575 Kostner Avenue, Chicago, Illinois, including approximately 32 acres of land and 820,000 square feet of space (“ Property Chicago ”), (b) located at the address commonly known as 1550 Wrightsboro Road, Augusta, Georgia, including approximately 17 acres of land and 364,000 square feet of space (“ Property Augusta ”), (c) located at the address commonly known as 1455 Highway 138 Northeast, Conyers, Georgia, including approximately 24 acres of land and 367,000 square feet of space (“ Property Conyers ”), (d) located at the address commonly known as 1000 Industrial Park Drive, Federalsburg, Maryland, including approximately 50 acres of land and 405,000 square feet of space (“ Property Federalsburg ”), (e) located at the address commonly known as 4444 West Ledbetter Drive, Dallas, Texas, including approximately 47 acres of land and 1,220,000 square feet of space (“ Property Dallas ”), (f) located at the address commonly known as 1505 East Main Street, Urbana, Illinois, including approximately 40 acres of land and 269,000 square feet of space (“ Property Urbana ”). Property Chicago, Property Augusta, Property Conyers, Property Federalsburg, Property Dallas and Property Urbana together constitute the Premises and each individually is herein called a “ Site ,” and together are herein the “ Sites .”

 

3. USE

(a) Tenant shall, subject to applicable zoning restrictions and any recorded covenants or restrictions in the public records upon the Commencement Date, use and occupy the Premises , including each Site, only as general offices, manufacturing and distribution of any products then used in Tenant’s business, including food service products, tableware, packaging and other lawful purposes which are both associated and related thereto (collectively, the “ Permitted Use ”); provided , however , except for the recordation of any Mortgage and any replacements, renewals, amendments, consolidations, modifications, extensions or refinancing thereof or as otherwise required by governmental order, from and after the Commencement Date, without first having obtained Tenant’s prior written consent which may be withheld or granted in Tenant’s sole and absolute discretion, Landlord shall not record or otherwise take any voluntary action to subject the Premises or Land to any additional (or modify or amend any existing) covenants, restrictions, easements, or other encumbrances of record or otherwise, or any rezoning of the Premises or any Site from the zoning classifications presently in existence as of the Commencement Date. Tenant shall not use, suffer or permit the Premises, or any portion thereof, to be used by Tenant, any third party or the public, as such, without restriction or in such manner as might adversely affect Landlord’s title to or interest in the Premises, or in such

 

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manner as might make possible a Claim or Claims of adverse possession by the public, as such, or third Persons, or of implied dedication of the Premises, or any portion thereof.

(b) So long as no Event of Default under this Lease shall have occurred and be continuing, Landlord shall not interfere, in any material respect, with any or all of (i) Tenant’s rights to occupy and use the Premises (in the manner and for the purposes contemplated hereunder), (ii) Tenant’s right to utilize the vehicular parking areas located on the Premises, and (iii) Tenant’s right of access, ingress and egress to and from the Premises.

(c) If no Event of Default has occurred and is continuing, Landlord shall, promptly upon request by Tenant, join with Tenant (at Tenant’s cost and expense), to (i) grant easements, licenses, rights of way and other rights and privileges in the nature of easements at any Site, (ii) release, amend or modify existing easements, licenses and appurtenances at any Site, (iii) take actions with respect to governmental entities or other third parties to enhance the use and enjoyment of the Sites and/or the enforcement or exercise of rights under Legal Requirements, and (iv) execute and deliver any instrument, in form and substance acceptable to Landlord, necessary or appropriate to make or confirm such grants, releases or actions to any Person, with or without consideration; provided that such grant, release or action does not interfere with and is not detrimental to the conduct of business on the Site and does not adversely affect the utility, useful life or fair market value of the Site.

 

4. TERM

(a) The primary term of this Lease (the “ Primary Term ”) shall be for a period of approximately twenty (20) years, beginning on the Commencement Date and ending on the Lease Expiration Date.

(b) Tenant shall have the right, at its option, to extend the Primary Term of this Lease for four (4) consecutive extension terms (the “ Extension Terms ”), each being five (5) years in length. Each Extension Term shall commence on the day after the expiration of the preceding term and shall expire on the fifth (5 th ) anniversary of the Lease Expiration Date in the case of the first (1 st ) Extension Term, and on the tenth (10 th ), fifteenth, (15 th ), and twentieth (20th) anniversaries of the Lease Expiration Date in the case of the second (2 nd ), third (3 rd ) and fourth (4 th ) Extension Terms, respectively. The options to extend the Term of this Lease as described above shall not be deemed exercised by Tenant unless at least eighteen (18) months prior to the Lease Expiration Date for the Primary Term or at least eighteen (18) months prior to the expiration of the Extension Term for the first (1 st ), second (2 nd ) and third (3 rd ) Extension Terms, respectively, Tenant shall have delivered written notice to Landlord of Tenant’s irrevocable decision to so extend this Lease at the end of the Primary Term or any exercised Extension Term, as applicable. Tenant’s failure to deliver one (1) such timely notice to Landlord shall terminate all future Extension Terms, if any, following the Extension Term to which such notice specifically relates. Subject to the provisions of paragraph 5, the terms and conditions of this Lease shall apply to each Extension Term with the same force and effect as if such Extension Term had originally been included in the Primary Term of the Lease. The right of Tenant to the Extension Terms shall be conditioned upon this Lease being in full force and effect, Tenant occupying the Premises, and no Event of Default then existing as of both the date that Tenant notifies Landlord of Tenant’s decision to extend the term of this Lease for any of the Extension Terms, and the Lease Expiration Date (for the first (1 st ) Extension Term) or expiration of the first

 

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(1 st ), second (2 nd ) and third (3 rd ) Extension Term, as the case may be for the second (2 nd ), third (3 rd ) and fourth (4 th ) Extension Term, respectively. The Primary Term, together with any Extension Term which Tenant properly exercises its option with respect to, and for which the conditions related thereto are satisfied, shall constitute the “ Term ” of this Lease.

 

5. RENTAL

(a) Tenant shall pay to Landlord the following amounts as Rent for the Premises:

(i) During the Term of this Lease, Tenant shall pay to Landlord, as fixed quarterly rent, the amount of quarterly fixed rent specified in the Basic Lease Information (“ Fixed Rent ”).

(ii) Throughout the Term of this Lease, Tenant shall pay, as Additional Rent, all other amounts of money and charges required to be paid by Tenant under this Lease, whether or not such amounts of money or charges are designated Additional Rent. As used in this Lease, “ Rent ” shall mean and include all Fixed Rent and Additional Rent payable by Tenant in accordance with this Lease.

(b) It is the intention of Landlord and Tenant that the Fixed Rent payable by Tenant to Landlord during the entire Term of this Lease shall be absolutely net of all costs and expenses incurred in connection with the management, operation, maintenance, repair and replacement of the Premises in accordance with this Lease. Landlord shall have no obligations or liabilities whatsoever with respect to the management, operation, maintenance, repair or replacement of the Premises during the Term of this Lease, and Tenant shall manage, operate, maintain and repair and replace the Premises in accordance with this Lease and shall pay all costs and expenses incurred in connection therewith before such costs or expenses become delinquent. Without limiting the generality of the foregoing, throughout the entire term of this Lease, Tenant shall pay, as Additional Rent, all premiums for all property and liability insurance covering the Premises required under this Lease, all Property Taxes and all Other Taxes that accrue during or are allocable to the Term of this Lease, and for Property Taxes and Other Taxes, allocable for any period of time prior to the Term of this Lease. Notwithstanding the foregoing or anything to the contrary contained in this Lease, Tenant shall not be responsible for the following costs or expenses (the “ Excluded Expenses ”): (i) interest and amortization of funds borrowed by Landlord or any similar payments made to the holder of a Mortgage (including the rent under any ground lease which constitutes a Mortgage for purposes hereof), (ii) costs in the nature of indemnification obligations of Landlord or any Landlord Party, (iii) costs and expenses (including court costs, attorneys’ fees and disbursements) related to or in connection with disputes with any holder of a Mortgage or by or among any persons having an interest in the Landlord or the Premises, (iv) costs incurred in connection with a sale, lease, Mortgage (except as set forth in the next sentence) or transfer (including testamentary transfers) of all or any part of any Site or any interest therein, or of any interest in Landlord, or in any person comprising, directly or indirectly, Landlord or in any person having an equity interest, directly or indirectly in Landlord, (v) costs and expenses incurred by Landlord associated with the operation of the business of the legal entity or entities which constitute Landlord (as opposed to operation of the Sites), and/or (vi) Excluded Taxes. Notwithstanding the terms of clause (iv) of the preceding sentence, Tenant shall be responsible for the legal, due diligence, title insurance and surveying costs and fees incurred by a Mortgagee in connection with the Initial Mortgage of the Premises

 

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entered into by Landlord after the Commencement Date, as well as any mortgage taxes (or equivalent taxes) due and payable in connection with such initial Mortgage; provided that such Mortgage is fully executed, delivered and recorded not later than sixty (60) calendar days after the Commencement Date (it being agreed that Tenant shall not be responsible for any such costs, fees or taxes in connection with any Mortgage executed, delivered or recorded after such sixty (60) calendar day period, nor shall Tenant be responsible for any costs, fees or expenses connected with any Mortgage other than the initial Mortgage with respect to the Premises entered into by Landlord after the Commencement Date); and provided further, that Tenant shall not be responsible for the payment of any mortgage taxes (or equivalent taxes) in connection with any such Mortgage executed, delivered and/or recorded with respect to the Property Federalsburg unless such Mortgage with respect to the Property Federalsburg is fully executed, delivered and recorded within thirty (30) days after the Commencement Date. The parties intend that any such Mortgage with respect to the Property Federalsburg which is executed, delivered and recorded within the thirty (30) day period described in the second proviso of the preceding sentence shall qualify as a “purchase money mortgage” for purposes of any mortgage taxes (or equivalent taxes) payable with respect to such Mortgage.

(c) Tenant shall pay all Fixed Rent to Landlord, in advance, on or before the first Business Day of each and every Calendar Quarter during the Term of this Lease (other than the payment due on the Commencement Date which is due as set forth in the Basic Lease Information) without notice, demand, deduction or offset, in lawful money of the United States of America, to the wire transfer address of Landlord specified in the Basic Lease Information, or to such other accounts and/or Person or Persons or at such other place or places as Landlord may from time to time designate in writing at least ten (10) Business Days in advance to Tenant (or otherwise so there are collected funds available to Landlord on the due date). Interest at the Overdue Rate shall accrue on unpaid Fixed Rent from the due date thereof to the date of actual payment. If the Fixed Rent is paid more than five (5) Business Days after its due date, a late charge of five percent (5%) of the delinquent amount shall be due and payable. Tenant shall pay all Additional Rent when due. If Additional Rent in the amount of $5,000 or greater is paid more than five (5) Business Days after its due date, a late charge of five percent (5%) of the delinquent amount shall be due and payable. All Additional Rent which is payable to Landlord pursuant to this Lease shall be paid by Tenant to Landlord without notice.

 

6. TAXES

(a) Tenant shall pay, as Additional Rent, directly to the appropriate governmental authorities, all Property Taxes prior to the assessment of any interest or penalty for late payment (subject to Tenant’s rights under this paragraph 6(a) to make payment thereof in installments or under paragraph 6(e) below or to protest Property Taxes); provided , however , if and to the extent Landlord or Mortgagee is holding Tenant’s estimated payments thereof pursuant to paragraph 6(f) below, Landlord or Mortgagee shall instead make such payments timely upon Tenant’s behalf; provided , further , if any such Property Taxes may legally be paid in installments, Tenant may, at its option, pay such Property Taxes in such installments together with any interest due thereon provided that Tenant shall have paid all such installments, or provided to Landlord or Mortgagee, such amounts as are necessary for the payment of, all such installments prior to the expiration or earlier termination of this Lease. “ Property Taxes ” shall mean all taxes, assessments, excises, levies, fees and charges (and any tax, assessment, excise, levy, municipal service fee, fee or charge levied wholly or partly in lieu thereof or as a substitute therefor or as an

 

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addition thereto) of every kind and description, general or special, ordinary or extraordinary, foreseen or unforeseen, secured or unsecured, whether or not now customary or within the contemplation of Landlord and Tenant, that are applicable to the Term (as described below), and are levied, assessed, charged, confirmed or imposed by any public or government authority on or against, or otherwise with respect to, the Premises or any part thereof or any personal property used in connection with the Premises, including Landlord’s franchise taxes based upon gross receipts solely with respect to the receipt of Rent (but not including net income or franchise taxes based upon, measured by or calculated with respect to net income or profits or derivatives thereof). The parties intend that, throughout the Term, the governmental authorities to whom Property Taxes are due shall issue bills therefor directly to Tenant, and shall reasonably cooperate to cause such governmental authorities to do so. If, however, Landlord receives any bills for any Property Taxes notwithstanding the foregoing efforts, Landlord shall immediately deliver such bills to Tenant for payment as provided herein. Property Taxes shall not include any Other Taxes or Excluded Taxes arising out of or levied in connection with this Lease, unless and only to the extent levied or assessed against Landlord as a substitute for any Property Taxes. For purposes hereof, Property Taxes shall be deemed to be “applicable to the Term” to the extent such Property Taxes accrue during the Term, regardless of whether such Property Taxes are due or payable during the Term (i.e., on an “accrual” basis).

(b) Tenant shall pay, as Additional Rent, directly to the appropriate governmental authorities (except as provided below), all Other Taxes prior to the assessment of any interest or penalty for late payment (subject to Tenant’s rights under this paragraph 6(b) and paragraph 6(e) below, to make payment in installments or to protest Other Taxes); provided , however , if Landlord or Mortgagee is holding Tenant’s estimated payments thereof pursuant to paragraph 6(f) below, Landlord or Mortgagee shall instead make such payments timely upon Tenant’s behalf; provided , further , if any such Other Taxes may legally be paid in installments, Tenant may, at its option, pay such Other Taxes in such installments together with any interest due thereon provided that Tenant shall have paid, or provided to Landlord or Mortgagee, such amounts as are necessary for the payment of, all such installments prior to the expiration or earlier termination of this Lease. “ Other Taxes ” shall mean all taxes, assessments, excises, levies, fees and charges, including all payments related to the cost or occupation of providing facilities or services, whether or not now customary or within the contemplation of Landlord and Tenant, that are applicable to the Term (as described in paragraph 6(a) above) and are levied, assessed, charged, confirmed or imposed by any public or government authority upon, or measured by, or reasonably attributable to (i) the Premises, (ii) the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises or the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, regardless of whether title to such improvements is vested in Tenant or Landlord, (iii) any Rent payable under this Lease, including any gross receipts tax or excise tax levied by any public or government authority with respect to the receipt of any such Rent but only to the extent that such taxes are in lieu of or a substitute for any Property Taxes, (iv) the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or (v) this transaction or any document pursuant to which Tenant creates or transfers an interest or an estate in the Premises. Other Taxes shall not include any Property Taxes or any Excluded Taxes arising out of or levied in connection with this Lease, unless and only to the extent levied or assessed against Landlord in whole or in part in lieu of, as a substitute for, or as an addition to any Other Taxes.

 

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(c) Except for any Excluded Taxes imposed on or with respect to the Rent, if at any time during the Term, any method of taxation shall be such that there shall be levied, assessed or imposed on Landlord, or on the Rent, or on the Premises, or any portion thereof, a capital levy, gross receipts tax on the Rent, occupational license tax, or a franchise tax, based upon (in each case) gross receipts with respect to the Rent, but not including any income or franchise taxes based upon, measured by, or calculated with respect to net income or profits, Tenant, to the extent permitted by law, covenants to pay and discharge the same, it being the intention of the parties hereto that the Fixed Rent to be paid hereunder shall be paid to Landlord absolutely net without deduction or charge of any nature whatsoever, foreseeable or unforeseeable, ordinary or extraordinary, or of any nature, kind, or description, except for Excluded Taxes and as otherwise expressly provided in this Lease. Any of the taxes which are payable by Tenant pursuant to this subparagraph (c) shall constitute Other Taxes for purposes hereof.

(d) Tenant covenants to furnish Landlord, within thirty (30) calendar days, official receipts of the appropriate taxing authority, if any, or other appropriate proof reasonably satisfactory to Landlord, evidencing the payment of all Impositions.

(e) Tenant shall have the right to contest the amount or validity, in whole or in part, of any Property Tax or Other Tax or to seek a reduction in the valuation of the Premises as assessed for real estate property tax purposes by appropriate proceedings diligently conducted in good faith (but only after the deposit or payments (whether under protest or otherwise) of any amounts required by applicable law to stay or prevent collection activities). If Tenant desires to contest the validity of any Property Tax or Other Tax, it shall (i) on or before thirty (30) calendar days prior to the due date thereof, notify Landlord, in writing, that Tenant intends to so contest same; and (ii) on or before the due date thereof, if such Property Tax or Other Tax involves an amount in excess of $50,000 or if any Mortgagee so requires, deposit with Landlord security (in form and content reasonably satisfactory to Landlord or Mortgagee) for the payment or bonding over of the full amount of such Property Tax or Other Tax and from time to time deposit additional security so that, at all times, adequate security will be available for the payment of the full amount of the Property Tax or Other Tax together with all interest, penalties, costs and other charges in respect thereof; provided, however, that the deposits referenced in this paragraph 6(e)(ii) shall not be required if and to the extent Tenant is required to pay the Property Tax or Other Tax, as applicable, in full prior to initiating such contest. If Tenant initiates any proceeding referred to in this paragraph 6(e), Landlord shall not be required to join such proceeding, except to the extent required by law, in which event Landlord shall, upon written request by Tenant, join in such proceedings or permit the same to be brought in its name, all at Tenant’s expense. Landlord agrees to provide, at Tenant’s expense, whatever assistance Tenant may reasonably require in connection with any such contest initiated by Tenant. Tenant covenants that Landlord shall not suffer or sustain any costs or expenses (including counsel fees) or any liability in connection with any such proceeding initiated by Tenant (or initiated by Landlord at Tenant’s request), unless the same is reimbursed by Tenant. No such contest initiated by Tenant shall subject Landlord to any civil liability or the risk of any criminal liability or forfeiture. If Tenant fails or declines to contest any Property Tax or Other Tax, then Landlord shall have the right (but not the obligation) to contest the same. Any contest initiated by Landlord (other than any contest initiated by Landlord at Tenant’s request) shall be at the sole cost and expense of the Landlord, provided , however , if Landlord is successful in reducing the valuation of any Property Tax or Other Tax on the Premises, and such reduction is greater than the costs and expenses incurred by Landlord in connection with such contest, Tenant shall be entitled to the benefit of such reduction and shall be obligated to reimburse Landlord for any costs or expenses in connection with such contest.

 

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(f) During the continuance of any Event of Default or as required by a Mortgagee, Tenant shall pay to Landlord on the first day of each Calendar Quarter an amount equal to one fourth (1/4) of the Property Taxes and Other Taxes thereafter due and payable, as reasonably estimated by Landlord on the basis of assessments and bills and estimates thereof. Such amounts shall be held by Landlord or Mortgagee, without interest, and shall not be deemed to be trust funds but, if held by Landlord, shall not be commingled with the general funds of Landlord and shall instead be held in a separate escrow account of Landlord opened and maintained for this Lease alone; provided , however , to the extent so received, any Mortgagee which is an entity unaffiliated with Landlord or any Affiliate of Landlord, may commingle such funds. Landlord shall apply such amounts paid by Tenant under this paragraph 6(f) (including any amounts tendered by Tenant which are intended for interest if Tenant shall have elected to make such payments in installments) to the payment before delinquency of the Property Taxes and Other Taxes, subject to any rights of Mortgagee thereto. Landlord and Mortgagee shall make no charge for holding and applying such amounts. If at any time the amount on deposit pursuant to this paragraph 6(f) shall be less than the amount reasonably deemed necessary by Landlord to pay such Property Taxes or Other Taxes as they become due, Tenant shall pay to Landlord the amount necessary to make the deficiency within ten (10) Business Days after notice from Landlord requesting payment thereof.

(g) Landlord will, within thirty (30) calendar days after receipt, reimburse Tenant for any refund of Property Tax or Other Tax received by Landlord or Mortgagee as a result of any tax contest relating to the Term. Further, the parties agree that any credit, reduction or abatement of Property Taxes or Other Taxes applicable to any period prior to the Commencement Date shall run to the benefit of, and/or be payable to and the property of, Tenant.

 

7. NET LEASE; NON-TERMINABILITY

(a) This is an absolutely net lease and the Fixed Rent, Additional Rent and all other sums payable hereunder by Tenant shall be paid without notice (except as expressly provided herein), demand, set-off, counterclaim, abatement, suspension, deduction or defense. It is the intention of the parties hereto that the Fixed Rent shall be an absolutely net return to Landlord throughout the Term of this Lease. In order that such Rent shall be absolutely net to Landlord, Tenant shall pay when due, and save Landlord harmless from and against, any and all costs, charges and expenses attributable to the Premises, including each fine, fee, penalty, charge (including governmental charges), assessments, sewer rent, Impositions, insurance premiums as required herein, utility expenses, carrying charges, costs, expenses and obligations of every kind and nature whatsoever, general and special, ordinary and extraordinary, foreseen and unforeseen, the payment for which Landlord or Tenant is, or shall become liable by reason of any rights or interest of Landlord or Tenant in, to or under the Premises or this Lease or in any manner relating to the ownership, leasing, operation, management, maintenance, repair, rebuilding use or occupation of the Premises, or of any portion thereof; provided , however , that nothing herein contained shall be construed as imposing upon Tenant any obligation to pay any Excluded Expenses.

 

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(b) This Lease shall not terminate, nor shall Tenant have any right to terminate this Lease, except as expressly provided in paragraphs 14 and 30 nor shall Tenant be entitled to any abatement or reduction of Rent hereunder except as required by paragraphs 14 and 30 nor shall the obligations of Tenant under this Lease be affected (except as expressly provided in this Lease), by reason of (i) any damage to or destruction of all or any part of the Premises from whatever cause; (ii) subject to paragraph 14, the taking of the Premises or any portion thereof by condemnation, requisition or eminent domain proceedings; (iii) the prohibition, limitation or restriction of Tenant’s use of all or any part of the Premises, or any interference with such use; (iv) any eviction by paramount title or otherwise, (v) Tenant’s acquisition or ownership of all or any part of the Premises otherwise than as expressly provided herein; (vi) any default on the part of Landlord under this Lease, or under any other agreement to which Landlord and Tenant may be parties; or (vii) any other cause whether similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding. It is the intention of the parties hereto that the obligations of Tenant hereunder shall be separate and independent covenants and agreements, that the Fixed Rent, the Additional Rent and all other sums payable by Tenant hereunder shall continue to be payable in all events and that the obligations of Tenant hereunder shall continue unaffected unless the requirement to pay or perform the same shall have been terminated pursuant to any express provision of this Lease. Tenant agrees that Tenant will not be relieved of the obligations to pay the Fixed Rent or any Additional Rent in case of damage to or destruction of or condemnation (except as expressly provided in paragraph 14) of the Premises.

(c) Tenant agrees that it will remain obligated under this Lease in accordance with its terms, and that it will not take any action to terminate, rescind or void this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution or winding-up or other proceeding affecting Landlord or its successor in interest, or (ii) any action with respect to this Lease which may be taken by any trustee or receiver of Landlord or its successor in interest or by any court in any such proceeding.

(d) TENANT WAIVES ALL RIGHTS WHICH MAY NOW OR HEREAFTER BE CONFERRED BY LAW (BUT NOT UNDER THIS LEASE) (I) TO QUIT, TERMINATE OR SURRENDER THIS LEASE OR THE PREMISES OR ANY PART THEREOF, OR (II) TO ANY ABATEMENT, SUSPENSION, DEFERMENT OR REDUCTION OF THE FIXED RENT, ADDITIONAL RENT OR ANY OTHER SUMS PAYABLE UNDER THIS LEASE, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN.

(e) Landlord and Tenant acknowledge and confirm that, pursuant to this Lease, Tenant is responsible for the routine day-to-day operation and maintenance of the Premises, upon and subject to the other terms of this Lease. Accordingly, Landlord and Tenant acknowledge and confirm that each contemplates that the service contracts, permits, approvals, guaranties, warranties and similar rights and documents which pertain to the use, occupancy and operation of the Premises are and shall remain throughout the Term in the name of Tenant, rather than Landlord. If the parties hereafter determine that any such contracts, permits, approvals, guaranties, warranties or similar rights or documents are required to be held in the name of Landlord as the fee owner of any of the Premises, then Tenant shall assign the same to Landlord (without recourse or warranty), to the extent the same are assignable, pursuant to a mutually satisfactory instrument, and Landlord shall be deemed to have granted Tenant a non-exclusive license and authority of Landlord to enforce and exercise Landlord’s rights under such rights or documents during the Term of this Lease. Tenant agrees to pay all costs arising from and

 

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indemnify Landlord from all claims arising or relating to the service contracts, permits, approvals, guaranties, warranties and similar rights and documents referred to in this paragraph 7(e).

 

8. SERVICES

Tenant shall, at Tenant’s sole cost and expense, be responsible for supplying the Premises with electricity, heating, ventilating and air conditioning, water, natural gas, lighting, replacement for all lights, restroom supplies, telephone service, window washing, security service, janitor, pest control and disposal services (including, if applicable, hazardous and biological waste disposal), and such other services as Tenant determines to furnish to the Premises. LANDLORD SHALL NOT BE IN DEFAULT HEREUNDER OR BE LIABLE FOR ANY DAMAGE OR LOSS DIRECTLY OR INDIRECTLY RESULTING FROM, NOR SHALL THE FIXED RENT OR ADDITIONAL RENT BE ABATED OR A CONSTRUCTIVE OR OTHER EVICTION BE DEEMED TO HAVE OCCURRED BY REASON OF, THE INSTALLATION, USE OR INTERRUPTION OF USE OF ANY EQUIPMENT IN CONNECTION WITH THE FURNISHING OF ANY OF THE FOREGOING SERVICES, ANY FAILURE TO FURNISH OR DELAY IN FURNISHING ANY SUCH SERVICES, WHETHER SUCH FAILURE OR DELAY IS CAUSED BY ACCIDENT OR ANY CONDITION BEYOND THE CONTROL OF LANDLORD OR TENANT OR BY THE MAKING OF REPAIRS OR IMPROVEMENTS TO THE PREMISES, OR ANY LIMITATION, CURTAILMENT, RATIONING OR RESTRICTION ON USE OF WATER, ELECTRICITY, GAS OR ANY FORM OF ENERGY SERVING THE PREMISES, WHETHER SUCH RESULTS FROM MANDATORY GOVERNMENTAL RESTRICTION OR VOLUNTARY COMPLIANCE WITH GOVERNMENTAL GUIDELINES. Tenant shall pay the full cost of all of the foregoing services and all other utilities and services supplied to the Premises directly to the Persons to whom such costs are due as Additional Rent.

 

9. REPAIRS AND MAINTENANCE; REPLACEMENT

(a) Tenant shall, at its own sole cost and expense, keep the Premises, including each Site therein, in good order and condition consistent with the Permitted Uses set forth in this Lease as of the Commencement Date at all times on and after Commencement Date to and including the date of the termination of the Term, by lapse of time or otherwise; provided , however , that during the last eighteen (18) months of the Term, Tenant shall be permitted to pay Landlord the cost of any capital improvements required as a result of normal use and wear and tear at the Premises in lieu of making any required capital improvements; provided further that Tenant shall not be required to pay the cost of any such capital improvements incurred during the last eighteen (18) months of the Term to the extent that such costs would exceed the amount required to cause the capital improvement in question to have a useful life that is longer than five (5) years beyond the scheduled expiration date of this Lease. Subject to the foregoing sentence and the requirements of paragraph 23, Tenant shall timely and properly maintain, repair and replace all of the Premises and all its component parts, including parking surfaces and stripes, driveways, all landscaping, mechanical systems, electrical and lighting systems, plumbing and sewage systems, fixtures and appurtenances, interior and exterior walls, roof, foundations, floor slabs, columns and structural elements so as to preserve and protect the useful life, utility and value of such components, and in all events so as to preserve the effectiveness of any warranty relating thereto, such repairs and replacements to be at least in quality and class to the original

 

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work. If any building system or component shall become obsolete, non-functional, or uneconomic to repair, Tenant shall remove such item from the Premises and, promptly replace it with an item of comparable initial value and function. Promptly upon installation of any equipment which is not Tenant’s Property, Tenant shall deliver to Landlord the original warranty relating to such equipment (which shall specify Landlord as the owner of the equipment and upon Landlord’s receipt of such original warranty, Landlord shall be deemed to have granted Tenant a non-exclusive license and authority of Landlord solely to enforce such warranty during the Term of the Lease). Tenant shall deliver to Landlord a written statement showing all removals and replacements of such systems or components (not including Tenant’s Property) during the preceding calendar year, including manufacturers, model numbers, and serial numbers. Landlord may, upon two (2) Business Days’ prior notice cause independent private inspectors to make inspections of any building and building systems on the Premises or segments thereof to determine Tenant’s compliance under this paragraph 9. Tenant shall pay the cost of (i) one (1) such inspection at each Site by or on behalf of Landlord in each calendar year and (ii) the costs of all such inspections during the continuance of an Event of Default under this Lease. Notwithstanding the foregoing requirements of this paragraph 9, Tenant shall have no obligation to deliver any warranties for any Tenant’s Property at the Premises which may be and which are subsequently removed by Tenant upon expiration or earlier termination of this Lease.

Landlord may, but is not required to, after two (2) Business Days notice to Tenant (except in the case of emergency, in which case Tenant shall be given notice contemporaneously with entry), enter the Premises and make such repairs, alterations, improvements, additions, replacements or maintenance as Landlord deems necessary to cure any Event of Default of Tenant hereunder which remains uncured after the expiration of any notice and cure period provided under this Lease, as applicable, in a diligent fashion, and Tenant shall pay Landlord as Additional Rent forthwith (and in any event within thirty (30) days) after being billed for same by Landlord the cost thereof plus an administrative fee of four percent (4%) of such cost, which bill shall be accompanied by reasonably supporting documentation. Such amounts shall bear interest at the Overdue Rate from the date of expenditure by Landlord to the date of repayment by Tenant at the Overdue Rate. Any entry into the Premises by Landlord pursuant to this paragraph 9(a) shall be conducted subject to and in accordance with the terms of paragraph 18 below.

(b) It is intended by Tenant and Landlord that Landlord shall have no obligation, in any manner whatsoever, to repair or maintain the Premises (or any fixture or equipment therein), whether structural or nonstructural, all of which obligations are intended, as between Landlord and Tenant, to be those of Tenant. TENANT EXPRESSLY WAIVES THE BENEFIT OF ANY STATUTE NOW OR IN THE FUTURE IN EFFECT WHICH WOULD OTHERWISE AFFORD TENANT THE RIGHT TO MAKE REPAIRS AT LANDLORD’S EXPENSE OR TO TERMINATE THIS LEASE BECAUSE OF LANDLORD’S FAILURE TO KEEP THE PREMISES IN GOOD ORDER, CONDITION AND REPAIR.

(c) Tenant shall turn over to Landlord upon expiration or termination of this Lease, then current operating manuals and original warranties (to the extent applicable) for the Equipment – Landlord then located on such Site specifically excluding, in all cases, Tenant’s Property at the Premises.

 

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10. DESTRUCTION OF OR DAMAGE TO PREMISES

(a) If any Improvements and/or Equipment – Landlord is damaged by Casualty during the Term of this Lease, Tenant shall, subject to the terms of this Lease (including paragraph 14 below), (a) repair such damage and restore such Improvements and/or Equipment – Landlord to substantially the same or better condition as existed before the occurrence of such Casualty using materials of the same or better grade than that of the materials being replaced (herein, a “ Casualty Repair ”) and (b) this Lease shall remain in full force and effect. Such repair and replacement by Tenant shall be done in accordance with paragraph 23 and the standards of paragraph 9 and Tenant shall, at its expense, obtain all permits required for such work. An architect or engineer selected by Landlord shall review, at Tenant’s expense, all plans and specifications for Casualty Repairs and (if applicable as provided below) all draw requests hereunder. In no event shall Fixed Rent or Additional Rent abate, nor shall this Lease terminate by reason of such damage or destruction, except as expressly provided in paragraph 14 below. Provided that no Event of Default by Tenant shall then exist under this Lease, all insurance proceeds (and other amounts) payable for the performance of Casualty Repairs shall be paid to Tenant (or to the Proceeds Trustee, as applicable), and Landlord shall make available to Tenant all insurance proceeds actually received by Landlord or Mortgagee on account of such Casualty for application to the costs of such Casualty Repair. All Casualty Repairs shall be performed in compliance with the terms of this Lease, including paragraph 23 below. Notwithstanding anything to the contrary contained herein, Tenant shall have no obligation to perform any Casualty Repairs with respect to any damage to the Premises resulting from any Casualty which occurs during the last eighteen (18) months of the Term, and to the extent that Tenant elects not to make any such Casualty Repairs during such period, all insurance proceeds payable with respect to the Improvements and Equipment – Landlord shall be payable to or at the direction of Landlord (but Tenant shall be entitled to receive all insurance proceeds payable with respect to Tenant’s Property).

(b) For all Casualty Repairs, the following apply:

(i) As used herein the “ Casualty Threshold ” means $500,000; provided , however , that if Tenant, at the time of such Casualty, has a Credit Rating meeting the Investment Grade Criteria, then the “Casualty Threshold” shall be $2,000,000. If the Net Casualty Proceeds are less than the Casualty Threshold at the time of the applicable Casualty, such Net Casualty Proceeds shall be paid to Tenant to apply to the cost of restoration. If the Net Casualty Proceeds are equal to or greater than the Casualty Threshold at the time of the applicable Casualty, such Net Casualty Proceeds shall be paid to the Proceeds Trustee (herein called the “ Restoration Fund ”) for release to Tenant as restoration progresses, subject to and in accordance with paragraph 23(b). If Landlord mortgages the Premises with a Mortgage, the Mortgagee thereunder may, at its option be appointed Proceeds Trustee for so long as such Mortgage remains outstanding and such Mortgagee does not Control Landlord or is not Controlled by or under Common Control with Landlord. Insurance proceeds shall be deposited in an interest bearing account and interest shall be distributed to Tenant upon completion of said installation, repair, replacement or rebuilding, provided no default has occurred and is continuing hereunder. All checks drawn on said account shall be signed by the Proceeds Trustee. Provided that no Event of Default by Tenant shall exist under this Lease, insurance proceeds shall be disbursed to Tenant by the Proceeds Trustee under the following procedure:

(A) No more frequently than once per calendar month, Tenant may request that Landlord disburse to Tenant such insurance proceeds as are requested by Tenant to pay for all costs incurred by Tenant for repair and restoration work of the damaged Site that was performed during the immediately preceding calendar month. Tenant’s request shall certify that all work for which reimbursement is requested was performed in compliance with the plans and specifications approved by Landlord pursuant to paragraph 23 and all applicable laws, and shall include reasonably satisfactory evidence of the costs incurred by Tenant and unconditional partial (as to the amount received compared to percentage completion) or final lien releases, as applicable, in form and substance required by applicable law executed by all mechanic’s, materialmen, laborers, suppliers and contractors who performed any portion of the repair work or supplied materials; and

 

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(B) Within fifteen (15) Business Days after receiving Tenant’s request, Landlord shall approve or disapprove Tenant’s request, which approval shall not be unreasonably withheld, delayed, or conditioned by written notice to Tenant. If Landlord approves all or any portion of a request and Landlord has received (and not previously disbursed) insurance proceeds for such costs, then Landlord’s approval shall include a check in the amount approved by Landlord. If Landlord disapproves all or any portion of a request, then Landlord’s notice shall state the reasons for that disapproval. Landlord’s failure to deliver a notice approving or disapproving a request shall be conclusively deemed Landlord’s disapproval of the request.

(C) If any Tenant’s Property is damaged by Casualty during the Term, then Tenant may (in its sole direction) repair and/or replace the same. All proceeds and other amounts payable with respect to Tenant’s Property in connection with any damage thereto by any Casualty shall be the sole and exclusive property of Tenant.

 

11. INSURANCE, HOLD HARMLESS AND INDEMNIFICATION

(a) To the fullest extent permitted by law, Landlord shall not be liable to Tenant for any damage to or loss or theft of any property or for any bodily or personal injury, illness or death of any person in, on or about the Premises arising at any time and from any cause whatsoever. TENANT WAIVES ALL CLAIMS AGAINST LANDLORD ARISING FROM ANY LIABILITY DESCRIBED IN THIS PARAGRAPH 11(A).

(b) TO THE FULLEST EXTENT PERMITTED BY LAW, TENANT HEREBY AGREES TO INDEMNIFY AND DEFEND LANDLORD AGAINST AND HOLD LANDLORD HARMLESS FROM ALL CLAIMS ARISING FROM OR RELATED TO ANY USE OR OCCUPANCY OF THE PREMISES, OR ANY CONDITION OF THE PREMISES, OR ANY DEFAULT IN THE PERFORMANCE OF TENANT’S OBLIGATIONS HEREUNDER, OR ANY DAMAGE TO ANY PROPERTY (INCLUDING PROPERTY OF EMPLOYEES AND INVITEES OF TENANT) OR ANY BODILY OR PERSONAL INJURY, ILLNESS OR DEATH OF ANY PERSON (INCLUDING EMPLOYEES AND INVITEES OF TENANT) OCCURRING IN, ON OR ABOUT THE PREMISES OR ANY PART THEREOF OR ANY PART OF THE BUILDING OR THE LAND CONSTITUTING A PART OF THE PREMISES ARISING AT ANY TIME PRIOR TO THE TERMINATION OF THIS LEASE AND FROM ANY CAUSE WHATSOEVER. THIS PARAGRAPH 11(B) SHALL SURVIVE

 

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THE TERMINATION OF THIS LEASE WITH RESPECT TO ANY DAMAGE, BODILY OR PERSONAL INJURY, ILLNESS OR DEATH OCCURRING PRIOR TO SUCH TERMINATION.

(c) Tenant shall, at all times and during the term of this Lease and at Tenant’s sole cost and expense, obtain and keep in force (i) commercial general liability insurance and excess/umbrella liability, including contractual liability, premises liability, products-completed operations, personal and advertising injury, and fire legal liability, all on an “occurrence” policy form, with a minimum combined limit in the amount of Fifty Million Dollars ($50,000,000) per occurrence for bodily injury to, illness of, or death of persons and damage to property occurring in, on or about the Premises; and (ii) Pollution Legal Liability insurance with limits of Three Million Dollars ($3,000,000) per occurrence and Ten Million Dollars ($10,000,000) aggregate; and if the Premises contains an underground storage tank which is in use or operation (not including any storage tanks which have been abandoned in place), Storage Tank Liability insurance with a minimum limit of One Million Dollars ($1,000,000) per claim. Such insurance shall name the Landlord, any Mortgagee of Landlord of whom Tenant shall have been provided written notice, and any other parties designated by Landlord as additional insureds.

(d) Tenant shall, at all times during the term of this Lease and at Tenant’s sole cost and expense, obtain and keep in force statutory worker’s compensation and employer’s liability insurance with limits of One Million Dollars ($1,000,000) per accident, One Million Dollars ($1,000,000) per employee, and One Million Dollars ($1,000,000) per policy limit, in all states in which the Premises and any other operations of the Tenant are located and any other state in which the Tenant may be subject to any statutory or other liability arising in any manner whatsoever out of the actual or alleged employment of others.

(e) Tenant shall, at all times during the Term of this Lease, at Tenant’s sole cost and expense, obtain and keep in force:

(i) insurance against loss or damage to the Premises by fire and all other risks of physical loss covered by “all-risk” property insurance in an amount not less than the full replacement cost of the Improvements at the Premises (without deduction for depreciation) (excluding foundations and footings), including the cost of debris removal and such customary endorsements as Landlord may reasonably require, including “Replacement Cost” and “Demolition & Increased Cost of Construction”; the property policy (or a separate policy maintained by Tenant) should also include:

a) for each Site, flood insurance for at least the lesser of: (i) $100,000,000, or (ii) the full replacement cost of the Improvements at such Site;

b) for each Site, earth movement insurance for at least the lesser of (i) $100,000,000, or (ii) the full replacement cost of the Improvements at such Site; and

c) terrorism insurance for at least $250,000,000 in the aggregate for all North American sites of Tenant and its Affiliates; provided, however, that if the federal backstop provision, Terrorism Risk Insurance Act of 2002 and extension of 2005 (TRIA) is not extended beyond December 31, 2007, then

 

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Tenant shall be required to obtain terrorism insurance in sufficient amounts as reasonably determined by Landlord (which shall in no event exceed the $250,000,000 aggregate limit set forth above for all of Tenant’s North American sites), but only to the extent that: (i) such terrorism insurance is then available to Tenant at a commercially reasonable cost, and (ii) such terrorism insurance is then customarily maintained by operators of properties similar to the Premises;

(ii) boiler and machinery insurance covering pressure vessels, air tanks, boilers, machinery, pressure piping, heating, ventilation and air conditioning equipment, and elevator and escalator equipment, provided the Premises contain equipment of such nature and insurance against loss of occupancy or use arising from any breakdown of any such items, in such amounts as Landlord may reasonably determine;

(iii) business interruption insurance insuring that the Fixed Rent will be paid to Landlord for up to one year if the Premises are destroyed or rendered untenantable by any cause insured against (it being understood that the existence of such insurance does not reduce Tenant’s obligation to pay Fixed Rent without diminution), and in the event of termination of this Lease due to any such insured cause, pay to Landlord one year’s Fixed Rent; and

(iv) insurance in amounts and against such other risks as Landlord or Mortgagee may reasonably require and against such risks as are customarily insured against by operators of similar properties.

(f) In addition, during any period of demolition or new construction or improvements, Tenant shall maintain the following insurance: (i) completed value, non-reporting builders risk insurance for the Premises, including all building materials thereon, covering all risk including collapse during construction, water damage, flood, earthquake and transit coverage, not less than the cost of the construction of the Improvements or alterations; and (ii) general liability, including contractual liability and workers compensation, as required by statute.

(g) All insurance required to be maintained by Tenant under this paragraph 11 and all renewals thereof shall be issued by companies qualified to do business in the states where the Premises are located and having an A.M. Best financial rating of “A: X” or better; or S&P claims paying ability rating of at least “A”. All deductible amounts shall be in commercially reasonable amounts, it being agreed that, as of the date hereof, deductibles in the amount of $250,000 for each policy of insurance required hereunder shall be deemed to be commercially reasonable. Each policy to be maintained by Tenant shall expressly provide that the policy shall not be canceled or adversely altered without thirty (30) days’ prior written notice to Landlord and any Mortgagee of whom Tenant has been provided written notice and shall remain in effect notwithstanding any such cancellation or adverse alteration until such notice shall have been given to Landlord and such period of thirty (30) days shall have expired. All insurance under this paragraph 11 to be maintained by Tenant shall designate Landlord, any Mortgagee of whom Tenant has been provided written notice, and any other parties designated by Landlord as an additional insured and/or loss payee (as appropriate given the nature of the policy, and only if possible given the nature of such policy (for example, but not limitation, such parties shall not be required to be named as additional insureds or loss payees under Tenant’s workers’ compensation and employer’s liability insurance)), and shall be primary and noncontributing with any insurance which may be carried by Landlord. Tenant may carry such insurance under

 

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“blanket” policies. Tenant shall deliver to Landlord a certificate of such insurance in customary form, together with a copy of the declaration page for each such policy and all endorsements specifically applicable to this/these locations, or upon request a copy of each insurance policy. Renewal certificates should be provided no later than the expiration date of each policy. If Tenant fails to provide to Landlord the policies of insurance required by this Section, Landlord may, but shall not be obligated to, procure such insurance for such risks covering Landlord’s interest, and Tenant will pay all premiums thereon within ten (10) Business Days after demand by Landlord, and until such payment is made by Tenant, the amount of all such premiums shall bear interest at the Overdue Rate.

(h) Tenant and Landlord both mutually agree to waive all rights of subrogation against each other on insurance required under this paragraph 11. Additionally, both Landlord and Tenant, as applicable, either prior to or immediately after the Commencement Date, procure from each of their respective insurers providing the insurance required by this paragraph 11, a waiver of all rights of subrogation which such insurer might otherwise, if at all, have to any claims against Landlord or Tenant, as applicable. Tenant shall have the right to control the claims adjustment process for any losses under all policies of property insurance required by this Lease and Landlord shall have the right to participate in such process without (so long as no Event of Default is then continuing) interference to Tenant. If Tenant fails to manage the claims process losses in a diligent manner, Landlord may, upon two (2) Business Days’ notice, assume control of the claims adjustment process.

(i) Tenant shall provide Landlord with all Property Loss Control Reports for the leased Premises completed by Tenant’s property insurance carrier or any third party consultant. In addition, Tenant will provide Landlord with all responses to recommendations listed in the Loss Control Reports.

(j) During the continuance of any Event of Default, Tenant shall pay to Landlord on the first day of each Calendar Quarter an amount equal to one fourth (1/4) of the premiums for the insurance required by this paragraph 11, as reasonably estimated by Landlord on the basis of bills and estimates thereof. If such premium payments shall have been made by Tenant, such amounts shall be held by Landlord or Mortgagee, without interest, and shall not be deemed to be trust funds and may be commingled with the general funds of Landlord or Mortgagee. Landlord shall apply such amounts to the payment of the insurance premiums with respect to which such amounts were paid, subject to any rights of Mortgagee thereto. Landlord shall make no charge for holding and applying such amounts. If at any time the amount on deposit pursuant to this paragraph 11(j) shall be less than the amount deemed necessary by Landlord to pay such premiums as they become due, Tenant shall pay to Landlord the amount necessary to make the deficiency within fifteen (15) Business Days after notice from Landlord requesting payment thereof. Upon the expiration or termination of the term of this Lease (other than as a result of an Event of Default), Landlord shall promptly refund, and cause its Mortgagee to refund, to Tenant any amount held by Landlord or its Mortgagee pursuant to this paragraph 11.

 

12. COMPLIANCE WITH LAWS, COVENANTS

(a) Tenant shall, throughout the Term, promptly comply or cause the Premises to comply with or remove or cure any violation of the Premises of, any and all present and future laws including the Americans with Disabilities Act of 1990, as the same may be amended from

 

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time to time, ordinances (zoning or otherwise), orders, rules, regulations and requirements of all Federal, State, municipal and other governmental bodies having jurisdiction over the Premises and the appropriate departments, commissions, boards and officers thereof, and the orders, rules and regulations of the Board of Fire Underwriters where the Premises are situated, or any other body now or hereafter constituted exercising lawful or valid authority over the Premises (collectively, “ Legal Requirements ”), or any portion thereof, or exercising authority with respect to the use or manner of use of the Premises, and whether the compliance, curing or removal of any such violation and the costs and expenses necessitated thereby shall have been foreseen or unforeseen, ordinary or extraordinary, and whether or not the same shall be presently within the contemplation of Landlord or Tenant or shall involve any change in governmental policy, or require structural or extraordinary repairs, alterations or additions by Tenant and irrespective of the amount of the costs thereof. Throughout the Term, Tenant, at its sole cost and expense, shall comply with all agreements, contracts, easements, restrictions, reservations or covenants, if any, running with the land or hereafter created by Tenant or consented to, in writing, by Tenant or requested, in writing, by Tenant (it being agreed that Tenant shall not, for purposes of this paragraph, be deemed to have consented to any Mortgage by executing and/or delivering a Subordination, Non-Disturbance and Attornment Agreement or other documents or instruments requested or required by any Mortgagee). Throughout the Term, Tenant shall also comply with, observe and perform all provisions and requirements of all Permitted Encumbrances (including performing all of Landlord’s obligations as the owner of the Premises thereunder, including paying all costs and expenses and maintaining all insurance coverages required thereby to be paid, maintained or carried by the owner of each Site respectively, if any, and Tenant hereby indemnifies and agrees to defend Landlord from and hold Landlord harmless from any and all Claims made against Landlord for non-compliance or breach of any obligation of the owner of Premises each Site respectively under any Permitted Encumbrances) and all policies of insurance at any time in force with respect to the Premises and required to be obtained and maintained by Tenant under the terms of paragraph 11 hereof and shall comply with all development permits issued by governmental authorities issued in connection with development of the Premises; provided , however , Landlord agrees, upon request of Tenant, to sign promptly and without a charge therefor (except as provided in the final sentence of this subparagraph) any applications or filings (1) for such licenses and permits as may be required by Legal Requirements for the conduct, operation or restoration of the Premises and the business to be conducted therein in accordance with the terms hereof, and (2) for the maintenance of the existing zoning for each Site to continue to permit Tenant’s use thereof, in both cases where the signature of Landlord is required by Legal Requirements in force at the time. All costs incurred by Landlord in connection with obtaining any such licenses and permits and zoning matters shall be borne by Tenant.

(b) If Tenant shall at any time fail to pay any Imposition in accordance with the provisions of paragraphs 6 or 26, or to take out, pay for, maintain and deliver any of the insurance policies or certificates of insurance provided for in paragraph 11, or shall fail to make any other payment or perform any other act on its part to be made or performed hereunder, then Landlord, after five (5) Business Days prior written notice to Tenant (or without notice in situations where Landlord determines that delay is likely to cause harm to Landlord’s interest in the Premises), and without waiving or releasing Tenant from any obligation of Tenant contained in this Lease, may, but shall be under no obligation to do so,

(i) pay any Imposition payable by Tenant pursuant to this Lease; or

 

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(ii) make any other payment or perform any other act on Tenant’s part to be paid or performed hereunder which Tenant shall not have performed within the time required therefor, except that any time permitted to Tenant to perform any act required by this paragraph that cannot reasonably be performed within such time shall be extended for such reasonable period, not to exceed one year, as may be necessary to effectuate such performance, provided that throughout such time Tenant is continuously, diligently and in good faith prosecuting such performance.

Landlord may enter upon the Premises for any such cure purpose set forth in this paragraph 12(b) and take all such action in or on the Premises as may be necessary therefor pursuant to this paragraph 12(b) (subject in all events to paragraph 7(e) above and paragraph 18 below). All sums, reasonable under the circumstances, actually so paid by Landlord and all costs and expenses, including attorney’s fees, incurred by Landlord in connection with the performance of any such act, together with interest thereon at the Overdue Rate and an administrative fee equal to four percent (4%) of all such costs and expenses, shall be paid by Tenant to Landlord within ten (10) days after written demand and submission of reasonable evidence of such expenditures. Landlord shall not be limited in the proof of any damages which Landlord may claim against Tenant arising out of or by reason of Tenant’s failure to provide and keep in force insurance as aforesaid, to the


 
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