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LEASE BETWEEN BELLINGHAM MECHANIC, LLC A MASSACHUSETTS LIMITED LIABILITY COMPANY LANDLORD, AND 99 COMMISSARY LLC A DELAWARE LIMITED LIABILITY COMPANY TENANT AND O'CHARLEY'S INC. A TENNESSEE CORPORATION

Lease Agreement

LEASE              BETWEEN     BELLINGHAM MECHANIC, LLC          A MASSACHUSETTS LIMITED LIABILITY COMPANY
            LANDLORD,   AND
  99 COMMISSARY LLC
                      A DELAWARE LIMITED LIABILITY COMPANY                                    TENANT
                                       AND
                                O'CHARLEY'S INC.
                             A TENNESSEE CORPORATION | Document Parties: O'CHARLEY'S INC. | 99 COMMISSARY LLC | BELLINGHAM MECHANIC, LLC You are currently viewing:
This Lease Agreement involves

O'CHARLEY'S INC. | 99 COMMISSARY LLC | BELLINGHAM MECHANIC, LLC

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Title: LEASE BETWEEN BELLINGHAM MECHANIC, LLC A MASSACHUSETTS LIMITED LIABILITY COMPANY LANDLORD, AND 99 COMMISSARY LLC A DELAWARE LIMITED LIABILITY COMPANY TENANT AND O'CHARLEY'S INC. A TENNESSEE CORPORATION
Date: 3/28/2005
Industry: Restaurants    

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<PAGE>

 

                                                                   EXHIBIT 10.63

 

                                      LEASE

 

                                     BETWEEN

 

                            BELLINGHAM MECHANIC, LLC

                    A MASSACHUSETTS LIMITED LIABILITY COMPANY

 

                                    LANDLORD,

 

                                       AND

 

                                99 COMMISSARY LLC

                      A DELAWARE LIMITED LIABILITY COMPANY

 

                                      TENANT

                                       AND

 

                                O'CHARLEY'S INC.

                             A TENNESSEE CORPORATION

 

                                    GUARANTOR

 

<PAGE>

 

                                 TABLE OF CONTENTS

 

<TABLE>

<S>                                                    <C>

1.     USE AND RESTRICTIONS ON USE.................      1

2.     TERM........................................      2

3.     RENT........................................      3

4.     ADDITIONAL RENT.............................      5

5.     TENANT'S RIGHT TO TERMINATE.................      8

6.     LANDLORD'S WORK/ALTERATIONS.................      8

7.     REPAIR......................................     10

8.     LIENS.......................................     11

9.     ASSIGNMENT AND SUBLETTING...................     11

10.    INDEMNIFICATION.............................     13

11.    INSURANCE...................................     13

12.    WAIVER OF SUBROGATION.......................     14

13.    SERVICES AND UTILITIES......................     14

14.    HOLDING OVER................................     15

15.    SUBORDINATION...............................     15

16.    RULES AND REGULATIONS.......................     15

17.    REENTRY BY LANDLORD.........................     15

18.    DEFAULT.....................................     16

19.    REMEDIES....................................     17

20.    TENANT'S BANKRUPTCY OR INSOLVENCY...........     20

21.    QUIET ENJOYMENT.............................     21

22.    DAMAGE BY FIRE, ETC.........................     21

23.    EMINENT DOMAIN..............................     22

24.    SALE BY LANDLORD............................     23

25.    ESTOPPEL CERTIFICATES.......................     23

26.    SURRENDER OF PREMISES.......................     23

27.    NOTICES.....................................     24

28.    DEFINED TERMS AND HEADINGS/FORCE MAJEURE....     24

29.    TENANT'S AUTHORITY..........................     25

30.    COMMISSIONS.................................     25

31.    TIME AND APPLICABLE LAW.....................     25

32.    SUCCESSORS AND ASSIGNS......................     25

33.    ENTIRE AGREEMENT............................     25

34.    EXAMINATION NOT OPTION......................     25

35.    RECORDATION.................................     25

36.    LIMITATION OF LANDLORD'S LIABILITY..........     25

37.    ACCESS......................................     26

38.    LANDLORD'S COMPLIANCE WITH LAWS.............     26

39.    SIGNAGE.....................................     26

</TABLE>

 

EXHIBIT A - PREMISES

EXHIBIT A-1 - LAND

EXHIBIT B - LANDLORD'S IMPROVEMENTS

EXHIBIT C - MODIFIED SITE PLAN

EXHIBIT D - FORM OF SNDA

EXHIBIT E - RULES AND REGULATIONS

EXHIBIT F - FORM OF GUARANTY

 

                                         i

<PAGE>

 

                                 REFERENCE PAGES

 

BUILDING:                 1-8 Mechanic Street

                         Bellingham, Massachusetts 02019

 

LANDLORD:                 BELLINGHAM MECHANIC, LLC, a

                         Massachusetts limited liability company

 

LANDLORD'S ADDRESS:       800 Technology Center Drive, Stoughton,

                         MA 02072

 

LEASE REFERENCE DATE:     December 13, 2004

 

TENANT:                   99 COMMISSARY LLC,

                         a Delaware limited liability company

 

TENANT'S ADDRESS:         3038 Sidco Drive

                         Nashville, TN 37204

                         Attn: Gregory L. Burns, Chairman and CEO

                         Tel.: 615-256-8500

                         Fax: 615-782-5030

 

                         With a copy to:

 

                         Ninety-Nine Restaurant & Pub

                         160 Olympia Avenue

                         Woburn, MA 01804

                         Attn: Executive Vice President of Real

                          Estate

                         Tel. 781-933-8999

                         Fax: 781-933-0821

 

                         and

 

                         Joseph R. Tarby, III, Esq.

                         Murtha Cullina LLP

                          600 Unicorn Park Drive

                         Woburn, MA 01801

                         Tel. 781-933-5505

                         Fax: 781-933-1530

 

                                        i

<PAGE>

 

PREMISES                  The warehouse and office and showroom areas shown as

IDENTIFICATION:           "NINETY-NINE" on the plan attached hereto as Exhibit A

                         ("Plan") in the building ("Building") commonly known

                         as the Bellingham Business Center and numbered as [1-8]

                         Mechanic Street, Bellingham, Massachusetts, together

                         with the use, in common with others, of any common

                         areas of the Building, including, but not limited to,

                          entryways, sidewalks, driveways and parking areas. The

                         Building has 239 parking spaces available, or 1.13

                         parking spaces per 1,000 rentable square feet of the

                         Building. The land ("Land") upon which the Building is

                         located the Building and the parking spaces are shown

                         on Exhibit A-1 attached hereto.

 

PREMISES RENTABLE         Approximately 78,000 sq. ft. (determined by Landlord's

AREA:                     architect, after completion of perimeter walls, using

                         ANSI/BOMA Z65.1 - 1996 Standard).*

 

PERMITTED USE:            Storage, office, processing of food products,

                         distribution of restaurant goods and supplies and

                         related products and uses ancillary thereto. SCHEDULED

                         DELIVERY DATE: July 25, 2005 (or on such earlier date

                         as Landlord can complete Landlord's Work)

 

DELIVERY DATE:            The date established under Section 2.1.

 

RENT COMMENCEMENT         The date established under Section 2.2.

DATE

 

TERM OF LEASE:            Ten (10) years plus any fraction of a month in which

                          the Delivery Date shall occur if-the Delivery Date

                         shall not occur on the first day of the month (unless

                         sooner terminated pursuant to the Lease).

 

TERMINATION DATE:         Subject to the provisions of this Lease, the date (at

                         5:00 p.m.) which is 120 months, plus any fraction of a

                         month at the commencement of the Term, from the

                         Delivery Date

 

                                       ii

<PAGE>

 

OPTION(S) TO EXTEND:      Two (2) option to extend the Term for five (5) years,

                         as set forth in Section 2.4

 

<TABLE>

<CAPTION>

                           Annual Rent    Monthly Installments

                           -----------    --------------------

<S>                         <C>            <C>

ANNUAL RENT (ARTICLE 3):

YEARS 1 THROUGH 5            $687,960*           $57,330*

YEARS 6 THROUGH 10           $726,960*           $60,580*

</TABLE>

 

TENANT'S PROPORTIONATE SHARE:           37.14%*

 

BUILDING RENTABLE AREA:                210,000 square feet

 

LANDLORD'S CONSTRUCTION                William Conroy

REPRESENTATIVE:

 

TENANT'S CONSTRUCTION                  Thomas Williams

REPRESENTATIVE:

 

REAL ESTATE BROKER(S) DUE              Richards Barry Joyce & Partners and

COMMISSION:                            Colebrook Realty Services, Inc.

 

The Reference Page information is incorporated into and made a part of the

Lease. In the event of any conflict between any Reference Page information and

the Lease, the Lease shall control. This Lease includes Exhibits A through F all

of which are made a part of this Lease.

 

LANDLORD:                              TENANT:

 

BELLINGHAM MECHANIC, LLC               99 COMMISSARY LLC

 

By: /s/                                 By: /s/ Gregory L. Burns

    -------------------------              --------------------------------------

 

Title: Manager                         Title: Chief Manager/President

 

Dated: December 17, 2004               Dated: December 16, 2004

 

*Subject to possible adjustment per above measurement of Premises

 

                                       iii

<PAGE>

 

                                      LEASE

 

      By this Lease Landlord leases to Tenant and Tenant leases from Landlord

the Premises described on the Reference Page. The Reference Page, including all

terms defined thereon, is incorporated as part of this Lease.

 

1. USE AND RESTRICTIONS ON USE.

 

      1.1 The Premises are to be used solely for the Permitted Use stated on the

Reference Page. Tenant shall not do or permit anything to be done in or about

the Premises which will be used for any unlawful purpose. Tenant shall not do,

permit or suffer in, on, or about the Premises, the commission of any waste.

Tenant shall comply with all governmental laws, ordinances and regulations

applicable to the use of the Premises and its occupancy and shall promptly

comply with all governmental orders and directions for the correction,

prevention and abatement of any violations in or upon, or in connection with,

the Premises, all at Tenant's sole expense, but excluding those responsibilities

of Landlord pursuant to Sections 6.1, 7.1 and 38 hereof. Tenant shall not do or

permit anything to be done on or about the Premises or bring or keep anything

into the Premises which will in any way increase the rate of, invalidate or

prevent the procuring of any insurance protecting against loss or damage to the

Building or any of its contents by fire or other casualty or against liability

for damage to property or injury to persons in or about the Building or any part

thereof.

 

      1.2 Tenant shall not, and shall not direct, suffer or permit any of its

agents, contractors, employees, licensees or invitees to at any time handle,

use, manufacture, store or dispose of in or about the Premises or the Building

any (collectively "Hazardous Materials") flammables, explosives, radioactive

materials, hazardous wastes or materials, toxic wastes or materials, or other

similar substances, petroleum products or derivatives or any substance subject

to regulation by or under any federal, state and local laws and ordinances

relating to the protection of the environment or the keeping, use or disposition

of environmentally hazardous materials, substances, or wastes, presently in

effect or hereafter adopted, all amendments to any of them, and all rules and

regulations issued pursuant to any of such laws or ordinances (collectively

"Environmental Laws"), nor shall Tenant suffer or permit any Hazardous Materials

to be used in any manner not fully in compliance with all Environmental Laws, in

the Premises or the Building and appurtenant land or cause the environment to

become contaminated with any Hazardous Materials. Notwithstanding the foregoing,

Tenant may (i) handle, store, use or dispose of products containing small

quantities of Hazardous Materials (such as aerosol cans containing insecticides,

toner for copiers, solvents, paints, paint remover and the like) to the extent

customary and necessary for the use of the Premises for general office purposes

and in connection with the Permitted Use; (ii) provide on-site, mobile fueling

for Tenant's vehicles, subject to any approvals which may be required by the

Town of Bellingham, and (iii) wash its vehicles, subject to any necessary

approvals from the Town of Bellingham; in each case provided that Tenant shall

always handle, store, use, and dispose of Hazardous Materials in a safe and

lawful manner and never allow such Hazardous Materials to contaminate the

Premises, Building or appurtenant land or the environment in violation of

Environmental Laws. Tenant shall protect, defend, indemnify and hold each and

all of the Landlord Entities (as defined in costs and reasonable attorney's

fees) incurred by reason of any failure of Tenant to fully comply with all

applicable Environmental Laws, or the presence, handling, use or disposition in

or from

 

<PAGE>

 

the Premises of any Hazardous Materials (even though permissible under all

applicable Environmental Laws or the provisions of this Lease) caused by Tenant

or its agents or invitees except to the extent of Landlord's obligations

pursuant to Section 38 hereof, or by reason of any failure of Tenant to keep,

observe, or perform any provision of this Section 1.2. Landlord represents that

the Land is currently free of environmental contamination (and in compliance

with all Environmental Laws) and shall indemnify Tenant and be responsible for

any costs of remediation of any environmental contamination, should any be

discovered to have been existing at the Land as of the date hereof.

 

      1.3 Landlord shall provide Tenant, as appurtenant to the Premises and

without extra charge, (i) with the use, in common with others in the Building,

of the common area parking servicing the Premises which is a ratio of at least

1.13 parking spaces for each 1,000 rentable square feet of the Building. Tenant

shall have truck access to drive around the Building and park at its loading

docks. Landlord agrees to proceed as soon as possible and to use diligent

efforts to obtain a modification to the site plan approval and any other permits

necessary to change the truck parking as shown on the Modified Site Plan

attached hereto as Exhibit C and shall allow Tenant the opportunity to

participate in this process.

 

2. TERM.

 

      2.1 The Term of this Lease shall begin on the delivery date ("Delivery

Date") which shall be the later to occur of (a) the Scheduled Delivery Date

shown on the Reference Page, and (b) the date when Landlord shall tender

possession of the Premises to Tenant with Landlord's Work described on Exhibit B

attached hereto substantially completed (but for punch list items that do not

materially interfere with Tenant's ability to use the Premises for the Permitted

Use) and all mechanical, plumbing and utility systems in working order and

available for Tenant's immediate use, and Landlord shall have provided Tenant

with a certificate of occupancy (or temporary certificate of occupancy) from the

Town of Bellingham, Massachusetts with respect to the Premises. Landlord agrees

to use reasonable and diligent efforts to obtain a certificate of occupancy and

deliver the Premises to the Tenant. As soon as it shall be determined, Landlord

and Tenant shall execute a memorandum in recordable form setting forth the

actual Delivery Date and Termination Date. In the event the Delivery Date shall

not have occurred by August 25, 2005 for any reason other than the fault of

Tenant, Tenant shall receive a credit against its first rental payments due

hereunder at the rate of $1,884.82 for each two (2) days by which the Delivery

Date is extended beyond August 25, 2005. If the Delivery Date shall not have

occurred by September 25, 2005 for any reason other than the fault of Tenant,

Tenant shall receive a credit against its first rental payment due hereunder at

the rate of $1,884.82 for each day by which the Delivery Date is extended beyond

September 25, 2005. If the Delivery Date shall not have occurred on or before

December 10, 2005, Tenant shall have the right to terminate this Lease upon ten

(10) days written notice to Landlord.

 

      2.2 Notwithstanding any provision of this Lease to the contrary, Annual

Rent and all other charges due under this Lease shall begin on the Rent

Commencement Date which shall be the Delivery Date.

 

      2.3 After the Lease Reference Date, and only after Landlord's prior

consent and scheduled so as not to interfere with Landlord's Work at least four

(4) weeks prior to the

 

                                        2

<PAGE>

 

Delivery Date, Landlord shall afford Tenant reasonable access to the Premises in

order for Tenant to install telecommunication (which may include a satellite

dish(es) upon the roof of the Building, where designated by Landlord, at

Tenant's expense and responsibility for any damage which the installation or

maintenance of the same may cause to the roof of the Building) and computer

wiring and equipment and other furniture, fixtures, warehouse racking and

equipment. In the event Landlord shall permit Tenant to occupy the Premises

prior to the Delivery Date, such occupancy shall be subject to all the

provisions of this Lease other than the payment of Rent and Additional Rent and

shall not advance the Termination Date.

 

      2.4 Option to Extend. Tenant shall have two (2) options to extend the Term

for a period of five (5) years each following the end of the existing Term, so

long as no uncured Event of Default by Tenant exists during the period from the

time of the exercise of this option until the end of the Term. Such options may

be exercised by notice from Tenant to Landlord given not less than twelve (12)

months prior to the expiration of the Term. Upon the giving of such notice, this

Lease and the Term hereof shall automatically be extended for five (5) years

without the necessity for the execution of any other instrument in confirmation

thereof except for a document memorializing the Annual Rent established as set

forth in Section 3.3 below for the extended Term and an amended notice of lease

to be signed by the parties suitable for recording that Tenant may register or

record at its cost and expense. Except for the rent payable during the option

period, which shall be determined in the manner provided in Section 3.3 below,

and the fact that there shall be no further option to extend, each extension

shall be upon all the same terms, conditions and provisions as contained in this

Lease. Whenever the context shall not be inconsistent therewith, references in

this Lease to the Term hereof shall be deemed to include the option period for

which the original Term shall then be so extended.

 

      2.5 Contiguous Space Expansion Option. Landlord agrees that it will not,

during the Term of this Lease, lease any space in the Building which is

contiguous to the Premises ("Contiguous Space") without first offering the same

to Tenant upon the same terms and conditions as Landlord would be willing to

lease to a third party. If Landlord intends to lease Contiguous Space, Landlord

shall first provide written notice of such terms and conditions to Tenant

("Landlord Notice") and Tenant shall have a period of ten (10) days from receipt

of Landlord's Notice within which to agree to lease such Contiguous Space upon

the exact same terms and conditions as set forth in Landlord's Notice. If Tenant

shall notify Landlord of its desire to lease the Contiguous Space within such

ten (10) day period, then this Lease shall be modified to include the Contiguous

Space upon the same terms and conditions as set forth in this Lease, except as

the same may be modified with respect to the Contiguous Space by the terms set

forth in Landlord's Notice. If Tenant shall fail to accept the offer contained

in Landlord's Notice within such ten (10) day period, then Landlord shall be

free to lease the Contiguous Space to a third party on terms and conditions no

more favorable to any third party than those set forth in Landlord's Notice.

 

3. RENT.

 

      3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time

to time by paying the Monthly Installment of Rent then in effect on or before

the first day of each full calendar month during the Term, except that the first

month's rent shall be paid upon the Delivery Date. The Monthly Installment of

Rent in effect at any time shall be one-twelfth of the

 

                                        3

<PAGE>

 

Annual Rent in effect at such time. Rent for any period during the Term which is

less than a full month shall be a prorated portion of the Monthly Installment of

Rent based (except as otherwise set forth in this Lease) upon a thirty (30) day

month. Said rent shall be paid to Landlord, without deduction or offset and

without notice or demand, except as may be required by Section 19.7, at the

Landlord's address, as set forth on the Reference Page, or to such other person

or at such other place as Landlord may from time to time designate in writing.

 

      3.2 Tenant recognizes that late payment of any rent or other sum due under

this Lease will result in administrative expense to Landlord, the extent of

which additional expense is extremely difficult and economically impractical to

ascertain. Tenant therefore agrees that if rent or any other sum is not paid

within seven (7) days of the date when due and payable pursuant to this Lease, a

late charge shall be imposed in an amount equal to four percent (4%) of the

unpaid rent or other payment. The amount of the late charge to be paid by Tenant

shall be reassessed and added to Tenant's obligation for each successive monthly

period until paid. The provisions of this Section 3.2 in no way relieve Tenant

of the obligation to pay rent or other payments on or before the date on which

they are due, nor do the terms of this Section 3.2 in any way affect Landlord's

remedies pursuant to Article 19 in the event said rent or other payment is

unpaid after date due.

 

      3.3 If Tenant shall extend the Term pursuant to Section 2.4 above, Tenant

shall pay Annual Rent during each extension of the Term equal to the greater of

(a) Market Rent, as defined below, or (b) the Annual Rent in effect upon the

last day of the Term existing prior to the extension period in question.

 

      "Market Rent" shall be computed for the option period at the then

effective current rentals being charged to new tenants in buildings of

comparable type, build-out and quality to that of the Premises, in the same

rental market area as that of the Premises, taking into account and giving

effect to, in determining comparability, without limitation, such considerations

as size, location of premises, lease term, whether or not there will be a

brokerage commission charged, and Real Estate Tax and Operating Expense charges

to the tenant.

 

      Landlord and Tenant shall use best efforts to agree on the Market Rent no

later than thirty (30) days after Landlord receives Tenant's notice of its

intent to extend the Term. In the event Landlord and Tenant cannot so agree,

Landlord shall provide Tenant with notice as to its designation of Market Rent

("Landlord's Designation") for the five year option period in question no later

than thirty (30) days after receiving Tenant's notice of its intention to extend

the Term and shall furnish comparable data in support of such designation. If

Tenant disagrees with Landlord's Designation of the Market Rent, then Tenant

shall have the right, by written notice given within thirty (30) days after

Tenant's receipt of Landlord's Designation ("Tenant's Arbitration Notice"), to

submit the determination of Market Rent to arbitration as follows. Market Rent

shall be determined by appraisers, one to be chosen by Tenant, one to be chosen

by Landlord, and a third to be selected, if necessary, as below provided. All

appraisers selected under this paragraph shall be experienced, M.A.I. real

estate appraisers with at least 10 years experience with properties in the

Greater Boston Area and shall not have been employed by the party choosing such

appraiser in the prior five (5) years. Within twenty-one (21) days after

Tenant's Arbitration Notice, the parties shall each designate its own appraiser

and notify the other of its chosen appraiser. Unless such two appraisers shall

have reached a unanimous

 

                                        4

<PAGE>

 

decision within thirty (30) days after their designation, then they shall so

notify the then President of the Greater Boston Real Estate Board and request

him or her to select an impartial third appraiser to act hereunder. Such third

appraiser shall receive submittals of the determination of Market Rent from each

of Landlord's and Tenant's appraisers with accompanying data to support their

determination. Within fifteen (15) days after receipt of such information from

Landlord's and Tenant's appraisers, the third appraiser shall determine Market

Rent only by selecting one or the other of the two appraisals without

modification. The decision of the third appraiser as to which appraisal the

third appraiser believes to be closest to Market Rent shall be final and binding

upon the parties. Landlord and Tenant shall each bear the expense of their own

appraiser and shall bear the expense of the third appraiser (if any) equally.

 

4. ADDITIONAL RENT.

 

      4.1 This Lease is a so-called "triple net" lease. For the purpose of this

Article 4, the following terms are defined as follows:

 

            4.1.1 LEASE YEAR: Each calendar year falling partly or wholly within

the Term.

 

             4.1.2 OPERATING EXPENSES: All direct costs of operation,

maintenance, repair and management of the Building (excluding all equipment

related to Tenant's HVAC and refrigeration and freezer areas which shall be at

Tenant's sole expense), as determined in accordance with generally accepted

accounting principles, including the following costs by way of illustration, but

not limitation: water and sewer charges; insurance charges of or relating to all

insurance policies and endorsements deemed by Landlord to be reasonably

necessary or desirable and relating in any manner to the protection,

preservation, or operation of the Building or any part thereof; utility costs,

including, but not limited to, the cost of heat, light, power, steam, gas, and

waste disposal (but not the wiring of electricity to the Premises or to any

other tenant space); the cost of security and alarm services (including any

central station signaling system); window cleaning costs; maintenance labor

costs; costs and expenses of managing the Building, including a management fee

not to exceed three (3%) percent of the gross annual income of the Building;

heating, ventilation and air conditioning maintenance costs; material costs;

equipment costs including the cost of maintenance, repair and service agreements

and rental and leasing costs; purchase costs of equipment other than capital

items; tool costs; licenses, permits and inspection fees; wages and salaries;

employee benefits and payroll taxes; accounting fees; any sales, use or service

taxes incurred in connection therewith. Operating Expenses shall not include

janitorial services, which are to be provided by Tenant to the Premises,

depreciation or amortization of the Building or equipment in the Building except

as provided herein, loan principal payments, costs of alterations of tenants'

premises, leasing commissions, interest expenses on long-term borrowings,

advertising costs or management salaries for executive personnel, all costs and

expenses incurred in connection with leasing space in the Building, including,

but not limited to, advertising and promotional expenses and real estate

brokerage commissions; legal fees incurred in leasing or in disputes with

tenants; cost of construction allowances provided to other tenants; interest or

principal payments on any mortgage or deed of trust or any ground lease payments

or any other financing costs or fees; any cost or expenditure for which Landlord

is reimbursed; costs of any services furnished to other tenants but which

Landlord does not make available to Tenant or is available to Tenant only for an

additional direct charge; any expense resulting from the negligence of Landlord,

its agents,

 

                                        5

<PAGE>

 

contractors or employees; costs recoverable by Landlord under its insurance

policies; costs resulting from defects in the design or construction of the

Building; cost of construction of new tenant or common area space in the

Building; attorneys fees, costs and disbursements incurred in connection with

matters relating to the formation of Landlord as an entity and maintaining its

continued existence as an entity; or costs resulting from Landlord's breach of

this Lease or imposed upon Landlord by any governmental authority as a result of

the violation of any law, statute or ordinance by Landlord or its agents or

employees. In addition, Landlord shall be entitled to amortize and include as an

additional rental adjustment: (i) an allocable portion of the cost of capital

improvement items which are reasonably calculated to reduce Operating Expenses;

(ii) fire sprinklers and suppression systems and other life safety systems

required by changes in the law after the commencement of the Term; and (iii)

other capital expenses which are required under any governmental laws,

regulations or ordinances which were not applicable to the Building at the time

it was constructed. All such costs shall be amortized over the reasonable life

of such improvements in accordance with such reasonable life and amortization

schedules as shall be determined by Landlord in accordance with generally

accepted accounting principles, with interest on the unamortized amount at one

percent (1%) in excess of the prime lending rate announced from time to time as

such by Bank of America, N.A. Landlord estimates that the initial Operating

Expenses shall be approximately $1.50/square foot, based upon similar buildings

which Landlord owns or manages.

 

            4.1.3 TAXES: Real estate taxes and any other taxes, charges and

assessments which are levied with respect to the Land and Building, or with

respect to any improvements, fixtures and equipment or other property of

Landlord, real or personal, located in the Building and used in connection with

the operation of the Building and said Land, any payments to any ground lessor

in reimbursement of tax payments made by such lessor; and all reasonable fees,

expenses and costs incurred by Landlord in investigating, protesting, contesting

or in any way seeking to reduce or avoid increase in any assessments, levies or

the tax rate pertaining to any Taxes to be paid by Landlord in any Lease Year.

Landlord agrees to seek an abatement of Taxes if requested to do so by tenants

occupying at least 51% of the Building (including the Premises), provided, if so

requested, any cost of obtaining the same will be borne by the Tenants of the

Building in their respective Proportionate Shares. If Landlord secures an

abatement or refund of any Taxes, Tenant shall receive its proportionate share

of the amount of such abatement or refund (i.e., the net amount remaining after

paying all reasonable costs and expenses of securing the abatement or refund,

including reasonable attorneys' fees) as a credit to be applied by Landlord

against rent next becoming due (or, if no further rent is due from Tenant, by a

cash payment by Landlord to Tenant). Landlord's obligation to pay such abatement

or refund to Tenant shall survive the expiration or termination of this Lease.

Taxes shall also include any substitute or additional tax on real estate or the

profits therefrom, whether or not now customary or within the contemplation of

the parties to this Lease: (a) upon, allocable to, or measured by or on the

gross or net rent payable under this Lease, including without limitation any

gross income tax or excise tax levied by the State, any political subdivision

thereof, or the Federal Government with respect to the receipt of such rent; (b)

upon or with respect to the possession, leasing, operation, management,

maintenance, alteration, repair, use or occupancy of the Premises or any portion

thereof, including any sales, use or service tax imposed as a result thereof;

(c) upon or measured by the Tenant's gross receipts or payroll or the value of

Tenant's equipment, furniture, fixtures and other personal property of Tenant or

leasehold improvements, alterations or additions located in the Premises; or (d)

upon this transaction or any document to which Tenant

 

                                        6

<PAGE>

 

is a party creating or transferring any interest of Tenant in this Lease or the

Premises. In addition to the foregoing, Tenant agrees to pay, before

delinquency, any and all taxes levied or assessed against Tenant and which

become payable during the term hereof upon Tenant's equipment, furniture,

fixtures and other personal property of Tenant located in the Premises. Taxes

shall not include any corporate franchise, or estate, inheritance, succession,

transfer, gift, profit or net income tax or capital levy, or tax imposed upon

any transfer by Landlord of its interest in this Lease or the Building.

 

      4.2 Tenant shall pay as additional rent for each Lease Year Tenant's

Proportionate Share of Operating Expenses and Taxes incurred for such Lease

Year.

 

      4.3 The annual determination of Operating Expenses shall be made by

Landlord and shall be binding upon Landlord and Tenant (subject to Tenant's

rights pursuant to Section 4.7 below). Tenant may review the books and records

supporting such determination in the office of Landlord, or Landlord's agent,

during normal business hours, upon giving Landlord five (5) days advance written

notice within ninety (90) days after receipt of such determination, and in no

event more often than once in any one year period.

 

      4.4 Prior to the actual determination thereof for a Lease Year, Landlord

may from time to time (but in no event more often than once in any one year

period) estimate Tenant's liability for Operating Expenses and/or Taxes under

Section 4.2. Landlord will give Tenant written notification of the amount of

such estimate and Tenant agrees that it will pay, by increase of its Monthly

Installments of Rent due in such Lease Year, additional rent in the amount of

such estimate. Any such increased rate of Monthly Installments of Rent pursuant

to this Section 4.4 shall remain in effect until written notification to Tenant

of the actual Operating Expenses pursuant to Section 4.3 above.

 

      4.5 When the above mentioned actual determination of Tenant's liability

for Operating Expenses and/or Taxes is made for any Lease Year and when Tenant

is so notified in writing, then:

 

            4.5.1 If the total additional rent Tenant actually paid pursuant to

Section 4.4 on account of Operating Expenses and/or Taxes for the Lease Year is

less than Tenant's liability for Operating Expenses and/or Taxes, then Tenant

shall pay such deficiency to Landlord as additional rent in one lump sum within

thirty (30) days of receipt of Landlord's bill therefore (irrespective as to

whether such bill shall have been rendered after Tenant shall no longer occupy

the Premises); and

 

            4.5.2 If the total additional rent Tenant actually paid pursuant to

Section 4.4 on account of Operating Expenses and/or Taxes for the Lease Year is

more than Tenant's liability for Operating Expenses and/or Taxes, then Landlord

shall pay the difference to Tenant within thirty (30) days irrespective as to

whether Tenant shall no longer occupy the Premises.

 

      4.6 If the Delivery Date is other than January 1 or if the Termination

Date is other than December 31, Tenant's liability for Operating Expenses and

Taxes for the Lease Year in which said Date occurs shall be prorated based upon

a three hundred sixty-five (365) day year.

 

                                        7

<PAGE>

 

      4.7 Notwithstanding any other provision of this Lease to the contrary,

Tenant shall have the right to audit the Operating Expenses, Taxes and any and

all other costs, charges or expenses (collectively, the "charges") for which

Tenant is required to reimburse Landlord pursuant to this Lease, and Landlord

agrees to cooperate with any such audit. Landlord shall maintain complete books

and records in accordance with generally accepted accounting principles for the

same period as required for income tax reporting purposes. Such audit(s) shall

only take place within one (1) year after such charges are due in accordance

with the terms hereof. If it shall be determined as a result of such audit(s)

that Tenant has overpaid any of such charges, Landlord shall promptly refund to

Tenant the amount of such overpayment. If the amount of Tenant's overpayment

exceeds four percent (4%) of said charges, Landlord shall promptly pay the cost

of said audit(s) upon Tenant's submission of an invoice for same.

 

5. TENANT'S RIGHT TO TERMINATE. The Tenant's obligation under this Lease is

specifically contingent upon Landlord using reasonably diligent efforts, at its

own expense, to secure all permits, licenses and other governmental and private

approvals which are required for the modification of the Site Plan as shown on

Exhibit C by February 10, 2005 (the "Approvals").

 

      If Landlord does not receive said Approvals by February 10, 2005, then

Tenant, at its sole option, may elect to terminate this Lease by written notice

to Landlord on or before February 20, 2005, accompanied by a lease termination

payment in the amount equal to Landlord's costs relative to Tenant's specific

construction requirements for the Premises, which costs include the Base

Building Architectural Design, Base Building Sub-Redesign, Fit Up of

Architectural Design, Steel Premium for Freezer/Cooler Space, Preconstruction

Activities/Dacon Project Planning, Refrigeration Sub-Design and General

Conditions and Supervision (45 days extra due to termination and re-work), but

such payment shall in no event exceed $85,000.00. If Tenant gives such timely

notice and payment, this Lease shall terminate and be of no further force or

effect; otherwise, Tenant shall conclusively be deemed to have waived any

termination right it may have under this Section 5.

 

6. LANDLORD'S WORK/ALTERATIONS.

 

      6.1 Landlord shall, at Landlord's sole cost and expense, cause to be

performed the work required described on Exhibit B ("Landlord's Work"). Landlord

shall use due diligence to promptly commence construction and shall use diligent

efforts to complete Landlord's Work. All Landlord's Work shall be done in a good

and workmanlike manner employing good materials and in compliance with all

applicable laws, rules, regulations and codes, including, without limitation,

all building and zoning laws. Landlord shall not make any material changes in

Landlord's Work without the prior written approval of Tenant, but Landlord shall

have the right to substitute materials of equal or higher quality if materials

specified on Exhibit B are not available in time for a timely completion of

Landlord's Work. Tenant shall have the right to install (at its own cost and

expense) and operate a generator on the (10' x 15') generator pad shown on the

Plan. Landlord shall be responsible for constructing the generator pad at its

cost and expense. Landlord agrees to use its best efforts to obtain all

governmental approvals necessary to modify the site plan to reduce the parking

and create trailer parking areas as shown on Exhibit C, and if Landlord is able

to obtain such approvals, the parking areas shall be built according to said

Exhibit C.

 

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<PAGE>

 

      6.2 Construction Representatives. Each party authorizes the other to rely,

in connection with plans and construction, upon approval and other actions on

the party's behalf by any Construction Representative of the party named in the

Reference Page or any person hereafter designated in substitution or addition by

written notice to the party relying. Tenant's Construction Representative shall

be afforded full and complete access to the Premises and Landlord's Work during

the construction of such work, and Landlord shall allow Tenant's Construction

Representative to attend meetings relating thereto.

 

      6.3 Tenant shall not make or suffer to be made any alterations, additions,

or improvements, including, but not limited to, the attachment of any fixtures

or equipment in, on, or to the Premises or any part thereof or the making of any

improvements as required by Article 7, without the prior written consent of

Landlord, which consent shall not be unreasonably withheld, conditioned or

delayed. When applying for such consent, Tenant shall, if requested by Landlord,

furnish complete plans and specifications for such alterations, additions and

improvements. Landlord may condition any consent on Tenant's agreement to remove

such alterations, improvements or additions at the end of the Term and to

restore the Premises to their previous condition. Notwithstanding the foregoing,

non-structural alterations costing less than $50,000.00 may be made by Tenant

without Landlord's approval provided Tenant provides Landlord with as-built

plans for such alteration(s) and will remove the same from the Premises upon

Landlord's request upon the termination of this Lease.

 

      6.4 In the event Landlord consents to the making of any such alteration,

addition or improvement by Tenant, the same shall be made at Tenant's sole cost

and expense. If Tenant shall employ any Contractor other than Landlord's

Contractor and such other Contractor or any Subcontractor of such other

Contractor shall employ any non-union labor or supplier, Tenant shall be

responsible for any and all delays, damages and extra costs suffered by Landlord

as a result of any dispute with any labor unions concerning the wage, hours,

terms or conditions of the employment of any such labor.

 

      6.5 All alterations, additions or improvements proposed by Tenant shall be

constructed in accordance with all government laws, ordinances, rules and

regulations and Tenant shall, prior to construction, provide the additional

insurance required under Article 11 in such case, and also all such assurances

to Landlord, including but not limited to, waivers of lien, surety company

performance bonds and personal guaranties of individuals of substance as

Landlord shall reasonably require to assure payment of the costs thereof and to

protect Landlord and the Building and appurtenant land against any loss from any

mechanic's, materialmen's or other liens. Tenant shall pay in addition to any

sums due pursuant to Article 4, any increase in real estate taxes attributable

to any such alteration, addition or improvement for so long, during the Term, as

such increase is ascertainable. If there shall be any dispute as to whether any

increase shall be attributable to Tenant's improvements, the burden shall be on

Landlord to establish the same and the matter shall be submitted to a third

party expert in municipal tax assessment for final and binding arbitration. At

Landlord's election said sums shall be paid in the same way as sums due under

Article 4.

 

      6.6 All alterations, additions, and improvements in, on, or to the

Premises made or installed by Tenant, including carpeting, shall be and remain

the property of Tenant during the Term but, excepting furniture, furnishings,

movable racks and partitions of less than full height

 

                                        9

<PAGE>

 

from floor to ceiling and other trade fixtures, shall become a part of the

realty and belong to Landlord without compensation to Tenant upon the expiration

or sooner termination of the Term, at which time title shall pass to Landlord

under this Lease as by a bill of sale, unless Landlord elects otherwise. Upon

such election by Landlord and provided Landlord informs Tenant of such election

at the time Tenant requests approval of any alterations, Tenant shall, at

Tenant's sole cost and expense, forthwith and with all due diligence remove any

such alterations, additions or improvements which are designated by Landlord to

be removed prior to such alterations being made, and Tenant shall forthwith and

with all due diligence, at its sole cost and expense, repair and restore the

Premises to their original condition, reasonable wear and tear and damage by

fire or other casualty and repairs that are the responsibility of the landlord,

excepted.

 

7. REPAIR.

 

      7.1 Landlord shall have no obligation to alter, remodel, improve, repair,

decorate or paint the Premises, except as may be specified in Exhibit B attached

to this Lease, and except that Landlord shall promptly repair, replace and

maintain the common areas and the exterior and structural portions of the

Building, including without limitation, the roof, walls, foundation, exterior

paint, exterior glass, floors (other than carpeting), the parking areas and

Building Systems including without limitation, plumbing, electrical (excluding

equipment in Tenant's freezer and refrigeration areas and HVAC throughout the

Premises which shall be Tenant's sole responsibility), utility and sewer lines

and sprinkler systems, except for damage caused or repairs required as a result

of the acts or omissions of Tenant or Tenant's agents, employees, contractors or

invitees. Landlord's costs of repair and maintenance of any of the foregoing

(but not replacement costs) shall be included in Tenant's Proportionate Share of

Operating Expenses. By taking possession of the Premises, Tenant accepts them as

being in good order, condition and repair and in the condition in which Landlord

is obligated to deliver them except for such items for which Tenant shall have

given written notice to Landlord within sixty (60) days after the Delivery Date,

except that with respect to the Building's HVAC system, seasonal items, items

under warranty and latent defects, Tenant shall have up to six (6) months to

notify Landlord of the same. It is hereby understood and agreed that no

representations respecting the condition of the Premises or the Building have

been made by Landlord to Tenant, except as specifically set forth in this Lease.

Landlord shall not be liable for any failure to make any repairs or to perform

any maintenance unless such failure shall persist for an unreasonable time after

written notice of the need of such repairs or maintenance is given to Landlord

by Tenant.

 

      7.2 Tenant shall at its own cost and expense, subject to Landlord's

obligations pursuant to Section 7.1 above, keep and maintain all parts of the

Premises and such portion of the Building and improvements as are within the

exclusive control of Tenant in good condition, promptly making all necessary

repairs and replacements, whether ordinary or extraordinary, with materials and

workmanship of the same character, kind and quality as the original (including,

but not limited to, repair and replacement of all fixtures installed by Tenant,

interior glass, doors, any special office entries, interior walls and finish

work, floor coverings, electrical systems and fixtures, refrigeration units,

dock boards, truck doors, dock bumpers, plumbing work and fixtures, and

performance of regular removal of trash and debris). Tenant, as part of its

obligations hereunder shall keep the Premises in a clean and sanitary condition.

Tenant, upon termination of this Lease in any way, will yield up the Premises to

Landlord in good condition and repair, reasonable wear and tear, loss by fire or

other casualty and repairs that are the

 

                                       10

<PAGE>

 

responsibility of Landlord excepted. Tenant shall, at its own cost and expense,

repair any damage to the Premises or the Building resulting from and/or caused

in whole or in part by the negligence or misconduct of Tenant, its agents,

employees, invitees, or any other person entering upon the Premises as a result

of Tenant's business activities or caused by Tenant's default hereunder.

Landlord shall similarly be responsible to Tenant for damage to the Premises

covered by Landlord or its contractors.

 

      7.3 Except as provided in Article 22, there shall be no abatement of rent

and no right of Tenant to terminate this Lease by reason of any injury to or

interference with Tenant's business arising due to the fault of Landlord, from

the making or failure to make any repairs, alterations or improvements in or to

any portion of the Building or the Premises or to fixtures, appurtenances and

equipment in the Building. Except to the extent, if any, prohibited by law,

Tenant waives the right to make repairs at Landlord's expense under any law,

statute or ordinance now or hereafter in effect.

 

      7.4 Notwithstanding anything to the contrary contained in this Lease,

Landlord shall cause Landlord's Work, and all other work performed by Landlord

pursuant to this Lease to be performed in a good, workmanlike and lien free

manner in compliance with all applicable laws, rules and regulations, and

Landlord warrants that all such work and all systems and equipment installed by

Landlord in the Building or the Premises shall be in good working condition as

of the Rent Commencement Date.

 

8. LIENS. Tenant shall keep the Premises, the Building and appurtenant land and

Tenant's leasehold interest in the Premises free from any liens arising out of

any services, work or materials performed, furnished, or contracted for by

Tenant, or obligations incurred by Tenant. In the event that Tenant shall not,

within thirty (30) days following the imposition of any such lien, either cause

the same to be released of record or provide Landlord with insurance against the

same issued by a major title insurance company or such other protection against

the same as Landlord shall reasonably accept, Landlord shall have the right to

cause the same to be released by such means as it shall deem proper, including

payment of the claim giving rise to such lien. All such sums paid by Landlord

and all reasonable expenses incurred by it in connection therewith shall be

considered additional rent and shall be payable to it by Tenant within thirty

(30) days of demand.

 

9. ASSIGNMENT AND SUBLETTING.

 

       9.1 Except as expressly set forth herein, Tenant shall not have the right

to assign or pledge this Lease or to sublet the whole or any part of the

Premises whether voluntarily or by operation of law, or permit the use or

occupancy of the Premises by anyone other than Tenant, and shall not make,

suffer or permit such assignment, subleasing or occupancy, without the prior

written consent of Landlord, which consent Landlord agrees not to unreasonably

withhold or delay. Said restrictions shall be binding upon any and all assignees

of this Lease and subtenants of the Premises. In the event Tenant desires to

sublet, or permit such occupancy of, the Premises, or any portion thereof, or

assign this Lease, Tenant shall give written notice thereof to Landlord at least

thirty (30) days prior to the proposed Delivery Date of such subletting or

assignment, which notice shall set forth the name of the proposed subtenant or

assignee, the relevant terms of

 

                                       11

<PAGE>

 

any sublease or assignment and copies of any financial reports and other

relevant financial reports and other relevant financial information of the

proposed subtenant or assignee.

 

      9.2 In the event that Tenant sells, sublets, assigns or transfers this

Lease, Tenant shall pay to Landlord as additional rent an amount equal to fifty

percent (50%) of any Increased Rent (as defined below) when and as such

Increased Rent is received by Tenant. As used in this Section, "Increased Rent"

shall mean the excess of (i) all rent and other consideration attributed to this

Lease which Tenant is entitled to receive by reason of any sale, sublease,

assignment or other transfer of this Lease, over (ii) the Rent, Taxes and

Operating Expense otherwise payable by Tenant under this Lease at such time

after deducting all of Tenant's reasonable costs directly related to such

sublease or assignment. For purposes of the foregoing, any consideration

received by Tenant in form other than cash shall be valued at its fair market

value as determined by Landlord in good faith.

 

      9.3 Notwithstanding any assignment or subletting, permitted or otherwise,

Tenant shall at all times remain directly, primarily and fully responsible and

liable for the payment of the rent specified in this Lease and for compliance

with all of its other obligations under the terms, provisions and covenants of

this Lease. Upon the occurrence of an Event of Default, if the Premises or any

part of them are then assigned or sublet, Landlord, in addition to any other

remedies provided in this Lease or provided by law, may, at its option, collect

directly from such assignee or subtenant all rents due and becoming due to

Tenant under such assignment or sublease and apply such rent against any sums

due to Landlord from Tenant under this Lease, and no such collection shall be

construed to constitute a novation or release of Tenant from the further

performance of Tenant's obligations under this Lease.

 

      9.4 Notwithstanding any other provision hereof, Tenant shall have no right

to make (and Landlord shall have the absolute right to refuse consent to) any

assignment of this Lease or sublease of any portion of the Premises if at the

time of either Tenant's notice of the proposed assignment or sublease or the

proposed Delivery Date thereof, there shall exist any uncured Event of Default

of Tenant.

 

      9.5 Tenant will pay to Landlord a sum equal to all of Landlord's

reasonable third party costs, including reasonable attorney's fees, incurred in

investigating and considering any proposed or purported assignment or pledge of

this Lease or sublease of any of the Premises, regardless of whether Landlord

shall consent to, refuse consent, or determine that Landlord's consent is not

required for, such assignment, pledge or sublease. Any purported sale,

assignment, mortgage, transfer of this Lease or subletting which does not comply

with the provisions of this Article 9 shall be void.

 

      9.6 Notwithstanding the foregoing provisions of this Section 9, Tenant

may, without Landlord's consent, assign this Lease or sublet any portion or all

of the Premises to any corporation, partnership, trust, association or other

business organization directly or indirectly controlling or controlled by Tenant

or to any successor by merger, consolidation or acquisition of all or

substantially all of the assets of Tenant, provided that the surviving entity

shall have a financial statement (balance sheet and income statement) at least

as strong as that of the Tenant at the time of execution of this Lease and shall

assume all of Tenant's obligations under this

 

                                       12

<PAGE>

 

Lease. As long as Tenant is a public company, the public trading of its stock

shall not constitute an assignment of this Lease.

 

10. INDEMNIFICATION. None of the Landlord Entities (defined in Section 28 below)

shall be liable and Tenant hereby waives all claims against them for any damage

to any personal property or any injury to any person in or about the Premises or

the Land by or from any cause whatsoever (including without limiting the

foregoing, rain or water leakage of any character from the roof, windows, walls,

basement, pipes, plumbing works or appliances, the Building not being in good

condition or repair, gas, fire, oil, electricity or theft), except to the extent

caused by or arising from the negligence or willful misconduct of Landlord or

its agents, employees or contractors for which Landlord agrees to indemnify and

hold harmless Tenant. Tenant shall protect, indemnify and hold the Landlord

Entities harmless from and against any and all loss, claims, liability or costs

(including court costs and reasonable attorney's fees) incurred by reason of (a)

any damage to any property (including but not limited to property of any

Landlord Entity) or any injury (including but not limited to death) to any

person occurring in, on or about the Premises or the Land to the extent that

such injury or damage shall be caused by or arise from any negligence by or of

Tenant, its agents, servants, employees, invitees, or visitors to meet any

standards imposed by any duty with respect to the injury or damage; (b) the

conduct or management of any work or thing whatsoever done by the Tenant in or

about the Premises or from transactions of the Tenant concerning the Premises;

(c) Tenant's failure to comply with any and all governmental laws, ordinances

and regulations applicable to the condition or use of the Premises or its

occupancy to the extent required in this Lease; or (d) any breach or default on

the part of Tenant in the performance of any covenant or agreement on the part

of the Tenant to be performed pursuant to this Lease. The provisions of this

Article shall survive the termination of this Lease with respect to any claims

or liability accruing prior to such termination.

 

      Landlord will, in all events, indemnify and save Tenant harmless from and

against any and all claims, actions, damages, liability and expense in

connection with the loss of life, personal injury and/or damage to property

arising from or out of any occurrence in, upon or at the common areas or the

occupancy or use of same, or any part thereof, by Landlord and its respective

agents, employees or contractors, without limitation, with the exception of

those matters which stem directly from Tenant's negligence, omissions or

intentional acts. In the event Tenant shall, with no fault on its part, be made

a party to any litigation commenced by or against Landlord arising from any such

action for which Landlord shall be responsible to indemnify Tenant, then

Landlord shall protect and hold Tenant harmless and pay all costs, expenses and

reasonable attorney's fees in connection with such litigation with attorneys

selected by Landlord, subject to Tenant's reasonable approval.

 

11. INSURANCE.

 

      11.1 Tenant shall keep in force throughout the Term: (a) a Commercial

General Liability insurance policy or policies to protect the Landlord Entities

against any liability to the public or to any invitee of Tenant or a Landlord

Entity incidental to the use of or resulting from any accident occurring in or

upon the Premises with a limit of not less than $1,000,000.00 per occurrence and

not less than $2,000,000.00 in the annual aggregate, or such larger amount as

Landlord may prudently require from time to time, covering bodily injury and

property damage liability and $1,000,000 products/completed operations

aggregate; (b) Business Auto Liability

 

                                       13

<PAGE>

 

covering owned, non-owned and hired vehicles with a limit of not less than

$1,000,000 per accident; (c) insurance protecting against liability under

Worker's Compensation Laws with limits at least as required by statute; (d)

Employers Liability with limits of $500,000 each accident, $500,000 disease

policy limit, $500,000 disease--each employee; and (e) All Risk or Special Form

coverage protecting Tenant against loss of or damage to Tenant's alterations,

additions, improvements, carpeting, floor coverings, panelings, decorations,

fixtures, inventory and other business personal property situated in or about

the Premises to the full replacement value of the property so insured.

 

      11.2 Each of the aforesaid policies shall (a) be provided at Tenant's

expense; (b) name the Landlord and building management company, if any, as

additional insureds; (c) be issued by an insurance company with a minimum Best's

rating of "A: VII" during the Term; (d) provide that said insurance shall not be

canceled unless thirty (30) days prior written notice (ten days for non-payment

of premium) shall have been given to Landlord; and (e) may be provided as a part

of any blanket insurance policy or policies maintained by Tenant; and said

policy or policies or certificates thereof shall be delivered to Landlord by

Tenant upon the Delivery Date and at least thirty (30) days prior to each

renewal of said insurance.

 

      11.3 Whenever Tenant shall undertake any alterations, additions or

improvements in, to or about the Premises ("Work") the aforesaid insurance

protection must extend to and include injuries to persons and damage to property

arising in connection with such Work, without limitation including liability

under any applicable structural work act, and such other insurance as Landlord

shall require; and the policies of or certificates evidencing such insurance

must be delivered to Landlord prior to the commencement of any such Work.

 

      11.4 Landlord represents that it currently maintain and shall maintain

throughout the Term (a) all risk of physical loss coverage for the full

replacement cost of the Building and (b) general liability insurance coverage

for the Building consistent with that being maintained from time to time by

reasonably prudent owners of properties similar to the Building in the Boston

metropolitan area.

 

12. WAIVER OF SUBROGATION. Notwithstanding anything contained in this Lease to

the contrary, so long as their respective insurers so permit, Tenant and

Landlord hereby mutually waive their respective rights of recovery against each

other for any loss insured by fire, extended coverage, All Risks or other

insurance now or hereafter existing for the benefit of the respective party but

only to the extent of the net insurance proceeds payable under such policies.

Each party shall obtain any special endorsements required by their insurer to

evidence compliance with the aforementioned waiver.

 

13. SERVICES AND UTILITIES. Tenant shall pay for all water, sewer, gas, heat,

light, power, telephone, and other utilities and services used on or from the

Premises, together with any taxes, penalties, and surcharges or the like

pertaining thereto and any maintenance charges for utilities. The Tenant's

utilities to the Premises shall be separately metered. Tenant shall furnish all

electric light bulbs, tubes and ballasts, battery packs for emergency lighting

and fire extinguishers. Landlord covenants and agrees to exercise all reasonable

efforts not to interfere with the conduct of Tenant's business in the Premises

and to exercise commercial diligence in repairing, replacing or restoring any

interruption in service or utilities.

 

                                       14

<PAGE>

 

14. HOLDING OVER. Tenant shall pay Landlord for each day Tenant retains

possession of the Premises or part of them after termination of this Lease by

lapse of time or otherwise at the rate ("Holdover Rate") which shall be the

greater of (a) 130% for the first month and 150% thereafter of the amount of the

Annual Rent for the last period prior to the date of such termination plus 100%

of all Additional Rent under Article 4; or (b) the then market rental value of

the Premises as reasonably determined by Landlord assuming a new lease of the

Premises of the then usual duration and other terms, in either case prorated on

a daily basis, and also pay all damages sustained by Landlord by reason of such

retention, and a tenancy at sufferance at the Holdover Rate shall be deemed to

have been created. In any event, no provision of this Article 14 shall be deemed

to waive Landlord's right of reentry or any other right under this Lease or at

law.

 

15. SUBORDINATION. Without the necessity of any additional document being

executed by Tenant for the purpose of effecting a subordination, this Lease

shall be subject and subordinate at all times to ground or underlying leases and

to the lien of any mortgages or deeds of trust now or hereafter placed on,

against or affecting the Land, the Building, Landlord's interest or estate in

the Building, or any ground or underlying lease; provided, however, that if the

lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust

elects to have Tenant's interest in this Lease be superior to any such

instrument, then, by notice to Tenant, this Lease shall be deemed superior,

whether this Lease was executed before or after said instrument. Notwithstanding

the foregoing, Tenant covenants and agrees to execute and deliver within ten

(10) days after request by Landlord, such further instruments evidencing such

subordination or superiority of this Lease as may be required by Landlord,

including but not limited to the Subordination, Non-Disturbance and Attornment

Agreement in the form attached hereto as Exhibit D, which Tenant acknowledges to

be reasonable, or in such other form as Landlord's lender may require. Landlord

agrees to provide Tenant with a non-disturbance agreement in a form reasonable

acceptable to Tenant from its lender(s) and it shall be a condition of Tenant's

obligation to subordinate this Lease to any mortgage (and of the self

effectuating subordination provisions described above) that the mortgagee shall

provide Tenant with a reasonable Non-Disturbance Agreement. Landlord represents

that the Danvers Savings Bank is the only lender currently holding a mortgage on

the Land, and that there are no ground leases in effect on the Land, and

Landlord will provide Tenant with a Subordination, Non-Disturbance and

Attornment Agreement from such bank.

 

16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with all

the rules and regulations as set forth in Exhibit E to this Lease and all

reasonable modifications of and additions to them from time to time put into

effect by Landlord. Landlord shall not be responsible to Tenant for the

non-performance by any other tenant or occupant of the Building of any such

rules and regulations. Landlord covenants to reasonably enforce such rules

fairly and non-discriminatorily against all tenants in the Building.

 

17. REENTRY BY LANDLORD.

 

      17.1 Landlord reserves and shall at all times, after reasonable advance

notice to Tenant except in the case of emergency, have the right to re-enter the

Premises to inspect the same, to show said Premises to prospective purchasers,

mortgagees or, tenants, and to alter, improve or repair any portion of the

Building, and may for that purpose erect, use and maintain scaffolding,

 

                                       15

<PAGE>

 

pipes, conduits and other necessary structures and open any wall, ceiling or

floor in and through the Building and Premises where reasonably required by the

character of the work to be performed, provided entrance to the Premises shall

not be blocked thereby, and further provided that the business of Tenant shall

not be interfered with unreasonably.

 

      17.2 Landlord shall have the right at any time to change the arrangement

and/or locations of entrances, or passageways, doors and doorways, and

corridors, windows, elevators, stairs, toilets or other public parts of the

Building provided the same does not unreasonably interfere with Tenant's use of

the Premises or inconvenience Tenant, and to change the name, number or

designation by which the Building is commonly known. In the event that Landlord

damages any portion of any wall or wall covering, ceiling, or floor or floor

covering within the Premises, Landlord shall repair or replace the damaged

portion to match the original as nearly as commercially reasonable but shall not

be required to repair or replace more than the portion actually damaged.

Landlord agrees that it shall not eliminate any parking shown on the Plan,

except as proposed by the modification of the site plan to accommodate Tenant's

truck parking shown on Exhibit C, and shall not make any material modifications

to Tenant's vehicular ingress or egress to or from the Property.

 

      17.3 For each of the aforesaid purposes, Landlord shall at all times have

and retain a key with which to unlock all of the doors in the Premises,

excluding Tenant's vaults and safes or special security areas (designated in

advance), and Landlord shall have the right to use any and all means which

Landlord may deem proper to open said doors in an emergency to obtain entry to

any portion of the Premises. As to any portion to which access cannot be had by

means of a key or keys in Landlord's possession, Landlord is authorized to gain

access by such means as Landlord shall elect and the cost of repairing any

damage occurring in doing so shall be borne by Tenant and paid to Landlord as

additional rent upon demand.

 

18. DEFAULT.

 

      18.1 Except as otherwise provided in Article 20, the following events

shall be deemed to be "Events of Default" under this Lease:

 

            18.1.1 Tenant shall fail to pay when due any sum of money becoming

due to be paid to Landlord under this Lease, whether such sum be any installment

of the rent reserved by this Lease, any other amount treated as additional rent

under this Lease, or any other payment or reimbursement to Landlord required by

this Lease, whether or not treated as additional rent under this Lease, and such

failure shall continue for a period of ten (10) days after written notice that

such payment was not made when due, but if within any twelve month period

commencing with the date of the first notice Landlord shall give two (2) such

notices, then thereafter, the failure to pay within seven days after due any

additional sum of money becoming due to be paid to Landlord under this Lease

shall be an Event of Default without notice.

 

            18.1.2 Tenant shall fail to comply with any term, provision or

covenant of this Lease which is not provided for in another Section of this

Article and shall not cure such failure within thirty (30) days (forthwith, if

the failure involves a hazardous condition) after written notice of such failure

to Tenant; provided, however, that if such cure cannot be reasonably performed

within such 30-day period, Tenant shall have a reasonable period of time to

complete

 

                                       16

<PAGE>

 

such cure so long as Tenant commences the cure within such 30-day period and

thereafter diligently pursues such cure to completion.

 

            18.1.3 Tenant shall become insolvent, file a petition in bankruptcy

or a petition to take advantage of any insolvency statute, make an assignment

for the benefit of creditors, make a transfer in fraud of creditors, apply for

or consent to the appointment of a receiver of itself or of the whole or any

substantial part of its property, or file a petition or answer seeking

reorganization or arrangement under the federal bankruptcy laws, as now in

effect or hereafter amended, or any other applicable law or statute of the

United States or any state thereof.

 

            18.1.4 A court of competent jurisdiction shall enter an order,

judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of

Tenant, or of the whole or any substantial part of its property, without the

consent of Tenant, or approving a petition filed against Tenant seeking

reorganization or arrangement of Tenant under the bankruptcy laws of the United

States, as now in effect or hereafter amended, or any state thereof, and such

order, judgment or decree shall not be vacated or set aside or stayed within

sixty (60) days from the date of entry thereof.

 

19. REMEDIES.

 

      19.1 Except as otherwise provided in Article 20, upon the occurrence of

any of the Events of Default described or referred to in Article 18, Landlord

shall have the option to pursue any one or more of the following remedies

without any notice or demand whatsoever, concurrently or consecutively and not

alternatively:

 

            19.1.1 Landlord may, at its election, terminate this Lease or

terminate Tenant's right to possession only, without terminating the Lease.

 

            19.1.2 Upon any termination of this Lease, whether by lapse of time

or otherwise, or upon any termination of Tenant's right to possession without

termination of the Lease, Tenant shall surrender possession and vacate the

Premises immediately, and deliver possession thereof to Landlord, and Tenant

hereby grants to Landlord full and free license to enter into and upon the

Premises in such event and to repossess Landlord of the Premises as of

Landlord's former estate and to expel or remove Tenant and any others who may be

occupying or be within the Premises and to remove Tenant's signs and other

evidence of tenancy and all other property of Tenant therefrom without being

deemed in any manner guilty of trespass, eviction or forcible entry or detainer,

and without incurring any liability for any damage resulting therefrom, Tenant

waiving any right to claim damages for such re-entry and expulsion, and without

relinquishing Landlord's right to rent or any other right given to Landlord

under this Lease or by operation of law.

 

            19.1.3 Upon any termination of this Lease, whether by lapse of time

or otherwise, Landlord shall be entitled to recover as damages, all rent,

including any amounts treated as additional rent under this Lease, and other

sums due and payable by Tenant on the date of termination, plus as liquidated

damages and not as a penalty, an amount equal to the sum of: (a) an amount equal

to the then present value of the rent reserved in this Lease for the residue of

the stated Term of this Lease including any amounts treated as additional rent

under this Lease and all other sums provided in this Lease to be paid by Tenant,

minus the fair rental value of the

 

                                       17

<PAGE>

 

Premises for such residue; (b) the amount of rent loss and expense incurred

necessary to obtain a replacement tenant or tenants, and the estimated expenses

described in Section 19.1.4 relating to recovery of the Premises, preparation

for reletting and for reletting itself and (c) the cost of performing any other

covenants which would have otherwise been performed by Tenant. Landlord agrees

to use commercially reasonable efforts to relet the Premises after any default

by Tenant.

 

            19.1.4 Upon any termination of Tenant's right to possession only

without termination of the Lease:

 

                  19.1.4.1 Neither such termination of Tenant's right to

possession nor Landlord's taking and holding possession thereof as provided in

Section 19.1.2 shall terminate the Lease or release Tenant, in whole or in part,

from any obligation, including Tenant's obligation to pay the rent, including

any amounts treated as additional rent, under this Lease for the full Term, and

if Landlord so elects Tenant shall pay forthwith to Landlord the sum equal to

the entire amount of the rent, including any amounts treated as additional rent

under this Lease, for the remainder of the Term plus any other sums provided in

this Lease to be paid by Tenant for the remainder of the Term.

 

                  19.1.4.2 Landlord may, but need not, relet the Premises or any

part thereof for such rent and upon such terms as Landlord, in its sole

discretion, shall determine (including the right to relet the premises for a

greater or lesser term than that remaining under this Lease, the right to relet

the Premises as a part of a larger area, and the right to change the character

or use made of the Premises). In connection with or in preparation for any

reletting, Landlord may, but shall not be required to, make repairs, alterations

and additions in or to the Premises and redecorate the same to the extent

Landlord deems necessary or desirable, and Tenant shall, upon demand, pay the

cost thereof, together with Landlord's expenses of reletting, including, without

limitation, any commission incurred by Landlord. Landlord shall not be required

to observe any instruction given by Tenant about any reletting or accept any

tenant offered by Tenant unless such offered tenant has a creditworthiness

acceptable to Landlord and leases the entire Premises upon terms and conditions

including a rate of rent (after giving effect to all expenditures by Landlord

for tenant improvements, broker's commissions and other leasing costs) all no

less favorable to Landlord than as called for in this Lease, nor shall Landlord

be required to make or permit any assignment or sublease for more than the

current term or which Landlord would not be required to permit under the

provisions of Article 9.

 

                  19.1.4.3 Until such time as Landlord shall elect to terminate

the Lease and shall thereupon be entitled to recover the amounts specified in

such case in Section 19.1.3, Tenant shall pay to Landlord upon demand the full

amount of all rent, including any amounts treated as additional rent under this

Lease and other sums reserved in this Lease for the remaining Term, together

with the costs of repairs, alterations, additions, redecorating and Landlord's

expenses of reletting and the collection of the rent accruing therefrom

(including reasonable attorney's fees and broker's commissions), as the same

shall then be due or become due from time to time, less only such consideration

as Landlord may have received from any reletting of the Premises; and Tenant

agrees that Landlord may file suits from time to time to recover any sums

falling due under this Article 19 as they become due. Any proceeds of reletting

by Landlord in excess of the amount then owed by Tenant to Landlord from time to

time shall be

 

                                       18

<PAGE>

 

credited against Tenant's future obligations under this Lease but shall not

otherwise be refunded to Tenant or inure to Tenant's benefit.

 

      19.2 Landlord may, at Landlord's option, enter into and upon the Premises

if Landlord determines in its sole discretion that Tenant is not acting within a

commercially reasonable time to maintain, repair or replace anything for which

Tenant is responsible under this Lease and correct the same, without being

deemed in any manner guilty of trespass, eviction, or forcible entry and

detainer and without incurring any liability for any damage or interruption of

Tenant's business resulting therefrom.

 

       19.3 If, on account of any breach or default by Tenant or Landlord under

the terms and conditions of this Lease, it shall become necessary or appropriate

for either party to employ with an attorney to enforce or defend any of it's

rights or remedies arising under this Lease, the losing party agrees to pay all

of the prevailing party's reasonable attorney's fees so incurred. Tenant

expressly waives any right to trial by jury.

 

      19.4 Pursuit of any of the foregoing remedies shall not preclude pursuit

of any of the other remedies provided in this Lease or any other remedies

provided by law (all such remedies being cumulative), nor shall pursuit of any

remedy provided in this Lease constitute a forfeiture or waiver of any rent due

to Landlord under this Lease or of any damages accruing to Landlord by reason of

the violation of any of the terms, provisions and covenants contained in this

Lease.

 

      19.5 No act or thing done by Landlord or its agents during the Term shall

be deemed a termination of this Lease or an acceptance of the surrender of the

Premises, and no agreement to terminate this Lease or accept a surrender of said

Premises shall be valid, unless in writing signed by Landlord. No waiver by

Landlord of any violation or breach of any of the terms, provisions and

covenants contained in this Lease shall be deemed or construed to constitute a

waiver of any other violation or breach of any of the terms, provisions and

covenants contained in this Lease. Landlord's acceptance of the payment of

rental or other payments after the occurrence of an Event of Default shall not

be construed as a waiver of such Default, unless Landlord so notifies Tenant in

writing. Forbearance by Landlord in enforcing one or more of the remedies

provided in this Lease upon an Event of Default shall not be deemed or construed

to constitute a waiver of such Default or of Landlord's right to enforce any

such remedies with respect to such Default or any subsequent Default.

 

      19.6 Any and all property which may be removed from the Premises by

Landlord pursuant to the authority of this Lease or of law, to which Tenant is

or may be entitled, may be handled, removed and/or stored, as the case may be,

by or at the direction of Landlord but at the risk, cost and expense of Tenant,

and Landlord shall in no event be responsible for the value, preservation or

safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all

reasonable expenses incurred in such removal and all storage charges against

such property so long as the same shall be in Landlord's possession or under

Landlord's control. Any such property of Tenant not retaken by Tenant from

storage within thirty (30) days after removal from the Premises and notice to

Tenant shall, at Landlord's option, be deemed conveyed by Tenant to Landlord

under this Lease as by a bill of sale without further payment or credit by

Landlord to Tenant.

 

                                       19

<PAGE>

 

      19.7 In the event that Landlord shall at any time be in default in the

observance or performance of any of the covenants and agreements required to be

performed and observed by Landlord hereunder and any such default shall continue

for a period of thirty (30) calendar days after written notice to Landlord (or

if such default is incapable of being cured in a reasonable manner within thirty

(30) calendar days then if Landlord has not commenced to cure the same within

said thirty (30) calendar day period and thereafter diligently prosecutes the

same to completion) and Landlord shall not thereafter cure such default, Tenant

shall be entitled at its election, to bring suit for the collection of any

amounts for which Landlord may be in default, or for' the performance of any

other covenant or agreement devolving upon Landlord, in addition to all remedies

otherwise provided in this Lease and otherwise available in law or equity under

the laws of the United States or the State or Commonwealth in which the Premises

are located, and after any judgment may be obtained by Tenant, Tenant may offset

the amount of any such judgment against rent due under this Lease.

 

      In addition to all of Tenant's other remedies hereunder, if Landlord

defaults in the performance of any obligation imposed on it by this Lease and

does not cure such default within twenty (20) days after written notice from

Tenant specifying the default (or does not within said period commence and

diligently proceed to cure such default), Tenant, without waiver of or prejudice

to any other right or remedy it may have, shall have the right, at any time

thereafter, to cure such default for the account of the Landlord, and Landlord

shall reimburse Tenant upon invoice for any amount paid and any expense or

contractual liability so incurred. If Landlord fails to reimburse Tenant, then

Tenant shall have the right to offset


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