NET LEASE AGREEMENT
THIS NET
LEASE AGREEMENT
(this "Lease") is made
as of September 28, 2007
(the "Effective
Date"), by and between FI Properties Pool I LP, a Delaware
limited partnership
("Landlord"), and
First National Bank of Chester County, a
national banking association ("Tenant") (collectively, Landlord and Tenant may
hereafter be referred to as the "Parties" or individually as a
"Party").
RECITALS
A.
Landlord is the owner of approximately 2.2 acres of real estate
commonly referred
to as 202 Carter
Drive situated in the Township of West
Goshen, County of Chester, Commonwealth of Pennsylvania,
which property is
more
particularly described on Exhibit A attached hereto and all of the
buildings and
improvements situated thereon (collectively, the "Demised
Premises"). On today's
date, Landlord purchased the Demised Premises from Tenant, pursuant
to a certain
Agreement for Purchase and Sale of Real Estate between Tenant (identified as
"Seller" therein) and Landlord, as assignee of FTN Ramp, LLC, a
Delaware limited
liability company, dated September ___, 2007 (identified as the
"Buyer" therein)
(the "Purchase Agreement").
B.
Landlord wishes to lease the Demised
Premises to Tenant,
and Tenant
wishes to lease the same from Landlord, upon the terms set forth
herein.
C. The
Parties intend this Lease to be a bondable, fully net lease,
wherein Tenant is responsible for all operating expenses (e.g.,
property taxes,
insurance, utilities,
Repairs (as such term
is defined in Section 6.2 herein),
maintenance and needed replacements) and, in addition, Tenant has
no termination
or abatement rights
whatsoever. This
mutual intention of the Parties should be
followed by an
arbitrator or other
trier of fact to interpret and enforce this
Lease if a dispute or controversy arises between Landlord and Tenant (or their
successors or permitted assigns).
D. The
Parties have
included provisions in this Lease to evidence
the
requirement and expectancy of Landlord described in Recital C above,
including
(by way of illustration and not limitation), (i) an express
obligation of Tenant
to continue payment of Base Rent or its present value equivalent to
Landlord for
the entire Lease Term, notwithstanding the full or partial taking,
condemnation
or destruction
of the Demised
Premises during the Lease Term (see Section
12
below), and (ii) an
express waiver by Tenant of any right to
terminate this
Lease and its
obligations hereunder
during the Lease Term
(see Section 27.16
below). Tenant
has expressly, knowingly and intentionally agreed to such
provisions, which the
Parties acknowledge may not be customary in all net,
long-term leases.
AGREEMENT
In
consideration of the foregoing Recitals (all of which are
incorporated
in this Lease),
the mutual covenants herein contained and other good and
valuable consideration
(the receipt, adequacy and sufficiency of which are
hereby acknowledged by the Parties by their execution hereof), the
Parties agree
as follows:
1. Demise;
True Lease. Subject to the terms and conditions hereof, Landlord
hereby leases to Tenant, and Tenant hereby leases from Landlord, the Demised
Premises, subject
to the items set forth
on Exhibit B
attached hereto (the
"Permitted Exceptions"), together with all rights,
privileges and
interests of
Landlord and easements appurtenant thereto. Landlord and Tenant
intend that: (i)
this Lease is a "true
lease" for tax
purposes, and an
"operating
lease" for
financial accounting
purposes, and not a financing lease, capital lease,
mortgage, equitable mortgage, deed of trust, trust agreement,
security agreement
or other financing or
trust arrangement,
and the economic realities of this
Lease are those of a true lease; and
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(ii) the business
relationship created
by this Lease and any related documents
is solely that of a long-term commercial lease between Landlord and Tenant
and
has been entered into
by Landlord and Tenant in reliance upon the economic and
legal bargains contained herein. Landlord and Tenant acknowledge
and agree that
the Lease Term is less than the remaining economic life of the
Demised Premises.
Landlord and
Tenant irrevocably waive any claim or defense based upon the
characterization of
this Lease as anything other than a true lease and
irrevocably waive any claim or defense which asserts that this
Lease is anything
other than a true lease. Landlord and Tenant covenant and
agree that they shall
not assert that this Lease is anything but a true lease. Landlord and Tenant
stipulate and
agree not to challenge the validity, enforceability or
characterization of
this Lease as a true lease, and Landlord and Tenant further
stipulate and agree that nothing contained in this Lease creates or
is intended
to create a joint venture, partnership (either de jure or de
facto), equitable
mortgage, trust, financing device or arrangement, security interest
or the like.
Landlord and Tenant shall support the intent of the Parties that
this Lease is a
true lease if, and to the extent that, any challenge occurs. Tenant represents
and warrants to Landlord that (i) the annual rental payable under this Lease is
the fair market value for the use of the Demised Premises and has
been agreed to
by Landlord
and Tenant on that
basis, and (ii) the
execution,
delivery and
performance by Tenant
of this Lease does not
constitute a transfer of title of
all or any part of the Demised Premises. The expressions of intent,
waivers,
representations, warranties, covenants, agreements and stipulations
set forth in
this Section 1 are a material inducement to Landlord entering into
this Lease.
2. Term;
Renewal Options. The term of this Lease
shall commence on the
Effective Date and
expire at 11:59 p.m. on the day before the fifteenth (15th)
annual anniversary of the Effective Date (the "Lease Term"). If
Tenant is not in
default under this Lease at the end of the initial Lease Term,
Tenant shall have
the right to renew the Lease Term for successive periods of five
(5) years, five
(5) years and then four (4) years by giving Landlord written notice of Tenant's
intent to renew the Lease at least one hundred twenty (120) days before the
expiration of the
then-current
Lease Term.
The renewal
shall be on the
same
terms and conditions contained in this Lease, except that the Base
Rent shall be
as set forth below.
3.
Rent.
3.1. Base
Rent for Lease Term.
Annual "Base Rent" during each year of the
Lease Term shall be (i) $264,750.00, payable, in advance, on the first day of
each Rental
Month , as defined
below, in twelve (12) equal installments of
$22,062.50 during the
first (1st) year of the Lease Term; (ii) Base Rent shall
be increased each year of the second (2nd) through the fifteenth
(15th) years of
the Lease Term by 1.0% of the annual Base Rent for the immediately preceding
lease year, payable,
in advance,
on the first day of
each Rental
Month, in
twelve (12)
equal installments, and (iii) if, and to the extent, Tenant's
renewal options are validly exercised hereunder, Base Rent shall be
increased in
each year of the sixteenth (16th) through twenty-ninth (29th) years
of the Lease
Term, as applicable, by 2.0% of the Base Rent for the
immediately
preceding
lease year, payable in advance, on the first day of each Rental
Month, in twelve
(12) equal installments, such annual Base Rent being as
follows:
Year 2 of
the Lease Term Annual
Base Rent
$267,397.50
Year 3 of
the Lease Term Annual
Base Rent
$270,071.48
Year 4 of
the Lease Term Annual
Base Rent
$272,772.19
Year 5 of
the Lease Term Annual
Base Rent
$275,499.91
Year 6 of
the Lease Term Annual
Base Rent
$278,254.91
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Year 7 of
the Lease Term Annual
Base Rent
$281,037.46
Year 8 of
the Lease Term Annual
Base Rent
$283,847.83
Year 9 of
the Lease Term Annual
Base Rent
$286,686.31
Year 10 of
the Lease Term Annual Base Rent $289,553.17
Year 11 of
the Lease Term Annual Base Rent $292,448.70
Year 12 of
the Lease Term Annual Base Rent $295,373.19
Year 13 of
the Lease Term Annual Base Rent $298,326.92
Year 14 of
the Lease Term Annual Base Rent $301,310.19
Year 15 of
the Lease Term Annual Base Rent $304,323.29
First Renewal Option (if applicable):
Year 16 of
the Lease Term Annual Base Rent $310,409.76
Year 17 of
the Lease Term Annual Base Rent $316,617.96
Year 18 of
the Lease Term Annual Base Rent $322,950.32
Year 19 of
the Lease Term Annual Base Rent $329,409.33
Year 20 of
the Lease Term Annual Base Rent $335,997.52
Second Renewal Option (if applicable):
Year 21 of
the Lease Term Annual Base Rent $342,717.47
Year 22 of
the Lease Term Annual Base Rent $349,571.82
Year 23 of
the Lease Term Annual Base Rent $356,563.26
Year 24 of
the Lease Term Annual Base Rent $363,694.53
Year 25 of
the Lease Term Annual Base Rent $370,968.42
Third Renewal Option (if applicable):
Year 26 of
the Lease Term Annual Base Rent $378,387.79
Year 27 of
the Lease Term Annual Base Rent $385,955.55
Year 28 of
the Lease Term Annual Base Rent $393,674.66
Year 29 of
the Lease Term Annual Base Rent $401,548.15
If the Lease Term commences on a day other than the first day of a
Rental Month,
or if the Lease Term expires on a day other than the last day of a
Rental Month,
then Base Rent for that month shall be prorated
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and shall be calculated by multiplying the applicable monthly installment by a
fraction, the
numerator of which shall be the number of
days Base Rent covers
during such
commencement
or expiration month, as the case may be, and the
denominator of which
shall be the actual
number of days in such month. Tenant
shall pay to
Landlord Base Rent for the first
month on the
Effective Date.
Tenant shall pay Landlord Base Rent by electronic
transfer pursuant to wiring
instructions from
time to time provided by Landlord, or, at Landlord's
discretion, to
Landlord's payment
address set forth in
Section 27.15 below or
such other place as Landlord may direct Tenant, in writing, from time to time.
"Rental Month" shall
mean a rental period
commencing on the first calendar day
of a calendar month and ending on (and including) the final
calendar day of such
calendar month, provided that Landlord shall have the right, by
notice to Tenant
in accordance with
Section 27.15,
to designate as the
Rental Month the period
commencing on any fixed numerical date of the calendar
month and ending on (and
including) the
immediately precedent
numerical calendar day of the following
calendar month (i.e.
if Landlord shall have
designated
the fifteenth
(15th)
calendar day of a calendar month as the first day of a Rental
Month, such Rental
Month shall end on (and include) the fourteenth (14th) calendar day of the
following calendar month).
3.2. Payment
of Rent. All Base Rent and Additional Rent (as such term is
defined in
Section 3.3 below) which is to be paid to
Landlord, and other
payments to be made to Landlord by Tenant hereunder shall be payable,
in legal
tender, by electronic transfer pursuant to wiring instructions from
time to time
provided by Landlord, or, at Landlord's direction, to Landlord's
payment address
set forth in Section
27.15 below or such
other place as
Landlord may direct
Tenant, in
writing, from time to time. Tenant shall pay all Base Rent,
Additional Rent and
other payments to be made by Tenant hereunder without
notice, abatement, demand, offset or counterclaim.
3.3. Additional
Rent.
3.3.1. Term Defined.
Tenant shall pay as
"Additional Rent" any amount
designated as "Additional Rent" hereunder. Without limiting in any manner
the
amounts designated as
Additional Rent
herein, Additional
Rent shall
include,
without limitation,
all costs and expenses incurred for the operation,
maintenance, Repair,
use or occupancy of
the Demised Premises,
including the
cost and expense of the following: snow and ice plowing and
removal;
gardening,
landscaping,
replanting and
replacing flowers and shrubbery; Repair of the
Demised Premises; electricity, water, gas, sanitary sewer,
telecommunications,
and all other
utilities; maintenance
and Repair of fixtures and building
systems; maintenance
and Repair of
elevators and service
contracts thereon;
operation, maintenance
and Repair of parking lots or garages, including
machinery and equipment used in such operation and including
systems regulating
automobile and pedestrian traffic; sanitary control and
extermination;
removal
of rubbish, garbage
and other refuse;
installation,
maintenance and Repair of
security systems
and policing; maintenance and Repair of paving, curbs,
driveways, sidewalks, and drainage facilities; operation,
maintenance and Repair
of the heating,
ventilating and air-conditioning systems ("HVAC"); cleaning and
janitorial services;
maintenance
and Repair of all doors and glass in the
Demised Premises
and the roof;
maintenance
and Repair of the fire
sprinkler
systems; all costs for Landlord's routine inspections of the
Demised Premises as
allowed under this Lease; all fees and costs incurred by
Landlord in connection
with any alterations,
additions,
reconstruction
or renovation of the
Demised
Premises in compliance
with this Lease,
whether any of the foregoing arise
following a
casualty or condemnation or otherwise; real estate brokers'
commissions incurred
by Tenant; and all
costs and expenses required to be paid
under any of the documents identified as Permitted Exceptions. Notwithstanding
the foregoing,
Additional Rent does
not include any of the following costs and
expenses: (a) real
estate brokers'
commissions
incurred by Landlord
(except
following an Event of Default (as defined in Section 13
herein)); (b) interest
and amortization
under mortgages or deeds of trust executed by Landlord and
encumbering the Demised Premises; and (c) any inheritance,
estate, succession,
transfer, gift, franchise, corporation or federal or state income
taxes based on
the Rent received for the Demised Premises. Additional Rent shall
either be
4
<PAGE>
paid to Landlord in the case of any of the foregoing costs or
expenses incurred
by Landlord,
or paid directly by Tenant in the case of any of
the foregoing
costs or expenses incurred by Tenant.
3.3.2. Payment of
Additional Rent.
Unless otherwise
specifically set
forth herein, Tenant
shall pay Landlord the Additional Rent which is payable to
Landlord on the first day of each calendar month by electronic
transfer pursuant
to wiring instructions from time to time provided by Landlord, or,
at Landlord's
direction, to
Landlord's
payment address set forth in Section 27.15
below or
such other place as Landlord may direct Tenant, in writing, from
time to time.
3.4.
Past Due Rent. If
Tenant fails to pay (i) Base Rent on or before the
date on which it shall be due, or (ii) Additional Rent payable to
Landlord on or
before the date on which it is due, or (iii) any other amount or
charge payable
hereunder when due, then Tenant shall pay an additional
administrative charge of
five percent (5%) of
the amount of each late payment (or, if less, the maximum
administrative charge
allowed by law) if
such late payments
are made within
seven (7) days of the date due and if such amounts remain unpaid after such
seven (7) day period,
interest at the per annum rate equal to the lesser of (a)
the prime rate of interest published by the Wall Street Journal from time to
time as of the date of the breach plus four percent (4%) or (b) the
maximum rate
of interest allowed by
law shall be charged and shall be paid by Tenant on each
unpaid amount,
retroactive
to the date such
amount shall have been due and
payable.
4.
Landlord's Net Return; Net Lease.
4.1. Landlord's Net Return. Landlord and Tenant intend that
this Lease
shall constitute a
"net lease," so that the Base Rent and the Additional Rent
shall provide Landlord
with an absolutely "net" return for the Lease Term, free
of all costs, expenses
or charges with respect to the Demised Premises. Tenant
shall pay, subject to
the terms of this Lease, as Additional Rent before they
become delinquent, all items of cost or expense arising during and
pertaining to
the Lease Term
attributable
to the operation, maintenance, Repair, use or
occupancy of the Demised Premises or any portion thereof applicable
to or during
the Lease Term. The Base Rent payable hereunder shall be net to
Landlord so that
this Lease shall yield
to Landlord
the Base Rent
specified herein, and all
costs, expenses and
obligations of every kind and nature whatsoever relating to
the Demised
Premises during the Lease Term shall be performed and paid by
Tenant, subject to the terms of this Lease. This Lease is a
bondable, fully
net
lease and all Base Rent, Additional Rent and other amounts
payable under this
Lease shall be absolutely net to Landlord, Tenant acknowledging Landlord shall
have no obligation or responsibility whatsoever under this Lease
for the payment
of any costs associated with the Demised Premises, including but not limited to
taxes, utilities,
insurance,
building maintenance, Repairs, replacements,
improvements,
additions or
modifications to the
Demised Premises or
any part
thereof, structural or
nonstructural Repairs for the Demised Premises, Repairs
for HVAC or equipment
or facilities used with the HVAC system or for the
mechanical, plumbing
or electrical systems for the Demised Premises, roof
Repairs, or for any
other costs associated
with or incidental to the Demised
Premises or the use,
occupancy or operation
of the Demised
Premises, all of
which are the sole responsibility of Tenant.
5
<PAGE>
5. Use
of Demised Premises.
5.1. Restrictions
on Use. The Demised
Premises shall be
occupied and
used by Tenant for a bank office facility and no other purpose
without the prior
written consent of
Landlord, which consent may be granted or withheld in
Landlord's sole and absolute discretion. In no event, however,
shall the Demised
Premises be used or
occupied by Tenant in
any manner contrary to
Law (as such
term is defined in this Section 5.1) or any agreement, restriction or other
matter of record.
"Laws" shall mean all
statutes, laws,
regulations,
codes,
ordinances, orders and
requirements of all federal, state and local governments
and appropriate
departments,
commissions
and boards
(including the
officers
thereof)
applicable to
the Demised Premises, whether now existing or
subsequently enacted.
5.2. Right
of Entry. Notwithstanding Tenant's use of the Demised
Premises, Landlord or
its representatives
may enter the
Demised Premises at
reasonable times and upon at least twenty-four (24) hours prior
notice to Tenant
(except in the case of an emergency, as determined by Landlord,
in which case,
no prior notice shall be required), for the purposes of: (i) inspecting the
Demised Premises to verify Tenant is complying with this Lease;
(ii) exercising
Landlord's rights
under the Lease; (iii)
performing
any work which
Landlord
shall elect to undertake for the safety, preservation, benefit or
welfare of the
Demised Premises;
(iv) exhibiting or
appraising the Demised Premises for sale,
lease or financing;
(v) performing any work which Landlord shall elect to
undertake made
necessary by reason of Tenant's default hereunder; or (vi)
performing any environmental assessment or other right under
Section 21 herein.
Landlord's right of entry under this Section 5.2 does not
constitute an eviction
of Tenant,
in whole or in part,
and no Base
Rent, Additional Rent or other
amounts payable
hereunder shall be reduced or abated, in whole or in part, as a
result of Landlord
exercising
its right of entry
hereunder.
This "right of
entry" shall not be
intended, nor may it be construed, to be limited to its
technical legal meaning.
6.
Condition, Repairs and Maintenance.
6.1. Delivery of
Demised Premises.
Landlord does not warrant, either
explicitly or impliedly, the condition or fitness of the
Demised Premises.
The
Parties acknowledge
that the Tenant is the former owner of the Demised Premises
and Tenant has occupied and operated the Demised Premises prior to
the Effective
Date of this Lease,
has inspected the Demised Premises and accepts the same
in
its present "AS IS" condition. Tenant acknowledges that the
Demised Premises is
in good order and satisfactory condition as of the Effective
Date.
6.2. Repairs and
Maintenance.
Throughout the Lease Term, Tenant, at
Tenant's sole cost and
expense, shall
maintain and keep the
Demised Premises
(including without
limitation
all buildings and exterior areas) in good
condition and
Repair all systems and components in good working order,
regardless of
whether interior or exterior, structural or nonstructural,
ordinary or extraordinary, or foreseen or unforeseen. The
term "Repair" as used
herein shall include all necessary repairs, replacements, renewals,
alterations,
additions or
betterments.
All Tenant's work performed hereunder shall be
performed in accordance with the terms and procedures described in Section 11
below. Tenant shall do all acts necessary for the safety and
preservation of the
Demised Premises and the improvements located thereon and all other acts
which
may be necessary by reason of any excavation or other building operation upon
any adjoining property
or street, alley or
passageway. Whether
Repairs to the
Demised Premises
and adjoining areas are necessary and adequate shall be
measured by the appropriate standard for improvements of similar
construction
and class. However, Tenant shall in any event make all necessary
Repairs in such
a manner as to avoid any structural damage or injury to the building(s) and
other improvements
located on the Demised
Premises. Tenant shall
maintain all
portions of the
Demised Premises
and adjoining areas in a clean and orderly
condition, free of
dirt, rubbish, snow, ice, and unlawful obstructions. Tenant
shall assume the full
and sole
responsibility for the
condition,
operation,
Repair, maintenance,
and management of the Demised Premises and adjoining areas
over which Tenant
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<PAGE>
has control, including
without limitation,
any paving and
striping of parking
and hard surface areas, mowing and landscaping. Tenant shall
perform any item of
Repair or maintenance as may at any time or from time to time be
required by any
Law. Tenant shall not
damage the Demised
Premises, shall
maintain and keep in
Repair all
improvements,
as well as
Tenant's property located in or on the
Demised Premises,
and shall maintain a first class general
appearance of the
Demised Premises.
Tenant
acknowledges
and agrees that Landlord has no
obligations to
maintain or Repair any portion of the Demised Premises. Tenant
hereby acknowledges and agrees that no disclosures made by, or
other information
provided by, Tenant
set forth in the Seller's Disclosure Statements (as that
term is defined in the Purchase Agreement) shall relieve Tenant of any
maintenance or Repair
obligation
hereunder,
but Tenant shall be
obligated to
promptly commence
any necessary Repairs and remedy any
deficiencies
in the
condition of the Demised Premises as indicated herein and
therein.
7. Compliance
with Laws. During the
Lease Term,
Tenant's use and occupation
of the Demised Premises, and the condition thereof, shall, at
Tenant's sole cost
and expense,
comply fully with all
Laws. Tenant
shall maintain all required
licenses and permits,
both governmental and private, to use and operate the
Demised Premises
in compliance with all Laws. Tenant shall be liable for
correction of or Alterations (as such term is defined in Section
11.1 below) and
Repairs to the Demised
Premises, including
any Alterations or Repairs required
from any noncompliance
of the Demised Premises with or under any Law (including
the Americans
with Disabilities Act) existing on the Effective Date and
thereafter during the Lease Term.
8. Taxes.In
addition to all other payments required to be paid by Tenant
under
this Lease,
Tenant shall pay, directly to the taxing authority, all real
property taxes and assessments levied or assessed against the Demised Premises
and any improvements
constructed
thereon, both general and special,
and any
other payments
required in lieu of or as a substitution, in whole or in part,
for taxes and assessments imposed upon or related to the
Demised Premises
(the
"Real Estate Taxes")
and any and all interest accrued or penalties imposed in
connection therewith.
Furthermore, Tenant shall pay before delinquent, directly
to the taxing authorities: (a) any privilege tax, sales tax, gross
proceeds tax,
rent tax, or like tax (but not including income, estate or inheritance taxes),
now or hereafter levied, assessed or imposed by any
federal, state,
county, or
municipal governmental
authority, or any
subdivision thereof; (b) all personal
property taxes and assessments levied or assessed by any
governmental
authority
against any personal
property of Tenant in, on, or about the Demised Premises;
(c) all value
added and single business taxes, and (d) all other taxes,
assessments, or
governmental charges of any kind including, but not limited to,
intangibles taxes related to secured leasehold improvements,
levied or assessed
against the Demised Premises (collectively, all of the foregoing together
with
Real Estate
Taxes are the
"Taxes.").
Tenant shall pay all Taxes under this
Section 8 at least
fifteen (15) days
prior to the due date for the payment of
such Taxes, and Tenant shall provide Landlord with written evidence
satisfactory
to Landlord of the payment of such Taxes at least ten (10) days
prior to the due
date for the payment of the Taxes. Tenant shall indemnify and hold harmless
Landlord from and
against any and all
liens or claims
arising from
Tenant's
non-payment of Taxes; provided, however, so long as there is no
Event of Default
(as defined in Section 13 below) of Tenant which is continuing, Tenant shall
have the right, in
good faith and at its sole cost and expense and in its own
name, to protest or
contest or seek to have reviewed, reduced, equalized or
abated any Tax or assessment by legal proceedings in such manner as it
may deem
advisable; provided
further, however, that no Taxes shall be deferred
until
after the Lease Term, and no contest shall be sought by Tenant
unless Tenant has
paid the applicable Taxes under protest and unless such contest
will not subject
the Demised Premises to any lien, foreclosure, or other action under
applicable
Laws for the unpaid Taxes. In the event of any such protest
or contest, Tenant
shall keep Landlord
apprised of such
protest or contest,
and shall provide to
Landlord (or, to the
extent there is a
Mortgage, as defined
in Section 19.1,
then outstanding on the Demised Premises, the Mortgagee,(as defined in Section
19.1), on Landlord's
or the Mortgagee's,
as applicable,
request and prior
to
initiating such
protest or contest, security for the Taxes that are being
protested or contested in the form of available funds or a bond, as
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determined by Landlord or the Mortgagee, as applicable.
Landlord shall have
the
right to participate in any tax protest or contest permitted Tenant hereunder.
No protest, contest,
or other action,
however, shall be asserted or maintained
by Tenant after the
time limit for the
payment of the Tax
without penalty or
interest unless
Tenant shall have first paid the amount of such Tax under
protest or shall have procured a stay of proceedings to enforce the collection
thereof by compliance with statutory procedures established for
such tax contest
(which may,
if applicable, require the payment thereof together with all
penalties, interest,
costs and expenses).
Tenant's obligation to pay the Taxes
required under this Section 8 shall be deemed to be "Additional
Rent" hereunder.
9. Utilities.
Tenant shall
contract, in its own name, for all utilities for
the Demised Premises.
Tenant shall pay or
cause to be paid to the appropriate
provider or party when due all charges for water, gas, electricity, telephone
service,
telecommunications, sewage services, garbage services and other
utilities (the "Utility Services") used in or upon the
Demised Premises
during
the Lease Term. In the event any Utility Services are delayed, interrupted or
discontinued, whether
by reason of Repairs,
strikes, accidents,
inability to
obtain fuel or supplies, or other causes, no such interruption or
discontinuance
of such service shall be deemed an eviction, partial eviction or disturbance
of
Tenant's use and
possession of the
Demised Premises or
any part thereof,
or
render the Landlord
liable to Tenant for
any damages, or
relieve Tenant
from
performance of
Tenant's obligations under this Lease including without
limitation the obligation to pay Base Rent. Tenant hereby
acknowledges that
its
obligation to pay the charges for Utility Services required under
this Section 9
shall be deemed "Additional Rent" hereunder.
10.
Insurance.
10.1 Insurance Requirements. At Tenant's cost, Tenant shall
obtain and
maintain during the Lease Term: (i) insurance insuring against loss
or damage to
all buildings, structures and other improvements located on the
Demised Premises
caused by fire and such other casualties and hazards as are insurable under
present and future
standard forms of fire and extended coverage (all-risk)
insurance policies,
expressly including earthquake and flood insurance, at all
times in an amount
not less than the full (100%) replacement costs of such
buildings, structures
and other improvements on the Demised Premises as
initially identified
on Schedule 10
attached to this Lease
(including
costs
associated with "civil
or ordinance of law
coverage" and without offset for
depreciation), naming Landlord and any Mortgagee (as such term is
defined below)
of Landlord
as a loss payee (with
respect to such
Mortgagee,
on a "Standard
Mortgagee
Endorsement");
(ii) coverage
for Tenant's fixtures, equipment,
furnishings,
merchandise and other
contents in the Demised Premises, for the
full replacement
value of such
items, insuring against all perils and risks
included in the
classification "fire
and extended coverage"
under insurance
industry practices in the jurisdiction in which the Demised
Premises is located;
(iii) commercial
general liability
insurance naming Landlord and any Mortgagee
of Landlord as additional insureds, which policy shall be in the
minimum amount
of one million dollars
($1,000,000.00) with
respect to any one person, and in
the minimum amount of
three million
dollars ($3,000,000.00) with respect to
combined occurrences;
(iv) worker's
compensation insurance
in the statutorily
mandated limits; (v)
employer's liability
insurance with limits
not less than
one million dollars
($1,000,000.00), (vi)
rental insurance for a
period of no
less than 12 months of Rent, naming Landlord and any Mortgagee of Landlord as
the insureds
thereunder,
(vii)
if reasonably requested by Landlord,
comprehensive boiler
and machinery
insurance (without exclusion for explosion)
covering all mechanical and electrical equipment against physical damage,
rent
loss and improvements
loss with minimum
amount of limits to be provided of not
less than $10,000,000
per accident.
Such insurance policy or policies shall
contain a broad form contractual liability endorsement under which the
insurer
agrees to insure Tenant's indemnity obligations hereunder to the extent
insurable, and
a "severability of interest" clause or endorsement which
precludes the insurer
from denying the claim
of Tenant or Landlord
because of
the negligence
or other acts of the
other. In the event
Landlord reasonably
considers the aforementioned policy limits insufficient at any time during
the
Lease Term, Landlord
shall have the right to require Tenant to (i) increase the
policy
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limits to such amounts as are then customarily required by similarly situated
landlords, and Tenant shall cause, at its sole expense, such policy
limits to be
increased, and (ii) obtain additional types of insurance Landlord
may reasonably
require, including
without limitation business interruption insurance. Tenant
acknowledges that in the event a Mortgage is, or is likely to be,
the subject of
a "securitization",
the insurance
requirements
of any nationally-recognized
statistical rating
agency (a "Rating
Agency") which is rating or has rated the
securities in such
securitization to
achieve a superior or improved rating for
such securities
shall be deemed
"customarily
required by similarly
situated
landlords" for
the purposes of clause (i) of the foregoing sentence and
"reasonable" for the
purposes of clause
(ii) of the foregoing
sentence, and
Tenant shall be
obligated to procure
such coverages in such
amounts from such
carriers so as to comply with any such Rating Agency requirements.
The insurance
coverage
required by
Tenant in this Section 10 shall be primary and
noncontributing with
respect to any other insurance or self-insurance which may
be maintained by an additional insured or a loss payee.
The policy or
policies
described above
shall be acceptable in form and content to Landlord, in
Landlord's reasonable
discretion, and each
insurer shall have a Best rating of
no lower than A- (or a comparable rating if Best no longer rates
insurers). Any
policy of insurance
applicable to this Lease shall include a provision wherein
coverage may not be cancelled, amended or modified without at
least thirty (30)
days' prior written
notice to the Landlord
(and any Mortgagee of Landlord).
Tenant shall deliver
to Landlord
certificates of
insurance on an annual basis
commencing on the Effective Date. Upon written request,
Tenant shall deliver
to
Landlord true and complete copies of any or all of the above
policies. In the
event that Tenant
fails to obtain,
maintain and offer
proof of the
insurance
coverage required
herein, Landlord may obtain insurance on Tenant's behalf
(after the
notice and
Tenant's failure to cure within ten (10) days of such
notice) and charge the cost thereof to Tenant on an annual
basis. Any coverage
carried by Tenant as
listed in this Section
10 shall be primary
and without
right of contribution from Landlord. Deductibles or self insured
retentions on
any of the coverages
listed above are the sole responsibility of Tenant and
shall not exceed fifty thousand dollars ($50,000.00). Tenant shall
not permit to
be done any act which
will invalidate
or be in conflict with the insurance
policies covering the
Demised Premises or
any other insurance
referred to in
this Lease. Tenant shall promptly comply with all rules and
regulations relating
to such policies.
Tenant does hereby acknowledge that its obligation to pay for
insurance as required herein shall be deemed "Additional Rent"
hereunder.
10.2 Settlement
of Claims.
Tenant will not, without the consent of
Landlord (and, if
required by Landlord's
Mortgagee or related loan documents,
the Mortgagee), settle any insurance claim without the prior
written approval of
Landlord; except
that any claim or
claims for insurance
that are less in
the
aggregate than
$25,000 for any
consecutive
12-month period, may be settled
without the consent of Landlord provided Tenant utilizes all
insurance funds to
Repair the Demised Premises or portion thereof. Tenant must notify Landlord of
all insurance claims Tenant makes. Notwithstanding the foregoing,
if at the time
of any damage or destruction to all or any part of a Demised
Premises an Event
of Default has occurred and is continuing, Landlord is hereby authorized and
empowered but is not
obligated,
in the name and on behalf of Tenant and
otherwise, to file and
prosecute Tenant's claim, if any, for insurance proceeds
for any damage or
destruction and to
collect the proceeds
and apply the same,
after deducting all costs, fees and expenses incident to the
collection thereof,
to the curing of such Event of Default or to the payment of any amounts then
owing by Tenant to
Landlord under this
Lease, in such order, priority and
proportions as Landlord in its discretion deems proper.
10.3 Waiver of
Subrogation.
Tenant agrees to cause the insurance
carrier for its casualty insurance to agree to a waiver of
subrogation.
Under
such waiver, Tenant
releases Landlord from
any claims for damage to any person
or the Demised
Premises or any
property thereon
that are caused by or
result
from risks insured
against under such
insurance policies to
the extent of the
available insurance proceeds.
9
<PAGE>
11. Tenant's
Improvements.
11.1. Alterations
and Improvements. No alteration, addition, or
improvement (each, an "Alteration") (structural or non-structural)
may be made
by Tenant without the prior written consent of Landlord and without
Landlord's
approval of
Tenant's plans and specifications therefor, which consent and
approval shall not be unreasonably withheld. Notwithstanding the foregoing,
no
consent of Landlord shall be required for any non-structural Alteration to the
Demised Premises by Tenant, the cost of which annually shall be
equal to or less
than twenty-five thousand dollars ($25,000.00); and Tenant delivers to
Landlord
a copy of the
plans depicting the work to be performed prior to Tenant
commencing such work. All reasonable costs for the review and
inspection of the
Alteration by
Landlord or Landlord's Mortgagee shall be paid by Tenant as
Additional Rent.
11.2. Performance
of Alterations. Tenant's Alterations permitted
hereunder shall be performed by contractors or workmen selected by or otherwise
approved by Landlord (which approval shall be deemed given if not
objected to by
Landlord within fifteen (15) days of its receipt from Tenant of
Tenant's written
request for and
Landlord's
approval thereof). Tenant, before its work is
started, must:
(i) secure all
required licenses and
permits; (ii) deliver
to
Landlord a statement of the names of all of its contractors
and subcontractors
and the estimated
cost of all labor and
material to be furnished by them; and
(iii) cause each
contractor to: (a) carry workmen's compensation insurance in
statutory amounts covering all of the contractor's and
subcontractor's employees
and comprehensive
public liability insurance and property damage insurance with
such limits as Landlord shall require; and (b) deliver to Landlord
certificates
of all such insurance. Tenant shall pay promptly when due the
entire cost of any
work done on the Demised Premises by Tenant, its agents, employees or
independent contractors. Prior to paying any contractors
and subcontractors for
work performed
hereunder to the
extent permitted by
law, Tenant shall
obtain
lien waivers from such contractors and subcontractors, and shall deliver copies
thereof to Landlord.
With respect to
Alterations
or other work
permitted or
required hereunder in
excess of two hundred thousand dollars ($200,000.00) and
if Landlord (or any
Mortgagee) so requests, Tenant must promptly obtain from
Tenant's contractors
performing
any such work a
performance and
payment bond
covering such
contractor's
obligations and in which Tenant and Landlord and/or
Mortgagee, as applicable, shall be named as dual obligees.
After completing any
of the work permitted herein, Tenant shall provide Landlord
drawings of any such
Alterations made by Tenant, which drawings accurately depict the
location of all
such Alterations.
Any such Alteration made by Tenant after
such consent shall
have been obtained
shall be made strictly
in accordance
with all applicable
Laws, and all such
Alterations
shall become the property of Landlord upon
installation or upon
the expiration or
sooner termination
of this Lease.
At
Landlord's option,
Landlord may require
that Tenant remove any such Alteration
to the Demised
Premises upon the expiration or sooner termination of the Lease
and to restore the Demised Premises to the condition prior to
such Alteration,
all at the expense of
Tenant. All such work shall be done by
Tenant in a good
and workmanlike
manner
and be diligently performed to completion.
Notwithstanding
anything herein to the
contrary, if any
Alteration by
Tenant
affects the foundation or "footprint" of any building, upon completion of such
Alteration, Tenant
shall provide
Landlord with a then current as-built ALTA
survey of the Demised
Premises depicting the
location of the Alteration to the
foundation or "footprint" and providing evidence that such Alteration does
not
encroach upon any easements or setback lines applicable to the
Demised Premises.
In no event may Tenant
remove or demolish any
building or
improvement on the
Demised Premises.
11.3. Trade Fixtures
and Personal Property.
All articles of
personal
property, all
furniture and all business and trade fixtures and equipment
owned
by Tenant or installed by Tenant at its expense in the Demised
Premises and not
purchased by Landlord under the Purchase Agreement (the "Tenant's Property"),
are and shall remain the property of Tenant. Subject to the applicable
provisions of this
Lease, and provided no Event of Default by Tenant has
occurred and is continuing, Tenant's Property may be
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<PAGE>
removed at any time during the Lease Term and in all events, shall
be removed at
the end of the Lease
Term. Tenant
shall repair any damage to the Demised
Premises caused by such removal.
11.4. Mechanic's
Liens. Tenant may not suffer any mechanic's or
materialmen's lien to
be filed against the Demised Premises by reason of work,
labor, services or
materials performed or furnished to Tenant or anyone holding
any part of the Demised Premises under Tenant. If any such lien shall at any
time be so filed,
Tenant must, within
thirty (30) days of the filing thereof,
cause such lien to be released of record or post an applicable statutory bond
which stays any
foreclosure or other
sale. If Tenant
fails to have such
lien
released of record within such thirty (30) day period, Landlord may (but is not
obligated to) cause
such lien to be
removed, unless
Tenant has posted a
bond
that is permitted
by Law and which stays
foreclosure
or other sale,
without
investigating the
validity thereof and irrespective of the fact that Tenant may
contest the propriety or amount thereof. Tenant, upon demand, shall
pay Landlord
the amount so paid by Landlord in connection with the discharge of such lien,
including reasonable
attorneys'
fees and expenses,
and any such amount
shall
constitute Additional
Rent. Nothing contained herein is intended to be or shall
be deemed to be a consent on the part of Landlord to subject
Landlord's
estate
in the Demised
Premises to any lien or liability under Law, and Landlord shall
have the right to post notices of such non-responsibility at the Demised
Premises as Landlord deems advisable.
12.
Condemnation; Destruction.
12.1. Condemnation.
12.1.1. Full or Partial Condemnation. Tenant shall give
Landlord
prompt written
notice if at any time
during the Lease Term
Tenant receives a
notice of any taking or proposed taking of the Demised Premises for any public
or quasi-public
use under any
statute or right of
eminent domain or private
purchase in lieu thereof. If the entire Demised Premises shall be permanently
taken for any public
or quasi-public
use under any statute or by right of
eminent domain,
or by private purchase in lieu thereof (any of which is a
"Condemnation"), this
Lease shall automatically terminate as of the date title
or possession is taken, whichever first occurs, and Tenant shall
immediately pay
to Landlord on the
date of such taking a sum equal to (i) all of the Base Rent,
Additional Rent and other monetary payments that are then due, and
(ii) all the
Base Rent which shall
become due under the
Lease for the balance
of the Lease
Term discounted
to present value at the rate of seven and
one-half percent
(7.5%) (the "Discount
Rate"). If any portion
of the Demised
Premises shall be
permanently taken under Condemnation so as to leave the remaining
portion of the
Demised Premises
unsuitable for the
purposes leased as
determined in Tenant's
reasonable discretion,
this Lease shall terminate as of the date the condemning
authority takes title, and Tenant shall immediately pay to Landlord on the
date
of such Condemnation,
a sum equal to (y) all of the Base Rent, Additional Rent
and other monetary
payments that are then
due, and (z) all the Base Rent which
shall become due under the Lease for the balance of the Lease Term
discounted to
present value using the Discount Rate. All compensation awarded or paid upon a
total or partial
Condemnation
of the Demised Premises (including, without
limitation, all
buildings or improvements) shall belong to and be the
property
of Landlord and Tenant hereby assigns to Landlord all rights
Tenant may have in
or to any Condemnation
award or payment, except only relocation and moving
expenses of
Tenant as described in the next sentence. No part of any award
(other than relocation and moving expenses directly petitioned by
and awarded to
Tenant which do not
reduce the award granted to Landlord) shall belong to
Tenant. If a portion
of the Demised Premises is Condemned and this Lease is not
otherwise terminated as provided therein, this Lease shall remain in full
force
and effect as to the portion of the remaining Demised Premises, and no portion
of the Base Rent or Additional Rent or other monetary payments under this Lease
shall be reduced,
adjusted or abated. If
this Lease is not terminated, Tenant
shall Repair any
damage to the Demised
Premises and otherwise restore the
Demised Premises
caused by such
Condemnation
(subject to Landlord
and any of
Landlord's
Mortgagee(s) making
the Condemnation
proceeds available for such
Repairs), and Tenant shall perform such Repair in accordance with
the terms
11
<PAGE>
of Section 11 above.
Tenant shall pay any amount in excess of such
proceeds
received by Landlord to complete such Repair.
12.1.2. Temporary
Condemnation.
Tenant shall give Landlord
prompt written notice
if at any time during the Lease Term temporary use of the
whole or any part of the Demised Premises shall be condemned for any public
or
quasi-public purpose
by any lawful authority, whether by exercise of the
right
of condemnation or eminent domain, or by Tenant's agreement with
such authority.
In such event, the
Lease Term shall not be reduced or affected in any way,
and
Tenant shall continue
to pay in full the Base Rent, Additional Rent, and all
other required sums of
money under this Lease. Tenant shall be entitled to
the
entire award for such temporary taking (whether paid by way of
damages, rent, or
otherwise). If,
however, the period of occupation
and use by the
condemning
authority extends
beyond the expiration date of this Lease, the award made for
such taking
shall be apportioned between Landlord and Tenant as of the
expiration date of the
Lease Term or earlier
termination
of the Lease,
with
Tenant entitled
to the portion of the
award for the
temporary taking for
the
period through the last day of schedule Lease Term and Landlord
entitled to the
portion of the award for the period thereafter. Landlord may intervene and
participate in
any proceeding for such taking or condemnation. If such
intervention is not permitted, however, Tenant shall, at its expense,
consult
with Landlord and its attorneys and experts, and make all reasonable efforts
to
cooperate with Landlord in prosecuting or defending such proceeding. When the
use or occupation of the Demised Premises by the condemning authority
terminates, Tenant
shall, at its expense,
repair and restore the buildings and
improvements on the Demised Premises, as nearly as is reasonably
possible, to
their condition
at the time of such
taking. Any recovery or sum received by
Tenant as an award or compensation for physical damage to the Demised
Premises
caused by and during the temporary taking shall be deemed a trust
fund for the
purpose of repairing or restoring such damage.
12.2. Destruction.
If the Demised
Premises, or portion thereof, is
damaged or destroyed by fire or other casualty, Tenant shall immediately
notify
Landlord of such damage or destruction. Tenant shall promptly Repair or
rebuild
the Demised Premises to a condition equal to or exceeding its
immediately prior
condition, subject to
Landlord and
Landlord's Mortgagee
making the
insurance
proceeds available
to Tenant;
provided, however, that Tenant's failure to
maintain insurance as required herein shall not relieve Tenant of
its obligation
to make such Repairs or rebuilding. All insurance proceeds that are not made
available to Tenant for Repairs or reconstruction shall be paid to Landlord (or
its Mortgagee,
if applicable). If the estimated cost of such Repair or
rebuilding is more than $25,000.00, the plans and specifications shall
first be
submitted to and approved in writing by Landlord, which approval shall not be
unreasonably withheld. All Repairs and rebuilding made by Tenant
hereunder shall
be made in accordance
with Section 11 above. Landlord will promptly make
available, in
installments as restoration progresses, an amount up to but not
exceeding the amount of any insurance proceeds or damages received by
Landlord,
but only: (a) upon request of Tenant accompanied by evidence reasonably
satisfactory to
Landlord that such amount has been paid or
is due and payable
and is properly a part of such costs; and (b) if Tenant has complied with the
terms of this Section
in connection
with the restoration. There shall be no
abatement of any Base
Rent or Additional
Rent hereunder in the event of any
damage or destruction
to the Property, except to the extent that Tenant's
restoration
exceeds the
period covered by Tenant's rental or business
interruption insurance
as a sole result of a delay or failure on the part of
Landlord to make insurance proceeds promptly available to Tenant to the
extent
required hereunder, or the unreasonable delay or failure on the
part of Landlord
to review and approve Tenant's Repairs and rebuilding of the
Demised Premises to
the extent required hereunder.
13. Events
of Default. The occurrence of any one or more of the
following
events, acts or occurrences constitutes an event of default ("Event
of Default")
by Tenant hereunder:
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<PAGE>
13.1. Monetary Covenants. Tenant defaults in the payment of
Base Rent,
Additional Rent or any
other monetary
obligation due hereunder after the same
becomes due and fails
to cure such default
within ten (10) days
after the due
date; provided, however, no Event of Default shall be deemed to
have occurred if
the payment
default arises out of a clerical error or a misapplication of
Tenant's payment by Landlord, provided such payment is properly
made immediately
upon Tenant becoming aware of such error or misapplication;
13.2. Non-monetary Covenants. Tenant defaults in the performance of
any
other covenant,
agreement, condition,
rule or regulation
herein contained
or
provided for, or hereafter validly established, for more than thirty (30) days
after Landlord
gives Tenant
notice of such default
or, if such default is not
capable of being cured
within such thirty (30) day period, Tenant has not
commenced such
performance in good faith within such thirty (30) day period
and
is not diligently and continuously proceeding therewith to
completion or, in any
event, Tenant has not
cured the default within one hundred twenty (120) days of
such notice;
13.3. Credit.
Tenant admits in
writing its inability to pay its debts
generally; Tenant
makes a general assignment for the benefit of creditors;
any
federal or state
banking or regulatory agency declares Tenant insolvent,
appoints a receiver for Tenant or takes over Tenant's operations;
any proceeding
is instituted by or against Tenant: (i) seeking to adjudicate it a
bankrupt or
insolvent (or its
equivalent in the
event Tenant is a bank or other financial
institution); (ii) seeking liquidation, winding up, reorganization,
arrangement,
adjustment,
protection, relief or
composition of it or its debts under any Law
relating to bankruptcy, insolvency, bank failure or
reorganization or relief of
debtors; or (iii) seeking the entry of an order for relief or the
appointment of
a receiver, trustee or other similar official for it or for any
substantial part
of its property and, either such proceeding remains undismissed or unstayed for
a period of thirty
(30) days or any of the actions sought in such proceeding
occurs; or Tenant
takes any action to authorize any of the actions set forth in
this Section 13.
13.4. Representations.
Any representation or warranty of Tenant set
forth in this Lease is or becomes false or otherwise inaccurate in any material
respect during the Lease Term.
13.5. Abandonment.
Tenant vacates or abandons all or any material
portion of the Demised Premises for a period in excess of sixty
(60) days.
13.6. Liens.
Tenant fails to
release any mechanic's or materialmen's
lien within
the period described in Section 11.4 or any other lien or
encumbrance is filed against the Demised Premises which is not released
within
thirty (30) days of the filing or recording of such lien or
encumbrance.
13.7. Prohibited
Transfers.
Tenant assigns or subleases the
Demised
Premises in violation of Section 18.1.
13.8. Payment of
Debts. Tenant is
generally not able to pay its debts
as such debts become due.
14. Landlord's
Remedies. Upon the occurrence of any Event of Default by
Tenant and subject to Tenant's right to cure as set forth above,
in addition to
all other remedies
that Landlord may have hereunder or under any applicable Law
or at equity, Landlord
has the following
rights and remedies
each of which is
nonexclusive, without further notice by Landlord (unless required
by Law):
14.1. Right of
Re-Entry. Landlord has the right to re-enter
and take
possession of the Demised Premises. In furtherance of such right,
Landlord has
the right to re-enter
or repossess the Demised Premises, either by force,
summary proceeding,
surrender or otherwise, and dispose of and remove therefrom
Tenant, or other occupants thereof, and their effects, and alter the locks and
other
13
<PAGE>
security devices at
the Demised Premises.
Landlord may do the above without
service of notice or resort to legal process and without being deemed
guilty of
trespass or
becoming liable for any loss or damage
which may be
occasioned
thereby. Notwithstanding such retaking of possession by Landlord or
the exercise
of any other remedy of Landlord under this Lease, Tenant's liability for Base
Rent, Additional Rent
and other monetary
payments provided for
herein are not
extinguished or reduced.
14.2. Right to Terminate; Acceleration of Rent. Landlord may exercise
its right to re-enter under Section 14.1 above, or take
possession
pursuant to
legal proceeding or
pursuant to any notice
provided by any applicable Law, and
terminate this
Lease. If Landlord terminates this Lease, Tenant shall
immediately pay to
Landlord a sum equal
to any and all Base
Rent, Additi
